Select Committee on Delegated Powers and Regulatory Reform Fourteenth Report


Notification of cessation by person to whom code applies

55.  Where the electronic communications code has been applied to a person who does not provide an electronic communications network of the type designated under Clause 30, and that person ceases to provide the network, he must notify OFCOM. Failure to do so may result in the provider being penalised an amount not exceeding £1,000. Clause 113(8) provides that the Secretary of State may by order amend this section so as to substitute a different maximum penalty. An order under Clause 113(8) is subject to the affirmative resolution procedure.

Transitional schemes on cessation of application of code

56.  Clause 114(1) provides that OFCOM may, by order, put in place a transitional scheme in cases where the electronic communications code has ceased to apply to a provider by reason of the code being either suspended, or revoked or modified in relation to that provider. An order made under this Clause is subject to the procedure under Clause 396.

Power to set conditions in relation to premium rate services

57.  Clause 117(1) gives OFCOM the power to set conditions in relation to the regulation of the provision, content, promotion and marketing of premium rate services. These are limited to conditions that require providers of premium rate services to comply with directions given in accordance with the code for premium rate services approved by OFCOM under clause 118 or if there is no such code, to comply with the provisions of an order made under Clause 119.

Approval of the Code

58.  If a code has been produced for the regulation of premium rate services (by another), then OFCOM may approve it under Clause 118(1). They can only approve the code if they are satisfied that there is a person who will enforce it, that person is independent, there are adequate funding mechanisms and the provisions of the code are objectively justifiable, non-discriminatory, transparent and proportionate.

Orders by OFCOM in the absence of a code under s. 118

59.  Clause 119(1) permits OFCOM to make an order imposing requirements with respect to the content, provision, promotion and marketing of premium rate services (including pricing) and their enforcement, where OFCOM consider there is no third-party code to which it is appropriate to give, or to continue to give, their approval under Clause 118. OFCOM's powers to make an order includes those to establish a corporate body to adopt its own rules, to determine the jurisdiction of that body or, for the purposes of the order, any other person, to confer jurisdiction over any matter to OFCOM themselves, to provide for a person on whom jurisdiction is conferred by the arrangements to make awards of compensation and/or to direct the reimbursement of costs or expenses and to enforce any awards. OFCOM must obtain the consent of the Secretary of State before making an order under Clause 119 and the power to make an order under this section is subject to the procedure under Clause 396 and the negative resolution procedure.

Enforcement of s. 117 conditions

60.  OFCOM may enforce conditions set under Clause 117 in accordance with Clauses 91 to 93. In deciding on the amount of a financial penalty under Clause 93, OFCOM must consider whether the fine is appropriate and proportionate to the contravention for which it is imposed and take into account any representations made by the premium rate service provider concerned as well as any steps taken by him to comply with the notified condition and remedy any consequences of a contravention. The penalty may not exceed £100,000. Clause 120(4) allows the Secretary of State by order to amend the maximum penalty, provided she complies with the affirmative resolution procedure.

Notification of misuse of networks and services

61.  Clause 125 gives OFCOM powers of enforcement in respect of persistent misuse of an electronic communications network or an electronic communications service. Where OFCOM determine that there are reasonable grounds to believe that a person has persistently misused an electronic communications network or an electronic communications service, OFCOM may notify that person accordingly, and allow him a specified period to make representations.

62.  Clause 125(8) enables the Secretary of State, by order, to specify uses of an electronic communications network or an electronic communications service that shall not be treated as a misuse of a network or service where she considers that appropriate alternative means of dealing with those uses exist. An order under Clause 125(8) is subject to the negative resolution procedure.

Penalties for persistent misuse

63.  Clause 127 allows OFCOM to impose a penalty if a person notified under Clause 125 has persistently misused an electronic communications network or an electronic communications service or if a person to whom an enforcement notification has been issued in accordance with Clause 126 has not complied with the notification. The penalty may not exceed £5,000. Clause 127(9) allows the Secretary of State to amend by order the maximum penalty. Such orders are subject to the affirmative resolution procedure.

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

64.  Clause 129(1) gives the Secretary of State a power to direct OFCOM to issue a person with a direction to suspend or restrict that person's entitlement to provide a network, service and/or associated facility where it appears to her to be necessary to protect the public from any threat to public safety or public health, or in the interests of national security. This is permitted by Article 3 of the Authorisation Directive.

65.  Subsection (2) places OFCOM under a duty to comply with any such direction by the Secretary of State. Once a suspension or restriction is in place, both the Secretary of State and OFCOM must allow the person in question an opportunity to make representations to them and to propose steps for remedying the situation. OFCOM may modify the terms of a suspension or restriction imposed under this Clause. Clause 129(9) permits the Secretary of State to direct OFCOM to revoke and/or modify a suspension or restriction imposed under this Clause. The Secretary of State is not required to comply with either the affirmative or negative resolution procedure when making a direction under this Clause.

Restrictions in leases and licences

66.  Clause 131(3) amends any provision, in any lease, licence or other premises-related agreement granted or entered into after the commencement of this Clause, which prohibits or restricts an occupier's choice of electronic communications services providers to a person who has an interest in the relevant premises or a person selected by a person with an interest in the relevant premises. Clause 131(4) amends any provision, in a lease of one year or more granted or entered into after the commencement of this Clause or in a premises-related agreement to which such a lease applies, that imposes any other prohibition or restriction on the lessee relating to an electronic communications matter where such prohibition or restriction relates to anything done inside a building occupied by the lessee or for purposes in connection with the provision of an electronic communications service by a communications provider to the lessee.

67.  Under Clause 131(6), OFCOM has the power by order to exclude certain provisions in leases, licences or other premise-related agreements falling within the remit of Clause 131. Under Clause 131(9), OFCOM may also by order apply the provisions of Clause 131 to leases, licences or other premise-related agreements entered into before the commencement of Clause 131. OFCOM must comply with the procedure set out in Clause 396 when making an order under either Clause 131(6) or Clause 1319).

68.  Under Clause 131(8), the Secretary of State has the power by order to specify that a public electronic communications network is a relevant electronic communications network for the purposes of this Clause.

Penalties for contravening information requirement

69.  Clauses 132 and 133 give OFCOM information-gathering powers. Where it appears to OFCOM that a person is or has been in breach of any requirement under either clause 132 or 133, they may by Clause 135 notify that person accordingly, and allow him a specified period of time (usually one month) in which to make representations to OFCOM and to take steps to comply with the notified requirement. Where a notified provider has not complied with a notified requirement, or remedied the consequences of the notified contravention, OFCOM may impose a penalty. The maximum fine that may be imposed under this Clause is £50,000. Clause 136(9) provides that the Secretary of State may by order amend this section so as to substitute a different maximum penalty. Orders made under Clause 136(9) are subject to the affirmative resolution procedure.

Directions with respect to the radio spectrum

70.  Clause 153(1) gives the Secretary of State a power, by order, to give general or specific directions to OFCOM about the carrying out of their spectrum functions. They may include a direction: (a) to reserve certain frequencies for different classes of use or user, for example broadcasting, mobile telecommunications, private business systems, air traffic control or radio astronomy, or within a class, for example for the provision of additional digital television or sound broadcasting multiplexes; or (b) to exercise their powers under the proviso to section 1(1) of the Wireless Telegraphy Act 1949 and sections 1 to 3A of the Wireless Telegraphy Act 1998 in accordance with the provisions of the direction. This power is in addition to the power conferred on the Secretary of State by Clause 5 to give directions for limited purposes in accordance with which OFCOM must exercise their functions. Clause 154 subjects orders under clause 153 to the affirmative resolution procedure. Orders must be laid before each House and approved before they take effect. In cases of urgency, the order may be made straight away before being approved by each House. However, they must then be laid before Parliament and cease to have effect if not approved by both Houses within 40 Parliamentary days.

Grant of recognised spectrum access

71.  Clauses 156 to 159 introduce a new scheme of "recognised spectrum access". Recognised spectrum access ("RSA") will offer greater security and quality of access to spectrum to persons who, in circumstances to be specified by OFCOM in regulations, transmit radio signals for reception in the United Kingdom, but who are not currently required to hold a licence under the Wireless Telegraphy Acts. The scheme is likely to apply to operators of wireless telegraphy stations or apparatus (for example, satellites) that are located outside the UK, who cannot be licensed under the current legislation and so cannot formally be recognised in spectrum management decisions. RSA will not be compulsory. The intention is that RSA will result in greater assurance that a service will be taken into account in spectrum planning and will be free from interference within identified parameters. It is also expected to help ensure more effective management of the radio spectrum by facilitating spectrum trading and extending incentives to use spectrum more efficiently. Clause 156(1) provides that RSA will be available where a person is proposing to use or to continue to use a station or apparatus for wireless telegraphy in circumstances specified by regulations made by OFCOM. Clause 156(5) permits the grant of RSA to include such restrictions and conditions as OFCOM think fit. OFCOM must comply with the procedure set out in Clause 396 in making the regulations.

Charges in respect of grants of recognised spectrum access

72.  Clause 158 amends section 1 of the Wireless Telegraphy Act 1998 to allow OFCOM to set the fees to be paid on the making of a grant of RSA. Clause 158(3) also inserts a new section 3A into the Wireless Telegraphy Act 1998 Act that makes provision for OFCOM to determine applications for the grant of RSA by means of an auction as specified by regulations made under section 3A. The regulations may make provision for restrictions and conditions subject to which grants are to be made. These provisions are similar to those for spectrum licences under section 3 of the 1998 Act.

Conversion into and from wireless telegraphy licences

73.  Clause 159(1) provides that OFCOM may by regulation make provision for the conversion of a wireless telegraphy licence into a grant of RSA, and vice versa. This will enhance flexibility in spectrum use, especially in frequency bands that are shared by licensed services and services that have RSA. OFCOM must comply with the procedure set out in Clause 396 when making regulations under Clause 159(1).

Limitations on authorised spectrum use

74.  Clause 161(1) provides that, where OFCOM consider it appropriate to limit the number of wireless telegraphy licences or grants of RSA on certain frequencies or for certain uses for the purpose of ensuring efficient spectrum management, they must do so by order. The purpose of this duty is implement Article 7 of the Authorisation Directive and ensure transparency in spectrum management. The order must set out the criteria OFCOM will apply in limiting the number of grants and deciding to whom to issue licences or RSA. The criteria must be objective, non-discriminatory, proportionate and transparent. OFCOM must keep the criteria under review. Clause 161(7) provides that it shall be a duty of OFCOM to make an order revoking or amending any provision of an order made under Clause 161 if, on reviewing it, they consider it necessary to do so for the purpose of securing the efficient use of the electro-magnetic spectrum. When making any order under clauses 161(1) and 161(7), OFCOM must comply with the procedure set out in Clause 396.

Exemption from need for wireless telegraphy licence

75.  Clause 163 amends the Wireless Telegraphy Act 1949 to require OFCOM, by regulation, to exempt certain stations or apparatus from the requirement to be licensed under the Wireless Telegraphy Act 1949 where the use is unlikely to cause undue interference (as redefined in Clause 180). This implements Article 5(1) of the Authorisation Directive.

Spectrum Auctions

76.  Clause 164 amends section 3 of the Wireless Telegraphy Act 1998 so that the regulations made and notices issued by the Secretary of State that set out the procedures and rules for the auction of radio spectrum licences are replaced by regulations for that purpose made by OFCOM (which by virtue of paragraph 150 of Schedule 17 are to be made in accordance with clause 396). The clause also amends the provision which can be made by those regulations, principally by allowing the prescription of alternative types of bids and of combinations of different types.

Spectrum trading

77.  Clause 165(1) gives OFCOM the power to make regulations authorising the holder of a wireless telegraphy licence or the holder of a grant of RSA to transfer the rights and obligations under their licence or RSA grant to another person. This will enable the development of a secondary market in licences and RSA where this is permitted by OFCOM. It is envisaged that spectrum trading will be introduced progressively and will be tailored to the technical and market characteristics of the service in question. Subsection (3) sets out the range of provisions that may be included in regulations authorising spectrum trading. For example, under paragraphs (c) and (e) regulations may require the approval of OFCOM before a trade can be made, and may make trades subject to compliance with conditions imposed by OFCOM. Under paragraph (i), the regulations may require that trades be notified to OFCOM both in advance of, and after, the trade taking place. OFCOM must comply with the procedure set out in Clause 396 when making regulations under this Clause.

Wireless telegraphy register

78.  Clause 167(1) provides that OFCOM may, by regulation, set up a public register of information about the holders of wireless telegraphy licences, and those to whom recognised spectrum access has been granted. This may also include details about the licences and frequencies assigned. The regulations may also prescribe when the register shall be open to the public. OFCOM must comply with the procedure set out in Clause 396 when making regulations under this Clause.

Amount of penalty under s.172

79.  Clause 172 gives OFCOM a power to impose penalties for breach of content conditions in any "general multiplex licence". This will bring the enforcement regime for such multiplexes into line with that under the Broadcasting Acts of 1990 and 1996. Clause 173(1) provides that the maximum penalty that OFCOM may impose under this Clause will be the greater of either £250,000 or 5% of the relevant amount of gross revenue. Clause 173(4) provides for the Secretary of State to amend by order the amount specified (but not the percentage of revenue). This flexibility reflects provisions in the Broadcasting Act 1990 and allows the maximum to be adjusted in the light of changing circumstances. Any orders made under Clause 173(4) are subject to the affirmative resolution procedure.

"Relevant amount of gross revenue" for the purposes of s. 172

80.  Clause 174(4) provides that a person's gross revenue for any period, for the purposes of Clause 172, is to be calculated in accordance with principles published by OFCOM. OFCOM must consult the Secretary of State and Treasury before issuing the principles and the Secretary of State must lay them before Parliament. This process mirrors that in the analogous provisions of schedule 1 to the Broadcasting Act 1996, as amended by the Bill. The principles may also make provision about the manner of determining the extent to which any part of a person's gross revenue is attributable to the provision of any service.

Modification of definition of "wireless telegraphy"

81.  Clause 181(1) gives the Secretary of State the power, by order, to modify the definition of "wireless telegraphy" in section 19(1) of the Wireless Telegraphy Act 1949 so as to vary the upper frequency limit (currently 3,000 Giga-Hertz) of the electromagnetic spectrum to which the Wireless Telegraphy Acts apply. Although current technology does not permit the use for radiocommunications of frequencies anywhere near that limit, as technology progresses it may be necessary to raise the ceiling. Such an order would be subject to the affirmative resolution procedure.

References of disputes to OFCOM

82.  Certain disputes between communications providers may be referred to OFCOM for resolution. Clause 182(4) provides for references to be made in such manner as OFCOM may require by notice published under Clause 182(5). No Parliamentary procedure applies to this notice.

Appeals against decisions by OFCOM, the Secretary of State etc.

83.  Clause 189(3) and (4) applies rules of the Competition Appeal Tribunal made under section 15 of the Enterprise Act 2002 to the procedure and time for appealing to the Tribunal against decisions of OFCOM under Part 2 of the Bill and certain other decisions. Under section 15, the rules are made by the Secretary of State subject to annulment by either House.

Reference of price control matters to the Competition Commission

84.  Clause 190(2)(a) also applies the rules of the Competition Appeal Tribunal made by the Secretary of State under section 15 of the Enterprise Act 2002 subject to annulment by either House, in this case to the way and time in which the Competition Commission must decide price control matters referred to them by the Tribunal.

85.  Clause 190(2)(b) enables the rules of the Competition Appeal Tribunal made by the Secretary of State under section 15 of the Enterprise Act 2002 subject to annulment by either House to empower the Tribunal to give directions to the Competition Commission about the way and time in which the Commission must decide price control matters referred to them by the Tribunal.

Functions of OFCOM in relation to the BBC

86.  Clause 195(3) provides that where set out in an Agreement between the BBC and the Secretary of State, OFCOM may impose penalties on the BBC for contraventions of the Agreement or of provisions of the Bill or Part 5 of the Broadcasting Act 1996. The maximum penalty that OFCOM may impose is £250,000. However, under Clause 195(6), the Secretary of State may by order amend the maximum penalty that may be imposed on the BBC. When making an order under this Clause, the Secretary of State must comply with the affirmative resolution procedure.

Borrowing limits for C4C

87.  Clause 199(1) permits the Secretary of State by order to limit the amount of money that the Channel 4 Corporation is permitted to borrow. Before making an order under this Clause, the Secretary of State must comply with the negative resolution procedure. She must also consult the Channel 4 Corporation and obtain the consent of the Treasury.

Welsh Authority's function of providing S4C and S4C Digital

88.  Under Clause 201(8) the Secretary of State may by order modify any Act resulting from the Bill or any other enactment to require the Welsh Authority to provide S4C in digital rather than analogue form, to merge S4C and S4C Digital, and to apply enactments relating to S4C and S4C Digital to the merged service. Such an order may require the provision of the whole or part of the merged service in analogue digital simulcast for a period specified in the order. Before making an order, the Secretary of State must comply with the negative resolution procedure.

Powers to provide other services

89.  Clause 202 confers on the Welsh Authority the power to provide certain broadcasting services (other than S4C and S4C Digital). If such services are provided, amongst other things, the service must be a public service of high quality for the dissemination of information, education or entertainment wholly or mainly to the Welsh public. Under Clause 202(1)(b), the Welsh Authority must obtain the approval of the Secretary of State for such a service and any such approval must be given in an order. The order must also set out the nature and characteristics of the service and (if it is a television service) its public service remit. When making an order under Clause 202(1)(b), the Secretary of State must comply with the negative resolution procedure.

Other activities of Welsh Authority

90.  Clause 203 enables the Welsh Authority to carry out activities in association with, and connected (other than merely in financial terms) with the provision of S4C, S4C Digital or other service approved by the Secretary of State under Clause 202. Clauses 203(2) and (3) require the Secretary of State to approve by order the carrying out of these activities. However, the Secretary of State may not authorise the Welsh Authority to provide a licensable service directly, although a licensable service could be provided by a S4C company. Any order under Clause 203(2) is subject to the negative resolution procedure.  

Welsh Authority finances

91.  Clause 204(7) amends section 61 of the Broadcasting Act 1990 so that the Secretary of State may increase the annual grant paid to the Welsh Authority if she is satisfied that additional funding is appropriate in light of the costs to the Welsh Authority of providing its public services and broadcasting and distributing such services. In making an order under this Clause the Secretary of State must comply with the affirmative resolution procedure.

The Gaelic Media Service

92.  Clause 206 inserts a new section 183A into the 1990 Act. This new section creates a Gaelic Media Service. The board of this service must presently include a member nominated by the BBC, a member nominated by Highlands and Islands Enterprise and a member nominated by Bord Gaidhlig na h-Alba (the Gaelic Development Agency) ("the GDA"). The Secretary of state will be empowered under the inserted section 183(10) to amend the reference to the GDA, by a negative resolution order. This will enable the Secretary of State to ensure that appropriate body for promotion of Gaelic, should it cease to be the GDA, is always able to nominate a member to sit on the Gaelic Media Service board.

Conditions in relation to Analogue broadcasting

93.  When OFCOM issues a licence to a broadcaster they must, under Clause 211(2), license the broadcast to be in digital form and must, if appropriate, include conditions requiring the service to be transmitted in analogue form. Clause 211(3) requires that any such analogue broadcasting conditions must be tailored to enable effect to be given to any direction made, from time to time, by the Secretary of State about the continuation of analogue broadcasting services.

94.  Similar duties fall on OFCOM in relation to the licence for Channel 4. Clause 211(2) is mirrored in Clause 228(3), and Clause 211(3) in Clause 228(4).

Meaning of "initial expiry date"

95.  Clause 221(2) allows the Secretary of State, by order, to postpone the date on which the Channel 3, Channel 5 and public teletext licences will expire, and to ensure that these licences will not expire less than eighteen months after the date set for digital switchover. This power can only be exercised if the date set for switchover is later than 30 June 2013 (see subsection (3)). 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). Any order made under this clause is to be subject to the negative resolution procedure.

Orders suspending right of renewal

96.  Under Clause 226 OFCOM will have a duty to report to the Secretary of State on the effect of conditions which would be included in the renewed licences on the capacity of Channel 3, 5 and public teletext services to fulfil their public service remit at a commercially sustainable rate. OFCOM may also recommend under subsection (4) that the Secretary of State suspend the right of renewal. If the Secretary of State receives such a recommendation, if she believes it is appropriate to do so, she may provide by order under Clause 227 that some licences are not to be renewed. This order must be made at least eighteen months before the end of the current licensing period and it must apply either to all licences to provide a Channel 3 service, or to all the licences to provide a national Channel 3 service or to all the licences to provide a regional Channel 3 service. Further, subsection (4) provides that this power 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 before the end of that period. Subsection (6) makes clear that 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. Any order made under this clause is to be subject to the affirmative resolution procedure.

Modification of ss. 229 and 230

97.  Clause 231(1) provides that the Secretary of State may modify Clause 229 or Clause 230 (which between them define what is, and what is not, a service requiring a television licensable content service licence), if she considers it appropriate. She may also by order provide that a description of service specified in the order is no longer to be licensable. In making any modification, she must take into account the level of protection expected by the public as respects the content of television programmes and text services, taking into account the means of reception; the ability of the public - having been made aware of the contents of a forthcoming programme - to control what they watch; technical innovation; the financial consequences of modification; and the relative ease or difficulty of setting different levels of regulation for different services. Such orders are subject to the affirmative resolution procedure.


 
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