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I have tabled these two amendments because Nominet was concerned about a mistake in Amendment 27-I spotted it just in time, although I know that it was also spotted by the Bill team-which sought to take out two lines too many; the lines actually refer to another new section on preparing reports. I have asked to delete all the stuff to do with asking Ofcom to report on Nominet. Why is Ofcom involved in this? Nominet is not a regulated industry; Ofcom is a regulator, so why should the Government want Ofcom to report on Nominet and the domain name space? I can see that it comes under telecommunications and looks as if it is in the same ambit, but some of its stuff does not touch on the Ofcom area and is not Ofcom's responsibility. Therefore, there may be circumstances in which Ofcom is not the most suitable body to report, should we require such a report if we feel there is a challenge in this area. Surely the Secretary of State could ask anyone to prepare a report, as Secretaries of State do when they see that things are going wrong in other areas. We have had many notable reports recently on other IT matters, such as losses of data and other such significant matters. I repeat, why should Ofcom report on Nominet? Is there, therefore, an intention to start regulating Nominet? What is the challenge? Why is Ofcom involved? That is what these amendments seek to find out.



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The Lord Speaker: I have to tell the Committee that if this amendment is agreed to, I cannot call Amendments 28 or 29 by reason of pre-emption.

Lord Lucas: My Lords, I wish to speak to Amendment 29. It seems to me that most of us are mystified about why the Government should wish to nationalise Nominet. I agree that it is necessary to have some reserve powers to be able to deal with circumstances that arise which threaten the national interest; for example, if someone started carpetbagging Nominet or something else untoward was to happen. However, I want to be sure that, should the Secretary of State trigger this clause, he makes it absolutely clear what it is that concerns him, and that he gives sufficient time for consultation.

The Explanatory Memorandums that go with the Bill are not very clear on this provision and include some descriptions of untoward activities which do not seem to me to correspond to reality. I will not go into great detail about it now, but certainly the description of drop-catching is completely wide of the mark and bears little relation to the actual activity. I am puzzled that the Government should feel so twitchy about this. I should like to be sure that, should they act, they are totally clear, open and consultative about the way that they do it.

The Earl of Erroll: I see the strong point of the amendment of the noble Lord, Lord Lucas. If the Government were minded to keep this provision with regard to Ofcom, it would be a very sensible amendment to adopt in order to modify it. The amendment is not a bad idea at all.

4 pm

Lord Young of Norwood Green: I am grateful to the noble Earl, Lord Erroll, for tabling Amendments 27A and 30A. The effect of these two amendments would be to remove from the Bill both the Secretary of State's power to request Ofcom to report on internet domain names and Ofcom's power to gather the necessary information. From what I understand, the noble Earl has concerns-he has expressed them today-about the involvement of Ofcom in compiling reports on domain names and about the costs to the industry.

Given the importance of a smooth-running domain name system to the internet economy-I do not think that anybody in the Committee would dispute that-this provision will allow the Government, if they feel it is necessary or if they wish, to be better appraised of domain name issues if there are developments that they feel warrant a formal report. I stress that it would be a case of the Government feeling that there were developments; this is not a fishing trip. There ought to be circumstances that are capable of being justified. The Government do not expect to use this provision for routine matters. I should also state that this provision is meant to stand alone and is not linked specifically to the other clauses in the Bill on domain names. However, it is possible that the Secretary of State might wish to request a formal report from Ofcom to assist him in deciding whether or not to exercise the powers in those clauses. But I agree with the noble Lord, Lord Lucas, that the Secretary of State ought to be capable of validating the need to involve Ofcom.



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Given Ofcom's existing experience of communication markets, albeit not specifically on domain names, we believe it probably is the most suitable body to carry out this reporting task for government. However, I assure noble Lords that it will be up to the Secretary of State to specify both the timing and the subject matter of any report. This provision does not empower Ofcom to gather information of its own volition on domain names. Furthermore, there is no power for Ofcom to regulate internet domain names. Again, let me stress that this is not the slippery slope for Ofcom to have that power, nor is there any intention to give such a power. As long as Nominet continues to function in a way that benefits UK plc, it seems to be a fair system of allocating domain names. If it ain't broke, why fix it? Some concerns have been expressed recently, but we are looking to the organisation to resolve those problems itself. I understand that there might be concerns about cost to industry in responding to requests for information from Ofcom. Let me offer reassurance that Ofcom is prevented by existing statute from making disproportionate demands on industry while gathering the information required to compile a report.

In relation to Amendment 29, I am conscious of the importance of proper consultation where appropriate. I am grateful, therefore, to the noble Lord, Lord Lucas, for tabling his amendment. The commissioning of a report is a neutral government activity which does not require prior consultation. However, in the interests of transparency, which I recognise is at the heart of the noble Lord's amendment, the Government would certainly aim to make the request to Ofcom public. I hope that, in the light of those reassurances, the noble Earl will feel able to withdraw the amendment.

The Earl of Erroll: I thank the Minister for that illuminating reply as people were looking for a certain amount of reassurance in this area. I have to admit I still do not understand why the Secretary of State is tying his hands to Ofcom. There may be a more suitable body in the future. We do not know what other bodies there might be even in the next three to five years, so this is not exactly future-proofing.

The Minister made an interesting point which I failed to make. He quite correctly spotted that there may be some inappropriateness in domain names. I know Companies House and Nominet are now talking, but they need to align their rules on business names and domain names so you cannot be clever about what you register at Companies House and then use that in order to misrepresent who you are in the domain names system. Closer co-operation in future in that area would be very useful. I know co-operation has started and I hope it will be given a fair wind.

I was also interested by the Minister's comment that this is not linked to the proposals later in the Bill, where I have tabled some amendments, for reserve powers for Nominet to deal with possible problems which might occur in the future with the domain names system. I am glad to hear that they are not linked as I thought that the report might be a precursor to something coming up.

Finally, I hope we are going to be clear about who we are going to be reporting on. Registries can be set up for companies which happen to be in the UK but

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have nothing to do with UK business. For instance, .tel operates from the UK but is to do with mobile telephony worldwide. It is not a UK business. We have to be very careful that we do not inadvertently do anything inappropriate against companies that do not really have a UK interest. I beg leave to withdraw the amendment.

Amendment 27A withdrawn.

Amendments 28 to 30A not moved.

Clause 2 agreed.

Clause 3 : OFCOM reports on media content

Amendment 31 not moved.

Clause 3 agreed.

Amendment 32

Moved by Lord Lucas

32: After Clause 3, insert the following new Clause-

"OFCOM report on retransmission fees and delayed transmission fees

OFCOM must produce a study on retransmission and delayed transmission fees within one year of the day on which this Act is passed."

Lord Lucas: This is, in effect, a Motion of Regret. These subjects were present in Digital Britain, but there is nothing in the Bill about them. When looking at a system of getting money for copyright holders which is under attack and which I believe will not prove to be totally defensible, we should, at the same time as trying to preserve that system, look at alternative means of getting money for copyright holders. There are well established methods on the continent and elsewhere of doing this. One is retransmission fees, whereby, for example, if the BBC's free-to-air broadcasts were retransmitted by Virgin or Sky a fee would be payable. Another method is fees for reuse or late use. On the continent these are in general collected by a levy on machinery, but we in this country have a licence fee, and we could look at collecting an annual levy in that way.

I do not have any particular conclusions to draw on these methods, but it is a pity that that element of Digital Britain is being neglected and that we are not, at the same time as experimenting with telling the tide not to rise-which Clauses 4 and onwards are concerned with-building a boat, which Digital Britain recommended. I beg to move.

Lord Maxton: I have some difficulty with this, particularly in relation to the BBC and the licence fee, because if I pay a licence fee, at the end of the day I am paying the BBC to make programmes, not to view just on the one occasion that they are broadcast, but at any time in the future-as is the case now. That may not have always been the case-you had to watch a BBC programme once only. I know that the Government's argument against the proposal in the amendment is

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that, while this is done abroad, there is no licence fee there. The public are already paying a large amount towards the production of programmes which they should be entitled to watch for as long as that programme is available to them. That will now be done not just through Virgin or Sky, but on the internet or BBCi. As regards one part of the amendment, ITV already allows a month in which to watch programmes on the internet, whereas the BBC allows only a week-longer if the programmes are part of a series. I do not know how exactly the noble Lord's proposals will work in terms of each customer. Does it apply to individual customers, as stated in Amendment 288, or will the transmitting company pay?

Lord Howard of Rising: My Lords, the issue of retransmission fees was looked at in depth by the Digital Britain report, which much of this Bill emanates from. The final report examined the possibility of removing Section 73 of the Copyright, Designs and Patents Act. This would remove the exemption that cable operators currently enjoy from paying a fee for the retransmission of certain wireless broadcasts within a limited geographical area. This is designed to ensure that public service content is spread across as much of the country as possible.

The report concluded that because removing this exemption would generate,

the Government,

We do not believe that it is necessary to include a specific power to examine this issue so soon after the Government have done so. We also believe that it should be government who examines the issues, not Ofcom. As part of this party's wider policy-formulation process, we will keep the issue under review, but we do not see the need to legislate so to do.

Lord Young of Norwood Green: The two amendments deal with the funding of content production through a system of regulated payments for retransmission of free-to-air material. I thank the noble Lord, Lord Lucas, as I confess that I tended to confuse retransmission with repeats, in relation to iPlayer and other such things, so we need to be careful that we are talking about retransmission and not repeats.

The first amendment will require Ofcom to produce a study of retransmission and delayed transmission fees. The second amendment will require Ofcom to set fees for the retransmission of free-to-air broadcast material at the time of the original by, for example, cable television, satellite services or streaming web services. It also tasks Ofcom to set similar fees for delayed retransmission of the same material by catch-up TV services, on-demand viewing services or potentially web TV services.

Retransmission or delayed transmission of broadcast material by means of these services, except cable, should already be subject to copyright licensing and payment through commercial negotiation. These payments are what the noble Lord, Lord Lucas, refers to as retransmission and delayed transmission fees. Cable

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operators, as the noble Lord, Lord Howard, reminded us, are exempt from paying retransmission fees under Section 73 of the Copyright, Designs and Patents Act 1988. Some have called for this exemption to be repealed, arguing that it would generate incremental money for content creation. The noble Lord, Lord Howard, reminded us that the Government considered that in Digital Britain: Final Report. Following a robust analysis of the available evidence, we remained unconvinced that in practice repealing Section 73 would generate incremental revenues to fund content creation in the UK.

No such exemption exists for satellite, and what is paid by platform operators and ultimately by broadcasters in return to rights owners is largely a matter for commercial negotiation. The current arrangements on satellite transfer no additional value to PSBs because the retransmission fees are offset by the carriage fee. There is no evidence that a similar situation to the one observed on satellite would not arise on cable if the Section 73 exemption were repealed, and therefore such a move would be unlikely to generate additional revenue for the UK content industry. We also believe that, given that there is only one national cable operator in the UK-Virgin Media-the majority of the uses of material covered by Amendment 288 are already subject to commercial negotiations. It does not appear that there is a pressing reason for the heavy hand of government to start setting prices for such licences-or perhaps I should say the potential heavy hand of government.

There is another angle from which to look at this issue. If the concern is not to ensure that copyright owners are paid for their work, as I have just discussed, but rather a concern that the material may not be currently available for licence at a reasonable fee, other considerations must be borne in mind. Enshrined in international treaties is a principle of copyright law that we must consider in debating these amendments. Amendment 288 appears to introduce compulsory licensing. Compulsory licensing where a copyright owner is told that they must license their property to a third party should be avoided unless there are very compelling reasons to consider it. In any event, it may be implemented only if it does not unfairly prejudice the rights of the copyright owner. I am not aware of evidence that there is a failure in the market such that this content is not available on fair terms to those who require it. In the absence of such evidence it would not be right to take away the control that copyright owners rightly enjoy over their property.

The Government are more than aware of the funding challenges faced by high-quality, original UK content. Indeed, we propose alternative measures in this Bill to modernise our public service media content ecology and to deal with the challenges of content creation. Outside the Bill, with the digital test-bed initiative, we are also contributing to the development and the testing of new funding models for content creation, particularly micropayments. We will, of course, keep the question of retransmission fees under review, but we consider that the case has not been made for intervention of the kind proposed by the noble Lord, Lord Lucas, for the reasons I have just mentioned.

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Furthermore, I do not agree that requiring Ofcom to conduct a one-off study, as proposed by Amendment 32, is a matter that should be enshrined in statute. In the light of that explanation, I hope that the noble Lord will feel able to withdraw the amendment.

Lord Lucas: I beg leave to withdraw the amendment.

Amendment 32 withdrawn.

4.15 pm

Amendment 33

Moved by Lord Razzall

33: Before Clause 4, insert the following new Clause-

"Obligations on copyright holders

Copyright holders seeking to take action against subscribers for online copyright infringement must use the process set out in sections 124A to 124E of the Communications Act 2003 except in cases of actual or likely extreme prejudice."

Lord Razzall: My Lords, we now come to one of the most controversial parts of this Bill, notwithstanding the length of time that has been taken on Clauses 1 to 3. I am moving Amendment 33 and, looking at the Marshalled List, we get to Amendment 214 before we emerge from the question of what we do about so-called illegal file-sharing.

I am glad this amendment has been taken first, because it focuses on the most serious issue here: how do we balance the interests of the copyright owners who feel that downloading without payment is in reality theft of their asset, against the understandable belief by many users of the internet that all information on the internet is free? That is the balance that your Lordships will try to find over the next 188 amendments and through Clauses 4 to 17.

The particular problem this amendment attempts to deal with is the current position with regard to what is happening on behalf of copyright holders and their firms of solicitors in relation to reports of illegal file-sharing. We have all had letters from people who have been subject to this. One of the letters that many of your Lordships will have received contains the sentence that encapsulates the problem: "nobody should have to endure what we have endured-no warnings, our homes searched and an endless involvement with the court system".

What appears to be happening at the moment is that many firms of solicitors, when they have an allegation of illegal file-sharing, demand large payments from people with the allegation that they will take them to court unless they pay up. People are put in the invidious position of either having to incur huge legal costs to defend their position or to pay the compensation that the firm of solicitors is asking for. There is a technical procedure which is now referred to as the Norwich pharmacal order, under which information can be obtained by the copyright holders with names and addresses of customers who allegedly have been engaging in illegal file-sharing. That has increased the opportunity for firms of solicitors to indulge in the practice that they are understandably using in order to protect the rights of the copyright owners.



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This is a very straightforward amendment, which requires anyone who is going to take action under the new regime against subscribers for online copyright infringement to use the process set out in the relevant sections of the Communications Act, except in cases of actual or likely extreme prejudice. This is a graduated response, rather than as now being able to use solicitors as a first step to deal with alleged file-sharing. I beg to move.

The Earl of Erroll: My Lords, I am not sure if I should be raising this on this amendment or the next one-Amendment 34. Whatever we do in this Bill must be compliant with EU directives. The new framework directive has just come out as a result of the action by the European Parliament, and Amendment 138 became Article 1(3a) of the new framework directive. To take little bits out of it,

"Any of these measures regarding end-users' access to, or use of, services and applications through electronic communications networks liable to restrict those fundamental rights or freedoms may only be imposed if they are appropriate".

I know that that is the next stage of the technical measures, but the principle that everything must be as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms is very important. We may be in danger of passing something into law here that could be struck down at the European Court of Justice in the near future if we did not get it right. The directive goes on to state that measures must comply,

Lord Clement-Jones: I point out with the greatest respect to the noble Earl that I think that he is speaking to the next amendment.

The Earl of Erroll: I thank the noble Lord for clearing that up, in which case, I shall not have to repeat it for the next amendment. I just wanted to make sure that the current amendment was not part of the same issue. I shall finish my remarks and hope that noble Lords remember them for the next amendment, because it is all about due process: about the Government doing it properly and not hitting the citizen when they should not.

Lord Howard of Rising: My Lords, although we on these Benches cannot agree with the amendment, we not should look to prevent a private person or company pursuing an action through the civil courts if they wish. The noble Lord, Lord Razzall, raises an interesting point about the impact that the provisions might-and, I hope, will-have on the number and form of actions that rights holders take against copyright infringers.

The difficulty of successfully suing someone through the judicial process for these copyright breaches is well established. The large number of people involved in file-sharing, the enormous number of files being shared and the low value of each individual copyright breach all point to our hope that the provisions lead to a significant reduction in illegal sharing without the courts being used.


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