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Lord Evans of Temple Guiting: My Lords, as the noble Lord, Lord Avebury, said, Amendment No. 66 is designed to allow Ofcom to apply the electronic communications code to persons other than telecommunications operators. Under the new regime there will no longer be "telecommunications operators", as I said in Committee; instead there will be providers of electronic communications networks and providers of electronic communications services.

A person who has the electronic communications code applied receives substantial rights and has substantial obligations imposed. The Bill is currently drafted under Clause 103(4) to allow Ofcom to apply the code to both those who will provide electronic communications networks directly and those who will make available conduit systems to providers of electronic communications networks.

I assure you that the code can apply to providers of electronic communications networks other than the existing telecommunications providers and the providers of broadcasting networks such as Crown Castle will, like any other provider, be able to provide for code powers under the new arrangements. Indeed, the consultation paper already mentioned issued on 2nd April by the Director General of Telecommunications on The Granting of the Electronic Communications Code by Oftel makes it clear at paragraph 1.12 that,

I do not think that that could be clearer, or that anything else could be achieved by an amendment to the Bill.

We believe that the code should be available only to those who either have infrastructure or are providing conduits. Furthermore, extending it beyond those limits would upset the code's delicate balance. The proposed amendment would widen excessively the range of potential applicants for the benefits it provides and so undermine the balance.

In Committee we understood that the amendment was intended to relate to a concern expressed by Crown Castle about the current procedures for the control of rent for space on shared transmitter masts. The code is not the applicable instrument for that concern. The market review of broadcasting transmissions services will determine what regime is applied in the future.

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All secondary legislation, including the general development orders, will, wherever we consider it necessary, be amended by an order made under Clause 399, so I ask the noble Lord to withdraw the amendment.

Lord Avebury: My Lords, It is helpful to have that assurance on the record, even though I would have preferred to have a provision in the Bill, because something written down in a code does not have the force of law. But having the Minister's assurances on the record goes some way to what we were asking for. Therefore I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.45 p.m.

Clauses 104 to 116 agreed to.

Clause 117 [Conditions regulating premium rate services]:

Lord McIntosh of Haringey moved Amendment No. 67:

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

The noble Lord said: My Lords, in moving the amendment I shall speak also to Amendments Nos. 68, 69, 71 and 72. It may be convenient to the House if I speak also to Amendments Nos. 69A and 70.

We had a rough ride with comparable amendments in Committee, which we introduced in response to concerns from ICSTIS on premium rate services. Government Amendments Nos. 67, 68, 69, 71 and 72 deal with the issues we discussed in Committee in connection with what were then Amendments Nos. 122A to 122D. They sought to respond to the concerns expressed by my noble friend Lady Gould of Potternewton during Second Reading about regulating certain premium rate services emanating from abroad.

As I agreed in Committee, officials have discussed the matters further with the operators and with ICSTIS, and I understand that these amendments meet the operators' concerns articulated during the debate, as well as those of ICSTIS.

Amendment No. 68 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 network 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.

Amendment No. 69, like the previous Amendment No. 122D, defines what is meant by an intermediary service provider for the purpose of these provisions. It is expanded slightly from the previous version to deal with situations in which there might be chains of intermediaries through which premium rate services might be delivered. Amendment No. 67 is consequential on those two amendments.

Amendment No. 71 is new. It restricts the obligations that a code approved by Ofcom could place on a communications provider falling within subsection 117(11A). In accordance with this

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amendment, such obligations are permitted only if three tests are met: first, the provider concerned is the only person against whom it is practicable to take regulatory action; secondly, the obligation arises only after notice has been given by the code enforcer of the premium rate service and the manner in which it is alleged to have breached the code; and thirdly, the obligation is solely to secure that the network does not deliver the premium rate service to persons in the United Kingdom.

I understand that that restriction removes the concerns of the operators expressed during Committee without jeopardising the effectiveness of the regulatory regime. Amendment No. 72 places the corresponding restriction on an order that might be made by Ofcom in the absence of a code.

We have no desire to place undue burdens on providers of electronic communications services. In Clauses 117 to 121 we are providing a regulatory regime which enables the code-making body in conjunction with Ofcom to ensure that consumers are not disadvantaged by the less scrupulous PRS providers—which will be the primary target of the regulatory regime.

But experience shows that there are times when the normal operation of the code is insufficient, and ICSTIS or Oftel has needed to ask—and, if necessary, to compel—the operator of an electronic communications service or network carrying the PRS service to act. It would be a matter of last resort that a network provider falling within Clause 117(11A) would be required to take action. But without that power of last resort, we would be leaving a great loophole in the arrangements, which I gather all interests agree should be plugged in the way that we now propose.

The amendments would ensure that the PRS regime operates effectively but without placing undue burdens on the operators.

Amendment No. 69A is at first sight very seductive. Nobody would argue that the interests of premium rate service providers—some of which have sadly shown themselves to be not terribly scrupulous—should be placed above the interests of the man, woman and child in the street. But it is too simplistic to say that we should include in the statute book a requirement that the new premium rate service regime places the interests of consumers above those of premium rate service providers. Taken literally, that could mean that consumers should pay next to nothing for the services, and providers should be deprived of a reasonable profit.

The risk of following the approach in the amendment would be that ordinary, decent premium rate service providers would be unable to offer commercially viable services and the customer would be deprived of many services to which they have shown they want to subscribe. We know that there are lots of complaints about some premium rate services, especially those pandering to people's baser instincts. But that overshadows the fact that premium rate services are much in demand by consumers across a wider spectrum: information about news, weather,

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financial services and sport; product helplines and entertainment such as quizzes, competitions and voting on television shows. It is now a billion pound industry with above-average growth because consumers want to use it and there are providers to supply the public with what they want.

In the premium rate service regulatory regime we need a continuation of the existing arrangements that seek to ensure that, among other things, consumers know that they are being charged a premium and the rate of the premium. There are arrangements for reducing the risk of inappropriate services reaching children and to enable the rogue elements in the industry to be dealt with effectively. The regime that we are providing for gives that assurance, so there is no need for the amendment.

Clause 118(2)(b) provides that Ofcom must not approve a code unless the code-making and enforcing body is independent of the providers of premium rate services. There is therefore no need to fear that the code will lean unduly in favour of suppliers. The amendment is not only unnecessary, it could be positively harmful to the provision of services that consumers have shown that they want.

We covered some of the ground on Amendment No. 70 in Committee, but I am happy to re-emphasise our agreement that we should not place unnecessary barriers in the way of innovation and investment in new services. That is particularly important in the sphere of premium rate services, in which there has been considerable growth in recent years with every prospect of it continuing.

However, with the growth of new services, there are always dangers of abuse. While most premium rate service providers are perfectly honourable and provide good, useful services, some would use them to fleece the unsuspecting public, including, I am afraid, children. We must therefore be wary of what we do.

I know that there are concerns about the current limit in the ICSTIS code of 20 before online services must be terminated by forced release. That limit related to only certain kinds of calls, notably online services, pay-for-product services and sexual entertainment services. In each of those categories, the code provides that the limit does not apply if ICSTIS gives prior consent. If business-to-business video conferencing were arranged in such a way that it fell within the provisions of the code applying for online services, it is likely that ICSTIS would give prior permission for the limits not to apply.

Apart from that, the amendment is unnecessary. Ofcom is already constrained as regards approving a code for regulating premium rate services. In accordance with Clause 118(2)(d) to (g) it cannot approve a code unless it is satisfied that: it is objectively justifiable, it does not discriminate unduly, it is proportionate to the intended effect and it is transparent. Those are significant constraints on the actions of Ofcom. In my view, they are adequate to provide the right balance to ensure that any code does not unnecessarily constrain innovation and investment.

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Given the scope for abuse in this area, I do not think that we should feel comfortable with sacrificing customers on the altar of innovation and investment to new ways of ripping them off. I beg to move.

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