Communications Bill

Public Bill Committee, 17 December 2002.

Standing Committee E

Communications Bill

Roger Gale (Conservative, North Thanet)

Before we start, I am pleased to note that the programming issues have been resolved satisfactorily by the usual channels. Also, I draw the Committee's attention to the fact that clause 28 is definitional—if there is such a word—and is fairly tightly drawn. Several amendments to it have been tabled, and we shall consider them in a moment, but I do not propose to permit the Committee to enter into a ''how many angels can dance on a head of a pin'' debate.

Michael Fabricant (Conservative, Lichfield)

On a point of order, Mr. Gale. When we terminated the previous sitting, you said that you would report the fact that about half of a group of amendments could not be discussed because we ran out of time according to the agreed guillotine. I wonder whether you have had any feedback that you could report to the Committee.

Roger Gale (Conservative, North Thanet)

I received the Hansard report of those proceedings only this morning. It is my intention to draw Sir Alan Haselhurst's attention to the verbatim report, so that he can see precisely what was said.Clause 28 Meaning of electronic communications networks and services

Clause 28 - Meaning of electronic communications networks and services

Andrew Robathan (Conservative, Blaby)

I beg to move amendment No. 62, in

clause 28, page 25, line 19, leave out paragraph (b) and insert—

'(b) such of the following as are used, by the person providing the system, for the conveyance, including switching or routing, of the signals—

(i) apparatus comprised in the system; and

(ii) software and stored data.'.

Roger Gale (Conservative, North Thanet)

With this we may discuss the following: Amendment No. 217, in

clause 28, page 25, line 24, leave out from 'service' to end of line 26 and insert

'which consists wholly or mainly in the conveyance of signals on electronic communications networks but excludes content services'.

Amendment No. 63, in

clause 28, page 25, line 28, leave out paragraphs (a) and (b) and insert—

'(a) is available for use incidentally to the use of an electronic communications network or service; and

(b) is so available for the purpose of—

(i) making the provision of that network or service possible; or

(ii) otherwise supporting the provision of that network or service.'.

Amendment No. 227, in

clause 28, page 25, leave out from beginning of line 30 to the word 'and' in line 31.

Amendment No. 218, in

clause 28, page 26, line 14, leave out from 'means' to end of line and insert

'any service which consists wholly or mainly'.

Amendment No. 219, in

clause 28, page 26, line 21, leave out from 'the' to the end of line 22 and insert

'transmission services in networks used for broadcasting but excluding services providing content'.

Andrew Robathan (Conservative, Blaby)

I can assure you that I shall not dwell on how many angels can dance on the head of a pin, Mr. Gale, although that is quite topical.

Chapter 1 of part 2 sets out the new regulatory framework for electronic communications largely according to the European Commission communications directives. Therefore, to a certain extent, it is not controversial, although we may have some discussion about the interpretation of the definitions in the clause. We are entering upon a technical subject in which my physics with chemistry O-level will, I am sure, come in very useful—as, indeed, will the time that the Minister for Tourism, Film and Broadcasting spent at Hornsey college of art.

We welcome the Minister for E-Commerce and Competitiveness to the Committee for the first time. He was not here last week, and it is nice that he has turned up. I was interested to learn that in 1986 he wrote a book or pamphlet entitled ''Broadband Communications: The Commercial Impact'', and another on ISDN. He used to work for a company called Ovum, a consultancy in computing and telecommunications, and was a major shareholder before he sensibly put the shares into a charitable trust. Those of us who stopped at chemistry O-level in 1966 look forward to him enlightening us on one or two technical issues.

Amendment No. 62—and the others in the group—tease more out of the definitions. We are concerned about gold-plating the definitions in the Bill. As drafted, the definition of ''electronic communications network'' includes apparatus comprised in the transmission system concerned; apparatus used for ''switching or routing'' the signals; and ''software and stored data'' used

''by the person providing the system and in association with it, for the conveyance of the signals''.

The amendment would simplify and clarify the definition by eliminating the words ''in association with'', which seem unnecessary and might make the definition dangerously wide. The amendment would eliminate the confusing duplication of the term ''apparatus'' by ensuring that the ''software and stored data'' referred to—the mention of ''data'' is for my hon. Friend the Member for Lichfield (Michael Fabricant)—is the software and data stored in exchanges to ensure that calls are properly routed. The clause currently allows regulation to spill over unpredictably into other areas—one area that might be affected is the billing system. The Government should bring certainty to the markets and encourage investment by clarifying what they want.

Amendment No. 217 to the definition of ''electronic communications service'' would represent or translate the wording of the framework directive. It would substitute the test of ''mainly'' for the test in the Bill of ''principal feature''. The distinction is important, because under the tests contained in the EU directive, a service can be regulated as an electronic communications service only if it consists wholly or mainly in the conveyance of signals.

Michael Fabricant (Conservative, Lichfield)

To follow on from my hon. Friend's point on amendment No. 62, does he agree that the entire nub of amendment No. 217 is contained in the last four words, ''but excludes content services''?

Andrew Robathan (Conservative, Blaby)

My hon. Friend is right. The amendment proposes that ''wholly or mainly'' should replace ''principal feature'', which would mean that if more than 50 per cent. of a system were to consist of other services, it could not be regulated as an electronic communications service. If the Bill's ''principal feature'' test is used, a service may be up for regulation if, for instance, 30 per cent. of it is a conveyanced service but it has seven other features that each make up 10 per cent. The 30 per cent. service would be the principal feature, even though the service group consisted mainly of non-conveyance activities.

Amendment No. 63 is intended to find out from the Minister the exact meaning of ''associated facility''. As the Bill is currently drafted, that term is defined extremely widely. It could bring within the scope of regulation all sorts of facilities that the directives did not intend to be regulated. The framework directive offers conditional access systems and electronic programme guides as examples of associated facilities, as do the Government's explanatory notes to the Bill. However, unless the term is limited in some way, it could leave a variety of other facilities open to regulation: for example, poles, ducts and trenches could fall within the current definition. Do we want the companies that dig trenches for telecoms companies to be subject to communications regulations? Does the Bill intend that the regulations should cover firms that sell content, marketing or distribution services to companies that provide electronic communications services?

Amendment No. 227 also addresses the definition of ''electronic communications network''. It currently includes apparatus, but the definition in article 2 of the European framework directive is significantly narrower in scope; it refers to systems and equipment that

''permit the conveyance of signals''.

We believe that the Bill should follow the wording of the definition in article 2 of the framework directive, where electronic communications network means,

''transmission systems and, where applicable, switching or routing equipment and other resources which permit the conveyance of signals''.

In the context of associated facilities, and the broadband objectives, one recommendation of the Broadband Stakeholder Group is that barriers to third parties providing similar infrastructure—which could

include the ducts and trenches—should be removed. We think that clause 28 should be revised: the words in brackets in subsection (3)(a) should be excised:

''(whether or not one provided by the person making the facility available)''.

That would align the provision with article 2(e) of the European framework directive, and it would allow the regulation of the third party providing civil infrastructure to fall outside Ofcom's scope.

Amendments Nos. 218 and 219 approach the same confusion from a different angle. They also address the definition of electronic communications service, and they seek to ensure that broadcasting is excluded from its scope. It is clear that, under the definition set out in the framework directive, broadcasting is not an electronic communications service because it is a content service—as my hon. Friend the Member for Lichfield said—and because it does not ''wholly or mainly'' consist in the conveyance of a signal. It is a service that is mainly, if not wholly, the provision of content to end users, and therefore should not be categorised as an electronic communications service. Although the signals used to transmit the contents services could theoretically constitute a service, under the ''wholly or mainly'' test they should not be treated as a separate service, and, in any case, they are not necessarily provided by the broadcaster. Therefore, broadcasting should not be regulated as an electronic communications service under part 2 of the Bill.

In essence, we are concerned about changes in the definition from the European Union framework directive and that it may constitute gold-plating of the EU legislation. I am sure that the changes have been introduced by good legal minds with good intent, but, in an international environment, it should be easier to see the international agreement clearly placed in legislation. Why have the changes to article 2 of the framework directive taken place? Do they represent gold-plating and might not sticking to the definitions in the directorate lead to divergence and confusion?

Richard Allan (Liberal Democrat, Sheffield, Hallam)

Although we are pushed for time, it is worth trying to get some more clarity from the Minister on the definitions in this group of amendments. As the hon. Member for Blaby (Mr. Robathan) said, the Minister, who has a distinguished record in information technology consultancy, is in an ideal position to clarify matters.

Clarity of language is important. As we introduce legislation to take us through the 21st century, it is interesting that we are talking about impartations of things between people and actuations of apparatus. Some of the language, which has presumably been deemed necessary by parliamentary counsel, will be difficult for people outside the House to understand without clarification.

The definition of the content service, as mentioned by the hon. Member for Blaby, will become increasingly important. My understanding of the clause as drafted is that the intention is to exclude those parts of the business that are primarily about producing and creating content. We have moved on from the issue of content regulation to try to define how we regulate an electronic communications

network. I understand that the clause is not trying to regulate the bit that is involved in the production of content. To what extent does the Minister believe we can do that in an age of vertical integration—that horrible phrase—when the real life examples that people will think of are companies such as AOL/Time Warner?

The whole logic of the business of such companies is to bring together content and network provision. How does the Minister see the provision operating in practice, when such companies have deliberately brought together the two services as part of their business model? Is the intention or expectation that companies will somehow be easily able to separate out the content elements? That could happen with a traditional broadcast network, and I understand that satellite networks are covered when programme providers can clearly be defined. However, with the internet, it may be less straightforward to define the provision of content as being a content service as opposed to part of the network service.

How will the provision work on an international basis? Again, the integration processes of companies are increasingly international. We are attempting to regulate people who may conduct the greater part of their business outside United Kingdom jurisdiction. With a satellite broadcaster the point is specific—the satellites are clearly not in the UK. How far in practice can we regulate satellites that have UK footprints in terms of the definition in the Bill?

New media and internet companies conduct a large part of their business outside the UK. If one is an AOL/Time Warner subscriber, the data—the important part of the content of the network—are stored in the United States. Questions surrounding telecoms charges make it viable for companies to base most of their service in the US, where international calls and the bandwidth are cheaper than in the European Union. That is a wider debate, but there is a question over the way in which the definitions that are tested by the amendments will be applied to companies who have elements of their business that form one network but are scattered across different jurisdictions. That particularly applies to those who operate in the US and in the EU. Through the directive, we are heading towards a single framework, which is logical and sensible. However, the US has gone its own way as regards data protection law, taking a direction that is much less regulatory and much more laissez-faire. The US might cry foul and say that we are seeking unfair restraint of trade by insisting that it has our data protection standards. To what extent do the definitions allow us to have the regulatory regime that we want within our agreed EU framework while applying it to a communications network that spans the Atlantic?

Andrew Lansley (Conservative, South Cambridgeshire)

I want to ask the Minister one question. Clause 28 and subsequent clauses of chapter 1 of part 2 substantially implement aspects of the EC directives—in this case, as my hon. Friend the Member for Blaby said, article 2 of the framework directive. It is curious that, presumably for drafting reasons, some of the

language is not precisely the same as that in the framework directive, although it is presumably intended to deliver exactly the same result. It is particularly odd because the Joint Committee took the view that it might be desirable to emphasise the point by including a provision analogous to the section 60 of the Competition Act 1998, whereby competition provisions should be interpreted in a way that is consistent with European law in order to align the two. The Government's response was that as regards competition law we were in some respects acting within the UK, with UK legislation, for UK purposes, but intended to align ourselves with EU law and therefore needed to instruct the UK courts to do so because they would not do it automatically. Under the Bill, however, they will do so, because article 249 of the treaty requires us to transpose the EC directive into UK law. Therefore, the definitions and provisions in the chapter will necessarily be interpreted by UK courts in a way that is consistent with the originating EC directives.

Clause 74 refers to the necessity that a reference

''to dominance of a market must be construed in accordance with . . . provisions of Article 14 of the Framework Directive.''

Why does at least one other part of the chapter need to cross-refer to the provisions of the originating directive, given that across the chapter as a whole all the definitions and provisions will be interpreted in line with the EC directive? Will the Minister explain how that has come about? I recall that in the scrutiny Committee on the draft Bill we had a piece of paper that directly related the provisions in the Bill to the originating provisions in the Community directive. I do not have a piece of paper that does that in relation to the new Bill. I imagine that it is available, so will the Minister provide it to help the Committee?

Roger Gale (Conservative, North Thanet)

Order. I will now do what I should have done earlier and welcome the Minister of State for the Department of Trade and Industry to his place.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Before the Minister replies, Mr. Gale, I want if I may to add one or two points to those made by my hon. Friend the Member for Blaby.

As the clause relates to definitions, the whole scope of Ofcom's activities will be determined by getting those definitions right. I particularly seek clarification in respect of last week's debate on clause 13 on consumer research. I questioned the fact that the current draft of the Bill appears to allow Ofcom to commission research about the views of consumers of electronic communications services. The definition of electronic communications services, as it stands, suggests that it could include television broadcasts, even though the Independent Television Commission and Oftel accept that television broadcasts are not such services. In his response to me on Thursday, the Minister said that my point was technically correct and that we could, perhaps, discuss it later and get greater clarity. As we are discussing the clause that deals with the issue of definitions, this is a good opportunity for us to obtain the clarity that the Minister promised.

I will make some additional points, not to repeat those that have already been made by my hon. Friend,

but to support what he said about the definition and meaning of electronic communications networks. My hon. Friend has already pointed out that the definition in the Bill is different from that of article 2 of the framework directive. My hon. Friend the Member for South Cambridgeshire (Mr. Lansley) also referred to that matter.

A potential problem exists regarding the definition in clause 28 that includes, as my hon. Friend said, apparatus as well as software and stored data. That could open up a panoply of ex ante regulation in an area of economic activity in which there is not a strong case for regulation. There is some inconsistency here: Ofcom can only regulate licensees, or those who come under its general authorisation, and an attempt to widen its remit in terms of the definition of networks which is contained in the clause might lead to confusion about who is a licensee under Ofcom. That could lead to a conflict between Ofcom and the Office of Fair Trading, in which the OFT would have an overarching responsibility for matters relating to competition. There might be a problem if Ofcom started to involve itself in industries that went beyond the narrow scope of electronic communications networks.

Brian White (Labour, North East Milton Keynes)

The Bill is about the movement and merger of different industries. Does the hon. Gentleman mean to say that when non-regulated industries move into this area regulations should cease, or does he mean that it should be the other way round—that Ofcom should seek to divest itself of regulation? In effect, much of the regulation will cease to exist.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I agree with the hon. Gentleman that flexibility is necessary, because technological change will happen more rapidly in this sector than many others, and it is difficult to predict precisely how providers will evolve and what kind of services they will provide in future. I accept that there is a need for flexibility. It is important, however, that we should set Ofcom's boundaries at this stage. We should make it clear that where providers are presently supplying services that do not seem to fall under the narrow definition of the EU directive, the Bill should not allow Ofcom to expand its remit into such areas and create confusion. I accept the hon. Gentleman's point about flexibility, but it is important that we should get on record something from the Minister about those areas in which it would not—certainly not at present—be appropriate for Ofcom to get involved.

The third issue I wanted to touch on is that of associated facilities. That refers directly to the recommendation of the Broadband Stakeholder Group that issued a report in November 2002. I am sure that the Minister is familiar with the report, because he is responsible for that group. The report said:

''For such a model to work, it would be necessary to address the regulatory . . . barriers to third parties providing such facilities. The regulatory issues include making the Code Powers currently applicable to communication companies available to civil infrastructure providers and ensuring that the provisions of the Communications Bill accommodate this requirement.''

It is quite easy to think of several ways in which third parties could assist in the provision of all sorts of parts of the network, from ducts, trenches and masts to cable. If that is to be allowed to happen, it is quite important that the clause does not act as a barrier to that third-party provision. That is another reason why it is particularly important that there should be a precise definition of ''associated facility'', and why we have tabled amendment No. 227, which would take

''whether or not one provided by the person making the facility available''

out of clause 28(3)(a). I invite the Minister to address those points.

Stephen Timms (Labour, East Ham)

I thank the hon. Member for Blaby for his kind words of welcome—at least, I think that is what they were—and must also say how pleased I am that you are in charge of our proceedings this morning, Mr. Gale. I vividly recall your participation in the Committee that considered the Broadcasting Bill in 1996. I also served on that Committee, as did several hon. Members present. We can be confident that our deliberations are being presided over by a Chairman who is extremely well informed on the matters raised in the Bill.

We are discussing a chapter of the Bill that deals with the regulation of electronic networks and services, and are implementing some important obligations arising from four European Union directives. My hon. Friend the Minister for Tourism, Film and Broadcasting referred to those four last Thursday. They were adopted by the EU earlier this year. They are the framework, the authorisation, the access and the universal service directive. Together with the new directive on privacy and electronic communications, they are the main building-blocks of the new EU regulatory framework for communications networks and service providers.

The UK was constructively engaged in the negotiations for that framework, which is a comprehensive overhaul of existing European law on the regulation of this subject. The framework will provide a harmonised structure for communications regulation across Europe. That is very much needed, given the increasingly international nature of communications, as the hon. Member for Sheffield, Hallam (Mr. Allan) rightly said. Certainly, the UK strongly supports the new framework.

The current legislation, under the Telecommunications Act 1984, is focused on the running of systems. A licence is required for the running of any system. The relevant regulatory requirements are largely set out in the conditions attached to the licences. The Bill will abolish the requirement for licensing and will repeal the relevant sections of the 1984 Act. The new regulatory framework, set out in the Bill, starts from the same point as the directives with the proposition that persons wishing to provide electronic networks and services should be free to do so without having to obtain prior permission. That is the fundamental difference between the old regime and that set out in the directives and the Bill.

Those wishing to provide electronic networks and services may, however, be required to make an appropriate notification to Ofcom. They will have to comply with the regulatory obligations set out in the new framework. The three key definitions in the clause are those of ''electronic communications network'', ''electronic communications service'' and ''associated facility''. Those three are fundamental to the new framework.

On amendment No. 64, let me make it clear that I entirely understand that there are some concerns about the way in which ''software and stored data'' has been included in the definition of ''electronic communications network''. I am aware that the industry is concerned that the explicit mention of ''software and stored data'' might be caught as part of the network for the purposes of UK regulation even if they were not being used in connection with the network. I understand that concern, but I can assure the Committee that that will not happen.

The specific examples of remote dial-up access software and encryption software have been mentioned. They are typically used by users, not network providers. If they are not used by the network provider, they are not caught under the definition. Concerns have been expressed that software used by the network providers in other contexts might be caught, but it will not be if it is used for something other than the conveyance of signals. The definitions set the boundaries at the right point.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

Will the Minister clarify that encryption software built into the network by the network provider—as in the Government's network—would be caught by the definition, as opposed to personal encryption software that a user might choose to use?

Stephen Timms (Labour, East Ham)

That is certainly my understanding. If software is used for the conveyance of signals in the way that the hon. Gentleman describes, it is caught within the definition.

Brian White (Labour, North East Milton Keynes)

There are several examples of hardware, which would be currently caught, being translated into software. Does the Minister intend that such software should be caught by the definition?

Stephen Timms (Labour, East Ham)

I am not quite sure which examples my hon. Friend has in mind, but as he has described the situation, the answer would be yes. If the software were being used to perform a function that in the past was performed by network equipment, it would come within the definition.

Andrew Lansley (Conservative, South Cambridgeshire)

I wonder whether the example of encryption software is a good one. My interpretation is that it is an associated facility for the purpose of the Bill, rather than part of the electronic communications network. It might, for example, be part of the conditional access system that would be used. Under the EC directive, that would be seen as an associated facility.

Stephen Timms (Labour, East Ham)

It would depend on the situation in which the software was used. The software will be caught only if it is associated with the system and used

for the conveyance of signals. I thought that that was the example that the hon. Member for Sheffield, Hallam had in mind.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

That is precisely what I was suggesting. Satellite systems have conditional access systems, which use encryption as an associated facility. The supplier of the computer network may want to build in encryption software for all its users. I am grateful to the Minister for clarifying that building in the encryption would probably be caught under the definition.

Stephen Timms (Labour, East Ham)

That was a helpful clarification of the position.

More generally, it has been suggested that software should only be caught to the extent that it is used in switching and routing. That would be too narrow a view. The directive clearly recognises that there can be other resources besides switching and routing equipment that permit the conveyance of signals. Such resources, of which software is one, are not limited in the directive to the context of switching and routing. It would be wrong to include them only in that context.

Amendment No. 62 deals with a slightly different issue. It excludes from the definition of an electronic communications network any apparatus used for the switching and routing of signals, if that apparatus is not comprised in the system. That would not be consistent with the directive. It provides that an electronic communications network means transmission systems and, where applicable,

''switching or routing equipment . . . which permits the conveyance of signals''.

Switching and routing equipment that is not comprised in the system may nevertheless be included in the definition where it is involved in the conveyance of the signals. The Bill has the effect that the directive sets out, but the amendment would not.

Amendment No. 219 would remove two helpful clarifications from the Bill. The first is that conveyance of signals can include parts of signals as well as whole signals—that may be a little esoteric, but in our view it is helpful to have it in the Bill. The second is that conveyance of signals includes the broadcasting of signals for general reception, an established concept in UK legislation.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Does the Minister nevertheless accept my earlier point that television broadcasts do not come under the definition of electronic communications services?

Stephen Timms (Labour, East Ham)

Yes, but the transmission of material to be broadcast around the networks does come under that definition. There are terrestrial networks around the country used for conveying material for broadcast from television transmitters, and it is important that that element comes under the definition here. That is one reason why we are not able to accept some of the amendments. We need to make sure that this tight set of definitions is precisely right.

Amendment No. 63 would substitute a new definition of ''associated facility''. Instead of applying to facilities available for use ''in association

with'' an electronic communications network or service, that definition would apply to facilities available for use ''incidentally to the use of'' such a network. I am not sure whether that is a very significant change, but the amendment would omit the useful clarification that the associated facility can be supplied by someone other than the provider of the network or service. Amendment No. 227, too, expressly removes that clarification, which is helpful and should stay in the Bill.

Under amendment No. 218, all electronic communications services would be classified as either content services or non-content services. However, the directive explicitly specifies that transmission services in networks used for broadcasting fall under the definition of an electronic communications service. That was the point that I just made to the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale). The Bill, therefore, excludes from the definition of an electronic communications service only those parts of such a service that consist of content provision or the exercise of editorial control over content. We have been very careful to transpose the fundamental definitions properly.

I now turn to some other points made in our interesting discussion. I am very pleased that the hon. Members for Blaby and for Maldon and East Chelmsford referred to the civil infrastructure code. That was highlighted in the excellent recent report of the Broadband Stakeholders Group. The Bill makes the change that that group called for. The civil infrastructure code is dealt with in clause 102 and following clauses, so we shall discuss it fully when we reach those clauses. The change is important because it opens up the possibility for others to contribute to the establishment of communications infrastructure, such as local authorities. The Broadband Stakeholders Group was right to highlight that significant matter, and I am pleased that we have been able to include it in the Bill. Certainly, nothing in the definitions in clause 28 undermines that change.

The hon. Member for Sheffield, Hallam asked about distinguishing content services and transmission. The question there is whether particular services fall under the definition of electronic communications services. I suggest to him that that can be decided by considering the service. In future, I am sure that tricky judgments will have to be made, but, as far as the definition is concerned, and as far as putting the directive into UK law is concerned, the position is reasonably clear.

The hon. Member for South Cambridgeshire asked for a table showing how and where the directives have been implemented. I think that what he was asking for is in appendices 2 and 3 of the explanatory memorandum. If anything is missing, the hon. Gentleman may wish to raise the issue again. He felt that there was inconsistency because some parts of the Bill, but not others, contain references to the directives. He is right to say that there is an explicit reference in clause 74. That is there because the directives are especially complex at that point and

there was a real possibility of ambiguity. The parliamentary draftsmen concluded that it was not possible to produce a full transposition without the reference to the directive. However, that is very much the exception; in this part and most other parts of the Bill, the position is as set out in the Government's response to the point raised by the Joint Committee.

I think that I have covered the points that have been raised and I hope that the hon. Member will feel able to withdraw the amendment.

Andrew Robathan (Conservative, Blaby)

The Minister has given a full and thorough explanation of what is intended. I am still a little concerned about some of the changes to definitions, but I assume that that has been done with the best of intentions and with the best legal minds in the civil service hard at work. I hope that that will lead to greater clarity and not to confusion. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 28 ordered to stand part of the Bill.

Clause 29 - Advance notification to OFCOM

Andrew Robathan (Conservative, Blaby)

I beg to move amendment No. 64, in

clause 29, page 26, line 38, leave out from 'service' to end of line 39.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to take amendment No. 65, in

clause 34, page 32, line 19, leave out paragraph (c).

Andrew Robathan (Conservative, Blaby)

Amendment No. 65 relates to clause 34 but it is consequent upon amendment No. 64, which relates to clause 29 (1). Clause 29 (1) requires a person who provides a ''designated associated facility'' to notify Ofcom of

''his intention to provide . . . that facility''.

Apart from the fact that the definition of ''associated facility'' is so wide that Ofcom will have wide discretion in designating such facilities, there is no authority under the EU authorisations directive for making associated facilities the subject of notifications to Ofcom. On the contrary, article 3.3 of the directive states:

''notification . . . shall not entail more than a declaration . . . to the national regulatory authority of the intention to commence the provision of electronic communication networks or services''.

The directive does not therefore provide for notification of associated facilities, which should be taken out of the notification procedure. This appears to be a classic case of more gold-plating of EU directives. That will put the UK out of line with other European markets and affect our competitiveness; it will also put us out of line with Government intentions as stated by the Better Regulation Task Force—namely the reduction of red tape.

Stephen Timms (Labour, East Ham)

The hon. Gentleman is right in what he said about the authorisation directive but, as I said a few minutes ago, four directives are being transposed into UK law and the access directive clearly foresees the regulation of persons who make available associated facilities. That is why such facilities are mentioned in clause 29. To ensure that regulation is effective, Ofcom may very well need to know who is

making associated facilities available. So clause 29 is not inconsistent with the directives. It is reasonable to provide for the possibility that associated facilities should be designated alongside designated networks and services, if Ofcom deems that necessary.

I emphasise that the provision is only a power. That is consistent with the Bill's requirement not to impose unnecessary obligations. Oftel's current view—I stress that it is a current view—is that, for the time being, there should be no designated networks, services or associated facilities requiring advanced notification. However, the provisions are necessary to implement the limitations that the authorisation directive imposes on any notification process and to circumscribe Ofcom's power, if it considers that such a notification process is required in the future. We need to have in the Bill the ability for a notification process to be introduced. Oftel currently has no intention of taking the option up.

John Robertson (Labour, Glasgow Anniesland)

Will my hon. Friend clarify a point? As I see it, one of the problems with Oftel is that it seems to slow up applications for new systems and technology and so on. That is particularly true in relation to larger companies. Is the Minister saying that, although Ofcom will need to be notified of what is happening, there will be no need to stop work and that services can continue to be put out, while Ofcom makes its mind up about whether the proposal is a good idea?

Stephen Timms (Labour, East Ham)

It will continue to be important that Ofcom is vigilant about the danger of anti-competitive behaviour, which is possible in this area, but the essential point that my hon. Friend made is absolutely right. In the future licences will not be required: that is a significant deregulatory measure.

On amendment No. 65, it is entirely reasonable to expect those who provide associated facilities, which are subject to some degree of regulation under the new regime, to share in the costs of the regulatory arrangements. It would not be fair to load all those costs on to other parties. Again, the power is an enabling one. The Bill does not mean that providers of associated facilities will be subject to the charging regime; it means that providers of ''designated'' associated facilities will be charged. At the moment there is no intention of there being any ''designated'' associated facilities. Given that reassurance, I hope that the hon. Gentleman will feel able to withdraw the amendments.

Andrew Robathan (Conservative, Blaby)

I do not doubt the Minister's good intentions, although I have some lingering concerns about agreeing to enabling powers that he suspects will not be used. Giving anybody powers that might be used in the future is something of which Members should always be wary. However, given the Minister's assurances, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

I want briefly to follow up what the Minister said about not expecting the powers in clause 29 to be invoked. Will the decision on whether to invoke the powers on the statue book be entirely in the hands of the board of Ofcom? Is it correct that there would be no further reference to outside authority, whether ministerial or parliamentary?

My other point relates to the interaction between clause 29 and clause 40. Clause 40 states that there needs to be a publicly accessible register of the advance notifications in clause 29. If no advance notification is required, because the clause 29 powers are not invoked by Ofcom, how will there be public access and an understanding of who are network or communication service providers? Are there other provisions that will allow the public to find out who is within the regulatory framework? Clause 40 seems to be the main point at which a publicly accessible register is highlighted.

I understand and sympathise with the deregulatory idea of not invoking the advance notifications in clause 29 if they are not necessary. From the public's point of view, however, the bit that has been left out is a way of finding out which services have come on stream or, more importantly, which have gone off stream. There have been high profile failures involving communications service providers such as telephone providers that have caused knock-on problems for businesses, there is sometimes a business interest in having access to information even if one does not wish to put a regulatory hurdle in the way.

I can envisage some people becoming increasingly dependent on their communications networks. People will want to turn to Ofcom to find out who is coming on stream and who is coming off stream, which is perhaps more important. If there is no way other than invoking clause 29 for the public to find out that kind of information, there could be a problem.

Stephen Timms (Labour, East Ham)

The hon. Gentleman's first point about whether Ofcom can go ahead, should it choose to, without referring elsewhere is correct. It would be entirely for Ofcom to decide whether it took up those powers at some point in the future. His point about the register is right: at the moment, it is not envisaged that there will be any requirements for advanced notification, and therefore the register will have nothing in it. One could say that that is a disadvantage of the deregulatory approach, which we, and the rest of the European Union, are now adopting. There was never a possibility that everybody would have had to register, so there will never be a complete register.

There are, of course, other sources of information. Clause 23, which the Committee debated last week, covers the publication of advice for consumers, and it helps to fill the gap. In terms of the register, however, the hon. Gentleman is absolutely right.

Andrew Lansley (Conservative, South Cambridgeshire)

I am sorry to delay the Committee. I am losing track of what the Minister was telling the Committee about the access directive in relation to the requirement for notification of associated facilities. He has helpfully drawn our attention to the relationship

between directives and the clause, and I can see the relationship between the authorisation directive and the clause. Perhaps he will run through how the access directive relates to the clause because it will clearly stretch the clause beyond what the authorisation directive is intended to do.

Stephen Timms (Labour, East Ham)

Yes. As I was saying earlier, the access directive foresees the regulation of persons who make associated facilities available.

Andrew Lansley (Conservative, South Cambridgeshire)

Where?

Stephen Timms (Labour, East Ham)

The hon. Gentleman asks me where from a sedentary position. I do not have that information in front of me but I am sure that I will swiftly have it. That is one of the things that the access directive does, which is why it needs to be picked up in clause 29. Perhaps I will drop the hon. Gentleman a line to point out exactly where that is.

Andrew Robathan (Conservative, Blaby)

Before the Minister finishes, is he saying that the access directive and the authorisation directive are contradictory?

Stephen Timms (Labour, East Ham)

No. The Bill needs to transcribe all those directives into UK legislation, and that is what it does.

Question put and agreed to.

Clause 29 ordered to stand part of the Bill.

Clauses 30 to 32 ordered to stand part of the Bill.

Clause 33 - Penalties for contravention of s.29

Clause 34 - Fixing of charges

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move amendment No. 89, in

clause 34, page 32, line 9, leave out from beginning to 'or'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to take the following amendments:

No. 90, in

clause 34, page 32, leave out line 23.

No. 220, in

clause 35, page 34, line 46, at end insert 'or'.

No. 221, in

clause 35, page 35, line 1, leave out paragraph (c).

No. 222, in

clause 35, page 35, line 10, at end insert 'or'.

No. 223, in

clause 35, page 35, line 11, leave out paragraph (c).

No. 224, in

clause 38, page 38, line 4, leave out paragraph (b).

No. 225, in

clause 41, page 41, line 3, leave out subsection (7).

No. 87, in

clause 41, page 41, line 3, leave out 'either'.

No. 88, in

clause 41, page 41, line 4, leave out from 'condition' to end of line 5.

No. 226, in

clause 41, page 41, line 6, leave out 'services'.

No. 91, in

clause 41, page 41, line 12, leave out subsection (9).

No. 92, in

clause 42, page 42, line 39, leave out subsection (9).

No. 93, in

clause 46, page 46, line 14, leave out subsection (6).

No. 115, in

clause 98, page 93, line 3, leave out 'or 97'.

No. 96, in

clause 98, page 93, line 4, leave out 'or contravening supplier'.

No. 97, in

clause 98, page 93, line 10, leave out 'or the contravening supplier'.

No. 116, in

clause 98, page 93, line 14, leave out 'or 97'.

No. 98, in

clause 98, page 93, line 15, leave out 'or contravening supplier'.

No. 117, in

clause 98, page 93, line 23, leave out 'or 97'.

No. 99, in

clause 98, page 93, line 32, leave out 'or contravening supplier'.

No. 118, in

clause 98, page 93, line 39, leave out from '96' to end of line 40.

No. 100, in

clause 131, page 120, line 42, leave out paragraph (e).

No. 101, in

clause 139, page 128, line 24, leave out subsection (2).

John Whittingdale (Conservative, Maldon and East Chelmsford)

Despite the fact that I am about to speak to a lot of amendments—23 in all—they all relate to a simple point, which deals with the provisions under clause 89 and Ofcom having the

power to determine that a supplier of apparatus has significant market power. I take apparatus to mean telephones or equipment that is plugged into the network. Not that long ago, there was significant market power in the supply of apparatus—indeed, there was one supplier of apparatus. That was in the days of nationalisation when BT, in a former incarnation, said that if we wanted a telephone, it would let us have one in six months' time and the telephone would be square and it would be black.

The world has moved on since then and, if we visited Dixons today, we would find a vast array of different types of telephone that can be plugged in. There would be different colours and shapes; some of the telephones would look like Mickey Mouse and others would be even more exotic. The one point that is fairly clear is that there is a fairly aggressive competitive market in the supply of apparatus.

Michael Fabricant (Conservative, Lichfield)

My hon. Friend has made a series of powerful points. Is he aware that the Minister is likely to say, ''Ah, but what about those telephones that are hard wired into the wall and cannot be replaced by equipment bought at Dixons or Currys?''

John Whittingdale (Conservative, Maldon and East Chelmsford)

I congratulate my hon. Friend on his telepathy and on knowing what is going through the Minister's mind. I agree with him. I intended to talk about hard-wired telephones.

John Robertson (Labour, Glasgow Anniesland)

I know a little about hard-wired telephones. Can the hon. Gentleman say how many there are? I have not seen one for about 10 years. I should be interested to know the answer.

John Whittingdale (Conservative, Maldon and East Chelmsford)

That is an interesting question. The hon. Gentleman has anticipated the point that I am about to make. Some 200,000 hard-wired telephones with a circular dial are currently attached to BT's network. I am not as great an expert as my hon. Friend the Member for Lichfield, so I do not quite know why one needs a hard-wired telephone, although I understand that Kingston Communications also operates some.

The Government might well consider it necessary to include provisions covering the supply of apparatus to take account of the specific instance of hard-wired telephones, but such provisions potentially go further than hard-wired handsets and might suggest that Ofcom's scope will extend to the whole market for the supply of telephone apparatus. That would go considerably beyond the requirements of the European directive, which makes no provision at all for regulating the supply of telephones and other electronic communications apparatus, whether based on the supplier having significant market power or not.

The amendments would remove references in the Bill to Ofcom acting in a market for the supply of apparatus in which it is determined that there is significant market power. The provisions are a flagrant example of gold-plating and they are completely unnecessary under the terms of the EU directive. If there is a need to address hard-wired telephones specifically, which Opposition and Government Members identified—although, as the hon. Member for Glasgow, Anniesland (John Robertson) said, few

are left—there must be a better way of narrowly focusing the Bill to do that.

Michael Fabricant (Conservative, Lichfield)

My hon. Friend said that he did not know whether there was a necessity for phones to be hard wired or, indeed, why they are hard wired. Would it be helpful if I told him that there is no earthly reason—nor any technical reason—why they must be hard wired? They are hard wired only because no one has gone around homes to fit new connectors to allow the phones to be soft wired and connected with a plug.

John Whittingdale (Conservative, Maldon and East Chelmsford)

That is a helpful intervention, which confirms the fact that the number of such phones is likely to continue to shrink. A specific provision therefore becomes steadily less necessarily.

My real concern is not the provision to deal with the few hard-wired telephones, but the way in which provisions could be used to extend Ofcom's power to a huge sector of the market in which strong competition exists and in which it is completely unnecessary for Ofcom to have a remit.

John Robertson (Labour, Glasgow Anniesland)

I shall make a few points about what the hon. Member for Maldon and East Chelmsford said about hard-wired telephones. The people who have hard-wired telephones are probably those who want them. They will have them either because the phones are antique, or because they like having a phone that is different from those that belong to other people.

Michael Fabricant (Conservative, Lichfield)

I take the hon. Gentleman's point about antiques—I have a friend who has a red telephone from Lancing fire station in his home in Lichfield, which is interesting to me because I originated in the area near Lancing. However, my friend has had the telephone connected with a plug that fits in the standard BT-type socket. He therefore has an antique phone—if a 30-year-old phone can be called antique—that is soft wired. Such phones do not have to be hard wired.

John Robertson (Labour, Glasgow Anniesland)

The hon. Gentleman addresses my next point. Hard-wired phones represent fewer than 1 per cent. of all phones. These days, we plug phones in. Conservative Members seem to be hung up on the fact that things must be plugged into a wall, but we have to look forward, and onwards and upwards. Ten years from now, the number of people with plug-in telephones will be roughly the same as the number of people who currently have hard-wired telephones.

Andrew Robathan (Conservative, Blaby)

A wager?

John Robertson (Labour, Glasgow Anniesland)

I will have a chat with the hon. Gentleman after this sitting.

It is important that the Bill consider other apparatus. We must look ahead. If we keep looking backwards, there will be nothing in the Bill worth talking about in six months, because we will have moved on. In all cases, we have to provide for the future, not for the past. I will win my bet in 10 years' time, when it will be important that the Bill covers telephones that are no longer plugged into anything.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

I have a point to make on hard-wired telephones, so I look forward to clause 89, which deals with them.

The provisions deal with a small section of the telephone-using population—we have heard that there are 200,000 such phones. The thrust of the Bill is to create competitive markets and use competition law generally to deal with the telecoms and broadcasting market as with other spheres of activity. The solution—it would obviate the need for the specific provisions to be in the Bill—would be for the incumbent supplier of the hard-wired telephones to make a binding commitment, saying that anyone who sought to leave the hard-wiring arrangement could go to a normal socket at the expense of the supplier and therefore avail themselves of the huge array of phones that start at £9.95 or whatever. Then primary legislation need not include specific provisions in relation to significant market power status for those telephones.

Will the Minister clarify whether at any point the supplier of those 200,000 phones—I understand that, historically, BT has the obligation—has ever come forward with such an offer? Would he welcome it as a way to avoid legislation that will become redundant in time?

Stephen Timms (Labour, East Ham)

The hon. Member for Maldon and East Chelmsford is right: there is no requirement in the directives. However, member states are free to impose their own regulatory requirements if they want to do so. In the United Kingdom, we want Ofcom to be able to regulate the position for the benefit of the consumer.

As we have heard, slightly more than 200,000 hard-wired telephones are still in use—I understand that one of them is used by the sister-in-law of my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller), but there are 199,999 others. In addition, 3 million people still rent a handset from their operator. Therefore, the matter is not tiny; it remains significant.

Michael Fabricant (Conservative, Lichfield)

The Minister raised an interesting point about the fact that 3 million subscribers rent their handsets, but are they not free to terminate that rental at any time?

Stephen Timms (Labour, East Ham)

The hon. Gentleman is right. The licences of BT—it is the principal operator, although Kingston Communications is involved too—currently provide for price control of charges for hard-wired phones and for the possibility of accounting separation of apparatus supply from other aspects of the business. So long as hard-wired telephones remain on the system and so long as significant numbers of users continue to rent apparatus from the dominant supplier of services in their areas, there will still be a need for some protection of the consumer.

Andrew Robathan (Conservative, Blaby)

I have to say that I do not know a great deal about hard-wired telephones, but I am concerned to discover that 3 million people still rent their telephones—largely, I suspect, from BT. They are likely to be elderly people, who may not have realised that they could buy their telephone, paying for it out of the annual rental. I am not in favour of a nanny

state, but is there some way to lead such people to understand that they might not be getting a good commercial deal?

Stephen Timms (Labour, East Ham)

The hon. Gentleman makes an interesting point. It may be that many of those 3 million people could be better off if they were to make that change.

John Robertson (Glasgow, Anniesland) rose—

Stephen Timms (Labour, East Ham)

It is likely that, over time, the regulations set out in clause 34—and, as the hon. Member for Sheffield, Hallam said, in clause 89—will become unnecessary. I do not think that we have yet reached that point, but it likely that we shall. That is why we have included in the Bill a mechanism to enable the Secretary of State by order to remove or restrict Ofcom's power to set significant market power apparatus conditions when Ofcom informs the Secretary of State that there are no dominant providers in the relevant market.

I hope that I have reassured the Committee that is there is a mechanism to remove the provision if it is not needed in future. It is in BT's and Kingston's current licences. Our view was that we should not simply remove it given that there are significant numbers—

Michael Fabricant (Conservative, Lichfield)

Will the Minister give way on that point?

Stephen Timms (Labour, East Ham)

No, because I must give way first to my hon. Friend the Member for Glasgow, Anniesland. Before I do so, let me say that it would not be appropriate simply to scrap the provision now. However, it may be appropriate to do so in future.

John Robertson (Labour, Glasgow Anniesland)

On the subject of elderly people who do not know any better than to rent their telephone, I must tell the hon. Member for Blaby that renting has been on the go for some 20 years and that those elderly people were not elderly when they first started renting. It is quite insulting to anyone of that age to be told that they did not know any better.

Stephen Timms (Labour, East Ham)

My hon. Friend makes a telling point. However, Ofcom does have a duty to give information to consumers and perhaps that ought to be publicised.

Michael Fabricant (Conservative, Lichfield)

Did the Minister say that the reason why he felt that the amendments should not be accepted was that Ofcom could tell the Secretary of State that there was not a significant market domination? Should it not be the other way around? The point of the amendments is to prevent Ofcom from imposing its will on the market. If the Secretary of State cannot say to Ofcom that it has no locus because there is no significant market domination, there is a need to include the provision in the Bill. Will the Minister clarify whether Ofcom needs to go to the Secretary of State, or can the Secretary of State impose the condition on Ofcom?

Stephen Timms (Labour, East Ham)

The question here is whether it is possible to have SMP apparatus conditions at all. If the amendments were to be agreed to, it would not be possible to have those conditions. My argument is that, at the moment, it is appropriate that those

conditions remain in the BT and Kingston Communications licences. At some time in the future, however, they may no longer be necessary. It would then be for Ofcom to take the initiative in the way that the hon. Gentleman describes. Ofcom would be under a duty to approach the Secretary of State in those circumstances—that is set out in clause 81.

John Whittingdale (Conservative, Maldon and East Chelmsford)

This has been an extremely illuminating debate. I was slightly surprised to find that so many people still possessed hard-wired telephones. I was even more astonished to discover from the Minister that 3 million people still rent their telephones, although my surprise was lessened when I discovered that two of the 3 million appear to be sitting beside me—both confessed in my ear that they still rent their telephones. Perhaps there is a great body of people in need of Ofcom's protection.

The one thing that the Minister has clearly stated—I am grateful for his confirmation—is that the provision goes way beyond anything that is required under the EU directive. Time and time again, we hear complaints about the Government gold-plating directives. They usually deny the allegation vigorously, but it is obvious that that is occurring in this case. I suspect that there is a more focused way in which to address that concern about half our telephones than including a general provision to allow Ofcom to regulate any part of the apparatus supply market in which it believes there is significant market power.

I take the Minister's point about giving direction to Ofcom and I do not want to press the amendment to a vote, but I hope that he will keep the matter under review, because there needs to be strong justification for gold-plating directives. I am not saying that it should never be done—there may be circumstances in which it should be done, but the Government need to be certain that to go beyond the terms of a directive is a real necessity. On the basis of what the Minister has said, I am not convinced that there is such a necessity in this case. None the less, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Andrew Robathan (Conservative, Blaby)

I beg to move amendment No.66, in

clause 34, page 32, line 30, after 'statement', insert 'published'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss amendment No.67, in

clause 34, page 32, line 33, at end insert—

'(3A) Before making a statement under subsection (3), OFCOM must consult such of the persons who, in their opinion, are likely to be affected by it as they think fit'.

Andrew Robathan (Conservative, Blaby)

The fixing of charges derives from articles 6, 12 and 13 of the authorisation directive, but surely it is not the Government's intention to give Ofcom unlimited power and free rein without any requirement to consult. I am concerned about the charging principles. How will Ofcom determine the charging principles to which the provision refers? I am concerned that, unless something is inserted in the Bill, Ofcom may not be restrained in its behaviour. We should be wary about giving Ofcom powers that we may come to regret.

Our amendment proposes inserting the word ''published'' because we want transparency, as does the Better Regulation Task Force. That principle is also included in the framework directive, which the amendment attempts to implement. The Minister should note that the collection of administration charges for these purposes is not necessary for the implementation of the provisions in the authorisation directive. Is this more gold-plating?

Stephen Timms (Labour, East Ham)

Let me first refute the charge about gold-plating. It is true that the provision that we just discussed was not set out in the directive, although it is included in the existing BT and Kingston Communications licences. Not everything in the Bill has emerged from directives, including that provision. My case, however, is that it is appropriate for that to be included in the Bill, so the charge of gold-plating cannot be made—in fact, we are anxious to avoid gold-plating.

The hon. Member for Blaby makes a fair point about the importance of consulting and publishing when a charge is envisaged, but clause 35(5) states:

''Before making or revising a statement of charging principles, OFCOM must consult such of the persons who, in OFCOM's opinion, are likely to be affected by those principles as they think fit.''

The hon. Gentlemen's point is a fair one, but it is dealt with in clause 35.

Andrew Robathan (Conservative, Blaby)

That is an extremely good answer. In fact, it is irrefutable, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move amendment No.68, in

clause 34, page 32, line 43, at end insert

'and reflect the extent to which those persons on whom it will fall to pay charges under this section will be the beneficiaries of the regulation under this Part of other persons'.

This is, to some extent, a probing amendment. It relates to the provision whereby Ofcom will levy charges on those that it regulates. I do not necessarily argue with that. It flags up the paradox that the benefit of the regulation is often felt more by those that are outside its scope and are not regulated, but compete with a dominant market player that is. The more a body, company or provider is regulated, the more likely it is, as a result of the provision, to have to pay the charges that Ofcom is to levy. The object is to encourage the Minister to explore whether it would be fair if the regulations' beneficiaries as well as their sufferers contributed to the costs.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

The amendment is helpful in that it allows us to explore the link between the benefits of regulation and the amounts paid by those being regulated. The principle works for the individual regulators that will form Ofcom, but it could prove to be quite contentious for the operators in that we are bringing together under one roof—the Ofcom roof—different charging regimes operated by the existing regulators for different services. Committee members would welcome some background information about

the current charging regimes so that we can project forward to what Ofcom might do, although I know that that will be difficult because Ofcom will set the charges in future.

I am particularly interested in the points about convergence. How are we, in the spirit of the amendment, to relate the benefits of the regulation to the value in the business, when those are not clear? One can see a difference between a low-value, small reseller of telephone or internet services and a large broadcaster, but we will increasingly encounter conglomerates that bring together a range of interests. They will want to see a clear relationship between the value of their businesses and what they have to pay to their regulator. That relationship is not currently apparent. There are settled conditions under the existing regulators, because people have accepted those formats, but they might jockey for position as the new framework is established. It would be helpful to have clear information from the Minister to flesh out the charging issue now or in a background briefing.

Stephen Timms (Labour, East Ham)

The basis of existing telecoms licence fees, with which the industry is familiar, is a simple percentage of turnover. That has the advantage of being transparent and broadly equitable, and it has on the whole worked well. The directive acknowledges that a turnover-related charge would be fair, simple and transparent, so that is the basis on which Oftel is working up proposals for the charging principles that will be used by Ofcom. When that work has progressed a little further, I shall send information to Committee members.

I cannot see an advantage in the more complicated and uncertain approach envisaged in this admittedly probing amendment. I suggest to the hon. Member for Maldon and East Chelmsford that the assessment would be difficult to make and, very likely, controversial. There would be a wide range of views about what the correct outcome of the assessment ought to be. That would create uncertainty, and it would be different from the basis on which charges are currently levied.

I think that on the whole the approach that has thus far been used, which it is intended that Ofcom use, is the right one. However, it might be helpful to the Committee if I circulate some more information about the way in which we expect those charging principles to be developed.

John Whittingdale (Conservative, Maldon and East Chelmsford)

It was my intention that the amendment should be probing. To some extent I share the reservations that the Minister expressed about the way in which it would work in practice. Its purpose was to draw from the Minister helpful suggestions such as the one he made about circulating more information about the charging principles. I am grateful to the Minister and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 34 ordered to stand part of the Bill.

Clause 35 ordered to stand part of the Bill.

Clause 36 - Notification of non-payment of charges

Michael Fabricant (Conservative, Lichfield)

I have some questions regarding the notification of non-payment of charges. I am pleased to see that there are provisions whereby Ofcom cannot unilaterally and suddenly announce that charges will be made against the licensee. However, I am curious to know whether there are any provisions for charging interest for late payment. That issue was discussed at great length during proceedings on the Office of Communications Bill. Where are those provisions, and what rate of interest would be applied?

Stephen Timms (Labour, East Ham)

There are no such provisions, and there is no intention to impose interest.

Michael Fabricant (Conservative, Lichfield)

I am grateful for the Minister's reply. If what he said is true, the only remaining option if someone does not pay on time is the nuclear option of withdrawing a licence, which is available under the Office of Communications Act 2002. Perhaps the Minister would like to consider how the Bill could be amended later. I am quite stunned. It is most unusual for any organisation not to have provision to charge interest on late payment. Even the Inland Revenue has such provisions. If the Bill does not provide such provisions, the nuclear option of withdrawing a license is all that is left. That seems particularly draconian. Would the Minister consider introducing such a provision?

Stephen Timms (Labour, East Ham)

I am happy to reflect on what the hon. Gentleman said. However, it is not clear to me that the alternative is the nuclear option that he outlined. Enforcement is an essential part of a charging system, and it is important that the money involved is recovered. I will reflect on the point that the hon. Gentleman made, and on whether explicit legislative sanction would be required. It would be possible to enforce the penalty by normal procedures—court orders and so on. That is the mechanism through which it is envisaged that money would be recovered. I shall reflect further on whether provisions on interest are necessary, though it is not clear to me why they should be.

Michael Fabricant (Conservative, Lichfield)

I am grateful to you, Mr. Gale, for indulging me. The Minister said that he was not sure why such provisions were necessary. I think that they are necessary because if a small radio or ITV company, or any other broadcaster, such as a small satellite broadcaster, were to have cash-flow difficulties, it might decide to pay suppliers that charged interest sooner rather than later. If no such provision is available to Ofcom, that broadcaster may consistently decide to leave paying Ofcom licence or other charges until the last minute.

Stephen Timms (Labour, East Ham)

I am happy to reflect further on the points that the hon. Gentleman has made.

Question put and agreed to.

Clause 36 ordered to stand part of the Bill.

Clauses 37 to 40 ordered to stand part of the Bill.

Clause 41 - Power of ofcom to set conditions

Richard Allan (Liberal Democrat, Sheffield, Hallam)

The clause relates to the power of Ofcom to set conditions on the providers of network services. I believe that it would be helpful to consider at this point the speed of access to database networks, which I assume comes within that area, so that the Minister can perhaps think about it. We may well return to the issue later when we talk about the detailed nature of the conditions.

Obviously, a debate is taking place on broadband, and there is a question about the universality of a broadband service, but even before we reach those issues, there are questions about access simply to be able to transmit data over a telephone network. We have a universal service obligation in terms of being able to transmit voice over a telephone network, but there are still plenty of parts of the country where one cannot get data access with any reasonable speed. My understanding is that the current universal service obligation is a very low speed of access.

I assume that Ofcom's power under the clause will be a tool that it can use to try to increase that minimum speed, perhaps not to broadband levels, but to reasonable levels, such as those we currently know as ISDN. Over time, the floor speed, if I may express it like that, will potentially increase.

I see that Ofcom can impose a condition under a universal service condition and an access-related condition. If Ofcom sought to raise the standards of the network, both the access-related condition and the universal service condition would seem to apply. However, in the clause, they appear to be mutually exclusive; they are separate forms of condition.

I raise that point not necessarily because I expect a detailed response from the Minister now, but because we are talking about giving Ofcom powers and I thought that it would be helpful to say that it will increasingly be an issue for Ofcom whether it can raise the level at which one can access data networks generally by using the powers that it gains under the clause.

Roger Gale (Conservative, North Thanet)

Order. The Minister may respond briefly if he wishes to do so. There will be an opportunity to discuss the issue further under clause 61.

Stephen Timms (Labour, East Ham)

Thank you, Mr. Gale. The hon. Member for Sheffield, Hallam makes a fair point. As time goes on, we would expect the threshold to be raised. The clause sets out four specific conditions, and as you said, Mr. Gale, we will be able to consider each condition carefully under later clauses.

Question put and agreed to.

Clause 41 ordered to stand part of the Bill.

Clauses 42 to 44 ordered to stand part of the Bill.

Clause 45 - Directions and approvals of a s.41 condition

Andrew Robathan (Conservative, Blaby)

I beg to move amendment No. 72, in

clause 45, page 44, line 11, leave out 'or consents' and insert ', consents or determinations.'

Roger Gale (Conservative, North Thanet)

With this we may discuss the following: Amendment No. 73, in

clause 45, page 44, line 16, leave out 'or consent' and insert 'consent or determination'.

Amendment No. 74, in

clause 45, page 44, line 24, leave out 'or consent' and insert 'consent or determination'.

Amendment No. 75, in

clause 45, page 44, line 42, leave out 'or consent' and insert 'consent or determination'.

Amendment No. 76, in

clause 45, page 44, line 43, leave out 'or consent' and insert 'consent or determination'.

Amendment No. 120, in

clause 187, page 167, line 26, after 'approval', insert ', determination'.

Andrew Robathan (Conservative, Blaby)

Clause 45 sets out the procedure that Ofcom or, indeed, other authorised persons must follow when giving, modifying or withdrawing a direction, approval or consent that may be given under a general condition entitlement. It implements articles 6 and 7 of the framework directive. Amendments Nos. 72 to 76 and the consequential amendment No. 120 would insert the word ''determination'', so that the measure did not refer only to ''approval or consent'', because determinations can have the same effect on a company's business as directives and should be subject to the same safeguards.

The clause sets out certain safeguards, such as consultation where Ofcom issues directions, approvals or consents, but the present wording does not include determinations made by Ofcom under the conditions of entitlement, which will replace licences. Many key issues will hang on the interpretation of those conditions and determinations issued under them. They should be subject to consultation to ensure that the ensuing regulation is right.

Stephen Timms (Labour, East Ham)

The hon. Member for Blaby may well be on to something with the amendments. We are considering whether the text in the Bill may have some problems in it along the lines to which he has just referred. I believe that there is an issue to be addressed, but the amendments that have been tabled do not deal with it properly. I ask the hon. Gentleman to withdraw the amendments, on the understanding that if we need to make changes I will introduce a fully considered amendment to do that on Report.

Andrew Robathan (Conservative, Blaby)

I am delighted to hear that I am on to something. Perhaps my drafting was slightly defective, but with his excellent and high-priced team of lawyers and civil servants, I am sure that the Minister will be able to produce something better.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 45 ordered to stand part of the Bill.

Clause 46 - delivery of copies of notification etc.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move amendment No. 69, in

clause 46, page 45, line 38, leave out 'in OFCOM's opinion'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following:

Amendment No. 70, in

clause 46, page 46, line 3, leave out 'in OFCOM's opinion'.

Amendment No. 71, in

clause 77, page 74, line 37, leave out 'in OFCOM's opinion'.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I am delighted that the Minister is in such a good mood to listen to our arguments, and I wonder whether I can tempt him again.

The amendment relates to notification to the European Commission if Ofcom decides that a determination of significant market power will affect trade between member states, and gives the Commission the opportunity to exercise a veto.

The provisions of the directive make it plain that the test for whether there will be such an effect on trade between member states is an objective test, and not a subjective opinion of the regulator. The purpose of our amendment is to bring the wording of the Bill into line with the requirement of the directive.

It is slightly unusual for me to stick up for the European Commission, but there is always a first time. Ofcom must not be able to avoid its Community obligations to notify SMP determinations to the Commission, and thus to avoid scrutiny and a possible Commission veto, by saying that in its opinion there is no effect on trade between member states.

This is another case in which we seem to be implementing an EU directive differently, and potentially to the disadvantage of UK competitiveness. Inconsistencies such as this could confuse UK companies and companies thinking of coming into the UK. We tabled the amendment to ensure that the Bill was consistent with the terms of the directive.

Stephen Timms (Labour, East Ham)

Ofcom will be required to submit the notification of proposals to the European Commission in accordance with the requirements of the directives—notably the framework directive—as the hon. Gentleman rightly said. It follows, therefore, that the onus must be on Ofcom to determine whether those proposals affect trade between member states. That is what the inclusion of the words, ''In Ofcom's opinion'' is intended to achieve. No one else who could have an opinion or direct Ofcom: it is a matter that Ofcom must decide for itself. Therefore we have to retain, ''In Ofcom's opinion'' and I would suggest to the hon. Gentleman that removing those words, as he proposes, would not change the matter. There is no let-out for Ofcom, because if Ofcom takes the view that there is a problem, it has a duty to act in the way that is set out in the Bill, so I do not think that there is a problem.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I accept what the Minister says, although we are slightly concerned that if a company is informed that it is subject to a determination of this sort, it has a right of appeal to the European Union if there is likely to be an effect on trade. That right is removed if Ofcom can turn around and say that it does not think that there will be an effect. It allows Ofcom a degree of latitude that concerns some people. I take the Minister's point and I do not want to make an issue of this, so on the basis of what he has said, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 46 ordered to stand part of the Bill.

Clause 47 - Matters to which general conditions may relate

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move amendment No.126, in

clause 47, page 47, line 5, at end insert—

'(h) conditions requiring devices used to reproduce, convert, retrieve or access data or content through electronic communications networks or services to include technological security systems in compliance with such standards as OFCOM consider appropriate for protecting personal data, protecting copyrighted content and empowering parents to protect children from harmful content.'.

To some extent, we had this debate when we considered the general duties of Ofcom under clause 3, but it is worth returning to briefly because it is a point of huge importance. The amendment is a probing amendment but it is designed to get on the record the importance of the whole issue of copyright. The Minister for Tourism, Film and Broadcasting, who responded to our debate on clause 3, is no longer with us. We now have a Minister from the Department of Trade and Industry—a Department that in many ways has a lead role in dealing with issues of copyright. I am therefore keen that the Minister should have an opportunity to respond to my brief contribution.

There is no doubt that at the moment the threat to copyright is most significant in the music industry. That is not covered by this Bill and we do not argue that it should be, but over time that threat will affect more and more of the creative industries. When we eventually achieve broadband or even broadband plus, extremely fast download speeds will enable people to access video streaming with perfect reproduction of films. There is a danger that the film and video industry will be subject to the same problems as those suffered by the music industry. People will access and take material off the internet for which they do not pay any charge to the person who has created it, thereby bypassing the copyright requirements.

Our main concern is that the Bill, which is supposed to set the framework for many years to come, seems not to recognise that real danger and does not allow Ofcom any remit to take account of future technological developments. I do not want to press the amendment because I do not think that it is necessarily the right approach, but I hope that the Minister will be able to say a word about it. It is an important issue.

Brian White (Labour, North East Milton Keynes)

Is the hon. Gentleman aware of developments that are going on in the United States at the moment? There are negotiations between Hollywood and television set and set-top box manufacturers to address the problem of the copyright protection of films. They might circumvent his amendment.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I am aware of that. As I said to the hon. Gentleman when the subject last arose, I prefer a self-regulatory solution. It would be vastly preferable if the industry could get together to agree a common standard and devise a mechanism to protect copyright, and I do not suggest that Ofcom should impose a standard over the heads of the industry. I should be grateful if the Minister could tell us whether he sees a role for Ofcom in encouraging the industry to come together in the way that the hon. Member for Milton Keynes, North-East (Brian White) rightly identifies.

Stephen Timms (Labour, East Ham)

I readily accept that it is important that we tackle problems of the abuse of copyright and the other issues listed in the amendment relating to the need for parents to protect children from harmful content, intrusions on personal privacy, and so on. I am grateful to the hon. Member for Maldon and East Chelmsford for drawing the Committee's attention to this matter again. I am also grateful to my hon. Friend the Member for Milton Keynes, North-East. He is right in the example he gives and in a host of other areas. Some promising technological developments in protection measures for rights management should help to deal with some of the music industry's current serious problems, but other industries might face similar problems in future.

Brian White (Labour, North East Milton Keynes)

Is it my hon. Friend's view that Ofcom and comparable bodies should participate in the current discussions to ensure that solutions appropriate for one country are not imposed on this country and other EU member states?

Stephen Timms (Labour, East Ham)

My hon. Friend makes an interesting point. The lead will have to be taken by the industry, but it will be important that Ofcom stays in close touch with the industry's views as technology develops. I have had discussions with some people in the industry and I am sure that Ofcom will want to do the same.

The hon. Member for Maldon and East Chelmsford did not make a strong case for the amendment, which presents several difficulties. It would not be right to hint at national steps to mandate technical standards when it has not been proved that self-regulatory solutions are ineffective. We hope that they will be effective. The issue is international and should be dealt with internationally rather than from one country's perspective. It is right to draw attention to the prospects for significant technological advances

—my hon. Friend the Member for Milton Keynes, North-East is right to say that Ofcom should keep a close eye on them—but it would be a mistake to go further in the way that the amendment suggests.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I did not intend to press the amendment, but was hopeful that the Minister would confirm that Ofcom should have a role in that debate.

I am grateful to him for doing so, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 47 ordered to stand part of the Bill.

Clause 48 - Conditions relating to customer interests

John Greenway (Conservative, Ryedale)

I beg to move amendment No. 77, in

clause 48, page 48, line 47, at end insert 'but only when the value of the dispute does not exceed £5,000'.

Clauses 48 to 51 place Ofcom under a duty to ensure that the communications industry has in place effective and accessible machinery for the protection of domestic and small business customers, including procedures for dealing with complaints and disputes. It is clear from the Bill that the procedures should be simple, transparent, effective and free of charge. Complaints are to be dealt with under a code of practice, and disputes covered by the public communications providers establishing machinery approved by Ofcom.

I remind the Committee that Oftel recently adopted a voluntary ombudsman scheme. The notes on clauses—after my earlier comment about a plate of spaghetti, I should say that I find them helpful on this part of the Bill—suggest that the scheme is likely to be submitted to Ofcom for approval. Will there be a seamless transition between the Oftel scheme and the one that Ofcom is likely to approve?

One aspect of the Bill is at variance with the existing scheme. Amendment No. 77 is designed to address whether some limit on monetary value should apply to any dispute mechanism. It would place a reasonable limit on the value of the type of customer dispute that can be dealt with by the procedures in the clause. We understand that the ombudsman scheme agreed with consumers and the industry has a £5,000 limit. It would make sense to add such a provision to the Bill to ensure that the scheme does not discriminate against firms of moderate size that have lower revenues.

Stephen Timms (Labour, East Ham)

The introduction of the telecommunications ombudsman service is an important step forward. I can certainly confirm to the hon. Gentleman that we want a seamless transition from the arrangement that is just being set up to the Ofcom scheme. It will not be possible for Ofcom to approve the scheme until the Bill becomes law and the provision has come into force, but we want approval as soon as possible thereafter and to avoid any disruption in the setting up of the service. I recently met the telecommunications ombudsman, Elizabeth France, and had a good discussion with her. A good service will be provided from the new base in Warrington.

I cannot accede to the amendments' proposed £5,000 limit. We are simply putting into UK law what the directive says, and it makes no mention of allowing member states to exclude relevant disputes from the arrangements in question on the basis of their value or for any other reason. If the amendment were

made, that would leave us with legislation inconsistent with the directive, and we cannot have that.

Ofcom will decide whether the imposition of general conditions on the subject is appropriate. If public communications providers can demonstrate that existing alternatives satisfy the requirements of the directive in respect of certain categories of dispute, Ofcom will not need to impose a requirement for the providers to have arrangements of their own for them. That may give the hon. Gentleman some reassurance, and I hope that on that basis he will feel able to withdraw the amendment.

John Greenway (Conservative, Ryedale)

That is an entirely valid and satisfactory explanation, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I do not want to debate the starred amendments, which you, rightly, have not selected, Mr. Gale, but I hope that I might use the opportunity of a clause stand part debate to draw the Minister out on a point that I am keen for him to address.

Clause 48(3)(b) on dispute procedures states that

''domestic and small business customers have the right to use those procedures free of charge''.

The universal service directive—the source of the requirement for an independent consumer dispute mechanism—states that the mechanism should be ''inexpensive''. The Government have interpreted that to mean free and have set that out in the Bill as a legal requirement, but that is not what the directive states. Although one would hope that in many cases the use of the mechanism might well be free, there is slight concern on the part of some of those who might be subjected to such complaints that there should be the ability to charge a small fee to put off vexatious complainants.

There is no attempt to push costs on to the complainant. No fee would be charged initially, especially given that the procedures are in any case subject to Ofcom's approval under clauses 48 to 51. Ofcom would have to be persuaded that a modest fee was appropriate in the event that any communications provider wanted one to be levied. As the Bill stands, there is no provision even to allow that. Will the Minister respond to that concern?

Stephen Timms (Labour, East Ham)

The hon. Gentleman is right. The directive does not require that the dispute scheme be provided free of charge, simply that it should be inexpensive. However, we do not want to discourage consumers from using it on cost grounds. A small charge might not be worth collecting—a nominal one certainly would not be. On the grounds of simplicity, the approach taken in clause 48 is right.

Clause 48 ordered to stand part of the Bill.

Roger Gale (Conservative, North Thanet)

I propose to put clauses 49 to 59 together unless any hon. Member indicates to me now

that there is an issue that they wish to raise on any individual clause.

Andrew Lansley (Conservative, South Cambridgeshire)

Clauses 52 and 54, Mr. Gale.

Clauses 49 to 51 ordered to stand part of the Bill.

Clause 52 - The national telephone numbering plan

Andrew Lansley (Conservative, South Cambridgeshire)

I appreciate this opportunity to debate clause 52, which deals with a large number of the measures that are brought into force by virtue of the general conditions and in line with the universal service directive. Can the Minister run us through how he proposes the emergency call numbers system should be introduced? I note that Oftel's publication of general conditions proposes that both 999 and 112 should be introduced as emergency call numbers and therefore made available as such over the network. Is it the intention that both of those numbers will be used for the indefinite future as emergency call numbers in an entirely interoperable way, or is there some intention to move from 999 to 112?

Stephen Timms (Labour, East Ham)

There is no such intention. That is clearly an important matter, telephone numbers being essential to the functioning of a switched network. I shall drop the hon. Gentleman a line, copied to each member of the Committee, to explain how we envisage the progress of arrangements for emergency numbers.

Question put and agreed to.

Clause 52 ordered to stand part of the Bill.

Clause 53 ordered to stand part of the Bill.

Clause 54 - Conditions about allocation and adoption of numbers

Andrew Lansley (Conservative, South Cambridgeshire)

Clause 54(1)(e) and (h) refer to number portability, which is covered by article 30 of the universal service directive. I wish to establish the Minister's intention about the extent to which number portability for geographic numbers may be required.

If one has a geographic number at a specific location, one can transfer it from one communications provider to another—the directive requires that. Does it require the ability to transfer a geographic number attached to a given exchange between one person and another when they are not necessarily at the specific location? To give a practical example, many businesses in the City of London fall under a given exchange and use a number that is consistent with that exchange and therefore capable of routing via that exchange. I believe that, at the moment, although it is technically possible, if such businesses change offices and location, they cannot seek number portability because a number is specific to a location. As I understand it, the directive does not require such portability, but it does not prohibit it. Will it be allowed?

In addition, article 30(2) says that regulators must ensure that

''pricing for interconnection related to the provision of number portability is cost oriented and that''—

this is the key point—

''direct charges to subscribers, if any, do not act as a disincentive of the use of these facilities.''

I think that that provision is translated into subsection (1)(h) as:

''payments of such amounts as may be determined by OFCOM to be made to them by a person in respect of transfers of allocations from one person to another''.

Maybe I have not been diligent enough, but I have not found the obligation on Ofcom to ensure that the charges, if any, do not act as a disincentive for the use of those facilities, as set out in the directive. As the preamble to the directive makes clear, number portability is important to the creation of a competitive market. The point about there being no disincentive to using number portability is important too, yet it does not seem to be reflected in the provisions.

Stephen Timms (Labour, East Ham)

I will need to expand my letter to the hon. Gentleman, to pick up some of those points. He is absolutely right about the importance of number portability, which allows users to switch operators. There is no barrier to that, such as the risk to users of losing their number. That is the importance of number portability, rather than people's ability to take their number with them when they move. It is perfectly possible for people who are changing building to ask to take the number from their previous building with them—I can think of examples of cases in which such a request has been acceded to. However, I do not think that it is the intention to make it a requirement that someone moving in those circumstances would be able to insist on taking their number with them. I shall check that, and address the point in the letter that I have already agreed to send to the hon. Gentleman.

The hon. Gentleman is right about the importance of there not being a cost barrier. I am sure that that is addressed—somewhere, although I am not sure exactly where. I shall address that matter, too, in the letter that I look forward to sending him.

Question put and agreed to.

Clause 54 ordered to stand part of the Bill.

Clauses 55 to 59 ordered to stand part of the Bill.

Clause 61 - Obligations to be secured by universal service conditions

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move amendment No. 129, in

clause 61, page 61, line 37, at end insert ', including broadband services'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to take amendment No. 237, in

clause 61, page 61, line 44, at end insert—

'(e) affordable access to services on ever-greater bandwidth.'.

In view of the time, the importance that some hon. Members attach to the clause, and the fact that it has been referred to this morning, I am perfectly prepared

to allow what would in effect be a clause stand part debate on the amendments.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I am grateful to you for that, Mr. Gale.

I acknowledge that the amendment is flawed and deficient, but it is terribly important that we have the opportunity to talk about broadband. It is of enormous importance, and it is extraordinary that the Government's publication, ''The draft Communications Bill—The Policy'', relegates the Government's policy on broadband to an annexe, which states:

''This comprehensive strategy does not require any legislation in order to achieve its objectives. As a result we are not looking to the Bill to help deliver our strategy.''

Given that the Bill will set the framework for communications for probably the next decade, it should take account of the fact that making broadband available is the biggest challenge that we face as a nation in terms of modernising our economy and rolling out the technology.

One reason why I accept that the amendment is deficient is that it is almost impossible to define broadband. In this country, it is regarded as the service that is now on offer from cable providers and BT at the rate of some 128 kilobits per second, or perhaps 512. Some cable companies intend to go further and supply the service at 1 megabit per second. I dial up my internet service provider daily to download my e-mails and access the internet, and I find the current speed on narrowband access incredibly frustrating—even 128 kilobits per second would be a big improvement. It will, no doubt, become faster, so it would probably be unhelpful even to try to define broadband formally at this stage. However, it is probably fair to say that even if we do not attempt to provide a formal definition, most of us know what it is when we see it.

Why is broadband important? It allows people to access a greater range of services: currently, people talk about downloading films or playing computer games, but it goes much further. Broadband is of huge economic importance to the nation. One recent study suggested that success in the new technologies, which means broadband in particular, could increase the United Kingdom's non-inflationary rate of growth from 2.5 per cent. to 3.5 per cent. in the next three years. A recent report entitled ''The Payoff Of Ubiquitous Broadband Deployment'' shows a positive correlation between broadband penetration and GDP per capita, which is already clear in the United States. There will be a real economic benefit to our nation if we can achieve much wider broadband access than we have at present.

The problem is that broadband can be made available through a variety of means. Most people who currently have access to broadband have it because they are cable subscribers, either to NTL or to Telewest, or because they have obtained it through BT, via ADSL technology. However, ADSL technology has flaws—for a start, it can be supplied

only to homes that are within 5.5 km of an enabled exchange. That means that even if BT eventually enables all its exchanges, there will be areas of the country where people cannot access broadband through that means.

It is therefore important that we consider all the other potential mechanisms for making broadband available. The Radiocommunications Agency is currently auctioning 12 licences to provide broadband fixed wireless access—we may discuss that later in our proceedings. There is also the potential development of satellite—I am talking about a one-way download from satellite first, but in due course a two-way download may be possible, although that is likely, at least in the short term, to be too expensive for residential customers. 3G, too, offers possibilities through the ability to access broadband through mobile telephony once 3G finally gets going.

Further ahead in the future, all sorts of other technologies will appear, some of which it is impossible even to guess at now. Perhaps one day, there will be the prospect of optical fibre linking exchanges first, then extending to the kerb, and finally into the home. That would make broadband available at a speed that is now almost inconceivable.

Andrew Lansley (Conservative, South Cambridgeshire)

In my hon. Friend's tour of such mechanisms, he has not referred to the possibility of wireless broadband using 3.5 gigahertz, which is in use in a number of countries. It has not been made available here simply by reason of allocation of frequency. Perhaps we shall come to that during the radio spectrum discussions.

John Whittingdale (Conservative, Maldon and East Chelmsford)

That is a good point that we should certainly consider during our discussion on the allocation of spectrum. We look forward to that debate on our return after Christmas.

John Greenway (Conservative, Ryedale)

Another issue to which my hon. Friend has yet to refer is cost. Although the technology clearly exists and many people have access to it, does he think that cost presents difficulties? This very morning, I received a circular from BT saying that I could have broadband in my home in Kennington for £27 per month.

Stephen Timms (Labour, East Ham)

Excellent.

John Greenway (Conservative, Ryedale)

That might well be an extremely good deal if I spent enough time at my home in Kennington to make use of it, but does my hon. Friend the Member for Maldon and East Chelmsford think that many people to whom such services might be of value would regard that cost as excessive?

John Whittingdale (Conservative, Maldon and East Chelmsford)

It is a huge improvement on what BT used to charge. The price has come down, but I agree that it is still a significant sum. I suspect that at present many people feel that they are not likely to use the service enough. It is possible to get it slightly cheaper. To some extent, the market is now providing cheaper services, but I do not think that there is anything below about £20 a month, which is still a significant sum for many.

It is worth comparing how we are getting on with what is happening in other countries. In some respects

we are making good progress. In terms of availability, we are middle ranking in the international league tables; about 65 per cent. of the population has cable or ADSL technology available to them should they choose to take it up. That means that we are ahead of France but behind Germany. There is room for improvement, but it is not an absolute disgrace. In our use of the internet, too, we are relatively well placed.

The real concern, however, is in the matter of take-up. At the end of the day, our competitiveness will depend on how many people have that technology and use it. A table of the top 20 countries would show that South Korea was far ahead, but we are lagging behind Canada, the United States, Sweden, Austria, the Netherlands, Belgium, France, Germany, Portugal, Italy and Spain—and by quite a long way. Most people would acknowledge that, in terms of take-up, we are now at the bottom of the international league table.

Simon Thomas (Plaid Cymru, Ceredigion)

Does the hon. Gentleman accept that there is not only an international digital divide but that there is one within the United Kingdom? Great swathes of the country, including many rural areas, not only do not take up broadband but do not have access to it.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I agree absolutely, and I want to deal with that matter. It is arguable, in the furthest-flung parts of the kingdom, that it would cost an awful lot of money to make broadband available to a small number of people. However, that is the case not only in extremely rural parts of the country, but in parts of the country that are pretty close to London and which have relatively large populations. That includes my constituency and, I suspect, the constituencies of other Committee members.

The Government have rightly set a target, saying that they wish to make the UK the most extensive and competitive broadband market in G7 by 2005. We have three years to go and we are bottom among the G7 countries. The question is how the Government intend to achieve that. Various suggestions have been made. I was surprised earlier this morning to find myself defending the importance of notification of the European Union. I now find myself praising the efforts of the Communication Workers Union, which has made some very good suggestions that the Government should consider. I draw attention to three specific suggestions. First, it said that Ofcom, as the ultimate regulator, needs to ensure that its actions promote the provision and take up of broadband. Ofcom should have a role in promoting the take up of broadband in the national interest.

Secondly, there is no question but that one of the ways to achieve roll out of broadband is through using the power of Government as purchaser. The Government are purchasing broadband in schools, hospitals and in all sorts of other ways. They could use their purchasing power to roll out broadband, because if BT could be assured of relatively secure demand that broadband would be used, it would be more willing than perhaps it is now to enable exchanges.

Thirdly, the CWU suggested that Ofcom should promote demonstration projects and publicise the benefits of broadband. All three suggestions are relatively limited, but it is terribly important.

Michael Fabricant (Conservative, Lichfield)

I have a letter dated 10 December from Christopher Bland concerning a large part of my constituency with no access to broadband. It is not quite as the hon. Member for Ceredigion (Mr. Thomas) implied; it is not that rural areas only are affected. In his letter, Mr. Bland, the chairman of BT, said that to help decide that an exchange should be upgraded, BT will

''establish trigger levels ranging from 200 to 750 end user registrations.''

Does not that relate in particular to the point of my hon. Friend the Member for Maldon and East Chelmsford that if people do not understand the benefits of broadband they will not go onto the web or make contact with British Telecom through other means in order to be one of those people who is a trigger that leads to broadband being introduced into an area?

John Whittingdale (Conservative, Maldon and East Chelmsford)

It is imaginative of British Telecom to have set these levels. I hope that that will mean that those who want to be exchange enabled will go out and campaign for people to take up broadband. However, my hon. Friend's point that this idea has some drawbacks is valid.

This is a very important issue for the competitiveness of the United Kingdom. As the hon. Member for Ceredigion suggested, there is a real danger that a two-tier economy will develop in this country. If one of our objectives is—for instance—to increase home working, which will get people off the roads, it will be much more difficult to achieve that increase if they cannot access broadband. Businesses not only in Wales but in constituencies such as mine will be put at a disadvantage if they cannot get broadband.

I could read out hundreds of constituency letters that refer to this point, but I will read from only one of them. It is from Andrew Palmer, who is a constituent of mine. He wrote to British Telecom:

''In the last few weeks there has been an explosion of advertising by BT in the newspapers and on television advertising the delights of Broadband. The public now fully expects to enjoy a series of new experiences which will make the rest of their lives pale into insignificance.

I am afraid that each advertisement merely further maddens me; because of the fact that is not stated in your advertisements, that BT has no intention of making these services available outside urban areas for 10 to 20 years''.

Brian White (Labour, North East Milton Keynes)

Is the hon. Gentleman aware of what is happening in Cornwall? There are a number of pilot exercises in that county that demonstrate that broadband is available in rural areas. Those exercises could be replicated throughout the country.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Cornwall has been particularly fortunate, but we are not talking about the extremities of the kingdom or deprived areas that have received special help. In this case, we are talking about a village in Essex that is about 50 miles from London. It is the fact that British Telecom is now promoting broadband

that is rubbing salt into the wounds of those people who cannot get it.

I do not want to press to a Division an amendment that seeks to impose the universal service obligation, because British Telecom's shareholders would not thank me for doing that. However, this matter is a real challenge, and I hope that the Minister will have the chance to say something about how we are going to meet it.

Brian White (Labour, North East Milton Keynes)

The hon. Member for Maldon and East Chelmsford should be made aware that my constituency, which is a vibrant new city in south-east England, has had most of its exchanges enabled but most of the people in the area cannot get broadband. I have had a meeting about that with British Telecom—and one with NTL, because the cable company also cannot provide broadband for different technical reasons. Therefore, this problem exists not only in rural areas, but in urban areas too. There are technical problems that need to be addressed.

There should be a universal requirement on Ofcom. One of the main problems in this area has been the relationship between the telecom companies and Oftel with regard to looking at different technologies. Broadband is the issue of today, but it may not be the issue of tomorrow as it could be superseded by the next technological step forward. However, one of the key issues of the future will be how bandwidth is used.

There are alternative providers. I received something in the post this morning from Eutelsat, which will be a competitor to Sky: it will offer broadband at 1 megabit per second for £19.95 anywhere in the UK. There are competitors, and there will be market providers.

As the hon. Member for Maldon and East Chelmsford suggested, the key questions are what are the roles of Government and the regulatory authorities? The regulatory authorities, in providing universal service provision, have a duty here. That is why I have supported the amendment tabled by my hon. Friend the Member for Glasgow, Anniesland.

We must ensure that bandwidth is the issue that is addressed, and that future technologies are addressed as well, rather than just broadband.

Simon Thomas (Plaid Cymru, Ceredigion)

One of the difficulties with the Bill is that the Government have taken the standpoint that it is technologically neutral. That is fine in principle, but in practice it lets down several areas of the country. I accept that there are problems in defining broadband, and the point made by the hon. Member for Milton Keynes, North-East that technology will change so we must be careful about what is included in the Bill. His amendment has certain virtues because it refers to increasing bandwidth. It does not define technology narrowly, but would mean that, throughout the UK, Ofcom raises the universal service obligation of a low width or low data transmission service, which is insufficient for a modern economy.

Like the constituents of the hon. Member for Maldon and East Chelmsford, my constituents have

huge problems with all the advertising from BT, Freeserve and others offering broadband. I have one exchange in my entire constituency enabled for broadband. That was enabled by a European 5b project, and not BT at all.

A small light is on the horizon however, as in north Wales BT is pioneering small broadband adaptors that allow 10 or 12 rurally based users to come in on a small exchange. I hope that that will be introduced throughout Wales, and the rest of the United Kingdom, because it offers us an opportunity.

It is inevitable that most users will turn first to the telecom providers—BT in the main—to provide a broadband service. Although I am excited by the prospect of wireless and satellite broadband, the general population want to know whether they can get that from their telecom providers. That is why the amendments are important.

It is important that the Bill refers to bandwidth. I hope that the Government shift from their position that the Bill is technologically neutral, and accept that an obligation should be put on Ofcom to ensure that greater bandwidth is available to a greater number of people throughout the countries of the United Kingdom.

John Robertson (Labour, Glasgow Anniesland)

In speaking to my amendment No. 237, we must look ahead. Although my amendment is probing to find out where the Government stand, I also want to ensure that broadband, its extra use and increasing width, are referred to in the Bill, and that we do not have stick to the limit that is bought off the shelf in the marketplace. We must ensure that we cover future expansion.

I thank the hon. Member for Maldon and East Chelmsford for his comments. As an ex-CWU member—I was a member for 20 years—I am glad that the Tories are reading its publications. I also refer hon. Members to my registered interest as a member of Connect, which is the management union associated with the CWU. The ongoing BT-bashing, as opposed to attempting to understand the problems, is wearing thin.

We need to ensure that universal service is both significantly protected and extended. It is important that the Bill receives backing not only from this side, but the other.

Andrew Robathan (Conservative, Blaby)

It is important that the Minister, who is expert on the subject, explains the DTI's position.- We are talking about the future of small and medium-sized enterprises throughout the UK—in my constituency and in others, including in those in Wales, so it is important to know what the champion of business will do to assist SMEs.

Andrew Lansley (Conservative, South Cambridgeshire)

I have one point to make. I cannot see how we could include broadband and the universal service obligation under the clause. At this stage, we want to know not only about the extent to which Ofcom can deliver greater availability of broadband through market mechanisms, but about whether the Government are considering what happens when the European Commission conducts its review in 2005 of the universal service obligation. From annexe 5 of the

universal service directive, one can see that we may be approaching the point at which it is appropriate to take account of the availability of broadband in the USO.

Michael Fabricant (Conservative, Lichfield)

I rise to say that there is an urgent need for broadband in urban as well as rural areas. In Brentwood, people are disadvantaged, and that is unfair.

Stephen Timms (Labour, East Ham)

I agree with everything that has been said about the importance—the central economic importance—of broadband in urban and rural areas. There are well over a million broadband connections in the UK, and the number is rising faster here than in most of the other countries on the list referred to by the hon. Member for Maldon and East Chelmsford. However, the Government are not complacent. The hon. Member for South Cambridgeshire is right: the time may come when broadband—

It being One o'clock, The Chairman proceeded, pursuant to Sessional Order C relating to programming [29 October 2002] and the Order of the Committee [10 December 2002], to put forthwith the Question already proposed from the Chair.

Amendment negatived.

The Chairman then proceeded to put forthwith the Questions necessary to dispose of the business to be concluded at that time.

Clauses 61 to 68 ordered to stand part of the Bill.

Roger Gale (Conservative, North Thanet)

As this is my last time in the Chair before the recess, I take this opportunity to wish all hon. Members an extremely happy Christmas and a peaceful new year.

Adjourned at One o'clock till this day at half-past Four o'clock.