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Several major points come out of this section of the Bill where I can say, straightaway, that we are unhappy. First, there is Clause 6, which would amend the Communications Act 2003 and would put in a new subsection (5)(b) of its proposed new clause which provides for retrospective penalties to be applied to people or organisations who have been seen to have

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infringed. We think that that retrospective element is inappropriate for this Bill and it ought to be deleted.

The second issue is that of costs; who is going to pay for these exceptionally expensive measures? The rights holders say that it ought to be the ISPs, and the ISPs say that it ought to be the rights holders. It is not surprising that there is a significant argument about this, because the costs of enforcing and putting into place the measures that this Bill contemplates probably run to somewhere between £50 million and £100 million. We are talking about significant sums of money to implement this.

I am glad that the noble Lord, Lord Carter of Barnes, is in his place, because in his last report he said that the issue of costs would be dealt with in the Bill. Now, I know that he has left Government since he made that statement, but somebody ought to indicate in responding why that is not the case, because how those costs are to be apportioned is clearly a major issue between the ISPs and the rights holders. Unless the Government give some indication of what they think that position should be, my guess is that Ofcom will always have to come up with a solution, rather than a negotiated agreement between the ISPs and the rights holders, which would clearly be preferable.

Thirdly, we welcome the development of the argument that has resulted in the creation of the First-tier Tribunal, but we still see serious issues, both of proof and of costs to the ISPs. We are rather attracted to the proposal for an entity in the middle, which has been suggested by both FACT and the Motion Picture Association. I will not bore your Lordships with how that would work, but I think it is something that we would wish to see seriously considered.

I recognise the general principle that we have to find a mechanism to stamp out this practice. However, it is clear from my remarks and those of the noble Lord, Lord Fowler, that this section of the Bill will need major scrutiny. I will add to his point that we feel that Clause 17, which effectively gives the Government power to alter copyright law by statutory instrument, should be rejected. We will not support that. I do not go as far as the Guardian in suggesting that this would be used, if there were a Tory Government, by their new friend Rupert Murdoch in some way to continue his fight against Google. I do not reject it for that reason; I just think that if we are going to alter copyright law it has to be done by primary legislation, rather than by statutory instrument.

Another glaring omission from the Bill is how to deal with format shifting, rather than file-sharing. Format shifting is the process by which, when you have downloaded music or a film to whatever instrument you downloaded it to, you then move it across to another instrument in your control for your private use. Although today that is technically a breach of copyright, nobody ever attempts to enforce it. We take the view that this is an opportunity to put in the Bill that format shifting does not constitute a breach of copyright if done for personal use.

As I indicated earlier, my noble friends Lord Clement-Jones and Lady Bonham-Carter of Yarnbury will deal with other matters in the Bill in this Second Reading

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debate. Following the remarks of the noble Lord, Lord Fowler, I regret that the opportunity to deal with the corporate governance and management of the BBC has been lost. It is running out there as a serious issue. The Minister is disagreeing with the structure that his Government put in place originally. We have a number of suggestions as to how the governance of the BBC ought to be improved, and the Bill seems to have been the opportunity to deal with that. Having said that, I look forward to the Committee with eager anticipation.

4.28 pm

Lord Birt: My Lords, I declare my current involvement with a number of companies acting in the digital economy-PayPal, Eutelsat and EMI-and I note my past association with the BBC. The noble Lord, Lord Fowler, proudly proclaims his former membership, or perhaps current membership, of a trade union, the NUJ. He inspires me to proclaim my former membership of the long-forgotten ACTT, the Association of Cinema and Television Technicians.

I greatly welcome some of the key measures in the Bill-for example, the proposals to improve our digital communications infrastructure. Britain, let us not forget, lagged seriously behind other leading countries in the first phase of developing broadband services. The primary cause of that was, of course, the failure of the regulator to grip BT. This Bill now offers the prospect of a catch-up-the strategic roll-out of high-speed broadband to an estimated 80 per cent of the population. Reaching the last 20 per cent will, no doubt, become our next preoccupation.

Secondly, the measures in the Bill for countering copyright theft are well considered and proportionate. Let us be clear-as the noble Lord, Lord Fowler, emphasised with considerable force and eloquence-that the arts, music and entertainment sector is a very large part of the British economy, fostering creative expression, wealth creation and employment; that copyright theft has increasingly undermined the sector's conspicuous creative and business success; and that unless that threat is countered effectively, the industry's prospects will diminish.

Let us also be clear that this is not a small problem: a huge proportion of internet traffic-probably around a half-is taken up with the pursuit of copyright theft of various kinds. For instance, on the day that new countermeasures were introduced in Sweden, internet usage simply fell off a cliff. For the avoidance of doubt, let us finally be clear that the Bill does not inaugurate-as some have suggested-a snooper's charter. The ISPs will not be required to spy on their customers. Rather, the carefully graded response set out in the Bill will apply only to an absolutely identifiable account which is used at a precise moment in time, measured to the second, by someone who admits to possessing specific named content and then transmits that content online to a third party in breach of copyright. In respect of music, that content will overwhelmingly be available easily, speedily and for payment from online sources. I accept the view already expressed that the music industry certainly could have done a lot more to facilitate online payment in the past. But it does now.

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My only concern about the process outlined in the Bill is that it may discourage criminal prosecution for persistent, flagrant theft. It is theft-as the noble Lord, Lord Razzall, asserted-the moral equivalent of persistent shoplifting of CDs or DVDs at an HMV store. The internet service providers should neither ignore it, nor abet it, nor appear to condone it, which some come dangerously close to seeming to do.

The noble Lord-the Secretary of State of almost all he surveys-has been typically unequivocal and bold in adopting these measures, and he deserves praise for that. So does the noble Lord, Lord Carter of Barnes, for tackling, against the clock and in quick time, under the Digital Britain umbrella, a formidable list of issues, and for resolving some of the most stubborn. He appears to be sporting a tan. I hope that he has enjoyed his well earned rest after the trials of No. 10 and project leadership. However, as we step back at the end of the Digital Britain process, perhaps I may make some broad observations about where we now find ourselves.

The first issue is how we as a nation are to maintain our glorious tradition of public service broadcasting as the digital age brings enormous structural change to the industry, as competition in the provision of public service programming erodes, and as our national investment in high-quality British production declines. That is the way to frame the issue, not just to ask questions about the BBC.

It was right to recognise in the Digital Britain process that the traditional providers of regional and local journalism and information, in print and over the air, are highly challenged. That really should worry us. But many other genres of public service content are also threatened, or soon will be. It was well intentioned, but I think too limiting, to focus primarily only on one genre and to look for a short-term fix, shifting funds from one convenient bucket to another. It was wrong in principle, I think, for the Government to consider intervening in such granular fashion in the provision of journalism. Our genius as a country since the 1920s, almost alone among developed nations, has been to keep government at arm's length from such matters and to address them through enlightened regulation. A job for the next Government will be, I hope, to step back-we heard echoes of this at the beginning of the debate-and to address comprehensively the future of public service broadcasting and the role of the BBC within it. Like the noble Lord, Lord Fowler, I hope that that will not be a monopoly role.

The Bill is not entitled a digital communication Bill, but rather a Digital Economy Bill. So my second observation is that we do not yet have the appropriate machinery of government to deal with the vast and growing challenges of the digital economy. The Bill barely scratches the surface of that. It is as if, 30 years after the invention of the motor car, there were no Ministry of Transport.

The noble Lord, Lord Carter, with his usual precision, clarity and verve, ran what was, in effect, a short-term project. He was not in a position to encompass the whole diverse catalogue of issues that the digital age is throwing up. I give just a few examples. First, online fraud is sophisticated and organised; it is both national

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and global; it is enormous and it is mushrooming; yet the law enforcement agencies here and in other countries are still not past first base in countering it. Secondly, wicked men and women can entice strangers online to commit dreadful acts of evil on children and others, yet there are still too few virtual bobbies on the digital beat to deny them. Thirdly, malware introduced surreptitiously to your personal computer, like the creature in "Alien", helps create powerful, malign and parasitical networks, yet the many loose networks of criminals operating in this space act with impunity. Fourthly, without a framework of standards, the emergence of cloud computing-vast storage and functionality sited away from the desktop-may place businesses, citizens and consumers at risk. Fifthly, the ability of search engines to monitor your personal online activity and to exploit it commercially will raise increasing privacy concerns. Sixthly and finally, online content may be woefully inaccurate or even defamatory, but it is a world where remedies are hard to find.

There are many other examples, but in sum, the digital economy is, in many respects, a lawless, unpoliced and unregulated place and I do not believe it can remain that way for much longer. This Bill is more than a step in the right direction, but we will sooner rather than later need to make a far bigger leap and to review, in the most fundamental ways, how we are not only to harness digital technology for the common good, but also how we are to deal with the enormous problems that it brings too. That review will require a substantial rethink of how Whitehall can be organised to bring a real and continuing focus on every aspect of the digital economy and what institutional framework will be needed in support.

4.39 pm

The Lord Bishop of Manchester: My Lords, I join the general welcome for this Bill as an encouraging sign of the Government's determination not only to deal with the pressing issues of copyright and digital piracy-which, as several noble Lords have said, is a breaking of the commandment: "Thou shalt not steal"-but to enable this country's digital future to be more socially inclusive, safe and beneficial to our economic well-being, our civic flourishing and the building up of our knowledge.

That is embodied in the welcome proposals, such as requiring Ofcom at all times to consider the impact of investment levels in public service content, the updating of Channel 4's remit and supporting its ambitions to continue backing and challenging the BBC in delivering innovative public service programming for a full range of platforms. However, in addition to securing a bright future for strong public service content in a non-linear world through legislation, the Government must also secure the ways and means to get that content to the people and for people to interact with it. Regional and local news coverage, for example, is key-as the noble Lord, Lord Fowler, under whose chairmanship of the Communications Committee I am privileged to sit, has said. That means not being content with a postcode lottery approach for access to high-quality, high-speed broadband, but aiming for and achieving genuinely universal inclusion across the country.

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I have some areas of concern about that. First, although the universal service commitment is an honourable ambition and is being helpfully supplemented by the Government's commitment to a home access scheme for low-income families and ongoing investment in the digital inclusion programme, groups are now suggesting that the bar has been set too low in terms of universal connection speed. It would be a shame if the considerable amount of money being diverted from digital switchover surplus towards funding that commitment were to become a futile catch-up game.

Secondly, significant state subsidy for the next generation access project through direct taxation of fixed phone lines needs to strike a fine balance between giving a shot in the arm to ensure that the most remote areas get superfast broadband, while not using public money to subsidise activities that will then distort competition. That said, the target of getting superfast broadband to only 90 per cent of homes in the next eight years seems rather too modest. By that time, if the pace of digital evolution continues, superfast broadband as it is today will certainly not be considered a luxury. It will be almost as basic as a telephone line is now-vital for small businesses, for individuals seeking to engage in the public sphere, or even for getting full use of government services. The Government must make it absolutely clear to the public why society should now collectively fill the digital vacuum from which those living in our remotest areas will undoubtedly suffer if public investment in the cutting-edge of internet access is not forthcoming sooner rather than later. There is a real issue of likely social exclusion here. I hope that the Minister can reassure us about the Government's determination to address that completely.

Turning to the introduction of a statutory age certification for boxed video games, it is a good move to give the Video Standards Council tough powers to police the Pan-European Game Information age rating system. Awareness of how children and other vulnerable groups might be affected by the unregulated excesses of the market must temper our desire to embrace new and creative technologies. With 10 per cent of 11 to 16 year-olds spending more than 10 hours a week playing computer games, according to the Childwise survey this year, and with inconsistency between the classification of such video games and the approach taken to films, tighter controls in this area would be more than welcome. Only credible regulation can begin to give parents and others responsible for bringing up children the confidence to enforce certification and not to succumb to pester pressure.

The switchover to digital radio may produce more problems than expected. Of course there is much to welcome in the creation of platforms for new content to meet the needs of specialist audiences. I think, for example, of Premier Christian Radio's recent acquisition of a national DAB licence. However, there may be much to be concerned about over the plan to cut off national stations and many local services as early as 2015. While the Government have indicated that that will not be finalised until digital services account for 50 per cent of all radio listening and can reach 90 per cent of the population, it is also clear that without an early deadline, sufficient pressure may not build on

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radio manufacturers and retailers to shift to selling DAB sets only for cars as well as homes. The radio switchover again underlines the risk of creating another two-tier system where significant swathes of the country could lose their favourite national stations from the FM dial, including the BBC stations they pay for through the licence fee. Surely that cannot be right.

What government support will there be for the switchover to digital radio, which is likely to be not only more problematic but, generally, more expensive across the population than the TV switchover has been? Will the Minister accept that overrushing towards analogue switch-off will not allow proper time for the Government, this House and the other place to think through the unintended consequences? Is there anything that the Government can learn from the German Government's experience and their postponements of switchover plans?

An example of unintended consequences comes from community groups and churches that use radio microphones in various ways to enable people to hear and to use space creatively. As part of the overall policy on the digital economy and the sale of the audio spectrum, Ofcom is going to move the channels on which community groups and churches operate their radio mics, rendering the old equipment useless. I am aware that Ofcom is now looking at compensation for that, but are the Government aware that from the point of view of many charities, not just churches, there is a potential problem and a possible case for compensation for equipment that is still serviceable but is no longer useable? I am concerned about unreasonable costs being faced by some voluntary organisations. On voluntary supported broadcasting, do the Government intend to keep some of the analogue spectrum going, for example, for hospital radio?

This country must, of course, embrace the opportunities offered by a digital economy, but the advantages must be shared by the widest possible number of citizens. Some, if not all, of the unintended consequences that could unfairly disadvantage people might be avoided by not being trapped in too rigid a timetable. If that happens, I fear that this country will not benefit from the best rewards that a digital economy offers.

4.49 pm

Lord Puttnam: My Lords, I have in a sense been given my cue by my friend the right reverend Prelate the Bishop of Manchester. I acknowledge that well known commandment, "Thou mayest not speak if thou art unable to remain for the wind-ups", and merely give notice that my noble friend Lord Bragg and I intend to play as vigorous a role as possible in Committee and at later stages of the Bill. I entirely support the Bill. I was hugely encouraged by my noble friend the Secretary of State's opening speech, which for me hit every button, and by the speech of the noble Lord, Lord Birt, which was really excellent. I apologise that I cannot stay for the rest of the debate, but, as I said, I look forward to playing a very full part in the remaining stages of the Bill.

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4.50 pm

Lord Lucas: My Lords, I am sure that I am not the only noble Lord in this House to be extremely disappointed to miss out on the speech of the noble Lord, Lord Puttnam. If he has written it out, perhaps he will e-mail it to us so that we catch it anyway.

I, too, support if not the whole speech of the noble Lord, Lord Birt, then certainly the end of it, when he talked about the policing of the net. It is the wild west out there. It can be a very uncomfortable place in which to be an ordinary citizen, and if the streets were like the internet we would want to know what was being done about it. It is high time that the Government caught up with the needs of their citizens and started to do something about this. Relying on poor, under-resourced police officers-in individual forces, for goodness' sake-to deal with something that is a global phenomenon is, frankly, ridiculous, and it is time that the Government gave us some help with this.

I will speak on three subjects: domain name registrars, the spectrum and copyright. I am not entirely convinced by what the Government are setting out to do with domain name registrars, and I want to understand their reasoning better. I understand the problems that are described in the impact statement in particular, but do they really have plans for dealing with these things if they actually own the domain name registrars? Have they really thought through what powers would be necessary to enable them to tackle these things fairly and effectively? If they have, why do they not try giving those powers to the domain name registrars before they get around to thinking that those registrars should be nationalised? I will explore that in some detail.

Secondly, there is a well established need for additional spectrum for the emergency services. The current systems have, on several occasions in the past year or two, been overloaded to the point of breakdown. They are running on old technology that is way behind anything used by noble Lords, let alone by their children, and we are coming up to 2012, when we will need to have a very effective and highly capable system to deal with security at that event. Surely at some time in the future we will want our emergency services to have a really modern and effective system that is equivalent to the iPhone in noble Lords' pockets or even, perhaps in five years' time, to something that is much better than that. That will require spectrum, and I will table an amendment to require Ofcom not to allocate but to set aside spectrum for the emergency services.

The noble Lord, Lord Carter, will doubtless remind me that the system is currently in place for more spectrum; the emergency services have to put forward a business case and can be allocated spectrum. However, the emergency services have just heard today that they are to reduce their budgets by 5 per cent a year for the next five years. In any case, it will take a lot of time to put together some of the things that they are required to think about and to sort out exactly what equipment will be required.

In Council recommendation 10141/09, which I think was signed by the noble Lord, Lord West, the European Union has agreed to a chunk of the spectrum being allocated for the future expansion of the emergency

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services so that they can be co-ordinated across Europe. The last time we produced a system for the emergency services, which was Tetra, we managed to create the international standard by doing so and we have benefited enormously from it. A large proportion of the industry which provides the equipment for that service is located in the UK and has been extremely successful in exporting it worldwide. If we find ourselves without the spectrum available within the band which has been allocated by the EU, when the demand really starts to build for the new generation of emergency services kit, we will find ourselves not only locked out of the market and all the benefits that would come with it, but also having to design for ourselves unique and expensive kit to cater for the fact that the bit of spectrum left over for the emergency services is somewhere off in another part of the spectrum and does not accord with EU and probable international standards.

This is a substantial decision because we are probably looking at 15 megahertz of spectrum, which is quite a chunk. None the less, I hope very much that I can persuade my Front Bench colleagues that they should support me in my amendment when it comes forward. I would also be delighted if we managed to persuade the Government that they should take an interest in this because it is pretty vital for national security reasons that we have a good allocation of spectrum for the emergency services.

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