Communications Bill

Public Bill Committee, 7 January 2003.

Standing Committee E

Communications Bill

Roger Gale (Conservative, North Thanet)

Good afternoon, hon. Ladies and Gentlemen and welcome back. I trust we find you refreshed. I wish you a happy new year, by the end of which I trust that we shall have made modest progress with the Bill.

Chris Bryant (Labour, Rhondda)

Only modest?

Roger Gale (Conservative, North Thanet)

That only time will tell.Clause 95 Confirmation of directions under s. 94

Clause 95 - Confirmation of directions under s. 94

Andrew Robathan (Conservative, Blaby)

A happy new year to you, Mr. Gale. I beg to move amendment No. 109, in

clause 95, page 90, line 19, leave out 'the' and insert 'a'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to take the following amendments: No. 110, in

clause 95, page 90, line 22, leave out 'the' and insert 'a'

No. 111, in

clause 95, page 90, line 23, leave out from the second 'that' to end of line 24 and insert 'a direction was justified, they may confirm the direction with or without modifications'.

Andrew Robathan (Conservative, Blaby)

The amendments are small and would replace the word ''the'' with the word ''a''. The purpose of that is to give Ofcom greater flexibility regarding action that it might wish to take to deal with alleged breaches. The Minister will know that under clause 94 Ofcom can take action to deal with an alleged breach as a matter of urgency and it can make a direction. Clause 95 enables Ofcom to confirm such a direction. The amendments are intended to give Ofcom flexibility to confirm or modify directions that have been made. The Committee might consider that to be a matter of semantics, but it has been suggested to us that the amendment would allow Ofcom to work with greater flexibility.

Stephen Timms (Labour, East Ham)

A happy new year to you, Mr. Gale, and to all Committee members.

I have listened with interest to the case that the hon. Member for Blaby (Mr. Robathan) made for substituting the word ''a'' for word ''the''. That would give Ofcom the opportunity to be able, when confirming a direction, to modify it as an alternative to withdrawing it. One can see the attractions of doing that. However, the scope of the urgent directions in clause 94 is deliberately narrow. That provision is supposed to be used only in urgent cases. It is right that Ofcom should be able to confirm the original direction only if it found that a contravention had occurred and it was justified in giving the direction in the first place.

Clauses 94 and 95 are not intended to replace the normal enforcement procedures that are set out in clauses 91 to 93 and 96 to 99. It is intended that

clauses 94 and 95 should be used in conjunction with those other procedures. Ofcom might determine, following an investigation, that it was not justified in giving a direction under clause 94. That does not mean, however, that Ofcom could not continue enforcement action in accordance with the normal enforcement procedures if it chose to do something different from what was proposed in a direction.

We do not want the power to be used too liberally. It is very tightly drawn and we need Ofcom to get it right or not use it at all and use the conventional procedures that are available. That provides an important protection for the companies. On that basis, and having given some thought to what is an interesting and significant amendment, I hope that the Committee will accept that the existing wording of the clause is the right one.

Andrew Robathan (Conservative, Blaby)

I pointed out that the amendment is small. It is not a matter of semantics, but seeks to allow Ofcom greater flexibility and the chance to modify its decisions. However, it is not something for which we should die in a ditch, nor do we wish to force it to a Division. 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 to ask the Minister a brief question about clause 95 in respect of confirmation of the directions under clause 94. He said that provisions under clause 94 apply only in exceptional cases. Clearly, the interests of a communications service provider are primarily in respect of its legal relations with its customers. The clause enables discretionary powers under which compensation can be paid.

Under clause 95 and the confirmation of clause 94 orders, communication service providers will want a clear idea of the time that may be involved. For example, if a clause 94 order has been issued and the providers are required to restrict or withdraw a service from their customers, this will trigger a set of legal relationships and activities. They may wish to invoke the force majeure clauses within their contracts with individual customers so that they are not liable for withdrawal of the service. They can say that they are withdrawing the service because the Government have issued an order under clause 94.

When the providers confirm those orders under clause 95, the question concentrates on the extent to which the clause 95 confirmation will follow hot on the heels of the issuing of the order under clause 94 or whether the Government anticipate a long delay. Communication service providers will want to know whether they will receive a clear idea about the length of time under which the clause 94 restrictions may be imposed on them and their customers. The Minister said that the powers are exceptional and, in that context, we expect them not to be invoked for long periods. I am trying to obtain an idea of the time scale, set against the context of communication service providers potentially having complex legal disputes with their customers as they will have been required to

withdraw a service and their customers will feel that they have been damaged by that withdrawal. In those circumstances, time scales will be critical, especially as they are likely to affect businesses with their sales taking place online. Let us consider the effect on a large online retailer of the withdrawal of service. Whether it will be invoked for a week, a month or six months will be critical to how potential disputes are resolved. Will the Minister clarify the time scales? I recognise that such circumstances are exceptional and that he cannot predict all of them, but it would be helpful if he gave the Committee some idea of the length of time.

Stephen Timms (Labour, East Ham)

I agree with the hon. Gentleman that the time scale may be critical and have a big impact on service providers. That is why reference is made in subsection (2) to things happening as soon as

''practicable after the period allowed by OFCOM for making those representations has ended, they must determine''.

Ofcom can, in several cases, reduce the period—usually a month—for the provider to respond to its notification of the contravention and direct the suspension or restriction of a provider's services and the imposition on conditions on the provider immediately. Nevertheless, Ofcom must confirm that direction or revoke it as soon as reasonably practicable, having allowed time for representations and voluntary remedial action. Ofcom can also delay the entry into effect of the conditions at a later date if it so to allow, for example, more time for the provider to introduce corrective measures. Any conditions attached to the direction that require the contravening provider to pay compensation to its customers cannot take effect until and unless the direction has been confirmed under clause 95(6). The hon. Gentleman will accept that it is difficult to anticipate precisely what the periods will be. A period of a month for the provider to respond has been mentioned, but there is an important requirement on Ofcom to act as soon as practicable, which is probably as specific as one can be given the range of potential situations covered by the clause in what would, we hope, be unusual circumstances.

Clause 95 ordered to stand part of the Bill.

Clause 96 ordered to stand part of the Bill.

Clause 97 - Suspending apparatus supply for

Andrew Lansley (Conservative, South Cambridgeshire)

Thank you, Mr. Gale. Happy new year to you and the rest of the Committee.

In its way, clause 97 is exactly like clause 96, but applies to apparatus supply rather than the provision of services. As we previously discussed, article 10(5) of the authorisation directive covers clause 96. In line with that, clause 97 allows such a penalty to be imposed in circumstances of persistent contravention of the conditions.

I have a problem with the clause. EC directives are not intended to govern apparatus supply. For reasons

of complementarity, the Government have chosen to extend the structure of industry regulation that applies to services to apparatus supply. As we move through this part of the Bill, we are examining two complementary systems: the EC directives on the one hand and the structure of penalties and competition rules contained in the Competition Act 1998 and the Enterprise Act 2002 on the other. Wherever possible, we have sought to establish a direct parallel between the penalties available under this legislation in relation to the telecommunications industry and those available in other industries for contravention of competition prohibitions under the Competition Act. We are looking at those two regimes side-by-side.

Clearly, the two regimes cannot be directly parallel when the EC directive has a different penalty in mind. The directive goes beyond stating that there should be penalties for contraventions and specifies that there must be a power to require a provider to suspend service under certain circumstances. I understand that we cannot escape from that. However, there is no requirement on us to depart from the structure of the Competition Act penalties to control apparatus supply. The question is whether it is necessary to have a power to require an apparatus supplier simply to suspend its business altogether in order to secure compliance with the conditions.

Nobody has suggested that there should be such a power under the Competition Act. That Act looks to construct penalties in terms of a fine in relation to relevant turnover and exactly the same power is available to Ofcom to secure the compliance of apparatus suppliers with this regime. Why is it necessary for there to be a power that goes beyond what is available even under the Competition Act? We would literally be telling apparatus suppliers that they had to go out of business immediately, for some period of time or indefinitely.

We have discussed a fine of 10 per cent. of turnover, which is intended to be a penalty and, I suspect, is intended to be not only proportionate but to have a deterrent effect. The clause proposes more than that. It would put companies out of business. Why is it necessary to stretch the regime to that extent when the decision to apply penalties is at the Government's discretion?

Andrew Robathan (Conservative, Blaby)

I am grateful to my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) for raising questions about the Competition Act, but we really want the Minister to justify the clause. As we have discussed in the past, apparatus has nothing to do with the EC directive, so any mention of it seems to us to be gold plating the EC directive.

Perhaps the Minister will say yet again that the reason for this gold plating relates to current licenses to British Telecom and Kingston Communications. I would like to witness a discussion between Kingston Communications and the right hon. Member for Hull, East (Mr. Prescott) as to how they deal with these inquiries—as well, I am sure, as we do in the House.

As there is no provision in the directives to suspend apparatus supply, according to page 16 of the explanatory notes, paragraph 72 states:

''This new regulatory framework implements a significant proportion of the harmonised framework for the regulation of electronic communications networks and services established by EC Communications Directives''.

That has nothing to do with apparatus so why is it included? We have discussed this before. The Minister must put it in black and white. We should not be regulating at all in that area. Apparatus should have nothing to do with Ofcom.

What could be the consequences of this huge, extra power given to Ofcom? If Ofcom finds a supplier to be in contravention, it gives a direction. According to subsection (2):

''A direction under this section is—

(a) a direction to the contravening supplier to cease to act as a supplier of electronic communications apparatus''.

The next subsection says that this should apply:

''for an indefinite period beginning with the time at which it is notified''.

I am sure it is unintentional, but this is a draconian power. Who will be covered? A supplier is not defined. I have checked the definitions but cannot find one. Presumably Motorola and other manufacturers will be suppliers, as well as retailers such as Carphone Warehouse, Dixons, Comet, or even a little electrical supplier in Blaby or Lutterworth—such as the one as I used during the Christmas holidays—or perhaps even in East Ham. The Minister needs to expand on this and tell us exactly what is the purpose of the clause. He needs to justify it entirely to explain why Ofcom should need extra power that is totally contradictory to the Government's stated purpose of implementing EC directives.

Michael Fabricant (Conservative, Lichfield)

May I also wish you a happy New Year, Mr. Gale, and say how refreshed you look?

I come from a slightly different angle on this. The Minister, in answering my question, can easily put a number of people's minds at rest.

Over the Christmas recess, through the miracle of electronic communication, while I was in Brownsville, Texas—

John Robertson (Labour, Glasgow Anniesland)

Name dropping.

Michael Fabricant (Conservative, Lichfield)

The honourable Gentleman says ''name dropping''. I can tell him that if he had ever been to Brownsville, Texas, he would want to drop the town, not the name. Austin was far more pleasant.

While I was there I was contacted by a couple of equipment suppliers who were concerned that the Bill may affect them. Let me give a couple of examples of where they feel that there may be a problem. I am sure that the Minister will be able to satisfy them that the clause does not apply to them. First, let me give a brief personal example.

In the early 1990s before I came to the House, I was involved in the setting up of a radio station in south-east England in which I had a minority shareholding. The radio station did not pay my company, which was

also supplying it with technical equipment. Fortunately the Independent Broadcasting Authority intervened. The Radio Authority is now that part of the Independent Broadcasting Authority, which will become part of Ofcom when the Bill is enacted. The IBA was able to put pressure on the radio station to ensure that we were paid. Otherwise the IBA would have taken away its licence. Let me express my belated thanks to anybody from the Radio Authority at the time who might read this debate.

I should like clarification that clause 97 could not have been applied in that instance. Can the Minister confirm that clause 97 will not apply to suppliers who supply a company that is in breach of its licensing agreement? A couple of suppliers were concerned about that. Can he confirm that if a supplier—who is, I believe, not covered by this clause—is supplying equipment to a firm that is in breach of its licence, there is no fear that a supplier's contract with the licensee will be broken by virtue of clause 97? If it could be broken, that would be a vicarious application of justice—by punishing the licensee, the supplier would also be punished. Manufacturing industry is in the deepest and longest recession since the 1970s, and electronics manufacturers and suppliers would be very worried if they thought that they could be caught under this clause.

Stephen Timms (Labour, East Ham)

The Committee has had several discussions about whether there should be provision in the new framework for significant market power conditions on apparatus, and it has agreed with the view that I have propounded that there should be. I will not rehearse the arguments again now, but having accepted that there should be such conditions, it is right that the framework set out in the Bill covers all the requirements to make such a framework work. That is why clause 97 is included—it suspends apparatus supply for contravention of conditions.

The unremarked upon clause 96 is about suspending service provision for contraventions of conditions, and one could argue that that is also a draconian provision. However, I think that the Committee has accepted that it is a necessary part of the framework that we are putting in place—and, indeed, the directives require it. If it is accepted that that should be in the legislation, I hope that the Committee will accept that clause 97 should also be included, because the package would be incomplete without it. Clause 97 allows Ofcom to suspend or restrict a provider's entitlement to supply electronic communications apparatus in the same way and subject to the same procedures as network services and associated facilities can be suspended or restricted under clause 96.

In our previous discussions, I made it clear that those conditions could be imposed in only a very limited set of circumstances. The hon. Member for Blaby has referred to our interesting debates about the fact that more than 3 million people still rent a telephone handset from their operator—such as BT or Kingston Communications—and just over 200,000 people still rent hard-wired telephones. The licences for BT and Kingston Communications include a protection for customers in those circumstances and

we want to maintain those controls and carry them forward into the new framework that this legislation will provide. I have argued that case to Committee members on several occasions.

In previous discussions, it was revealed that there has been concern that it might appear that the circumstances in which we intend to use these powers could be rather broader than those that I have described. The hon. Member for Lichfield (Michael Fabricant) raised concerns about that in his remarks of a few moments ago, and I notice that hon. Members have tabled amendment No. 119 for our debate on clause 146 later this afternoon.

In case we can have only a brief debate on that clause, I wish to make the following statement now. We are considering tabling a Government amendment to make more explicit the rather limited circumstances in which we expect the powers to be used. I hope that that will be of some reassurance to the Committee.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Before the Minister leaves the interesting point raised by my hon. Friend the Member for Lichfield, I should mention, in case we do not have time to explore the matter at length under clause 146, that my hon. Friend referred to circumstances in which clause 97 might be used to bring pressure to bear on suppliers of equipment to firms in breach of their authorisation conditions. Might not there be a similar concern that the clause could be used to bring pressure to bear on suppliers of equipment to those who are not authorised at all? I was thinking particularly of those broadcasting illegally, perhaps from the high seas—I know you have had some experience of that, Mr. Gale, as has one of my hon. Friends. The Department has had great difficulty finding ways to deal with illegal broadcasts. The clause seems a rather attractive means of tackling the problem. I wonder whether that has crossed the mind of the Minister.

Roger Gale (Conservative, North Thanet)

Order. It is the duty of the Chairman to try to facilitate debate, and there is no doubt that some of the issues under clause 146 are related to those under clause 97. I will allow the Minister to respond to the hon. Gentleman, but I find it unsatisfactory that it appears to be thought necessary to create artifices and devices in order to work into the debate matters that should, properly, be taken later.

Stephen Timms (Labour, East Ham)

I am grateful to you, Mr. Gale. The point made by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) had not crossed my mind. I do not think that the clause would be an appropriate way of addressing that concern.

The hon. Member for Lichfield asked whether clause 97 could be applied to a company in breach. In principle it could not. However, that would depend on the contractual arrangements that had been entered into. Ofcom would need to take account of the individual circumstances between a supplier of apparatus whose entitlement was being suspended

and a company with which it had a contract for the supply of, for example, components.

Michael Fabricant (Conservative, Lichfield)

I am now 90 per cent. relieved that the Minister has said that the answer is no, but he threw some doubt on the matter. Is he saying that there is still a possibility that an innocent company—a third party—that is not in breach of any regulation, and certainly not in breach of the Bill, could be penalised simply because it is a supplier to a company that is in breach of the Bill? Is not that profoundly unfair?

Stephen Timms (Labour, East Ham)

If the company were innocent, it would not be caught. I cannot give the hon. Gentleman the definitive no for which he is pressing. Circumstances would depend on the contractual arrangements that were in place.

Let me comment on the concerns raised by the hon. Member for South Cambridgeshire. As the Committee knows, Ofcom will be under a duty to use the Competition Act 1998 rather than the sectoral powers when that is the best way forward. Indeed, I understand that Oftel is currently carrying out an investigation of British Telecom's handset rental activities under the Competition Act. However, the sectoral regime allows for the maintenance and application of some specific obligations, notably price controls, which, at least for the time being, we consider it necessary to retain.

We discussed in Committee the fact that in future it may be appropriate to take away the possibility of such controls being imposed. However, for the time being, our view is that we need to retain them. At the moment, given the importance—from many viewpoints—of making sure that apparatus supply to consumers is made on reasonable terms and conditions, our view is that it is right to have sectoral powers to regulate that activity directly, if necessary, by directing restriction or suspension if the conditions that Ofcom imposes on those with a dominant position in the area are repeatedly or seriously breached. We cannot rely solely on the Competition Act, as it would not allow us to do that.

Andrew Lansley (Conservative, South Cambridgeshire)

The Minister will recall that it was previously considered desirable that there should not be a structure of penalties that would cause Ofcom to choose a sectoral approach—the imposition of conditions rather than reliance on Competition Act powers because of a difference in the availability of penalties. If apparatus applies, the situation is different from that of services. If services are involved, significant market power conditions must be imposed and, therefore, the structure flows through. Does the Minister accept that there is a risk at the outset that Ofcom will say that a penalty would be available to it through the imposition of conditions and not through the application of Competition Act powers alone, and there might be a distortion in favour of applying conditions rather than relying on Competition Act powers?

Stephen Timms (Labour, East Ham)

I hoped that the hon. Gentleman would feel that that would not be a danger, given the restricted circumstances in which the powers will be

used. Ofcom will be under a duty to use the Competition Act rather than sectoral powers in circumstances in which that represents the best way forward. We will make proposals on how the apparatus that we are discussing should be narrowly defined. In view of that, I hope that the hon. Gentleman will accept that there is no danger of the sort about which he is understandably concerned.

Andrew Robathan (Conservative, Blaby)

The Minister might recall that I mentioned the definition of a supplier; he then mentioned a later clause that we do not want to address now. Does he foresee that a supplier will end up being fined under the amendment that he will table?

Stephen Timms (Labour, East Ham)

The amendment that might well be tabled will address the apparatus, not the supplier.

Question put, That the clause stand part of the Bill:—

The Committee divided: Ayes 14, Noes 6.

Roger Gale (Conservative, North Thanet)

Before we proceed, I meant to mention the following at the start of our proceedings, and it was an oversight on my part that I did not do so. Hon. Members will have noticed that we have been relegated to Room 10 because the Hunting Bill has apparently attracted large numbers of Members and other interested parties in Room 14. I have asked the officials of the House to see whether there is a Room that might conveniently accommodate the guests of Members who wish to be here.

Hon. Members will appreciate that we do not usually recognise the Public Gallery, but it has come to my attention this afternoon that the Hansard staff who traditionally use the Public Gallery have had difficulty accessing this end of the Room when they need to do so. I believe that Officers of the House should be able to do their duty expeditiously and I therefore suggest that if Hansard staff wish to use the Press Gallery, they may do so.

Clauses 98 and 99 ordered to stand part of the Bill.

Clause 100 - Civil liability for breach of conditions

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move amendment No. 112, in

clause 100, page 94, line 14, leave out paragraph (a).

Since this is my first contribution, rather than an intervention, in this sitting may I join in wishing the Committee a happy new year and apologise for my slightly late arrival? The explanation relates to the point that you just made, Mr. Gale. I set my autopilot and found myself in the middle of the Committee considering the Hunting Bill, before beating a hasty retreat to the calmer waters of the Communications Bill.

Clause 100, on the face of it, appears to be relatively simple. It addresses civil liability and makes compliance with conditions and with enforcement notification a duty owed to, and enforceable by, any person who has suffered a loss as a result of a breach of conditions. Under the Telecommunications Act 1984, it is possible for a person to sue for breach of an enforcement order from Oftel. However, the clause goes further and gives individuals the power to sue for breaches of conditions. Many in the industry believe strongly that it is inappropriate for people to have recourse to the courts for breaches of conditions. The amendment would remove the provision under which compliance with a condition, rather than an enforcement order, is a duty owed to third parties.

Such a case that might occur is if a person believes that he has been unfairly or unduly discriminated against. It is a primary job of the regulator to determine that; it is not, in most cases, a matter of law that courts should judge. An obvious question to ask is what is the point of having a regulator if somebody can have recourse to the courts to decide whether a breach has occurred?

Other obligations under the conditions of authorisation might relate to highly technical issues such as price regulation, whether economic tests have been met, or third party rights. If we allow all those to be grounds for recourse to the courts, there is a real danger that we will create a litigious environment and undermine Ofcom's authority to enforce the conditions that it lays down. There is no requirement under EU directives to allow such third-party rights.

I think that the amendment is the only one that we have considered to date that has brought together all providers in the sector: British Telecom, which is the biggest provider; the alternative providers that are in competition with BT; and the mobile operators that can be considered to be direct competitors. All providers have expressed considerable concerns about the extension of the right to allow people to sue providers for potential breach of conditions.

Several further points have been made by the industry. They are valid and I hope that the Minister will at least consider them. First, conditions in a telecommunications authorisation are quintessentially a matter of public policy. Policy considerations, such as the duty to act transparently and the principle of proportionality, should be applied when conditions are enforced. A third party that enforces them through a court will not be able to do that. Conditions in authorisation are designed to be of general benefit rather than to give rise to what could be called quasi-contractual duties that are enforceable by individuals. That is another reason why it is much more

appropriate that those highly specific rules should be left to a public body.

Most of the alternative providers operate in a market that is either highly competitive, or in which they themselves are sometimes the victims of anti-competitive behaviour. It is unclear why they should be exposed to a much greater range of civil liabilities than are other individuals and companies that are going about their business. That is particularly true in the current financial environment; many such providers are operating under very tight margins, and the extra legal liabilities that the clause would impose on them open up the real possibility that telecoms and internet providers will find it more difficult to obtain funding to operate in the UK.

Where it is felt that special consumer protection measures are needed, they are covered by the horizontal regimes—for example, through the consumer credit regime. Quite often, the customers of business-focused telecommunications providers are larger than the providers themselves; therefore they, too, do not need the special legal privileges that the clause will provide.

There is a fear that the right to take court action could be used by a telecoms operator who does not like Ofcom's policy stance, and that it could therefore result in the second-guessing of the regulator's policy, which is a bad idea in principle. Furthermore, it is not always clear what the conditions of authorisation really mean. They are not designed to give legal certainty in the way that, for example, a legal contract would. It is part of Oftel's role—and it will become part of Ofcom's role—to decide those questions. For example, the word ''reasonable'' is used more than 20 times in the new draft conditions of authorisation that Oftel is proposing should have effect under the new regime. It will not always be possible for providers of communications services to know when they are complying with their obligations—or, in other words, to define whether they are acting reasonably.

For all those reasons, there is real concern that the effect of the clause will be to second-guess the job of the regulator and to create double jeopardy for providers. The provision is not required under the terms of the new directive and it is strongly felt to be unnecessary and potentially detrimental to the development of communications services in this country. The entire industry is united on the issue. I urge the Minister to think carefully about whether he considers the provision to be necessary, or whether he might, on second thoughts, accept the merits of our amendment to remove it.

Stephen Timms (Labour, East Ham)

When we debated clause 90, I set out the key elements of the enforcement arrangements that we proposed for the conditions of entitlement, which will replace the current system of telecommunications licences. Clause 100 provides that the obligation to comply with the conditions of entitlement—an enforcement notification, or conditions attached to a direction to suspend a person's entitlement to provide networks or services or make available associated facilities—is a duty owed to every person who may be

affected by the contravention. The impact of the introduction of such a duty is the creation of a new right for a private party to bring civil court actions for damages—or whatever—against a person whom they consider is not complying with their obligations under the conditions.

The remainder of the clause contains provisions defining more closely the basis on which an action is to be based, and subsection (3) includes a statutory defence in proceedings that the person

''took all reasonable steps and exercised all due diligence to avoid''

a breach. Under section 18 of the Telecommunications Act 1984, such a right only arises where the Director General of Telecommunications has made an order requiring the licensee to comply with his obligations under the licence. In other words, private parties do not have a right of action unless and until the director has ruled that the licensee is in breach of his obligations. Amendment No. 112 would prevent a private party from bringing civil proceedings unless Ofcom had determined that a provider was in breach of a condition of entitlement. I do not believe that that would be an appropriate or helpful change to make to the clause.

I understand the argument that extending the right of private party action, which we propose, might add to the business burden faced by communications providers, and I understand the concerns about the risk that private parties may bring action out of the blue, rather than raise alleged breaches with Ofcom as complaints or disputes. The hon. Member for Maldon and East Chelmsford is right to express those concerns, which we considered when preparing the Bill. However, those concerns are not justified to the extent that the provisions should be amended.

There is concern that a court might take a view that is not consistent with that which might be taken by Ofcom. That cannot be ruled out, although I think that it would be a rare occurrence. It would be right if Ofcom were to take account of court decisions when it takes a view—I would expect that to happen. It is possible for a regulator's position on an issue to evolve over time, and now that we are introducing a full right of appeal on the merits of a case, there are bound to be cases in which the regulator's original decision is overturned or modified on appeal.

Complete consistency, and the certainty that goes with that, cannot be assured in the system that would be introduced under the Bill, but they would not be assured if Ofcom alone were to decide on the matter, and the additional risk created by the courts having to decide on the merits of a case does not seem to be a large one. The parties may provide the courts with any specialist evidence that they think appropriate, which is what happens in respect of a case or decision by the regulator.

The hon. Member for Maldon and East Chelmsford voiced concern about providers being ambushed by private parties without the issue having been raised previously with Ofcom. There are no grounds for the view that the courts would not allow adequate time for a provider to prepare a defence and for relevant

documents and so on to be made available before a hearing; nor would the opening of proceedings preclude the parties from reaching an agreed settlement by negotiation before a formal judgment was reached. I expect the courts to give short shrift to any frivolous cases that might be brought before them.

Simon Thomas (Plaid Cymru, Ceredigion)

Does a third party have to go through a complaints procedure with Ofcom first, before resorting to the courts? If they do not have to do that, why has that not been considered in the context of the clause?

Stephen Timms (Labour, East Ham)

That goes to the heart of the amendment. The clause gives providers the opportunity to take a concern directly to the courts, rather than go through Ofcom, should they wish to do that. When reaching a view on whether that is the right approach, it is important to consider the other side of the case—the considerable and quite significant benefits of what we are proposing.

Part 2 introduces new rights in respect of providers' entitlement, subject to conditions, to provide networks and services and provide associated facilities. Those rights are recognised in the communications directive that part 2 implements. The unrestricted right of private party recourse is a proper counterpart to that. Just as providers will no longer need to obtain a Government licence before commencing or varying operations, it will no longer be necessary for them or others to route complaints about abuse of those rights to a Government-created body, or to rely on that body to secure an appropriate outcome. The possibility of court action without a previous Ofcom decision against the provider—

John Robertson (Labour, Glasgow Anniesland)

Will the Minister give some clarification on that point? Would someone who starts a company and sells services without obtaining a licence come under Ofcom's powers? If a complaint were made against the company while it did not have a licence, would a customer still be able to go to Ofcom to make a complaint?

Stephen Timms (Labour, East Ham)

Under the framework set out in the Bill, there will no longer be licences. The company in my hon. Friend's example would need to comply with the conditions set down by Ofcom for an operation of that sort. Under clause 100, we propose that if an aggrieved party thinks that Ofcom's conditions are not being effectively and properly implemented by a provider, they can go to court to try to have that put right. That is a helpful change, because the case he mentions might not be a high priority for Ofcom. It might join a list of issues that Ofcom is dealing with.

Our view is that creating the opportunity for an aggrieved party to go to court to try to put things right, rather than having to go through Ofcom, is a helpful change. The amendment, which would remove that possibility, would be unhelpful.

Brian White (Labour, North East Milton Keynes)

Many companies have concerns about barriers to entry. Has my hon. Friend considered the barriers that the amendment could create to entry to the market? A start-up company would have to employ lawyers to consider the question of its entry to the market being prevented by malicious legal action.

Roger Gale (Conservative, North Thanet)

Before the Minister proceeds, I gently suggest to him that if some other Chairmen had been sitting in my place and he had stood with his back to the Chair for as long as he has, he would have had his head bitten off.

Stephen Timms (Labour, East Ham)

I apologise for turning my back on you, Mr. Gale. I shall endeavour not to do so again.

The arrangement set out under clause 100 gives people with grievances—and we have all come across companies that have grievances about such matters—the opportunity to take their complaint to court rather than having to wait for Ofcom to reach a conclusion about it. That will give small and new players a greater opportunity to be effective in the competitive marketplace than they would have if we left things as they are. I consider this a pro-competition change, rather than the reverse.

The hon. Member for Maldon and East Chelmsford made the point that the directive does not make an express provision permitting such claims, and that is correct; but recital 27 of the authorisation directive, as he will know, says that the directive is

''without prejudice to any claims between undertakings for compensation for damages under national law.''

The directive that is being implemented in part 2 introduces or acknowledges the possibility of this kind of change being made.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

I would be grateful if the Minister could clarify whether there would be any barrier to companies mounting legal action against each other were the clause not included in the Bill. Do we have to say explicitly that civil action could be taken in respect of the breaching of an Ofcom condition? Or, does the presumption that someone could take such action anyway mean that, even without the clause, a company that felt aggrieved could go to court and say, ''I wish to take action because I believe that there is a barrier to my entering this market''?

Stephen Timms (Labour, East Ham)

Should the amendment be agreed and clause 100(1)(a) deleted, people would have to go to Ofcom and would not be able to go to court. My argument is that, if it is appropriate, the possibility of going to court is helpful. The courts are well able to reject vexatious or frivolous cases, so companies should not be prevented from going to court if it is in their interests to do so.

Andrew Lansley (Conservative, South Cambridgeshire)

I have listened carefully to what my hon. Friend the Member for Maldon and East Chelmsford said from the Front Bench and he is right. It is strange that the Minister resists the argument. Certainly, recital 27 of the authorisation directive might contemplate such a possibility, but the articles do not specify it. If the directives were looking for something that was pro-competitive, they would have set it out.

The logic of the Minister's argument would apply equally to Competition Act prohibitions. Why would one not have an independent right to go to court to secure damages against someone in contravention of those prohibitions? We have not gone that far, and there is a great risk that enforcement of this regime will be taken out of the hands of Ofcom too many times, at

too early a stage and into the hands of courts. It is undesirable to risk Ofcom trying to establish a system of regulation and finding that it has been taken out of its hands by earlier court decisions.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Like my hon. Friend the Member for South Cambridgeshire, I am disappointed and unconvinced by the Minister's response. He began his remarks by saying that he recognised the legitimacy of concerns expressed by the industry at the possible consequences of the clause. He went on to say that the risk was not significant. That is not the view of those currently participating in the industry. They are very concerned.

The issue raised by the hon. Member for Ceredigion (Mr. Thomas) goes to the heart of the matter. We are not saying that people should not be able to go to court. They were able to do that whenever an operator continued to be in breach of an order issued by Ofcom, and under our amendment that would continue to be the case. The effect of our amendment would be that, in the first instance, Ofcom would have the responsibility of enforcing the conditions and it would then be subject to judicial process only if the provider was in breach of the enforcement order issued.

The Minister answered a different question when he talked about the EC directive. We were not suggesting that the directive did not allow the introduction of such a provision, but that it does not require such provision. I do not accept the Minister's arguments for those reasons and I wish to press the amendment to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 9, Noes 12.

John Greenway (Conservative, Ryedale)

I beg to move amendment No. 113, in clause 100, page 94, line 31, at end add—

'(4) Any proceedings brought against a person by virtue of subsection (2)(a) shall be suspended pending the outcome of any appeal under section 187 in respect of any decision of OFCOM in relation to the breach or alleged breach which is the subject matter of the proceedings and the outcome of such appeal shall be binding in relation to those proceedings.'.

May I also wish you a happy new year, Mr. Gale?

Much of this issue relates to the amendment moved by my hon. Friend the Member for Maldon and East Chelmsford. In response to him, the Minister said that it is open to any person to appeal to the Competition Appeal Tribunal against any judgment by Ofcom with which he disagreed. In similar vein to what my hon. Friend said, the whole arrangement gives rise to some concern within the telecommunications industry because, in effect, if someone were taking legal proceedings against a company that is appealing against a decision on which the legal proceedings are based, the question arises about which takes precedence.

The amendment proposes that the proceedings that may be brought by virtue of subsection (2)(a) ought to be suspended pending the outcome of an appeal under section 187 in respect of a decision by Ofcom about a breach or an alleged breach, which is the subject matter of the proceedings. There is another matter connected with which decision would take precedence. Would it be the decision of the Competition Appeal Tribunal or the decision of the court in which the individual had taken proceedings under subsection (2)(a)? That should be clarified. It would be to the benefit of the Competition Appeal Tribunal standing if that decision were binding in respect of any action brought by a third party under subsection (2)(a). The amendment would add such a caveat. Without such an amendment, there is a danger of proceedings being brought under the circumstances that my hon. Friend and I have outlined when the nature of the cause of such proceedings is not accepted by the company concerned and is the subject of an important appeal against Ofcom's decision.

I hope the Minister will consider the fact that there appears to be a flaw—if that is not too strong a word—in the thinking about the way these arrangements have been set out and that he will, at the very least, acknowledge that where an Ofcom ruling is the subject of an appeal in which he laid store in his reply to my hon. Friend the Member for Maldon and East Chelmsford, it would be ludicrous if the proceedings permitted under subsection 2(a) were to be continued.

Simon Thomas (Plaid Cymru, Ceredigion)

I want to add my support, in principle, to the hon. Member for Ryedale (Mr. Greenway). Looking at the particular clause and the amendments that have been tabled to it, it seems that the Government are in danger of tying up the industry in knots over these issues. Some contentious cases could come forward, which would slow down the effective work of Ofcom in its early days. We need to have an idea about how to get Ofcom moving in a proper format. Although I sympathise with what the Government are trying to achieve in this particular clause—strengthening the consumer arm within the structure of the Bill—we have to balance that with the other appeals systems. Somehow these have to be squared within the framework of the Bill, but so far that has not been achieved. I hope that the Minister will reply that the Government are prepared to look again at the Bill and ensure that the customers and the industries regulated by Ofcom, and the public, know clearly who will have precedence when these issues

come before either the courts or an appeals process. My personal feeling is that it is better to have an exhaustive appeals process before there is any recourse to court action. It seems that, if we build an appeals process into the Bill, that must take precedence over any court action.

Stephen Timms (Labour, East Ham)

On the hon. Gentleman's last point, an important feature of the arrangements under clause 100 is that some matters will not go to Ofcom at all. He expressed concern that Ofcom might get bogged down with decisions and appeals. The reverse is the case as a result of these arrangements. Some issues will be sorted out by the courts and will not go to Ofcom at all. That will assist Ofcom in managing its work in the early stages, rather the reverse of the concern that the hon. Gentleman has just expressed.

Amendment No. 113, as the hon. Member for Ryedale has said—revisiting some of the issues raised by amendment No. 112—would limit the extent to which third parties would be able to exercise the right that we are proposing to give to them to those cases where either Ofcom did not take a decision on the alleged breach of condition, or that it did so but there was no appeal to the Competition Appeal Tribunal. Under the amendment, the lodging of an appeal would automatically bring the court proceedings to an end and substitute the decision of the Competition Appeal Tribunal for the decision that the court would otherwise take.

The amendment is not necessary. The courts would be able to stay proceedings before them, pending the outcome of an appeal to the Competition Appeal Tribunal. If the tribunal upheld Ofcom's decision, I would expect the courts not to go against that. Allowing the amendment, on the other hand, could well encourage providers—if they were the subjects of court proceedings—to bring the case to Ofcom and seek a decision that they could then appeal against to avoid a court case. That would be an undesirable change to the arrangements set out under clause 100.

Given the reassurance of how the courts might deal with a case where there is an appeal, the hon. Gentleman may be able to withdraw the amendment.

John Greenway (Conservative, Ryedale)

The Minister, with his usual flair puts the alternative point of view. I am not entirely convinced that this is how it would work in practice. We have, in the previous amendment and the Division that we took on it, expressed our opinion that clause 100 contains some provisions which have not been thought through. Having voted on the previous amendment, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 100 ordered to stand part of the Bill.

Roger Gale (Conservative, North Thanet)

May I put this to the test? Are there any matters arising from clauses 101 to 115 and schedules 3 and 4?

John Greenway (Conservative, Ryedale)

I wish to catch your eye on schedule 4, Mr. Gale.

Michael Fabricant (Conservative, Lichfield)

And I on clause 104.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

I on clause 102.

Clause 101 ordered to stand part of the Bill.

Clause 102 - Application of the electronic communications

Richard Allan (Liberal Democrat, Sheffield, Hallam)

This is an important clause and I want clarification from the Minister on a couple of points. The clause refers to the electronic communications code. That sounds innocuous, like the green cross code or the highway code, but the electronic communications code is much more exciting that that to many members of the general public because it is the thing that means that roads are dug up outside houses, or telephone masts are put in back gardens. People care passionately about that so it is worth airing some of the issues.

I understand that the clause and subsequent clauses change the way in which we confer powers on telecoms companies enabling them to have preferential access to land and allowing them to disrupt highways and make compulsory purchases of land in order to ensure that we have a proper telecommunications infrastructure. It is always difficult to strike a balance: we need a telecoms infrastructure, but people experience disruption when building occurs near them.

I understand that the clause changes the way in which the powers are conferred. Licences for providers of telecommunications services will no longer exist and powers will be conferred on specific projects such as putting in place a network or a system of conduits. The change is fundamental, and I want clarification from the Minister on key points.

To what extent does the Minister envisage the change leading to local and specific powers, rather than more general ones, being conferred? At present, a national mobile telecoms operator in the UK has powers under the telecommunications code, in effect, throughout the whole of the country. Do we expect people to come forward with localised plans, such as a proposed mobile phone network for Sheffield. Will Ofcom give powers under the new electronic communications code for a mobile network for Sheffield? Alternatively, would the powers cover Yorkshire, or England, or the United Kingdom?

The conduit systems introduced under the clause are new. Offering licences to people to dig up the roads of Sheffield once—to use that example again—in order to put in place telecoms conduits, rather than having many operators digging up roads separately, is a great idea, but only if subsequent applicants can be required to use the conduits. We will achieve nothing if specific powers are given to somebody to put a system of conduits in place but Ofcom, after giving the power once, does not have the power to refuse to allow other telecommunications companies to dig up roads and not use conduits. It must be able to say, ''No, we have given someone else specific advantages under the electronic communications code to put in place a system of conduits. You should use that system rather than start all over again.''

Mast sharing, which has been mentioned before, is also introduced under the clause. When we start a telecommunications infrastructure, there tends to be too little of it everywhere, so it makes sense to have a code that says that we want people to be able to roll out infrastructure. However, a point is reached at which infrastructure is in place and the public expect licensing authorities to tell companies to use existing infrastructure rather than put new infrastructure in place.

A decision to give someone specific, preferential powers over any other applicant in the planning system, which is what the code confers, would be justified in the public's eyes only where there is an overriding need to roll out infrastructure. Where the public see existing infrastructure, they will rightly question whether a new applicant should be given the exceptional powers to introduce infrastructure where, to their mind, it is already in place.

Michael Fabricant (Conservative, Lichfield)

I was especially fascinated—indeed, I woke up—when the hon. Gentleman spoke about mast sharing. Channel Five found itself unable to put transmitter antennae on masts on sites that were operated by the BBC, now Crown Castle-operated, and by the Independent Broadcasting Authority, now NTL-operated. That meant that many people had difficulty in receiving Channel Five without an additional aerial. Does the hon. Gentleman feel that that situation would not have arisen if the provisions he wants had been in effect?

Richard Allan (Liberal Democrat, Sheffield, Hallam)

The hon. Gentleman makes his own point. I am not familiar with the details of why agreements were not reached in that case. The distinction is really between whether anyone should have powers under the electronic communications code and whether additional powers should be conferred on them to introduce new infrastructure. It is not about whether commercial agreements can be reached between people who own sites and those who wish to introduce new infrastructure. Another set of questions is contained in that issue.

The legal status of codes of practice is another key issue. The mobile phone operators have been trying to overcome resistance to some of their current activities under the telecommunications code by conforming to a code of practice. They believe that their roll-out of infrastructure will be more acceptable to the public because they are considering some issues on an area-wide basis, including the possibility of sharing. As for people who dig up the roads, it is important to note that local authorities carrying out roadworks are worse offenders than telecoms operators. Telecoms operators often get the blame, but they are not the biggest offenders in terms of hours lost—they tend to get in and out fast and they try to conform to codes of practice.

If we are trying to deregulate, perhaps some of the compliance management, with a condition to allow preferential access to land to install infrastructure, should contain some recognition of where operators

have tried to do that properly and have adopted codes of practice. There should be some relationship between such good behaviour and the application of the electronic communications code. I hope that the Minister will elaborate on some of those points.

Stephen Timms (Labour, East Ham)

I agree with the hon. Gentleman that the electronic communications code is an important part of the Bill. I am grateful to him for giving me the opportunity to say something about it.

For the most part, the Bill will continue to apply the telecommunications code set out in schedule 2 to the Telecommunications Act 1984, but it will adapt that for the new converging electronic communications regulatory regime. Like the 1984 Act, the electronic communications code gives network operators the rights that are essential if they are to build and maintain networks in a cost effective and efficient way. That remains important because civil engineering—digging trenches, making good roads—often constitutes more than 60 per cent. of the cost of extending a network.

Without the ability to apply the code, the additional costs and delays would raise the hurdles so high that the investment needed, especially for broadband and for the new mobile networks that the hon. Gentleman referred to, might make the cost prohibitive. That is particularly the case, not so much in Sheffield but in the more remote parts of the country where the business case for market investment is often quite marginal.

Earlier on in the debate, perhaps on Second Reading, the hon. Member for Maldon and East Chelmsford, or one of his hon. Friends, mentioned that the Broadband Stakeholder Group, in its November report, called for changes to enable the provision of civil infrastructure by third parties as an important step in facilitating investment in broadband. That is an important part of the reason why we are making the change that the hon. Member for Sheffield, Hallam (Mr. Allan) talked about. The change is a deregulatory move to allow the code to be applied not only to companies operating electronic communications networks, as was the case in the past, but to those offering access to conduits or other infrastructure to network operators.

Ofcom will be able to apply the code to a person who is not operating an electronic communications network, but who is in a position to contribute to the provision of such networks by providing the basic infrastructure. I hope that that will lead to a lower cost of roll-out of new networks. The hon. Gentleman asked whether that change is likely to be local or national in its impact. I expect that it will more often be taken advantage of in specific local circumstances.

Let me give some examples of possible developments. Existing utilities companies—gas or water companies—might want to take advantage of work that they plan to carry out for their own purposes to make available conduits for telecommunications networks. Local authorities—this might prove especially significant—might provide managed services directly as part of their activities as local highways authorities for the

promotion of well-being, and might set in the ground infrastructure that can be taken advantage of by network providers in the area. There might be public-private partnerships, in which a local or regional authority procures a managed infrastructure service for the promotion of well-being using the power now available to them. Purely commercial businesses might choose to construct infrastructure that network operators can take advantage of.

The change seems to be relatively small, but its impact could, as the hon. Member for Sheffield, Hallam says, be quite big. It could remove some of the current barriers to establishing the new infrastructure that we all want. The provision could be operated nationally, but I should think that it would more frequently be used locally.

The hon. Gentleman asks whether we might compel people to use infrastructure provided in that way. I do not think that we can do that. If a network operator thinks that it is better to construct a whole new network of its own than to use facilities already in place, it needs to have that opportunity. However, there will be a huge cost incentive to take advantage of any existing infrastructure rather than build new infrastructure, with the expense and the time involved in doing so. It would not be appropriate to force people to use existing infrastructure, but I think that the hon. Gentleman accepts that there are big commercial cost benefits if the opportunity to do so arises. The provision could give rise to a large and beneficial change and bring in some of the new investment that we want.

Michael Fabricant (Conservative, Lichfield)

I understand the Minister's point that Ofcom could not compel people to use facilities, but could it act as a facilitator if there were contractual difficulties, or if one party thought that another was being unreasonable? Again, I give the example of Channel Five, which felt that the BBC and independent broadcasters were being unreasonable in not permitting Channel Five to put little dipoles on top of existing masts. The reasons given were that wind loading would cause masts to collapse, even though most chartered engineers who considered the matter thought that an impossibility. Channel Five's theory was that it was in the interests of the BBC and independent broadcasters to try to limit the coverage area as much as possible. Does the Minister see an opportunity for Ofcom to intervene and, if not to compel—to use the Minister's word—at least to encourage joint sharing of conduits or antennae?

Stephen Timms (Labour, East Ham)

I think that Ofcom will want to encourage sharing in that way. If the hon. Gentleman takes a look at clause 103(4)(c) he will see a reference to Ofcom having to have regard to

''the need to encourage the sharing of the use of electronic communications apparatus''.

That statement is made in the context of whether to apply the electronics communications code in any particular case. However, the Bill states that Ofcom should play a role in encouraging sharing of that sort, and the hon. Gentleman might take encouragement from that.

Michael Fabricant (Conservative, Lichfield)

I am encouraged, but would there be any sanction if, despite the encouragement, Ofcom were ignored?

Stephen Timms (Labour, East Ham)

No, I do not propose such a sanction, but such encouragement is important, and we expect Ofcom to take considerable interest in that. The new directives encourage that as well. It is clear to everyone that if there can be sharing of that sort, costs—the amount of investment that is needed to achieve the desired outcome—will be significantly lower. There is a public interest in encouraging sharing of that kind.

Andrew Lansley (Conservative, South Cambridgeshire)

I am slightly confused. I thought that in the circumstances to which my hon. Friend the Member for Lichfield referred, access-related conditions might be applied to Crown Castle. It therefore appears that it is possible for conditions to be imposed—and, thereby, for sanctions to be applied.

Stephen Timms (Labour, East Ham)

I will need to reflect on that point. I think that the answer to the question of whether, under clauses 102 and 103, Ofcom could compel people to use particular facilities is no. I will have to give some thought to whether other parts of the Bill would apply if the issue with the BBC were to arise again.

Question put and agreed to.

Clause 102 ordered to stand part of the Bill.

Schedule 3 agreed to.

Clause 103 ordered to stand part of the Bill.

Clause 104 - Register of persons in whose case code applies

Michael Fabricant (Conservative, Lichfield)

The Minister and other contributors to the debate on clause 102 rightly pointed out the importance of the code, and I wish to raise a simple question about the publication and maintenance of the register. Subsection (4)(a) states that the register should be made available to the public, and subsection (4)(b) talks about fees. Does the Minister envisage that Ofcom will maintain the register on a website that is available to everyone who tries to access it? If so, what is the implication for any income stream on which Ofcom might be partially dependent that might be generated by subsection (4)(b)?

Stephen Timms (Labour, East Ham)

I expect Ofcom to place that list on its website so that people can look at it simply by accessing the site. At present, charges are levied only for the costs of photocopying a part of the register. That would fall away, as we are talking primarily about web access, so I do not expect a charge to be levied.

Question put and agreed to.

Clause 104 ordered to stand part of the Bill.

Clauses 105 to 114 ordered to stand part of the Bill.

Schedule 4 - Compulsory purchase and entry for

John Greenway (Conservative, Ryedale)

I do not want to prolong the Committee's debate, but it would be remiss not at least to pause for a moment's reflection before agreeing to the schedule, given that it provides substantial opportunities and powers for code operators and people in the telecommunications industry to compulsorily purchase and enter land. Over the years, each of us in our constituency surgeries have had cause to wonder how quickly and speedily some powers have been passed by Parliament without it reflecting even for a moment on the effect that they would have on individuals.

I want to make two or three brief points to give the Minister the opportunity to say a word about the provisions. Can he explain the frequency of compulsory purchase powers that are used under the present arrangements? How does what is proposed under the Bill compare with what happens now? I listened with great interest to the point raised by the hon. Member for Sheffield, Hallam and I wish to make a not dissimilar point about conduits digging up roads, the sharing of facilities and so on, which are all encapsulated in the schedule.

Paragraph 2 of schedule 4 sets out four criteria that the Secretary of State must bear in mind when authorising a power for an operator to compulsorily purchase land. Even the most cursory reading of the criteria shows the extent of the conflicts contained within such well-meaning proposals. One the one hand, the Secretary of State is to have regard to

''the duties imposed on OFCOM''

which, as we debated earlier, are to ensure a highly competitive communications industry. On the other hand, she must also protect the environment and a

''need to ensure that highways are not damaged or obstructed''.

There is a fair degree of traffic obstruction, particularly in London, on a daily basis. We heartily concur with

''the need to encourage the sharing of the use of electronic communications apparatus''.

Can the Minister explain what thought has been given to how we will achieve consistency in the decisions that are made in such matters, given that so many of them are bound to be taken to try to strike a balance between what are clearly conflicting proposals?

If I have not looked in the right place, I am happy to stand corrected, but one matter slightly surprised me. The notes on clauses are helpful and, on pages 168 to 174, explain why and in what sense the various proposals under the Bill are compatible with the European convention on human rights. I was surprised that no mention was made of the compulsory purchase powers. I would have thought that there would have been some explanation about why that was okay, especially given that so much of

the Bill was drafted to meet the requirements of European Union directives. Why is there no reference to the rights and interests of people whose land is compulsorily purchased? The Minister may want to come back to me on that point.

I have said sufficient to establish that the powers are wide ranging. It would have been remiss of the Committee not to have at least paused for a moment's reflection on them. I can see from the Minister's smile that he is grateful for the opportunity to say a few words in response.

Stephen Timms (Labour, East Ham)

As the hon. Member for Ryedale acknowledged, the powers under schedule 4 are provided to code operators under the terms of the 1984 Act. He asked specifically how often those powers have been used. In fact, they have never been used in the 19 years since then. There is an understandable view, however, that they are necessary as a back-stop and underline the powers of operators to reach agreement with landowners on a commercial basis. Paragraphs 1 to 5 of the schedule set out how the powers operate within England and Wales, Scotland and Northern Ireland.

The rationale for including such powers under the 1984 Act is to cover an operator who is under an obligation to provide a service. For example, 3G mobile licences oblige operators to cover 80 per cent. of the population by 2007. When such an obligation is imposed on an operator, we need to make sure that the operator has the means to meet it. In the example that I cited, a mobile operator may need to place a mast within a particular location and, without at least the possibility of calling on a power of the sort set out under schedule 4, may not be able to gain agreement from the landowner. It is on that basis that I suggest to the Committee that we need the powers set out in the schedule.

The hon. Gentleman asked specifically about human rights. I put it to him that there is a balance between the rights of individual landowners and of wider society. The way in which we framed the Bill gets that balance just about right.

Question put and agreed to.

Schedule 4 agreed to.

Clause 115 ordered to stand part of the Bill.

Clause 116 - Conditions regulation premium rate services

John Greenway (Conservative, Ryedale)

I beg to move amendment No. 245, in

clause 116, page 107, line 27, after 'content', insert ', promotion'.

This is the first of several extremely important amendments proposed by the Independent Committee for the Supervision of Standards of Telephone Information Services—ICSTIS, if I can pronounce the acronym correctly. It may be helpful if I explain to the Committee that ICSTIS is the independent body responsible for regulating premium-rate services in the United Kingdom.

Clause 116(1) gives a detailed legal definition of those services. They are delivered as a result of some

form of telecommunications call in which content is provided, generally information or entertainment, and when payment is made through a charge on a telephone bill for the call and when there is some form of sharing of revenue between a communications network and the party responsible for the provision of the service. I shall cite a few brief examples. The services include voting on television shows—such as ''Big Brother'' and ''Pop Idol''—chat and dating services, visa and Government information services, sport, weather, directory inquiries and so on.

The first concern that has been drawn to our attention is that the wording of subsection 116(1) refers only to giving Ofcom power

''for the purpose of regulating the content and provision of premium rate services''.

The subsection does not include the word ''promotion'' that amendment No. 245 seeks to insert. In the experience of ICSTIS, it is often the promotion of such services that gives rise to some of the greatest consumer harm and mischief. Sadly, because we need to press on with other matters, time does not allow me to regale the Committee with all the details of cases drawn to my attention. However, one that will provide some entertainment concerns an organisation called Slick Industries of St. Vincent in the Caribbean, where

''Members of the public complained about receiving an unsolicited e-mail which invited them to call a premium rate service and enter their mobile number and the mobile number of a person they 'fancied'. A text message would then be sent to that person inviting them to call the service to find out who 'fancied' them.''

A document has come to my attention that also relates to the promotion rather than provision of a service. At my tender age, I find this matter difficult, but someone would apparently send a message saying:

''Totally crazy about you!!! A person who knows you has asked us to send you this message. The person is madly in love and crazy about you, and has said that: You are Charming''

and so forth. The message then gives a number to ring, which is where the money is spent. That case relates to the promotion not the provision of a service, and the Committee will be glad to know that ICSTIS upheld various breaches of its code of practice and the companies concerned were fined.

I could mention cases relating to other mischief. For example, people received unsolicited letters purporting to be from a clinic for sexually transmitted diseases. Substantial fines were imposed on those companies.

I have probably said enough to convince the Committee that the work undertaken by ICSTIS—supervising, controlling and taking necessary action against the companies promoting such services when appropriate rather than being limited to the content and provision of those services—is extremely important.

I do not intend to press the amendment, because it may be that the Minister has thought through the problem and will stand up and say, ''Yes, that is a good point.'' He may say, ''Actually, the wording already caters for the problem'', but that is not the view reached by the lawyers who advise ICSTIS.

Before the process of the Bill is concluded over the next six months, I hope that the Minister will at least agree to examine the problem and ensure that the provisions allow ICSTIS to continue its valuable work.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

I rise to support strongly the amendment moved by the hon. Member for Ryedale. Many of my concerns about premium rate services are in precisely the area of promotion that he mentioned. When the first premium rate numbers were published, there was a big fuss about people running up huge phone bills. ICSTIS was born out of that process and has done a good job regulating the straightforward premium rate numbers with which everyone is now familiar. It works well.

What is more insidious and dangerous is the way in which people disguise the use of such numbers. The ones that really irritate me are the fax-back services that say in very small letters at the bottom of the page that calls are premium rate. They do not make that fact obvious and use devious and appalling psychological techniques to try to get people to use them. Some of the worst of them that I have seen say things such as, ''An animal will die if you do not fax this back now to vote on this issue.'' That kind of statement really gets to people—[Interruption.] I will not be drawn on that. They will use that kind of technique and the people who fax them back will end up paying £2 or £3 for the privilege of having done so. That technique is appalling, as is the fact that they hide the costs in very small print at the bottom—that is a promotion issue. Action must be taken on such matters.

I turn to the issue of what I call ''naughty diallers''—although I am unsure whether that is the correct technical term. Naughty dialling takes place on the internet, and I have seen it take place in the UK. I have a child who was using the internet; she came back to the service that she had been using, and by using a wholly innocuous service a naughty dialler that replaces one's normal internet dialler with a premium rate number that costs £1 a minute had insinuated itself on to the machine.

These things are happening now; as we speak, people are having them downloaded on to their machines. The technology for doing that and for disguising the fact that one has got someone to use the naughty dialler—naughty in an adult sense in many cases, but also naughty in the sense that it is not the internet dialler that one intended to use—is improving. People are developing these technologies.

I think that all of this subject falls into the area of promotion. At some point, someone might have clicked a box on a web page—often a disguised box that is not doing what it looks like it is doing. If one clicks on a box that says ''OK,'' that may be taken for implied consent for substituting this expensive dial up connection for one's normal dial-up connection.

We will have to run quickly to keep up with some of these changes. If someone is using devious methods but has kept to the letter of the law, Ofcom should have the flexibility to say, ''No, that was sufficiently devious for me to rule you out of order and stop that

service taking place.'' Unless the Minister can give us further assurances, I am concerned that if the amendment is not accepted some of these devious practices that occur in the area of service promotion will not be caught. That would be a great shame, and people's confidence in the use of such services—and the internet, in particular—would decrease if they did not feel that they had some kind of protection against such awful practices.

Brian White (Labour, North East Milton Keynes)

Premium rate services are a billion-pound industry in this country and a lot of goods things come from it. However, the hon. Member for Sheffield, Hallam (Mr. Allan) has highlighted some relevant issues. One of my concerns is the way in which innovative services are coming in. If public confidence in these services is lost, that will prevent the good and proper use of them.

There are legitimate uses that need to be protected. Unscrupulous companies could simply unbundle the charging mechanism, and there are ways in which they could get round the Bill—I appreciate that that relates to the next set of amendments. I was struck by Bryan Carsberg's comment that what will drive the regulator is what is in the legislation rather than the intention behind it. I am concerned that there is a gap here, and I ask the Minister to look at it again.

Michael Fabricant (Conservative, Lichfield)

Important points have been raised. The unscrupulous operators of this type of premium rate service will be looking for the loophole that the hon. Member for Milton Keynes, North-East (Brian White) just referred to. He also said that while the majority of people who offer premium rate services provide very good services and run honourable and decent organisations, sadly there seems to be a large degree of latitude on the standard deviation between those that are very good and those that are very bad, regardless of whether they are in St. Vincent or in parts of the UK. It is important that we can be assured that there will not be a loophole if the word ''promotion'' is not used.

The hon. Gentleman mentioned that premium rate services is a billion-pound industry and I think that it will get larger for the reasons that the hon. Member for Sheffield, Hallam mentioned. His comments reminded me of a famous front cover of the American National Lampoon magazine. It had a picture of a puppy dog with a hand and a gun pointing at its head. Underneath was the headline, ''If you don't buy this magazine, we'll shoot this dog''. The hon. Member for Sheffield, Hallam pointed out that that example is used in several types of internet promotion.

ICSTIS has said that it regards child protection as fundamentally important because children could be those most affected by such things—especially when considering puppy dog protection. I know that my hon. Friends on the Front Bench feel strongly about that because I can see their conviction.

However, not only children, but older people are affected. ICSTIS has laid down regulations on the publication of the cost of using services, but costs vary

considerably. People may vote on issues featured on BBC News 24. May I say how much I enjoy BBC News 24? It has been getting a little bit of stick of late but people need to stand up for it. If one phones in to vote on such issues, the likely cost is only 10p for a minute. However, one finds that participation in other television companies' phone-in shows covers the cost of almost all the show.

Andrew Robathan (Conservative, Blaby)

Like ''Who Wants To Be A Millionaire''.

Michael Fabricant (Conservative, Lichfield)

Yes, like ''Who Wants To Be A Millionaire''.

Chris Bryant (Labour, Rhondda)

The hon. Gentleman is issuing a foul calumny against many broadcasting companies. He will know that when the Select Committee expressly asked representatives of Granada and Carlton about the issue, they made it clear that they do not try to make significant amounts from the polls.

Michael Fabricant (Conservative, Lichfield)

I am grateful for that helpful intervention.

The hon. Gentleman will know that several companies that advertise put in very small writing that phone calls to them can cost up to £1.50 per minute, which is the current maximum premium rate. Is the Minister convinced that the wording of subsection (1) is such that no third party could promote the provision of a premium rate service in such a way that it could threaten the conscience of young children, provide other attractions to young children that might otherwise be banned by ICSTIS or disguise the actual cost of the call? If third parties could get round such aspects by not using the word ''promote'', that is a major loophole. The Minister can be assured that unreasonable people and organisations in the United States make considerable amounts from such services because legislation contains loopholes. It would be unsatisfactory if bad drafting created such a loophole in this country.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I shall add a few words to those of my hon. Friends because the issue is provoking a lot of concern in the Committee. Two particular examples worry me. One is junk faxes, which is my particular bugbear and was raised by the hon. Member for Sheffield, Hallam. The majority of faxes that I receive in my office promote premium rate services. Most of them tell me how I can achieve a miracle diet, although I am not sure whether I have been singled out for that promotion, although I agree that that is highly unlikely. However, receiving the faxes involves a considerable cost because twice during recent months I have had to buy new ink cartridges, which hon. Members know are not cheap. I object to financing junk faxes that are cluttering up my fax machine.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

I am sure that the hon. Gentleman shares my sense of outrage that although several of the faxes give a number at the bottom that one can fax if one wants them to stop, the number given is a premium rate number that costs £3 to fax.

John Whittingdale (Conservative, Maldon and East Chelmsford)

The hon. Gentleman is right to be angry, as am I.

I kept my eyes open during the Christmas recess, and in every single magazine that I opened, I obtained

a card telling me that I had the opportunity to win £1 million, £30,000, a multi-media PC, and all sorts of other wonderful things. All I had to do to see if I had won a prize was to scratch over various symbols to see if I had three matching symbols. I had five cards and, extraordinarily, Lady Luck must have been smiling on me, since for every single card I was a top-tier prize-winner. Retirement from my current occupation beckoned. However, I looked at the bottom of the cards, and, as my hon. Friends have already said, in each case I had to ring a number, the calls cost £1.50, and the amount of time for which I would be on the telephone varied from three minutes to five minutes. It does not take more than simple arithmetic to work out that that represents a significant cost, and one that is likely to be far greater than the value of the minor prize that I might receive as an alternative.

I believe that members of the Committee are sufficiently astute to see through that kind of promotion. I generally abide by the principle of caveat emptor. My hon. Friend the Member for Lichfield raised a valid point, because my excitement at finding the cards was outweighed only by that of my nine-year-old son, who insisted that I should ring up in order to obtain my £1 million. He became quite upset when I told him that I did not think that that was a good idea. He pointed out to me that I was a top-tier prize-winner, and that therefore it was more or less guaranteed that I would receive one of the wonderful prizes. I spent some time explaining the ways of the world to him, and I fear that the trusting innocence of the child has been rather damaged by that experience.

There has been an explosion of that sort of promotion, so that they are almost impossible to avoid. They represent a deception that raises real concerns, particularly in relation to children, who inevitably will be taken in by them. I hope, therefore, that ICSTIS will continue to examine them. The amendment is important in strengthening the hand of ICSTIS in dealing with this sort of thing.

Stephen Timms (Labour, East Ham)

We have had a lively debate on amendment No. 245, and I am impressed by the degree of consensus that has emerged across the Committee in support of the proposal made by the hon. Member for Ryedale.

I agree that ICSTIS does an excellent job, and is a good model of effective self-regulation without, until now, any legislative support. We recognise the success of ICSTIS, and want to support and strengthen its work.

I also agree that it is important for it to be possible to make conditions in the proposed code about the promotion and advertising of premium rate services. Such services account for a large proportion of the complaints that ICSTIS deals with, and it should be possible to include those aspects in the code.

In drafting the legislation, our view was that promotion and advertising fell within the scope of the phrase ''provision of premium rate services'' which appears in subsection (1) in the second line of clause 116. Concern has been expressed in the debate that we may have been a little optimistic on that point, and I understand that some legal thinking confirms that. In

the light of what has been said, and the unanimity of the Committee, I will make a commitment to look again at the matter, to see whether there is any doubt about whether promotion and advertising is covered by the current wording. If there is such doubt, I will return with a fully considered amendment to rectify that deficiency.

I agree with what every Member who has spoken has said, that ICSTIS should have a clear ability to deal with problems with promotion and advertising of the kind to which hon. Members have drawn attention. I hope that on that basis the hon. Gentleman will feel able to withdraw his amendment.

John Greenway (Conservative, Ryedale)

I am grateful to the Minister for his response. I had indicated that I suspected that the relevant matter had been caught during the initial drafting and I am willing to accept that the matter needs to be reconsidered. The purpose of introducing such amendments is so that we can debate such issues. The Minister is right to catch the mood of the Committee, because this is a growing problem and one that ICSTIS needs all power at its elbow to deal with.

We have made valuable progress on the Bill in the past half an hour, 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. 274, in

clause 116, page 107, line 40, after second 'power', insert—

'(a)'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to take amendment No. 275, in

clause 116, page 107, line 41, at end insert 'and

(b) to determine, subject to such conditions as they think fit, that any premium rate service of any description, or any individually specified such service provided by a person, is not to be treated as a premium rate service for the purpose of any condition set under subsection (1).'.

Amendment No. 295, in

clause 116, page 108, line 5, at end insert 'and that charge is set at an amount or rate which exceeds such amount or rate as OFCOM may specify by order for the purposes of this section.'.

Amendment No. 247, in

clause 116, page 108, line 5, at end insert 'and'.

Amendment No. 296, in

clause 116, page 108, line 6, leave out paragraphs (c) and (d) and insert—

'(7A) This section does not apply to a premium rate service unless—

(a) the charge for that service is required to be paid to the person providing the electronic communications service by means of which the premium rate service is received directly by the user of the premium rate service, and

(b) that charge is imposed in the form of a charge made by that person for the use of that electronic communications service.'.

Amendment No. 246, in

clause 116, page 108, line 7, leave out first 'service' and insert 'network'.

Amendment No. 248, in

clause 116, page 108, line 8, leave out from 'provided' to end of line 10.

Amendment No. 297, in

clause 116, page 108, line 21, leave out paragraph (b) and insert—

'(b) that person—

(i) is the provider of the electronic communications service through which the premium rate service is received directly by the user of that premium rate service, and

(ii) charges that user in respect of the use of the electronic communications service for the use or reception of that premium rate service, and

(iii) has made an agreement with the content provider under which that charge is shared with the content provider.

(9A) For the purposes of paragraph (b) of subsection (9) a person is a content provider in relation to a premium rate service if that person falls within paragraph (a) of that subsection in relation to that service.'.

Amendment No. 249, in

clause 116, page 108, leave out lines 23 to 27 and insert—

'(c) he is the provider of an electronic communications network used for the transmission of communications comprised in the service.'.

Amendment No. 298, in

clause 116, page 108, line 39, at end add—

'(12) Section 388 shall apply to the power of OFCOM to make orders under this section.'.

John Whittingdale (Conservative, Maldon and East Chelmsford)

We had a general debate on the first amendment, which was moved by my hon. Friend the Member for Ryedale. Rather than repeat it, so I shall concentrate on some specific provisions of the amendments. My hon. Friend might seek your leave to say a word on one or two of the others.

Amendments Nos. 274 and 275 are designed to give extra flexibility in one respect and to close off the possibility of extension in another. It is intended that those amendments should give Ofcom the flexibility to exclude from regulation certain services that would otherwise fall within the definition, if it believes that it would be proportionate to do that. In the draft general conditions produced for consultation by Oftel in May 2001, a paragraph was inserted that gave Ofcom the power not to regulate a service that would otherwise fall within the definition of a premium rate service—potentially a useful power if Ofcom decides, at some point in the future, that it is either impractical or undesirable for a service to fall within the remit of the ICSTIS code. I will not give any specific examples in which use of such a power that might be appropriate, but it is felt that it might be helpful to retain that power in order to achieve the deregulatory principle in the Bill, if that is possible.

Let me talk briefly about amendments Nos. 295 to 298. Clause 116(7) defines a premium rate service as one for which there is a charge for its provision. That could mean any level of charge and it might bring within the scope of the regulation, in what is a deregulatory Bill, services that are not currently regulated. The purpose of amendment No. 295 is to preserve the status quo in defining what charges would lead to a service being brought within the scope of Ofcom.

Amendment No. 296 is intended to clarify the drafting of 116(7), which is not entirely clear. For example, references are made to ''the service'' and it is not clear whether that is intended to refer to the premium rate service or to the electronic communications service.

Moving on to amendment No. 297, from the viewpoint of a consumer of premium rate services there are two relevant parties: the content provider, from which the consumer directly receives the service and for which he pays, and the telecoms company, which shares the revenue and has the power to disconnect the service, should that be necessary. It is possible that other intermediary electronic communications service providers, in addition to the originating provider, will be involved in provision before the consumer can access a service. Such providers might not necessarily have charge-sharing arrangements in place with the content provider; they may simply act as a conduit in transmitting the service to the consumer. Such intermediary providers should not be caught by the proposed regulation, but, at the moment, the provision appears to encompass them. Amendment No. 297 is therefore intended to clarify that the relevant electronic communication service provider for the purposes of regulating premium rate services is the one from which the consumer directly receives the PRS.

Finally, amendment 298 would incorporate the procedural requirements of clause 388 into Ofcom's powers to make orders under clause 116.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

This group of amendments is important to fleshing out provisions on premium rate services in future. It is an irony of legislation that we are starting to regulate the telecoms world just as we are on the verge of entering a different telecoms environment with the arrival of third generation, or 3G, mobile services. That is a primary area of a concern. The public largely understand what we mean by regulating the 09 series of telephone numbers, which would provide me with a more or less dubious or useful voice service if I phoned them up. We understand that to be a premium rate service, but in the world into which we are moving the question of what is a premium rate service will be a lot cloudier, especially when we consider services such as those that allow people to send pictures via mobile telephones.

The information service of the future is potentially a picture-based service that comes to a screen on people's mobile phones. Many different players may be involved in that, and we might, once again, encounter boundary issues. If I used my phone to search for a piece of screen-based information, we would understand that to be part of the internet, which would be regulated as an internet service provided by my mobile telephone supplier, not a premium rate service. If, however, I went directly through to an information service to get the same information on the same screen, would that be a premium rate service? We are getting into difficult areas of definition, and I do not know how we can work out a definition that effectively covers all the potential future circumstances when they are still evolving. However, it is helpful to have amendments that try to tease that out.

The particular points raised by the hon. Member for Maldon and East Chelmsford about the carrier are important. It is much clearer that a voice telephone carrier is purely a carrier. For example, BT may be the intermediary that carries the telephone connection and the voice signal from the information service supplier to the individual. However, where there are various players, as is likely to be the case with multi-media services, we are in a much more difficult situation. Some of the carriers—those providing mobile telephony services—are, reasonably, seeking assurances that they will not be dragged into an area of regulation that they do not think should apply to them and that the public may feel does not need to be applied.

The regulation can be justified only on the basis of public interest, which clearly exists for some of the 09 telephone number services, as was mentioned in our previous debate. However, I am not sure that that public interest can be used in the same way if we have well understood additional rate services that cost more but are supplied by a range of highly competitive telecoms companies, with the result that the public do not feel that they are being cheated and the scope does not exist for the fraud that has gone on in the traditional telecoms environment.

It would be helpful if the Minister stated the Government's position and their intentions for Ofcom in relation to premium rate services in the new telecoms environment, as opposed to the one that we are on the point of leaving.

John Greenway (Conservative, Ryedale)

I shall be as brief as possible. I commend amendments Nos. 246, 248 and 249 to the Minister. They have been suggested by ICSTIS and it will probably be easier if I explain as briefly as possible what the amendments would do. In debate on an earlier amendment, the hon. Member for Milton Keynes, North-East mentioned a situation in which network and service providers split the cost involved of providing a premium rate service on which they have collaborated. That is covered by the current ICSTIS code, but it will not continue to be so unless we alter the wording of the Bill.

We think that confusion will be caused to the consumer, who would not know how the services were being paid for unless and until he received the bills. To be as brief as possible, the purpose of amendments Nos. 246 and 248 is to ensure that even when there is unbundling of the different elements of the provision of the service, the code—and the consumer protection that it brings—will still apply.

Amendment No. 249 is somewhat complicated. A service provider may—and, indeed, often does—subcontract to a number of parties between the service provider and the actual provider of the content. In other words, it is not only one organisation that provides the service in the end. There is significant subcontracting, and I understand that some of the subcontractors can be extremely small—almost a one-man band. There is concern that the relevant provisions should apply to enable all of those subcontractors to be caught by the code. That is why we suggest that we amend clause 116 to ensure

that it is clear that anyone involved in the provision of a service

''is the provider of an electronic communications network used for the transmission of communications comprised in the service.''

That way, anyone involved in the process would be caught by the code, and subcontracting would not enable some parts of the operation to escape the net.

I could have given a much longer and more thorough explanation, but I am sure that the notes with which the Minister has been provided to respond to my points will help the Committee to understand the issue, if some aspects of what I have said are not entirely clear.

Michael Fabricant (Conservative, Lichfield)

As if by telepathy, the hon. Member for Sheffield, Hallam made the main points that I wanted to make. You will be pleased to know, Mr. Gale, that that rather curtails what I intended to say.

The hon. Gentleman said, rightly, that the ability to recognise a premium rate service will diminish over time. What role does the Minister envisage for Ofcom in educating subscribers to recognise a premium rate service? At the moment we know that a premium rate telephone number commences with 09, but that is quite a recent innovation, before which there was no standard system of numbering. We all know that 07 numbers are mobile telephones or pagers, that 08 numbers are special rate numbers, including toll-free numbers, and that 09 numbers are premium rate numbers.

In the past, Oftel has had a role in educating people in what the numbers mean, because they have a direct impact on how the numbers are used. Does the Minister envisage Ofcom having a role in ensuring that subscribers recognise whether a number is premium rate? As the hon. Member for Sheffield, Hallam asked, what will happen in future, when premium rate numbers are not only 09 numbers, and there are other ways of accessing or sending data such as television or still pictures by means of mobile telephony, for which services there are extra charges? What role will Ofcom have in ensuring that the subscriber recognises that?

Finally, does Ofcom have a role in ensuring that the numbers system, including the 09 system, is maintained? Does the Minister envisage that future services will also be categorised logically? I remind the Minister that the 07, 08 and 09 numbering system is quite a recent innovation. How will it be maintained in future, and how will it be extended into the new systems of communication so admirably described by the hon. Member for Sheffield, Hallam?

Stephen Timms (Labour, East Ham)

The ICSTIS arrangements are based on Oftel having backstop powers with telecommunications licences. With the passing of the Bill and the coming into force of the new European Community telecommunications directive, telecom licences will cease to exist. The backstop powers will no longer be available, so the basis of those ICSTIS arrangements will be removed. We therefore need to provide a new basis for the effective and often speedy

co-regulatory regime within the new framework. Clauses 116 to 120 are designed to achieve that. Our aim is to provide continuation of regulation comparable to the present system. We have worked closely with the industry and with ICSTIS itself.

Translating largely voluntary arrangements to those based on statute has not always proved easy. I have already conceded that one or two drafting points may not yet be perfect, so the amendments are helpful and I am grateful to the hon. Members who tabled them.

Amendment No. 248 would remove subsection (7)(d), which is designed to ensure that the only services being regulated are those where the charges for the content and carriage elements of the premium rate service are levied as one combined charge on the telephone bill. That is considered necessary on the basis that the customer is unable to distinguish between the two elements making up the charge and runs the risk of being unable to change the amount relating to the content of the premium rate service.

We are not trying to embrace services where a consumer uses a telephone to make a purchase with the charge appearing on a credit card or bank statement, as that is clearly outside the scope of the regulations. We also want to avoid catching purchases made over the internet through credit and other cards. However, I accept that in some future cases the charge for the premium rate service may appear on the phone bill but be identified separately from the charge for the carriage of that service. Such services would be at the margins of what might need to be regulated and I can envisage some definitional problems. I would like to reflect further on the amendment and, if the provision needs changing and the wording altered, I shall table an amendment later. The same applies to amendment No. 247.

Amendment No. 249 is designed to draw an electronic communications network provider into the PRS regulatory regime, a move that would be unhelpful. There may be a desire to embrace network providers because, in the last resort, ICSTIS can go to the network operator to request pulling the plug on an offending PRS provider. Under the new framework, the person to whom one will go in the last resort will be the electronic communications service provider who conveys the PRS to the consumer. The person whom we will describe in future as the network provider—the one who simply provides the wires and so forth over which the electronic communications service carrying the PRS is conveyed—is unlikely to have a direct relationship with a provider of a PRS where he is not also the provider of the electronic communications service. For that reason, I am doubtful about including network providers within the ambit of this regime. Again, however, it is a difficult matter and I undertake to reflect further and, if changes are necessary, to table amendments on Report.

I think that amendment No. 246 is inappropriate. I am prepared to re-examine the matter when I review the provisions, but the wording is broadly right. With

respect to amendments Nos. 247, 248 and 249, I accept that further work needs to be done.

I understand the purpose of amendments Nos. 274 and 275, especially in the light of the previous consultation by Oftel on the possible general conditions relating to the premium rate services that might be set under the new regulatory regime. However, the details of that regime have slightly changed since the consultation was launched last May. In particular, the Bill has specific provisions for regulating premium rate services in clauses 116 to 120 that were not in the draft Bill published last spring. The general conditions will no longer have to deal with premium rate services, so I am not convinced that the drafting needs to be changed to achieve the results that we all desire.

The hon. Member for Maldon and East Chelmsford seeks to exclude from the regulatory regime premium rate services in circumstances in which it would be disproportionate to include them. However, that effect can be achieved by provisions in the Bill as drafted. Clause 116(1) enables Ofcom to set conditions

''for the purposes of regulating . . . premium rate services''

and subsection (2) goes on to provide that such conditions

''may be applied either

(a) generally''

or

''to every person who is of a specified description . . . or who provides a specified''

service.

As in all such aspects of regulation in the Bill, in setting such conditions, Ofcom is required under (3)(b) to have regard to

''the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed''.

Taken together, those provisions make amendments Nos. 274 and 275 unnecessary. When Ofcom considers it disproportionate, and particular premium rate services fall within the regulation provided in the Bill, clause 116(2) would enable Ofcom not to apply conditions to such services, which is the objective of the hon. Gentleman's amendments.

On amendment No. 295, I have sympathy for the notion that low-cost premium rate services might be excused by the regulation foreseen by clauses 116 to 120. Again, however, subsections (1), (2) and (3) should make the amendment unnecessary. When Ofcom considers services to be of such a low level that it would be disproportionate for them to fall within the regulation, subsection (2) would allow it not to apply conditions to such services. Amendment No. 298 is consequential on No. 295, and is therefore also unnecessary.

Amendment No. 296 would not achieve anything that is not achieved by subsection (7) as drafted.

On amendment No. 276, the scheme provided by the clauses, especially by the totality of the definitions in subsections (7) to (11), is that a premium rate service is one that is carried by an electronic communications

service and for which the charge is collected by the electronic communications service provider. The amendment requires that part of the charge be remitted to the provider of the premium rate service. That adds nothing to the clarity of the definition. The definition that we have is fine.

I do not fully follow amendment No. 297. It appears to rewrite part of subsection (9) and contradicts amendment No. 249, which, as I have said, I will take away and reflect on. In the case of amendment No. 297, the existing provisions already have the effect aimed for by the hon. Member for Maldon and East Chelmsford.

Yes, Ofcom does have a role in ensuring that consumers understand the process. The hon. Member for Ryedale referred to clause 10, in which Ofcom is given the duty of promoting media literacy. Subsection (1) paragraphs (a) to (e) sets out the things that Ofcom has a duty to promote. He should be satisfied that the type of issues that he raised are covered in that list.

As for where the numbering system will go from there, clause 23 requires Ofcom to ensure that consumers are provided with adequate information. Of course, people may be able to obtain information about many different things from the number, including the cost of the call, the geographic location and the type of network that is being used. I do not want to be too prescriptive about how the numbering system will evolve. Ofcom will certainly be responsible for that and will take all such issues into account in exercising its responsibilities.

It might help the Committee to know that I shall reflect on amendments Nos. 250 and 251, which are yet to be moved, when I consider amendments Nos. 247, 248 and 249 again.

John Greenway (Conservative, Ryedale)

Thank you very much.

Roger Gale (Conservative, North Thanet)

Order. Before I ask the hon. Member for Maldon and East Chelmsford to wind up the debate, I should point out that the Minister referred to amendment No. 276, which was not selected. I am happy to have his remarks placed on the record, but I do not want to encourage the hon. Gentleman to pick up on them.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Thank you, Mr. Gale. I shall resist that temptation. I am most grateful to the Minister for his helpful comments on the amendments. I note that he will consider the amendments mentioned by my hon. Friend the Member for Ryedale, but that sadly he has not been persuaded by the ones to which I referred. However, I shall not take that personally. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 116 ordered to stand part of the Bill.

Clause 117 - Approval of code for premium rate services

Andrew Robathan (Conservative, Blaby)

I beg to move amendment No. 277, in

clause 117, page 109, line 19, leave out 'the pricing of premium rate services' and insert 'the transparency of pricing of premium rate

services and the maximum amounts payable for each transmission of a premium rate service before a transmission is terminated.'

Roger Gale (Conservative, North Thanet)

With this it will be convenient to take amendment No. 278, in

clause 118, page 109, line 37, after 'about', insert 'the transparency of'.

Andrew Robathan (Conservative, Blaby)

The amendments are inspired by the mobile telephone operators, who seek particular clarification that ICSTIS's activities remain confined to consumer protection and do not extend into economic regulation. The Committee will see that any code approved under the section as worded will include provision about the pricing of premium rate services. That seems to give ICSTIS responsibility for pricing matters. The amendment would replace the pricing of premium rate services with the words

''the transparency of pricing of premium rate services and the maximum amounts payable for each transmission of a premium rate service before a transmission is terminated.''

Amendment No. 278 is consequential upon that.

The amendments seek to clarify the position that ICSTIS is not an economic regulator, and that it does not, and should not be asked to, make judgments about the fairness of service providers' pricing, which is surely a matter for the Office of Fair Trading or for Ofcom, if applicable. It should be absolutely clear that the premium rate service regulator is there for the purpose of protecting consumers from unexpectedly high telephone charges incurred by them or by others at their expense, and from getting access to inappropriate material. ICSTIS should not be put in a position in which it is required make judgments about value for money and similar problems of economic regulation. The amendments would provide that certainty and fulfil the Government's policy objective that these provisions do not extend the scope and responsibility of ICSTIS's work.

Stephen Timms (Labour, East Ham)

It is certainly not the Government's intention that ICSTIS, or indeed anyone else who might in future be responsible for the code referred to in the clause, should engage in economic regulation. I agree with the hon. Gentleman about that. We aim to ensure that users are not taken advantage of by unscrupulous operators or subjected to extraordinary costs without being aware of the risks that they are running. In principle, that requires the transparency on cost and maximum charge prior to a call being terminated that the amendment envisages. The ICSTIS codes sets out several different maximum charges. There is the potential for services to be structured in a way in which a set maximum would not be appropriate. In any event, setting a maximum charge might not be helpful to mobile operators where the cost of premium rate service is often a little higher than it would be from a land line.

We should stick to the wording in the Bill. I give an undertaking to reflect on what has been said this afternoon and look again at several issues. I shall consider whether the text will implement our intentions faithfully. If we conclude that changes are needed, I shall table an amendment at a later stage.

Andrew Robathan (Conservative, Blaby)

I am delighted to hear the Minister's words. As he has been so generous with his reflections, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

It being Seven 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 Questions

necessary to dispose of the business to be concluded at that time.

Clauses 117 to 146 ordered to stand part of the Bill.

Further consideration adjourned—[Mr. Jim Murphy.]

Adjourned accordingly at Seven o'clock till Thursday 9 January at five minutes to Nine o'clock.