Digital Economy Bill

Baroness Buscombe Excerpts

1st reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords
Tuesday 31st January 2017 Lords Chamber

[Baroness Buscombe (Con)]

My Lords, let me begin by making it very clear that the Government are committed to building a country that works for everyone, and that we are working to make sure that nobody is digitally excluded. The broadband universal service obligation will provide a digital safety net by giving everyone the legal right to request a connection to fast, affordable broadband.

Amendment 4 proposes that the broadband USO should include a social tariff. The existing telephony USO already includes one—as the noble Baroness, Lady Janke, said—and BT has voluntarily added broadband for those who want it. When Ofcom was commissioned to provide advice to the Government on the design of the broadband USO, we specifically asked it to consider a social tariff to ensure that the USO was affordable for all. Noble Lords will be aware of the report that was published on 16 December. Ofcom’s USO analysis said that a social tariff was likely to be appropriate for low-income users. Once we have considered Ofcom’s report we will publish a consultation on the detailed design of the USO.

I should also make it clear—particularly in relation to the contribution from the noble Lord, Lord Maxton, and the reference by the noble Baroness, Lady Janke, in connection with vulnerability and access—that the Government are committed to actively tackling digital exclusion, which can be caused by lack of access but also by other barriers such as lack of basic skills. Some people will never be able to use online services independently, so the Government are committed to ensuring that assisted digital support is always available for these people. The Government’s digital support strategy mandates departments to provide this support.

If I have interpreted Amendment 5 correctly, it proposes that consumers would not be required to pay any excess costs above any cost threshold that is set. Under the current telephony USO, consumers pay the first £130. BT will then pay up to a threshold of £3,400. Consumers are then asked to pay any further costs above the cost threshold. Similar arrangements are in place for other essential services such as electricity and water. Ofcom’s technical advice, which we are considering, sets out analysis of this kind of model for a broadband USO.

Under the telephony USO, consumers have the option of carrying out some of the work themselves to help reduce their costs. Individual consumer requests for a USO connection can also be aggregated to help reduce the cost per premises to below the reasonable cost threshold. We are considering whether this type of arrangement would be suitable for the new broadband USO; this will be the subject of the later consultation. With that explanation, I hope that the noble Baroness will be able to withdraw her amendment.

[Lord Foster of Bath (LD)]

Could the Minister help the House with what she has just said about Ofcom’s recommendation being that it was likely that a social tariff would be needed? Can she explain exactly where within the legislation that social tariff will be introduced, bearing in mind what is said in Clause 1 about setting out the universal service obligation characteristics?

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[Baroness Buscombe]

My Lords, I will need to check this to be absolutely sure, but it will not form part of the legislation. I am talking about the report that is being considered with care at the moment. There will be a public consultation after that report, so we cannot commit to this without fully exploring our thoughts and proposals in response to the report of 16 December. I hope that that is helpful—but it will be subject to regulations as opposed to primary legislation.

[Lord Clement-Jones (LD)]

My Lords, I do not want to prolong this but if it is to be subject to regulation, there must be primary legislation permitting that regulation to be made. Perhaps the Minister could write to us on that subject.

[Baroness Buscombe]

Yes, that is a good idea. We will absolutely make sure that we write to noble Lords on this point.

[Baroness Janke]

I thank the Minister for her response, which sounds extremely encouraging, and I look forward to hearing the Government’s response to the Ofcom report. In so doing, I beg leave to withdraw the amendment.

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[Baroness Buscombe]

My Lords, I thank all those who have spoken in this debate. I begin with Amendment 14 in the names of the noble Lords, Lord Stevenson of Balmacara and Lord Foster of Bath. The amendment seeks to place a mandatory obligation upon mobile phone service providers to agree with the customer a financial cap on their monthly bills at the time of entering into a contract.

Providers offer consumers a range of innovative ways to manage their usage, such as apps that allow consumers to turn financial caps on and off, warning text messages when customers are approaching their existing allowance limits, and dedicated telephone numbers that advise the customer about their usage. The noble Lord, Lord Foster, has already referred to some of these opportunities.

We expect providers to continue to take steps to minimise bill shock and to ensure that their customers are sufficiently equipped to manage their usage. Having said that, if the Government consider that more needs to be done, the forthcoming consumer Green Paper will be an opportunity for us to consider the issue of bill capping in more detail. It is also important to note—and perhaps it has been said before in another place—that Ofcom has guidance on its website to help consumers avoid so-called bill shock. Tips include making sure you have the right deal to suit your usage, switching provider or increasing your usage allowance, monitoring your usage, and how to protect your phone from unauthorised use.

Amendment 15, in the names of the noble Lords, Lord Stevenson and Lord Mendelsohn, seeks to amend the Communications Act 2003 and Ofcom’s power to set conditions to ensure that the interests of the consumer are protected when purchasing a contract relating to a mobile phone, and when switching mobile provider. Changing provider should, of course, be quick and easy for everyone. This is why Clause 2 makes explicit that Ofcom has powers to facilitate easier switching across all the communications sectors, including mobile services. Ofcom has an existing statutory duty to protect consumers of communications services, including consumers of mobile services, under Section 51 of the Communications Act 2003. The combination of this power and duty thus already creates the effect this amendment seeks.

The noble Lord, Lord Clement-Jones, is concerned about whether there is more to be said on this matter. The clause extends Ofcom’s power to set conditions for switching, so it will be for Ofcom to decide what should be required and whether switching is an appropriate requirement to impose on providers.

[Lord Clement-Jones]

My Lords, I am sorry to interrupt the Minister but I find that a somewhat extraordinary statement. The Government are responsible for policy—indeed, they have published a paper on switching principles. The question is: what has Ofcom been asked to implement? Surely the type of switching that will be implemented is not purely up to Ofcom. The Government—the business department, as was—published a paper setting out very clearly the principles on which switching was to be based. We cannot have a situation where a Minister simply says that it is all down to Ofcom and that is the kind of scheme that it will suggest. I find that extraordinary.

[Baroness Buscombe]

My Lords, I am sorry if the noble Lord finds it extraordinary. However, I think that he has made a reasonable request and I will make sure that we write to him in detail, giving a full reply.

Amendments 16 and 18 seek to make additions to Clause 3 to ensure that compensation is paid within a reasonable timescale and that, for mobile phone services, compensation is payable where the provider fails to meet a specified standard or obligation. Also, one of those standards must be satisfactory mobile coverage.

The drafting of the clause already allows for Ofcom to consider timescales for compensation, as well as what service standards are within scope. In the spring of this year Ofcom plans to publish a full consultation setting out how automatic compensation could work. Thus, we do not see the need for these amendments.

Amendment 22 seeks to establish a code of practice on business broadband speeds. In January 2016, Ofcom published a voluntary code of practice on business broadband speeds, and it came into force in September 2016. The code gives businesses clearer, more accurate and transparent information on broadband speeds before they sign up to a contract. Signatories to the code also commit to manage any problems that businesses have with broadband speed effectivity and to allow customers to exit the contract at any point if speeds fall below a minimum guaranteed level. Ofcom will continue to work with the industry to ensure full transparency. With such a code already in existence, we see no need for there to be a power for the Secretary of State to prepare one.

Amendment 233 would amend the Consumer Rights Act 2015. I am grateful for the response of the noble Lord, Lord Clement-Jones, to this amendment, as I have to hand the transcript of the debate on that legislation—it makes quite enjoyable reading—when he referenced the consequences of an amendment which is the same as the one before us tonight. He said that,

“the consequences of this amendment could be quite unforeseen and extremely contrary to the interests of the strong and vibrant software industry that we have in this country”.—[Official Report, 19/11/14; col. 507.]

We entirely agree with the noble Lord that things have not changed that much, and they certainly have not changed in that regard. The rights set out in the Consumer Rights Act were designed to achieve a workable balance to reflect consumers’ reasonable expectations while not imposing unnecessary and potentially damaging requirements on our vibrant, growing and technically innovative digital content suppliers. We believe that this amendment would undermine those rights.

When formulating the Consumer Rights Act, we concluded that providing for a short-term right to reject was not necessary in the context of digital content. Unlike physical goods, digital content can on the whole be fixed rapidly and with little effort on the part of the consumer. Consumers accept that it is the nature of digital content that it may be released with minor errors and incompatibilities which come to light in use and which will be fixed to ensure that the product is satisfactory. A short-term right to reject digital content and impose strict limits on the number of repairs and replacements would not be practical in this context. In the digital environment, a fault in one copy of digital content may be replicated in all copies, or the fault may not be the result of an action by the trader at all. That is why a repair is a more equitable solution in the first instance than a full refund.

Many digital content producers are micro-businesses and start-ups, and we need to maintain an environment in which they can flourish and provide innovative products, while ensuring appropriate protections. Enabling rejection as an immediate remedy could cause the industry to be more conservative in its product offerings, reducing our competitiveness and chilling innovation, to the detriment of both business and consumers.

As we know, the Act has been in force since October 2015 and the Government have received no evidence or representations to the effect that it is not working as intended. With that further explanation, I hope that the noble Lord will agree to withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank the noble Lord, Lord Foster, for joining me on Amendment 14 and I welcome the contribution from the noble Lord, Lord Clement-Jones, with whom we can agree on one thing and disagree on another. I am sure that that will continue—he is a contrary sort of chap and it is sometimes difficult to work out where he is coming from.

I like the phrase “bill shock”—I had not come across it before. It is an issue that might be dealt with in the forthcoming Green Paper and therefore I accept that at this stage we need not progress further on that amendment. However, I should like to reflect on my experience of trying to deal with accounts from my provider of mobile telephony. It is complicated by the fact that I also, stupidly, pay my children’s bills. I should not do that because, if I can never work out what their bills are, I certainly cannot work out my bills, and the combination is almost impossible.

The only way that you can interrogate your bill from that particular provider, whose name begins with a “V”, is by going on to the website and logging in. That is fair enough, but you cannot access your account until the provider sends you a text message on your mobile phone with a number that you have to enter in. That methodology is now becoming common among the banks. However, it does not work in a not-spot, so I cannot reach my account. I cannot interrogate it, I cannot set caps and I cannot do all the things that the noble Baroness talked about in her full and very interesting response. Therefore, there is an issue there with some of the technology that is still being used. I do not think that it is anti-competitive or anti-consumer but it borders on the “difficult to use”. I think that there is an issue there that we might want to come back to, although a Green Paper may well be the right way forward.

If we could have a letter on gainer provider-led switching, that would be very helpful. This is an area where I do not think there is any doubt about where we are trying to get to, but the pace seems glacial and I do not understand what the barriers are.

On the two points on payment, I accept that a paper offering a consultation on that would be useful. If I am correct about the timescale, it seems a little unfortunate that it will appear later than the completion stage of the Bill. The Minister mentioned the spring, but if she could give us some detail in writing about when it is likely to be available, that will be helpful.

With regard to the voluntary code of practice, we come back to the point that we raised on Amendment 1 regarding what the USO will be if it does not have teeth. In some senses, an aspiration is fine and a floor is also fine, but if the code is to be used to make real progress in this area, we have to try to make sure that the ISPs that try to operate it find that it contains something that they have to deliver on. I will look carefully at the Minister’s response and we may come back to that point.

Finally, I turn to my Amendment 233 on digital content. The debates are obviously very familiar. Indeed, I think that the Minister may have been present at one or two of the previous ones and therefore what we say will ring even more loudly in her mind. The noble Lord, Lord Clement-Jones, was quick to pick up the main point, but time is moving on. So much more material is now downloaded and not supplied in hard copy, and at some point we will have to look at this again. The more the Minister talks about a strong and vibrant software industry, the more that speaks to me of customers being put at the bottom of the priority list, and I do not think that that is right. It is difficult to operate in a digital environment without the proper digital legislation. I am not sure that we know yet what that is and I accept that we may need more time to go through it. I signal that this is something that we may have to come back to at some point but, in the interim, I beg leave to withdraw the amendment.