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Michael Fabricant (Lichfield): The Bill has my full support and, I am pretty sure, that of my party. However, its whole effect is to stop the re-programming of the international mobile equipment identity, or IMEI number, and that will be effective only if the companies can disable the handset. How convinced is the Minister that Vodafone and O2 will have not only the hardware but the software in place by September, as set out in the explanatory notes, rather than later, in 2003, which would negate the whole point of the Bill?

Mr. Denham: I have of course been in contact with the operator companies throughout the past year, and my officials work with them through the standing group that we set up to tackle mobile phone theft, and my understanding as of today—it is the best information that I can give the House—is that, by the end of August, each of the five main operators will be able to bar stolen handsets on their own network.

The next stage beyond that is to prevent the stolen phone from being used on one of the other major networks, and the second part of the agreement that we have reached with the operators is that they will create a central equipment identity register, which will enable each of them to bar the use of stolen mobiles across all the networks. That decision was announced in February 2002, and we have the industry's assurance that it is on course for implementation of the shared database in September 2002. I have no reason to doubt that the target date will be met.

Michael Fabricant: I totally accept what the Minister says, and only time will tell whether his confidence is justified. If a phone is stolen and then exported, will there be a similar sharing of databases with other global system for mobiles—GSM—operators elsewhere in the world, because if not, all that will happen is that the phones will be usable everywhere but here?

Mr. Denham: I am anticipating some remarks that I shall make in due course, but in Europe, where the bulk of the other GSM operators are, our initiatives are being recognised as setting best practice standards for the whole region. We are considering how we should follow up in Europe the initiatives taken here. I cannot claim that everything is in place in Europe to mimic what we are doing here, but what we have achieved with the operators here has been noted as best practice. We shall continue to press on the matter. I shall shortly say something about the security of the phones themselves.

The hon. Gentleman also asked about the export of phones. He is right to say that wider international action will help to tackle the problem. Although there is undoubtedly some theft for export, that is clearly a more complicated transaction than the simple theft and re-use of a mobile phone. I cannot claim that the Bill totally closes off the export route, but it will have a significant impact on the theft of phones for domestic use.

Mr. Dominic Grieve (Beaconsfield): Clearly, if the technology exists to bar a mobile phone, irrespective of

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its keeping its original IMEI number, it will not be able to be used. The Bill is aimed at criminalising the re-programming of the telephone, but if the technology exists for such re-programming to continue to be done on the black market—if people are willing to risk the penalties—it will be possible to continue to use it with a new number.

Mr. Denham: That is self-evident, I suppose. With the current generation of phones, we cannot make re-programming physically impossible. That is why we continue to press the industry, and especially the manufacturers, with the support of the operators, to make phones themselves more secure and more difficult to re-programme. Given that there is a fairly rapid replacement rate of the stock of mobile phones—fashions and designs change—we can look forward to a new generation of phones that are more secure. I believe that criminalising the act of re-programming, with tough but justified sentences, as proposed in the Bill, will help to make a significant impact on the problem.

We all know that there is no magic bullet that will instantly solve the problem, and we are pursuing other measures, educating mobile phone users and persuading schools to discourage pupils from taking their phones to school. All those measures have a role to play, but the Bill is a significant part of the process.

From September, customers who have their mobile phone stolen will be able to ring their network and get it disabled, just as they can ring their bank and cancel a stolen credit card. We have also worked with the industry and the police on promoting greater awareness of security and personal safety, and there is much more information on phone operators' and retailers' websites. The Government have issued 5 million crime prevention leaflets on avoiding mobile phone theft as part of the safer streets campaign.

In London, for example, the Metropolitan police have marked thousands of mobile phones with a permanent ultra-violet property code, making them instantly identifiable if they are stolen and subsequently recovered. In Birmingham, the police and youth offending teams and Victim Support are focusing on mobile phone security and crime prevention presentations, which they are delivering to all secondary school assemblies.

Hon. Members asked about wider issues. We are working with colleagues in Europe and discussing possible cross-boundary solutions, building on the good practice developed in the UK, because we want to prevent stolen phones from being used in other countries, too, so as to remove incentives for illegal export.

The Bill is specifically designed to complement the handset blocking measures taken by the mobile phone operators. Phones are identified and disabled by reference to a serial number on each handset, known as the international mobile equipment identity, or IMEI number—a 15-digit number both programmed into the handset and visible on its body. The number appears on the records of the network providers each time the phone is used. The operators' handset barring system works by reference to the IMEI number, so barring handsets in that way will prevent thieves from being able to use the phones that they steal, and if they cannot be used, they cannot be sold on. That, in itself, should act as a deterrent to mobile phone theft.

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However, barring a handset is not fully effective if the IMEI number itself is changed. Changing the number makes it impossible for the operators to track and disable a handset, and that is what we believe is happening. A tracking exercise that operators have undertaken with the police has shown that the IMEI number of as many as 75 out of 100 stolen phones could not be traced on any of the UK networks' records. We can make a reasonable guess that these phones were not thrown away, but were re-programmed and were therefore untraceable. However, I accept that some were sent overseas to emerging markets.

Another indication of the extent of the re-programming problem was revealed last July when BT Cellnet—now O2—estimated that, potentially, the IMEI number of 1.5 million phones on that network had been changed from the manufactured number. Those who were re-programming mobile phones used duplicate IMEI numbers that they knew would work on the network. The most duplicated number on the BT Cellnet network had been copied more than 9,000 times.

Michael Fabricant: Has the Minister discussed with major telephone operators the introduction of a system through which the IMEI number is matched with the telephone number? Such a system is technically possible, and if it were adopted the duplication of an existing and correct IMEI number would not work, because it would not match up with the recognised phone number on the SIM card that is inserted in a GSM telephone.

Mr. Denham: We have looked at various technical arrangements, and the problem with that solution is that it is not quite as straightforward as the hon. Gentleman suggests. All simple mechanisms that cannot be got round have been examined in detail by the industry, and by the consultants whom we have retained to advise us independently on these matters. The existence of so many duplicate IMEI numbers may well be a by-product of the particular software, often written by hackers, that is used for re-programming phones in the same place. Such software may inadvertently create the same IMEI number.

It is relatively cheap and easy to change the IMEI number of a mobile phone—all that is needed is the relevant software to re-programme the handset, a computer and a cable. The software is freely available; it may be bought, or downloaded from the internet. A kit can be bought for under £150. The Metropolitan police say that stolen and re-programmed phones can be sold for about half their retail price—up to about £100. Given the number of stolen phones and the estimated number of re-programmed ones, it is clear that the re-programming of stolen phones has the potential to produce large-scale criminal profits. At the moment, it is completely legal to re-programme a mobile phone. Re-programming services are lawfully offered and advertised by independent retail outlets, market stalls, car boot sales and internet companies, despite the fact that no legitimate reason exists for changing the number.

On the next stage in the process, to which I have referred, new international security standards that came into force on 1 June state that the IMEI number should not be changed, and should be resistant to change. I am pleased to say that manufacturers are now playing more of their part in the fight against mobile phone crime by hardening the IMEI numbers on their new phones,

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in compliance with the new standards. That addresses the problem at source. We are also meeting manufacturers to discuss other measures that they can take to enhance the security of their products. However, as I said, at the moment the IMEI numbers of phones already on the market can be changed, and that is the issue that the Bill seeks to address.

In February, we made clear our intention to introduce the Bill at the earliest opportunity. It will create a new criminal offence: the unauthorised re-programming of mobile phone handsets. Specifically, it will be an offence to change, or to interfere with, the operation of a phone's unique identifier—the IMEI number. The Bill will also create linked offences of possessing, supplying or offering to supply equipment for that purpose. It will be an offence to be in possession of equipment with the intention of unauthorised re-programming.

There will be occasions when the manufacturer of a mobile phone will need to change the IMEI number. No offence is committed if the change is made by the manufacturer, or with their written consent. The new "either way" offences of changing, or interfering with, the unique identifier of mobile phones without authorisation, and of possessing or supplying the equipment for that purpose, will carry a maximum penalty on indictment of five years' imprisonment, or an unlimited fine, or both. In the magistrates courts, an offender may be punished with six months' imprisonment, or a fine of up to £5,000, or both. The offence will be an arrestable offence under the provisions of the Police and Criminal Evidence Act 1984. The penalty for the new offence is in line with those for the various offences of obtaining telecommunications services dishonestly, as provided for in the recently amended Telecommunications Act 1984.

We accept that these penalties are severe, but I believe that they are fully justified. A strong deterrent is needed for those who, in some cases, are hardened criminals engaged in several other criminal activities. However, such a deterrent is also necessary in the context of the wider street crime problem, which has certainly been fuelled by rise in mobile phone theft.

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