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Lord Eatwell: My Lords, before the noble Lord sits down, since he mentioned me, will he acknowledge that in the other countries he is thinking of—probably the United States and Australia—format regulation does not exist? In Britain we have strict format regulation, which ensures that diversity in radio is maintained, and the homogenising process he described cannot occur?

Lord McNally: My Lords, I agree that we have format content, and by God we are determined to keep it.

Lord Davies of Oldham: My Lords, I am delighted that that little exchange helped to clarify some of the key issues involved with the amendments. As I have indicated, the amendments were tabled in the light of consultation and the discussion in Committee, where we promised to address these issues, which were forcefully addressed on that occasion.

The change to Clause 306, which deals with the requests for departures from the character of the service, makes it completely clear that the character of a service includes the music and spoken material selected for inclusion on that service. The same change is made to Clause 348, which deals with variations to licences following change of control. That ensures that Ofcom must consider the selection of music played on a station when considering the character of the station. That provision has general approval.

The new clause requires Ofcom to consult on requests to depart from the character of a service, except where there are considerations of commercial

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confidentiality—so it is not the case that it happens on all occasions—or where the time taken would prejudice the interest of a licence holder. In circumstances where a radio station might be in severe difficulties, Ofcom has the capacity to reach a judgment on whether it needs to engage in those procedures.

There are also a number of changes to Clause 307, which deals with Ofcom's duty to secure that local material is included in local radio stations. The amendments we have tabled make it clear that not all services need include local material. We make it clear that a suitable proportion of local material must be locally made. We remove specific examples of what the guidance could cover and remove references to the need to secure "local connections". We remove references to a code to emphasise that the clause is concerned not with a code but with guidance; we define more clearly what is meant by local material, making it clear that it includes music; and we make it clear that local advertising is not to be included in that guidance.

Those were some of the issues raised in Committee and which have been raised with us through the industry on which we believe we have made a suitable response. The guidance only bites on the station on the conditions already included in licences. It is not a way of introducing regulation via the back door, which I think my noble friend Lord Eatwell indicated, and might be a justified suspicion. Because of the restrictions under which the guidance operates, we are ensuring that it is not additional regulation in those terms. I hope he will recognise the value of that point.

We do not accept the argument that the guidance is all about "one size fits all". We think there are clearly levels of flexibility which meet some of the points about which my noble friend indicated he was anxious. In our view, guidance is inherently less regulatory than changing licences. The guidance will have effect only in so far as there are already localness conditions in a licence. It will not place new requirements on the licence holder. Rather, it will merely interpret and explain existing requirements which are often loosely defined. For example, there may be requirements that a service includes,

    "features of particular local relevance"

or be,

    "a locally-oriented station for the area".

The guidance could set out the sort of things which a station could do to satisfy these requirements.

The notion of the guidance being "one size fits all" is misplaced. Guidance is only guidance, and it will remain the responsibility of the licence holder to decide how to meet whatever undertakings it has already given. Secondly, as I indicated, the guidance will just bite on existing commitments into which the licence holder has entered.

My noble friend expressed anxieties in other areas, particularly on Amendment No. 166A, in which, as he will appreciate, I see considerable merit. There could be many people who may wish to express their opinion

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on any proposed change, from other stations in the area to the music industry and to those who would be most affected—the listeners to the station. This seems a good example of open and consultative regulation. We have built in safeguards for the industry. The minimum time period for consultation has been kept down to 28 days so as to avoid unnecessary delays in the process. Furthermore, Ofcom does not have to consult where that would involve publishing matters which are commercially confidential. It can choose to foreshorten the period of consultation or not consult at all if it is anxious about the viability of the station.

We are seeking to indicate, through these amendments, that, far from the guidance being an excessively tough regulatory mechanism, it is well suited to the needs of the industry. It takes into account what the noble Lord, Lord McNally, indicated—that we have to strike a balance between two perspectives on the achievements and value of local radio. We are seeking, through the amendments and as a result of the discussions we have had, to strike that balance. The noble Lord, Lord McNally, kindly referred to me being between a rock and a hard place. I do not know which is more comfortable, but I will try and find out. I beg to move.

On Question, amendment agreed to.

[Amendment No. 166 not moved.]

Lord Davies of Oldham moved Amendment No. 166A:

    After Clause 306, insert the following new clause—

After section 106 of the 1990 Act there shall be inserted—
(1) Before deciding for the purposes of a condition imposed under section 106(1A) whether to consent to a departure from the character of a service provided under a local licence, OFCOM must publish a notice specifying—
(a) the proposed departure; and
(b) the period in which representations may be made to OFCOM about the proposal.
(2) That period must end not less than 28 days after the date of publication of the notice.
(3) The notice must be published in such manner as appears to OFCOM to be appropriate for bringing it to the attention of the persons who, in OFCOM's opinion, are likely to be affected by the departure.
(4) OFCOM—
(a) are not required to publish a notice under this section, and
(b) may specify a period of less than 28 days in such a notice as the period for representations,
if they consider that the publication of the notice, or allowing a longer period for representations, would result in a delay that would be likely prejudicially to affect the interests of the licence holder.
(5) OFCOM are not required under this section—
(a) to publish any matter that is confidential in accordance with subsection (5) or (6); or
(b) to publish anything that it would not be reasonably practicable to publish without disclosing such a matter.

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(6) A matter is confidential under this subsection if—
(a) it relates specifically to the affairs of a particular body; and
(b) its publication would or might, in OFCOM's opinion, seriously and prejudicially affect the interests of that body.
(7) A matter is confidential under this subsection if—
(a) it relates specifically to the private affairs of an individual; and
(b) its publication would or might, in OFCOM's opinion, seriously and prejudicially affect the interests of that individual.""

On Question, amendment agreed to.

Clause 307 [Local content and character of local sound broadcasting services]:

Lord Davies of Oldham moved Amendments Nos. 166B to 166Q :

    Page 271, line 6, after "services" insert "but, in the case of each such service, only if and to the extent (if any) that OFCOM consider appropriate in that case"

    Page 271, line 7, leave out from "that" to end of line 8 and insert ",where such programmes are included in such a service, what appears to OFCOM to be a suitable proportion of them consists of locally-made programmes."

    Page 271, line 10, leave out "a code giving"

    Page 271, line 12, leave out "code" and insert "guidance"

    Page 271, line 14, leave out subsections (3) and (4).

    Page 271, line 31, leave out "code may make different provision" and insert "guidance may be different"

    Page 271, line 32, leave out "code" and insert "guidance"

    Page 271, line 33, leave out "code" and insert "guidance"

    Page 271, line 39, leave out "code and every revision of the code" and insert "guidance and every revision of it"

    Page 271, line 42, leave out from beginning to end of line 2 on page 272.

    Page 272, line 4, leave out "(including news)"

    Page 272, line 10, at end insert "or a part of it"

    Page 272, line 13, at end insert—

""material" includes news, information and other spoken material and music; and "programme" does not include an advertisement."

    Page 272, line 14, leave out second "in" and insert "within"

On Question, amendments agreed to.

[Amendment No. 167 not moved.]

11 p.m.

Baroness Buscombe moved Amendment No. 168:

    Page 273, line 32, leave out "and"

The noble Baroness said: My Lords, I shall also speak to Amendments Nos. 168 to 171 and 173 to 181. I regret that the debate on the amendments in Committee failed to take us much further, so I have decided to return once again to this extremely important issue.

I shall first review the issue to hand. At present it appears that the Bill contains no restriction on Ofcom's ability to undertake the economic regulation of broadcasting using its Broadcasting Act powers through broadcasters' licences, as opposed to its Competition Act powers or its sector specific competition powers.

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In the latter two instances, economic regulation is by definition a matter of competition, and decisions taken through these routes by Ofcom are subject to full rights of appeal to the competition appeals tribunal. In the former instance, regulation of broadcasters through their licences for a competition purpose is also subject to full rights of appeal to the CAT where that is the only or main reason for the decision. However, economic regulation may not always be a matter of competition. It may, for example, be a matter of promoting consumers' interests with little or no competition element. For example, Ofcom could impose conditions on broadcasting licensees relating to the packaging and pricing of channels and services pursuant to its Clause 3 duties to further the interests of consumers in relevant markets or to secure the availability of a wide range of TV and radio services.

In such instances, where economic regulation is applied through broadcasters' licences for reasons not wholly or mainly for a competition purpose, there is no right of appeal to the CAT. Instead, broadcasters may only take the more limited route of judicial review, which looks at the decision-making process only, not the merits of the decision. That stands in stark contrast to the economic regulation of, for example, telephony providers and providers of other electronic communications networks and services under Part 2 of the Bill where all decisions are subject to appeal to the CAT.

With one very significant exception, Amendments Nos. 173 and 174 would address this problem by ensuring that any person affected by a decision of Ofcom to exercise any of its Broadcasting Act powers in fulfilment of general duties under Section 3 may appeal to the CAT. The exception is that Amendment No. 175 would amend Clause 310(8) to ensure that the right of appeal to the CAT is disapplied in relation to all Ofcom's content functions unless any such decision were made for a competition purpose as reflected in Amendment No. 176.

Amendments Nos. 178 to 191 are consequential to these amendments and widen the scope of any future Ofcom review of its codes, guidance, directions and, as proposed in Amendment No. 179, conditions.

In Committee the Minister drew a distinction between Part 2 and Part 3 of the Bill. In Part 3, he explained, Ofcom is required to make "subjective content judgments" that are subject to appeal by judicial review only, while in Part 2 there are no subjective content judgments, and all decisions are subject to appeal to the CAT.

I agree with that analysis in relation to "content judgments". As I have made clear all along, my amendments do not seek to introduce a right of appeal to the CAT on all Ofcom decisions under its Broadcasting Act powers. I recognise that most content decisions will have some economic impact, however small, and accept that they should attract no more than a right of judicial review. That is why my amendments disapply the CAT appeals route to Ofcom's content functions.

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Rather, as I said, my amendments seek to bring within the CAT appeals process those decisions taken and imposed in Broadcasting Act licences under Part 3 that are not wholly or mainly for a competition purpose but nevertheless are unambiguously economic regulation. That is the extent of their ambition.

I regret to say that I was confused by some of what the Minister had to say in response to the amendments in Committee. At one point he appeared to agree with me that a CAT appeal would be appropriate where economic regulation was applied to broadcasters for reasons other than a competition purpose. The Minister said:

    "Intervention, such as economic regulation in pricing and in the packaging of channels made in the interests of consumers should be treated in the same way in terms of route of appeal as a competition intervention. For example, Ofcom may wish to intervene in Sky's packaging of channels so that consumers could have more choice of packages without having to buy a lot of unwanted channels as a minimum".

However, the Minister went on to say:

    "But the purpose of the intervention would be a subjective question of what represented an acceptable amount of consumer choice".

Given the Minister's previous statement that subjective decisions under Part 3 are subject only to judicial review, this would appear to confirm that a CAT appeal would not be possible for economic regulation in pricing and packaging of channels made in the interests of consumers. I should be grateful for some clarification from the Minister.

In rejecting these amendments in Committee the Minister also argued:

    "Ofcom's duty to further the interests of consumers is qualified by the parameter, where appropriate, of promoting competition".—[Official Report, 3/6/03; 1293.]

The Minister suggested in this regard that an intervention in the packaging of channels in the consumer interest would not be possible unless Ofcom could show that it was not appropriate to achieve the same result through the use of general or sectoral competition powers, and that such a decision could be challenged through judicial review.

This explanation, I regret to say, provides no assurances and completely misses the point of the amendments. The fact is that even if Ofcom were able to show that it was inappropriate to achieve the desired level of channel unpackaging through general or sectoral competition powers, the regulation pursuant to the duty to further the interests of consumers would still be a purely economic one. This should be subject to a right of appeal to the CAT. To suggest that Broadcasting Act licensees could challenge the process through judicial review is a wholly inadequate substitute for a right of appeal to the CAT.

It is also important to point out that there are Clause 3 duties other than the furthering of consumer interests which OFCOM could use to impose economic regulation through broadcasters' licences. The duty to secure a wide range of television and radio services, for

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example, could equally be used by Ofcom to require the unpackaging of channels, without any identified competition purpose.

I also raised in Committee the inequity that cable operators, who are retailers of pay television, will escape regulation of their pay TV retail activities, as they may not hold TLCS licences unless they themselves provide channels whereas identical retail activities of satellite operators will be regulated simply because the satellite operator happens to hold TLCS licences for channels which he himself provides. The Minister said in response simply that no unfair treatment exists because a cable operator who owned a channel would be in the same position as the satellite operator.

Here, again, the point has been missed. Clearly, where cable companies do not have their own channels, they do not require a licence for these. I am not arguing that that is an unfair position. What I am saying is that because such licences are not owned by cable operators they do not find themselves exposed to the same potential for economic regulation of, say, pricing and packaging television services. That is the inequality that I wish the Government to address, or at least against which to provide additional safeguards for broadcasters through an appeal to the CAT.

In conclusion, therefore, I am disappointed that the Government have yet again failed to address our core concerns on this issue. Let me say again that I am not talking about a CAT appeal for subjective content regulation, as I think the Government by now understand. Yet they seek in their answers to present a simplistic divide between content regulation on the one hand, with an appeal through judicial review, and economic regulation for a competition purpose on the other, with an appeal to the CAT. It is difficult to understand why the Government refuse to acknowledge that economic regulation for reasons other than a wholly or mainly competition purpose may take place under Part 3 and a right of appeal to the CAT should be provided.

I now turn briefly to my other amendments. Amendments Nos. 168 and 169 seek to extend Clause 310(1) to cover Ofcom's powers to issue codes of practice or guidance to holders of licences. In spite of the Minister's view that such a provision is already provided for under subsection (1)(d), I continue to believe that it would be helpful for that to be more clearly indicated on the face of the Bill.

Amendments Nos. 170 and 171 would require Ofcom not to use its Broadcasting Act powers on any matter where that matter is capable of being dealt with under the Competition Act. The amendments would replace the current wording which simply provides that, before exercising any of its Broadcasting Act powers for a competition purpose, Ofcom should consider whether a more appropriate way to proceed would be under the Competition Act. The Minister in Committee opposed these amendments, on the basis that where conduct breaches both the competition and broadcasting Acts, it might still be more appropriate to act under the Broadcasting Act. Yet the Minister

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provides no examples of where that might in fact be the case. Perhaps he can take the opportunity tonight to provide some examples to justify his position.

Finally, my Amendment No. 177 would introduce additional procedural safeguards into Part 3 of the Bill along similar lines to the set of tests for setting or modifying conditions in Clause 44 in Part 2 of the Bill.

I am pleased that the Minister agreed with the principle behind the amendments, but am surprised by his view that the Bill,

    "contains sufficient provisions to ensure that that is delivered". —[Official Report, 3/6/03; col. 1295.]

Where in the Bill are these provisions to be found? If they are there, why have the Government also seen the need to introduce specific conditions into Part 2? Further clarification on this matter would be welcome. I beg to move.

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