Joint Committee on The Draft Communications Bill Appendices to the Minutes of Evidence


Memorandum submitted by the Scottish Advisory Committee on Telecommunications (SACOT)

  1.  The Scottish Advisory Committee on Telecommunications (SACOT) is a statutory body established under the Telecommunications Act 1984 to advise the Director General of Telecommunications. Members are appointed by the Secretary of State for Trade and Industry. SACOT concentrates on issues that affect consumers in Scotland, especially consumers on low incomes and consumers who live in remote areas. This submission therefore focuses on the consumer implications of the draft Bill. It is a preliminary submission, as there has not yet been an opportunity for a full SACOT discussion. This will be held on 18 June and is possible that a second submission will be made after that date.

  2.  The present regulatory structure for communications is a patchwork quilt, with overlaps and gaps between different regulatory bodies. The Government's intention in the Bill to develop a coherent approach to communications regulation and to set up a single regulatory body is therefore very welcome and should bring benefits to the industries concerned as well as to consumers and citizens.


  3.  There are various terms used in different parts of the Bill to encapsulate "the consumer". These include:

    —  "Customers" defined in Clause 3(7) and Clause 257 to include an individual who is in a quasi-contractual (or pre-contractual) relationship with a service of facility provider, but apparently excluding by default other members of that individual's household, not to mention people in hospitals, residential homes and other institutions. It would seem that all these groups of people are currently excluded from the consumer protection provision of the Bill;

    —  "Persons" used in Clause 3(2)(d), Clause 16, Clause 97(4) and elsewhere, but not apparently defined;

    —  "Citizens" used in Clause 4(5) in the context of ". . . the interests of persons who are citizens of the European Union" but not defined;

    —  "Members of the public" used in Clause 12(1)(a) and (b) but not apparently defined (except by inference in Clause 109(9));

    —  "Public opinion" used in Clause 12(1)(a) but not defined;

    —  "End-users" of public electronic communications services in Clause 38(1)(a), defined in Clause 109(1);

    —  "Domestic and small business customer" in Clause 96, defined jointly rather than separately in Clause 96(8).

  It is not immediately apparent why it is necessary to use all these different terms and, if it is, what significance there may be in their different use.


  4.  Clause 3(1)(a) lists seven general duties of OFCOM. We consider that the first—"to further the interests of the persons who are customers for the services and facilities in relation to which OFCOM have functions"—should be the over-riding primary duty (subject to our comments in para. 3 above and para. 5 below on the definition of "customer"). Without this duty, none of the other duties would make sense: indeed, there would be no need to set up OFCOM. However, any of the other six duties could be dropped without affecting OFCOM's fundamental purpose.

  5.  We have indicated in para. 3 that the use of the word "customers" in the Bill seems to be very narrowly defined, being limited to those in individuals who are in a quasi-contractual relationship with providers of service. It appears to exclude other members of "customers" households as well as all residents in institutions. If our interpretation is correct, this is a serious fault: it implies that OFCOM has no duty to these other citizens and consumers (the majority of the population) and that the consumer protection provisions of the Bill do not apply to them. Indeed, Clause 4(5) states that it is a Community ". . . requirement to promote the interests of all persons who are citizens of the European Union". The very narrow definition of "consumer" in the draft Bill would seem not to fulfil this.

  6.  Clause 3(2)(b) raises more questions than it answers. What is meant by "the different interests of those living in rural and in urban areas"? Are these two categories intended to cover the entire population of the UK? Or are some people considered to live in neither urban nor rural areas—for example, those living in the suburbs or small towns? Into which category, or neither, does someone living in Helensburgh, Barnton, Dalkeith or Nairn fall? However, we do consider that consumers living in remote and deprived inner city areas should be the subject of OFCOM's regard in the context of this Clause.


  7.  SACOT welcomes the Clause 17(4) provision that a Content Board member should represent the interest of persons in Scotland.


  8.  SACOT welcomes the spirit and the letter of these Clauses. They should provide a secure basis for the improvement of complaints handling and dispute resolution procedures, and in particular for the development of an effective Ombudsman scheme.


  9.  SACOT welcomes in principle the proposal to establish a Consumer Panel. However, we have a number of serious doubts.

  10.  While we can see the intention behind the exclusion of content matters from the Consumer Panel's remit, the limitation of the scope of the Consumer Panel in effect to telecommunications in Clause 92(2)(a) and (b) would seem to negate the whole objective of building a unified regulatory system. There are many aspects of broadcasting other than content which should come within the Consumer Panel's remit. Examples are the delivery of broadcasting services to consumers, whether television and radio licence holders meet the terms and conditions of their licences, and electronic programme guides. Moreover, not only would the draft Bill preclude the Consumer Panel from dealing with the substance of these issues, it would also prohibit the Panel from looking at associated service standards, customer rights, complaints handling and dispute resolution.

  11.  It is not clear whether Clause 96(3)(c) empowering the Panel to "give advice to OFCOM in relation to any matter referred to the Panel by OFCOM for advice" would prevent the Panel from taking the initiative in putting issues on OFCOM's agenda, or whether this would be allowed by virtue of Clause 96(2).

  12.  SACOT welcomes the provision that OFCOM should be under a duty to consider the Panel's advice and research (Clause (6(4)) and to give reasons publicly if it disregards the Panel's advice (Clause 96(7)).

  13.  While it would be valuable for small businesses to be covered by the Panel's remit, the definition in Clause 96(8) of a small business as one that employs 50 or less employees let in far too wide a range of business interests. Some businesses with 50 employees are very substantial firms with a multi-million pound turnover. The definition of a small business should be much more narrowly drawn—say, five or less employees.

  14.  At present, the Chairmen and Members of SACOT and the other Statutory Advisory Committees on Telecommunications (ACTs) are appointed by the Secretary of State for Trade and Industry, not by the Director General of Telecommunications, and their appointments may only be terminated by the Secretary of State. These are valuable safeguards against the ACT Chairmen and Members being the regulator's tame poodles. The ACTs will cease to exist when the OFCOM Bill comes into force and it is with some unease that we see in Clause 97(1) and (2) and Clause 97(7) that the powers of termination and appointment of Panel members will in future lie with OFCOM, albeit subject to the approval of the Secretary of State. This represents a dilution of independence from the regulator. There is not even a provision that Panel members will continue to hold office quamdiu se bene gesserint and the possibility of OFCOM seeking to remove "awkward cusses" who disagree with OFCOM policy must be a real one.

  15.  While we welcome the provision of Clause 97(3 that the Panel should include members from England, Scotland, Wales and Northern Ireland, we do not believe that this in itself deals adequately with the interests of the four countries of the UK. At present, as we have said above, there are four statutory ACTS, one for each country, which will cease to exist when the OFCOM Bill is enacted. It is vitally important that consumer representation in the new OFCOM framework should at least match the present system in terms of its effectiveness and we believe that this involves a separate committee for each of the four countries. So far as Scotland is concerned, it is a country which has distinct economic, social and cultural characteristics. For example, it has a notably higher proportion of households on low incomes, as well as households living in remote areas, while large swathes of the country are still subject to an effective BT monopoly so far as fixed line telephony is concerned. Moreover, Scotland is far from uniform. This distinctiveness and variety is currently recognised in the current statutory basis of SACOT. It needs to be recognised in future in the structure of the OFCOM Consumer Panel. We consider that it is of the utmost importance that the Consumer Panel should be required in the Bill to have a Committee for Scotland and for each of the other countries.

  16.  Further, there does not even appear to be any explicit provision in the Bill allowing the Consumer Panel to establish any committees. It would appear that if the Consumer Panel wished to set up a committee, it would have to put the proposal to OFCOM for decision.

  17.  Clause 97(4) states that in appointing Consumer Panel members, OFCOM should have regard to the interests of certain groups of people. We have state above our criticism of the use of "urban" and "rural", but as it stands the list is an example of meaningless "tokenism" which purports to provide a solution to a problem but does not in fact do so. For example, the interests of disabled and elderly consumers of telecommunications services are currently represented by DIEL, an ACT established under the Telecommunications Act to advise on the particular interest and requirements of consumers who are older or disabled. The membership of DIEL covers a wide range of disabilities, including the physically handicapped, the mentally handicapped, people with impaired vision, those with hearing loss, and so on. How can a single member of the Consumer Panel possibly be considered as "representative" of all these different types of disability? This is another example of where the Bill should require the Consumer Panel to have a committee.


  18.  The Bill is silent on the relationship between OFCOM and the Scottish Executive and Scottish Parliament, in spite of this having featured in the White Paper (Section 8.7). SACOT considers that OFCOM should be required to liaise with the devolved administration in Scotland on relevant issues. Also, the Scottish Executive should be at least consulted on the appointment of persons representing the interests of Scotland on the Content Board (Clause 17(4)) and the Consumer Panel—and, if our proposal in the paragraph 20 below is accepted, the OFCOM Board itself.

  19.  OFCOM should be required to establish an office in Scotland. The Secretary of State for Culture, Media and Sport gave an assurance on this point in the House of Commons on 7 May 2002, but this does not go far enough unless it is embodiesdin the Bill. For example, the Office of Fair Trading used to have an office in Scotland, but this disappeared in a wave of financial cuts as there was no statutory safeguard.

  20.  Finally, we come to the composition of the OFCOM Board. The draft Bill is silent on this, presumably because it is dealt with in the Office of Communications Act 2002. However, the present situation is inherently unsatisfactory, certainly from Scotland's viewpoint. The distinctive economic, social and cultural needs of Scotland should be recognised in the composition of the OFCOM Board. The current regulatory system provides for statutory members for Scotland on both the ITC and the BSC, a practical recognition of these distinctive needs. SACOT considers that in the new regulatory framework there should be statutory provision for at least one member for Scotland on the OFCOM Board. A clause to this effect should be added to the Bill.

May 2002

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