House of Lords - Explanatory Note
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Clause 12: Functions of the Content Board

44.      OFCOM are to determine which of their functions are to be delegated to the Content Board. To such an extent and subject to such restrictions as OFCOM may determine, these must include the functions set out in subsection (2) e.g. functions related to broadcast content and media literacy.

45.     The Board must ensure that OFCOM are aware of the different interests and factors that need to be taken into account in the carrying out of OFCOM's functions as respects different parts of the United Kingdom.

46.     The Board may be authorised by OFCOM pursuant to subsection (5) to establish committees or panels to advise it in carrying out its functions. Members of those committee or panels may include persons who are not members of the Content Board.

Clause 13: Consumer research

47.     This clause requires OFCOM to make arrangements to ascertain public opinion and the experiences of consumers on certain issues relating to the communications sector, including electronic communications services, networks, associated facilities and television and radio services and programmes distributed by other electronic media. In general, these arrangements may include the carrying out of research. With regard to matters relating to the promotion of media literacy, the setting and observance of programme standards for radio and television, the prevention of unjust and unfair treatment of persons in those programmes and the unwarranted infringement of privacy resulting from those activities making arrangements for such research is mandatory.

48.     OFCOM are not required to make arrangements under this clause in respect of the incidence or investigation of any interference with wireless telegraphy.

Clause 14: Duty to publish and take account of research

49.     This clause requires OFCOM to publish, consider and, to such extent as they think fit, take account of research under clause 13. This obligation does not extend to information that is confidential within the meaning of subsections (3) or (4).

Clause 15: Consumer consultation

50.     This clause places OFCOM under a duty to establish and maintain effective arrangements for consulting with consumers, in the markets for services and facilities in relation to which OFCOM have functions, the markets for apparatus used in connection with those services and facilities and the markets for directories capable of being used in connection with an electronic communications network or service. This clause implements Article 33(1) of the Universal Service Directive.

51.     Such arrangements must include the setting up of an advisory panel to be known as the Consumer Panel. The principal responsibilities of the Consumer Panel will be to advise OFCOM and others on the interests of domestic and small business consumers in relation to the matters listed in subsection (3). The matters listed in subsection (3) include the provision of networks, services and directory enquiry facilities; the making available of associated facilities, the supply of apparatus; service, quality and safety standards; financial and other terms of provision; complaints handling; dispute resolution and remedies; and the availability of information. The matters in subsection (3) about which the Panel are able to give advice do not, however, include matters that concern the contents of anything which is or may be broadcast or otherwise transmitted by means of electronic communications networks. OFCOM may also refer additional matters not included in subsection (3) to the Panel for advice. The Panel may publish such of their advice, the results of their research, or information on their operations, as they think fit.

*the meaning of domestic and small business consumer is given in subsection (10), and covers customers of a communications provider who are not themselves a communications provider, nor an undertaking for which more than 10 people work.

52.     Subsection (7) places OFCOM under a duty, when carrying out their functions, to have regard to the advice and research of the Consumer Panel. OFCOM are also obliged to provide the Panel with such information as is necessary to enable the Panel to carry out their functions and such other information requested by the Panel as OFCOM can reasonably be expected to disclose (having regard particularly to confidentiality requirements). Finally, OFCOM must ensure that where they intend to disregard any of the Panel's published advice, they both publish this intention and inform the Panel of their reasons for disagreeing with this advice.

Clause 16: Membership etc. of the Consumer Panel

53.     This clause provides for the appointment of the chairman and other members to the Consumer Panel. The power to make all these appointments is conferred on OFCOM, subject to the approval of the Secretary of State. In appointing persons to be members of the Consumer Panel OFCOM must ensure that for each of England, Scotland, Wales and Northern Ireland there is a different member of the Panel capable of representing the interests and opinions of persons living in those parts of the United Kingdom. Also, OFCOM must seek to ensure that the Panel they appoint will be able to represent the interests of the categories of persons listed in subsection (4), which includes persons living in rural and urban areas, small businesses, the disadvantaged, and the elderly. The Panel will have a duty, when carrying out their functions, to have regard to the interests of those persons as well as the interests of persons from different parts of the United Kingdom.

54.      All appointments to the Panel will be for a fixed period with provision for re-appointment. Members may be removed from the Panel by notice given by OFCOM, but again only with the approval of the Secretary of State. Being a member or employee of OFCOM shall disqualify a person from becoming a Panel member.

55.     Subsection (9) provides that OFCOM may pay to the chairman and to other members of the Consumer Panel remuneration and allowances as OFCOM consider appropriate.

Clause 17: Committees and other procedure of the Consumer Panel

56.     The Consumer Panel may make such arrangements as they think fit for committees established by the Panel to give advice to them about matters relating to the carrying out of their functions. The Panel may make arrangements, including those related to quorums and the making of decisions by majority, regulating their own procedure and the procedure for committees established by them. Persons who are not members of the Panel may be members of a committee established by the Panel; however, every committee must include at least one person who is a member of the Panel. OFCOM may pay non-Panel members of a committee such remuneration and expenses as OFCOM may determine.

Clause 18: Power to amend remit of Consumer Panel

57.     The Secretary of State may by order add to (but not reduce the) list of matters in subsection (3) of clause 15 in relation to domestic and small business consumers on which the Consumer Panel may advise OFCOM and other persons. Before making an order under this clause, the Secretary of State must consult with OFCOM and such other persons.

Clause 19: Representation on international and other bodies

58.     The Secretary of State may, as respects the United Kingdom, require OFCOM to represent the Government on international and other bodies having communications functions and at international meetings about communications. The Secretary of State may also require OFCOM to become a member of or subscribe to international and other bodies having communications functions.

59.     OFCOM may also, as respects the Channel Islands, the Isle of Man or any British overseas territory, at the request of the Secretary of State, represent the Government on international and other bodies having communications functions and at international meetings about communications. However, the Secretary of State cannot require them to do this.

60.     Subsection (3) provides that OFCOM must carry out these functions in accordance with directions by the Secretary of State; and subsection (4) provides that this does not allow the Secretary of State to direct that OFCOM must represent any of the Channel Islands, the Isle of Man and the British overseas territories but that if OFCOM do represent any of them, the Secretary of State may direct them how.

*communications functions are defined in subsection (5) as any function concerned with the use of the radio spectrum, television or radio broadcasting regulation, or any other matter in respect of which OFCOM have functions.

*subsection (5) also defines international meetings about communications as international meetings concerned with the use of the radio spectrum, broadcasting regulation or provision, or any other matter in respect of which OFCOM have functions.

Clause 20: Directions for international purposes in respect of broadcasting functions

61.     This clause gives the Secretary of State the power, by order, to give directions in respect of OFCOM's functions under the enactments relating to broadcasting. Such directions may be given only for the purposes of securing compliance with an international obligation of the United Kingdom.

Clause 21: Provision of information to the Secretary of State

62.     This clause provides that when directed to do so, OFCOM must provide the Secretary of State with such information as is required by the Secretary of State in order to enable her to secure compliance with an international obligation of the United Kingdom. This provision enables the Secretary of State to provide the European Commission with information requested pursuant to Article 25 of the Framework Directive, Article 16 of Directive 2002/20/EC ("the Authorisation Directive"), Article 15(2) and 17 of the Access Directive and Article 36(3) of Directive 2002/20/EC ("the Universal Service Directive").

Clause 22: Community requirement to provide information

63.     This provision provides that OFCOM are under a duty to comply with a requirement to provide the European Commission with information for the purpose of enabling it to perform any of its functions in relation to networks, services of associated facilities. This provision is necessary in order to implement Article 5(2) of the Framework Directive.

Clause 23: Publication of information and advice for consumers etc.

64.     This clause allows OFCOM to publish information and advice for customers of communications providers; customers of persons who make available associated facilities; users of electronic communications networks, electronic communications services and associated facilities; and persons to whom radio and television services are, or may be, provided. OFCOM should, where practicable, not publish confidential or private information relating to a particular individual or body where this might seriously adversely affect the interests of that individual or body.

65.     This clause implements Article 5(4) and (5) of the Framework Directive, Article 15(1) of the Authorisation Directive, Article 15(1) of the Access Directive, and Article 21(2) of the Universal Service Directive.

Clause 24: Training and equality of opportunity

66.     This clause requires OFCOM to take all such steps as they consider appropriate to: (i) promote the development of opportunities for the training and re-training of persons for employment by broadcasters or for work in connection with the provision of the services that they provide, otherwise than as an employee; (ii) promote equality of opportunity in relation to employment by broadcasters and the training and retraining of persons for such employment; and (iii) promote the fair treatment of disabled persons in relation to such employment, training and retraining. It is envisaged that, under this clause, OFCOM might, for example, carry out or commission research, publish such research or other information, hold conferences etc and promulgate codes of practice or other guidance.

Clause 25: General power to charge for services

67.     This clause gives OFCOM a general power to prescribe or agree fees to be charged for the services they provide, save in respect of any service that they are under a duty to provide, or for which fees are expressly provided (or prohibited) elsewhere.

Clause 26: Secretary of State guarantees for OFCOM borrowing

68.     This clause allows the Secretary of State to guarantee, in such manner and on such conditions as she thinks fit, the repayment of the principal of any borrowing by OFCOM, any interest on such borrowing or any other financial obligation incurred by OFCOM connected with such borrowing. Subsection (3) limits the total amount payable by the Secretary of State in fulfilling any guarantees she may give to a sum not exceeding £5 million. Subsection (4) enables the Secretary of State to substitute a different total amount, subject to a draft order to that effect being laid before Parliament and approved by the House of Commons (subsection (5)). Subsections (8) and (9) provide that any sums paid by the Secretary of State in fulfilling any guarantee she has given must be repaid by OFCOM as the Secretary of State directs and that payments are to be made with such interest, at such times and in such manner as she may determine.

Clause 27: Transfers of property etc. from pre-commencement regulators

69.     This clause gives the Secretary of State a power to give directions requiring any pre-commencement regulator to make a scheme or schemes for the transfer to OFCOM of any of that regulator's property, rights and liabilities. The Office of Communications Act 2002 gives the Secretary of State a power to require that such schemes are prepared in draft form. Before making such a scheme the pre-commencement regulator must consult OFCOM.

70.     Such transfer schemes will become effective only if the Secretary of State approves them. Subsection (6) allows the Secretary of State to approve such schemes subject to modification.

*the meaning of modification is given in subsection (1) of clause 398 and includes omissions, alterations and additions. Cognate expressions shall be construed accordingly.

71.     Subsections (10) and (11) provide for the circumstances in which the Secretary of State may herself prepare a transfer scheme. These are: (i) in order to transfer property, rights and liabilities from a pre-commencement regulator or herself to OFCOM; (ii) where a regulator has not complied with a direction of the Secretary of State; and (iii) where the scheme prepared by a regulator is not approved by the Secretary of State.

72.     Schedule 2 covers the contents and effects of transfer schemes. It explains that a transfer scheme is to set out the property, rights and liabilities that are to be transferred. As soon as a scheme comes into force, property transferred by that scheme shall vest in OFCOM, and any agreement made by the transferor shall have effect as if made in the name of OFCOM. The Secretary of State may retrospectively modify the scheme as appropriate. The Schedule also describes the circumstances in which third parties whose interests are affected by the operation of a scheme - whether due to any diminution in value of their interests or rights, or any increase in the burden of their liabilities - are entitled to compensation. Any dispute as to compensation is to go to arbitration.

Clause 28: Transitional functions and abolition of pre-commencement regulators

73.     This clause imposes a duty on the pre-commencement regulators to take all such steps as are necessary or expedient for ensuring that OFCOM are able effectively to carry out their functions from the time that they are vested in OFCOM. The Secretary of State may direct the pre-commencement regulators as to how to carry out this duty. OFCOM and the pre-commencement regulators must give the Secretary of State all such information and assistance as she requires for the purposes of carrying our her functions under clause 27.

74.     This clause also gives the Secretary of State a power, by order, to appoint a day for the abolition of the offices of the pre-commencement regulators and of the advisory bodies established under section 54 of the Telecommunications Act 1984. The Secretary of State may appoint different days for the abolition of each of the different regulators and advisory bodies.

*Section 54 of the Telecommunications Act 1984 provides for the establishment of various advisory bodies to advise the Director General of Telecommunications. The Secretary of State was required to set up an advisory body for matters affecting each of the following: England, Wales, Scotland, Northern Ireland, and the Director was required to establish advisory bodies for matters affecting small businesses, and matters affecting persons who are disabled or of pensionable age. In addition, the Director was empowered to establish such other advisory bodies as he thought fit. Section 54 is repealed by subsection (4) of clause 28.

PART 2: NETWORKS, SERVICES AND THE RADIO SPECTRUM

Chapter 1: Electronic Communications Networks and Services

75.     Chapter 1 of Part 2 of the Bill provides for a new regulatory framework that will apply to all electronic communications networks, electronic communications services and associated facilities. Networks and services make up the communications infrastructure by means of which voice, content and other data are delivered to the consumer (the regulation of television and radio content is dealt with separately under Part 3 of the Bill). This new regulatory framework implements a significant proportion of the harmonised framework for the regulation of electronic communications networks and services established by EC Communications Directives (see Appendices 2 and 3). The remainder will be implemented by secondary legislation or, where appropriate, administrative action.

76.     The Bill abolishes the criminal offence of running a telecommunications system without a licence currently contained in the Telecommunications Act 1984. In the new regulatory framework for electronic communications networks, electronic communications services and associated facilities, there will be no need to apply for a licence. Persons will automatically be entitled to provide an electronic communications network, electronic communications services or to make available associated facilities provided that, where required, they notify OFCOM of this intention and comply with certain regulatory conditions (known as conditions of entitlement) set by OFCOM.

Clause 29: Meaning of electronic communications networks and services

77.     This clause sets out the meanings of the three key concepts - 'electronic communications network', 'electronic communications service', and 'associated facility' - that are referred to throughout this Part.

78.     This clause implements Article 2(a), (c), (e) and (m) of the Framework Directive.

*electronic communications network is defined in subsection (1) as a transmission system for the conveyance, by the use of electrical, magnetic or electro-magnetic energy of signals of any description, and associated apparatus, software and stored data. Examples of such networks include satellite networks, fixed networks (whether circuit- or packet-switched, and including the Internet) and mobile terrestrial networks and networks used for radio and television broadcasting, including cable TV networks.

*electronic communications service is defined in subsection (2) as a service consisting, or having as its principal feature, the conveyance, by means of an electronic communications network, of signals except in so far as it is a content service. Examples of such services include telecommunications services and transmission services in networks used for broadcasting.

*associated facility is defined in subsection (3) as a facility which is available for use in association with an electronic communications network or service in order to make the provision of that network or service (or other services) possible, or to support the provision of other services. Examples of such facilities include conditional access systems and electronic programme guides.

*content service is defined in subsection (7) as so much of a service as consists in (1) the provision of material with a view to it being comprised in signals conveyed over an electronic communications network, or (2) the exercise of editorial control over the contents of signals conveyed by means of such a network.

*a signal is defined in subsection (10) as including anything consisting of speech, music, sounds, visual images and communications or data of any description, and signals serving for the impartation of anything or for actuating or controlling any apparatus.

Clause 30: Advance notification to OFCOM

79.     This clause allows OFCOM to designate certain classes of networks, services or associated facilities as requiring notification. Under subsection (1) no one may provide any network, service or associated facility that has been designated in this way, unless he has notified OFCOM in advance of his intention to do so. If a network, service or associated facility already being provided is subsequently designated by OFCOM as requiring notification, the person concerned must notify OFCOM within the time period specified in the designation. OFCOM must also be informed when a person intends to modify or to cease to provide a designated network, service or associated facility.

80.     Subsection (5) lists the information that OFCOM may require to be contained in a notification. This basically consists of the information necessary to enable OFCOM to identify the person giving the notification, such as his name and address, a declaration of his proposal to provide, modify or cease to provide the network or service described in the notification or to make available, modify or cease to make available an associated facility, and details of when he intends to commence these activities. OFCOM may also require details of a person who can accept service on behalf of that person and a person who can be contacted if there is an emergency.

81.     This clause implements Articles 3(2) and (3) and 6(1) of and condition 10 of Part A of the Annex to, the Authorisation Directive.

Clause 31: Designations and requirements for the purposes of s. 30

82.     This clause details the procedural requirements imposed on OFCOM regarding the making or withdrawal of a designation by them under clause 30. Subsection (1) provides that OFCOM must consult with those likely to be affected by OFCOM's actions, and subsection (2) requires OFCOM to consult with the Secretary of State prior to making or withdrawing a designation.

Clause 32: Notification of contraventions of s.30

83.     This clause provides that where OFCOM have reasonable grounds to believe that a person has contravened his obligations under clause 30, they may notify that person and allow him a specified period of time (usually one month) in which to make representations to OFCOM and to comply with his obligations.

84.     This clause and clauses 33 and 34 implement Article 10 of the Authorisation Directive in the context of the enforcement of the advance notification requirements.

Clause 32: Enforcement notification for contravention of s. 30

85.     If, by the end of the period specified in the notification given under clause 32, OFCOM are satisfied that a person has contravened clause 30 and he has not provided them with all the information needed to remedy the contravention, subsection (2) allows OFCOM to serve an enforcement notification on the relevant provider. Such a notification requires the relevant provider to comply with clause 30. Those persons to whom an enforcement notice has been given are under a duty, enforceable by OFCOM via civil proceedings, to comply with it.

Clause 34: Penalties for contravention of s. 30

86.     If a person has contravened clause 30 and, by the end of the period specified in the notification given under clause 32, he has not provided OFCOM with all the information needed to remedy the contravention, OFCOM may impose a penalty. OFCOM may also impose a penalty if a person contravenes a requirement of an enforcement notification given under clause 33. In deciding on the amount of a financial penalty under clause 34, OFCOM are required to consider whether the financial penalty is appropriate and proportionate, and to take account of any representations made by the person concerned, and any steps taken by him to comply with clause 30. The financial penalty shall not, in any event, exceed £10,000.

Clause 35: Fixing of charges

87.     This clause gives OFCOM a power to require providers of particular designated networks, services or associated facilities, universal service providers designated by regulations under clause 63 for the purposes of conditions relating to directories and directory enquiry facilities, suppliers of apparatus to whom SMP apparatus conditions apply (under clause 90) and also persons to whom the electronic communications code has been applied who do not provide a designated electronic communications network (under clause 103(4)), to pay a yearly administrative charge. Any such charges should be set by OFCOM in accordance with pre-determined "charging principles", designed to ensure that the aggregate charges collected in any one year will just cover OFCOM's costs - in that same year - of carrying out the administrative functions listed in subsection (5). This clause implements Articles 6(1), 12 and 13 of, and condition 2 of Part A of the Annex to, the Authorisation Directive. It should, however, be noted that although OFCOM are able to collect an administrative charge from a supplier of apparatus to whom an SMP apparatus condition (set under clause 42) applies or from a provider of a system of conduits to whom the electronic communications code has been applied, the collection of the administrative charge for these purposes is not part of the implementation of those provisions.

88.     Charges must also be objectively justifiable, proportionate and transparent. This implements Article 12(1) of the Authorisation Directive.

89.     Subsection (9) obliges OFCOM to publish an annual statement of the aggregate charges collected (or to be collected) for that year, and the corresponding aggregate costs incurred in carrying out their administrative functions. Any deficit or surplus must be taken into account in setting charges for the following year. This implements Article 12(2) of the Authorisation Directive.

90.     Paragraph 10 of Schedule 18 (transitional provisions) provides that where any licence fees in respect of licences granted under section 7 of the Telecommunications Act 1984 remain outstanding on the abolition of such licences, that liability is to have effect after the abolition as a liability to pay OFCOM so much of the amount outstanding as does not relate to times after the abolition.

91.     For the purpose of ascertaining who is liable to pay an administrative charge, subsection (6) of clause 134 enables OFCOM to publish a general demand for information.

 
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Prepared: 6 March 2003