House of Lords - Explanatory Note
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Clause 36: Supplemental provision about fixing charges

92.     This clause lays down the procedures (including consultation and publication) OFCOM must follow when they are setting administrative charges and determining "charging principles".

93.     Subsections (2) to (4) provide that when setting an administrative charge, OFCOM may make provision for a deduction from the charge in cases where a network, service or associated facility has been provided, or the universal service condition, electronic communications code or SMP apparatus condition has applied, for part of a year only. Conversely, a charge may apply to networks, services or associated facilities that were being provided, or to persons to whom the universal service condition, electronic communications code or SMP apparatus condition applied, in a particular year before the charge for that year was set, as long as this is consistent with the "charging principles" for that year. This would, for example, mean that OFCOM would have the flexibility to set the amount of the charge for a particular year after that charging year has commenced.

Clause 37: Notification of non-payment of charges

94.     This clause allows OFCOM to notify persons who do not pay part or all of the administrative charges due to OFCOM, and sets out the procedures, such as giving notice and allowing for representations, to be followed by OFCOM in such cases. OFCOM may not bring proceedings for the recovery of administrative charges unless they have given a notification under this clause.

95.     This clause and clauses 38 to 40 relate to the enforcement of the administrative charge requirements contained in the Bill and implement Article 10 of the Authorisation Directive.

Clause 38: Penalties for non-payment of charges

96.     If a person has failed to pay an administrative charge fixed under clause 35 and has not paid the whole of the amount outstanding in the period allowed by the enforcement notification under clause 37, OFCOM may fine the notified charge payer. In deciding on the amount of a fine, OFCOM are required to consider whether the fine 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 35. The maximum fine that may be imposed under this clause is twice the amount of the relevant administrative charge for the year in question.

Clause 39: Suspending service provision for non-payment

97.     This clause gives OFCOM a power to suspend a person's entitlement to provide networks, services and/or associated facilities where OFCOM are satisfied that that person is or has been in serious and repeated breach of his obligations to pay administrative charges to OFCOM, that the breaches are not breaches relating only to charges in respect of the application of SMP apparatus conditions, that the bringing of proceedings and the imposition of penalties has failed to secure complete compliance and that such a response is appropriate and proportionate. However, under subsection (6) OFCOM may not issue a direction unless they have given the provider notice of the proposed direction and given him an opportunity to make representations about it and to propose steps to remedy the situation. Subsection (7) provides that this period must be at least one month.

98.     A direction by OFCOM under this clause may suspend entitlement generally or in relation to particular networks, services or associated facilities, or may restrict the entitlement in the way specified. A direction may impose conditions on the provider in order to protect the provider's customers. Subsection (8) enables OFCOM to revoke suspensions and restrictions where they consider it appropriate to do so.

Clause 40: Enforcement of directions under s. 39

99.     It is an offence, punishable by a fine, for any person to provide an electronic communications network, electronic communications service or associated facility while he is subject to a direction suspending his entitlement to do so, or to provide such a network, service or associated facility in contravention of a restriction in such a direction.

100.     A contravention of a condition of a direction which results in any person sustaining loss or damage is actionable at the suit or instance of that person. It is a defence for the person providing the electronic communications network, electronic communications service or associated facility to show that he did all that was reasonable to avoid contravening the condition.

Clause 41: Duty of OFCOM to keep publicly accessible register

101.     This clause places OFCOM under a duty to keep an up-to-date public register of designations made under clause 30 or clause 35, withdrawals of such designations and notifications given to them, or treated as given to them, under clause 30. OFCOM must publish (and comply with) a notification setting out the times during which the register is available for public inspection and the fees (if any) that must be paid to inspect the register.

102.     This clause implements Article 3(3) of the Authorisation Directive.

Clause 42: Power of OFCOM to set conditions

103.     Under the regulatory framework provided for in Part 2, any person to whom OFCOM applies a condition under clause 43 must comply with that condition. Clause 42 gives OFCOM the power to set two categories of conditions - general conditions and specific conditions, the latter comprising universal service conditions, access-related conditions, privileged supplier conditions or significant market power (SMP) conditions. Subsection (10)(f) provides that the power to set conditions includes the power to revoke or modify conditions.

104.     General conditions are conditions of general application and must be set in accordance with clauses 48, 49, 54, 55 or 61. The ability to set such conditions implements Article 6(1) of, and partially implements Part A of the Annex to, the Authorisation Directive. It also implements Article 4(1) and 4(3) of the Access Directive.

105.     Universal service conditions are conditions authorised or required under clause 64 for the purpose of ensuring that certain minimum electronic communications networks, services and facilities are available at all times throughout the UK. The ability to set such conditions implements Article 6(2) of the Authorisation Directive and Articles 3 to 7 and 9 to 11 of the Universal Service Directive.

106.     Access-related conditions are conditions authorised under clause 70 for the purpose of ensuring adequate network access within communications infrastructure. The ability to set such conditions implements Article 6(2) of the Authorisation Directive and Articles 5(1) and (2) and 6 of the Access Directive.

    *network access is defined in clause 148 as meaning (1) interconnection of public electronic communications networks; or (2) any services, facilities or arrangements (other than interconnection) by means of which a communications provider or a person making associated facilities available is able, for the purposes of the provision of an electronic communications service (whether by him or by another), to make use of any network or comprised apparatus, or any service or facility capable of being used to provide a service.

107.     Privileged supplier conditions can be applied where a communications provider enjoys special or exclusive rights in relation to the provision of any non-communications services. They are intended to ensure the separation of the provider's activities as a communications provider from other aspects of his undertaking, and must comply with clause 74. The ability to set such conditions implements Article 13 of the Framework Directive.

108.     SMP conditions may be either an SMP services condition authorised or required under clauses 84 to 89 or an SMP apparatus condition authorised under clause 87. The ability to set SMP services conditions implements Article 6(2) of the Authorisation Directive, Articles 8 to 13 of the Access Directive, Article 16(2) of the Framework Directive and Articles 17 to 19 of the Universal Service Directive. SMP apparatus conditions are out with the scope of the EC Communications Directives because the supply of apparatus is not part of the provision of an electronic communications network or service. The power to set such conditions is therefore additional to the requirements of the Directives.

Clause 43: Persons to whom conditions may apply

109.     This clause lists the persons to whom OFCOM may apply general conditions and specific conditions set in accordance with clause 42.

110.     Under subsection (2), OFCOM may apply general conditions to all persons providing electronic communications networks or electronic communications services or to all persons providing networks and services of a particular description specified in the general condition. General conditions may not be applied to persons providing associated facilities. Subsection (2) implements Articles 2(a) and 6(1) of the Authorisation Directive.

111.     Under subsection (3), OFCOM may apply specific conditions to a particular person specified in the condition.

112.     Subsection (4) specifies that OFCOM may also apply a privileged supplier condition to public communications providers who enjoy special or exclusive rights in relation to the provision of services in other sectors (other than the provision of associated facilities) or to particular descriptions of public communications providers, as specified by OFCOM in the privileged supplier condition. Subsection (4) implements Article 13 of the Framework Directive.

113.     Under subsection (5), universal service conditions may be applied by OFCOM to communications providers, persons providing directories and persons providing directory enquiry facilities designated by OFCOM in accordance with regulations adopted under the provisions of clause 63. Subsection (5) implements Article 8 of the Universal Service Directive and Article 6(2) of the Authorisation Directive.

114.     Under subsection (6), where an access-related condition is for the purpose of securing end-to-end connectivity as described in clause 71(1), OFCOM may apply the condition to any person. In all other cases, access-related conditions may be applied by OFCOM to providers of electronic communications networks or associated facilities. Subsection (6) implements Article 6(2) of the Authorisation Directive and Article 5(1)(b) of the Access Directive.

115.     Subsection (7) allows OFCOM to apply an SMP services condition to communications providers and persons providing associated facilities where (1) such persons have been designated as having significant market power in a specific market for electronic communications networks, electronic communications services or associated facilities; or (2) for the purposes of compliance with an international obligation, it appears necessary to OFCOM to impose a condition that corresponds to an SMP services condition. Subsection (7) implements Article 6(2) of the Authorisation Directive, Article 16(4) of the Framework Directive, Articles 8(2) of the Access Directive and Articles 16 to 19 of the Universal Service Directive.

116.     Finally, subsection (9) permits OFCOM to apply an SMP apparatus condition to persons who supply electronic communications apparatus and have been determined by OFCOM to have significant market power in a specific market for electronic communications apparatus.

117.     "Significant market power" is defined in clause 75.

Clause 44: Tests for setting or modifying conditions

118.     OFCOM must not set or modify any general, access-related, privileged supplier, universal service or SMP conditions unless they satisfy the test in subsection (2). This provides that the condition or modification must be objectively justifiable, non-discriminatory, proportionate, and transparent. This implements Articles 6(1) and 14(1) of the Authorisation Directive, Articles, 5(3) and 8(4) of the Access Directive and Articles 3(2), 9(5) and 17(2) of the Universal Service Directive.

Clause 45: Procedure for setting, modifying and revoking conditions

119.     This clause sets out the procedural requirements for the setting, modification or revocation of conditions of entitlement. OFCOM are required to consult on any proposal by them to set, modify or revoke a condition and to allow a period of at least one month for representations to be made to them on the matter. OFCOM are to set, modify or revoke a condition only after considering every representation received, and any international obligations of the UK drawn to their attention by the Secretary of State for this purpose. They must set, modify or revoke the condition by notification to the relevant people in accordance with subsection (6). OFCOM must also publish the conditions in their final form. This implements Articles 6 and 7 of the Framework Directive, Articles 5(3), 6(3) and 8(4) of the Access Directive and Article 14(1) of the Authorisation Directive.

Clause 46: Directions and approvals for the purposes of a s.42 condition

120.     This clause sets out the procedure that OFCOM or other authorised persons must follow when giving, modifying or withdrawing a direction, approval or consent that may be given under a general condition of entitlement.

121.     Where any authorised person other than OFCOM gives, modifies or withdraws a direction, approval or consent, that person must act in accordance with the six Community requirements set out in clause 4.

122.     Before a direction, approval or consent may be given, modified or withdrawn, a notification must be published that states that there is a proposal to give, modify or withdraw it, that identifies the person making the proposal, that explains what he is proposing and that sets out the direction, approval or consent that he proposes to modify or withdraw, its effect, the reasons for his decision and the period during which persons may comment on the proposal. The representations period must be at least one month, though (provided the notification is not one which needs to be sent to the European Commission in accordance with clause 47(4) or (5)) may be shorter in exceptional circumstances. If the condition to which the direction, approval or consent relates requires the authorised person to publish the notification, he must do so. Otherwise OFCOM must publish the notification (subsection (4)).

123.     An authorised person may adopt the direction, approval or consent, provided they have considered each comment made about the proposal within the period specified by him for comments and he has had regard to the international obligations of the UK as notified to them by the Secretary of State for the purposes of clause 46(6).

124.     Any direction, approval or consent given, modified or withdrawn must be objectively justifiable, non-discriminatory, proportionate and transparent. This clause implements Articles 6 and 7 of the Framework Directive.

Clause 47: Delivery of copies of notifications etc.

125.     This clause requires the relevant person to send a copy of each of the following to the Secretary of State: (i) a notification under clauses 45(1) or (2), (ii) a notification published under clause 46(4), (iii) each direction, approval or consent giving effect to a proposal that must be published under clause 46(4); and (iv) any instrument modifying or withdrawing a direction, approval or consent giving effect to such proposals.

    *The relevant person means, in relation to a notification, direction, approval or consent, the person by whom it is published or (as the case may be) by whom it has been or is to be given, modified or withdrawn. Where a direction, approval or consent is given, modified or withdrawn by a person other than OFCOM for the purposes of giving effect to a proposal published by OFCOM under clause 46(4), OFCOM is the relevant person.

126.     The relevant person must also send to the European Commission a copy of each of the following: every notification that is published under clause 45(1), which sets out his proposal with respect to an SMP services condition, every direction, approval or consent given under an SMP services condition and every instrument modifying or withdrawing them.

127.     OFCOM are required to send to the European Commission and to the regulatory authorities of every other member State, a copy of every notification that they publish under clause 45(2), which sets out their proposals with respect to the setting, modification or revocation of an access-related condition falling within clause 70(2) or (4) or an SMP services condition, where such proposals would, in OFCOM's opinion, affect trade between member States. This implements Article 7(3) of the Framework Directive.

128.     OFCOM must send to the European Commission and to the regulatory authorities of every other member State, a copy of every notification that they publish under clause 46(4), which sets out their proposals relating to the giving, modification or withdrawal of a direction, approval or consent under an access-related condition falling within clause 70(2) or (4) or an SMP services condition, and where such proposals would, in their opinion, affect trade between member States. Where another person publishes a notification under clause 46(4), he is required by subsection (5) to refer to OFCOM the question of whether the proposal would affect trade between member States, who must decide the matter immediately, and the person publishing the notification must act accordingly.

129.     In cases which OFCOM consider would not affect trade between member States, the relevant person must, where he considers it appropriate, send a copy of every notification published under clauses 45(1), 45(2) or 46(4), every direction, approval or consent given pursuant to a condition set under clause 42 and every instrument modifying or withdrawing them to the European Commission and to such of the regulatory authorities of other member States as the relevant person thinks fit. However, the relevant person is not required to comply with this obligation where the notification or the notified proposal relates to an SMP apparatus condition or to any direction, approval or consent modifying or withdrawing such a condition.

130.     The requirements to send various matters to the European Commission and the national regulatory authorities of other member states set out in this clause, implement Articles 8(5) and 16(2) of the Access Directive and Article 36(2) of the Universal Service Directive.

Clause 48: Matters to which general conditions may relate

131.     Clauses 48 to 61 set out the scope of OFCOM's power to set general conditions, and the procedural provisions applicable for that purpose.

132.     Clause 48 provides that, subject to clauses 49 to 61, OFCOM may set general conditions only in relation to matters that are listed in subsection (1). The matters listed in subsection (1) include protection of end-users of public electronic communications services; network access and interoperability of services; protection of the integrity of public electronic communications networks and services; prevention (in accordance with European Community obligations) of interference with networks and services; provision for financial contributions towards the cost of universal service; provision of networks and services in the event of disaster; protection of public health; and compliance with relevant international standards. Clauses 49 to 61 relate to customer interests, the assignment and use of telephone numbers and must-carry obligations.

    *
      public electronic communications servic
    e is defined in clause 148 as an electronic communications service provided to the public.

*

    public electronic communications network
is defined in clause 148 as an electronic communications network provided principally for the purpose of making services available to the public.

    *network access is defined in clause 148 as meaning (1) interconnection of public electronic communications networks; or (2) any services, facilities or arrangements (other than interconnection) by means of which a communications provider or a person making associated facilities available is able, for the purposes of the provision of an electronic communications service (whether by him or by another), to make use of any network or comprised apparatus, or any service or facility capable of being used to provide a service.

*

    relevant international standard
s are defined in clause 148
as meaning (1) any standards or specifications from time to time drawn up and published in accordance with Article 17 of the Framework Directive; (2) the standards and specifications adopted by the European Standards Organisations; and (3) the international standards and recommendations adopted by the International Telecommunications Union, the International Organisations for Standardisation or the International Electrotechnical Committee.

133.     The subject matter set out in subsection (1) implements most of Part A of the Annex to the Authorisation Directive. For more detailed information see the Table in Appendix 2.

134.      Subsection (3) provides that general conditions must be of general application. This means that the same general conditions must apply equally to all providers of the particular class of network or service to whom they are expressed to apply.

Clause 49: Conditions relating to customer interests

135.     Clauses 49 to 52 place OFCOM under a duty to ensure that the communications industry has in place effective and accessible machinery for the protection of domestic and small business customers, including procedures for dealing with complaints and disputes. They allow OFCOM to take action if the industry does not voluntarily develop an effective regime for this purpose. Taken together these clauses implement Article 34 of the Universal Service Directive and form part of the implementation of condition 8 of Part A of the Annex to the Authorisation Directive.

136.     Clause 49 provides that OFCOM must set such general conditions (if any) as they consider appropriate for securing that public communications providers establish procedures for dealing with domestic and small business customer complaints, and for resolving domestic and small business customer disputes. OFCOM are to ensure that, so far as they consider appropriate, such procedures are simple, transparent and effective, and that they can be used free of charge. The procedures as respect complaints are to be met through securing compliance with a code of practice that has been approved by OFCOM. The requirement to establish procedures for resolving customer disputes is to be met by the public communications providers establishing dispute resolution arrangements approved by OFCOM. The voluntary Ombudsman scheme for communications disputes recently adopted by Oftel is likely to be submitted to OFCOM for approval under these provisions.

*public communications provider is defined in clause 148 as the provider of a public electronic communications network, service or associated facility.

*the meaning of domestic and small business customer is given in subsection (6) and covers customers of communications providers who (a) are not themselves communications providers nor (b) are not undertakings for which more than 10 people work.

Clause 50: Approval of codes of practice for the purposes of s. 49

137.     This clause sets out the procedures and criteria for approval by OFCOM of codes of practice for dealing with customer complaints. OFCOM shall only approve such a code if it adequately protects the customers of public communications providers to whom the code applies.

138.     Subsection (2) places OFCOM under a duty to keep under review codes of practice previously approved by them and subsection (3) allows OFCOM to approve modifications made to an approved code, to withdraw their approval, or to make their continuing approval conditional on the responsible providers making appropriate modifications to the code within a defined period of time.

139.     In considering whether to approve (or to continue to approve) a code of practice, OFCOM is obliged to take into account whether the code is easily understandable by customers, the need for consistency between approved codes of practice and the need to keep the number of different approved codes to a minimum.

Clause 51: Approval of dispute procedures for the purposes of s.49

140.     This clause sets out the procedures and criteria for approval by OFCOM of dispute procedures. Before OFCOM approve a dispute procedure, they must be satisfied that the procedure satisfies the criteria set out in subsection (2), including accountability, independence and transparency, and they must consult the Secretary of State. The procedures and criteria for approval of dispute procedures are similar to those for approval of codes of practice (outlined in the notes to clause 50).

Clause 52: Orders by OFCOM in the absence of conditions under s. 49

141.     This clause enables OFCOM, by order, with the consent of the Secretary of State, to take appropriate measures where public communications providers have failed to put in place suitable procedures, standards and policies for complaints handling and dispute resolution, and where OFCOM consider it necessary for the protection of customers or to comply with EU obligations. Appropriate measures by OFCOM may include establishing an independent body corporate to administer and enforce the necessary arrangements, and obliging public communications providers to pay for the establishment and maintenance of such a body.

 
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Prepared: 6 March 2003