House of Lords - Explanatory Note
Communications Bill - continued          House of Lords

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Clause 213: Renewal of Channel 3 and 5 licences

457.     This clause permits the holders of a licence to provide a Channel 3 service or a licence to provide Channel 5 to apply to OFCOM for the renewal of his licence for the next licensing period.

458.      An application for renewal may only be made in the period beginning four years before the end of the current licensing period and ending three months before the day that OFCOM determine they would have to publish a tender notice if they were proposing to grant a fresh licence to take effect from the end of the current licensing period. Any determination of that date must be made at least one year before the date on which the tender notice would have to be published and must be notified to every person who is, at the time of the determination, a holder of a licence to provide a Channel 3 service or the Channel 5 licence.

459.     Unless the Secretary of State makes an order suspending the rights of renewal under clause 227, where OFCOM receive an application for the renewal of a licence, they must determine whether or not they will be renewing the licence and, if they will, the financial terms on which the licence will be renewed. They must also notify the applicant accordingly. Subsections (6) and (7) provide that OFCOM may determine that they will not renew a licence if:

  • they are not satisfied that the applicant (if his licence were renewed) would provide a service complying with the requirements imposed under Chapter 4 of Part 3 of the Bill relating to the public service remit for the licensed service, programming quotas, news and current affairs programmes or regional programming; or

  • they propose to grant a fresh licence for a service replacing the licensed service which would differ from the licensed service in the areas where it would be provided or the times of the day, or days of the week, between or on which it would be provided.

460.     OFCOM must not grant a renewal under this clause more than 18 months before the end of the current licensing period.

461.     Where OFCOM determine that a licence should be renewed, they must renew it on the same terms and subject to the same conditions with such modifications required to give effect to the requirements imposed under clause 214(4).

Clause 214: Financial terms of licence renewed under s.213

462.     Any offer made by OFCOM to renew an existing licence under clause 213 must specify the fee that the licensee is required to pay during the first year of the replacement licence and the percentage of qualifying revenue to be paid for each accounting period of the applicant falling within the relevant licence period.

463.     The fee for the first year of the renewed licence must approximate to what OFCOM estimate would have been the cash bid of the licensee had the licence been offered by a notice requesting tenders under section 15 of the Broadcasting Act 1990. When determining the percentage of qualifying revenue, OFCOM may set different percentages (including nil percentages) for different accounting periods.

464.     OFCOM must include conditions in any replacement licence requiring payment of: the fee for the first calendar year of the licence, that fee increased by an appropriate percentage for each subsequent year and a specified percentage of the qualifying revenue attributable to a licence holder in each accounting period of the licence term. Payments required under these conditions are in addition to those required by OFCOM under section 4(1)(b) of the Broadcasting Act 1990.

Clause 215: Duty to secure the provision of a public teletext service

465.     This clause imposes a duty on OFCOM to secure the provision of a single, nationwide, public teletext service in a digital format broadcast by way of a television multiplex service and the provision of an analogue teletext service on the spare capacity available on Channels 3 and 4 and S4C until the first of these services ceases to transmit in analogue format. The licence holder will have the option of continuing to provide an analogue service.

    *Subsection (4) specifies that the analogue teletext service is a single additional television service that uses the spare radio spectrum allocated to Channel 3 services, Channel 4 and S4C for the provision of additional television services.

466.     OFCOM must ensure that the analogue and digital teletext services are provided by the same person, although the content of the two services may differ and the licence holder may appoint third parties to provide the teletext services in accordance with clause 217.

467.     OFCOM shall have regard to their duties under this clause when making radio spectrum available to Channel 3 services, Channel 4 and S4C and making determinations of spare capacity under section 48(2)(b) of the Broadcasting Act 1990.

Clause 216: Licensing of the public teletext service

468.     The public teletext service is to be licensed under Part 1 of the Broadcasting Act 1990, subject to the restrictions and conditions set out in this clause. For example, subsection (5) specifies that OFCOM must include in the public teletext service licence a condition prohibiting the imposition of charges for the reception of the licensed service in the United Kingdom.

469.     Schedule 10 specifies the procedure with which OFCOM must comply when it seeks to award a licence to provide the public teletext service and the conditions to be included in the licence. It also gives OFCOM powers to enforce the conditions included in the public teletext service licence.

470.     When OFCOM proposes to award a licence to provide a public teletext service, they must publish (along with general guidance) a notice that sets out the information listed in paragraph 1(2). OFCOM must include the additional information listed in paragraph 1(3) if the teletext service must be provided in analogue form.

471.     Any application made in response to a notice published by OFCOM must be accompanied by the appropriate fee and must also include the information listed in paragraph 3(1). OFCOM may require the applicant to provide further information once they have received the application. Following the closing date for applications, OFCOM must then publish the name of each applicant along with certain details of each application as described in paragraph 4(1). OFCOM must also invite the public to make representations.

472.     Before OFCOM may consider whether to award a public teletext service licence to an applicant, they must find that: (1) the applicant's technical plan and its proposals relating to the fulfilment of the public service remit for the public teletext service, the inclusion of news items, their update and revision and the inclusion of material of interest to different communities in the United Kingdom are acceptable to them; and (2) the provision of the proposed services can be maintained during the licence term. OFCOM must then award the licence in accordance with sections 17 and 17A of the Broadcasting Act 1990 (as modified by this Schedule).

473.     Paragraph 6 permits OFCOM to revoke and re-award a public teletext service licence when the licensee indicates that he does not intend to provide the service or OFCOM have reasonable grounds to believe that the licensee will not provide the service. OFCOM must notify a licensee of their intention to revoke a licence. Before revoking a licence, OFCOM must serve a notice on the licensee and offer him a reasonable opportunity to submit representations.

474.     Paragraph 7 requires OFCOM to include in a public teletext service licence conditions requiring payment of the following determined in accordance with Schedule 10 during the licence term: an annual fee, increased by an appropriate percentage, and a specified percentage of the qualifying revenue for each accounting period of the licensee falling within the licence term. Payments required under these conditions are in addition to those required by OFCOM under section 4(1)(b) of the Broadcasting Act 1990.

    *Appropriate percentage has the same meaning as in section 19 of the Broadcasting Act 1990 (i.e. it takes account of inflation).

475.     OFCOM may also include conditions permitting them to estimate the amount of payments due by the licence holder during an accounting period and requiring him to make monthly interim payments. Conditions permitting OFCOM to revise their estimate and the monthly interim payments made by the licence holder and to make adjustments for any over- or under payment made may also be included.

476.     Paragraph 8 provides that section 40 of the Broadcasting Act 1990 (power to direct correction or statement of findings) has effect in relation to the public teletext service.

477.      Paragraphs 9 and 10 confer on OFCOM the power to enforce the conditions included in the public teletext service licence. Where OFCOM are satisfied that a licence holder has contravened a condition of the licence or has failed to comply with a direction given by OFCOM under the Broadcasting Acts 1990 or 1996 or Part 3 of the Bill, they may impose a penalty and/or reduce the term of the licence by up to two years. Licences may also be revoked for contraventions of licence conditions or directions. Where OFCOM do not revoke the licence they may fine the offender up to 5 per cent of the qualifying revenue for its last complete accounting period.

478.     Before imposing a penalty or reducing the term of the public teletext service licence, OFCOM must notify the licence holder and provide him with a reasonable opportunity to make representations. A licence may be revoked where OFCOM are satisfied that the conduct of the licence holder justifies its revocation.

479.     Where OFCOM decide to revoke a public teletext service licence, they must also notify the former licence holder of the penalty that he must pay. A maximum fine (whichever is the greater) of either £500,000 or 7 per cent of either the estimated or actual qualifying revenue may be imposed.

Clause 217: Delegation of provision of public teletext service

480.     A licence for the provision of the public teletext service may enable the licence holder to subcontract the provision of all or part of the service to a third party, subject to and in accordance with the requirements of conditions set by OFCOM. Contravention by the relevant third party of a condition imposed under this clause will be treated for the purposes of Chapter 2 of Part 3 and the Broadcasting Act 1990 as a contravention by the licensee.

Clause 218: Replacement of existing public teletext provider's licence

481.     As soon as practicable after the television transfer date OFCOM must offer the person who holds the existing licence to provide the public teletext service at the time that the offer is made the opportunity to exchange that licence for a replacement licence. The replacement licence must provide for a service that is equivalent in all material respects both to the existing service and to the digital service that the licensee is required to provide under section 30 of the Broadcasting Act 1996. The replacement licence must be awarded in accordance with clause 216 and Part 1 of the Broadcasting Act 1990. However, Part 1 of Schedule 10 is not to apply to the replacement licence.

482.     The offer of the replacement licence must specify each of the following as determined by OFCOM: the conditions on which they propose to grant the replacement licence, the timeframe of their offer, the date on 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 of the offer is rejected. 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. 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.

Clause 219: Renewal of public teletext licence

483.     This clause permits the holder of the licence to provide the public teletext service to apply to OFCOM for the renewal of his licence for the next licensing period.

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

484.     An application for renewal may only be made in the period beginning four years before the end of the current licensing period and ending three months before the day that OFCOM determine they would have to publish a tender notice if they were proposing to grant a fresh licence to take effect from the end of the current licensing period. Any determination of that date must be made at least one year before the date on which the tender notice would have to be published and must be notified to the person who is holding the public teletext licence at the time that the determination is made.

485.     Unless the Secretary of State makes an order suspending the rights of renewal under clause 227, where OFCOM receive an application for the renewal of a licence, they must determine whether or not they will renew the licence and, if they do intend to renew the licence, the financial terms on which they intend to do so. They must also notify the applicant accordingly. Subsections (6) and (7) provide that OFCOM may determine that they will not renew a licence if:

  • they are not satisfied that the applicant (if his licence were renewed) would provide a service complying with the requirements imposed under Chapter 4 of Part 3 of the Bill relating to the public service remit for the public teletext service, news programmes and regional matters; or

  • they propose to grant a fresh licence for a service replacing the licensed service which would differ from the licensed service in any material respect.

486.     OFCOM must not grant a renewal under this clause more than 18 months before the end of the current licensing period.

487.     Where OFCOM determine that a licence should be renewed, they must renew it on the same terms and conditions, subject only to such modifications than are required to give effect to the requirements imposed under paragraph 7 of Schedule 10.

Clause 220: Financial terms of licence renewed under s. 219

488.     Any offer made by OFCOM to renew an existing licence under clause 219 must include a determination of the fee that the licensee is required to pay during the first complete calendar year of the renewal period and the percentage of qualifying revenue to be paid for each accounting period of the applicant falling within the relevant renewal period. The fee for the first year of the replacement licence must approximate to what OFCOM estimate would have been the highest cash bid of the licensee had the licence been awarded under Part 1 of Schedule 10. When determining the percentage of qualifying revenue, OFCOM may set different percentages (including nil percentages) for different accounting periods.

Clause 221: Meaning of "initial expiry date"

489.      The initial expiry date for the purposes of Part 3 of the Bill is 31st December 2014, unless it is postponed under this section.

490.     The Secretary of State may postpone the initial expiry date on one or more occasions. This is to ensure that the licences will not expire less than eighteen months after the date set for digital switchover. This power can only be exercised where switchover is later than 30th June 2013.

491.     Subsections (4) and (5) have the effect that the initial expiry date must always fall at least 18 months after digital switchover (so that the licences will continue for at least that long after switchover).

492.     The extended licence will be deemed to be granted under the same terms as the original one.

493.     "The date for digital switchover" is defined by subsection (8), as the date that appears to the Secretary of State to be the date after which Channel 3 and Channel 5 services are no longer to be broadcast to any significant extent in analogue form.

Clause 222: Application for review of financial terms of replacement licences

494.     The holder of a licence granted under clause 212 or 218 may apply for a review of the financial terms of this licence, on one or more different occasions. The first one may happen at any time during the first review period, i.e. the period starting four years before the first notional expiry date and ending on a date fixed by OFCOM. The subsequent reviews may happen at any point during any subsequent review period, which begins four years before the relevant subsequent notional expiry date, and ends on a date fixed by OFCOM.

495.     No such application may be made when an application for a review under clause 223 is pending or less than twelve months after a determination of new financial terms have been made by OFCOM under clause 223.

496.     Subsection (7) defines the "first notional expiry date" as the date on which the existing licence would have expired if not renewed, and "subsequent notional expiry date", in relation to a replacement licence, as either the tenth anniversary of the last notional expiry date, or, if the licensee has previously applied for a review under this section, the tenth anniversary of the date on which OFCOM's determination of that review was notified to the licensee.

Clause 223: Application for review of financial terms in consequence of new obligations

497.     This clause applies where an order brings into force any of clauses 268, 269, or 270 (must-offer in relation to networks and satellites and must-provide). In that event a Channel 3 service provider or the provider of Channel 5 or of the public teletext service may apply for a review of the financial terms of his licence. Any application for a review must be made during the review period, namely the period running from the day on which the order is made until the coming in to force of the relevant clause (or clauses). Clauses 268(10), 269(8) and 270(11) have the effect of ensuring that this period is at least six months long.

Clause 224: Reviews under ss. 222 and 223

498.     A determination made by OFCOM under this section must include the fee to be paid for the first calendar year of the period under review, which must be what OFCOM think would have been the amount that the licensee would have bid if the licence were awarded under section 15 of the Broadcasting Act 1990 and the percentage of qualifying revenue to be used for each accounting period.

499.     When determining these new financial terms, OFCOM must have regard to any additional costs that are likely to be incurred by the licence holder as a consequence of the new conditions imposed following the orders made under clauses 268, 269 or 270.

Clause 225: Giving effect to reviews under ss. 222 and 223

500.     This clause provides that, as soon as reasonably practicable, after making a determination, under clause 224, OFCOM must send to the applicant a notification setting out this determination, the modifications required in the applicant's licence, a response date by which the applicant has to notify his acceptance to OFCOM, and an end date by which the licence will cease to have effect if he does not.

501.     Subsection (5) provides that the new licence conditions are to have effect when the applicant notifies OFCOM that he accepts the determination. If the applicant does not notify his acceptance before the response date set by OFCOM, his licence will cease to have effect on the end date set by OFCOM.

Clause 226: Review in anticipation of new licensing round

502.     This clause gives a duty to OFCOM, no later than 30 months before the end of each licensing period, to report to the Secretary of State on the effects of the conditions which would be included in the renewed licences, on the capacity of the holders of Channel 3, 5 and public teletext service licences to contribute to the fulfilment of the public service remit at a cost that is commercially sustainable for them.

503.     Under subsection (4), OFCOM will also include any recommendations that they consider appropriate to make as to the use by the Secretary of State of his powers under clause 227 or under Chapter 4 of Part 3 of this Bill.

If it seems appropriate to update this report when the Secretary of State has made an order extending the licences, after the report was submitted, he has, under subsection (5), the power to require a supplementary report.

Clause 227: Orders suspending rights of renewal

504.     This clause applies when the Secretary of State receives a report made by OFCOM under clause 226. If the report contains a recommendation to make an order under this section or in the absence of a recommendation, where the Secretary of State believes it is appropriate to do so, he may by order provide that some licences are not to be renewed under clause 213 or 219 from the end of the current licensing period.

505.     Subsection (3) provides that such an order must be made eighteen months at least before the end of the current licensing period.

506.     Under subsection (4), the power to prevent the renewal of the licences from the end of the initial licensing period can be exercised only if a date for switchover has been fixed which falls before the end of that period. Subsection (5) provides that if the Secretary of State postpones the date for switchover after she has made an order preventing the renewal of licences, this order will not have effect if the new date for switchover falls after the end of that the initial licensing period. However, in such a case, the Secretary of State will be able to make another order preventing the renewal of licences. But this power will be subject to the requirement, set by subsection 221(5), that she must postpone the initial expiry date of the licences when this date falls within the period of eighteen months after switchover.

507.     Under subsection (7), an order with respect to Channel 3 licences must apply either to all licences to provide a Channel 3 service, or to all licences to provide a national Channel 3 service, or to all the licences to provide a regional Channel 3 service. Any order made by the Secretary of State will be subject to the affirmative resolution procedure.

Clause 228: Replacement of Channel 4 licence

508.     When subsection (1) comes into force, Channel 4 shall be granted a new licence under this clause. Its licence granted under section 24(3) of the Broadcasting Act 1990 shall no longer apply. In advance of this, OFCOM must prepare a draft replacement licence and consult the Channel 4 Corporation on its contents. The replacement licence must provide for the service being broadcast digitally and may provide that the service is also provided in analogue form until such time as is determined according to conditions in the licence giving effect to the Secretary of State's directions as to how long the service must continue to be provided in analogue form. The programming of the analogue service should replicate that of the digital service, or such part of it as is specified by the licence conditions included under subsection (3)(b). There can be no charge levied for the use of such a service or for any programming assistance for disabled people or other ancillary services included in the service.

509.     Subsection (6) provides that such a replacement licence must continue in force until the end of 2014. The licence may be renewed as OFCOM think fit.

Clause 229: Meaning of "television licensable content service"

510.     A "television licensable content service" is defined in this clause as any service which is provided (whether in digital or analogue form) as a service to be made "available "for reception by members of the public" (as defined in clause 354) by being broadcast from a satellite, or distributed by an electronic communications network, and consisting of television programmes and/or electronic programme guides (or both). The service covered by a single licence will comprise not only what subsection (3) calls a "main service" (which could consist either of television programmes or of an electronic programme guide, or both) but also such of the ancillary services and facilities provided with it as are "relevant ancillary services" and are not "two-way services". "Two way services" are defined in subsection (5) and encompass services such as video conferencing. The term "relevant ancillary services" encompasses both services that are actually provided by the provider of the "main service" and those facilities which are no more than links to services provided by others. It is not intended to encompass any apparatus (such as a television set, a PC, or a set-top box).

511.     A licensee is not held to be responsible for services which may be accessed from the "main service" unless he has general control over them (subsection (4)).

512.     Ancillary services that are not "relevant" ones are not to be covered by the licence for the main service (although some might be licensable in their own right, e.g. if they constitute a television licensable content service provided by someone other than the provider of the main service). To give some examples, say you are watching a wildlife programme on the "main service" i.e. a television channel in the conventional sense, albeit that it includes all the enhanced features to be expected from digital services. A menu might offer access to different camera angles: these would constitute "relevant ancillary services" which would be part of the licensed service. The menu might also give you access to additional factual information (provided within the broadcast stream) about the animals you are watching. That is expected to be within the scope of the licence too. But there might be a link (a "facility") which might take you to a website. The fact that the link is provided would be within the licence (and so OFCOM might require it to be removed if it led directly to unsuitable material), but the website at the end of the link would neither be regulated nor within the licence of the "main service" as it would not be a service made "available for reception by members of the public". Also outside the scope of the licence would be content that could be accessed from the "main service" but which is not under the general control of the provider of the "main service", such as a television service provided by someone else but showing similar wildlife programmes. Other services, such as being able to order takeaway food, or engage in on-line banking, or participate in an on-line chatroom, would not be within the licence either. These are just examples, and everything would depend on the exact nature of the services and facilities offered and the circumstances in which they were offered.

*an electronic programme guide is defined in subsection (6) as a service which lists and/or promotes television programmes, including programmes of providers other than the provider of the guide. The service must also allow the user to access programmes contained in the guide.

 
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