Digital Economy Bill

Lord Fox Excerpts

Report: 1st sitting: House of Lords
Wednesday 22nd February 2017 Lords Chamber

[Lord Fox (LD)]

My Lords, I associate myself with, and support, Amendment 1. The noble Lord, Lord Mendelsohn, covered it comprehensively and I do not want to go over the same territory.

In his opening speech in Committee, the Minister correctly hung his hat on delivering world-class digital connectivity. We can all subscribe to that. There was no doubting the mood of noble Lords in Committee, and certainly no doubting the mood of the country given that we are some distance from being world class in that regard. The objective of this amendment is to help move us along that road. At the time, the Minister associated the Government with the gigabit objective of the noble Lord, Lord Mendelsohn, while firmly ruling it out as a USO objective. The Minister has the notion that we should rely on Ofcom to set the target, that we should rely on a public consultation, and that, eventually, a USO will emerge. In the Minister’s view, this House is not expected to advise Ofcom on where that USO should be set. We disagree with that, because, once the USO is established, it will be trimmed, edited and manipulated. Then, no doubt, the debates will begin among the service deliverers about what exactly the USO means.

We have already seen the length and byzantine nature of the debate that can unfold when Openreach and BT start to discuss matters. We have only to look at the protracted ownership debate that continues unabated. That lengthy discourse will lead only one way; it will trim and pull back from whatever USO Ofcom establishes. For this reason we believe that Ofcom’s hand needs to be firmed up. It needs support and we must strengthen its hand in dealing with what is essentially a monopoly and very experienced public sector supplier. Therefore, this amendment is designed to support Ofcom to take the steps needed on the way to delivering the world-class digital network to which we aspire. That is why we think it should be accepted.

Proposed new subsection (2B) in the amendment contains a medium-term objective which the Minister has endorsed. We need to move towards gigabit connectivity. That will drive increased fibre-to-the-premises connection. Proposed new subsection (2BA) sets a difficult yet achievable goal for 2020 which Ofcom itself has modelled, as the noble Lord, Lord Mendelsohn, set out. It is important to have both those objectives because one can be the enemy of the other unless they are both included in the Bill. We cannot second-guess the country’s future need but we can be certain that it will be more than 10 megabits. We must be in a position to assist Ofcom in establishing a USO that can begin to deliver the needs of this country. It is for that reason that we support Amendment 1.

[Lord Wigley (PC)]

My Lords, I declare an interest immediately, because in both my household and my neighbour’s household we have had immense problems in securing adequate speeds. I referred at earlier stages to some of these difficulties.

I very much support both Amendments. Amendment 1 states that,

“by 2020, the following will be available in every household”,

and the list includes,

“download speeds of 30 megabits per second”.

This is absolutely necessary, because under the present provision, the providers just are not willing to do that. They are willing to rest their case on the fact that it is too expensive to run the necessary connection to a household, not just in far-flung rural areas but in conurbations and villages. I am within half a mile of the main exchange and within 200 metres of a box. However, because of the way they have laid out the connectivity sequence, we cannot get decent speeds. It is irritating that the excuse can be used that it is too expensive to provide a connection.

I assume that if there was a legislative requirement along the lines laid out in the proposed new subsections in Amendments 1 and 2, that would be overcome. If the Government are not willing to accept these amendments, I would be interested to know what response they would give to people who are facing this difficulty. It is not a technical impossibility, just too expensive. I was on the committee which dealt with the privatisation of telephones, with the late John Golding and others—it took a considerable amount of time to go through—and assurances were then given that of course, the responsibilities that had been on public bodies would be continued. I accept that, to a large extent, BT has done that. However, safeguards are needed, particularly in rural areas, and I would be grateful if the Minister said how he will cover that if he cannot accept these amendments.

--- Later in debate ---

[Baroness Janke (LD)]

My Lords, on this side of the House we are concerned about the whole issue of affordability. With the universal service obligation, we need to recognise that many people who would very much benefit from having access to broadband will not be able to afford it. I am speaking about low-income communities and communities with interests, such as people on pensions, or those who have a need to use broadband more so than others, such as the disabled. It is important that some form of social tariff is introduced. In Committee, the noble Baroness gave a very encouraging response to this amendment. I think she referred then to a report from Ofcom that recommended the introduction of a social tariff. In moving the amendment again, I would like some assurance that this is a concrete proposal rather than an aspiration. I hope the noble Baroness will be able to assure me of that and I beg to move.

[Lord Fox]

I shall speak to Amendment 4. When an amendment along similar lines was debated in Committee, the Minister rightly noted that we were in danger of mixing our drinks with some USO and some non-USO measures clustered together. That is why I accepted the Minister’s advice and have separated the USO and left it in the Ofcom section of the Bill. This amendment covers the non-Ofcom measures. I am sure that as I have taken the Minister’s advice to frame the amendment in this way, he will be persuaded that there is something to be gained from the transparency that these measures will give and will back up his relatively supportive comments about the importance of driving public acceptance and helping people to understand what they can get from broadband by measuring those efforts and reporting them to Parliament. On that basis, I am sure the Minister will be only too willing to include this amendment in the Bill.

--- Later in debate ---

[Lord Maxton]

My Lords, I shall be brief. I have in my pocket a mobile phone owned by Virgin Media. Virgin Media uses the EE spectrum. As far as I know, there is no financial connection between Virgin Media and EE, but Virgin uses the EE network. Could the Minister explain that to me?

[Lord Fox]

My Lords, I am fortunate to follow the noble Lord, Lord Stevenson, whose comprehensive support of his amendment means that I need say very little, but I will make a couple of points.

We have talked in various debates on the digital economy about how wireless and broadband are converging, but there is one area where we do not want them to converge. The paroxysms that we are putting ourselves through around the broadband issue are because of how broken that market is, and there is a firm danger that we may be sending the wireless market down the same route. As the noble Lord, Lord Stevenson, pointed out, we had an equitable spectrum distribution, but there is a clear and present danger that we will move even further from that equity, with two dominant players and two very small players. The purpose of this amendment is to work in advance of that, so that we will not subsequently be debating the brokenness of the wireless market as we have been, from time immemorial, in respect of the broadband market.

When this amendment was debated in Committee, the Minister’s response was very much about leaving Ofcom to choose. He hazarded that, from the Government’s point of view,

“it also strikes us as unlikely that Ofcom, having determined appropriate rules …, would immediately nullify the results”.—[Official Report, 31/1/16; col. 1196]

In other words, it is up to Ofcom to decide, and it is not going to decide on this issue. That actually makes this amendment more important, not less. Ofcom has clearly recognised that there is a potential issue here, and it has gone tentatively down the route of limiting access to the 2.3 gigahertz spectrum while completely ignoring the 3.4 gigahertz spectrum. I think that the case has been made by the noble Lord, Lord Stevenson, for us to take account of that in the Bill and, for that reason, I support the amendment.

[Lord Ashton of Hyde]

My Lords, I thank all noble Lords who have spoken on this technical but important subject. The intention behind the amendment is that Ofcom is able to ensure competition in the mobile market. It also proposes that the Government commission and evaluate the current usage and allocation of mobile spectrum.

As has been said, Ofcom already has the power to set appropriate rules for its spectrum licensing, taking due account of competition implications. Ofcom must award licences by processes that are open, objective, transparent and proportionate to what they are intended to achieve and not unduly discriminating against particular persons or a particular description of persons. It is important to remind ourselves that Ofcom has been given the position of regulator of the telecommunications market in the United Kingdom. It already has a duty, when carrying out its radio spectrum functions, to have regard to the desirability of promoting both competition in the provision of electromagnetic communications services and the efficient management of radio spectrum for wireless telegraphy.

Reviewing the state of competition in the mobile market falls clearly within Ofcom’s remit. It considered many of the issues outlined in the proposed new clause in its recent consultation on the forthcoming spectrum auction. This included a proposal to apply a cap of 255 megahertz on the amount of immediately useable spectrum that any one operator can buy. Ofcom believes that the UK mobile market is currently working well for consumers and businesses, with strong competition between mobile network operators. It considers it unlikely that any of the four mobile network operators would cease to be credible as a national supplier of mobile services in the next few years, even if they did not obtain any spectrum in the forthcoming auction. Additionally, more useable mobile spectrum, such as the 700 megahertz band, will be available in the future. The reality is that Ofcom has considered the competition issues in some detail. Not everyone agrees with its conclusions, and Ofcom will take that into account as part of its consideration of the consultation responses. However, it is for Ofcom as the regulator to take a view on these issues, and it has already done so.

The noble Lord, Lord Stevenson, asked whether the current divisions are optimum. Ofcom is obviously more expert than I am, and we think it is for Ofcom to opine on that. As I said, Ofcom proposes to set a cap of 255 megahertz on the immediately useable spectrum. It has explained that, as a result of this proposed cap, BT/EE would not be able to bid for spectrum in the 2.3 gigahertz band. The cap will prevent a worsening of the current extent of asymmetry in immediately useable spectrum. I think that that indicates its views and I am not going to contradict it.

In addition, if the Government felt that it was necessary to direct Ofcom to undertake a competition assessment, they could do so under Section 5 of the Wireless Telegraphy Act, and they did so in 2010 ahead of the 4G auction.

The noble Lord, Lord Maxton, asked how Virgin supply a mobile network through EE. I am informed that the answer is that Virgin sublet part of EE’s spectrum access.

Given that Ofcom is already able to, and does, take into account competition issues, I hope that the noble Lord will agree to withdraw this amendment.