Explanatory Notes to Communications Act 2003
 

Explanatory Notes to Communications Act 2003

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Explanatory Notes to Communications Act 2003 List of acts
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CONTENTS

These notes refer to the Communications Act 2003 (c.21), which received Royal Assent on 17 July 2003

COMMUNICATIONS ACT 2003

EXPLANATORY NOTES

 

INTRODUCTION

1.     These explanatory notes relate to the Communications Act, which received Royal Assent on 17th July 2003. They have been prepared by the Department of Trade and Industry and the Department for Culture, Media and Sport in order to assist the reader of the Act. They do not form part of the Act and have not been endorsed by Parliament.

2.     These notes need to be read in conjunction with the Act. They are not, and are not meant to be, a comprehensive description of the Act. So, where a section or part of a section does not seem to require any explanation or comment, none is given.

3.     The Act relates to matters within the responsibilities of both the Secretary of State for Trade and Industry and the Secretary of State for Culture, Media and Sport. References to the Secretary of State in the Act mean any Secretary of State. In practice, some of the functions conferred upon the Secretary of State will be exercised by the Secretary of State for Trade and Industry and the Secretary of State for Culture, Media and Sport jointly and others by only one of them. This will reflect their respective ministerial portfolios.

SUMMARY

4.     The Act gives effect to the Government's proposals for the reform of the regulatory framework for the communications sector, as set out in the Communications White Paper - A New Future for Communications (Cm 5010) - published on 12th December 2000.

5.     The main provisions of the Act provide for:

the transfer of functions to the Office of Communications (OFCOM) from the bodies and office holders which currently regulate the communications sector (which broadly speaking encompasses telecommunications and broadcasting) and manage the radio spectrum;

OFCOM's general duties in carrying out their functions;

the replacement of the current system of licensing for telecommunications systems with a new framework for the regulation of electronic communications networks and services;

the power to develop new mechanisms to enable spectrum to be traded in accordance with regulations made by OFCOM, and a scheme of recognised spectrum access;

*In these explanatory notes, "spectrum" refers to radio spectrum (or radio frequencies) that forms a small part of the electromagnetic spectrum. Radio spectrum is an important and versatile communications medium, used for terrestrial and satellite broadcasting, mobile telephony, fixed wireless access, and many other applications. Radio spectrum is a finite resource and key issues in the effective use of spectrum include the efficient allocation and sharing of frequency channels (both domestically and internationally) and the need to ensure that radio signals from different users and services do not significantly interfere with each other.

procedures for appealing decisions relating to networks and services and rights of use for spectrum;

the development of the current system for regulating broadcasting to reflect technological change, to accommodate the switchover from analogue to digital broadcasting and to rationalise the regulation of public service broadcasters;

the establishment of a Consumer Panel to advise and assist OFCOM and to represent and protect consumer interests;

the establishment of a Content Board to advise OFCOM, and undertake functions on their behalf, in relation to the content of anything broadcast or otherwise transmitted by means of an electronic communications network and in relation to media literacy;

the concurrent exercise by OFCOM of powers under the Competition Act 1998 and the Enterprise Act 2002 across the whole of the communications sector (including broadcasting); and

the application of the merger control regime under the Enterprise Act 2002 to mergers involving newspaper and other media enterprises.

6.     There are currently five bodies or office holders who exercise regulatory responsibilities in the communications sector and who will be replaced by OFCOM. These are:

the Broadcasting Standards Commission, a non-departmental public body which has statutory responsibilities for standards and fairness in broadcasting. It has three main tasks, as established by the Broadcasting Act 1996 ("the 1996 Act"). These are to produce codes of conduct relating to standards and fairness; to consider and adjudicate on complaints; and to monitor, research and report on standards and fairness in broadcasting;

the Director General of Telecommunications, who is responsible for running the Office of Telecommunications (Oftel) - the UK telecommunications regulator. Oftel is a non-ministerial government department. The Director General is responsible under the Telecommunications Act 1984 for administering and enforcing the licences that regulate telecommunications operators. His duties include those of ensuring that adequate telecommunications services are provided throughout the UK; of promoting the interests of consumers; and of maintaining effective competition;

the Independent Television Commission, the statutory body which licenses and regulates independent television services in the UK, including cable and satellite. Operating under powers derived from the Broadcasting Acts 1990 and 1996, their responsibilities include setting and maintaining the standards for programmes, economic regulation, public service obligations, research, TV advertising regulation and technical quality;

the Radio Authority, which is the statutory body responsible for regulation and licensing of independent radio broadcasting in the UK, that is to say all non-BBC radio services. Operating under powers derived from the Broadcasting Acts 1990 and 1996, their responsibilities include frequency planning, the awarding of licences, the regulation of programming and radio advertising, and the supervision of the radio ownership system; and

the Secretary of State, as far as she has a regulatory role in respect of the allocation, maintenance and supervision of non-military radio spectrum in the UK. This role is exercised through the Radiocommunications Agency, an executive agency of the Department of Trade and Industry.

The Office of Communications Act 2002 establishes OFCOM and gives them a single initial function - to prepare to assume regulatory functions at a later stage. It also gives the existing regulators additional functions and duties to assist OFCOM to prepare.

7.     One of the central objectives of the Act is the transfer to OFCOM of the functions, property, rights and liabilities of the bodies and office holders that currently regulate the communications sector. OFCOM will then develop and maintain new regulatory rules for the communications sector within the context of a single set of regulatory objectives, and in the light of the changing market environment.

8.     In February 2002 the European Parliament and the Council of Ministers adopted four Directives ("the EC Communications Directives"), which set out a package of measures for a common regulatory framework for electronic communications networks and services. Provisions in the Act implement a significant proportion of this new regulatory package in the UK (see Appendices 2 and 3).

OVERVIEW OF THE ACT

9.     The Act is in six parts -

Part 1 - Functions of OFCOM

Part 2 - Networks, Services and the Radio Spectrum

Part 3 - Television and Radio Services

Part 4 - Licensing of TV Reception

Part 5 - Competition in Communications Markets

Part 6 - Miscellaneous and Supplemental

TERRITORIAL EXTENT AND TERRITORIAL APPLICATION

10.     The large majority of the provisions in the Communications Act are on reserved matters (the exceptions being training and equality of opportunity in broadcast employment). The Act applies to the whole of the United Kingdom (a few procedural matters being dealt with separately for England and Wales, Scotland and Northern Ireland to take account of the different legal systems), with power to extend it by Order in Council to the Channel Islands and the Isle of Man. The Act does not confer functions on the National Assembly for Wales, although the Secretary of State is required to consult the National Assembly for Wales when carrying out a review of the fulfilment by the Welsh Authority of its public service remits (section 339).

COMMENTARY ON SECTIONS

PART 1: FUNCTIONS OF OFCOM

Section 1: Functions and general powers of OFCOM

11.     This section sets out the functions of OFCOM. These consist of those functions that prior to commencement were carried out by the Secretary of State and the pre-commencement regulators and which are transferred to OFCOM, together with all other functions conferred on OFCOM by other legislation, including the present Act.

*the meaning of pre-commencement regulators is given in subsection (1) of section 405. Those regulators are the Broadcasting Standards Commission, the Director General of Telecommunications, the Independent Television Commission and the Radio Authority. The expression does not include the Radiocommunications Agency, as the Agency is an executive agency of the Department of Trade and Industry and acts in the name of the Secretary of State and, although functions of the Secretary of State are transferred to OFCOM by the Act, the office of the Secretary of State will not cease to exist, unlike the other four regulators.

12.     Subsections (3), (4) and (5) provide that OFCOM have power to do anything incidental or conducive to carrying out their functions. This, in particular, includes the power to borrow money (provided that this is done with the consent of, or in accordance with a general authorisation given by, the Secretary of State), the power to undertake research and development work in relation to their functions as well as to promote and arrange for it to be carried out by others, the power to prosecute in England, Wales and Northern Ireland offences relating to matters in respect of which they have functions, and the power, at their discretion, to compensate (where no legal liability arises) persons adversely affected by OFCOM's activities.

13.     Subsection (6) requires OFCOM to establish and maintain offices in England, Wales, Scotland and Northern Ireland.

14.     Subsection (7) enables OFCOM to contract out their functions to a third party, where an order providing for such has been made by the Secretary of State under the Deregulation and Contracting Out Act 1994.

Section 2: Transfer of functions of pre-commencement regulators

15.     Subsection (1) provides that, from such date as the Secretary of State may appoint for the coming into force of this section, certain functions of the Secretary of State and the functions of the pre-commencement regulators will be transferred to OFCOM. By virtue of section 411 the Secretary of State may appoint different dates for different purposes.

16.     Schedule 1 sets out those functions that will be transferred to OFCOM from the pre-commencement regulators. These functions relate to wireless telegraphy, the licensing of television and radio services, the Channel Four Corporation, the proscription of foreign satellite services, Gaelic Broadcasting, the national television archive, the reservation of digital capacity to the BBC, listed events, fairness and privacy in broadcasting, and standards for transmission services. The functions also relate to warrants to enter and search premises to enforce broadcasting licence provisions, variation of existing Channel 3 and Channel 5 licences, and reviewing digital broadcasting.

17.     Subsection (2) explains the effect of the transfer of functions to OFCOM on references in existing legislation to the pre-commencement regulators and the Secretary of State. Where necessary, references in existing legislation to any of the pre-commencement regulators or the Secretary of State should be read as if they referred to OFCOM.

18.     Subsection (3) provides that, from the appointed date, OFCOM will be able to exercise the functions transferred to them in respect of events or issues arising both before and after the appointed date.

19.     Subsection (4) provides that any function transferred is that function as modified by this Act.

20.     Paragraph 1 of Schedule 18 (transitional provisions) provides that any subordinate legislation made or any other thing done for the purpose of carrying out the transferred functions by the pre-commencement regulators or the Secretary of State shall from the date of the transfer made by virtue of section 2 have effect as if they had been done by OFCOM.

Section 3: General duties of OFCOM

21.     This section sets out the general duties of OFCOM when carrying out their functions. OFCOM's principal duty is: (i) to further the interests of citizens, and (ii) to further consumer interests in relevant markets, where appropriate by promoting competition. "Citizens" are defined in subsection (14) as all members of the public in the United Kingdom; "consumers" are defined in section 405(5).

22.     Subsection (2) provides that the particular things that OFCOM are required to secure in carrying out their functions include: (a) the optimal use of the radio spectrum; (b) the availability throughout the United Kingdom of a wide range of electronic communications services; (c) the availability in the UK of a wide range of TV and radio services, comprising high quality services of broad appeal; (d) the maintenance of a sufficient plurality of providers of different television and radio services; (e) the application, in television and radio services, of standards that provide adequate protection to members of the public from any offensive and harmful material; and (f) the application, in television and radio services, of standards that safeguard people from being unfairly treated and from unwarranted infringements of privacy.

23.     Subsection (3) requires OFCOM to have regard in all cases to the principles that regulatory activities should be transparent, accountable, proportionate, targeted and consistent, and to any other principles which appear to OFCOM to represent best regulatory practice.

24.     Subsection (4) sets out a list of factors to which OFCOM must have regard, wherever relevant, in the performance of their general duties. These are the desirability of promoting the fulfilment of the purposes of public service television broadcasting, the desirability of promoting competition in relevant markets, the desirability of promoting and facilitating the development and use of effective self-regulation, the desirability of encouraging investment and innovation, the desirability of encouraging the availability and use of high speed data transfer services, the different needs of all existing and potential users of the radio spectrum, the need to guarantee an appropriate level of freedom of expression when applying the standards falling within subsection (2)(e) and (f) to television and radio services, the opinions of consumers and of members of the public generally, the need to protect potentially vulnerable members of society such as children, the elderly, those with disabilities and those on low incomes, the desirability of preventing crime and disorder and the interests of those living in different parts of the country, including rural and urban areas, and of different ethnic communities. They may also have regard, in each case, to the extent to which it is reasonably practicable for them to further their duties under this section.

25.      OFCOM must also have particular regard to the interests of consumers in respect of choice, price, quality of service and value for money when performing their duty of furthering the interests of consumers.

26.     OFCOM are given a duty to resolve as they see fit any conflicts that arise between their various general duties. However, in cases where their general duties may conflict with their "European duties" (imposed by sections 4, 24 and 25), OFCOM's European duties must prevail.

27.     Where OFCOM are resolving conflicts in 'important' cases between their duties under subsection (1), they are required as soon as possible after the conflict has been resolved to publish a statement setting out the conflict, how they have resolved it and why they have taken that particular approach, unless they are legally obliged not to publish something which would be in the statement.

28.      OFCOM's annual report must include a summary of the manner in which they have resolved conflicts arising from their general duties in 'important' cases.

29.     'Important' cases are those that include: a major change in OFCOM's activities; are likely to have a significant impact on communications businesses or the general public; or appear to OFCOM to have been of unusual importance.

30.     OFCOM's duties under this section do not apply in relation to anything done by OFCOM in the carrying out of their functions under the Competition Act 1998 or the Enterprise Act 2002, unless they are matters to which the Office of Fair Trading is entitled to have regard when operating under those Acts (section 370(11) and section 371(11) of this Act and section 119A(4) of the Enterprise Act 2002 (inserted by Chapter 2 of Part 5 of this Act)).

Section 4: Duties for the purpose of fulfilling Community obligations

31.     This section creates a duty, which applies only to certain functions of OFCOM. These are their functions under:

Chapter 1 of Part 2;
the enactments relating to the management of the radio spectrum;

* Section 405(1) defines the enactments relating to the management of the radio spectrum as the Wireless Telegraphy Act 1949, the Marine, &c., Broadcasting (Offences) Act 1967, the Wireless Telegraphy Act 1967, Part 6 of the Telecommunications Act 1984, the Wireless Telegraphy Act 1998, Chapter 2 of Part 2 of the Act and the other provisions of the Act so far as relating to any of those enactments.

Chapter 3 of Part 2 relating to network access disputes referred to them under section 185;

sections 24 and 25, so far as they relate to information required for purposes connected with matters in relation to OFCOM functions specified in this section; and

section 26, if carried out for the purpose of making information available to the customers of communications providers, the customers of persons who make associated facilities available and persons who use electronic communications networks, electronic communications services or associated facilities.

32.     The duty is a duty to act in accordance with six Community requirements. In the event that there is any conflict between this duty and the section 3 duties, the former, which is required by the EC Communications Directives, is to take precedence.

33.     The Community requirements are: (i) to promote competition; (ii) to ensure that OFCOM's activities contribute to the development of the European internal market; (iii) to promote the interests of all persons who are citizens of the European Union; (iv) to take account of the desirability of carrying our their functions in a manner which, so far as practicable, does not favour one form of network, service or associated facility, or one means of providing or making available such a network, service or facility over another; (v) to encourage the provision of network access and service interoperability; and (vi) to encourage compliance with international standards to the extent necessary to facilitate service interoperability, and to secure a freedom of choice for customers.

* network access is defined in section 151 as meaning (1) interconnection of public electronic communications networks; or (2) any services, facilities or arrangements (other than interconnection) by means of which a communications provider or a person making associated facilities available is able, for the purposes of the provision of an electronic communications service (whether by him or by another), to make use of any network or apparatus comprised in a network, or any service or facility capable of being used to provide a service.

*

service interoperability

is defined in section 151 as interoperability between different electronic communications services.

34.     Requirements (i) to (iv) implement Articles 7(1) & (2) and 8 of Directive 2002/21/EC (the "Framework Directive"). Requirement (v) implements Article 5(1) of Directive 2002/19/EC ("the Access Directive") and Article 18 of the Framework Directive and requirement (vi) implements Article 17(2) and 18 of the Framework Directive. This section also implements Article 20 (3) of the Framework Directive and Article 7(3) of the Authorisation Directive.

Section 5: Directions in respect of networks or spectrum functions

35.     This section gives the Secretary of State a power to give directions to OFCOM in respect of: (i) their functions relating to networks, services and the radio spectrum under Part 2 of the Act; and (ii) their functions relating to the management of the radio spectrum not contained in Part 2. Such directions may only be made for one or more of the purposes listed in subsection (3). Those purposes are: national security, relations with foreign countries, compliance with international obligations, public safety and public health.

36.     The Secretary of State may not use her powers under this section to direct OFCOM to suspend any person's entitlement to provide electronic communications networks or electronic communications services or to make available associated facilities. This can only be done by a direction given by the Secretary of State in accordance with the provisions of section 132. Section 132 gives the Secretary of State express power to direct OFCOM to suspend or restrict entitlement, where this appears to her to be necessary to protect the public from any threat to public safety or public health or in the interests of national security.

*associated facilities are defined in section 32.

37.     The Secretary of State must publish a direction issued under this section unless publication is against the interests of national security or relations with foreign countries.

Section 6: Duties to review regulatory burdens

38.     This section imposes on OFCOM a duty to review their functions so that regulation by OFCOM does not lead to the imposition or maintenance of burdens that are or have become unnecessary. OFCOM must from time to time publish a statement setting out how they propose to comply with this duty and must have regard to that statement when carrying out their functions. When reviewing their duties under this section, OFCOM must consider whether or not their general duties set out in section 3 may be furthered or secured, or are likely to be furthered or secured, by effective self-regulation and, in the light of that, whether it would be appropriate to remove or reduce regulatory burdens.

Section 7: Duty to carry out impact assessments

39.     Unless the urgency of a matter makes it impracticable or inappropriate, before implementing an important proposal in connection with the performance of their functions, OFCOM must either carry out and publish their assessment of the likely impact of the proposals or publish a statement setting out their reasons for thinking that it is unnecessary for them to carry out such an assessment. A proposal is an important proposal if it would be likely to involve a major change of their activities or have a significant impact on communications businesses or the general public. OFCOM will decide the form and content of the assessment, having regard to relevant general guidance, but subsection (4) requires that the assessment must set out how the proposal would secure or further the performance of OFCOM's general duties, or how the performance of the duties would be secured or furthered in relation to the proposals. When OFCOM publish an assessment, they must provide persons who are likely to be affected by the proposal with an opportunity to comment on it. OFCOM's annual report must set out the assessments that have been carried out under this section and summarise the decisions taken by OFCOM in relation to proposals in respect of which impact assessments have been carried out.

Section 8: Duty to publish and meet promptness standards

40.     This section requires OFCOM to publish a statement setting out promptness standards which they propose to meet in carrying out their functions or transacting business for purposes connected with the carrying out of their functions. Such time limits will not apply where the Act or any other enactment already sets time limits within which their functions are to be carried out. OFCOM's annual report must summarise the extent to which they have complied with the promptness standards set out under this section.

 
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