Digital Economy Bill

Lord Foster of Bath 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?

--- Later in debate ---

[Lord Foster of Bath (LD)]

My Lords, as my noble friend Lord Fox has said, I will very briefly address one element of the report, though I support the principle and all other aspects of the proposed list of things to be covered in that report. However, I draw the House’s attention to subsections (2)(g) and (h). Paragraph (g) talks about the take-up of superfast broadband as a proportion of connected premises and (h) about the measures taken by various bodies to improve that take-up.

I fully share the Government’s desire to create a digital Britain, with all the benefits that it can bring, including the online delivery of our public services. However, all the discussions I have had about broadband since joining the House have predominantly been about its speed and making it available. We know the figures—they are fairly clear: about 89% of households can currently access high-speed broadband, but we also know that only 31% of households have actually taken up the offer and 22% remain entirely offline. Furthermore, last year’s Ofcom study revealed that some 10% of households make it clear that they have no intention whatever of getting on to the internet at any speed. We also know that it is those with limited means—perhaps older and less well-off people—who make up the bulk of the 30% of the population who currently have either very limited or no access to the internet.

Bearing those figures in mind, and while I welcome all the energy, enthusiasm, debate and deliberation going on in the House—and by the Government, Ofcom and others—to improve the availability of high-speed broadband, at the same time as addressing the supply side we need to do far more work to address the demand side as well. If we are to reap the full benefits of digital Britain—to bridge the digital divide and reduce the unit cost of the installation of high-speed broadband—we need a concentrated and co-ordinated demand-side management programme. I have argued before that such a programme would address issues such as: skills training, which we will come on to later in the Bill; marketing the benefits of broadband; addressing the cost barriers—we have already had a brief debate on that with the amendment of my noble friend Lady Janke in relation to social tariffs; and of course developing quality, technology and content.

I readily acknowledge, as I have in the past, that there is good work going on in this regard by BT itself, the BBC, Barclays and many others. Local councils deserve a great deal of credit for the work they are doing, and the Do It Digital campaign is trying to help businesses get online. The Government have played their part with changes to the IT curriculum and aspired improvements, at least, to digital skills.

However, given that the take-up rate is so low, far more needs to be done, from the skills agenda to having a digital TV switchover-style campaign, advertising the benefits of getting online. It needs co-ordination. I believe that BDUK would be best placed to do that—its business voucher scheme was a good demand-driver—and the Minister might comment on where we are with the next iteration of that in his response. I toyed with tabling an amendment adding to the purposes of BDUK to cover responsibility for that but, for the time being, so that we have an opportunity to hear the Minister’s reaction and find out a bit more about what the Government plan in demand-management measures, I thought it more sensible to leave it included as one of the issues to be reported under the excellent proposal of my noble friend.

[Lord Mendelsohn]

My Lords, I express our support for the amendment so ably produced by the noble Lord, Lord Fox. It is entirely consistent with Amendment 21, to which we shall come in the next group, and it provides a useful window on performance. In considering what the full report should look at, I just suggest that it would be useful if it considered upload speeds, outages and user experience. We talk far too often about what speeds are delivered to the home and not enough about the user experience; it would be very useful to include that in such a report.

--- Later in debate ---

[Lord Foster of Bath]

My Lords, we on these Benches have much sympathy for Amendments 15, 16, 18 and 22, although I know that my noble friend Lord Clement-Jones will say a few words in a minute or two about Amendment 15. I will confine my remarks predominantly to Amendment 14. I am conscious that many Members of the House are probably regular users of credit and debit cards. However, we are of course also increasingly regular users of mobile phones. I suggest to noble Lords that most mobile phone contracts are in all but name no different from their credit card contracts: they are a credit agreement, paying retrospectively for services that have been received. Yet with the credit card, of course, a limit is imposed upon you, which is not currently the case with mobile phones.

As mobile phones have developed since they were first introduced 30 years ago, the services that are offered and the billing arrangements are increasingly complex. There are benefits from all of that, but their complexity can lead to difficulty for some people, not least people from low-income families, who are five times more likely to rely on their mobile phone than people from high-income families. Very often their mobile phone is their only connected device, as they do not have a fixed landline or broadband connection. Unfortunately, as the complexity has developed, some of the support systems for customers have not gone alongside them. We know from evidence from Citizens Advice that in 2014-15 it helped no fewer than 27,000 customers who had problems with mobile phone debts, which totalled some £11 million. I was told of the case of Martin, who,

“was in the British Armed Forces and had been deployed overseas. He contacted his mobile network provider before travelling and, based on their advice, believed he had disabled data roaming. He took his phone with him and used Skype to stay in touch with his wife back in the UK, believing he was connected via Wi-Fi and that Skype calls would therefore be free. On arriving back in the UK, Martin found he had been billed £3,700 for data roaming”.

We need some mechanism to help customers from falling into debt unexpectedly. The amendment proposes the voluntary and opt-in cap system.

During the passage of the Bill in another place, a similar amendment was put before the Government on a number of occasions, and they repeatedly said that they did not think such a measure was necessary, because there are a variety of ways in which the consumer can avoid bill shocks. They talked about the range of apps that are available, dedicated phone lines for people to check on their current limits, warning texts that are sent when customers approach their allowances, and a range of different online tools. However, the reality is that none of that saves the large number of people who get into difficulty with their mobile phone bills. Nearly five years ago, Ofcom recognised that this was a problem, producing a report in which it said:

“We will also push for increased availability and use of financial caps … We have already called on”,


mobile service providers,

“to do more to develop and promote ‘opt-in’ systems so that consumers can choose to set limits on their expenditure”.

Indeed, Ofcom went even further five years ago, saying that,

“it might be more appropriate to move to an ‘opt-out’ system of financial caps”.

So, five years ago, Ofcom was alerting us to a real problem—a problem that it was proposing could be addressed by mobile service providers at least being able to offer an opt-in cap to their consumers. It did not proceed with that because the mobile phone operators said it would be far too expensive and too difficult to change their billing systems. But those were exactly the same arguments the mobile phone operators used in 2009 against the imposition of the EU roaming cap, which is in place. They said it was far too difficult and could not be done—that there were technical difficulties and so on. Yet they have done it, and it is perfectly possible for them to do it in this country. The evidence of it being perfectly possible is that two companies, Three and Tesco Mobile, have demonstrated that it can be done. They have done it, they are leading the way, and they have shown that they are providing a better service to customers as a result.

The time has now come for us to require mobile service providers to offer an opt-in cap system to their customers. The customer does not have to take it, but the offer should be there. I hope that, at this stage of the Bill— having rejected it on a number of occasions in another place, and given that Ofcom recommended it some five years ago—the Government might now be minded to accept the amendment, or at least something like it.

[Lord Clement-Jones (LD)]

My Lords, at the beginning of the debate on this group, the noble Lord, Lord Stevenson, said this was rather a disparate group. I agree with him, and on that basis it is entirely logical that I am quite supportive of one amendment, Amendment 15, but entirely unsupportive of another, Amendment 233.

This takes us back to the Consumer Rights Act, which feels but yesterday although, looking back, I see that it was debated at the end of 2014. Amendment 15 is very timely and it is right to probe the Government’s intentions on switching. I have a letter, which the noble Baroness, Lady Neville-Rolfe, wrote to me after we had put down various amendments on the then Consumer Rights Bill, on gaining provider-led switching. She said:

“I think we are in full agreement on the likely benefits of gaining-provider led switching for consumers and for competition in the telecoms industry. This view is reflected in our work on switching, since before the publication of the Consumers, Connectivity and Content strategy paper, when two experts from Ofcom were seconded to DCMS to help develop policy on switching”.


Moving on slightly from there, I thought it was quite encouraging that, in the Government’s May 2016 paper, Switching Principles: Government Response and Action Plan, a number of principles were set out. But I see none of them reflected in the primary legislation. I do not know what the Government’s intentions are in terms of regulations. It is not even clear that gaining provider-led switching will be permissible. Therefore, I ask the Minister whether principles such as these will be enshrined in the secondary legislation:

“Switching should be free to the consumer, unless they are aware of and have consented to fair, reasonable and clear restrictions and charges to do so … The switching process should be led by the organisation with most interest in making the switching process work effectively—the gaining provider … Sites and tools providing comparisons to consumers that receive payments from suppliers should make clear where this affects the presentation of results”.


These are principles that the Government have set out in their own paper, and it is not clear at this stage whether they fully plan to deliver on them. I would appreciate an answer from the Minister on that.

On Amendment 233, I am not sure why the noble Lord, Lord Stevenson—with whom I have sparred on a number of occasions on software issues, and certainly on the then Consumer Rights Bill—believes that we are in a different place and need another bite at this particular cherry. The software industry carefully negotiated a particular break-out from the Consumer Rights Act, for good reasons, because of the way that software is developed. There are beta applications that need to be perfected before the final product is fit for purpose, and there are upgrades and so on, as is perfectly well understood by the industry. So I do not support a call for another look at this. I do not believe the evidence is yet there that we have moved into a new place. It is barely two years since we debated these issues and I do not think technological progress has been so quick that we can afford another look at this without prejudicing our software industry.