Joint Committee on the Draft Communications Bill Minutes of Evidence

Memorandum submitted by The Internet Services Providers Association (ISPA UK)

  ISPA welcomes this opportunity to comment on the draft Communications Bill to the Joint Scrutiny Committee. We welcome the Government's attempt to streamline the myriad of regimes that affect the communications sector. However, we do have some particular concerns which are addressed herein under the four headings "Content Regulation"; "Procedures of OFCOM"; "Access"; and "Notifications & Costs".


  The Communications Bill's approach to content regulation is broadly welcomed by the Internet industry. The Government states in the policy narrative that "it is not the intention for the draft Bill to extend regulation into the Internet" (policy narrative section; a position which remains unchanged from the White Paper. It is worth noting however, that it is incorrect to assume that Internet content is currently unregulated: the online world is of course already subject to the laws of the offline world.

Clarification of meanings and definitions

  The definitions in Sections 154 to 155, meaning of "television licensable content service" and Services that are not television licensable content services, are not sufficiently clear to ensure that Internet content does not fall under the former definition. We would urge the Government to refine this definition as well as others appearing in these Sections, including "electronic visual programme guide", "relevant ancillary service", "two way service" and, in Section 238, "general public" and "broadcasting or distribution".

  It is possible at present to interpret the definitions in such a way that even the most simple Internet content, such as web pages, plain tv listings or hyperlinks could be covered. There is even the potential for the basic hosting of third party content to be covered, under Section 238.5 "distribution". We understand the desire for the Bill to remain as technology neutral as possible, but it must also be clear in its intent.

  We are also concerned that the draft Bill assumes an out-of-date definition of "broadcasting". In particular, it appears to assume that producers of content also have responsibility for its distribution. There should be an understanding that while the content of "web casting" can be equivalent to broadcasting in its form (ie simultaneous, single point to multi-point transmission), it differs from television broadcasting with respect to the editorial control. That is, the means of transmission is operated by a third party and not the broadcaster.

Discretionary powers of the Secretary of State (ss 156): modification of ss. 154 and 155

  We believe there should be a duty placed on the Secretary of State to consult with OFCOM, and for OFCOM to formally consult with industry before modifications to these provisions are considered. This is an area of fundamental importance to the Internet industry.

Function of Content Board

  We believe it would be inappropriate, as well as impractical, for the Content Board's remit to extend to Internet content. It would also conflict with the Government's commitment regarding Internet content in the policy narrative. We appreciate that Section 18 "Functions of the Content Board" states that the Content Board's remit will cover anything "published by being distributed by means of any electronic communications network to members of the general public or of any section of the general public" as defined in Section 238 (ie "available for reception by members of the general public"). However we believe an explicit sub-Section exempting the Internet would be a useful clarifier. It should, furthermore, be recognised that there is a significant "grey area" between on demand and broadcasting services which risks creating legal uncertainty for both ISPs and broadcasters. This will be particularly problematic with respect to the regulation of interactive television where viewers can switch between broadcast content and e-commerce services. Such complexities of today's media will require OFCOM's particularly close attention.

  For this reason, we suggest that the Bill stipulates that the membership of the Content Board includes representatives of all industry sectors covered by its remit and, as such, it should be revised in line with any revision of the definition of "television licensable content service" in section 238.

Liability for Third Party Content

  The draft Bill does not contain any cross-reference to the e-Commerce Regulations, which transpose the European e-Commerce Directive, in particular the liability provisions for intermediaries. Given that the e-Commerce Directive explicitly absolves intermediaries of all liability for the transmission, caching or hosting of third party content (provided certain conditions are met), we would expect the draft Bill to maintain explicit consistency with the Directive and the UK Regulations.

Promotion of Media Literacy

  We endorse OFCOM's proposed role to raise awareness and use of consumer tools, including filtering and rating systems, to enable consumers to manage their own Internet experience. A particular example of would be the ICRA self-rating and filtering system, which is receiving wide-scale international support from stakeholder groups. We are concerned, however, that in the draft Bill no guidance has been given as regards allocation of costs for development and deployment of such systems. We believe it would be inappropriate for OFCOM, in promoting awareness of such tools generally, to promote or even require their provision, but not contribute financially to their deployment or development.


Lessons to be learnt from Oftel

  There has been some concern over delays in decision making by the current Telecommunications regulator, Oftel, which has been felt to hamper effective competition and innovation in the market. The speed of decision-making by OFCOM must reflect the speed of commercial decision-making in the communications industry. There is a need for a "service level agreement" between OFCOM and industry to this effect. Decision-making on the part of OFCOM also needs to be transparent to industry players.

  To provide effective and timely regulation, OFCOM must be equipped with experienced and knowledgeable staff. Oftel has suffered from a high turnover of staff, which affects both the speed, and consistency of decision-making and the general level of industry and technological knowledge of the regulator. We would therefore urge that payment of employees at OFCOM should not be rigidly tied to civil service pay scales and allow OFCOM the discretion accorded to other regulators such as the ITC.

Interaction of OFCOM with other bodies and agencies

  Given that the draft Bill awards OFCOM concurrent powers with the OFT under the Competition Act, we would urge that there be greater clarity as to how OFCOM and the OFT will interact regarding competition issues.

  We would also emphasise the need for greater clarity as to how OFCOM will interact with bodies with a self or co regulatory mandate in this area, such as the IWF, ICSTIS, and the Telecoms Ombudsman, with a recognition that cumulative costs of maintaining these bodies, along with the new notification costs imposed on ISPs under the draft Bill, have the potential to significantly increase the cost of doing business in the sector.


  We believe that issues concerning access to services and networks by operators should be addressed in such a way that effectively promotes competition within all relevant sectors and is in accordance with the EU Communications Framework. In particular, access costs and conditions should be cost orientated, transparent and non-discriminatory since competition at this level will continue to be key for the competitive provision of down stream services such as Internet services.


General Conditions of Entitlement

  Whilst the authorisation scheme suggested in place of the existing telecommunications licensing requirements is permissible within the scope of the EU Communications Framework, it is nonetheless key that the burden of such a regime is kept to the minimum to be in line with the Government's policy of de-regulating where possible

  We will be responding separately to Oftel's consultation on "The General Conditions of Entitlement".

Clarification of OFCOM funding model

  We believe that funding of the regulator by the communications industry should be in proportion to the division of work between the sectors covered. No one sector should be placed under a disproportionate financial burden. For example, the cost of regulating Conditional Access Services (CAS) expenses should be met by the contributions made by broadcasters, particularly Multiplex licence holders.

  Within each sector, there should be a fair balance between the charges imposed on large and small players, with a minimum threshold of turnover set, below which there should be no imposition of charges. We feel this is essential to ensure that notification charges do not act as a barrier to market entry for small businesses.

General Costs to the Internet industry

  Efforts should be made to ensure that costs incurred by the industry in the form of notifications, funding for the telecoms Ombudsman scheme etc are not prohibitive to new market entrants nor innovations in technology.

  There should also be recognition that costs incurred under the draft Communications Bill, along with those incurred by the industry under RIPA and the ATCS Act, may represent a significant increase in the cost of doing business in the communications sector.

  In conclusion, we welcome the Communications Bill and the Government's intention to provide a modern, converged regulator for an innovative and evolving communications industry. If the above issues are satisfactorily addressed during the consultation, we believe the Communications Act will deliver significant benefits for industry and consumers alike.

June 2002

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