Select Committee on Delegated Powers and Regulatory Reform Fourteenth Report


ANNEX 1

COMMUNICATIONS BILL

Memorandum by the Department for Culture, Media and Sport and the Department of Trade and Industry

INTRODUCTION

1.  The Communications Bill was brought from the House of Commons on 5 March 2003. This Memorandum:

  • summarises the main provisions of the Bill;
  • identifies the order making powers and powers to make regulations given to the Secretary of State;
  • summarises the powers to make directions given to the Secretary of State;
  • identifies the order making powers and powers to make regulations given to OFCOM;
  • explains why the matters have been dealt with by creating delegated powers; and
  • explains the degree of Parliamentary control on the exercise of those powers.

MAIN PROVISIONS

2.  The Communications Bill contains 403 clauses and 19 Schedules. The purpose of the Bill is to give effect to the Government's proposals for the reform of the regulatory framework for the communications sector, as set out in the Communications White Paper - A New Future for Communications (Cm 5010) - published on 12 December 2000 and in the subsequent policy narrative published alongside the draft Bill in May 2002.

3.  The main provisions of the Bill provide for:

  • the transfer of functions to the Office of Communications (OFCOM) from the bodies and office holders who currently regulate the communications sector (which, broadly speaking, encompasses telecommunications, broadcasting and spectrum management);
  • the replacement of the current system of individual licensing for telecommunications systems with a new framework for the regulation of electronic communications networks and services;
  • the power to develop new mechanisms to enable spectrum to be traded in accordance with regulations made by OFCOM, and a scheme of recognised spectrum access;
  • the development of the current system for regulating broadcasting to reflect technological change, to accommodate the switchover from analogue to digital broadcasting, and to introduce a new, more coherent and more self-regulatory scheme for the public service broadcasters;
  • the establishment of a Consumer Panel to advise and assist OFCOM and to represent consumer interests;
  • the establishment of a Content Board to advise OFCOM in relation to the content of anything broadcast in an electronic communications service, or by means of an electronic communications network;
  • the concurrent exercise by OFCOM of powers under the Competition Act 1998 and the Enterprise Act 2002 across the whole of the communications sector (including broadcasting); and
  • procedures for appeal of decisions relating to networks and services and rights of use for spectrum.

OVERVIEW OF DELEGATED POWERS

4.  The Bill contains 173 powers for the Secretary of State and, in a limited number of circumstances, OFCOM to make orders, regulations and give directions. All the powers given to the Secretary of State and OFCOM are described in more detail below. A full list of the delegated powers conferred in the Communications Bill is attached at Annex A. A list of the powers that have been added, retained or removed by the Communications Bill as brought from the House of Commons on 5 March 2003 in comparison with the Draft Communications Bill is contained in Annex B. A number of the delegated powers contained in the Communications Bill have "precedence", in other words, they are powers that existed in some form in previous legislation. A list of these powers is contained in Annex C.

5.  Clause 395(1) provides that every power conferred by the Bill on the Secretary of State to make orders or regulations (except those in Schedule 4) is exercisable by statutory instrument. Except where indicated below, and as set out in Clause 395(2), all statutory instruments containing an order or regulations made in exercise of such power are subject to annulment in pursuance of a resolution of either House of Parliament. In other words, the statutory instrument is subject to the negative resolution procedure.

6.  Every power of the Secretary of State to make an order or regulation under this Bill, other than under Clause 28 or 403 or Schedule 4, includes the power to make different provision for different cases, to include exemptions and exceptions, and to make such supplementary, consequential and transitional provisions as she sees fit.

7.  Clause 396, which must be applied by a provision, sets out how OFCOM are to exercise their powers to make regulations, orders or schemes under the provisions in the Bill and those inserted into other Acts. The instruments concerned must be made by statutory instrument; and where the provision in the Bill and provisions inserted in other Acts under which the instrument is made provide for it to be laid before Parliament, OFCOM must send it to the Secretary of State for that to be done. Subsection (6) provides that OFCOM must allow a period of at least one month for representations to be made on any proposal by them to make an order or regulations under a provision in the Bill or under a provision inserted in other Acts which applies this Clause.

8.  Our main aim has been to take delegated powers only in those areas where changes will be necessary from time to time. In some cases delegated powers are required in order to allow sufficient flexibility to enable the regulatory framework to adapt to changes in technology, in the relevant markets and, if appropriate, in public attitudes on matters such as taste and decency. It is due to the fast-moving and unpredictable nature of the markets in question that provisions cannot be set out absolutely on the face of the Bill, but need to be capable of variation to reflect changes in circumstances.

9.  The delegated powers that are included in the Bill can be broken down into a number of categories. Although not all the powers fall into one of these groups, they should give a flavour of why certain powers are required:

(a)  There are a number of provisions in the Bill which permit the Secretary of State to amend primary legislation. These fall into eight main categories:

(i)  the power to amend definitions[3]: such powers are required to ensure that the relevant definitions in the Bill remain up to date and relevant to the regulation of the electronic communications industry;

(ii)  the power to amend lists: this includes the power to add groups to be considered in equality provisions[4], changing the considerations of particular bodies[5] and amending the channels that must be carried[6]. These powers allow the Secretary of State to ensure that the equality provisions in the Bill reflect other legislation and that the considerations and must carry channels reflect the reality of the fast changing markets;

(iii)  the power to amend the public service remit and programming requirements[7]: these powers are necessary to ensure that the obligation is a realistic one which broadcasters can meet;

(iv)  the power to amend certain media ownership requirements[8]: this is required to allow the restrictions to accurately reflect the media market;

(v)  the power to make alterations to create access radio[9];

(vi)  the power to amend financial penalties[10] and to amend penalty schemes[11];

(vii)  the power to amend legislation for technical or consolidation reasons[12];

(b)  The Bill allows OFCOM to set conditions on electronic communications operators[13]: these conditions generally reflect obligations that were previously imposed under a telecommunications licence, although certain obligations that were previously dealt with by other regulatory regimes may also form the subject matter of a condition;

(c)  The Bill makes provision for certain schemes and rules[14] to be set in delegated legislation: these cover a wide range of things that are too detailed to be included on the face of the Bill;

(d)  In relation to certain powers which OFCOM will be able to exercise they will have to publish their policy[15], which will evolve with the market;

(e)  There are a number of powers which nominate or suspend a service, network or person: once more, these need to be dynamic to reflect the market as it changes; and

(f)  Powers are granted to limit or extend the application of certain other provisions for the same reasons as outlined in (e).

10.  Where the orders essentially deal with technical or procedural matters, we have opted for use of the negative resolution procedure. Where the order making powers relate to issues of more substance (for example, in the regulation of broadcasting and broadcasting content), we have proposed the use of an affirmative procedure. Except where otherwise indicated, references below to the affirmative procedure are to the procedure under which the order or regulation in question must be approved in draft by both Houses of Parliament.

11.  The Joint Committee on the Draft Communications Bill (the 'Joint Committee') produced a report on the published draft of the Communications Bill, as part of the pre-legislative scrutiny process. In our response of 29 October 2002 to the Joint Committee, we explained that we were going to adopt the majority of the Delegated Powers and Regulatory Reform Committee's recommendations. Those recommendations led to changes being made to the Bill before introduction to the House of Commons. In particular, we have changed the various provisions that permit the Secretary of State to increase the maximum penalty to require affirmative resolution rather than negative resolution. We have also gone further and amended the Broadcasting Acts to require affirmative resolutions, instead of negative resolutions, to increase certain maximum penalties[16]. We have also amended the equality clauses, so that any additional group to be added must be by affirmative resolution[17]. Further, the Joint Committee asked for a statement of the considerations for the Secretary of State when a must-carry service is added or removed: Clause 61(7) now includes those criteria. Reflecting the concerns of the Joint Committee we have transferred the power in what is now Clause 103(6)[18] from OFCOM to the Secretary of State. In addition, we have removed a provision which would have allowed the Secretary of State in what is now Clause 38[19] to adjust the multiplier.

DETAILS OF DELEGATED POWERS CONTAINED IN THE COMMUNICATIONS BILL

Directions in respect of networks or spectrum functions

12.  OFCOM are under a duty to carry out their functions in accordance with such general or specific directions as may be given to them by the Secretary of State as provided for at Clause 5(2). The purposes for which the Secretary of State may give such directions are listed in Clause 5(3) and relate to national security, public health and safety, international relations, and compliance with European Community obligations or with any international agreement to which the United Kingdom is party. The Secretary of State shall publish a direction under this Clause in such manner as she considers appropriate for the purpose of bringing it to the attention of the persons most likely to be affected by it, except where to do so would be against the interests of national security or of international relations.

Secretary of State's powers in relation to promptness standards

13.  Clause 8 requires OFCOM to publish a statement setting out time limits within which they propose to carry out their functions. Such time limits will not apply where the Bill or any other enactment already sets time limits within which their functions are to be carried out. OFCOM's annual report must summarise the extent to which they complied with any promptness standards set out under this Clause.

14.  Where the Secretary of State considers that the promptness standards set by OFCOM under Clause 8 are not satisfactory, she may notify OFCOM. If OFCOM fails to amend the standards to her satisfaction, the Secretary of State may give a direction pursuant to Clause 9(2) requiring OFCOM to issue or revise their promptness standards in accordance with its terms. When issuing a direction under Clause 9(2), the Secretary of State is not required to comply with either the affirmative or negative resolution procedure. However, she must comply with the requirements set out in Clause 9. Before issuing a direction, the Secretary of State must give OFCOM an opportunity to comment on her proposal. Thereafter, the direction must be published in a manner that will bring it to the attention of any person affected by OFCOM's promptness standard. The Secretary of State cannot act under Clause 9 within 12 months of the commencement of Clause 8.

Power to amend remit of Consumer Panel

15.  Clause 18(1) gives the Secretary of State the power, by order, to add to (but not reduce) the list of matters about which the Consumer Panel are required to be able to give advice: this list is set out in Clause 15(3). Before making an order under this Clause, the Secretary of State must consult with OFCOM and such other persons as she thinks fit. This must be by the affirmative resolution procedure.

Representation on international and other bodies

16.  Clause 19(1) gives the Secretary of State a power to require OFCOM to represent the Government on international and other bodies having communications functions.

17.  Clause 19(2) enables OFCOM, if requested by the Secretary of State, to represent the Government in respect of the Channel Islands, the Isle of Man or any British overseas territory, on international and other bodies having communications functions and at international meetings about communications.

18.  Clause 19(3) gives the Secretary of State the power to direct OFCOM to carry out their functions under subsections (1) and (2) in accordance with her directions. However, under subsection (4)(a) she may not require OFCOM to represent the Government in respect of the territories mentioned in subsection (2) (but under subsection (4)(b) she may direct them how to carry out the representation if they choose represent those territories).

Directions for international purposes in respect of broadcasting functions

19.  Clause 20(2)(a) makes it a duty of OFCOM to carry out its broadcasting functions in accordance with any directions given by the Secretary of State, and carry out in accordance with such directions other functions in relation to matters which those functions are conferred. Such directions may only be made for the purposes of securing compliance with an international obligation of the United Kingdom. Clause 20(4) provides that any such direction must be contained in an order made by the Secretary of State; it will be subject to the negative resolution procedure.

Provision of information to the Secretary of State

20.  Clause 21(1) provides that, when directed to do so, OFCOM must provide the Secretary of State with such information as is reasonably required by her so she can secure compliance with an international obligation. This provision enables the Secretary of State to provide the European Commission with information requested pursuant to Article 25 of Directive 2002/21/EC ("the Framework Directive"), Article 16 of Directive 2002/20/EC ("the Authorisation Directive"), Article 15(2) and 17 of Directive 2002/19/EC ("the Access Directive") and Article 36(3) of Directive 2002/20/EC ("the Universal Service Directive"). The direction will also set out the manner by and times at which such information must be provided.

Training and equality of opportunity

21.  Clause 24 requires OFCOM to take all such steps as they consider appropriate to: (i) promote the development of opportunities for the training and re-training of persons for employment by broadcasters or for work in connection with the provision of the services that they provide, otherwise than as an employee; (ii) promote equality of opportunity between men and women and between persons of different racial groups in relation to employment by broadcasters and the training and retraining of persons for such employment; and (iii) promote the fair treatment of disabled persons in relation to such employment, training and retraining. It is envisaged that, under this Clause, OFCOM might, for example, carry out or commission research, publish such research or other information, hold conferences or promulgate codes of practice and other guidance. Subsection (4) defines "equality of opportunity" to be that between men and women and between persons of different racial groups, and Clause 24(6) provides that the Secretary of State may amend this list by adding any other form of equality of opportunity that she considers appropriate (e.g. between persons of different ages). Following the observations of the Committee in its report on the draft Bill, this provision has been changed so that any order under Clause 24(6) must be made by the affirmative resolution procedure.

Secretary of State guarantees for OFCOM borrowing

22.  Clause 26 allows the Secretary of State to guarantee, in such manner and on such conditions as she thinks fit, the repayment of the principal of any borrowing by OFCOM, any interest on such borrowing or any other financial obligation incurred by OFCOM connected with such borrowing. Subsection (3) limits the total amount payable by the Secretary of State in fulfilling any guarantees she may give to a sum not exceeding £5 million. Clause 26(4) enables the Secretary of State, by order, to substitute a different total amount, subject to the requirement in clause 26(5) that the draft order must be laid before Parliament and approved by the House of Commons.

Transfers of property etc. from pre-commencement regulators

23.  Clause 27(1) gives the Secretary of State a power to make directions requiring any pre-commencement regulator to make a scheme or schemes for the transfer to OFCOM of any of that regulator's property, rights and liabilities. The Office of Communications Act 2002 gives the Secretary of State a power to require that such schemes are prepared in draft form. Before making such a scheme the pre-commencement regulator[20] must consult OFCOM, and must submit that scheme to the Secretary of State for approval. The Secretary of State may, if she wishes, approve or modify the scheme after consulting OFCOM. If the pre-commencement regulators fail to make a scheme following a direction under Clause 27(1), then the Secretary of State may devise a scheme herself under Clause 27(10). Such a scheme must be approved by OFCOM.

Transitional functions and abolition of pre-commencement regulators

24.  Clause 28 imposes a duty on the pre-commencement regulators to take all such steps as are necessary or expedient for ensuring that OFCOM are able effectively to carry out their functions from the time that they are vested in OFCOM. Clause 28(2) provides that the Secretary of State may direct the pre-commencement regulators as to how to carry out this duty.

25.  Clauses 28(4) and (5) provide, respectively, that the Secretary of State has a power, by order, to appoint a day for the abolition of the offices of the pre-commencement regulators and of the advisory bodies established under section 54 of the Telecommunications Act 1984. The Secretary of State may appoint different days for the abolition of each of the different regulators and advisory bodies. This power exists to provide some flexibility, so that any relevant practical matters can be dealt with before the pre-commencement regulators are abolished. Clause 395 provides that the negative resolution procedure shall not apply to Clause 28. However, any order must be made by statutory instrument.

Advance notification to OFCOM

26.  Clause 30(1) provides that a person shall not provide a designated electronic communications network or service or make available a designated associated facility unless before beginning to provide it or make it available he has given a notification to OFCOM. Clause 30(2) provides that an electronic communications network, an electronic communications service or an associated facility is designated if it is of a description of network, services or facilities that is for the time being designated by OFCOM as a description of networks, services of facilities for which notification is required. This provision enables OFCOM to ensure that they are notified of all networks, services and associated facilities, which they consider they need to know are being provided or made available (OFCOM must also be informed when a person is no longer providing such a service). Before making or changing any designation, OFCOM must consult with the Secretary of State and any person likely to be affected (Clause 31). It would not be possible to specify these networks, service and associated facilities on the face of the Bill, because given rapid technological changes, it would be impossible to know in advance what these would be.

Penalties for contravention of s. 30

27.  As stated above, Clause 30 allows OFCOM to designate certain classes of networks, services or associated facilities as requiring notification. If it appears to OFCOM that a person has failed to so notify OFCOM, they must allow that person a specified period of time (usually one month) in which to make representations to OFCOM, and to comply with its obligations. If by the end of the specified period OFCOM are satisfied that Clause 30 has still not been fully complied with, OFCOM may impose a financial penalty of up to £10,000. Clause 34(10) enables the Secretary of State by order to substitute a different maximum financial penalty. The order must be made in accordance with the affirmative resolution procedure.

Duty of OFCOM to keep publicly accessible register

28.  This Clause places OFCOM under a duty to keep an up-to-date public register of designations made under Clause 30 or Clause 35, withdrawals of such designations and notifications given to them, or treated as given to them, under Clause 30. Clause 41(4) gives OFCOM the power to publish (and comply with) a notification setting out the times during which the register is available for public inspection and the fees (if any) that must be paid to inspect the register.

Power to set conditions

29.  Clause 42(1) grants OFCOM the power to set conditions. These conditions fall into two groups: general conditions and specific conditions. Specific conditions fall into four sub-groups: universal service conditions, access related conditions, privileged supplier conditions and significant market power conditions ("SMP condition"). The subject matter of these conditions is described in more detail below. The ability to set such conditions replaces the previous system of granting licences, with conditions attached, to run telecommunications systems under section 7 of the Telecommunications Act 1984.

30.  Under Clause 44(2) any condition made or modified must be objectively justifiable, non-discriminatory, transparent and proportionate. Clause 45 explains how conditions are set, modified or revoked. Essentially, it requires OFCOM to publish the proposed conditions and then OFCOM must consider any representation made and any relevant international obligation.

General Conditions

31.  Under Clause 48 general conditions can relate to: protection of end users, securing interoperability and network access, ensuring proper and effective functioning of networks, sharing the burden of universal service obligations (under Clause 68), provision of availability of networks, services and associated facilities in the event of a disaster, compliance with international standards and protection of public health by the prevention and avoidance of exposure to electro-magnetic fields.

32.  Clause 49 creates a duty on OFCOM to set such general conditions (if any) as they consider appropriate for securing that public communications providers establish and maintain procedures, standards and policies regarding the handling of complaints and the resolution of disputes. OFCOM can fulfil this duty by setting general conditions requiring a public communications provider to comply with an approved code of practice relating to complaints handling (Clause 49(4)) or approved procedures for resolving disputes (Clause 49(5)). Such codes and procedures must be approved by OFCOM in accordance with clauses 50 and 51 respectively.

Orders by OFCOM in the absence of conditions under s. 49

33.  Clause 52(1) enables OFCOM, by order, with the consent of the Secretary of State, to take appropriate measures where public communications providers have failed to put in place suitable procedures, standards and policies for complaints handling and dispute resolution, and where OFCOM consider it necessary for the protection of customers or to comply with Community obligations. Appropriate measures by OFCOM may include establishing an independent body corporate to administer and enforce the necessary arrangements and obliging public communications providers to pay for the establishment and maintenance of such a body. Before making an order under this Clause, OFCOM must obtain the consent of the Secretary of State. An order made under this Clause is subject to the procedure set out in Clause 396 and the negative resolution procedure.

The National Telephone Numbering Plan

34.  Clauses 53 to 60 contain provisions for the regulation of telephone numbers. OFCOM are to publish a document, the National Telephone Numbering Plan ('the Plan') setting out the telephone numbers available for allocation and the restrictions on the adoption and use of telephone numbers allocated under the Plan. This implements Article 10.3 of the Framework Directive. Clause 53(7) provides that the Secretary of State may by order exclude such numbers as may be described from the numbers that are to be treated as telephone numbers for the purposes of Part 2, Chapter 1. Because of the constantly evolving nature of communications services, any definition of "telephone numbers" which was limited to what we currently recognise as such would be liable to go out of date. By way of future proofing, the Bill therefore uses a very general definition, in subsection (10). As this would result in catching certain kinds of electronic identifier that do not presently require regulation, the intention is to use the power in this subsection to exclude such things as Internet addresses, e-mail addresses and domain names. An order made under Clause 53(7) is subject to the affirmative resolution procedure.

35.  OFCOM can impose a general condition, by reason of Clause 54(1), that ensures that every end-user is able to communicate with every normal telephone number. This implements Condition 4 of Annex A to the Authorisation Directive.

36.  Clause 55 permits OFCOM to set general conditions in relation to allocation, adoption, use and transfer of telephone numbers.

37.  Clause 56 permits OFCOM to impose numbering conditions on persons other than communications providers. Such conditions will be enforceable in civil proceedings.

Must-carry obligations

38.  General conditions may include provision to ensure that services on the must-carry list are carried by networks which are used by a significant number of end users as their principal means of receiving television. The must-carry list contains the following services: a service of television programmes provided by the BBC in digital form (where the service is one in relation to which OFCOM have functions), digital Channel 3, digital Channel 4, digital Channel 5, S4C Digital and the digital public teletext service. This Clause implements Article 6(1) of, and condition 6 of Part A to the Annex to the Authorisation Directive and Article 31 of the Universal Service Directive.

39.  Clause 61(5) provides that the Secretary of State may by order set the maximum and minimum proportions of available capacity that network providers must use in complying with the must-carry obligations, whilst subsection (6) sets out the factors to which she must have regard when using this power. Clause 61(9) gives the Secretary of State the power, by order, to modify the list of must-carry services. Following the committee's recommendation, subsection (10) of the same clause provides a list of matters that the Secretary of State must consider before adding or removing a must carry service. Under subsection clause 61(11) the Secretary of State can also make an order which sets the terms on which a service on the must-carry list is to be broadcast. This can include a requirement that no payment is made by the service provider or the network provider. The Secretary of State must comply with the negative resolution procedure when making any order under this clause. In addition, before making an order under subsection (5) or, in a case where there has been no review under subsection (7), when making one under subsection (11), she must first consult OFCOM as well as anyone else she feels is likely to be affected by the order.

Obligations to be secured by universal service conditions

40.  Under Clause 62(1) the Secretary of State is required to make an order, which may be varied at any time, to set out the extent to which the electronic communications networks, electronic communications services, (including means of billing and accepting payment for such services), associated facilities, directories and directory enquiry facilities must be provided throughout the UK by universal service providers. Before making or varying the order, the Secretary of State must consult OFCOM and other appropriate persons. The Secretary of State must comply with the negative resolution procedure when making an order.

Designation of universal service providers

41.  Under Clause 63(1) OFCOM have the power, by regulations, to provide for a procedure for designation of communications providers (or persons who are not communications providers, in the case of supplying directories or directory enquiry facilities) who will be subject to universal service conditions. Such regulations must establish an efficient, objective, transparent, and non-discriminatory procedure for designation. Regulations made under this Clause are also to provide for a designation to cease to have effect where all the universal service conditions applying to a provider are revoked. When making such regulations under this Clause, OFCOM must comply with the procedure set out in Clause 396.

Universal Service Conditions

42.  Under clause 64 OFCOM may set any universal service conditions it considers appropriate to secure compliance with the universal service order made under Clause 62. These conditions must include various obligations to provide information and prove compliance.

Sharing of burden of universal service obligations

43.  If, following an analysis under Clause 67, OFCOM conclude that a net financial burden is imposed on the provider of universal services, OFCOM shall assess whether it would be unfair for that provider to shoulder the entire burden. If they determine that it would be unfair, and if the provider applies to them, OFCOM may determine that contributions from other providers, who themselves are subject to general conditions, are to be made. Clause 68(4) provides that all this should be carried out in accordance with regulations made by OFCOM. These regulations should ensure that the calculation, collection and distribution of such contributions is to be done in an objective, transparent, and non-discriminatory way, and in a manner that avoids or minimises any distortion to competition or demand. If any such regulations are made, Clause 69 requires that OFCOM produce a report setting out contributions, market benefits and other relevant determinations. When making such regulations, OFCOM must comply with the procedure set out in Clause 396.

Access-related conditions

44.  Clause 70 sets out the permitted subject matter of access related conditions. The only conditions which can be set as access-related conditions are (1) conditions about the provision of network access and service interoperability; (2) conditions securing that persons to whom the electronic communications code applies participate, where there are no viable alternatives, in arrangements for sharing use of electronic communications apparatus and apportioning costs incurred; (3) conditions of a technical or operational nature which are appropriate for securing the proper operation of an electronic communications network; and (4) conditions relating to the provision of conditional access systems.

Privileged supplier conditions

45.  Clause 74, provides that where a public communications provider enjoys special or exclusive rights in relation to the provision of services in other sectors (other than the provision of associated facilities), OFCOM must set such privileged supplier conditions as they think fit (unless that provider has an annual turnover in relation to all of his communications activities of less than €50 million, in which case OFCOM are not obliged to impose a condition, but may do so if they wish). Such conditions can require privileged providers to keep separate accounts or to have structural separation between different activities. This implements Article 13 of the Framework Directive.

Review of apparatus market identifications and determinations

46.  Clause 82 permits OFCOM to review previous definitions of apparatus markets and market power (if any) and whether to modify any SMP apparatus conditions previously set under Clause 90. Where OFCOM concludes that a person no longer has significant market power in an identified apparatus market, they shall revoke the SMP apparatus conditions imposed upon that person.

47.  Clause 82(6) provides that, where OFCOM have concluded that no person has significant market power in relation to an identified apparatus market, the Secretary of State may by order remove or restrict OFCOM's power under to set apparatus conditions in relation to the identified market. An order under Clause 82(6) is subject to the negative resolution procedure.

SMP Conditions

48.  Clauses 84 to 89 set out the subject matter of SMP services conditions and Clause 90 sets out the subject matter of SMP apparatus conditions. The subject matter of SMP services conditions include conditions about network access, network access pricing, carrier selection and pre-selection, the regulation of services. for end-users and leased lines. The subject matter of SMP apparatus conditions is limited to setting conditions imposing price controls in relation to the supply of hard-wired telephones and conditions requiring accounting separation.

Amount of penalty under section 93

49.  Clause 93 allows OFCOM to impose a financial penalty on a notified provider where a notification of contravention under Clause 91 has been issued and the notified provider is in contravention of any of the conditions specified there and has not within the period allowed by OFCOM for making representations, taken steps to comply with the condition(s) concerned and to remedy the consequences. OFCOM may also impose a penalty where a person is in contravention of a requirement of an enforcement notification issued under Clause 92. Clause 94 sets out the amount of a penalty which can be imposed under Clause 93. The upper limit for such a penalty is ten per cent of the notified provider's turnover, and Clause 94(3) provides that this turnover shall be set in accordance with such rules as may be set out by order made by the Secretary of State. Such an order can also determine what is to be treated as the network, service, facility or business by reference to which the calculation of that turnover falls to be made. This order is subject to the affirmative resolution procedure.

Application of the electronic communications code

50.  Clauses 103 to 116 and Schedule 3 amend the telecommunications code (set out in Schedule 2 to the Telecommunications Act 1984) in order to translate it into a code applicable to apparatus used in electronic communications networks and services. The telecommunications code is designed to facilitate the installation and maintenance of telecommunications systems. It confers rights on operators to install and maintain apparatus in, over or under land and results in considerably simplified planning procedures, similar to those given to utilities.

51.  Clause 103 provides that the electronic communications code will apply to any person in respect of whom OFCOM has made a direction for this purpose. Clause 103(5) provides that such a direction may specify that the code is to apply to the person concerned only in relation to particular places, or particular networks or parts of networks or particular conduit systems or parts of conduit systems.

52.  Paragraph 16(3) of the electronic communications code, as it shall be known, specifies the minimum amount of compensation entitled to the holder of land disrupted by a provider with code powers. Clause 103(6) provides that the Secretary of State has a power, by order, to substitute a different amount for that set out in paragraph 16(3) of the Code. This has been changed from the draft Clause, which gave OFCOM that power, in response to the recommendation of the committee. An order made under section 103(6) is subject to the negative resolution procedure.

Restrictions and conditions subject to which code applies

53.  Under Clause 106(1) the Secretary of State may, by regulations, make the application of the code subject to restrictions and conditions. These regulations will be in place of the conditions and restrictions that were previously contained in the telecommunication operators' licences. In making such regulations, the Secretary of State must consider OFCOM's general duties and their duties for the purpose of fulfilling Community obligations. She must also consider the environment, road-traffic management, the need to encourage the sharing of apparatus and the need to ensure that the provider will be able to meet any liabilities incurred due to the imposition of the code. Before making regulations under this section the Secretary of State must consult with OFCOM and such other person as she thinks appropriate. When making regulations under Clause 106(1), the Secretary of State must comply with the negative resolution procedure.

Penalties for contravention of code restrictions

54.  Where a notified provider has not complied with a notified requirement, or remedied the consequences of the notified contravention, OFCOM may impose a penalty. In deciding on the amount of a financial penalty, OFCOM are required to consider whether the fine is appropriate and proportionate, and to take account of any representations made by the person concerned and any steps taken by him to comply with the condition or restriction in question. The maximum fine that may be imposed under this Clause is £10,000. Clause 109(10) provides that the Secretary of State may by order amend this section so as to substitute a different maximum penalty. Such orders are subject to the affirmative resolution procedure.


3   Paragraphs 81, 120, 135, 136 and 175. For the same reasons some definitions will henceforth be in regulations see paragraphs 133 and 134. Back

4   Paragraphs 21, 123, 165. Back

5   Paragraphs 15, 119. Back

6   Paragraphs 39 and 107. Back

7   Paragraphs 104, 110, 161 and 162. Back

8   Paragraphs 130, 168 and 169. Back

9   Paragraph 102. Back

10   Paragraphs 26, 52, 54, 55, 60, 63, 72, 79, 86, 98, 121, 125, 161. Back

11   Paragraphs 156-158. Back

12   Paragraphs 88, 144, 145. Back

13   Paragraphs 29-32, 35-38 and 40-58. Back

14   Paragraphs 49, 53, 59, 66, 72, 73, 80, 82, 114, 140, 150, 155, 158 and 177. Back

15   Paragraphs 63, 69, 79 and 138. Back

16   Paragraph 166. Back

17   Paragraphs 21, 123, 165.  Back

18   It was Clause 82(5) in the draft Bill of May 2002. Back

19   Paragraph 27. It was Clause 32(9) of the draft Bill of May 2002. Back

20   These are the Broadcasting Standards Commission, the Director General of Telecommunications, the Independent Television Commission and the Radio Authority.

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