House of Lords - Explanatory Note
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Schedule 14: Media ownership rules

884.     This Schedule establishes new rules on the ownership of television services and radio multiplex services, and outlines the scope for the Secretary of State to impose new rules by order on the ownership of analogue and digital radio services. These provisions are described in more detail in the notes to clause 342.

Schedule 15: Amendments of Broadcasting Acts

885.     This Schedule amends the 1990 and 1996 Acts. Many of the amendments are simply to update those Acts in line with the Bill, for example, to change references to the Independent Television Commission and the Radio Authority into references to OFCOM, or to add references to the Bill where relevant to the application or interpretation of those Acts. Other amendments include—

(a)     additional powers for OFCOM to obtain information under sections 5(2) and 88(2) of the 1990 Act (see paragraphs 3 and 36) and sections 5(2) and 44(2) of the 1996 Act (see paragraphs 79 and 104) in connection with ownership restrictions in relation to television and radio broadcasting licences;

(b)     changes to make sections 15 to 17A of the 1990 Act (which concern the award of Channel 3 and Channel 5 licences) reflect, in particular, the self-regulation of the delivery of public service remits by those channels (see paragraphs 7 to 10);

(c)     amendments in section 89 (see paragraph 37), which disqualifies a person from holding certain radio licences if he or she has been convicted of certain broadcasting offences in the previous five years, and also provides that a licence holder must do all that he or she can to ensure that a person convicted of any such offence is not concerned in the operation of a wireless telegraphy station broadcasting the service. The list of offences is amended, and subsection (3) is amended to provide that a licence holder must also do all he or she can to ensure that a disqualified person is not concerned in the provision of the service or of programmes for inclusion in the service (and section 60 of the 1996 Act is amended to extend most of section 89 to digital sound programme licences - see paragraph 119). These amendments do not apply to offences committed before the amendments come in to effect;

(d)     to provide that no more than one member of the Welsh Authority may be a person who is a member or an employee of OFCOM (see paragraph 72);

(e)     amendments to provisions relating to "multiplex revenue" (see paragraphs 87 and 88) to take account of amendments elsewhere in the Bill (see clause 239 in particular) for the carriage of digital sound programme services on television multiplexes, and because broadcasting services (e.g. digital sound and digital television programme services) might in future be carried on general multiplex services (within the meaning given in clause 355(1));

(f)     to bring the definition of "digital additional services" (section 24) into line with concepts in the Bill (e.g. "available for reception by members of the public") and to allow for such services to be carried on general multiplex services (see paragraph 93);

(g)     to bring Part 5, which concerns the Broadcasting Standards Commission, into line with the Bill (see paragraphs 132 to 137), in consequence of the repeal of provisions about standards complaints and the transfer of the Commission's functions as respects fairness and privacy to OFCOM (see also clause 320).

Schedule 16: Further amendments in connection with newspaper mergers

886.     This Schedule sets out further amendments in connection with newspaper mergers.

Schedule 17: Minor and Consequential Amendments

887.     Schedule 17 sets out minor amendments to other legislation and amendments to other legislation that are consequential upon the Bill. Paragraph 1 of the Schedule sets out the definitions that apply for the purposes of any Act or instrument amended by the Schedule.

888.     The majority of these amendments involve changes to terms contained in other legislation that is used in relation to the current telecommunications licensing regime that is to be replaced by the Communications Bill, to ensure, as far as possible, that the current term is replaced with an equivalent term for the purposes of the new regulatory regime. A number of these amendments are of a similar nature and include, for example, amendments to legislation such as the Opencast Coal Act 1958 and the Regional Development Agencies Act 1998 to replace references to the telecommunications code and telecommunications apparatus with references to the electronic communications code and electronic communications apparatus. The amendments also include amendments to disclosure of information provisions in various legislation (for example, the Greater London Authority Act 1999 and the Water Industry Act 1991), to provide an exemption from the general restriction on the disclosure of information in respect of OFCOM and the Communications Bill.

889.     In addition, this Schedule sets out a number of minor and consequential amendments to the enactments relating to radio spectrum management. These include the amendment of section 1D of the Wireless Telegraphy Act 1949 which is dealt with in more detail in the notes to clause 165 and amendments requiring the Secretary of State's approval for orders and regulations made by OFCOM. For example, paragraphs 9(3) and 11(4) amend those sections of the Wireless Telegraphy Act 1949 which provide for regulations as to wireless telegraphy and regulations as to radiation of electro-magnetic energy, in order to require the Secretary of State's approval of any such regulations that are made by OFCOM. Similarly, paragraph 37(5) requires the approval of the Secretary of State for the making by OFCOM of any order under section 7 of the Wireless Telegraphy Act 1967, which places restrictions on dealing in, and custody of, certain apparatus. Paragraph 73 requires the approval of the Secretary of State for the making by OFCOM of any order under section 85 or 86 of the Telecommunications Act 1984 about information to be marked on or to accompany wireless telegraphy apparatus or to be given in advertisements for such apparatus.

890.     Schedule 17 also contains minor and consequential amendments with respect to broadcasting. These mainly reflect the changes to the regulatory structure so as to replace references to the existing regulators with references to OFCOM.

891.     The Welsh Development Agency Act 1975, section 19(1), which relates to the Agency and the Media, is amended so that references to "the appropriate authority" are replaced by a reference to OFCOM, and at subsection (11), the references to the Independent Television Commission and the Radio Authority are replaced by a reference to OFCOM. Similarly, references to the Independent Television Commission and the Radio Authority in section 92 and 93 of the Representation of the People Act 1983, which relate to broadcasting from outside the United Kingdom and broadcasting of local items during election periods are replaced by references to OFCOM.

892.     The Cinemas Act 1985 contains provisions, including a licensing regime, concerning premises which are used for "film exhibitions". The definition of "film exhibition" at section 21(1) is amended so that a film exhibition means any exhibition of moving pictures other than an exhibition of items included in a programme service within the meaning of Part 3 of the Communications Bill that is being simultaneously received (or virtually so) by the exhibitor. The effect of the amendment is to ensure that cinemas which exhibit films transmitted to them via cable or satellite from a central source will not require licensing under the Communications Bill; however films exhibited in such a way will continue to be covered by the licensing provisions of the 1985 Act.

893.     Various amendments have been made to the Copyright, Designs and Patents Act 1988 so as to bring these in line with the regulatory changes made under the Communications Bill. In particular, these ensure that copyright is not infringed by the use by OFCOM in connection with the performance of their functions of material provided to them; or of any existing material which is transferred to them by a scheme made under section 26 of the Communications Bill.

894.     In section 33 of the Value Added Tax Act 1994, which relates to refunds of VAT in certain cases, the reference to the Channel 3 nominated news provider is replaced by a reference to the Channel 3 appointed news provider, to reflect changes made by the Bill.

895.     The Transport Act 2000 Schedule 9 which contains disclosure of information provisions has been amended so as to substitute OFCOM for the Independent Television Commission and so as to add the Broadcasting Act 1996 and the Communications Bill to the list of specified enactments covered by those disclosure provisions.

896.     The provisions relating to party political broadcasts and referendum campaign broadcasts contained in section 11 and Schedule 12 paragraph 4(6) to the Political Parties, Election and Referendums Act 2000 have been amended so as to remove the references in that section to Sianel Pedwar Cymru. The effect is now that those provisions provide that the BBC shall have regard to the Electoral Commission's views when determining its policy with respect to party political broadcasts and referendum campaign broadcasts. The corresponding duty with respect to the Welsh Authority is now contained in Schedule 12.

897.     The Schedule also includes minor amendments to the Office of Communications Act 2002. Paragraph 8(1) of the schedule to the OFCOM Act is amended to require OFCOM to conduct their affairs so as to secure that revenues from fees and charges which do not fall to be paid to the Consolidated Fund are at least sufficient to cover the cost of carrying out the functions to which they relate.

Schedule 18: Transitional Provisions

898.     The relevant paragraphs of this schedule have been described in connection with the applicable clauses. In addition, paragraph 3 applies to agreements that would cease to have effect or are capable of being terminated, if a party to the agreement, ceased to hold a relevant licence and provides that such agreements are not to cease to have effect or be capable of being terminated, as a result of the abolition of licences by the Bill.

*A relevant licence means a licence under section 7 of the Telecommunications Act 1984, a licence under Part 1 of the Broadcasting Act 1990 to provide a satellite television service or a licensable programme service or to provide the service mentioned in section 49(2) of that Act, a licence under Part 2 of the Broadcasting Act 1990 to provide a local delivery service, a licence under Part 3 of the Broadcasting Act 1990 to provide licensable sound programme services, or a satellite radio service.

899.     Paragraphs 56 to 58 of this Schedule set out the transitional arrangements that will apply on commencement of the provisions of Chapter 2 of Part 5 of this Bill.

900.     Paragraph 56 provides that the new provisions introduced in this Chapter will not apply to any transfer of a newspaper or of newspaper assets that has already taken place as at the commencement date of these provisions. In addition, any transfer for which an application for consent has been made, but not determined, at the date of commencement will continue to be considered under the special newspaper merger provisions in the FTA 1973.

901.     If, however, an application is made that falls within section 59(2) FTA 1973 because it is "expressed to depend" on the Secretary of State exercising a discretion in that Act not to refer the transaction to the Competition Commission, then the effect of paragraph 56(2) of this Schedule is that only that "expressed to depend" application will fall within the transitional saving of the FTA 1973 provisions. If the Secretary of State's consent is not given without a reference, but the parties then decide to pursue the merger after the provisions of Chapter 2 of Part 5 of the Bill take effect, it will then be treated as a merger under the EA 2002, as amended by these provisions.

902.     Paragraph 58 sets out provisions applying to conditional consents that have been given under the FTA 1973. On implementation of the provisions of Chapter 2 of Part 5 of this Bill existing consents will be unaffected and will continue in effect as consents given under the FTA 1973. However, where these consents have conditions attached to them, such that the party concerned is subject to ongoing obligations, paragraph 52 provides that the Secretary of State may accept undertakings in lieu of the conditions on the consent. Acceptance of an undertaking will be at the Secretary of State's discretion but, if accepted, any such undertaking would then be treated as equivalent to an undertaking given to the Secretary of State in a public interest case under the EA 2002 (see paragraph 9 of Schedule 7 EA 2002). Such undertakings could relate to competition and/or to general public interest obligations and so in deciding whether to accept such undertakings the Secretary of State can, in particular, consult with the OFT and/or OFCOM.

Schedule 19: Repeals

903.     This Schedule sets out those provisions in other enactments that will be repealed as a consequence of the Bill.


904.     The Government does not envisage that significant public expenditure implications will arise from this Bill. As was described in more detail in the Explanatory Notes that accompanied the Office of Communications Act 2002, the current cost of regulating the communications sector is in the region of £118 million. It is not anticipated that the cost of regulating the new regime will be significantly different. Currently, the costs of the existing regulators are covered by administrative fees for licences, and other charges levied on the industry. The new regulator will be funded in a very similar way.

905.     OFCOM have no power to charge fees before they are fully operational, so the 2002 Act enables the Secretary of State to pay grant in aid to OFCOM, or to make an advance. The Government has stated that the latter is expected to provide most, if not all, of the funding required until OFCOM are able to charge fees to the sector. It is intended that subsequent repayment of any advance would be met out of the powers that OFCOM have to charge fees to the sector under the Bill. The initial planning costs of establishing OFCOM met from public funds have so far amounted to £2.6 million.

906.     Further to these initial planning costs, with the OFCOM Board now in place, there will be implementation costs covering such areas as detailed organisation design, premises, recruitment and IT system design, which might also include pension transfer costs, severance, early retirement, and payments for forfeiture of existing leases. These transition costs will be met by a repayable loan made to OFCOM by the Secretary of State. The Board of OFCOM will take key decisions on major operational issues, including organisational design, human resources, location and work processes. Ultimately, the costs will depend on what is needed effectively to discharge the functions that Parliament gives OFCOM.

907.     The existing regulators will incur some additional expenditure in preparing for the transition to OFCOM, but these are expected to be modest, and will be almost entirely financed by their existing powers to charge fees to the sector.

908.     We do not expect any significant effect on public service manpower under this Bill. However, civil service manpower will decrease by some 870 when the Radiocommunications Agency and Oftel are moved into OFCOM, since OFCOM employees will not be classified as civil servants.


909.     There will be some one-off preparatory costs for companies in adjusting to the new regulatory set-up. As with the existing regime, the costs of OFCOM will be met by the industry generally. Businesses will benefit from dealing with one regulator.

910.     The provisions dealing with communications networks and services for the most part implement four EC Directives that were agreed in 2002. The Bill imposes specific requirements where the Directives require it and gives OFCOM enabling powers where the Directives allow some discretion to either the national regulatory authority or the Member State.

911.     The Act will enable spectrum trading. There will be implementation costs for OFCOM estimated to amount to £4.4 million discounted over a 20-year period. Spectrum trading will enable an alternative and speedier access to spectrum than the current system of licensing and total benefits are estimated to range from a net present value of £142 million over 20 years up to several billions of pounds a year. Transaction costs associated with spectrum trading are expected to be modest and should in any case should be less than the benefits since parties will choose to trade only if it is mutually beneficial to do so.

912.     The provisions on broadcasting regulation aim to help ensure access to modern technologies while protecting consumers and the quality of public service broadcasting. Extending the provision of subtitling, signing and audio description to cable and satellite services will result in a cost to the industry. Those with sensory impairments will benefit from increased access to broadcasting services as a result and broadcasters should benefit from increased audiences.

913.     The Act will simplify and relax the current system of media ownership rules. Where there are costs to business, these will be minimal. Both businesses and the public will benefit. The Act will also replace the special merger regime for newspapers with one that is less burdensome. There will be cost savings for business and for DTI.

914.     A copy of the overarching Regulatory Impact Assessment can be obtained from the DTI and DCMS Communications Bill website at

915.     Copies can also be obtained from Julie Braithwaite, Communications Bill Team, Department of Trade and Industry, G06, 4 Abbey Orchard Street, London SW1P 2HT (Tel: 020 7215 1193, e-mail [email protected]).


916.     The following are the principal human rights issues arising in relation to the Bill. Subject to the Secretary of State's inability to make a compatibility statement in relation to clause 314, the Government believe that the provisions in question comply with the Convention rights. References to "the JCHR" are to the Joint Committee on Human Rights who reported on the draft Communications Bill in their Nineteenth Report of Session 2001 - 02 (HL Paper No.149, HC 1102).

Suspension of entitlement to provide networks, services and associated facilities

917.     Regarding clauses 39, 97, 98, 137 and 138, the JCHR were concerned (see paragraph 9 of their Report) about the absence of procedural safeguards for the rights of network and service providers before a suspension or restriction is imposed for failure to pay administrative charges, although they accepted that it might be appropriate to relax the stringency of these requirements in cases of exceptional urgency. The Government consider that the published draft Bill was compatible with the ECHR, but accept that, as a matter of good practice, OFCOM should be required to notify a person of their intention to suspend or restrict a person's entitlement and give that person an opportunity to make representations before doing so, unless the case is urgent; the Bill now provides accordingly. Similar provision is now made in respect of suspension of the application of the Electronic Communications Code under clause 110(4).

Must-carry obligations

918.     Clause 61 implements Article 31 of the Universal Service Directive, which permits Member States to impose reasonable "must-carry" obligations whose effect would be to require the carriage of certain broadcasting services on a network (e.g. a cable or satellite broadcasting system in the UK). Such general conditions could therefore engage rights under Article 1 of the First Protocol, which guarantees the right to the peaceful enjoyment of possessions. The Government consider that the public interest in the widespread accessibility of high quality public service broadcasting is sufficient to justify under the ECHR the power under clause 61 to impose must-carry obligations. In particular, the Bill allows for a corresponding obligation on the provider of a must-carry channel to offer it to the carrier (see clause 268) and power exists for the Secretary of State to make provision as to the terms on which services are carried, including payments by one side (broadcaster or carrier) to the other.

Electronic Communications Code

919.     Clauses 103 to 116 provide for what is known as the "Electronic Communications Code". Under it, OFCOM may grant certain rights to providers of electronic communications networks and providers of underground conduits which enable them to install apparatus on or under land owned by others. If the owner's or occupier's consent to the installation is refused, the provider can apply to the courts for an appropriate order. These provisions engage Article 1 of the First Protocol to the ECHR, since they affect the "peaceful enjoyment of possessions": but it is considered that they satisfy the exception of being in the public interest; and it may be noted that no objection to the existing Code (see section 10 of and Schedule 2 to the Telecommunications Act 1984 which make essentially the same provision as in the Bill) has been raised on ECHR grounds.

Powers to require suspension or restriction of a provider's entitlement

920.     Clause 129 provides for the suspension or restriction, on public safety, public health or national security grounds, of a person's entitlement to provide an electronic communications network, service or associated facility. The JCHR were concerned that the clause as it was originally drafted, did not contain adequate safeguards against arbitrary decisions made by the Secretary of State, which may affect a person's rights to the enjoyment of their possessions under Article 1 of the First Protocol to the ECHR. The Government consider that the provision as drafted was compatible, but have amended this clause to provide expressly that the Secretary of State, before making a direction under this clause, is required to have reasonable grounds for believing that it is necessary to do so.

Information provisions

921.     Clauses 132 to 142 contain provisions about the gathering of information by OFCOM; and additional provisions are contained in clauses 168 (which enables OFCOM to require persons who establish, use or install wireless telegraphy stations or apparatus to provide information for statistical purposes) and 188 (under which OFCOM may require the provision of information by both parties to the dispute and others as part of their function of resolving disputes). The JCHR expressed concerns about the implications that the equivalent provisions in the consultation draft of the Bill had for rights to a fair hearing, to respect for private life, and to enjoyment of possessions. As a result, some provisions in that draft have been removed.

922.     However, the Government have not included in the Bill anything to provide express protection against self-incrimination or for items subject to legal professional privilege. Such provision is not necessary to ensure that the privileges in question (created under common law) are fully protected. The widespread use of such provisions could paradoxically have the effect of weakening the protection accorded to them, by suggesting that in legislation where such express provision is absent, Parliament did not intend the privilege to receive full protection.

Seizure and forfeiture

923.     In clause 179 and Schedule 7 (which provide for the seizure and forfeiture of wireless telegraphy apparatus which does not comply with section 7 of the Wireless Telegraphy Act 1967) some changes have been made to meet some concerns of the JCHR about minor aspects of these provisions as they appeared in the published draft. The Bill now provides that OFCOM must exercise discretion before bringing forfeiture proceedings and return seized apparatus if they decide not to proceed; forfeiture proceedings may not be brought without notice; and the court is given discretion about whether to condemn seized apparatus as forfeit, and also on whether to order security for costs to be given.


924.     Clauses 182 to 188 provide for OFCOM to resolve disputes between private parties in respect of matters arising under the Bill and other wireless telegraphy legislation. In itself this procedure would not satisfy Article 6 of the ECHR, particularly since OFCOM, as the regulator, might not be regarded as impartial. Compliance is secured, however, by virtue of the fact that, until OFCOM makes a final determination, either party may bring court proceedings in respect of the subject of the dispute (clause 184(1)), which may lead to a stay of the OFCOM proceedings (subsection (3) of that clause); and a final determination is subject to appeal to the Competition Appeal Tribunal under clause 189(1)(a), with further appeal on point of law to the Court of Appeal or Court of Session (clause 193).

Replacement of Channel 3, Channel 5 and public teletext licences

925.     The clauses in Chapter 2 of Part 3 that concern the grant of new digital licences to provide the Channel 3 and Channel 5 services, and the licence to provide the public teletext service (see especially clauses 211 to 214, 218 to 220 and 222 to 227) could potentially engage the rights of licence holders to the enjoyment of their possessions under Article 1 of the First Protocol to the ECHR, especially where the implementation of must-offer obligations and the requirement to offer smart ("solus") cards to persons who can get their television by satellite only could impose economic burdens on licensees. The Government are satisfied that these provisions pursue a legitimate public purpose in ensuring the universal availability of public service broadcasting, and that the Bill makes adequate provision for licence holders to be compensated for those costs through the adjustment of the additional payments due under their licences.

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Prepared: 6 March 2003