White Paper2

01 February 2001

Sally Trebble

The Communications White Paper

The Government is proposing a fundamental reform of broadcasting and telecommunications legislation. It has recently published a White Paper which sets out the framework of a Communications Act. Drafting instructions for the new Bill will be with Parliamentary Counsel by early March. It is expected that the Draft Bill will come before the next Parliament (ie after the election) and can be expected to become law at any time in the next 2 years.


The proposals are grouped into the following areas:

1. The Government's vision and objectives, which can be summarised as competition, universal access to electronic communications services and consumer protection.

2. Creating a dynamic market, which describes the proposed legal framework, including the powers to be given to a new single Regulator, OFCOM, to enforce competition law and give effect to regulatory policy.

3. Ensuring universal access, which covers a variety of aspects of service conveyance and delivery for both broadcasting and telecommunications. Access to public service broadcasting, in particular the BBC, before and after digital switchover is addressed, as well as universal service and universal access policies for telecommunications delivered over narrowband and high bandwidth networks. A public- private sector partnership to develop a practical broadband strategy is proposed, as well as development of training and education programmes so that users can fully exploit what is available.

4. Maintaining diversity and plurality, concentrates on content production, describing what can be supplied by whom, in particular over commercial television networks. It looks at promotion of independent production, support for regional broadcasting and meeting the needs of different communities and development of access radio and local TV. It proposes a range of reforms to ITV Licensing, controls on radio ownership, cross media ownership rules, Broadcasting Act Licensing procedures, rules on ITV news provision and newspaper merger rules.

5. Securing quality looks at quality control for broadcast content, and proposes new ways to regulate broadcasting content, based on a 3 tier system of self regulation and independent regulation. It goes on to describe loosening of controls on the output of ITV companies.

6. Safeguarding the interests of citizens looks at broadcast regulation in the context of public policy, examining censorship and application of codes of conduct as well as ways to discipline breaches. It makes proposals for future regulation of advertising, film classification and data protection.

7. Protecting the interests of consumers concentrates on the telecoms industry and ensuring high quality customer service. It looks at how to secure adequate service standards and consumer protection, considering, on the way, type approvals, accommodating people with disabilities, crime prevention and industry best practice initiatives.

8. New organisational framework sets out plans for the creation of OFCOM, describes its remit and policy goals and details some of the processes and practices which it might adopt.

9. Processes for implementation provides information and guidance on taking part in the public consultation on the Government's proposals.

Detailed Reforms

Some of the main changes proposed are as follows:

Institutional change

  • A new single regulator, OFCOM, for the communications sector, taking over the roles of OFTEL, ITC, Radiocommunications Agency, Radio Authority and the Broadcast Standards Commission and possibly the video classification role of the British Board of Film Classification
  • OFCOM's touchstones will be transparency, accountability, proportionality, consistency and targeting. Its primary duty will be promoting the interests of consumers. Competition will be a means to that end, not an end in itself
  • OFCOM will have a CEO, a Chairman and a Board
  • OFCOM will be able to use its Competition Act powers to impose fines and its decisions will be subject to an appeal process which can look at errors of fact as well as errors of law
  • OFCOM will be able to charge for radio spectrum and for numbers
  • There will be a new Consumer Panel with rights to advise OFCOM and prerogatives to conduct and publish its own research

Changes for suppliers

  • Individual telecommunications licences will be scrapped altogether, save where an operator has significant market power (by the EU definition) or where scarce resources are being used. For everyone else, there will be a general authorisation, perhaps with a requirement to pre-register and obligations will be restricted to consumer protection, access and interconnection, planning and code powers, emergency services and licence fees, to be known as administrative charges. Exercise of code powers and works on the public highway may become chargeable
  • Licences will still be required for content providers, to assist with enforcement of licence obligations, but the restrictions on licensing of religious bodies, local authorities and advertising agencies will be reduced or removed
  • Public service channels maybe required to be available over all major broadcast platforms including cable and satellite - this will principally affect ITV and ITV2

Changes for producers

  • Review of Channel 4's public service broadcasting obligations to make them more positive and review of Channel 5's obligations to better allow it to compete with the new digital commercial channels
  • Public service broadcasters, including the BBC, will be required to publish statements of programme policy and regulatory arrangements. OFCOM will have backstop powers to ensure qualitative obligations are met
  • Some mooted initiatives are expressly rejected - privatisation of Channel 4, prohibition of vertically integrated carriage and content providers, abolition of the BBC's self-regulation privileges, abolition of public service broadcasting altogether, permission of certain types of politically motivated advertising eg by humanitarian organisations.

Trends and Directions

These proposals are all about convergence. Regulatory reform is inevitable because convergence between telecommunications and broadcasting networks and competition between service providers which can deliver their content over all or any electronic platforms, makes it a nonsense to give different powers to different regulators. The CWP describes a streamlined regulatory framework equipped to address bottlenecks ('gateways') and market distortions created by vertical integration over any type of electronic communications network, ie telecommunications, cable, satellite or the Internet and for any related service eg electronic programme guides (EPGs).

The CWP gives more coverage to changes in the broadcasting and content framework than to telecommunications, but the principles for regulation of broadcasting are those which are traditionally associated with the telecommunications sector. The proposals are clearly based on forthcoming EU rules for the European communications industry.

The CWP promotes consumer access to a broad range of content from a variety of sources. The idea is that all public service broadcasting will be available over all broadcast media - except, for now, the Internet. There is a suggestion that new public digital services may be added to the ITC's due prominence arrangements to ensure 'full social inclusion', an issue related to both OFCOM regulation of the EPG and access to public service broadcasting. A specific question is the position of public service broadcasters on commercially provided EPGs.

The digital switchover is going to be a watershed on the broadcasting landscape and several new measures are hinted at or proposed: the trend is to remove constraints on national or mass market media consolidation but to use public money to encourage diversity in local or special interest service provision: an 'access fund' is proposed to finance the start up of regional and community based radio stations, drawing on EU and Government social and enterprise funds; competition rules will replace the current absolute prohibitions on a single Licensee holding both London ITV franchises and the rule preventing a single broadcaster controlling more than 15% of the TV audience except under a single licence; the parallel 'radio points' system may also disappear. The cross media ownership rules, which prevent newspaper and television interests controlling a market share greater than 20% from vesting in the same corporate hands, are brought under review although there are no concrete proposals for a replacement.

The CWP refers to the Government's review of the use of the radio spectrum, which goes beyond those parts currently in commercial use. This should lead to public secotr users of large amounts of spectrum, such as the Ministry of Defence and the BBC, having economic incentives not to use more spectrum than they really need and to make the rest available for commercial use. It will become possible to trade surplus spectrum on a secondary market.

Content regulation will be modernised. OFCOM will use a set of 'principles and objectives' designed to allow a flexible approach, so that regulation is appropriate to the expectations of viewers of the relevant broadcast medium. The responsibilities of the Broadcasting Standards Commission to police un-litigated invasions of privacy and unfair representations in broadcast media will be subsumed into OFCOM's remit, which might then be delegated to a self-regulatory body comparable to the Advertising Standards Authority which polices non-broadcast media.

If any Government body has responsibility for regulating content on the Internet, it will be OFCOM assisted by the Internet Watch Foundation and other industry bodies, but little will change from the rating and filtering mechanisms now on offer.

A review of universal service policy for telecommunications is considered, with a broad hint that there will be future action to create a universal service fund of which the current incumbent 'BT' may not be the only beneficiary.

Although there are no current plans to finance roll-out of high bandwidth infrastructure from a USO fund, this is clearly within the Government's sights, although it would require a change to EU rules for it to be possible. The current proposal is a 'public-private' partnership, based on a clear statement that 'the market alone will not deliver affordable high speed connections to all rural areas or to lower income urban communities'. Applications for funding to the EU regional funds may be in the pipeline.

Precipitated by the forthcoming digital switchover and the multiplicity of new channels that this will bring, the CWP gives considerable thought to regulation of commercial and public service broadcasting. The plan is to introduce a 'three-tier structure' of regulation, which is consistent and coherent for all broadcasters. The bottom tier imposes standards on all broadcasters, including the BBC, echoing the existing ITC codes of conduct and content rules. The next tiers will apply to public service broadcasters, only. The content of tier 2 is not detailed, but is likely to capture existing provisions in the BBC charter and the licences of S4C, ITV, Channel 4 and Channel 5 relating to quotas for independent, original and regional productions. The third tier relates to the 'qualitative public service remit' of public sector broadcasters which will largely be a matter for self-regulation by the broadcasters concerned, based on the new legislation.

OFCOM and OFT will have concurrent powers to enforce the Competition Act. This means that OFCOM will be handed responsibility for policing competition in broadcasting and media markets which formerly fell to OFT because the ITC did not have powers under the Act. For example, OFCOM is expected to have responsibility for the BSkyB rate card and will have a formal voice in consideration of proposed media mergers.

The communications industry will be expected to regulate itself (or co-regulate where ongoing Government involvement is considered appropriate) in providing services over the Internet. But in all areas where regulation is primarily an industry responsibility, OFCOM will have powers to take control if it believes that self-regulation is not providing adequate consumer protection.

Next Steps - The Open Questions

Comments are invited on certain aspects of the White Paper.

These are as follows:

  • Do the proposals in the CWP give OFCOM the teeth it will need to regulate the electronic communications sector effectively? (see CWP section 8.9)
  • Is the proposal for a three-tier structure for content regulation a sound one? (see CWP section 5.5)
  • Are the proposed 'objectives and principles' for OFCOM's activities the right ones? (see CWP section 6.3)
  • Should OFCOM regulate time-shifted viewing eg videos? (see CWP section 6.11)
  • How should digital terrestrial services be licensed after digital switchover? For example, should there be a new digital licensing system under which bids could be invited to provide commercially funded public service channels, with must carry obligations and guaranteed access to public service content (see CWP section 8.8)
  • How can geographical gaps in broadcast coverage be addressed for regional programming? (see CWP section 3.3)
  • Should cross-media ownership rules be reformed and if so, how? (see CWP section 4.8)
  • How should regional programming be promoted? (see CWP section 4.4)
  • What should happen to the 20% limit on ownership of the nominated ITV news provider? (see CWP section 4.10)
  • Should there be changes to the special rules applying to newspaper mergers? (see CWP section 4.11)
  • How should the pre-classification system for videos, DVDs and computer games be reviewed? (see CWP section 6.12)
  • Will the communications industry be able to produce - in time - Codes of Practice for service delivery and infrastructure sharing which are adequate and have sufficient bite to make the imposition of detailed obligations unnecessary? (see CWP section 7.3)

For further information, please contact Sally Trebble at Bird & Bird on Tel: 020 7415 6105 or email: sally.trebble@twobirds