Joint Committee on Draft Communications Bill Report


Letter from the Bill Team to the Clerk

Thank you for your letter asking for further clarification on a number of the powers included in the draft Communications Bill. This letter provides a response to each of these points.

Clause 11

The Committee asked why the power to add other forms of equality to clause 11 is not subject to positive resolution. This is because we would only expect other forms of equality to be added to bring the clause into line with general equality law if the Govt introduced new general legislation on e.g. age discrimination, religious discrimination. We would not expect this sort of alignment with other legislation to be controversial. This mirrors the power to add other forms of equality to the licence conditions in clause 224.

Clauses 28, 32, 77, 88, 91, 101 and 132

The Committee noted that the power to vary maximum penalties is not in fact a standard provision, and asked why a power to increase maximum penalties by anything above inflation is needed, and why, if it is needed, it should not be subject to the affirmative procedure. The provisions in the clauses in question were designed to be in line with similar provisions in the Broadcasting Act 1996, as one of the things that the Communications Bill is trying to achieve is consistency across the communications sector. The powers in the Broadcasting Act were included with the intention that any changes

made under the relevant provisions would not represent any change of policy, but simply maintain the effectiveness of the level of financial penalty applicable, principally in order to take account of inflation. We would expect the same principles to apply to the powers proposed in the Communications Bill.

Clause 77(5) however does not appear to be appropriately founded on any analogy with the Broadcasting Acts, and we are reconsidering the rationale for this provision in the light of the Committee's comments.

Clause 49

The Committee have asked for a statement of the considerations which would decide whether or not a service should be added to or removed from the list of must-carry services. We envisage that the criteria used to add a service to the list of must-carry services will be :

·  its public service remit;

·  its importance for social inclusion, on a national or a local basis;

·  its unavailability by other means for a significant proportion of people using the platform.

As indicated in the Communications White Paper, the Government would also, in any review preceding amendment of the must-carry list, take account of capacity constraints, and OFCOM's advice before deciding on any additions to the list and the Bill provides for reasonable compensation for the operator, as also proposed in the White Paper.

Clause 82

The Committee asked whether this power was intended to deal only with inflation,

why it was thought right to delegate the power to OFCOM rather than the Secretary of State and why there was no provision for Parliamentary control over the exercise of the power.

The power proposed in clause 82 replicates the power currently contained in section 11(3) of the Telecommunications Act 1984, but transfers it to OFCOM from the Secretary of State. The power in the Telecommunications Act 1984 has not been used to date and we would not expect the proposed power in clause 82 to be used for anything other than keeping pace with inflation.

We propose moving this power from the Secretary of State to OFCOM because, in the future, as it will be OFCOM and not the Secretary of State, who are responsible for both the application of the code and for the enforcement of the restrictions and conditions subject to which the code applies, we consider that it would be more appropriate for this power to be exercised by OFCOM.

The Committee also asked how the provisions about compensation in the Compulsory Purchase Act 1965 apply to utilities generally. In relation to gas, schedule 3 to the Gas Act 1986 contains provisions relating to the acquisition of land by "gas transporters". Part II of that Schedule deals with procedure and compensation etc in relation to England and Wales and Part III deals with the same matters in relation to Scotland. As regards England and Wales, paragraph 13 provides that the enactments in force in England and Wales with respect to compensation for the compulsory purchase of land shall apply with the necessary modifications as respects compensation in the case of a gas transporter's compulsory acquisition of a right by the creation of a new right as they apply to compensation on the compulsory purchase of land and interests in land. There is no provision delegating power to amend compensation limits.

As respects electricity, section 10 of the Electricity Act 1989 gives transmission licence holders and distribution licence holders the compulsory powers of acquisition set out in Schedule 3 of that Act, subject to any restrictions imposed in the terms of the licence. Schedule 3 to the Electricity Act 1989 applies the Compulsory Purchase Act 1965 (with some amendments) for the purpose of calculating compensation. Once again there is no provision delegating power to amend compensation limits.

In relation to water, sections 155 and 167 of the Water Industry Act 1991 confer compulsory purchase powers on water and sewerage undertakers. The Compulsory Purchase Act 1965 applies to water and sewerage undertakers using those powers but there is no provision in delegating power to amend compensation limits.

Clauses 56 and 124

The Committee asked for an account of the considerations which led to the decision not to provide that regulations made by OFCOM under clause 56 or 124 should be subject to negative procedure.

Clause 56 deals with the making of regulations for setting up a mechanism for the sharing the burden of the universal service obligations. The Committee will be aware that the circumstances in which it would be appropriate to establish such a cost-sharing mechanism have not to date arisen in the UK. But if they should arise at some point in the future, decisions as to the form of such a mechanism and who should contribute to it would necessarily be closely related to the prior question of whether the universal service obligations resulted in a unfair burden on the provider. Consideration of that question is a responsibility specifically assigned by the Directives to the national regulatory authority, which for the UK will be OFCOM. In these circumstances, it seems most appropriate that any necessary cost sharing mechanism should be defined by OFCOM because of its prior consideration of related issues. However, its discretion in these matters will be substantially constrained by the framework of principles which the Directives specifically require to be applied to the establishment of any such mechanism (i.e., Art. 13 of, and Annex IV part B to, the Universal Service Directive). If any affected party considers that OFCOM have not complied with the principles specified by the Directive, they will of course have a full right of appeal on the merits. In the light of these statutory safeguards for the interests of those who might be affected, the negative resolution procedure was not considered necessary.

Turning to clause 124, it seems sensible to explain here both clause 124, about which the Committee have asked, and clause 115, about which they have not. These clauses concern the exercise of what may be termed basic spectrum management tools and concern their detailed application, i.e. the services for which RSA will be available and the rules that will govern spectrum trading. The persons to whom they apply have a choice in that they can decide whether or not to use spectrum and whether to trade it. Holding RSA is completely voluntary as are decisions whether to trade.

If OFCOM is to be an independent regulator, it will need operate freely within the statutory framework to decide where and how to use these tools. It would defeat the purpose of setting up an independent regulator if the day-to-day exercise of the powers were to be subject to Parliamentary supervision.

Clause 117

The Committee ask why clause 117 is subject to the negative procedure although Schedule 11 paragraph 25, which is related, does not. This questions also applies to Clause 123.

The new section 3A of the Wireless Telegraphy Act 1998 introduced by clause 117 and section 3 of that Act amended by clause 123 are different from the existing section 3 in that they provide for a single instrument - regulations made by OFCOM - to replace separate regulations made and notices issued by the Secretary of State. The bulk of provisions governing spectrum auctions are contained in the notices, which are not subject to any Parliamentary procedure: the regulations only set out a framework. Thus the new combined regulations will partake more of the characteristics of existing notices than of existing regulations; and it therefore seems appropriate that the procedure should be more akin to that for notices than for existing regulations. Moreover, Parliament will retain a role in respect of spectrum auctions, because directions by the Secretary of State under clause 112(4) and (5) relating to spectrum auctions and other procedures for setting the charges for spectrum use will require the approval of Parliament under clause 112(6).

The Committee also asked what considerations led to the changes to Section 6 of the WT Act 1998. The change to section 6 of the Wireless Telegraphy Act 1998 (effected by paragraph 8 of Schedule 11) to remove the need for negative resolution for regulations made under that Act reflects the transfer of pricing functions from the Secretary of State to an independent regulator. The power to set fees for licences and Recognised Spectrum Access will be transferred to OFCOM to exercise in the course of carrying out its function of managing the radio spectrum. Fees will be set in accordance with spectrum management considerations, having regard in particular to the factors set out in section 2 or by means of auction. As OFCOM will be independent, it is considered appropriate that the powers should be exercisable without reference to the Secretary of State. Requiring negative resolution would involve the Secretary of State in approving OFCOM's charges, which would be contrary to the principle that OFCOM should be independent. Furthermore, in view of the statutory safeguards in UK and EC law against fees being set higher than justified by spectrum management considerations, the negative resolution procedure is considered unnecessary. Finally, Parliament will retain a role in approving any directions given by Ministers to OFCOM on the exercise of the powers.

Paragraph 3 of Schedule 8

The Committee asks whether there is a requirement to consult the National Assembly for Wales before the Secretary of State uses the power under paragraph 3(4) of Schedule 8 to amend the Welsh Authority's public service remit. The answer is no. Broadcasting being a reserved matter, we believe that provision for such consultation is more appropriate to the concordat between the Department and the Assembly, rather than primary legislation. This would mirror the arrangements for the Secretary of State to consult the Assembly on the appointment of the Chair and members of the Authority.

11 June 2002

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