The draft Communications Bill, published on 7 May, sets out in more detail the Government's proposals to create a modern and flexible regulatory framework for the converging communications sector.

The draft Bill implements the policy proposals set out in the Communications White Paper, A New Future for Communications, published in December 2000.

The draft Bill follows on from the Office of Communications Act 2002 which received Royal assent in April, establishing OFCOM and paving the way for the transfer of functions from the existing regulators. OFCOM will replace the five existing regulatory bodies and will exercise regulatory responsibilities across telecommunications, broadcasting and spectrum management.

What does the draft Bill mean for telecoms?

The draft Bill provides for a completely new regulatory framework that applies across all electronic communications networks and services. The draft Bill implements the harmonised framework for electronic communications as detailed in the provisions of the four European Directives that were adopted last month (see Oftel News 55).

The key change from the current regime is that it will no longer be a criminal offence to run a telecommunications system without a licence. The current regime will be replaced by a 'general authorisation' which means that companies do not have to obtain a licence to operate an electronic communications network. However, they will (where required by OFCOM) have to inform OFCOM in advance and comply with general conditions of entitlement.

General conditions of entitlement, which replace individual licences, will apply to all communications providers (the shorthand term for a provider of an electronic communication network or an electronic communication service). Oftel is currently consulting on general conditions of entitlement that will apply to all communications providers.

In addition, specific conditions will apply to individual communications providers where appropriate, including SMP obligations, access related conditions and universal service obligations.

Another provision relating to telecoms is the establishment of a spectrum trading regime, following work undertaken by the DTI to which Oftel published its response last May.

New enforcement powers

Oftel does not have the power to fine for breach of a licence obligation, although using its powers under the Competition Act, Oftel can fine companies in breach of the Act up to 10 per cent of their annual turnover.

The draft Communications Bill introduces a power for OFCOM to impose a fine - again, up to 10 per cent of turnover - for breach of either a general or a specific condition of entitlement.

In addition, if a company does not comply with either a general or specific condition, any person who might be affected by breach of the condition will be entitled to take legal action for compensation - whether or not OFCOM has taken enforcement action.

OFCOM, like Oftel, will have concurrent powers under the Competition Act, which will extend across the whole communications sector including broadcasting.

Universal service

The major change to Universal Service made by the draft Communications Bill is that it will now be the Secretary of State, rather than Oftel (or in the future OFCOM), who will determine the extent of the universal service obligation, for example what services it covers, meeting the requirements of the Universal Service Directive.

OFCOM will determine how the obligations specified by the Secretary of State are to be met, including the designation of universal service providers - operators required to provide universal service.

Decision making process

Consultation with stakeholders is a key concern for any regulatory authority. The draft Bill includes a provision requiring OFCOM to consult with consumers. The draft Bill proposes to establish a Consumer Panel which will play an important part in achieving consultation with consumers. The Panel, which will replace Advisory Committees on Telecommunications will advise OFCOM on the interests of domestic and small business customers.

Other important developments

Another major development is the granting of a new and wider right of appeal. The Competition Appeals Tribunal (part of the Competition Commission) will hear appeals on decisions made by OFCOM in relation to networks and services.

Media coverage of the draft Bill has to date focused on one area which has nothing to do with telecoms. The Government has proposed significant changes to the regulatory framework for multimedia ownership.

Also in the area of broadcasting, the current system for regulating content will be developed under OFCOM. This will include the proposed establishment of a content board, which will advise on the regulation of content across the different markets OFCOM will have responsibility in.

Next steps

The Government has acknowledged the importance of the draft Communications Bill by seeking stakeholders' views on the draft Bill including OFCOM's duties, governance and powers. The closing date for comments is 2 August 2002.

In parallel with the public consultation a Joint Committee of the House of Lords and House of Commons has been established to carry out pre-legislative scrutiny of the draft Communications Bill (see our guide to Parliamentary process). The Committee is expected to report by 7 August 2002. The Committee will be seeking evidence from interested parties as a separate exercise to the DTI/DCMS consultation.

In order to assist stakeholders to provide informed responses to the consultation on the draft Communications Bill, Oftel is planning to hold a workshop on the draft Communications Bill next month.

www.communicationsbill.gov.uk