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Lord Kingsland: There is nothing to prevent the Minister, in any one of the separate utility regimes, inserting a simple clause stating that where, in the judgment of the utility regulator, one regime is preferable to another he can opt for that regime, and to cast that clause so clearly that, at some given moment

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in the application of competition law or the licence conditions, the regulator has to take a position. From that moment he goes down whichever one of the two paths he selects. Surely, not only is that not beyond the technical abilities of the parliamentary draftsman, but also it cannot be beyond the Minister's vision for a system which is as certain and clear as possible for the companies concerned.

Lord Simon of Highbury: Again, I thank the noble Lord for his inventiveness. It seems to me that the appropriate locus for addressing this question is precisely the working group for the director general and the existing sector regulators. If during the process of consultation after the guidelines have been published we find that many people say, "This is a new sector of industry developing under the broad aegis of telecommunications which needs to be regulated by a different regulator", or indeed, "We wish to redefine what the telecommunications director general is responsible for", that is the appropriate time for that to be done. I would note the point and put it to the working group that that is a test for the particular sector.

Lord Kingsland: In a few amendments' time, in relation to another sector, this point will arise again. By implication, the amendment proposes a much more clear-cut way of dealing with the situation than that proposed by the Minister. I am sorry to anticipate an amendment, but I have to shoot at my pheasants when they fly over me. I hope that I do it rather more effectively with respect to this legislation than I do in other circumstances. I submit that there are ways of doing this under the Bill that are preferable to simply hiving matters off for discussion under a working party and delaying a decision which, if it is not taken before the Bill comes into effect, will undoubtedly result in a great deal of uncertainty.

Lord Simon of Highbury: The noble Lord leaves me all of a tremble at the thought of yet another discussion around this matter on an amendment that I cannot yet foresee. I was racking my brains. However, perhaps dinner will intervene. I await the argument when it comes.

Currently, the idea that we should specify in the Bill that markets are developing in such a static way (in fact, "static" and "development" are not words that go well together) that we need to re-define already on the face of the Bill how this particular market place--telecommunications--has differed in applying the new prohibitions seems premature. I would let the people who are expert in the sector, who are expert regulators, and the director general, take account of this debate and consider whether, in issuing guidelines and advice, they need to revise the scope of the sector in any way. I certainly do not think that we can do it here on the Floor of the House. Under those circumstances perhaps the noble Lord is prepared to withdraw the amendment at this stage.

Lord Ezra: Once again, I express appreciation for the lively debate we have had on this issue. It is clearly

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not the last time during consideration of the Bill that we shall debate this subject. What has emerged clearly is the jurisdictional uncertainty which covers these issues. With market places evolving, conglomerates forming up and technology in telecommunications developing rapidly, the situation is far from static. It is difficult to see where the lines will be drawn today, tomorrow and the day after. Undoubtedly, we shall need to return to this issue from time to time.

I wish to study carefully the remarks of all noble Lords, and in particular the contribution of the noble Lord, Lord St. John, who referred to a number of matters stated by Oftel. I got the impression from the noble Lord's clearly devoted reading of the background material that, far from the existing situation continuing, the powers of Oftel could be considerably strengthened under the new arrangements, and that could add to the degree of uncertainty. I should like to study that matter. I do not wish to detain the Committee any longer and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 209 not moved.]

Clause 52, as amended, agreed to.

7 p.m.

Schedule 10 [Regulators]:

Lord Simon of Highbury moved Amendment No. 209A:

Page 69, line 25, leave out (" 64") and insert (" 65").

The noble Lord said: Amendment No. 209A is a consequential amendment to Schedule 10 which flows from the substantive amendments which I have tabled to Clauses 63 and 65. With the leave of the Committee, we shall speak to those substantive amendments when we reach Clause 63. In the meantime, I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 209B:

Page 70, leave out lines 4 to 8.

The noble and learned Lord said: The purpose of the amendment is to increase certainty regarding the scope of Part I functions and their application by the Director General of Telecommunications to clarify the purposes for which the functions under Part I, in particular the prohibitions, may be applied by that sectoral regulator to achieve a better alignment of Part I of the Bill with EC law and principles and a better consistency of decision-making. The amendments would not prevent the director general from exercising functions under Part I but would simply remove the bridge created in Schedule 10 between the objectives of the relevant sectoral statute and the prohibitions in Part I. They would therefore maintain the present position--they would not introduce the change to which the noble Lord, Lord St. John, referred a moment ago--under which the Director General of Telecommunications wears two

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hats, as regulator and as a competition authority, but those hats would have to be kept separate and would not be worn simultaneously. I beg to move.

Lord Simon of Highbury: The question of regulators' general duties under their utility statutes and their relationship to concurrent functions under the Bill takes us into the territory of conflict. The provisions that these amendments would delete have two purposes. The first is to make clear that in applying the prohibitions a regulator must regard his functions under the Bill as paramount. In other words, in carrying out his functions he must act in accordance with the governing principles set out in Clause 58. That is vital to ensure that the principles upon which the Bill rests are not undermined and that they are to be followed by each of the regulators when applying the prohibitions. That may well be the effect without specific provision in the Bill, but it is such an important issue that we wish to put beyond doubt that that is the prime function.

The second purpose is to enable, but not to require, each regulator to have regard to his general duties in the utility statutes, subject to the crucial point about functions under the Bill being paramount. We consulted the regulators in the development of this provision and received differing views as to whether they should be required to have regard to the general duties in their utility statutes or whether those duties should be disapplied. We decided that the right course was to enable a regulator to have regard to those duties, where appropriate, but not to require him to do so. The effect of the amendments would be to require a regulator to have regard to his utility statute duties without making clear that he is to regard his functions under the Bill as paramount. That would create a risk of conflict and inconsistency.

A particular area that we are reflecting upon is the interaction between the duties in the Channel Tunnel Rail Link Act and those in the Railways Act 1993. I may wish to return with an amendment on that point on Report.

I hope that the noble and learned Lord, Lord Fraser, finds this explanation helpful and is under those circumstances prepared to withdraw the amendment.

Lord Fraser of Carmyllie: I am grateful to the noble Lord for anticipating what I was going to say about the Channel Tunnel Act. I say more seriously to the noble Lord that I shall reflect on what he said. I am not sure that it is quite an answer to the point that concerns us. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 210 and 211 not moved.]

Baroness Dean of Thornton-le-Fylde moved Amendment No. 211A:

Page 70, line 17, at end insert ("and activities preparatory or ancillary thereto").

The noble Baroness said: In moving the amendment, I wish to apologise to the Committee for not being present at the Second Reading of this important Bill. It was impossible for me to attend. I shall not kid you that it was business; it was actually a holiday abroad.

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My amendment deals with the concurrent powers and the application of those powers by the Director General of Telecommunications. The amendment is specifically in the area of telecoms regulation. I almost hesitate to use the word "telecommunications" because the impact of the amendment is to face the challenges of much of the convergence of which we shall enjoy the benefits now and in the future.

As presently worded, the Bill will limit the regulator's powers to the area of,

    "commercial activities connected with telecommunications".

I suggest that those words are almost outdated in their general usage. I am aware too that my noble friend Lord Cocks of Hartcliffe complained at Second Reading of the Bill that those powers were too wide. I approach it from a different direction and think that they are too narrow and too restricting for the director general to ensure access and true competition in this sector.

The words are from the Telecommunications Act 1984. The world has moved on a long way since 1984. We are now seeing convergence as between telecoms and broadcasting; it is with us and is poised to take off in a big way. The advent of digital transmission technology and the developments in information technology software provide us with the opportunity for our television sets to deliver interactive, on-line services, with the use of telecommunications too. Already our PCs in our homes and offices deliver live sound and pictures to users, again on-line services. The two are converging. It is for this reason that I propose my amendment.

Some may argue that these services will not be widely available for a number of years yet at prices which the public can afford. I suggest that that is debatable. The average shelf-life of a competition Act seems to be about 15 years. I am trying to project us not into the immediate future but a little further on. That is necessary when we consider the speed at which technology is developing. On past experience, the words in the Telecommunications Act 1984, which are repeated in the Bill, have been interpreted very narrowly by lawyers. I suggest that in the best interests of competition, of the consumer and of the developing industries we can no longer afford a very narrow interpretation.

I am drawn to the amendment from debates that we had during the passage of the Broadcasting Bill 1996 which clearly brought out the concern that we could face an increasing possibility of dominant market players--they now exist--determining for the consumer future availability of access to the emerging services from the set-top box on the television. Though the Broadcasting Act, as it became, recognised that it would probably have a short shelf-life, developments in the sector made many feel that the problem had been alleviated by the powers which the DTI sensibly granted to the DGT at Oftel.

We hoped that those powers would ensure that access to information about proprietary technology was readily available to the people who wished to enter the market. I suggest that experience over the past year fell short of

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our expectations. For instance, I gather that the information on what is called the "applications programme interface" only recently became available, despite new players in the sector wishing to have that information to plan their involvement in the medium and longer term. That demonstrates clearly that, where gateways are controlled by organisations which are content providers, there are significant commercial incentives for anti-competitive behaviour. The Director General of Telecommunications had no power to force the release of that information in the face of protected anti-competitive behaviour.

I put forward a simple analogy. When privatisation of telecoms took place, no one imagined that the privatisation would permit or prevent any of us using a handset to make a telephone call to any number in the land irrespective of who the service provider or network operator was. Legislation ensured that the public, and indeed business, had that access. This is not a dissimilar situation. It is the principle of access in a way that ensures that the regulator has the authority to take steps which will enable a competitive situation to exist.

The powerful position of the controllers of gateway technology was recognised by the DTI when it established the system of class licences for the running of telecommunications services for the provision of conditional access services. Those licences, which are issued and regulated by the DGT, place on the holders a "duty to co-operate with" content service providers wishing or entitled to use their network to reach audiences in order to prevent the abuse of a dominant position of network controllers who are also content service providers.

That narrow definition of conditional access services includes encryption services and subscriber manager services. Those were two issues debated in this Chamber during the passage of the Broadcasting Bill. The wider definition that the regulator has rightly chosen to interpret includes software and middleware which support the navigation and selection of services for the public. Amendment No. 211A will put on a statutory basis the broad interpretation of those powers to ensure that we have competition in this sector. It is a competition amendment.

The amendment is consistent with EC jurisprudence in this area. It reflects the approach of the advanced television services regulations in the UK, jointly sponsored by the DTI and the Director General of Oftel. And it echoes the sentiments of the Minister, my noble friend Lord Simon, in our considerations on this Bill on 13th November when he pointed out that it is wrong to make the assumption that a utilities company licence conditions deal with all competition concerns which can arise,

    "particularly in a dynamic market place".--[Official Report, 13/11/97; col. 334.]

In that same contribution my noble friend went on to say that if anti-competitive conduct takes place which is not covered by explicit licence conditions, the prohibitions contained in the Bill should be applied as rigorously and effectively as elsewhere. My amendment is designed to achieve just that in what is probably the most dynamic market place in our country today. It

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ensures that effective action can be taken in relation to activities which are preparatory or ancillary to licensed telecommunications activities in their widest sense.

I appreciate that in not being here for the Second Reading the Minister has not had prior indication of my general anxieties in this matter. It may be that he will wish to consider the points that I put forward. If so, I fully accept that. And if that is the case, might I suggest that when he considers the amendment he might also consider that Section 50(3) of the Telecommunications Act grants the Director General of Telecommunications concurrent powers under the Competition Act 1980--the Act which will be superseded by this Act--and it would be worth including more words from that Act into this Bill. That would give us legislation which truly provides competition both for the consumer and for the emerging players in this sector. It will also prevent dominant market players from taking full advantage, as I am sure they would wish. I beg to move.

7.15 p.m.

Lord Mottistone: I support in principle the amendment of the noble Baroness, Lady Dean. I am told that the Director General of Telecommunications has a certain anxiety about the definition of his powers under the Competition Bill and believes that the amendment raises an important point. However, he is not sure that the wording is quite right and suggests that the Government may like to study the point to see whether better wording can be achieved.

In the same connection, the director general believes that the scope of his powers as currently defined in the Bill probably also need amending to match Oftel's scope under the Telecommunications Act, to which the noble Baroness referred. I am not sure whether the noble Baroness was on the same point as myself, but the Government may wish to consider it so as to ensure consistency between this Bill and the Telecommunications Act regimes. I hope that the Minister will feel that that is something he can willingly take up.

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