Figure 1 below provides a diagrammatic representation of the proposed revised licence modification procedure.

Part III: Licence Modification Procedure

Clause 11: Appeals against modifications of licences

66.     This Clause provides for an appeal under Section 46B of the Telecommunications Act 1984 against licence modification decisions under section 12 of a licence granted to a particular person. (Section 46B provides for appeals against a range of regulatory decisions on wider grounds than those provided by judicial review.)

Clause 13: Prohibition on key escrow requirements

67.     This Clause limits the powers given by this Bill to any Minister of the Crown, the Scottish Ministers, or any person appointed under section 3, such that these powers may not impose requirements on a person to deposit a key for electronic data with any person or otherwise make the key available. Subsection (3) defines a key for the purposes of this clause, making use of the definition of being put into an intelligible form given in Clause 14 (3).

Clause 14: General interpretation

68.     This Clause provides for the interpretation of various terms used throughout the Bill.

69.     Subsection (1) inter alia defines:

• electronic communication to mean a communication transmitted (whether from one person to another, from one device to another or from a person to a device or vice versa) by means of a telecommunication system (within the meaning of the Telecommunications Act 1984), or by other means but while in an electronic form.

Section 4(1) of the Telecommunications Act 1984 says

• In this Act telecommunications system means a system for the conveyance, through the agency of electric, magnetic, electro-magnetic, electro-chemical or electro-mechanical energy of-

(a)     speech, music and other sounds

(b)     visual images

(c)     signals serving for the impartation (whether as between persons and persons, things and things or persons and things) of any matter otherwise than in the form of sounds or visual images; or

(d)     signals serving for the actuation or control of machinery or apparatus.

• subordinate legislation as having the same meaning as in the Interpretation Act 1978, and also including corresponding secondary legislation made under Acts of the Scottish Parliament and certain statutory rules in Northern Ireland.

• Section 21(1) of the Interpretation Act 1978 provides that subordinate legislation means Orders in Council, orders, rules, regulations, schemes, warrants, byelaws and other instruments made or to be made under any Act.

Clause 15: Short title, commencement, extent

70.     Subsection (2) allows the Secretary of State to commence Part 1, and clauses 7, 10 and 11 on such days as he may appoint. Different days may be appointed for different purposes. Subsection (3) provides that Part I is repealed if it has not been commenced within 5 years of Royal Assent.

FINANCIAL EFFECTS OF THE BILL

71.     If Part I is commenced and the approvals scheme is set up, there may be some initial impact on public expenditure relating to start-up costs, but the Government intends that the fees paid would cover the start-up costs and the costs of running the scheme. Part II should result in savings as Government Departments modernise their dealings with business and the public, by making better use of e-commerce technologies. The provisions in Part III will not impact on public expenditure.

EFFECTS OF THE BILL ON PUBLIC SERVICE MANPOWER

72.     The statutory approvals scheme would probably result in a small increase in manpower. The powers in Part II to permit electronic communication with Government could result in manpower savings in the longer term. The provisions on telecommunications licences will have no significant impact on manpower.

SUMMARY OF THE REGULATORY IMPACT ASSESSMENT

Electronic Commerce

73.     The provisions in Part II of the Bill are expected to lead to substantial savings for business in transacting with Government.

Cryptography Services Providers

74.     The statutory approvals scheme for cryptography service providers would, if implemented, be voluntary: whether or not a company seeks approval will be a business decision for it. Only those companies in the specialised sector of providing cryptography services will be directly affected. The precise cost of approval will depend on the nature of the services a company may wish to be approved for and the scale of their business. A possible estimate would be between £10,000 and £30,000 for a medium sized company seeking approval for the issue of certificates. On the basis of the number of bodies which are likely to seek approval in the first year of any such scheme, the total cost to industry would be no more than £500,000. In deciding whether to seek approval a company would need to take account of the additional revenues which being approved might bring. It is anticipated that the cost to providers who wish to be approved under the "T" Scheme would be equivalent, or perhaps less, than under a statutory scheme.

Telecommunications Licences

75.     The proposals on telecommunications licences principally impact only on those telecommunications operators who have individual licences. They will allow the DGT to make licence modifications without the need for complex and expensive CC enquiries in cases where no licensees whose licences are to be changed object to the modification and in cases where the DGT considers the modification to be deregulatory according to the criteria specified in the Bill. The precise impact of these proposals will depend upon the nature of the modifications which may from time to time be proposed by Oftel, but the overall impact is likely to be deregulatory.

76.     The Regulatory Impact Assessment of the costs and benefits of the Bill is available on the DTI website at www.dti.gov.uk/cii or from David Lee on 0207 215 1435.

COMMENCEMENT

77.     The Government will commence Part I and set up the statutory scheme, only if the industry led approvals scheme (see paragraph 10 above) does not work. The Government will inform Parliament on how self-regulation is developing during the passage of the Bill. The Government intends to commence clauses 7, 10 and 11 two months after the date of Royal Assent. The remainder of the Bill will come into effect on the date of Royal Assent.

EUROPEAN CONVENTION ON HUMAN RIGHTS

78.     Section 19 of the Human Rights Act 1998 requires the Minister in charge of a Bill in either House of Parliament to make a statement about the compatibility of the provisions of the Bill with the Conventions rights (as defined by section 1 of that Act). The Parliamentary Under Secretary of State for Science, Lord Sainsbury of Turville, has made the following statement:

In my view the provisions of the Electronic Communications Bill are compatible with the Convention Rights.

Extract from the Telecommunications Act 1984 showing words inserted at Section 12 by the Bill; it also shows other amendments made by the Bill (not highlighted)

Modification of licence conditions by agreement.

12 (1) Subject to the following provisions of this section, the Director may modify the conditions of a licence granted under section 7 above.

(2) Before making modifications under this section, the Director shall give notice-

(a)     stating that he proposes to make the modifications and setting out their effect;

(b)     stating the reasons why he proposes to make the modifications; and

(c)     specifying the time (not being less than 28 days from the date of publication of the notice) within which representations or objections with respect to the proposed modifications may be made.

(3) A notice under subsection (2) above shall be given by publication in such manner as the Director considers appropriate for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be affected by them and, in the case of a licence granted to a particular person, by sending a copy of the notice to every relevant licensee.

(4) Delete existing subsection and replace with:

(4A) In the case of a licence granted to all persons, or to all persons of a particular class, the Director shall not make any modification unless-

(a)     he has considered every representation made to him about the modification; and

(b)     there has not been any objection by a person running a telecommunication system under the authority of the licence to the making of the modification.

(4B) In the case of a licence granted to a particular person, the Director shall not make any modification unless-

(a)     he has considered every representation made to him about the modification or any modification in the same or similar terms that he is at the same time proposing to make in the case of other licences; and

(b)     the requirements of section 12A below are satisfied in the case of the modification and also in the case of every such modification in the same or similar terms.

(5) The Director shall also send a copy of a notice under subsection (2) above to the Secretary of State; and if, within the time specified in the notice, the Secretary of State directs the Director not to make any modification, the Director shall comply with the direction.

(6) The Secretary of State shall not give a direction under subsection (5) above unless-

(a)     it appears to him that the modification should be made. if at all, under section 15 below; or

(b)     it appears to him to be requisite or expedient to do so in the interests of national security or relations      with the government of a country or territory outside the United Kingdom.

(6A) Where the Director makes a modification under this section, he shall, as soon as reasonably practicable after making the modification, give notice of his reasons for doing so.

(6B) Subsection (3) above shall apply in the case of a notice under subsection (6A) above as it applies in the case of a notice under subsection (2) above.

(6C) Where the Director has given notice under subsection (2) above of a proposal to modify the conditions of a licence, he may in such manner and at such time as he considers appropriate publish-

(a)     the identities of any or all of the persons who objected to the making of the modification; and

(b)     to the extent that confidentiality for representations or objections in relation to the proposal for the modification has not been claimed by the persons making them, such other particulars of the representations or objections as he thinks fit.

(6D) In this section and section 12A below (except in subsection (6C) above), a reference to a representation or objection, in relation to a modification, is a reference only to a representation or objection which-

(a)     was duly made to the Director within a time limit specified in the case of that modification under subsection (2)(c) above or section 12A(5)(d) below; and

(b)     has not subsequently been withdrawn;

and for the purposes of this section and section 12A below representations against a modification shall be taken to constitute an objection only if they are accompanied by a written statement that they are to be so taken.

(6E) In this section and section 12A below 'relevant licensee', in relation to a modification, means-

(a)     in a case where the same or a similar modification is being proposed at the same time in relation to different licences granted to different persons, each of the persons who, at the time when notice of the proposals is given, is authorised by one or more of those licences to run a telecommunication system; and

(b)     in any other case, the person authorised by the licence in question to run such a system.

(6F) In this section references to making a modification of the conditions of a licence do not include references to the exercise of any power conferred by a term of the licence to revoke the licence in part or for particular purposes.

(7) References in this section and in sections 12A to 15 below to modifications of the conditions of a licence do not include references to modifications of conditions relating to the application of the telecommunications code.