Communications Bill Update
By Ingrid Silver, Solicitor at Taylor Wessing

Following its initial publication in May 2002, the revised Communications Bill was published on 20 November 2002.  The Bill is expected to get royal assent in November 2003. Some of the key proposals of the Bill are:

•      The transfer of regulatory functions to a single regulator, the Office of Communications (OFCOM), from the existing five regulators (the Independent Television Commission, Radio Authority, Office of Telecommunications, Broadcasting Standards Commission and Radiocommunications Agency). OFCOM has already been created and its key executives appointed, including its Chairman, Lord Currie and its Chief Executive, Stephen Carter.

•     The removal of the licensing regime for telecommunications systems and its replacement with a new regulatory system for electronic communications networks, services and associated facilities in line with the EC Communications Directives;

•       Provisions for trading of radio spectrum;

•     The lifting of restrictions on foreign ownership, cross-media ownership and a revamp of the radio ownership regime.

At this stage, much of the Bill appears to have the broad approval of industry, the government and the opposition but there are still a number of issues provoking debate. These include:

·        Foreign ownership of UK media – The Bill is set to abolish all existing rules preventing companies from non-EU countries from buying a UK TV or radio licence. Some argue that we should not open our markets to the US in the absence of any reciprocal moves by the UK into US markets.  However, the concern for many is that a foreign (probably US) company will buy up Channel 3 or Channel 5 and inundate the stations with low quality programmes (despite US firms insisting that this would not make any commercial sense as viewers would simply switch channels).  To allay these fears to a degree, and in response to recommendations made by the ITC, the Bill was amended in January to give OFCOM similar powers of intervention in relation to a proposed change of control of Channel 5 as it has in relation to Channel 3.
 

·         Cross-media ownership – The rules on cross-media ownership have not changed since the first draft of the Bill in May, and it remains the case that national newspaper proprietors will be able to buy into national and local radio and into Channel 5, although not Channel 3. Many commentators of course fear that Murdoch will extend his newspaper and pay-TV empire by buying up Channel 5.
 

·          The role of the BBC – Under the Bill, the BBC will remain largely outside of OFCOM's power, perpetuating a somewhat incongruous situation in which an organisation representing over a third of British broadcasting is not regulated along with the rest of the broadcasting industry. However, for the first time, OFCOM will be able to impose fines on the BBC in the same way as on commercial broadcasters for breaches of certain regulatory requirements relating to advertising and production quotas. Many expect further amendments to the Bill to be tabled in the commons with the intention of extending OFCOM's remit over the BBC.

One of the key principles behind the Bill since its inception is deregulation and the removal of sector specific rules wherever possible.  Whilst such an approach may have seemed appropriate in a world of growing competition and multiplying industry players where excessive regulation risked impeding positive market forces, the reality seems to be that only the BTs and Skys have been able to thrive in the brave new competitive world.  As a result, certain industry players believe that excessive deregulation may be premature and are calling for more intervention and regulation to help them keep their foothold in today's market.

Whilst it is clear that it will be crucial to get the regulatory framework right, it will be equally crucial to get the regulator itself right. Lord Puttnam, who chaired the parliamentary joint scrutiny on the Bill, has already voiced concerns about sufficient resourcing for OFCOM, if, to use Puttnam's words, it is to "regulate with teeth".  At the end of the day, no matter how cogent and well drafted the legislation, if the regulator fails to apply it effectively, it will rapidly become otiose.

Ingrid Silver is a solicitor at Taylor Wessing specialising in communications law.

Email: i.silver@taylorwessing.com