Satellite Television (Hansard, 30 June 1997)

§ The Secretary of State for National Heritage (Mr. Chris Smith)
I beg to move, That the draft Satellite Television Service Regulations 1997, which were laid before this House on 18th June, be approved. The regulations have been laid before the House under section 2(2) of the European Communities Act 1972. Their purpose is to implement a judgment of the European Court of Justice concerning the United Kingdom's implementation of articles 2(1), 2(2) and 3(2) of the 1989 broadcasting directive, which is perhaps better known in the House and elsewhere as the "television without frontiers" directive.
In brief, the Court found that the United Kingdom had failed to fulfil its obligations under the directive by misinterpreting the basis on which satellite broadcasters fell within United Kingdom jurisdiction, by applying different licensing regimes to domestic and non-domestic satellite services and by exercising control over broadcasts transmitted by broadcasters falling within the jurisdiction of other member states.
This is an opportune moment to debate the regulations, as a revised version of the broadcasting directive was recently adopted by the European Parliament and the Council of Ministers.
The broadcasting directive is a single market instrument that governs transfrontier television broadcasting within the European Union. For it to work effectively, it is essential that certain elements are implemented in a common manner by all member states. One such element is the determination of which country should have jurisdiction over a broadcaster.
In the United Kingdom, the Independent Television Commission licenses and regulates all broadcasters that come under UK jurisdiction, with the exception of the BBC and S4C. Other countries operate different systems, but from the European Union perspective, the crucial factor is that each broadcaster should come under the jurisdiction of only one member state. To achieve that, it is clearly essential that a single system of determining jurisdiction is in operation throughout the Community.
That is where a problem arose. The wording of the 1989 directive was ambiguous. When member states came to implement the directive at national level, differing interpretations of the provisions on jurisdiction were exposed. The UK chose to use satellite uplink as the basis of jurisdiction. That was the criterion used in the Council of Europe's convention on transfrontier television, which predated the directive and was, to some extent, a model for European broadcasting regulation. Other member states, however, used the broadcaster's place of establishment.
Establishment and uplink are both fairly complex issues, but in simple terms, establishment concerns the place in which an organisation is based. The place of establishment of a broadcaster is generally held to be the place in which it has its head office and where decisions about programming content are made. Uplink is the technical process whereby programmes are broadcast, from a specific transmitter on the earth to a satellite, from where they are subsequently downlinked back to satellite receptors on earth.
74 The situation did not cause too many practical problems, because the vast majority of services uplinked from the UK are by broadcasters also established in the UK. Nevertheless, it was clearly necessary to have a common interpretation throughout the EU to ensure that a member state, or its regulator, would know which Government were the sole licensing authority. Monitoring the implementation of directives, the European Commission considered that, by using uplink as the basis of jurisdiction, the UK had misinterpreted the broadcasting directive. In 1992, therefore, it initiated the legal infractions process.
In responding to the Commission, the Government of the day took the view that the UK had implemented the directive properly. The legal process was pursued through its various stages, culminating in the judgment of the European Court of Justice last September. The judgment recognised that the existing directive was ambiguous, but found that establishment was the correct basis for determining jurisdiction. The regulations implement the Court's judgment by changing the basis of jurisdiction over broadcasters from uplink to establishment.
We now also have the benefit of the revisions to the 1989 directive, including article 2, where the ambiguity to which I referred is removed. The revised directive, which was adopted by the Council of Ministers and the European Parliament earlier this month, states clearly that establishment shall be the basis of jurisdiction and sets out a hierarchy of criteria for defining the place of establishment of broadcasters. These regulations can now be read alongside the detailed guidance in the revised directive.
The practical effect of the change is minimal. According to the Independent Television Commission, of the more than 150 broadcasters currently holding satellite broadcasting licences, only half a dozen at most will be affected.
In the second part of its judgment, creating a single satellite licensing regime, the European Court of Justice found that the UK had unlawfully established two licensing regimes for satellite broadcasting in the Broadcasting Act 1990. Domestic satellite services were defined as those that used UK frequencies and were designed for general reception in the UK. Non-domestic satellite services were those that did not use UK frequencies and were intended for general reception in the UK and elsewhere. The Court's judgment found that the distinction between those two regimes was discriminatory and that the UK was favouring its own viewers by imposing a more rigorous content regime on domestic satellite service licensees.
That had not been the intention or the effect of the UK's distinction between the two regimes. The large majority of the more than 150 licensed non-domestic satellite services use non-UK frequencies, but broadcast wholly or mainly to UK audiences. The different domestic satellite regime merely applies to UK satellite frequencies the kind of procedure applied for commercial UK terrestrial broadcasting frequencies—bids for the use of the spectrum and controls on content reflecting the scarcity of the resource.
Nevertheless, under the revised directive the UK clearly must license all satellite broadcasters established in the UK on the same basis. The regulations accordingly remove the distinction between the two types of satellite 75 service. The consequence of the change is to abolish the domestic satellite service regime and to rename the non-domestic satellite service. Licences issued under the new unified regime will be known as satellite television service licences.
Again, the effect of the change on existing licensees is minimal. There are at present no domestic satellite service licence holders—and there never have been. The new integrated regime, removing some of the restrictions applying to the use of UK frequencies, may, however, encourage more services to emerge. In particular, the duration of domestic satellite service licences, which requires broadcasters to plan and broadcast for 15 years, as opposed to 10 years for non-domestic services, may have acted as a deterrent to broadcasters from using UK allocated frequencies.
The Government are fully committed to complying with their international obligations. The regulations will enable the United Kingdom to do so in respect of the European Union broadcasting directive. They will not, however, have any material effect on the thriving UK satellite broadcasting industry. I commend the regulations to the House.

§ Mr. John Whittingdale (Maldon and Chelmsford, East)
This is the first occasion on which I have addressed the House from the Dispatch Box. I am happy to be able to contribute to the general harmony of this place by agreeing with the Secretary of State and saying that we support the regulations. Indeed, I understand that they were drafted under the last Conservative Government.
I convey the apologies of my right hon. Friend the Member for Horsham (Mr. Maude), who is in Hong Kong this evening, witnessing the handover. I have no doubt that he would otherwise have been replying to this short debate.
I do not believe that there is any need to detain the House on the regulations. The Secretary of State correctly explained that the first provision implements the European Court of Justice judgment, changing the basis on which the United Kingdom takes jurisdiction over a broadcaster. It is clearly sensible that that should be agreed common practice between member states. The European system—that jurisdiction is based on the country in which the broadcaster is established rather than the country from which the broadcaster happens to uplink—seems more appropriate. As I understand it, the change will have no effect on UK broadcasters and those broadcasting in the English language into the UK, merely removing an anomaly which could have been abused.
It is also worth noting that there have been suggestions that some other member states might have tried to challenge the UK's regulatory regime in an attempt to avoid having to accept broadcasts on the basis of an ITC licence alone. The change will remove that possibility so that, in future, ITC licences will be recognised without challenge across Europe.
On the second provision, the change is clearly beneficial. It will remove the distinction between domestic and non-domestic satellite services. Such a distinction is purely historic and has no relevance today. As a veteran of the Committee sittings on the 76 Broadcasting Bill, I can say from experience that the distinction was a source of considerable confusion because, as the Secretary of State has explained, no domestic satellite services exist and all satellite broadcasts are defined as non-domestic. On occasion, that has given the impression that those companies responsible for satellite broadcasts into the United Kingdom are foreign and that they may not be subject to regulation.
Neither of those impressions is true. The best-known broadcaster, BSkyB, is a British company, which invests billions of pounds in this country and deserves proper recognition as such. United Kingdom satellite services are also rightly subject to licensing by the ITC and to scrutiny by the Broadcasting Standards Council. The new description of satellite television services is therefore both more accurate and more sensible.
The Secretary of State has explained in detail precisely the way in which the regulations will operate. We have no problems with anything that he has said and, on that basis, we are happy to support the motion.

§ Mr. Phil Willis (Harrogate and Knaresborough)
In the spirit of harmony, I, too, can say that we on the Liberal Democrat Benches are very supportive of what is proposed. As a new Member, I must confess that the statement was one of the most confusing ever delivered, but I trust that, on reading it tomorrow, I will find it much clearer.
The Secretary of State will be aware of the hysterical press headlines that greeted the European Court of Justice ruling last year that satellite broadcasters should be licensed in the country in which they have their headquarters. One may make light of that, but there was a genuine fear that that interpretation would mean that broadcasting from countries with very liberal—I use that word in its true sense—laws, especially on child and other types of pornography, was allowed into the United Kingdom.
I have only two questions for the Secretary of State. First, will he continue to be able to proscribe a foreign satellite service that, in the opinion of the Independent Television Commission, would offend good taste and decency, as has always happened in the past? Could his answer go on record? Secondly, will he ensure that the provisions of the television without frontiers directive, which protects minors, will be rigorously applied?

§ Mr. Chris Smith
With permission, I should first warmly welcome the hon. Member for Maldon and Chelmsford, East (Mr. Whittingdale) to his new post and thank him for his welcome support for the motion. I likewise thank the hon. Member for Harrogate and Knaresborough (Mr. Willis), the Liberal Democrat spokesman, for his support. I hasten to give him assurances on both the questions that he asked. The answer to both is yes.
As the hon. Member for Maldon and Chelmsford, East said, it is of course sensible to do two things: first, there should be agreed common practice across Europe in relation to the definitions of where regulation should take place; and, secondly, the impression that domestic services are somehow foreign should be assisted by a much more accurate description—as well as unifying the two disparate definitions that we have at the moment.
77 It may have seemed from my speech that the statement was one of the most confusing that the hon. Member for Harrogate and Knaresborough has ever heard, but I think that when he reads it in Hansard tomorrow morning he will find that it is a model of lucid clarity. With that in mind, I commend the very sensible and worthy regulations to the House.