Corporate Clips

THE COMMUNICATIONS ACT 2003: A SUMMARY

Introduction

The Communications Act, which received Royal Assent on 17 July 2003 , followed more than four years of consultation, white papers and a bill [1], bringing a number of sweeping changes to the regulatory regimes governing the communications and media sectors.

Its aim has been to cut down on regulation, address the issue of regulatory convergence and to facilitate a dynamic and competitive market, while retaining sufficient safeguards to secure a plurality of voice and a diversity of services across our media.

The following is an outline of the most significant provisions of the Act.

Office for Communications (OFCOM) - General Powers and Duties

On 29 December 2003 , OFCOM, a unified regulator for media, telecommunications and radio communications replaced the existing five regulators (Office of Telecommunications (OFTEL), Radio Authority, Independent Television Commission, Broadcasting Standards Commission and the Radiocommunications Agency).

OFCOM's objectives are wide ranging and these are reflected in its "general duties" set out in Part 1 of the Act. These duties include protecting the interests of consumers, where appropriate by promoting competition and securing the optimal use of the electro-magnetic spectrum [2]. In exercising its duties, OFCOM needs to consider such things as the desirability of promoting competition and the vulnerability of children, and others who may need protection, for example the elderly and those with disabilities.

OFCOM is under a duty to use a "light touch" approach in regulating the communications and media industry and to publish and meet "promptness standards" for carrying out its functions . However, the range of powers and duties raise questions as to the likely "lightness" of the approach.

OFCOM also exercises concurrent Competition Act 1998 and Enterprise Act 2002 powers with the Office of Fair Trading in respect of the communications sector and has the powers to impose financial penalties on television broadcasters who contravene their licences .

These duties reflect the obligations on OFCOM laid down by the four EC Directives of 7 March 2002: Directive 2002/19/EC (Access Directive); Directive 2002/20/EC (Authorisation Directive); Directive 2002/21/EC (Framework Directive); and Directive 2002/22/ (Universal Service Directive) published in the Official Journal. See "Useful URLs" for link.

Liberalisation of Media Ownership

The Act provides a major overhaul and simplification of the complex rules on media ownership but leaves a few basic limits to market forces.

Cross-media ownership regulation has been reduced to three core rules. The first two rules limit the joint ownership of a substantial share (> 20%) of both the newspaper market and Channel 3 at both national and regional level. The third rule upholds the plurality of ownership in local media to ensure that ownership will be restricted across local radio, Channel 3 and local/regional newspapers; a points system for local radio ensures at least three separate owners of local/regional media in markets with three of more radio stations.

Examples of the restrictions that have been lifted by the Act include: non-EEA ownership of broadcasting licences; the formation of a single ITV company (subject to competition and merger regulations); joint ownership of national TV and radio licences; joint ownership of national TV and radio licences; joint ownership of a national Channel 3 licence and the Channel 5 licence; newspaper proprietors buying into national and local radio markets and Channel 5; and ownership of more than 20% of the national newspaper market and Channel 5.

OFCOM has a duty to "future proof" the media ownership rules by reviewing them once every 3 years.

In relation to certain media mergers (including cross-media and newspaper only mergers), the Secretary of State for Trade and Industry is able to intervene where it is believed media public interest considerations are relevant to the merger. These media public interest considerations are set out in the Act and include such things as the availability of a wide range of high quality broadcasting [3].

Broadcasting

The Act sets out a new three-tier structure for regulation of broadcasting content:

Tier 1 - basic requirements to cover all broadcasters (standards of programme content, advertising standards and impartiality);

Tiers 2 and 3 apply to the public service broadcasters (PSBs), namely the BBC , S4C, Channels 3, 4 and 5 and public teletext and defines their "individual public service remit":

Tier 2 - specific requirements that can be measured objectively, eg quotas on independent/original production and regional programming and production, and educational programming.

Tier 3 - system of self-regulation eg an obligation to produce an annual statement of programme policy and an annual report of performance.

OFCOM has a general duty to review PSB standards and regulate all broadcasters including the BBC . However, regulation of the BBC will principally be through amendments to the BBC Agreement and the BBC Governors will continue in their role.

OFCOM also regulates content standards of broadcast media, including advertising. Notably, there is no attempt to make internet service providers subject to any of the tiers.

Networks and Services

The Act introduces recent changes in European Law relating to electronic communications . The effect is a new regime for electronic communications networks, services and associated facilities, a key feature of which is the abolition of licensing in favour of "general authorisation" from OFCOM (which scrapped around 400 licences). Rather than applying for licences, new providers are generally able to enter the market subject to notification to OFCOM. It has power to fix and define charges paid by communications providers (subject to restrictions imposed by European Law) and to set conditions on providers which are binding and may be applied either generally [4] to a particular type of provider, or in limited cases, specifically to individual providers (for instance if they are designated as having significant market power [5]). Regulated companies have rights of appeal against OFCOM's decisions.

The Act also amends the Telecommunications Code (now the Electronic Communications Code) providing a simplified procedure for communications providers who wish to install and maintain apparatus in, over or under land.

OFCOM's duties under the Act include the requirement to contribute to the development of the internal market and to promote the interests of EU citizens.

Spectrum

The system of wireless telegraphy licensing has largely been retained with certain changes to streamline processes and remove restrictions. Perhaps most importantly, OFCOM is given the power to adopt regulations allowing spectrum trading and is in the process of doing so. The Act also sets out provisions for Recognised Spectrum Access (RSA) to act as a mechanism for providing formal recognition for spectrum planning purposes on services that are not currently subject to licensing, eg satellite downlinks.

Conclusion

The Act has replaced some relatively old and outdated legislation that failed to take account of convergence. Despite the length and complexity of the Act, it does offer industry the opportunity to work with OFCOM in order to minimise regulatory burdens and maximise commercial opportunities. Whether this happens in practice remains to be seen.

Charles Claisse

[1]	See Shortlines - Communications Bill.
[2]	These duties reflect the obligations on OFCOM laid down by the four EC Directives of 7 March 2002: Directive 2002/19/EC (Access Directive); Directive 2002/20/EC (Authorisation Directive); Directive 2002/21/EC (Framework Directive); and Directive 2002/22/ (Universal Service Directive) published in the Official Journal. See "Useful URLs" for link.
[3]	For further information see http://www.ofcom.org.uk/media_office/latest_news/nr_20040105
[4]	These general conditions can be found at http://www.ofcom.org.uk/static/archive/oftel/publications/eu_directives /2003/cond_final0703.pdf
[5]	By way of example, BT has been found to have SMP in certain markets

Useful URLs:-

The Communications Act 2003 http://www.hmso.gov.uk/acts/acts2003/20030021.htm
OFCOM's Website http://www.ofcom.org.uk/
Access, Authorisation, Framework and Universal Service EC Directives http://europa.eu.int