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Lord McIntosh of Haringey: This has been a wide-ranging and well-informed debate about important subjects—which has almost nothing to do with the amendment before the Committee. If we are to make progress, strictly speaking, I ought to confine myself to the amendment; but I shall have to respond to one or two of the points made.

The amendment seeks to add the phrase,

to the existing wording of these clauses, which refer to the provision, content, promotion and marketing of such services.

After the debate in the Commons, which was about the amendment—it was about the type of things that customers are told about premium rate services—I can give the assurance that the wording in the Bill covers the concerns raised. For example, the present ICSTIS code requires that,

    "the service provider must state clearly in all promotional material the likely charge for calls to each service".

That is exactly what the noble Lord, Lord Lucas, and the noble Baroness, Lady Buscombe, are looking for. The provisions are being carried over into the code, which will be established for the regime once the Bill has been passed. Currently, ICSTIS is consulting on the draft code. I suggest that we should not add unnecessary words to the statute.

We were chided for not making reference to the Advertising Standards Authority. The ASA is not the body concerned. I am happy to confirm that premium

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rate service providers are not exempt from the rules that govern all advertisements and promotions in non-broadcast media. They are not exempt from the advertising industry's self regulatory standards regime, which is set out in the British Codes of Advertising and Sales Promotion and administered by the Advertising Standards Authority.

The provisions of Clauses 117 to 121 do not detract from the work of the ASA as an effective regulator of non-broadcast advertising. The combination of statutory regulation with self-regulation is exactly what we seek. Action by the ASA can result in posters, advertisements, and promotions that are not,

    "legal, decent, honest and truthful",

being withdrawn and misleading advertisers being reported to the Director General of Fair Trading.

The remits of the ASA and ICSTIS extend to advertising in the new media, including e-mail, Internet banners, pop-ups, and so on. So I can give all necessary assurances about the role of self-regulation and the balance between self-regulation and statutory regulation. I have nothing to say against the speech yesterday of the noble Lord, Lord Currie. I was not able to accept the invitation to the lunch, but clearly he was talking about co-regulation of broadcast advertising. We support the line that he has taken, that Ofcom should be proportionate and targeted and should not be too bound by convention in looking for effective regulatory solutions. The noble Lord, Lord Currie, already acts as the Bill envisages.

Finally, I can assure the noble Lord, Lord Baker, that there is plenty of provision for flexibility. The Bill provides the outer envelope of what can be regulated. However, as matters develop they can be covered by the code made by ICSTIS and approved by Ofcom. That should provide the required flexibility.

Baroness Buscombe: I thank the Minister for his response. I was not surprised to hear his reference to a wide-ranging debate. I believe that it was important to raise the issues on which I touched. I am grateful to the noble Lord, Lord Thomson, my noble friend Lord Baker and the noble Lord, Lord Borrie, for their contributions to this important debate.

As my noble friend Lord Baker said, in terms of, in a sense, balance with regard to the scrutiny of the Bill, there has perhaps been a galloping through of the clauses both in this House—

Lord McIntosh of Haringey: I shall certainly not apologise for us taking 30 clauses without amendment. That is an achievement and nothing to apologise for. If no one proposes amendments to clauses they should go through. I wish it could happen more often.

Baroness Buscombe: While I accept the Minister's intervention, I was not looking for an apology. I was not suggesting that that was a problem. But it is important that we show regard to this enormously important electronic communications network and services industry which contributes so much to the well-being of the nation. Those parts of the Bill to which we referred are extraordinarily important.

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I thank the Minister for his response in relation to the amendments of my noble friend Lord Lucas. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.45 p.m.

Lord McIntosh of Haringey moved Amendment No. 122A:

    Page 111, line 13, leave out "or (11)" and insert ", (11) or (11A)"

The noble Lord said: Amendments Nos. 122A, 122B, 122C and 122D respond to the concerns expressed by the noble Baroness, Lady Gould of Potternewton, at Second Reading on 25th March. We have further discussed the matter with ICSTIS. We recognise that there is a potential loophole in the arrangements in Clauses 117 to 121, which these amendments seek to close.

Amendment No. 122B is aimed at ensuring that, even when a premium rate service provider is located abroad and the arrangements for the use of the electronic communications service for the provision of the premium rate service in this country is via an intermediary, there is still a person who is subject to regulation—a person who, in the last resort, can be required to take action in respect of a premium rate service which falls foul of the regulatory arrangements.

So, even if an unscrupulous provider of premium rate services tries to avoid regulation by operating via a foreign network, Ofcom can, should the need arise, still impose conditions on the UK provider of the electronic communications network which is used for the provision of the service.

Amendment No. 122D defines what is meant by an intermediary service provider for the purpose of these provisions. Amendments Nos. 122A and 122C are consequential on the other two amendments. The amendments seek to ensure that the premium rate services regime will operate effectively. I beg to move.

Lord Avebury: We object to these amendments because they inappropriately extend the regulation of premium rate services. They also reverse a government amendment which was correctly made at the Report stage in another place.

In the UK, premium rate service providers establish a service, which may be, for example, telephone voting for "Big Brother" by having a telecommunications provider, such as BT, allocate one, or a multiple, of its telephone numbers to the service in the 09XXX range. BT undertakes to deliver all calls to the PRS provider, wherever they come from, in return for a share of the revenue generated from the incoming traffic. In the industry jargon, BT is acting as the "terminating operator".

The PRS provider, if in the UK, is bound by the ICSTIS code to promote and sell its service in accordance with the rules set down by ICSTIS. The "terminating operator" has a condition in its Telecommunications Act licence to use its commercial leverage over the PRS provider to make sure that it abides by the ICSTIS code.

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Not all calls to PRS services are made by BT customers. They could come from anywhere—the customers of mobile operators, cable operators and overseas operators. The network operator whose customer makes the call to the PRS provider is known as the "originating operator". Through the interconnect and call-routing agreements, the call is passed to the terminating operator and is then delivered to the PRS provider.

The originating operator is paid for the conveyance of the call but does not receive a share of the revenue from the premium rate service. In fact he has no commercial leverage or relationship with the PRS provider. He does not form part of the PRS value chain and has no liability for— or way of—enforcing the ICSTIS code.

The rationale for the inclusion of the PRS in the Communications Bill is that, after the abolition of the Telecommunications Act licences, Ofcom will need to maintain a requirement on terminating operators to exercise leverage over the PRS providers. There is no disagreement between us on that point.

The version of the Bill that emerged from the Committee stage in another place resulted from agreement between the industry and the Government that the definition in the Bill of a PRS provider was slightly wrong, in that it unintentionally defined the originating operator as forming part of the PRS value chain. The definitions in Clauses 117(10) and (11) were introduced with industry agreement on Report in another place so as to exclude the originating operator by stipulating that there had to be a commercial relationship between the PRS content provider or aggregator and the electronic network communications provider for a business to be defined as supplying PRS. It is simply unreasonable and unworkable to expect the originating operator to exercise leverage over the PRS content provider to bring it into line with the PRS code.

As we understand the amendments—and as was confirmed by what the Minister just said—they are an attempt to regulate PRS content providers that reside overseas. That is the Vanuatu problem, as it has been defined by ICSTIS, where a call may be originated from the United Kingdom but the content provider is in a foreign location and the call may pass through many intermediate service providers before it reaches its destination. Clearly, BT or whoever is the originator of the call cannot exercise direct control of those providers, so the Government are trying to regulate any communications network operator that passes traffic through them, including the originating operator.

There are two possible scenarios under the amendments. Either the traffic is passed to what is called an intermediary service provider, or it is passed direct to a terminating operator. In the first case, where there is an agreement between an originating operator and the intermediary service provider, which is presumably an international carrier, the concept of a UK terminating operator is redundant. Any calls to an overseas premium rate number would go straight from the originating operator to the international service provider—it might transit through BT, but that is not relevant to the amendments.

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It is unworkable to place PRS regulation on originating operators in that way. To the extent that the intention is to cover UK intermediary service providers, the provisions are unnecessary, because all the possibilities are dealt with in Clause 117(9)(c) and (d). In the second case, where there is,

    "an agreement subsisting between that person and . . . a person who is a provider of the relevant service by virtue of subsection (10) or (11)",

the originating operator is again drawn into the value chain of PRS supply, which is surely not the Government's intention.

In fact, the effect of the amendments is to throw out the baby with the bathwater. They have undone the good work of the previous amendment and threaten to introduce a measure that is unworkable and an unwarranted extension of the scope of premium rate regulation. So I hope that the Government will reconsider what they have done at the last minute by the amendments.

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