Electronic Communications and Wireless Telegraphy (Amendment) (European Electronic Communications Code and EU Exit) Regulations 2020

Baroness Barran Excerpts

Tuesday 10th November 2020 Grand Committee

Moved by

[Baroness Barran]

That the Grand Committee do consider the Electronic Communications and Wireless Telegraphy (Amendment) (European Electronic Communications Code and EU Exit) Regulations 2020.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)]

My Lords, these draft regulations are being introduced to transpose the EU Electronic Communications Code directive into domestic law, as we are committed to do under the European withdrawal agreement. The Joint Committee on Statutory Instruments, the Parliamentary Business and Legislation Committee and the Secondary Legislation Scrutiny Committee have all considered the instrument and did not raise any issues. The draft regulations are being introduced under powers set out in Section 2(2) of the European Union Communities Act 1972 as repurposed for the transition period by the European Union (Withdrawal Agreement) Act 2020.

The draft regulations make corrections to legal deficiencies arising from the UK’s exit from the European Union. The corrections being made under the powers set out in Section 8 of the European Union (Withdrawal) Act 2018 are mostly minor and technical, including references to EU law that are no longer applicable to the UK as a result of EU exit. These regulations are a crucial milestone towards the delivery of our digital ambitions and will play a significant role in aiding the delivery of our manifesto commitments, ensuring a future-proofed telecommunications regulatory regime. These changes will facilitate competition and a pro-investment regulatory environment, supporting gigabit-capable rollout across the country. UK consumers will benefit from better information to make informed decisions, have stronger contract rights and be able to switch their services much more easily than before, which will help support competition. The regulations will also ensure that universal services remain affordable for consumers with low incomes or other specific needs.

The measures sit alongside those being implemented by Ofcom under its existing powers. Ofcom is implementing new rules on information requirements for contracts, contract duration and termination rules, along with broadband switching rules. This includes rules banning providers from selling locked devices, ensuring that a customer’s new provider leads any switch, stronger contract exit rights and short summaries of main contract terms to help customers make more informed decisions. We recognise that the industry will need to make changes as it responds to Covid-19 so Ofcom will allow providers a further year to put these measures into place during this exceptional period.

A small number of measures in the directive are not being implemented via these draft regulations. Some measures are being implemented through other legislation, while others have already been put in place, including those that relate to car radios via the Road Vehicles (Approval) Regulations 2020. A limited number of the measures are applicable to “over the top” services, including instant messaging and email communications, which we are considering further how to take forward. We have given Ofcom powers to gather information on these services in the draft regulations. This will help us to better understand and assess this market and to continue to develop any future measures.

The draft regulations introduce measures to drive investment into future-proof networks and communications services through sustainable competition, supporting the efficient and effective use of radio spectrum and providing a high level of consumer protection. While we are required to implement these changes, they are legislative changes that we would want to make in any case. The UK played a key role in the negotiations and indeed shaped the wider regulatory framework for telecoms that the directive builds on.

A number of the provisions promote competition and are pro investment. Ofcom will be able to impose conditions to ensure connectivity and choice for consumers where it is challenging for competition to emerge in an area that already has a network. The instrument also provides Ofcom the power to ensure that another provider can access a dominant provider’s physical infrastructure assets—the ducts and poles that house the network—to ensure choice and competition irrespective of the market scope. We will enable Ofcom to impose longer-term pro-investment regulation, such as implementing longer market review periods that focus on promoting higher capacity networks. We will support the availability of build plan information to industry and to the Government in order to better inform any rollout plans. We will also enable co-operation between network providers, which should support these primarily rural deployments. These measures are essential if we are to create the right environment to encourage investment and ensure that Ofcom has the necessary powers to promote competition and protect consumers.

The draft regulations include measures that will enhance consumer protections. The Government, alongside Ofcom, are implementing measures to help ensure that UK consumers will benefit from better information to make informed decisions, stronger contract rights and the ability to switch services much more easily than before. The regulations will support the efficient and effective use of radio spectrum, promoting competition and the timely rollout of 5G services and the widespread availability of mobile connectivity. There are also measures that relate to the universal service obligation that will ensure that a range of telecoms services remain affordable for consumers with low incomes or other specific needs, giving them a safety net to ensure full participation in both society and the economy.

The instrument also includes powers for the Secretary of State to establish a mobile universal service obligation in the future if that is deemed necessary, and ensures that people who use legacy universal service obligation services, such as payphones, telephone directories, fax and particular methods of billing, will continue to be able to do so. Additionally, the instrument introduces measures to update the regime for social tariffs for telephony and broadband, should they be required. These will ensure that consumers with low incomes or other specific social needs are able to access universal services at affordable prices where the market does not provide these commercially or on a voluntary basis.

The importance of electronic communications has been underlined during the Covid-19 pandemic. Telecoms are now more critical than ever for the country, with a large proportion of the population working from home. Combined with future expectations around new technologies and services, including 5G, building future-proof networks will be essential to our future economy. The changes that we are introducing represent a significant step forward in helping to achieve these ambitions. I look forward to hearing noble Lords’ reflections on this instrument and I beg to move.

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[Baroness Barran (Con)]

My Lords, I thank both noble Lords for their questions and the constructive tone of their contributions. I am pleased that in principle the regulations command support from all sides of the Committee, and that we share the ambition that this country should be able to benefit from gigabit-speed connectivity and that consumers should benefit from greater protections. I will try to address the points raised but in a couple of cases I will need to follow up with a letter to your Lordships.

In answer to the point raised by the noble Lord, Lord Clement-Jones, about the respondents to the consultation, a number of organisations representing consumers responded; these included Citizens Advice, the Communications Consumer Panel and the Clarion Housing Group, to give just three examples. I hope that that reassures him that a balance of views was sought.

Both noble Lords questioned—perhaps I can express it as—our enthusiasm for implementing this legislation. As I mentioned, the UK was heavily involved in negotiating the final text of the directive to make sure that it would be truly positive for the UK telecommunications market, and we played a really leading role in the negotiations.

The noble Lord, Lord Clement-Jones, questioned whether we were going above and beyond some of the minimum requirements in the directive. There are more than 100 measures in the directive and in six of them we have gone further, where it has been clearly in the UK’s interest to do so. That relates to Ofcom’s ability to collect information regularly about gigabit-capable network future build plans; its ability to penalise BT or KCOM if either reneges on voluntary commitments; and the additional powers to promote retail competition in buildings where there is not room for more than network deployment. I think that addresses that point.

In relation to speeding up, questions were raised about the impact of the directive. The £5 million cited in the memorandum relates to the direct impact but we expect the indirect impact to be very substantial in terms of opening up and speeding up the implementation of high-capacity networks. We believe that this will support our plans to incentivise investment in gigabit-capable networks by promoting both competition and commercial investment wherever possible; allowing Ofcom to have longer market reviews, which gives industry greater planning time; and, as I mentioned, supporting the availability of build plan information to industry and government, which supports our rollout plans. There are other examples that I will happily share with your Lordships in a letter.

The noble Lord, Lord Stevenson, is testing my technical knowledge of the impact of the statutory instrument on our spectrum policy framework. If I may, I will include further answers on that in my letter. The statutory instrument does introduce a requirement for Ofcom to consider whether specified level of use conditions would promote efficient use of the spectrum when designing competitive awards, but that does not address the noble Lord’s point about the quality of the spectrum, so, if I may, I will include that in my letter.

Finally, the noble Lord, Lord Stevenson, asked about not-spots in both rural areas and some urban areas. As he will be aware, we have committed £5 billion to support the rollout of gigabit-capable broadband in the hardest-to-reach 20% of the country. We are sticking with our target of 2025. We acknowledge that it is a very ambitious target, but we are driving forward with it as hard as we can.

To recap, transposing these changes into UK law will allow us to drive investment in future-proofed networks and communications services through sustainable competition. It will support efficient and effective use of the radio spectrum and provide a high level of consumer protection. It will also ensure that Ofcom’s powers remain operable and reflect recent technological innovation. Some of the measures are being transposed through alternative legislation, such as the requirements for the security of networks and services.

With thanks to both noble Lords for their questions, I beg to move.

Motion agreed.