Memorandum by the Department for Culture, Media and Sport and the Department of Trade and Industry
THE POWERS GRANTED TO THE SECRETARY OF STATE UNDER THE COMMUNICATIONS BILL
Further to the request of the Joint Committee, the officials of the Department for Culture, Media and Sport and the Department of Trade and Industry are pleased to submit this memorandum on the powers granted to the Secretary of State for Trade and Industry and the Secretary of State for Culture, Media and Sport under the draft Communications Bill.
This submission consists of a note summarising the types of powers granted to the Secretary of State (which will be exercised by the Secretary of State for Trade and Industry and/or the Secretary of State for Culture, Media and Sport) and why she is not subject to the general duties set out in Clause 3 (General duties of OFCOM) and Clause 4 (Duties for the purpose of fulfilling Community obligations). The note also reviews examples of powers granted to the Secretary of State in the Communications Bill of specific interest to the Joint Committee, including the power to determine the scope of universal service provision in the United Kingdom. The note concludes with a brief assessment on the ability of OFCOM to act independently, notwithstanding the grant of these powers to the Secretary of State for Trade and Industry and the Secretary of State for Culture, Media and Sport.
A detailed table which identifies the policy rationale for each clause in the Communications Bill which confers a power on the Secretary of State and the constraints on the exercise of each power is attached at Annex A.
This note is divided into four sections:
Section 1 classifies the types of powers that are granted to the Secretary of State and the underlying policy rationale for the grant of those powers in the draft Communications Bill.
Section 2 broadly explains why the Secretary of State is not subject to the general duties set out in Clause 3 (General duties of OFCOM) and Clause 4 (Duties for the purpose of fulfilling Community obligations) of the Communications Bill.
Section 3 provides examples of powers granted to the Secretary of State in the Communications Bill of specific interest to the Joint Committee.
Section 4 concludes with a brief assessment of the ability of OFCOM to act independently, notwithstanding the powers granted to the Secretary of State.
2. TYPES OF POWERS GRANTED TO THE SECRETARY OF STATE
Under the Communications Bill, OFCOM has been given specific responsibilities and functions to drive forward the high-level policy objectives for the reform of the communications sector as set out in the Communications White Paper. These objectives are:
The creation of a dynamic market.
Ensuring universal access.
Maintaining diversity and plurality.
Safeguarding the interests of citizens.
Protecting the interests of consumers.
The powers reserved to the Secretary of State under the Communications Bill deal with matters, complementary to or in support of these high-level objectives and the work to be undertaken by OFCOM, which are more appropriately dealt with by a Minister than by a statutory body.
The table attached at Annex A identifies the powers conferred to the Secretary of State and explains the policy rationale for the need of such powers. Broadly speaking, the powers conferred fall into six broad categories:
"Future proofing" powers, which permit changes to the proposed Communications Bill once it is enacted to ensure it remains effective in light of rapidly changing market dynamics.
Powers to ensure "public policy" objectives, for example, the provision of services essential to full social and economic inclusion.
Powers to ensure compliance with international obligations and/or promotion of international relations.
Powers to ensure effective operation of concurrency in competition law. These allow the Secretary of State to determine jurisdictional issues concerning enforcement of competition legislation between OFCOM and the Office of Fair Trading ("OFT").
"Transitional" powers needed to ensure smooth transition between the current and proposed regulatory regimes.
"Consequential" powers needed to ensure that other areas of the law, which are affected by the current regulatory regime, are amended to reflect the proposed regime.
3. CONSTRAINTS ON THE EXERCISE OF THE POWERS OF THE SECRETARY OF STATE
When exercising any of the powers conferred by the Communications Bill, the Secretary of State must take into account the obligations of the United Kingdom under European Community law and other obligations arising under domestic law and international treaties to which the UK is a party. Before using a power, the Secretary of State would need, for example, to consider whether such action was proportionate and compliant with the EC Communications Directives.
However, the exercise of the powers conferred on the Secretary of State is not subject to the general duties contained in Clauses 3(1) and 3(2) of the Communications Bill. The reasoning for this is that the Secretary of State can be expected to be exercise wider public policy discretion than that of OFCOM when using its powers under the Communications Bill. Clause 3(1) imposes obligations on OFCOM to (among other things) further consumer interests, promote competition and encourage efficient use of the radio spectrum. Clause 3(2) also requires OFCOM to consider a number of factors when performing their duties, which include (but are not limited to) best regulatory practice, the needs of the elderly and disabled and the vulnerability of children and others requiring special protection. The Secretary of State will not be limited to the consideration of these factors when exercising her powers.
The Communications Bill specifically does not impose a duty on the Secretary of State to take into account these factors since, under the new regime, OFCOM and the Secretary of State do not perform or share regulatory obligations. There is therefore no need for a common framework for decision-making. This is unlike the regime set out in the Telecommunications Act 1984, which equally imposed certain duties on the Director General of Telecommunications and the Secretary of State where they shared licensing functions.
The ability of the Secretary of State to exercise her powers is, however, constrained in a number of ways: (1) by specific criteria listed in the Communications Bill; (2) by the "negative resolution procedure" whereby a statutory instrument made by the Secretary of State may be overturned by either House of Parliament; or (3) one of the "affirmative resolution procedures", which (depending on the provision in question) either requires the Secretary of State to obtain the approval (signified by a resolution) of each House of Parliament either to a draft or within 40 days after the statutory instrument has been made. The actual constraint(s) imposed varies on the nature of the power granted.
In addition, the Secretary of State is, of course, also subject to the requirements of general administrative law.
4. KEY POWERS
Set out below is an example of each of the types of powers conferred on the Secretary of State of specific interest to the Joint Committee under the Communications Bill. "Transitional" and "consequential" powers are not highlighted, as they will be used to enable the new communications regime to come into effect but not thereafter.
Clause 50(1) of the Communications Bill confers "public policy" powers. It requires the Secretary of State to publish a notice ("the Notice") setting out the extent to which the communications services, networks, facilities, directories and directory enquiry facilities described in subsection 50(2) of the Bill must be provided, made available or supplied throughout the UK, for the purpose of securing compliance with the UK's European Community obligations.
The things falling within subsection 50(2) of the Communications Bill include:
Electronic communications network and electronic communications services (eg connection to the PSTN and functional Internet access);
Facilities capable of being made available as part of or in connection with any electronic communications service;
Directories capable of being used in connection with the use of an electronic communications network or electronic communications service; and
Directory enquiry facilities capable of being used for purposes connected with the use of such a network or service.
Under the Communications Bill, the Secretary of State is responsible for determining the scope of the obligations contained in the Notice. However, OFCOM is then responsible for adopting such measures in accordance with the Communications Bill so as to secure compliance with the obligations contained in the Notice and for designating which communications providers must supply the services listed in the Notice.
Under the Universal Service Directive, for example, the UK is required to ensure that a number of services are available at the quality specified to all end-users in the UK, independently of geographical location, and, in light of specific national conditions, at an affordable price. These services and facilities include:
A connection to the public telephone network, able to support voice telephony, fax and data, including functional Internet access.
A comprehensive telephone directory and comprehensive directory enquiry facilities.
The provision of public payphones, including the ability to dial emergency service numbers free of charge.
The ability of disabled users to have affordable access to publicly available services and facilities equivalent to those enjoyed by other end-users.
Tariff options and packages that depart from normal tariffs to ensure that consumers on local incomes or those with special social needs may have access to publicly available telephone services.
In accordance with the Universal Services Directive, it is envisaged that the Notice will specify that these services and facilities are to be made available in the United Kingdom.
Television Licensable Content Service
Clause 156 of the Communications Bill grants to the Secretary of State the power to amend the definition of "television licensable content service", and is an example of "future proofing" powers. The power has been proposed so that the legislation relating to content licensing remains relevant in light of anticipated market or technological changes. In the future, it may be necessary to exclude services that might develop but not merit content regulation. Conversely, it may be appropriate to bring new services within the ambit of regulation.
Before exercising her power under Clause 156, the Secretary of State must have regard to the factors set out in Clause 156(1) when proposing a change to the definition of "television licensable content service", including:
The protection expected by members of the public as respects the contents of television programmes and text services.
The extent to which the public uses facilities to control the content of programmes and services watched or accessed.
The practicability of applying different levels of regulation to different services.
The financial impact of proposed changes on service providers.
Any changes are also subject to the affirmative resolution procedure to ensure that there is a mechanism requiring sufficient Parliamentary scrutiny of the boundaries of the proposed licensing regime.
Power to require OFCOM to provide such services, maintain records and give further advice in relation to the use of radio spectrum
Clause 110(2) is an example of the powers granted to the Secretary of State to ensure compliance with international obligations. Clause 110(2) empowers the Secretary of State to direct OFCOM to provide services, to maintain records and give further advice in relation to the use of radio spectrum for the purpose of securing compliance with the United Kingdom's international obligations.
Spectrum use is subject to various international requirements and Clause 110(2) gives OFCOM the obligation and powers to do what is necessary in order to comply with those international requirements as directed by the Secretary of State. When exercising this power, the Secretary of State will take into account the interests of all users and the wider public interest.
Resolution of Jurisdictional Disputes between OFCOM and the OFT
Clauses 247(7) and 248(8) grant powers to the Secretary of State to resolve disputes concerning the jurisdiction between OFT and OFCOM to enforce certain competition legislation. These powers are necessary to ensure the effective operation of concurrency. The Government anticipates that in general OFT and OFCOM will be able to reach mutually acceptable decisions as to whether OFCOM should exercise functions under the relevant competition legislation but this power is needed as a reserve power to ensure that there is a mechanism for resolving any disputes. Any decision of the Secretary of State under these clauses of the Communications Bill may be annulled by a resolution of either House of Parliament.
5. OFCOM REMAINS AN INDEPENDENT ENTITY
The Communications Bill grants a number of powers to the Secretary of State under the Communications Bill. However, the powers are limited by a number of mechanisms, including Parliamentary oversight, the level of which varies in accordance with the nature and scope of decision-making authority conferred on the Secretary of State.
The powers granted to the Secretary of State will enable her to have a limited but on-going role in determining the framework of communications regulations in the United Kingdom, in particular where public policy issues, such as the provision of universal service, and national security interests are at stake. As such, OFCOM's independence is not unduly compromised and the appropriate balance between OFCOM and the Government has been reached.
The Committee asked how the provisions of Clauses 150 to 152 of the draft Communications Bill are expected to operate with regard to the 31 December 2014 timescale.
The effect of the provisions would be:
Clause 150 (4) (a) provides that any digital licence granted before 31 December 2014 will lapse on that day.
Clause 150 (4) (b) refers to licences that are granted to run at any point from 1 January 2015.
Clause 152 relates to existing analogue licences. Clause 152 (3) (a) provides that any such licence, which has been renewed under the 1990 Act, Will lapse on 31 December 2014.
Taken together, the clauses therefore provide that all existing licences, analogue and digital, lapse on 31 December, 2014: and that any new digital licence which is offered to run at any time after 1 January 2015 will run for 10 years.
31 See, for example, clauses 51, 52, 53, 54, 55, 56, 57 and 58 of the Communications Bill. Back