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Arrangement of Clauses (Contents)
These notes refer to the Communications Bill
1. These explanatory notes relate to the Communications Bill as brought from the House of Commons on 5th March 2003. They have been prepared by the Department of Trade and Industry, and the Department for Culture, Media and Sport in order to assist the reader of the Bill and to help inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament.
2. The draft Communications Bill and draft explanatory notes were published by the Government in May 2002. The explanatory notes set out below relate to the Communications Bill as introduced to House of Lords and have been amended to incorporate the changes made to the draft Bill since May 2002 (see comparative tables in Appendix 3).
3. These notes need to be read in conjunction with the Bill as introduced to the House of Lords. They are not, and are not meant to be, a comprehensive description of the Bill. So, where a clause or part of a clause does not seem to require any explanation or comment, none is given.
4. The Bill relates to matters within the responsibilities of both the Secretary of State for Trade and Industry and the Secretary of State for Culture, Media and Sport. References to the Secretary of State in the Bill mean any Secretary of State. In practice, some of the functions conferred upon the Secretary of State will be exercised by the Secretary of State for Trade and Industry and the Secretary of State for Culture, Media and Sport jointly and others by only one of them. This will reflect their respective ministerial portfolios.
5. The Bill will give effect to the Government's proposals for the reform of the regulatory framework for the communications sector, as set out in the Communications White Paper - A New Future for Communications (Cm 5010) - published on 12th December 2000.
6. The main provisions of the Bill provide for:
7. There are currently five bodies or office holders who exercise regulatory responsibilities in the communications sector and who will be replaced by OFCOM. These are:
The Office of Communications Act 2002 establishes OFCOM and gives them a single initial function - to prepare to assume regulatory functions at a later stage. It also gives the existing regulators additional functions and duties to assist OFCOM to prepare.
8. One of the central objectives of the Bill is the transfer to OFCOM of the functions, property, rights and liabilities of the bodies and officeholders that currently regulate the communications sector. OFCOM will then develop and maintain new regulatory rules for the communications sector within the context of a single set of regulatory objectives, and in the light of the changing market environment.
9. In February 2002 the European Parliament and the Council of Ministers adopted four Directives ("the EC Communications Directives"), which set out a package of measures for a common regulatory framework for electronic communications networks and services. Provisions in the Bill implement a significant proportion of this new regulatory package in the UK.
OVERVIEW OF THE BILL
10. The Bill is in six parts -
Part 1 - Functions of OFCOM
Part 2 - Networks, Services and the Radio Spectrum
Part 3 - Television and Radio Services
Part 4 - Licensing of TV Reception
Part 5 - Competition in Communications Markets
Part 6 - Miscellaneous and Supplemental
TERRITORIAL EXTENT AND TERRITORIAL APPLICATION
11. The large majority of the provisions in the Communications Bill are on reserved matters (the exceptions being training and equality of opportunity in broadcast employment). The Bill applies to the whole of the United Kingdom (a few procedural matters being dealt with separately for England and Wales, Scotland and Northern Ireland to take account of the different legal systems), with power to extend it by Order in Council to the Channel Islands and the Isle of Man. The Bill does not confer functions on the National Assembly for Wales, although the Secretary of State is required to consult the National Assembly for Wales when carrying out a review of the fulfilment by the Welsh Authority of its public service remits (clause 332).
COMMENTARY ON CLAUSES
PART 1: FUNCTIONS OF OFCOM
Clause 1: Functions and general powers of OFCOM
12. This clause sets out the functions of OFCOM. These consist of those functions that prior to commencement were carried out by the Secretary of State and the pre-commencement regulators and which are transferred to OFCOM, and all other functions conferred on OFCOM by other legislation, including the present Bill.
*the meaning of pre-commencement regulators is given in subsection (1) of clause 398. Those regulators are the Broadcasting Standards Commission, the Director General of Telecommunications, the Independent Television Commission and the Radio Authority. The expression does not include the Radiocommunications Agency, as the Agency is an executive agency of the Department of Trade and Industry and acts in the name of the Secretary of State, and although functions of the Secretary of State are transferred to OFCOM by the Bill, the office of the Secretary of State will not cease to exist, unlike the other four regulators.
13. Subsections (3), (4) and (5) provide that OFCOM will have power to do anything incidental or conducive to carrying out their functions under this Bill. This, in particular, includes the power to borrow money (subject to the consent of, or in accordance with a general authorisation given by, the Secretary of State), to undertake research and development work in relation to their functions as well as to promote and arrange for it to be carried out by others, to prosecute in England, Wales and Northern Ireland offences relating to matters in respect of which they have functions, and at their discretion to compensate (where no legal liability arises) persons adversely affected by OFCOM's activities.
14. Subsection (6) requires OFCOM to establish and maintain offices in England, Wales, Scotland and Northern Ireland.
15. Subsection (7) enables OFCOM to contract out their functions to a third party, where an order providing for such has been made by the Secretary of State under the Deregulation and Contracting Out Act 1994.
Clause 2: Transfer of functions of pre-commencement regulators
16. Subsection (1) provides that, from such date as the Secretary of State may appoint for the coming into force of this section, certain functions of the Secretary of State and the functions of the pre-commencement regulators will be transferred to OFCOM. By virtue of clause 403 the Secretary of State may appoint different dates for different purposes.
17. Schedule 1 sets out those functions that will be transferred to OFCOM from the pre-commencement regulators. These functions relate to wireless telegraphy, the licensing of television and radio services, the Channel Four Corporation, the proscription of foreign satellite services, Gaelic Broadcasting, the national television archive, the reservation of digital capacity to the BBC, listed events, fairness and privacy in broadcasting, and standards for transmission services. The functions also relate to warrants to enter and search premises to enforce broadcasting licence provisions, variation of existing Channel 3 and Channel 5 licences, and reviewing digital television broadcasting.
18. Subsection (2) explains the effect of the transfer of functions to OFCOM on references in existing legislation to the pre-commencement regulators and the Secretary of State. Where necessary, references in existing legislation to any of the pre-commencement regulators or the Secretary of State should be read as if they referred to OFCOM.
19. Subsection (3) provides that, from the appointed date, OFCOM will be able to exercise the functions transferred to them in respect of events or issues arising both before and after the appointed date.
20. Subsection (4) provides that any function transferred is that function as modified by this Bill.
21. Paragraph 1 of Schedule 18 (transitional provisions) provides that any subordinate legislation made or any other thing done for the purpose of carrying out the transferred functions by the pre-commencement regulators or the Secretary of State shall from the date of the transfer made by virtue of clause 2 have effect as if they had been done by OFCOM.
Clause 3: General duties of OFCOM
22. This clause sets out the general duties of OFCOM when carrying out their functions. These are (i) to further consumer interests in relevant markets, where appropriate by promoting competition; and (ii) to further the interests of the community as a whole in relation to matters for which OFCOM have functions.
23. Subsection (2) provides that the particular things that OFCOM are required to secure in carrying out their functions include: (i) the optimal use of the radio spectrum; (ii) the availability throughout the United Kingdom of a wide range of electronic communications services; (iii) the availability in the UK of a wide range of TV and radio services, comprising high quality services of broad appeal; (iv) the maintenance of a plurality of providers of different television and radio services; (v) the application, in television and radio services, of standards that provide adequate protection to members of the public from any offensive and harmful material; and (vi) the application, in television and radio services, of standards that safeguard people from being unfairly treated and from unwarranted infringements of privacy.
24. Subsection (3) sets out a list of factors to which OFCOM must have regard in the performance of their general duties. These are the desirability of promoting competition in relevant markets, the principles that regulatory activities should be transparent, accountable, proportionate, targeted and consistent, and should accord with best regulatory practice, the desirability of promoting and facilitating the development and use of effective self-regulation, the desirability of encouraging investment and innovation, the different needs of all existing and potential users of the radio spectrum, the need to guarantee an appropriate level of freedom of expression when applying the standards falling within subsection (2)(e) and (f) to television and radio services, the opinion of consumers, the need to protect potentially vulnerable members of society such as children, the needs of the elderly, those with disabilities, those on low incomes and those living in different parts of the country, including rural and urban areas, the desirability of preventing crime and disorder and, in the circumstances, the reasonable practicability of furthering their duties under this clause.
25. OFCOM must also pay particular regard to the interests of consumers in respect of choice, price, quality of service and value for money when performing their duty of furthering the interests of consumers.
26. OFCOM are given a duty to resolve as they see fit any conflicts that arise between their various general duties except in cases where their duties may conflict with OFCOM's "European duties" imposed by clauses 4, 21 and 22, in which case OFCOM's European duties must prevail.
27. OFCOM's annual report must include a summary of the manner in which they have resolved conflicts arising from their general duties in 'important' cases. 'Important' cases are those that include: a major change in OFCOM's activities; are likely to have a significant impact on communications businesses or the general public; or appear to OFCOM to have been of unusual importance.
28. OFCOM's duties under this clause do not apply in relation to anything done by OFCOM in the carrying out of their functions under the Competition Act 1998 or the Enterprise Act 2002, unless they are matters to which the Office of Fair Trading is entitled to have regard when operating under those Acts (clause 363(11) and clause 364(11) of this Bill and section 118A(4) of the Enterprise Act 2002 (inserted by Chapter 2 of Part 5 of this Bill)).
Clause 4: Duties for the purpose of fulfilling Community obligations
29. This clause creates a duty, which applies only to certain functions of OFCOM. These are their functions under:
30. The duty is a duty to act in accordance with six Community requirements. In the event that there is any conflict between this duty and the clause 3 duties, the former, which is required by the EC Communications Directives, is to take precedence.
31. The Community requirements are: (i) the promotion of competition; (ii) ensuring that OFCOM's activities contribute to the development of the European internal market; (iii) promotion of the interests of all persons who are citizens of the EU; (iv) to take account of the desirability of carrying our their functions in a manner which, so far as practicable, does not favour one form of network, service or associated facility, or one means of providing or making available such a network, service or facility over another; (v) encouragement of the provision of network access and service interoperability; and (vi) encouragement of compliance with international standards to the extent necessary to facilitate service interoperability, and to secure a freedom of choice for customers.
32. Requirements (i) to (iv) implement Articles 7(1) & (2) and 8 of Directive 2002/21/EC (the "Framework Directive"). Requirement (v) implements Article 5(1) of Directive 2002/19/EC ("the Access Directive") and requirement (vi) implements Article 17 of the Framework Directive. This clause also implements Article 20 of the Framework Directive and Article 7 of the Authorisation Directive.
Clause 5 : Directions in respect of networks or spectrum functions
33. This clause gives the Secretary of State a power to give directions to OFCOM in respect of: (i) their functions relating to networks, services and the radio spectrum under Part 2 of the Bill; and (ii) their functions relating to the management of the radio spectrum not contained in Part 2. Such directions may only be made for one or more of the purposes listed in subsection (3). These purposes include the interests of national security, international obligations, public safety and public health.
34. The Secretary of State may not use her powers under this clause to direct OFCOM to suspend any person's entitlement to provide electronic communications networks or electronic communications services or to make available associated facilities. This can only be done by a direction given by the Secretary of State in accordance with the provisions of clause 129. Clause 129 gives the Secretary of State express power to direct OFCOM to suspend or restrict entitlement, where this appears to her to be necessary to protect the public from any threat to public safety or public health or in the interests of national security.
35. The Secretary of State must publish a direction issued under this clause unless publication is against the interests of national security or relations with foreign countries.
Clause 6: Duties to review regulatory burdens
36. This clause imposes on OFCOM a duty to review their functions so that regulation by OFCOM does not lead to the imposition or maintenance of burdens that are or have become unnecessary. OFCOM must from time to time publish a statement setting out how they propose to comply with this duty and have regard to that statement when carrying out their functions. When reviewing their duties under this clause, OFCOM must consider whether or not their general duties set out in clause 3 may be furthered or secured, or are likely to be furthered or secured, by effective self-regulation and in the light of that consideration whether it would be appropriate to remove or reduce regulatory burdens.
Clause 7: Duty to carry out impact assessments
37. Unless the urgency of a matter makes it impracticable or inappropriate, OFCOM must either carry out and publish their assessment of the likely impact of proposals made by them while carrying out their functions that involve a major change of their activities or have a significant impact on communications businesses or the general public or publish a statement setting out their reasons for thinking that it is unnecessary for them to carry out such an assessment. When OFCOM publishes an assessment, they must provide persons who are likely to be affected by a proposal with an opportunity to comment on it. OFCOM's annual report must set out what assessments have been carried out under this clause and summarise the action taken by OFCOM as a result of carrying out their assessments.
Clause 8: Duty to publish and meet promptness standards
38. This clause requires OFCOM to publish a statement setting out promptness standards which they propose to meet in carrying out their functions or transacting business for purposes connected with the carrying out of their functions. Such time limits will not apply where the Bill or any other enactment already sets time limits within which their functions are to be carried out. OFCOM's annual report must summarise the extent to which they complied with any promptness standards set out under this clause.
Clause 9: Secretary of State's powers in relation to promptness standards
39. Where the Secretary of State considers that the promptness standards set by OFCOM under clause 8 are not satisfactory, she may notify OFCOM. If OFCOM fails to amend the promptness standards to her satisfaction, the Secretary of State may give a direction requiring OFCOM to issue or revise their promptness standards in accordance with its terms. Before issuing a direction, the Secretary of State must give OFCOM an opportunity to comment on her proposal. The Secretary of State cannot use her powers under this clause until 12 months after the commencement of clause 8 have elapsed.
Clause 10: Function of promoting media literacy
40. This clause provides that it shall be a duty of OFCOM to enter into arrangements calculated to bring about, or to encourage others to bring about, increased public awareness and understanding of material published by the electronic media, the processes by which such material is selected or made available for publication, the available systems by which access to such published material is or can be regulated, and the available systems by which persons to whom such material is available may control what is received. OFCOM are also required to encourage the development and use of technologies and systems for regulating access to such material, and for facilitating control over what material is received. These could include internet filtering systems, rating systems by which, for example, programmes and videos can be given a classification that indicates the nature of their content, and other technical devices such as PIN based systems to control viewing. Promotion of the use of such systems could include OFCOM participation in the development of related educational materials.
Clause 11: Duty to establish and maintain Content Board
41. This clause places OFCOM under a duty to set up and maintain a Content Board, the functions of which are set out in clause 12.
42. Subsections (2) to (11) detail the composition of the Content Board, including OFCOM's requirement to ensure that for each of England, Scotland, Wales and Northern Ireland, there is a different member of the Board, and to ensure that a majority of Board members is made up of individuals who are neither members nor employees of OFCOM. The chairman of the Content Board is to be appointed by OFCOM and must be a non-executive member of OFCOM (other than their chairman). No governor or employee of the BBC, nor any member or employee of the Welsh Authority or the Channel Four Television Corporation can be a member of the Board, nor can any person whom OFCOM think has a conflict of interests (although such a conflict will not arise merely through being a member or employee of OFCOM).
43. Subsection (12) provides that, in addition to paying remuneration and expenses under paragraph 14(4) of the Schedule to the Office of Communications Act, OFCOM may pay such sums as they see fit by way of pensions, allowances or gratuities (or provide for the making of such payments) to members of the Content Board who are not members or employees of OFCOM.
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