§ '.—(1) Any person who operates a conditional access system shall be required to first obtain from the Commission a licence for the operating of such a system.
§ (2) The Commission may after consultation with the Director grant a licence for the operating of a conditional access system.
§ (3) A licence granted under this section shall be in writing and shall continue in force for such period as may be specified in or determined by or under the licence.
§ (4) A licence granted under this section shall include conditions requiring—
- (a) payment to the Commission on the grant of the licence or payments during the currency of the licence (or both) as may be determined by or under the licence;
- (b) any person who is authorised by the licence to operate a conditional access system to furnish to the Commission, in such manner and at such times as they may reasonably require, such documents, accounts, forecasts, returns or other information as they may reasonably require;
- (c) compliance with any direction given by the Commission as to such matters as are specified in the licence or are of a description so specified;
- (d) determination by the Commission of such questions arising under the licence as are specified in the licence or are of a description so specified;
- (e) any person who is authorised by the licence to operate a conditional access system to provide services to all relevant television programme service provides without undue preference or discrimination; and
- (f) compliance with such further conditions as appear to the Commission to be requisite or expedient having regard to the duties imposed on them by subsection (7) below.
§ (5) Subsection 4(e) shall not apply to the holder of a licence under Section 72 of the 1990 Act to provide local delivery services.
§ (6) Any sums received by the Commission under this section shall be paid into the Consolidated Fund.
§ (7) It shall be the duty of the Commission to exercise their functions in the grant of licences hereunder in the manner which they consider is best calculated:
- (a) to ensure fair and effective competition between persons engaged in the provision of conditional access systems;
- (b) to promote the interests of consumers, purchasers and other users in the United Kingdom of conditional access systems and to ensure that access to such systems are fair and reasonable.
§ (8) The holding by any person of a licence authorising the provision of a conditional access system shall not relieve him of any requirement to hold a licence under section 7 of the Telecommunications Act 1984 in connection with the provision of such a system.
§ (9) Any person who operates a conditional access system within the United Kingdom shall be guilty of an offence unless he is authorised to operate such a system by licence granted hereunder.
§ (10) A person guilty of an offence under this section shall be liable:
- (a) on summary conviction to a fine not exceeding the statutory maximum:
- (b) on conviction on indictment, to a fine.
§ (11) No proceeding in respect of an offence under this section shall be instituted except by or on behalf of the Commission.
§ (12) Without prejudice to subsection (9) compliance with this section shall be enforceable by civil proceedings for an injunction or interdict or other appropriate relief.'.—[Dr. Moonie.]
§ Brought up, and read the First time.
§ Motion made, and Question proposed, That the clause be read a Second time.—[Dr. Moonie.]
§ Madam Deputy SpeakerWith this, it will be convenient to discuss the following: New clause 47—Licensing of conditional access technology—
§
'After section 45 of the 1990 Act there shall be inserted the following section:—
45B (1) It shall be the duty of the relevant authority to ensure that any person operating a conditional access system for the digital transmission of a domestic or non domestic satellite service, or any digital terrestrial service for general reception
§ (2) In this section the "intellectual and industrial property rights" means those rights allowing for:
- (a) the manufacture of a decoding box which is capable of decoding entitlement management information transmitted with that service, and
- (b) the broadcast of encrypted television signals and entitlement management information by other broadcasters using that system.
§ (3) In this section 'the relevant authority' means the Director General of Telecommunications.".'.
752
§
Amendment No. 127, in clause 35, page 29, line 44, at end insert—
'"Conditional access system" means any telecommunications systems or telecommunications apparatus designed or adapted for the origination, initial transmission and final reception of signals for the actuation, operation or control from another place of other telecommunications apparatus by means of which signals comprising encrypted television programme services in either analogue or digital form (or any combination thereof) are broadcast or transmitted for general reception and received and decrypted.'.
§
Amendment No. 128, in page 30, line 3, at end insert—
Director" means the Director General of Tele-communications.'.
§ Mr. Robert Maclennan (Caithness and Sutherland)We dealt with issues cognate to new clause 47 yesterday and it deals with the licensing of conditional access technology—the technology used at the receiving end in a set-top box. Some of the issues that we considered yesterday do not bear repeating, but because new clause 47 deals with a matter of great concern, especially for the consumer organisations, it is right to raise the issue explicitly again.
New clause 47 has the support of the ITC, the BBC, the Voice of the Listener and Viewer, the National Consumer Council and the Consumers Association. In Committee, the Minister recognised that the issue was perhaps the most serious and important of the Bill. I do not seek, through the new clause, to mandate a single conditional access system. It would provide that the operators of conditional access systems would have an obligation to license the key industrial and intellectual property on fair and reasonable terms so that other manufacturers could produce a dual-capable box that could access signals from both digital-terrestrial and digital-satellite transmissions. Proprietary systems would still emerge and their operators would be free to place them on the market—and even to subsidise them heavily, as seems likely—but consumers would still have the option to buy in the high street a box that includes the key technology needed to access the full range of digital services.
5.15 pm
It has been suggested that licensing would be expropriatory in some way. I fail to understand how that charge can be made because new clause 47 provides that the licensing would take place on fair and reasonable terms or, in other words, on payment of a fee.
We cannot delay on this issue because we would hold up the development of digital television and sap consumer confidence. We should move clearly and quickly to take account of the problem. New clause 47 would simply remove a barrier to the operation of the market and, if one system is successful, ensure that service operators cannot be prevented from adopting that system.
§ The Minister for Science and Technology (Mr. Ian Taylor)Some of the elements of new clauses 22 and 47 were touched on last night and, therefore, I too will refrain from going through the detail again. I realise that the House wants to make swift progress.
New clause 22 would extend the conditional access regulations to analogue transmissions. In my judgment, that would not be a wise move. The analogue market is 753 likely to be constrained by the availability of transponder capacity and the market will probably decline as the push to digital happens. There will be an incentive to be first in the market and the new clause would, therefore, not be appropriate on technical grounds. It would also be inappropriate on market grounds. A stable series of investments were made in the analogue market under a particular regulatory environment and it would not be sensible to change that regulatory environment simply because the Bill provides a legislative platform. Any changes would not engender confidence in long-term investments by market players, who have a right to expect a proper return. The difference in conditional access in the digital market is that the whole market will require the conditional access systems. In the analogue market, the systems are principally required by those broadcasting via satellite.
New clause 22 would also switch the conditional licensing system to the ITC whereas our proposals will hand it to the Office of Telecommunications under the Telecommunications Act 1984. Licences under that Act will be required in any event by people using conditional access systems. We do not believe in double jeopardy and, in our judgment, Oftel is the appropriate authority because it is used to dealing with detailed economic regulations. Telecommunications lines will also often be one of the means of broadcasting. The Government will therefore resist new clause 22.
The hon. Member for Caithness and Sutherland (Mr. Maclennan) mentioned new clause 47. I dealt with some of the issues last night, but I understand the hon. Gentleman's motivation. We want to create certainty in the market and we do not want problems between different systems. The mandatory licensing of all conditional access technology appears, on the surface, to be attractive. However, as I explained to the House last night, the European directive and our regulations would meet the problems that most concern the hon. Gentleman. Broadcasters will be able to interconnect with conditional access systems under our proposals through the use of simul-crypt. The Bill will link the technology to interconnection rather than introduce further licensing conditions which would be more likely to create delay. I hope that the hon. Gentleman will withdraw his new clause.
§ Mr. MaclennanI do not want to delay the House, but I would be grateful if the Minister would explain how his system would prevent the emergence of a single powerful player and the consequent limited choice and constantly increasing prices for the consumer. How will the technology stop that?
§ Mr. TaylorThe technology comes within the context of the overall competitive regulatory environment, as I explained to the House yesterday and is also made clear in the regulations that I tabled on 26 June. The framework of competition law obliges fair access for all broadcasters to the systems and the regulatory and competition authorities can take certain steps. That clear framework will enable us to encourage the necessary private sector investment to come into the market. The technical prospects behind the process of simul-crypting will enable the transmission signal to 754 contain a series of instructions that will enable the decoder to react to the different broadcasters. Therefore, through simul-crypt, the technology enables the operation to work, and the regulatory framework of competition law means that no one can resist the application of a broadcaster to send a transmission signal. That is a sufficient framework.
We are talking about a system for the future into which, as of this date, no one has put any money. My hon. Friend the Minister of State has spent hours in Committee attempting to get the framework right. The Bill is designed to provide a clear and solid framework so that people are encouraged to come forward with proposals for investing risk capital in the industry.
§ Mrs. Anne CampbellThe market solution which the Government are proposing led, with the introduction of video recorders, to competition between Betamax and VHS. I was one of the unfortunates who bought Betamax, believing it to be a superior technical solution, but, in the end, I had to throw it away because I could not get the videos to play on it. Will a similar situation arise in this case? Shall I buy a set-top box only to find that I shall have to throw it away after six months because I cannot use it?
§ Mr. TaylorThat is the first time in the House that the hon. Lady has, to my knowledge, admitted making a technological error. There is a first even at this stage of the Bill.
Manufacturers and other parties in the industry are well aware of the Betamax problem. That is why standards committees work constantly to ensure that such mistakes do not occur. Ultimately, a commercial judgment has to be made in the marketplace. It is not for me to tell any company that it should not try to go down a particular avenue if it believes that that will give a reward. If it has a dominant market position and abuses it, the competition regulations will come into force. That is the right way to proceed. Otherwise the Government will have to put up the risk capital. I am sure that the hon. Lady would not find much favour from the shadow Chancellor if she were to propose that.
The simple reality is that no one has as yet put the money on the table to enable us to make the transfer to digital satellite or digital terrestrial television. The Bill must encourage private sector investment as much as possible. Any ill thought through regulations, or any attempt to be over-prescriptive, is likely to have a counteractive effect.
Our proposals use a competition framework and then we have found a way, through technology, to stimulate convergence.
§ Mr. TaylorI am under great pressure, not least from those on the Opposition Front Bench, to make progress, so I shall not take any further interventions. I look to the hon. Member for Kirkcaldy (Dr. Moonie) to withdraw the new clause.
§ Dr. MoonieI beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.