House of Lords - Explanatory Note
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Clause 194: Interpretation of Chapter 3

412.     THIS CLAUSE PROVIDES FOR THE INTERPRETATION OF DEFINED TERMS USED IN CHAPTER 3.PART 3: TELEVISION AND RADIO SERVICES

Chapter 1: The BBC, C4C, the Welsh Authority and the Gaelic Media Service

Clause 195: Functions of OFCOM in relation to the BBC

413.     OFCOM shall regulate the BBC's services to the extent that there is specific provision for OFCOM to do so in any agreement between the BBC and the Secretary of State; and in the provisions of this Bill and of Part 5 of the Broadcasting Act 1996 (that is, in relation to unfairness and unwarranted infringement of privacy). Where authorised, OFCOM may also act on behalf of the Secretary of State.

414.      Subsection (3) provides that where set out in the Agreement, OFCOM may impose penalties on the BBC for contraventions of the Agreement and provisions of Part 3 of the Bill or Part 5 of the Broadcasting Act 1996 or for any other liability as is determined in accordance with the Agreement. Initially, the maximum penalty that OFCOM may impose will be £250,000, but the Secretary of State will be able to change this figure by order. The BBC must also pay such fees towards the carrying out of OFCOM's functions as may be agreed between the BBC and OFCOM (or in the absence of agreement, is set by the Secretary of State).

415.     The existing Agreement between the Secretary of State and the BBC supplements the Royal Charter in setting out in more detail the provision and content of the BBC's services. The Agreement will be amended to give effect to the new regulatory obligations placed on the BBC and to provide for OFCOM to impose financial penalties in the event of the BBC failing to comply with them. A draft of the proposed amendments to the Agreement was published on 13th January and a revised draft will be published to assist consideration of the Bill by the House of Lords.

Clause 196: Functions of C4C

416.     The Channel 4 Corporation are able to engage in activities which appear to them to be appropriate to carry on in association with their primary functions and to be connected (other than merely in financial terms) with activities undertaken by them for the carrying out of those functions. Those functions are securing the continued provision of Channel 4 and the fulfilment of the Channel's public service remit set out in clause 260, as described in the notes to that clause below. The Channel 4 Corporation may also do such things and enter into such transactions as appear to them incidental or conducive to the carrying out of their statutory functions.

417.     Under subsection (3) the Channel 4 Corporation shall cease to have powers in relation to "qualifying companies" under section 24(5)(b) and (6) of the Broadcasting Act 1990.

418.      Schedule 9 provides a framework for the approval and enforcement of arrangements about the carrying out of the Corporation's activities.

419.     Paragraph 1 requires OFCOM to notify the Channel 4 Corporation that, within a period specified in the notification, the Corporation must submit to OFCOM proposals for arrangements that will apply to the relevant licence period. OFCOM must do this as soon as practicable after the commencement of this Schedule and as soon as practicable in the last twelve months preceding each date on which the Channel 4 licence would expire if not renewed.

420.     Where the Channel 4 Corporation have received a notification, they must submit proposals to OFCOM setting out the arrangements under which they are proposing to secure, so far as reasonably practicable, that all significant risks that their other activities will have an adverse effect on the carrying out of their primary functions (i.e. the provision of Channel 4 and the fulfilment of its public service remit) are identified, evaluated and properly managed. The proposals must include, the arrangements that the Corporation consider appropriate for securing the transparency objectives set out in paragraph 2(4). They may relate in particular to the list of matters specified in paragraph 2(5).

421.     OFCOM must consider the proposed arrangements and approve them, approve them with modifications, or require the Channel 4 Corporation to submit revised proposals. OFCOM may review the arrangements once during each licence period, either as a single review of all of the arrangements or two separate reviews, one relating to the arrangements to secure the transparency objectives and one relating to other matters. OFCOM must also publish the arrangements.

422.     The Channel 4 Corporation must act in accordance with the approved arrangements. OFCOM has powers to enforce the arrangements and may impose a penalty, which may not exceed 3 per cent of the Corporation's qualifying revenue, if they are contravened.

*Qualifying revenue has the same meaning as in Section 19(2) to (6) and Part 1 of Schedule 7 of the Broadcasting Act 1990 with any necessary modifications.

423.     In carrying out their functions under Schedule 9, OFCOM must have regard to the need to secure, so far as reasonably practicable, that all significant risks that the Channel 4 Corporation's other activities will have an adverse effect on the provision of Channel 4 or its public service remit are identified, evaluated and properly managed.

Clause 197: Removal of members of C4C

424.     This clause gives OFCOM the power, after consulting the Secretary of State, to remove members of the Channel 4 Corporation appointed by them.

Clause 198: Deficits and surpluses of C4C

425.     This clause repeals sections 26 and 27 of the Broadcasting Act 1990 (revenue deficits and excesses of Channel 4 Corporation to be met or distributed to providers of Channel 3 services) in respect of any year ending after the commencement of this clause.

Clause 199: Borrowing limit for C4C

426.     The Secretary of State may by order limit the amount of money that the Channel 4 Corporation are permitted to borrow. Before making an order under this clause, the Secretary of State must consult the Channel 4 Corporation and obtain the consent of the Treasury. The Channel 4 Corporation must not borrow money in excess of any limit set by the Secretary of State. The effect of this will be only to circumscribe new borrowing - the setting of a limit at a figure below that of the Channel 4 Corporation's actual outstanding borrowing would not require the Corporation to take positive steps to reduce their outstanding borrowing to a level which did not exceed the limit.

Clause 200: Function of OFCOM in relation to the Welsh Authority

427.     OFCOM are to regulate the services provided by the Welsh Authority to the extent provided by Part 5 of the Broadcasting Act of 1996 and the present Bill.

Clause 201: Welsh Authority's function of providing S4C and S4C Digital

428.     The Welsh Authority, as currently constituted, shall continue to exist. However, their functions as described under section 57 of the Broadcasting Act 1990, will be replaced with the function in subsection (2), namely of providing high quality television programmes for reception in Wales. The Welsh Authority must continue to provide S4C and may continue to provide S4C Digital. However, the Secretary of State may by order require the Welsh Authority to provide S4C in digital rather than analogue form, to merge S4C and S4C Digital and/or to provide the whole or part of the merged service in analogue digital simulcast for a period specified in the order.

429.     Subsection (5) imposes a duty on the Welsh Authority to ensure that S4C and S4C Digital are public services used for the dissemination of information, education and entertainment. The Welsh Authority may provide programming subtitles and other ancillary services for their S4C programmes. They may also provide programming assistance for disabled people and other ancillary services for their S4C Digital services.

Clause 202: Powers to provide other services

430.     This clause confers on the Welsh Authority the power to provide certain services in addition to S4C and S4C Digital. Subsection (1) prohibits the Welsh Authority from providing any television programme service (other than S4C and S4C Digital) unless its provision is approved by an order made by the Secretary of State and it is a public service of high quality used for the dissemination of information, education or entertainment wholly or mainly to the Welsh public. Any television broadcasting services provided under this clause must broaden the existing range of public television broadcasting services in Wales.

*The meaning of a television programme service is given in clause 355(1).

431.     Subsection (2) allows the Welsh Authority to provide services other than television programme services or sound services, provided they are public services of high quality used for the dissemination of information, education or entertainment which will be made available wholly or mainly to the Welsh public, or for use in Wales, and have been approved by the Secretary of State. Examples of the types of service that the Welsh Authority may provide under this subsection include (but are not limited to) an interactive service delivered via the Internet. Paragraph 24(1) of Schedule 18 stipulates that the Welsh Authority are not required to obtain the Secretary of State's approval for the continued provision of any service that they are providing before clause 200 comes into effect.

432.     In the course of providing a service approved by the Secretary of State under clause 200, the Welsh Authority may under subsection (7) also provide: assistance for disabled people in relation to programmes included in the service, services ancillary to programmes included in the service and related to their content, and other types of ancillary services offered in a digital format.

433.     Any programme service approved by the Secretary of State under this clause must contain a substantial proportion of programmes in the Welsh language.

Clause 203: Other activities of Welsh Authority

434.     This clause enables the Welsh Authority to carry out activities carried out in association with or connected (other than merely in financial terms) with the provision of S4C, S4C Digital and any other service approved by the Secretary of State under clause 202. Prior to carrying out such activities, the Welsh Authority must obtain the approval of the Secretary of State under subsection (2). The types of activities that may be approved by her under subsection (2) include those needed to secure, and those in connection with, the provision of licensable services, such as the formation of a company to provide a programme service, but do not include the provision of a licensable service. Subsection (6) amends the provisions in the Broadcasting Act 1990 which govern the power of the Welsh Authority to do things incidental or conducive to the carrying out of their functions. Paragraph 24(2) and 24(3) of Schedule 18 provides that the Secretary of State's approval is not required for the continuation of activities undertaken by the Welsh Authority or an S4C company before this clause comes into effect.

*A licensable service is defined in subsection (7) as an independent television or independent radio service that would be regulated under clause 208 or 242 if provided by an S4C company.

Clause 204: Welsh Authority finances

435.     It is unlawful under subsection (2) for the Welsh Authority to charge people in Wales for the reception or use of any of their public services, any assistance provided to disabled persons for programmes included in their public services or any of the ancillary services that they provide in a digital format.

*Under subsection (9), a public service includes S4C, S4C Digital or other services approved by the Secretary of State under clause 202.

436.     Subsection (3) states that the power of the Welsh Authority to do anything that is conducive or incidental to the carrying out of their functions includes the power to borrow money. However, they may not do so without the approval of the Secretary of State and the consent of the Treasury. The Welsh Authority must also pay such fees towards the carrying out of OFCOM's functions as may be agreed between the Authority and OFCOM (or, in the absence of agreement, as are set by the Secretary of State).

437.     Subsection (7) amends section 61 of the Broadcasting Act 1990 so that the Secretary of State may increase the annual grant paid to the Welsh Authority if she is satisfied that additional funding is appropriate in light of the costs they incur in providing their public services and broadcasting or distributing such services.

438.     Subsection (8) amends section 61A of the Broadcasting Act 1990 so that the Welsh Authority must use the money in their public service fund only for the provision of television programme services that are "public services" as defined by subsection (9). Subsection (8) also amends section 61A of the Broadcasting Act 1990 so that the first broadcast of any programme funded from the public service fund must be on one of the Authority's public television services.

Clause 205: The Gaelic Media Service

439.     This clause renames the Gaelic Broadcasting Committee (Comataidh Craolaidh Gaidhlig), originally the Gaelic Television Committee (Comataidh Telebhisein Gaidhlig) established under section 183 of the Broadcasting Act 1990, as the Gaelic Media Service (Seirbheis nam Meadhanan Gaidhlig). It also inserts new subsections (3B), (4), (4A) and (4B) to section 183. These set out the functions and powers of the Gaelic Media Service who must secure that a wide and diverse range of high quality programmes in Gaelic are broadcast or otherwise transmitted so as to be available for reception in Scotland.

440.     The Gaelic Media Service may apply the Gaelic Broadcasting Fund for the purpose of, or any purpose connected with, the carrying out of their functions. In carrying out their functions, the Gaelic Media Service may finance, or engage in, the making of television and sound programmes in Gaelic to be broadcast or transmitted so as to be available for reception in Scotland, provide or arrange training in relation to programme-making and carry out research to discover the types of television and sound programmes that the Gaelic-speaking community would like to be broadcast. The Gaelic Media Service may not provide any of the services specified in subsection (4B).

441.     Paragraph 25 of Schedule 18provides for transitional provisions in respect of the membership of the Comataidh Craolaidh Gaidhlig. Paragraph 26 of that Schedule provides for the continuation of the Multiplex Licence (Broadcasting of Programmes in Gaelic) Order 1996 (S.I. 1996/2758).

Clause 206: Membership of the Service

442.     This clause inserts a new section 183A into the Broadcasting Act 1990 that deals with the composition of the Gaelic Media Service. The Service must consist of no more than 12 members, each of whom must be appointed by OFCOM, having regard to the matters listed in subsection (6) of section 183A, and must be approved by the Secretary of State for Scotland. OFCOM must appoint one member as chairman. One member must be nominated, respectively, by the BBC, Highlands and Islands Enterprise and the Bard Gaidhlig na h-Alba (Gaelic Development Agency).

443.     OFCOM must also secure that the members of the Services are able to adequately represent the interests of (i) regional Channel 3 services for areas wholly in Scotland or such other areas as determined by OFCOM under section 184(4)(b) of the Broadcasting Act 1990; (ii) the independent radio and television production industries in Scotland; and (iii) other persons and bodies concerned with the promotion and use of Gaelic language.

444.     Schedule 19 to the Broadcasting Act 1990 (Gaelic Broadcasting Committee: supplementary provisions) (as amended by clause 207) also applies to the Gaelic Media Service.

Clause 207: Supplementary provisions about the Service

445.     This clause amends Schedule 19 (supplementary provisions) to the Broadcasting Act 1990.

Chapter 2: Regulatory Structure for Independent Television Services

446.     Paragraph 27 of Schedule 18 provides that, subject to any express provision of this Bill, any pre-transfer Broadcasting Act licence shall continue to have effect on the same terms and conditions, and for the same period, as it would have done had this Bill not been passed.

Clause 208: Regulation of independent television services

447.     This clause specifies the television services that OFCOM shall regulate. The first group of services comprises television broadcasting services (other than those broadcast only from a satellite), restricted television services and additional television services broadcast or provided from places in the United Kingdom, and television licensable content services and digital television programme services provided by persons under United Kingdom jurisdiction. OFCOM is not under this section to regulate these services where they are provided by the BBC or the Welsh Authority. The second group of services comprises multiplex television services provided from places in the United Kingdom and digital additional television services provided by persons under United Kingdom jurisdiction. OFCOM is not under this clause to regulate these services where they are provided by the BBC.

*television broadcasting service is defined in clause 355 as a service (other than any text service) which consists in a service of television programmes provided with a view to its being broadcast (whether in digital or in analogue form), and which is provided so as to be available for reception by members of the general public. It does not include a restricted television service, a television multiplex service, a service provided under the authority of a licence to provide a television licensable content service, or a service provided under the authority of a licence to provide a digital television programme service.

*restricted television service has the same meaning as in section 42A of the Broadcasting Act 1990 (as amended in Schedule 15 of this Bill), namely a service which consists in the broadcasting of television programmes for a particular establishment or other defined location, or a particular event, in the United Kingdom. The label in the 1990 Act is simply a "restricted service": the word "television" has been added here, and also in relation to digital television programme services and digital additional television services, to distinguish them from radio-related service which, in the 1990 or 1996 Act are given the same name.

*the meaning of television licensable content services is given in clause 229 and is described in more detail in the notes to that clause below.

*a digital additional television service is defined under section 24 of the Broadcasting Act 1996, which is amended by Schedule 15, as being any service provided with a view to its being broadcast in digital form by means of a television or general multiplex service, but not including a Channel 3 service, Channel 4, Channel 5, a public television service of the Welsh Authority, the public teletext service, a digital television programme service, a digital sound programme service, an ancillary service, or a technical service.

*a digital television programme service means any digital programme service within the meaning of section 1(4) of the Broadcasting Act 1996, namely a service consisting in the provision of television programmes (together with any ancillary services as defined by section 24(2) of that Act) with a view to its being broadcast in digital form so as to be available for reception by members of the public (see the amendment in paragraph 75(3) of Schedule 15). It does not include a teletext service, any service in the case of which the visual images to be broadcast do not consist wholly or mainly of images capable of being seen as moving pictures (except to the extent that either of these services are ancillary to the television programme) or a qualifying service.

* persons under United Kingdom jurisdiction for the purposes of the Television without Frontiers Directive are primarily persons established in the United Kingdom. A provider is deemed to be established in the United Kingdom if its head office is located here and this is where editorial decisions are taken, or if a significant part of the workforce engaged in the television broadcasting activity operates in the United Kingdom, or if this is where the provider first began broadcasting, assuming that the provider still maintains a stable and effective link with the economy of the United Kingdom. If these tests are not met, persons established under UK jurisdiction may also, in descending order, be persons using a frequency granted by the United Kingdom, persons who use a satellite capacity appertaining to the United Kingdom, and persons who use a satellite up-link situated in the United Kingdom.

*additional television service is defined in section 48 of the Broadcasting Act 1990 as any service which consists in the sending of telecommunications signals for transmission by wireless telegraphy by means of the use of spare capacity within the signals carrying any television broadcasting service.

*qualifying service has the same meaning as is given in section 2 of the Broadcasting Act 1996.

    *an ancillary service is defined in section 24 of the Broadcasting Act 1996, as amended by paragraph 94(3) of Schedule 15 of the Bill, and refers to assistance for disabled people in relation to some or all of the programmes included in a digital programme service or qualifying service provided by him, a service (apart from advertising) that relates to the promotion or listing of programmes included in such a service or in a digital sound programme services so provided or any other service (apart from advertising) that is ancillary to one or more programmes so included, and relates directly to their contents.

*a technical service is a service provided for the encryption or decryption of digital programme services, digital sound programme services, or digital additional services.

Clause 209: Abolition of function of assigning television frequencies

448.     The Secretary of State shall no longer have the power to assign television frequencies for independent television services which are licensable under Part I of the Broadcasting Act 1990, for S4C, or for television multiplex services which are licensable under Part I of the Broadcasting Act 1996. The function of managing radio spectrum (from which the function of assigning frequencies derives) is transferred by the Bill to OFCOM.

Clause 210: Abolition of licensing for local cable systems

449.     From the television transfer date the provision of a local delivery service shall no longer require a licence under Part 2 of the Broadcasting Act 1990.

*a local delivery service is defined in section 72 of the 1990 Act to mean (broadly) a service of a kind specified by the Secretary of State consisting in the use of a telecommunication system (whether run by the person providing the local delivery service or not) for the delivery of various television and radio services listed in section 72(2). Licences are awarded on a system of cash bids.

*television transfer date means the date on which the ITC's functions under the Broadcasting Acts of 1990 and 1996 are transferred to OFCOM.

Clause 211: Digital Channel 3 and Channel 5 licences

450.     Any Channel 3 or a Channel 5 licence granted after the television transfer date must provide for the licensed service being broadcast digitally. Such a licence may also contain such conditions requiring the service also to be provided in analogue form as OFCOM consider appropriate. In such cases the programming (apart from advertisements) should replicate that of the digital service.

451.      The conditions included in the licence must enable compliance with any directions given from time to time by the Secretary of State about the continuation of analogue services.

452.     Any licence taking effect before "the initial expiry date" (which is 31st December 2014 or a later date set by the Secretary of State under Clause 221) must remain in force until the end of that day. Any licence taking effect thereafter must remain in force from the time when it takes effect until the end of the licensing period beginning or current at that time. This licence shall be renewable subject to the Secretary of State's decision to use the power provided for in clause 227. There can be no charge levied for the use of a licensed service or for any related assistance for disabled people or for ancillary services.

*Subsection (12) of clause 213 provides that a licensing period is the period beginning with the commencement of that clause and ending with the initial expiry date, or any subsequent period of 10 years beginning with the end of the previous licensing period.

Clause 212: Replacement of existing Channel 3 and Channel 5 licences

453.     As soon as practicable after the television transfer date OFCOM must offer persons who hold a Channel 3 or the Channel 5 licence the opportunity to exchange that licence for a replacement licence, being a licence of the kind described in the notes to clause 211 above. The replacement licence must provide for substantially the same service as the existing licence, although it does not have to be identical in all respects.

454.     Any offer made by OFCOM to replace an existing licence under clause 211 must specify the terms of the proposed replacement licence, the conditions on which they propose to grant the replacement licence, the time frame of their offer, the date on which the licence will be granted if the offer is accepted, the time from which the licence will take effect if the offer is accepted (which must fall within the period of twelve months after the television transfer date), and the time from which the licence will cease to have effect if the offer is rejected.

455.     The financial terms of the offer must propose that the licensee will pay the same annual amount and percentage of qualifying revenue as would have been payable under the existing licence had it continued in force until the end of the period for which the replacement is granted.

456.     A licence holder refusing this offer will have his existing licence revoked on a date specified by OFCOM in the offer. This date must fall no later than eighteen months after the closing date for agreeing the offer.

 
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Prepared: 6 March 2003