Digital Economy Bill [HL]
Lord Mandelson (Lord President of the Council, Privy Council Office, Secretary of State, Department for Business, Innovation and Skills; Labour)
My Lords, when we talk about the digital economy, we are talking about every business that runs a website or transfers data digitally; every firm that sells goods online or whose creative or intellectual property is represented by digital content; and every business that enables these business models to exist.
The Digital Britain White Paper set out our plans to upgrade the UK's legal and physical digital landscape. Digital Britain includes plans, which are already being implemented, to ensure the availability of broadband to practically every home and business in the UK.
The Bill is an important part of the wider Digital Britain agenda. It is a broad legislative agenda that stretches from new rules that for the first time make it an offence to sell 12-rated video games to children under 12, to a strong new commitment to public service news. I do not aim to be comprehensive or to touch on every aspect of the Bill today. I will focus on three key things: where the Bill takes us in modernising our digital infrastructure, in particular charging Ofcom to create new capacity for radio and mobile telephony and internet services; the measures that we propose here to update our copyright regime for a world in which we use digital content in radically new ways; and, finally, how we will protect and strengthen public service content both nationally and locally.
I stress that the Bill and the wider Digital Britain agenda are about adapting our infrastructure, our copyright laws, our support for public service media content and the regulator that oversees all these things to quite revolutionary technological change. At the heart of what we are discussing today are the British creative and communications industries, which produce £125 billion a year and employ just fewer than 2 million people. Vital as they are, the Bill is not just about the communications and the creative industries; it is about the wider legal frameworks and infrastructure of an entire knowledge economy. It is therefore about future readiness in the economy, competitiveness and growth.
A digital economy, just like any other economy, is built on infrastructure. We think of infrastructure as tying two places together across distance, but the digital economy collapses distance into nothing. Its infrastructure is more about spectrum, speed and capacity than geography, but, just like any infrastructure, it has to be in place for innovation and growth to happen. For that reason, the Bill creates a new obligation on Ofcom to report every two years on the state of Britain's communications infrastructure. It also requires that Ofcom adapts its principal focus on promoting competition and the interests of citizens to the need to promote investment in infrastructure in the UK.
The short-term goal of lowering prices for consumers has to be balanced with the necessary long-term goal of constant investment in the network itself. The Bill makes changes that will support the recommendations of the independent spectrum broker that we will implement to ensure that we have the mobile network capacity that we need. This will include arrangements for applying new pricing arrangements to already auctioned spectrum to make sure that it is used as efficiently as possible. We have also set out our vision for the future of digital radio, which will see the country shift to digital, when transmission coverage and audience numbers are wide enough, by the end of 2015.
The Bill also represents a major evolution in our copyright system in Britain. That shift is a reflection of the unique challenge that digital content poses to industries whose survival depends on protecting content and rewarding creativity. I recognise that this House is probably the one place in Britain where peer-to-peer file-sharing is associated more with passing notes in the Lords' tea room than with piracy, but, joking aside, this is a major problem for Britain's creative industries. Our copyright regime is 300 years old this year, which means that our copyright infringement problem is also 300 years old. But the dimensions of the problem have been exponentially changed by digital technology. The ease with which data can be transferred and shared is the most powerful transformative force in the digital economy. For creative businesses, it is also its Achilles heel.
An effective copyright strategy for the digital economy has to do a number of things. It has to make a compelling case, an educative one, to an internet-literate generation that protecting the creativity it enjoys means rewardingcreativity, and that means protecting copyright. But it also means recognising that copyright infringement is the market's way of telling us that we need to develop new business models that make digital content legally available at reasonable prices. This is a market challenge for content providers who need to reconnect with their customers.
But this does not replace the need for government and for the law to protect the rights of content holders, so we are creating two new obligations on internet service providers: first, to send letters to their subscribers linked with an alleged online copyright infringement; and secondly, to record the number of these notifications with which each subscriber is associated, and to provide anonymised lists to copyright owners on request. This allows copyright owners to apply for a court order to get access to the names and addresses of serious infringers and target legal action. If, following a period of assessment, such warnings are not deterrent enough, we are also proposing a reserve power for the Secretary of State by secondary legislation to direct ISPs to impose technical measures and for Ofcom to consult on a code to regulate this obligation. The measures could include temporary account suspension and would be targeted only against the most serious infringers. These tougher technical measures will be exceptional and a last resort. Our central goal is for users to reconnect to a legitimate market for this content, not disconnect from it. Infringers would have clear and ample warning of the risks they appear to be taking and will have been advised clearly on how to access material legally. There would be a clear and independent route of appeal, including to a first tier tribunal.
I realise that people expect these measures to be proportionate-and they are. ISPs already have and use the power to disconnect in appropriate circumstances. Critics have suggested that this policy focuses on coercion, but that is quite wrong. We are clear that there is a primary role for education about the value of copyright, and a very clear obligation on the creative industries to get their act together and build business models that provide access to content at a cost that makes the risk of breaking the law an unattractive option. But I do not accept that the difficulty of defending creative content from piracy in a digital economy should become an argument for not even trying. There will be no creative economy if we cannot preserve the value of creativity by protecting what it produces.
To reflect the ever-changing nature of this market, the Bill includes a power to amend the Copyright, Designs and Patents Act 1988 in future, to reflect fast-changing technology. Such a power should not and will not be used lightly. That is why any use of the power would require full public consultation followed by approval of both Houses of Parliament, and it is why we have provided explicitly that the power may not be used to create or modify criminal offences.
Finally, I want to point to the strong defence in this Bill of the principle and practice of support for public service content in broadcasting, both nationally and locally. The provision of high quality UK content-and news in particular-is the clear preference of the public. It reflects the fact-not universally acknowledged, I grant you-that a purely free market for media simply will not produce or preserve the plurality, diversity and impartiality of local news content that people demand. Keeping this function of our media strong means recognising that market pressures and structural changes are putting pressure on commercially provided news in the nations, regionally and locally. Some element of public support is needed if this provision is to be preserved.
The Bill sets out a revised remit for Channel 4. This refreshed remit underlines the Government's clear and continuing commitment to Channel 4 and to public service broadcasting more generally. But it also makes clear what the Government expect from public service broadcasters-that they help advance the development of a well informed, well educated and socially cohesive society. As an additional way of doing this, the Bill also creates the power in Ofcom to support independently funded news consortia to provide regional and local news services. The Government have announced their preference to maintain in the next broadcast licence fee settlement the existing top-up element and to use it to fund the new consortia. However, the multi-year funding settlement with the BBC is crucial to the BBC's independence, so we do not intend to make a decision on this until nearer the 2013 rollout date.
There are serious implications in this work for Ofcom. The Bill creates an adapted remit for Ofcom in three important ways. It requires Ofcom to balance its primary focus on consumers and competition with a new additional focus on ensuring investment in the long-term strength of Britain's communication infrastructure. It also requires Ofcom to take a new forward role in ensuring that the British media market produces the right mix of impartial national and local news. This expanded role is critical and must be well defined and defended. It requires Ofcom to take a new role in shaping our response to online copyright infringement.
There are some in the commercial sector who believe that the future of British media would be served by cutting back the role of the media regulator. They take this view because they want to commandeer more space and income for themselves and because they want to maintain their iron grip on pay-tv-a market in which many viewers feel they are paying more than they should for their movies and their sport. They also want to erode the commitment to impartiality-in other words, to fill British airwaves with more Fox-style news. They believe that profit alone should drive the gathering and circulation of news rather than allowing a role for what they call "state-sponsored journalism". The Government and this Bill reject this world view, and I hope that the whole House, including the Conservatives, will make it clear today that they think likewise, and that notably they will support Ofcom's efforts to ensure that consumers are getting a fair deal in the pay-tv market.
Ofcom represents an important means of securing media standards, strong public service content and investment in the future infrastructure of the digital economy. In my view, Ofcom should be strengthened, not emasculated as some Conservative spokesmen have suggested.
Although this Bill is broad in the scope of issues on which it touches, every measure has a simple but powerful objective: to equip this country to get the very best out of the digital economy. I look forward to hearing the views of noble Lords today and to engaging with them in Committee. I beg to move.
Lord Fowler (Conservative)
My Lords, I am responding first from this side but I should perhaps make it clear that the views I set out are mine alone and, probably to its relief-do not bind my party in any way. This is also not a bid to move from here to the Front Bench. I know this will come as an enormous disappointment to your Lordships, but I have already made more political comebacks than the noble Lord, Lord Mandelson.
Lord Fowler (Conservative)
That is about right; on reflection, he has made rather more.
In any event, I was rather put in my place at the State Opening. The cameras roamed over those of us waiting and, I am told, for a moment or two dwelt on me, which noble Lords might think was rather good-and it might have been had the BBC commentator not chosen to add the remark:
"Ah, there's a face from the past".
So my first complaint about the Bill is that it does nothing to curb the excessive salaries paid to BBC commentators.
In introducing the Bill, the Secretary of State wisely left to one side some of the rhetoric he uses outside this House, particularly the charge that this party has entered into some kind of pact with Mr Murdoch and News International. Given that his old boss travelled half way round the world to gain Murdoch's support, that seems a rather fanciful criticism. Yet it is useful to recall this because in the Bill there are a number of commercial interests at stake. The House will need to be precise in defining what is the public interest. That is the acid test.
This is a major Bill, dealing with a wide variety of issues from how you strengthen the communications infrastructure, on which the noble Lord dwelt, to digital security and public service broadcasting. In principle, I agree with much of it. However, the Bill is also behind time. In their Creative Britain paper, the Government committed to having legislation in place on illegal file-sharing by April 2009. That was not an aspiration; it was, in their words, a commitment. Self-evidently, the Government have fallen behind on that timetable. An election looms and the position is made no easier by the lack of detail in many of the clauses of the Bill. We should certainly make all speed with it, but not at the price of letting through bad legislation. That would not be carrying out our duty.
I will deal, briefly, with three aspects of this Bill. First, and most contentious, is illegal file-sharing. The United Kingdom has a real interest in seeing the creative industries develop and prosper. Films, music, broadcasting, publishing and video games already make an enormous contribution to the economy. The exact scale of that contribution depends on definition, but the Government estimate that the sector contributes some £60 billion per year to the British economy and that the creative sector has grown at twice the rate of the economy generally. To put it in more manageable terms, the music industry estimates that they account for more than 100,000 jobs. The film industry employs an estimated 35,000 to 40,000. Broadcasting employs another 50,000. Those jobs are not just actors, writers and directors; they are the scene-makers, the plasterers who work at Pinewood, the skilled animators who have produced everything from Wallace and Gromit to Fantastic Mr Fox and the skilled engineers who work in the post-production studios. It is not just artistic talent that is employed in these industries. There is a wide range of technical skills and skills at the highest level. In other words, these are serious industries making a serious contribution to the United Kingdom economy.
These industries also depend on innovation, new ideas and the willingness to back those new ideas with investment and with risk capital. Most films that are made never get shown in the cinema. Many films make a loss for the investors who have backed them. But the incentive always is that those who have created and financed the content should have the opportunity of reward for their initiative. They back their judgment. "Slumdog Millionaire" is a prime example of that. That is why illegal file-sharing piracy is such a threat to the creative industries. It means that legitimate business aims are undermined. If you have invested heavily in a film only to find that this is being distributed free on the internet, clearly your whole business plan is put at risk.
The Select Committee on Communications, which I chair, has been taking evidence from the film industry. One piece of evidence which sticks in my mind was from James Clayton, the chief executive of Ingenious Investments. He said:
"One of the films we co-financed recently was 'Wolverine', a spin-off of the 'X Men' series, released at the start of May. Shortly before release in April, a partially completed version of the film found its way onto the web. It was downloaded four million times and Fox, who are our partners on the film, estimate that it probably knocked $20 million to $30 million off the box office".
That is the kind of challenge that such producers face.
The internet has achieved many good things, but it is equally clear that it has made that kind of abuse possible. It is clear that public interest heavily argues for action to be taken to prevent such abuse taking place. I understand that there are other views. We have all been inundated with advice on this matter. If you go to a recent BBC blog, you will see that three pages of what was intended as an objective discussion of the position was followed by 23 pages of comment, mostly from people who were passionately opposed to action being taken. The argument is that the Bill is illiberal, that file-sharers are those who spend most in the legitimate commercial market and that the industries would help themselves by making more material available legally and legitimately, which is an important argument to which I shall come in a moment.
Against that, as far as the music industry is concerned, the British Recorded Music Industry says,
"that online copyright infringement seriously threatens the sector ... record companies stand to forgo something like £200m in lost sales due to infringement in 2009".
Many of the figures who gave evidence to the Select Committee on Communications also warned very much of the dangers. Tim Bevan, the head of Working Title Films and the chairman of the UK Film Council, made very much the same point. David Kosse, the president of Universal Pictures International, said:
"We would perceive piracy as the number one threat to the industry for everyone-studios, independents, everyone around the world".
It seems to me that that is the case, and that it is not just films. It can be books and video games, and Premier League football, which is free-to-air in China and then transmitted here. Too often, what we are talking about is theft and a kind of theft which can have a devastating effect on industries where Britain is a leader and where the challenge is to develop more. We are also talking about organisations transmitting illegally and getting advertising revenue as their reward. We would be mad not to take some action in this respect.
Obviously, the crucial question is how we do that. I think that the step-by-step approach set out in the Bill is correct. We will have to examine the implications in Committee and seek to obtain more detail at times, as the British Library has argued. My support is also subject to two qualifications. The industries must take action of their own to make their products accessible, legitimately and legally. What the music industry has now done, perhaps belatedly, is encouraging. Today there are now 35 legal music services available in the UK.
My other qualification has to do with camcorder crime. Here, there is no sensible argument of justification. It simply means a small team going to one of the first performances of a film, recording it and then putting it on the net. Specific legislation is enacted in a number of other European countries but here the Government's position is that we must wait to see whether the Fraud Act covers it. A test case is imminent, we are told. We will have to see the outcome, but if it is not covered then I think that there will be a very strong case for specific legislation.
The second area, to which I turn briefly, is public service broadcasting. I declare an interest as a lifetime member of the NUJ and a past chairman of two regional newspaper companies. No one should be in any doubt about the crisis we face in regional news. ITV has been quite frank. It cannot afford to produce regional news programmes-in spite of the big audiences it attracts-and it intends to withdraw them. As it stands at the moment, we face the prospect of a return to the 1950s, with the BBC having a monopoly of regional television news. I say return to the 1950s but it is actually worse than that. At that time there was a thriving regional press. There were strong morning regional papers as well as big circulation evening papers. There has been a steady decline since then and the position has markedly worsened. Competition from the internet for advertising, particularly houses and jobs, has hit the regional press, as too has the financial crisis of the past few years. The result is that the whole industry is fighting for its future.
Faced with that position, the Communications Select Committee proposed a reduction in controls on newspapers taking a stake in regional television and also contestable funding in which a news consortium could bid for public funding. Ofcom shared its view. I would not have financed digital switch-over in the way it has been financed. I would have preferred it to be, and I think it would more properly have been, social security spending, but that advice was ignored. Licence fee money has been used. There is an estimated £130 million a year underspend. That is one option for the public funds that would be required without going back to the taxpayer, but it is not the only one. It would be possible, for example, in the longer term to use the money the Government are going to get from the sale of analogue spectrum-there will be very real value to them in that in spite of switch-over.
We will have to look very carefully at this in Committee, but on the principle of public support, there is nothing new. Broadcasters such as ITV have received an implied subsidy from the analogue system from which we are moving. Competition was limited; the financial benefit was undoubted. As for the BBC, which opposed the use of licence fee money in this way, in my view the public interest requires a more generous response from it. I do not want to see a BBC regional monopoly.
My third area is the proposals affecting Channel 4 and ITV. I welcome the abandonment of the Government's plan for putting Channel 4 and BBC Worldwide together in a new company. I never thought that made sense and it was a piece of institutional engineering that was not going to work. I hope that instead there can be a more meaningful partnership between the two companies. I also welcome the fact that Channel 4 has been given an explicit duty concerning film. I welcome the liberalisation of controls on ITV. I make one point about this. The significant feature of the changes proposed for ITV and Channel 4, covering Clauses 21 to 28 of the Bill, is that they have been proposed only a few years after the Communications Act 2003. The Act is being amended to bring it up to date.
Changes are much more difficult to make with the BBC. The BBC is controlled by royal charter. It sounds very grand, but actually it means that a deal is done between the Government and the chairman of the BBC. There is no vote in Parliament and the charter, as the Minister said, lasts for 10 years. The implication is basically this. Most people now agree that the corporate governance arrangements for the BBC are a mess. There is no chairman and there is a fatally divided structure between the main organisations in the BBC Trust. It is not only I and my committee who have said that; Mr Bradshaw, the Secretary of State, makes entirely the same point. However, because it has a royal charter, we cannot do what we can do with ITV and Channel 4.
Technological change is taking place in a time of severe economic turbulence. Broadcasters are having to adapt rapidly and policy makers are having to be flexible. Against that background, an agreement setting down BBC policy 10 years in advance seems to be wildly out of date.
In general, I welcome the Bill. My criticism is that too much is left to regulation; my concern is that some fundamental issues about the media and communications, especially with regard to the BBC, have not been tackled; and my warning would be that if we want efficient and modern industries in the new digital age, after the election these issues will need to be tackled by the incoming Government with new legislation.
Lord Razzall (Liberal Democrat)
My Lords, in the debate over the past 10 days on the gracious Speech, a number of criticisms were made of the Government's proposals-particularly that they were either blatant electioneering or had no chance of becoming law. However, this Bill is the exception to those criticisms, as from all sides of the House we welcome it and hope that in its appropriately amended form, after it has been subjected to the scrutiny that your Lordships always give, it will get passed through another place and become law before the election. That is the view of my party and, from listening to the remarks of the noble Lord, Lord Fowler, also of the Conservative Opposition.
The Minister was right in using this opportunity to put on record the importance of the creative industries. Statistics are always difficult in this field but, if we take the film industry, radio and television, the music industry, book publishing, computer software and video games, let alone the explosive growth in the mechanisms to deliver the software to people's homes, the creative industry probably represents not far off 10 per cent of British GDP. So when we debate these issues, we are talking not of minority industries but about industries that already represent a significant part of British industry and are likely to be the fastest growing element of British GDP, as public sector expenditure shrinks.
We on these Benches give a gentle welcome to this Bill, which has had a long gestation period. It is very nice to see the noble Lord, Lord Carter of Barnes, in his place for this debate. During his period as-I shall not use the expression of my noble friend Lord McNally-a GOAT, we had several debates in your Lordships' House on the paper that has ultimately resulted in the Bill. The noble Lord, Lord Fowler, made a valid point in asking why it has taken so long to get to this position. He had some implicit and explicit criticism of the Government, which I share. We could apply some element of blame to the creative industries themselves. Although they have pressed for a considerable length of time for a lot of these provisions to be enacted, when they could have reached agreement and made it easier for the Government they have taken some time to do so. Even now, we may find it necessary for Ofcom to impose a code on the online infringement of copyright, because the industry will not be able to come up with its own code to be franked by Ofcom as the Bill requires.
It is particularly unfortunate that the code on the online infringement of copyright to which the Minister referred has not appeared in any form in draft that we could consider when looking at the Bill. I know that colleagues on all sides of the House have significant reservations on the human rights issues in relation to potential infringement. It would be easier for those concerns to be dealt with if we had a draft code to deal with the mechanisms under which penalties would be applied to individuals. We are clearly not going to have that code in draft, so we will have to do the best we can as the Bill proceeds.
I shall deal primarily with the second part of the Bill on the online infringement of copyright. Other issues will be taken up by my noble friends Lady Bonham-Carter of Yarnbury and Lord Clement-Jones. However, we will support the first part of the Bill, under which obligations are imposed on Ofcom to promote appropriate levels of investment in electronic communication networks and also to promote appropriate levels of investment in public service media content. We believe it is the right thing to do.
When we get to Committee, however, we would like to revisit the role of the National Audit Office in the scrutiny of public service content providers for the purposes, as the Bill says, of ensuring efficiency. Those of us with long memories will remember that my noble friend Lord Sharman, right at the beginning of the debate on the BBC's corporate governance, raised the involvement of the National Audit Office as an auditor of the BBC. His proposals were resisted. I sometimes wonder whether the resistance in involving the National Audit Office really goes to the desire of the BBC particularly to prevent the public disclosure of the talent salaries, which is a matter of significant public interest, almost on the same level as bankers' salaries, but we shall see. We will return to that when the Bill comes to Committee.
The major issue, and in our view likely to be one of controversy, is the online infringement of copyright. It is clearly a major problem. Many people suggest that they know the answer to the numbers and it is obviously very difficult to say how much online copyright infringement actually goes on in the UK, but the general suggestion is that about 6.5 million people-if you can have "about" 6.5 million people-in the United Kingdom share copyrighted files regularly. That is about 10 per cent of the UK population. It is generally thought that 95 per cent of music downloads in the UK are illegal, and it is suggested that up to 25 per cent of the world's online television piracy takes place in the United Kingdom. In 2007, an estimated 78 million illegal downloads and streams of films took place in the UK. We may dispute the statistics, although I understand that Mr Bradshaw does not, and we may all take them with a pinch of salt. Nevertheless, I think there will be common ground that this is a major issue. In the impact assessment on the Bill, it is suggested that if a reduction of 55 per cent in illegal downloading took place as a result of the measures to be introduced, there would be an annual revenue increase to the creative industries of about £200 million per annum, so this would be a very significant step.
Which business sectors are affected by these proposals to ban or restrict illegal file-sharing? First, there are obviously the internet service providers and the mobile network operators. Six of the internet service providers represent over 90 per cent of the market, but the mobile network operators are beginning to become more significant. Secondly, we have the creative content industries where there are rights holders-primarily in films, TV, music, video games and software. Then we have some element of the book publishing industry; the introduction of structures such as Kindle obviously gives the opportunity for more significant illegal downloading.
In broad terms, I share the view of the noble Lord, Lord Fowler, in that we support the provisions of this Bill. As always, however, the devil will lie in the detail and from these Benches we shall be applying three principles in looking at these provisions. First, we accept the point that the noble Lord, Lord Fowler, made; to use copyrighted material without the appropriate payment is actually theft, and we have no sympathy for the suggestion coming from certain quarters that all information on the internet should be free, irrespective of the copyright position. Although many 18 year-olds-or even 17 year-olds-would take that position, we do not think that that is the correct position to take.
That leads me onto the next test. Again, I think that the noble Lord, Lord Fowler, mentioned this-it might have been the Minister-but we think that education in this area is very important. There is a whole universe of people out there who genuinely believe that everything on the internet is free. They do not realise that they are in breach of copyright when they download music or a film, so the industry and the Government need to work together to ensure that there is proper education on that. The third and most fundamental point is that penalties must be subject to the principles of natural justice, so that no unfair measures can be taken against an individual and, more particularly, that each individual must, under the process, be seen to be innocent until proved guilty.
Several major points come out of this section of the Bill where I can say, straightaway, that we are unhappy. First, there is Clause 6, which would amend the Communications Act 2003 and would put in a new subsection (5)(b) of its proposed new clause which provides for retrospective penalties to be applied to people or organisations who have been seen to have infringed. We think that that retrospective element is inappropriate for this Bill and it ought to be deleted.
The second issue is that of costs; who is going to pay for these exceptionally expensive measures? The rights holders say that it ought to be the ISPs, and the ISPs say that it ought to be the rights holders. It is not surprising that there is a significant argument about this, because the costs of enforcing and putting into place the measures that this Bill contemplates probably run to somewhere between £50 million and £100 million. We are talking about significant sums of money to implement this.
I am glad that the noble Lord, Lord Carter of Barnes, is in his place, because in his last report he said that the issue of costs would be dealt with in the Bill. Now, I know that he has left Government since he made that statement, but somebody ought to indicate in responding why that is not the case, because how those costs are to be apportioned is clearly a major issue between the ISPs and the rights holders. Unless the Government give some indication of what they think that position should be, my guess is that Ofcom will always have to come up with a solution, rather than a negotiated agreement between the ISPs and the rights holders, which would clearly be preferable.
Thirdly, we welcome the development of the argument that has resulted in the creation of the First-tier Tribunal, but we still see serious issues, both of proof and of costs to the ISPs. We are rather attracted to the proposal for an entity in the middle, which has been suggested by both FACT and the Motion Picture Association. I will not bore your Lordships with how that would work, but I think it is something that we would wish to see seriously considered.
I recognise the general principle that we have to find a mechanism to stamp out this practice. However, it is clear from my remarks and those of the noble Lord, Lord Fowler, that this section of the Bill will need major scrutiny. I will add to his point that we feel that Clause 17, which effectively gives the Government power to alter copyright law by statutory instrument, should be rejected. We will not support that. I do not go as far as the Guardian in suggesting that this would be used, if there were a Tory Government, by their new friend Rupert Murdoch in some way to continue his fight against Google. I do not reject it for that reason; I just think that if we are going to alter copyright law it has to be done by primary legislation, rather than by statutory instrument.
Another glaring omission from the Bill is how to deal with format shifting, rather than file-sharing. Format shifting is the process by which, when you have downloaded music or a film to whatever instrument you downloaded it to, you then move it across to another instrument in your control for your private use. Although today that is technically a breach of copyright, nobody ever attempts to enforce it. We take the view that this is an opportunity to put in the Bill that format shifting does not constitute a breach of copyright if done for personal use.
As I indicated earlier, my noble friends Lord Clement-Jones and Lady Bonham-Carter of Yarnbury will deal with other matters in the Bill in this Second Reading debate. Following the remarks of the noble Lord, Lord Fowler, I regret that the opportunity to deal with the corporate governance and management of the BBC has been lost. It is running out there as a serious issue. The Minister is disagreeing with the structure that his Government put in place originally. We have a number of suggestions as to how the governance of the BBC ought to be improved, and the Bill seems to have been the opportunity to deal with that. Having said that, I look forward to the Committee with eager anticipation.
Lord Birt (Crossbench)
My Lords, I declare my current involvement with a number of companies acting in the digital economy-PayPal, Eutelsat and EMI-and I note my past association with the BBC. The noble Lord, Lord Fowler, proudly proclaims his former membership, or perhaps current membership, of a trade union, the NUJ. He inspires me to proclaim my former membership of the long-forgotten ACTT, the Association of Cinema and Television Technicians.
I greatly welcome some of the key measures in the Bill-for example, the proposals to improve our digital communications infrastructure. Britain, let us not forget, lagged seriously behind other leading countries in the first phase of developing broadband services. The primary cause of that was, of course, the failure of the regulator to grip BT. This Bill now offers the prospect of a catch-up-the strategic roll-out of high-speed broadband to an estimated 80 per cent of the population. Reaching the last 20 per cent will, no doubt, become our next preoccupation.
Secondly, the measures in the Bill for countering copyright theft are well considered and proportionate. Let us be clear-as the noble Lord, Lord Fowler, emphasised with considerable force and eloquence-that the arts, music and entertainment sector is a very large part of the British economy, fostering creative expression, wealth creation and employment; that copyright theft has increasingly undermined the sector's conspicuous creative and business success; and that unless that threat is countered effectively, the industry's prospects will diminish.
Let us also be clear that this is not a small problem: a huge proportion of internet traffic-probably around a half-is taken up with the pursuit of copyright theft of various kinds. For instance, on the day that new countermeasures were introduced in Sweden, internet usage simply fell off a cliff. For the avoidance of doubt, let us finally be clear that the Bill does not inaugurate-as some have suggested-a snooper's charter. The ISPs will not be required to spy on their customers. Rather, the carefully graded response set out in the Bill will apply only to an absolutely identifiable account which is used at a precise moment in time, measured to the second, by someone who admits to possessing specific named content and then transmits that content online to a third party in breach of copyright. In respect of music, that content will overwhelmingly be available easily, speedily and for payment from online sources. I accept the view already expressed that the music industry certainly could have done a lot more to facilitate online payment in the past. But it does now.
My only concern about the process outlined in the Bill is that it may discourage criminal prosecution for persistent, flagrant theft. It is theft-as the noble Lord, Lord Razzall, asserted-the moral equivalent of persistent shoplifting of CDs or DVDs at an HMV store. The internet service providers should neither ignore it, nor abet it, nor appear to condone it, which some come dangerously close to seeming to do.
The noble Lord-the Secretary of State of almost all he surveys-has been typically unequivocal and bold in adopting these measures, and he deserves praise for that. So does the noble Lord, Lord Carter of Barnes, for tackling, against the clock and in quick time, under the Digital Britain umbrella, a formidable list of issues, and for resolving some of the most stubborn. He appears to be sporting a tan. I hope that he has enjoyed his well earned rest after the trials of No. 10 and project leadership. However, as we step back at the end of the Digital Britain process, perhaps I may make some broad observations about where we now find ourselves.
The first issue is how we as a nation are to maintain our glorious tradition of public service broadcasting as the digital age brings enormous structural change to the industry, as competition in the provision of public service programming erodes, and as our national investment in high-quality British production declines. That is the way to frame the issue, not just to ask questions about the BBC.
It was right to recognise in the Digital Britain process that the traditional providers of regional and local journalism and information, in print and over the air, are highly challenged. That really should worry us. But many other genres of public service content are also threatened, or soon will be. It was well intentioned, but I think too limiting, to focus primarily only on one genre and to look for a short-term fix, shifting funds from one convenient bucket to another. It was wrong in principle, I think, for the Government to consider intervening in such granular fashion in the provision of journalism. Our genius as a country since the 1920s, almost alone among developed nations, has been to keep government at arm's length from such matters and to address them through enlightened regulation. A job for the next Government will be, I hope, to step back-we heard echoes of this at the beginning of the debate-and to address comprehensively the future of public service broadcasting and the role of the BBC within it. Like the noble Lord, Lord Fowler, I hope that that will not be a monopoly role.
The Bill is not entitled a digital communication Bill, but rather a Digital Economy Bill. So my second observation is that we do not yet have the appropriate machinery of government to deal with the vast and growing challenges of the digital economy. The Bill barely scratches the surface of that. It is as if, 30 years after the invention of the motor car, there were no Ministry of Transport.
The noble Lord, Lord Carter, with his usual precision, clarity and verve, ran what was, in effect, a short-term project. He was not in a position to encompass the whole diverse catalogue of issues that the digital age is throwing up. I give just a few examples. First, online fraud is sophisticated and organised; it is both national and global; it is enormous and it is mushrooming; yet the law enforcement agencies here and in other countries are still not past first base in countering it. Secondly, wicked men and women can entice strangers online to commit dreadful acts of evil on children and others, yet there are still too few virtual bobbies on the digital beat to deny them. Thirdly, malware introduced surreptitiously to your personal computer, like the creature in "Alien", helps create powerful, malign and parasitical networks, yet the many loose networks of criminals operating in this space act with impunity. Fourthly, without a framework of standards, the emergence of cloud computing-vast storage and functionality sited away from the desktop-may place businesses, citizens and consumers at risk. Fifthly, the ability of search engines to monitor your personal online activity and to exploit it commercially will raise increasing privacy concerns. Sixthly and finally, online content may be woefully inaccurate or even defamatory, but it is a world where remedies are hard to find.
There are many other examples, but in sum, the digital economy is, in many respects, a lawless, unpoliced and unregulated place and I do not believe it can remain that way for much longer. This Bill is more than a step in the right direction, but we will sooner rather than later need to make a far bigger leap and to review, in the most fundamental ways, how we are not only to harness digital technology for the common good, but also how we are to deal with the enormous problems that it brings too. That review will require a substantial rethink of how Whitehall can be organised to bring a real and continuing focus on every aspect of the digital economy and what institutional framework will be needed in support.
The Bishop of Manchester (Bishop)
My Lords, I join the general welcome for this Bill as an encouraging sign of the Government's determination not only to deal with the pressing issues of copyright and digital piracy-which, as several noble Lords have said, is a breaking of the commandment: "Thou shalt not steal"-but to enable this country's digital future to be more socially inclusive, safe and beneficial to our economic well-being, our civic flourishing and the building up of our knowledge.
That is embodied in the welcome proposals, such as requiring Ofcom at all times to consider the impact of investment levels in public service content, the updating of Channel 4's remit and supporting its ambitions to continue backing and challenging the BBC in delivering innovative public service programming for a full range of platforms. However, in addition to securing a bright future for strong public service content in a non-linear world through legislation, the Government must also secure the ways and means to get that content to the people and for people to interact with it. Regional and local news coverage, for example, is key-as the noble Lord, Lord Fowler, under whose chairmanship of the Communications Committee I am privileged to sit, has said. That means not being content with a postcode lottery approach for access to high-quality, high-speed broadband, but aiming for and achieving genuinely universal inclusion across the country.
I have some areas of concern about that. First, although the universal service commitment is an honourable ambition and is being helpfully supplemented by the Government's commitment to a home access scheme for low-income families and ongoing investment in the digital inclusion programme, groups are now suggesting that the bar has been set too low in terms of universal connection speed. It would be a shame if the considerable amount of money being diverted from digital switchover surplus towards funding that commitment were to become a futile catch-up game.
Secondly, significant state subsidy for the next generation access project through direct taxation of fixed phone lines needs to strike a fine balance between giving a shot in the arm to ensure that the most remote areas get superfast broadband, while not using public money to subsidise activities that will then distort competition. That said, the target of getting superfast broadband to only 90 per cent of homes in the next eight years seems rather too modest. By that time, if the pace of digital evolution continues, superfast broadband as it is today will certainly not be considered a luxury. It will be almost as basic as a telephone line is now-vital for small businesses, for individuals seeking to engage in the public sphere, or even for getting full use of government services. The Government must make it absolutely clear to the public why society should now collectively fill the digital vacuum from which those living in our remotest areas will undoubtedly suffer if public investment in the cutting-edge of internet access is not forthcoming sooner rather than later. There is a real issue of likely social exclusion here. I hope that the Minister can reassure us about the Government's determination to address that completely.
Turning to the introduction of a statutory age certification for boxed video games, it is a good move to give the Video Standards Council tough powers to police the Pan-European Game Information age rating system. Awareness of how children and other vulnerable groups might be affected by the unregulated excesses of the market must temper our desire to embrace new and creative technologies. With 10 per cent of 11 to 16 year-olds spending more than 10 hours a week playing computer games, according to the Childwise survey this year, and with inconsistency between the classification of such video games and the approach taken to films, tighter controls in this area would be more than welcome. Only credible regulation can begin to give parents and others responsible for bringing up children the confidence to enforce certification and not to succumb to pester pressure.
The switchover to digital radio may produce more problems than expected. Of course there is much to welcome in the creation of platforms for new content to meet the needs of specialist audiences. I think, for example, of Premier Christian Radio's recent acquisition of a national DAB licence. However, there may be much to be concerned about over the plan to cut off national stations and many local services as early as 2015. While the Government have indicated that that will not be finalised until digital services account for 50 per cent of all radio listening and can reach 90 per cent of the population, it is also clear that without an early deadline, sufficient pressure may not build on radio manufacturers and retailers to shift to selling DAB sets only for cars as well as homes. The radio switchover again underlines the risk of creating another two-tier system where significant swathes of the country could lose their favourite national stations from the FM dial, including the BBC stations they pay for through the licence fee. Surely that cannot be right.
What government support will there be for the switchover to digital radio, which is likely to be not only more problematic but, generally, more expensive across the population than the TV switchover has been? Will the Minister accept that overrushing towards analogue switch-off will not allow proper time for the Government, this House and the other place to think through the unintended consequences? Is there anything that the Government can learn from the German Government's experience and their postponements of switchover plans?
An example of unintended consequences comes from community groups and churches that use radio microphones in various ways to enable people to hear and to use space creatively. As part of the overall policy on the digital economy and the sale of the audio spectrum, Ofcom is going to move the channels on which community groups and churches operate their radio mics, rendering the old equipment useless. I am aware that Ofcom is now looking at compensation for that, but are the Government aware that from the point of view of many charities, not just churches, there is a potential problem and a possible case for compensation for equipment that is still serviceable but is no longer useable? I am concerned about unreasonable costs being faced by some voluntary organisations. On voluntary supported broadcasting, do the Government intend to keep some of the analogue spectrum going, for example, for hospital radio?
This country must, of course, embrace the opportunities offered by a digital economy, but the advantages must be shared by the widest possible number of citizens. Some, if not all, of the unintended consequences that could unfairly disadvantage people might be avoided by not being trapped in too rigid a timetable. If that happens, I fear that this country will not benefit from the best rewards that a digital economy offers.
Lord Puttnam (Labour)
My Lords, I have in a sense been given my cue by my friend the right reverend Prelate the Bishop of Manchester. I acknowledge that well known commandment, "Thou mayest not speak if thou art unable to remain for the wind-ups", and merely give notice that my noble friend Lord Bragg and I intend to play as vigorous a role as possible in Committee and at later stages of the Bill. I entirely support the Bill. I was hugely encouraged by my noble friend the Secretary of State's opening speech, which for me hit every button, and by the speech of the noble Lord, Lord Birt, which was really excellent. I apologise that I cannot stay for the rest of the debate, but, as I said, I look forward to playing a very full part in the remaining stages of the Bill.
Lord Lucas (Conservative)
My Lords, I am sure that I am not the only noble Lord in this House to be extremely disappointed to miss out on the speech of the noble Lord, Lord Puttnam. If he has written it out, perhaps he will e-mail it to us so that we catch it anyway.
I, too, support if not the whole speech of the noble Lord, Lord Birt, then certainly the end of it, when he talked about the policing of the net. It is the wild west out there. It can be a very uncomfortable place in which to be an ordinary citizen, and if the streets were like the internet we would want to know what was being done about it. It is high time that the Government caught up with the needs of their citizens and started to do something about this. Relying on poor, under-resourced police officers-in individual forces, for goodness' sake-to deal with something that is a global phenomenon is, frankly, ridiculous, and it is time that the Government gave us some help with this.
I will speak on three subjects: domain name registrars, the spectrum and copyright. I am not entirely convinced by what the Government are setting out to do with domain name registrars, and I want to understand their reasoning better. I understand the problems that are described in the impact statement in particular, but do they really have plans for dealing with these things if they actually own the domain name registrars? Have they really thought through what powers would be necessary to enable them to tackle these things fairly and effectively? If they have, why do they not try giving those powers to the domain name registrars before they get around to thinking that those registrars should be nationalised? I will explore that in some detail.
Secondly, there is a well established need for additional spectrum for the emergency services. The current systems have, on several occasions in the past year or two, been overloaded to the point of breakdown. They are running on old technology that is way behind anything used by noble Lords, let alone by their children, and we are coming up to 2012, when we will need to have a very effective and highly capable system to deal with security at that event. Surely at some time in the future we will want our emergency services to have a really modern and effective system that is equivalent to the iPhone in noble Lords' pockets or even, perhaps in five years' time, to something that is much better than that. That will require spectrum, and I will table an amendment to require Ofcom not to allocate but to set aside spectrum for the emergency services.
The noble Lord, Lord Carter, will doubtless remind me that the system is currently in place for more spectrum; the emergency services have to put forward a business case and can be allocated spectrum. However, the emergency services have just heard today that they are to reduce their budgets by 5 per cent a year for the next five years. In any case, it will take a lot of time to put together some of the things that they are required to think about and to sort out exactly what equipment will be required.
In Council recommendation 10141/09, which I think was signed by the noble Lord, Lord West, the European Union has agreed to a chunk of the spectrum being allocated for the future expansion of the emergency services so that they can be co-ordinated across Europe. The last time we produced a system for the emergency services, which was Tetra, we managed to create the international standard by doing so and we have benefited enormously from it. A large proportion of the industry which provides the equipment for that service is located in the UK and has been extremely successful in exporting it worldwide. If we find ourselves without the spectrum available within the band which has been allocated by the EU, when the demand really starts to build for the new generation of emergency services kit, we will find ourselves not only locked out of the market and all the benefits that would come with it, but also having to design for ourselves unique and expensive kit to cater for the fact that the bit of spectrum left over for the emergency services is somewhere off in another part of the spectrum and does not accord with EU and probable international standards.
This is a substantial decision because we are probably looking at 15 megahertz of spectrum, which is quite a chunk. None the less, I hope very much that I can persuade my Front Bench colleagues that they should support me in my amendment when it comes forward. I would also be delighted if we managed to persuade the Government that they should take an interest in this because it is pretty vital for national security reasons that we have a good allocation of spectrum for the emergency services.
Lastly, I want to speak about copyright. I should declare my interest as my main activity outside this House is in producing copyrighted material and selling it in book form and very substantially on the internet, so the basic protections that copyright law offers are extremely important to me. However, I think that the Bill has to be careful to ensure that it looks after the proper interests of citizens. We have always allowed citizens leeway under copyright law. You can lend books to friends and, as has been said, you can even copy your music and put it on to different kit. It is well known that newspapers are read by many more people than buy them, and certainly I am happy to borrow them when they are left behind on buses. I think it is entirely reasonable that people have got used to a reasonable level of sharing of copyrighted material between friends and within small communities, so that it does not have to be purchased again for every instance that it is used. The figures produced to show the losses incurred by the creative industries through illegal downloads do not represent those losses, but reflect infringement of copyright. It is not at all certain how many songs or films would actually have been purchased if people had had to pay for them. Many of the people who are downloading in this way are not in a position to pay for more than they do already, so one must be careful about the terminology one uses.
We have to be careful too about the industry cloaking itself in the finery of the small, creative individual. We are not talking about the small, creative individual here, but about powerful, monopolistic industries and giving them power over citizens. We must be careful of that. A principal example is that of the pornography industry, which I have seen mentioned in one briefing but has not been spoken of in any of the speeches today. Pornography is widely used on the internet and is one of the most assiduous industries when it comes to pursuing people for supposed non-payment for illegal downloads et cetera. We have to face it that we will be putting a lot of people into the hands of pornographers and their lawyers if we are not careful about the way we draft the Bill.
The recording industry is another major beneficiary of what is being done here. That industry is not exactly known for its kindness to creative people. Many people have created pieces of music and sold them to rapacious recording companies for a couple of hundred quid, only to see those companies go on to make vast sums out of them. The relationship is not equal and, as I have said, we are not dealing here with the benefit to the creative individual, but with the benefit to a powerful and monopolistic industry. We are also being asked to protect football, and presumably the interests of Mr Murdoch when it comes to putting the Times behind a "pay for" wall on the internet. In that context I am delighted to support what the noble Lord, Lord Mandelson, said about the BBC. I am 100 per cent behind his resistance to Mr Murdoch's demands in that regard.
We also need to bear in mind that the problems now facing the industry are, to quite a large extent, of their own creation. The industry has been extremely slow to listen to the demands of its customers, and has had something of an abusive relationship with them, seeking to punish them before thinking of how to serve them better. It has taken a decade for the industry to produce sensible alternatives to illegal file-sharing, and the fact that a generation of people have become used to an illegality comes down to the industry's sluggishness. It is still slow. The football people have complained that there are sites where people can download streaming video of premier division matches. All that the companies offer is an annual contract for several hundred pounds. They do not offer per match deals at a reasonable price. If companies treat their customers in that way, they really should not be surprised that their customers try to get round the system.
The noble Lord, Lord Mandelson, put it quite well when he talked about moving the industry forward and producing better business models. We ought not to be producing legislation that fossilises the creative industry in this unsatisfactory relationship with its customers. We ought to be ensuring that we are producing something that creates a real incentive to move it forward. Little things get complained of, such as the immense sluggishness in rights clearances. I have come across that to some extent. These things have to be dealt with by the industry. Underlying the Bill there should be a real quid pro quo.
I want to see an ISP/customer-friendly system to back us out of our addiction to illegal downloads. The first letter that comes from an ISP to the customers ought to be helpful, friendly and explanatory. It ought to give people the information that they need without making them feel like criminals in the way that the BBC does when it sends out a letter to someone it thinks has not paid the licence fee. It is very important to get the text of that letter right and I hope that we will set in place a system in which the text of the letter is under the control of Ofcom or the Government, and not individual copyright holders or ISPs.
Secondly, it should be compulsory for copyright holders to go through the mechanism we are putting in place. It is not acceptable that we are putting in place a mechanism for them to deal with per-to-peer file-sharing and for them still to go immediately to lawyers and harass people as the pornography industry does already. The briefing that noble Lords will have seen from Which? describes the consequences well. We should take the opportunity of this Bill to stamp that out.
Thirdly, the appeals system must be good and clearly set out. We should be offering our citizens due process, not something that is summary. Losing one's internet connection in the digital age is a severe disadvantage. Losing it because you happen to be sharing it with other members of your family or, under current British Telecom arrangements, you are letting your neighbours use it, is something that we have to be careful of. I am not at all clear that we have the technology to go beyond the IP address, which comes into my router, to identify which user of perhaps one or two dozen who have access, has done the illegal downloading. We need to be very clear that we do not tip people into losing their internet connection or worse on a technically fallible basis. If I have one last request for my Front Bench, it is please can we vote against Clause 17?
Baroness Bonham-Carter of Yarnbury (Liberal Democrat)
My Lords, at the last minute, I was not able to take part in the debate on the gracious Speech, so I start by saying how sorry I am that the noble Lord, Lord Carter, our DCMS "Goat", has gone to pastures new. Not long ago, I welcomed him to the government Front Bench as a distant cousin as well as a colleague. He will be missed. I am pleased that an even bigger beast is to take his Bill through this House.
I will briefly concentrate on those areas pertaining to public service content in Digital Britain. I am glad that the majority of the Bill, and by far the most complex parts of it, will be dealt with on these Benches by the "noble Tims" who sit in front of me. I declare an interest as an associate of an independent production company.
We on these Benches welcome the Government's commitment to Channel 4. Their recognition of the need to update Channel 4's remit will help to secure its role as the main public service competitor to the BBC. Here I echo the Minister. Competition is an essential element to ensuring a healthy future for the BBC and public service broadcasting.
Currently, Channel 4's remit relates only to linear TV and ignores the growth of digital media. We welcome the Bill extending this remit to new formats and platforms, where the channel is already pioneering public service broadcasting. I recommend its "1066" online game, designed to accompany a history programme of the same name broadcast on its terrestrial channel. This was targeted at 10 to 15 year-olds. We also welcome the new specific obligation placed on Channel 4 to produce content for older children and young adults. The channel already has a strong connection with younger audiences, so this is a sensible fit. I join the noble Lord, Lord Fowler, in welcoming a commitment to the making and showing of British films being enshrined in the Bill as part of the channel's role.
I have two caveats about the Channel 4 elements. It is important that these new arrangements do not lead to any diminution of PSB on Channel 4's main, terrestrial channel. An essential component of public service broadcasting is that it engages as wide a spectrum of the population as possible so that different kinds of people with different interests and insights can share with society as a whole. Public service content must not be relegated to digital channels with small, niche audiences. This must not be used as an excuse to not commission public service broadcast programmes for the main channel. In the light of this, should Ofcom not be given new powers to ensure that Channel 4 adheres to its existing PSB obligations on its main, linear channel? While we wholeheartedly welcome what is in the Bill, we worry about what is not. It fails to address the longer term problems of plurality in public service broadcasting.
As many noble Lords have said, the multi-channel landscape of the digital future poses particular challenges to the purely commercial public service broadcasters. We accept the need addressed by the Bill to reduce the regulatory burden on ITV. This new landscape has transformed the economics of commercial PSB and put the provision of regional and local news under particular threat. We agree with the noble Lords, Lord Birt and Lord Fowler, and with the Minister that the BBC must not become a monopoly supplier.
The Bill proposes that the underspend from the licence fee money ring-fenced to help pay for digital switchover's targeted assistance programme will be used to pay for the independently financed news consortia pilots that start next April. How do the Government know how much that underspend is when digital switchover is not completed until 2012? We still have London to go.
Although we were against the BBC money being used to fund a social cost, we support the surplus being used to help to fund commercial public service broadcasting, but there it ends. We are absolutely against top-slicing. Once this money is used, that is it. We believe that top-slicing threatens the independence of the BBC and that condoning raids on the licence fee sets a dangerous precedent, leaving the BBC vulnerable to further funding cuts at the whim of the Government of the day.
For the pilots to work, there must be variety and innovation and they must concentrate on the local as well as the regional. As I understand it, the DCMS-not Ofcom-is running the pilots, so will the functions set out in Clause 28, allowing Ofcom to set criteria and conditions for the provision of this type of new service, apply to the pilots? Surely, for the pilots to be of any benefit, that must be the case. I am pleased to see in the Explanatory Notes that Ofcom may set conditions which encourage the provider to support or promote wider benefits to society in connection with the provision of news. That might include commitments to media skills and training. Is that something which the DCMS intends to encourage? Like the proposals for Channel 4, the Bill is silent about what comes next. How will the news consortia be funded in the future? As it stands, it seems that the pilots exist in a strange limbo not unlike contestants on a TV reality show.
I have a couple of questions about the interface with ITV. What quality control will ITV have over the programmes which emerge from the news consortia? After all, they will appear as part of the ITV schedule, and their success or failure will impact on the channel. Given that work previously undertaken by ITV's regional production teams will be taken over by the news consortia, will-I have to use a terrible acronym-TUPE, the transfer of undertakings protection of employment regulations, apply to the affected staff?
I end by picking up on what my noble friend Lord Razzall said about the fact that there is no mention of the BBC in the Bill. Long ago, we on these Benches called for a truly independent regulator of the BBC and argued, at the time that the BBC Trust was established, that that arrangement would only perpetuate the muddle between regulation and governance. Considering that those are the very sentiments expressed very publicly, as the noble Lord, Lord Fowler, and my noble friend Lord Razzall have pointed out, by the most recent Secretary of State for Culture, Media and Sport, does the Minister agree that not addressing the matter of BBC governance in the Bill is a lost opportunity?
Lord Carter of Barnes (Labour)
My Lords, as has been mentioned already this afternoon, I have some previous interests that are relevant to the Bill. However, as I am currently languishing in post-ministerial purdah, I do not believe that I have any current interests or conflicts which I need to disclose.
Earlier, in opening the debate, my noble friend the Secretary of State rightly highlighted the importance of the digital economy, the need for adaptation due to changes in technologies, and the increasing industrial importance of being future-ready as a knowledge and service economy. The triple effects of the death of distance, the crescendo of new creativity and the insurgence of the internet have created a new world and there is a clear need for legislative adaptation so that we may adjust to those changes.
For my part, one of the unexpected and possibly unintended consequences of my post-ministerial cooling-off period has been to spend time working abroad and observing in some detail other countries' developments and approach in this area. Whether it is the emerging markets, the ever-more powerful Chinese economy, the vision of the smaller Scandinavian countries, the aggression of the newer European countries or the clear approach of our more significant European partners, all of them have plans for and investments in their digital economies. It is increasingly clear that a digital future is central to industrial and governmental strategies around the world. The explosion of distribution systems, applications and the increasingly borderless nature of the content markets highlights those countries which are either ahead or behind in the digital future.
The debate within our Government was whether, at this stage in the political cycle, a small but perfectly formed Digital Economy Bill could do enough of the heavy lifting to merit inclusion in a final Queen's Speech, or whether it would be more coherent to wait until we were at a different point in that cycle and more fulsome legislation could be considered in the round. As the noble Lord, Lord Birt, rightly highlighted, could we go in a year from a consultation document, through a White Paper and a Green Paper, to a Bill, and avoid major mistake, major omission or a significant diminution of quality?
In politics, as in life and business, waiting for the perfect moment is rarely advisable. In my experience, a good decision on Monday is often preferable to a perfect one on Friday. This Bill therefore has a number of merits which I believe will bear the scrutiny of this House. First, it lays down a marker by its very existence, by not being solely a piece of broadcasting legislation, while at the same time seeking to address some if not all of the issues facing our public service broadcasters, but in the context of the modern digital economy.
Secondly, in the critical areas of investment, infrastructure, spectrum liberalisation and the digitalisation and deregulation of sound radio, it provides a framework for innovation, development and investment. Thirdly, in a whole range of detailed areas-from content protection and the value of rights, to video games classification, domain name registration and protection, the future remit of Channel 4, the broader issues of public service content, and the provision of funding, albeit short-term funding, for independent impartial news-it seeks to play catch-up with some of the capabilities of the technologies and the changing nature of consumer preferences.
As to its very existence, I do not think that it is merely a matter of nomenclature that this is a Digital Economy Bill rather than simply a piece of communications or broadcasting legislation. As I have commented before in this place and in others, one of the remarkable features of the 550 pages of the Communications Act 2003 was that the internet was not mentioned at all by name and only once by an oblique reference to an obligation on the regulator to consider the importance of high-speed data services in remote locations.
On the strategic elements of the Bill, and in particular the proposed updating and amending of the regulator's primary duties, I would urge noble Lords not to underestimate the importance of the proposed changes. Regulators are creatures of statute, of their leadership, of their governance structures and of the environment and the context of the times in which they operate. Their independence, their objectivity and their quality is often valued only when it is absent.
Many of us have lived through-some of us in rather too close proximity-the seismic events in the financial services sector, and an interesting question to pose is whether a gentle but firm amendment, ahead of time, to the primary duties of the Financial Services Authority might have produced a different response and emphasis in its approach to its regulatory duties.
In this country we do not have a crisis in the communications sector. In many ways we have enormous strength, significant competition, highly competitive retail pricing and, in the content and applications market, world-class levels of innovation and entrepreneurialism, and a number of globally admired companies. However, as I said in my opening comments, the rest of the world is not only catching us up but, in many instances, overtaking us. Two much-discussed elements of the Digital Britain White Paper are not in the Bill, either because legislation is not required, as is the case for the delivery of the universal service commitment, or because it was a tax measure, albeit a hypothecated one, and will therefore be dealt with in a Finance Bill. But perhaps I may make two related comments on these two issues, not least because they are often elided together as the same thing, and sometimes wilfully misunderstood and misreported.
The first proposal in relation to the universal service commitment allows this country to fund, from the underspend in the digital switchover, some hundreds of millions of pounds of public funds to ensure that every community, and possibly even those residents in Hambledon who are not BT employees, has access to a basic level of connectivity and a minimum level of broadband connectivity. The separate but related proposal for a hypothecated levy intended to generate seed-corn public funding that could be made available at an appropriate coupon rate for commercial players is a modest attempt, I would be the first to acknowledge, to bridge the gap that exists in this country today for the need for capital investment in our infrastructure set against the market's ability to fund it. It may help produce a fixed fibre infrastructure that extends further. It may combine in part with some of the liberalisation measures in this Bill relating to the electromagnetic spectrum to allow for the creation of fixed and wireless combined capabilities.
In truth, the technology solution should not concern this House; what matters is our willingness to recognise the importance of the communications sector and the need for investment upgrade in infrastructure. At the same time we need to see that the real future value is in the applications and services that will and can be delivered on such an infrastructure capability. That is the digital economy. As a country we are still broadly willing, with some notable objectors, to spend £142.50 per household per annum, with appropriate exemptions for certain households, in a hypothecated tax called the licence fee to provide us with high quality public service British content and the broadly beneficial multiplier effect that the money has on creating commercial businesses in the content markets.
It seems a credible proposition that we should be more than willing to invest £6 per household per annum, with appropriate exemptions for certain households, to facilitate and accelerate our infrastructure upgrade. For our digital economy it is far from the final answer. It is in truth only the beginning and that is probably a useful summary of this Bill-it is only the beginning, as the noble Lord, Lord Fowler, rightly pointed out. It is the first digital economy Bill. It contains a series of measures and proposals that are tightly drafted, broadly necessary and, in some areas, will have a much greater and profound difference than some have anticipated.
It does unashamedly seek to lay the groundwork for the next Government to return to this sector and look at it more broadly than Parliament has traditionally done through what has often been a broadcasting-only telescope. I share the view of the noble Lord, Lord Birt, that there is a machinery of government change that merits further thought and far-reaching work. I share the view of the noble Lord, Lord Fowler, that there is a need for a proper and measured parliamentary debate on the BBC, and that needs to be done in an environment where discussions can be had around structure, reach and governance without the hysteria of attack and defence polluting the debate.
Overall, this is a Bill that I am sure will be improved through discussion and debate in this House, but I would hope that, when that debate is finished, there would be cross-party and cross-Benches support, as it is a Bill that it will be more than helpful for the British economy to have on the statute book.
If I may, and I hope I am not breaking convention, I would like to close by recording my admiration for the Bill team which, despite rather irritating ministerial changes, has produced a focused and well drafted Bill that makes up for its limited clauses in the ground it manages to cover in 49 of them. I look forward to the Committee debate.
Baroness Howe of Idlicote (Crossbench)
My Lords, when the noble Lord, Lord Carter of Barnes, introduced Digital Britaina little while ago we all recognised that things were beginning to happen and there were some very welcome realisations, for example, on the need to move forward with digital radio. Even if it is only a beginning, clearly this Bill is an important one, which will do much to update British communications structure and regulation content. Judging by the speed of change in the industry since the Communications Act 2003 was passed, I believe that it makes sense for the Bill to include powers for the Secretary of State to make regulatory changes through secondary legislation to deal with any potentially challenging new developments that still lie just over the horizon. Similarly sensible is the proposed duty on Ofcom to report to the Government every two years on any developments significantly affecting the UK's communications infrastructure and Ofcom's specific new duty to promote investment in public service media content.
I shall concentrate most of my remarks on the protective measures proposed for creative industries-alas, like many other noble Lords-and on the amendments to the Video Recordings Act. I also want to welcome those parts of the Bill that will help to facilitate opportunities for a wider range of quality PSB content, enabling UK citizens access to these across the increasingly multiple platform that we have now within the communications market.
It is realistic, too, that the Bill includes plans for ITV, which over recent months made its position very clear. The plans will enable ITV to relinquish its public service responsibilities unless they are funded from elsewhere. Equally, on the other side, it is certainly good news-interestingly, warmly welcomed by Channel 4 itself-that the Bill, as a result of the growth of digital media, proposes to update its activities, requiring Channel 4 to be involved with a wide range of quality programmes, including news and current affairs, for different delivery platforms and multiplexes. Channel 4 has made a considerable success of its public service channels, with news and older children's programmes and, especially, its huge contribution to British film. We shall all look forward to it playing an even more important role in public service broadcasting competition to the BBC and other commercial stations that want to go down that route. However, it remains unclear where the finance for this enhanced role is to come from, although the Minister, in replying, may put us fully in the picture.
I welcome those parts of the Bill which incorporate the Digital Britain promise to speed up delivery of a fully operational DAB digital radio platform. I spend a lot of time in cars and have had hearing difficulties since the arrival of my first child, so it is a real pleasure to enjoy the quality and clarity of digital sound, especially when listening to music-whether it is Radio 3 or Classic FM, both of which are excellent stations. The plank for Ofcom to be able either to terminate analogue licences without consent, subject to a minimum two years' notice, or where appropriate to extend analogue licences up to and beyond switchover, on condition that digital services are also provided, will no doubt help to build in the much-needed flexibility to enable radio switchover. I very much hope and have confidence in the plans that have been outlined that it will happen by 2015. It is important that it does.
I turn to Part 3, which deals with creative industries-a key part, with exports worth £16 billion or 8 per cent of GDP, as the Creative Coalition Campaign tells us. Sadly, the industry is increasingly undermined by illegal file-sharing, or theft, to put it bluntly.
There are also some 1.8 million UK jobs involving a wide range of skills which are endangered while this illegal trade, which is far more dangerous now it is digitally enabled, continues. While most people would be reluctant to limit anyone's access to the internet-my imagination somewhat boggles at how this is to be achieved-and despite the briefings by Which? and other organisations, which I have certainly read and I think are concerning, my initial reaction is that the Bill's clauses are both moderate and proportionate. It is good that the Bill will require ISPs and rights holders to work together on how the process to be followed is carried out. Obviously there will be a need for a closer look at the clauses in Committee, but on balance, this seems an acceptable, step-by-step approach to a difficult and-I hope, as we are told-relatively temporary problem, as the market produces a better business model that will make this form of activity less desirable.
Finally, noble Lords will understand that with my background at the Broadcasting Standards Commission, my main concern with amendments to the Video Recordings Act 1984 is child protection. I of course welcome those parts of the Bill implementing Dr Tanya Byron's recommendations in Safer Children in a Digital World, but I am concerned that this Bill represents a missed opportunity to update all the exemptions in Section 2 of the current Act. These exemptions relate not only to video games which the Bill does amend, but also to other video work such as music and sports videos. Such works can claim exemption from the VRA and be sold perfectly legally to children, even if they contain material which is clearly potentially harmful. I am not suggesting extending the VRA to all such exempted works, merely to those that contain content which is potentially harmful, such as graphic violence, sexual content falling short of actual sexual activity, and inimitable, dangerous behaviour and drug use.
I have seen some of these works myself. Their content is by any standards, inappropriate for children. For example: "Motley Crue - Greatest Video Hits"-and these, I may say, are not on my usual viewing list-features topless lap-dancing. "Slipknot (10th Anniversary DVD)", features the sight of the band's name carved into girls' arms and torsos. These are works which parents could legitimately expect to be regulated. Yet under the current legislation they can be sold legally without any age restriction. The enforcement agencies have no ability to prosecute distributors for supplying such works unclassified.
Will the Minister confirm that it is not the Government's intention to allow the new video games authority to classify film-type content, including full length feature films, in video games? This is important not to undermine a regulatory system for films and other non-game content that is tried and tested and has public support.
I note that the Bill anticipates that certain classes of video games may be transferred to the BBFC from the video games authority, and I understand both from it and the Explanatory Notes, that this could include games which are supplied on the same disc as a film, where the film is the primary content, and hard-core sex games, which require specific expertise because of the extreme pornographic content.
I would suggest-and perhaps we can look at this in Committee-that it might better reflect the Government's intent if they were to state in the Bill that these allocations shall take place where the primary content on a disc is film-type material rather than a video game, or where the video game would require an R18 certificate for supply to a licensed sex shop. I hope that the Government are able to address these concerns and, indeed, the others that will clearly be arising in Committee and on Report, but I thoroughly support the main purpose of the Bill. I hope that it is going to be improved-I am sure that it will-by the debates that go on in your Lordships' House, and that the result will be to more effectively future-proof the whole legislation, and to better achieve support for the creative industries and, above all, for public service broadcasting.
Baroness Morris of Yardley (Labour)
My Lords, before making a brief contribution to this debate I declare an interest as a director of the Performing Right Society. I very much welcome the Bill, and it has been heartening to hear some really powerful speeches in favour both of its thrust and of some of the details in it. In particular, I am struck by the idea that in this digital age, this is the first time that we are looking at communication other than just as the BBC, ITV and Channel 4. Yet really, Parliament and the legislators are seeing it as the public have experienced it for a long time now. Very often, we are catching up with the public and in a lot of the details of this Bill we are, indeed, doing just that.
I shall restrict my remarks to Clauses 4 to 17 on "Online infringement of copyright", and at this stage I will not really go beyond that. I very much welcome them; the principle is right, and from what I have read so far I think that the detail is right as well. If there is to be an argument against it, I suppose that it will be that this is legislation which should have happened some time ago, but if that accusation is going to be bandied around the Government will certainly not be the only guilty party. Indeed, everybody seems to have been slow to react to changes in this field. That is why, so many years into the digital economy, we are now faced with a really quite serious problem of online piracy.
I suspect that as we go through this Bill we shall be talking a lot about some of the difficulties that the digital economy has thrown up. I suppose that is why we are legislating, and I therefore wanted to take the opportunity to say at Second Reading that those things are the small downside of two incredible success stories. First, there is the success story of the digital economy itself, which has quite simply transformed access to information, to creative content and to social networking in a way that we could not have imagined 10 or 15 years ago. Secondly, we are discussing these issues because of the quality of the creative content. Quite simply, no one would bother to download for free lousy content in an infrastructure that was difficult to use. It is because we have a strong digital economy and high-quality creative content that we have the problem.
The digital economy is a success story, when you look at it, because of its pace of innovation and its speed in adapting to the wishes of its users, which have made it one of the fastest-growing industries, perhaps, of all time. In 2006, the Performing Right Society licensed 400 providers of online music; in 2009, it is licensing 1,200-an increase of 200 per cent in about four years. I cannot think of another industry so important which has managed to grow at that speed. There is no doubt that, in terms of education and opportunity, the world is far stronger because of it.
Often, in these debates, we have spoken as if the digital world sweeps away everything else. We talk about a revolution and, indeed, in many ways it has been one. Yet we constantly make this mistake, when talking of the need for a revolution and welcoming rapid change when it has happened, of forgetting to say what does not change. We forget to say what must remain in place. The principle that a creator should be able to choose whether they get paid for their work or give it away free should be a cornerstone of the digital economy, in the same way that it has been a cornerstone of the creative economy. We have all failed to remind everybody, particularly the youngsters who have grown up in a digital age, that that does not change. It is not part of the revolution that we otherwise welcome.
It has indeed been a long-standing practice of musicians to give away their work for free. No one is opposed to that. The important principle is that it is their choice. If not, it is not only theft from the individual, as a number of noble Lords have already said, but foolishly short-sighted. It risks undermining the very talent that will take both the creative and digital economies to the next stage of their development. Of course, as a number of noble Lords have said, copyright in a digital age should have been addressed years ago. When you look at the history, you see that anyone who could have acted or had a vested interest in acting failed to do so. It was almost like the rabbit in the headlights. The big companies-so successful for so many decades-were so slow to adapt to a digital world from an analogue world.
There were two things that we failed to do. One was to argue the need for copyright. We sometimes talk as though it is only this generation that does not understand copyright and treats it with such disregard. To tell you the truth, when I was 17 or 18, I am not sure that I thought much about copyright when, in those days, I taped something from a record that was playing. It is not that this is the first generation not to value copyright; it is the first generation that can do it at such high quality. Therefore, it has such an impact on the rest of the economy. Our generation probably did it; we got away with it and the economy got away with it, but it is a different ball game now.
Clearly, as a number of noble Lords have already said, there should have been models that safeguarded copyright far earlier than there have been. If we are going to move forward on this, and get the best of the revolution but at the same time preserve the best of what needs to be preserved, four things need to be in place. First, consumers need easy ways to pay for download content. Secondly, new business models need to make sure that rights holders are paid for the work that they create. Thirdly, a legal framework needs to protect consumers and creators, but also provide an environment in which the digital economy can flourish. Fourthly, something that has not been mentioned as much so far this afternoon is the need for an education programme about the value of copyright. None of those things would restrict the creativity or innovation that is important to make sure that the digital economy continues to flourish.
I would argue that in three of those four areas, prior to the Bill, progress-although late-has been made. It is now easy to download music legally and pay for it. There is no excuse now for not doing so. iTunes, probably the first online provider of music to be licensed, in 2004, now has 8 million people who download music and pay for it. Perhaps an even greater success story is that of Spotify, which went from a zero start to having 2.7 million users in the six months up to July of this year. Most of them are over 35 years of age and are downloading music for the very first time. People are beginning to use the facility that is there.
There is also a business model. In 2002 the Performing Right Society collected £1 million to pay its members for online music services. By 2008 it was collecting £23 million just through online music, and distributing £20 million to its members. There is also an education programme. The Federation Against Copyright Theft has worked long and hard to get a programme, but I know from experience that having a programme does not mean that people learn. It certainly does not mean that people act on it.
The problem we have is that the idea that creative content should be freely available is received wisdom for such a large proportion of our population. A whole generation has grown up believing that it is all right to download someone else's creative work at no cost. Progress is being made but there are challenges. Trying to persuade people to pay for something that was once free is far more difficult than doing it the other way round. Moreover, it is an incredibly complex market to license. It is not the easiest thing to negotiate, monitor and manage the 1,200 online providers that the Performing Right Society licenses. You often hear it said outside-it has not been repeated much here today-that the sector can afford it and that the people who are losing the income can afford to get it elsewhere. Last year, 82 per cent of Performing Right Society members earned less than £1,000 from the music they created. Some 1.5 per cent of them earn above £50,000 a year while fewer than 500 members earn more than £100,000 a year. Those 500 members who can afford to give their work away free online can turn to other income sources such as gigs to earn their income. That is why the Bill-it is, if you like, the digital economy's fourth plinth-is so important. We have had nothing like this so far, and it is therefore very welcome in adding to the infrastructure. Indeed, it goes some way to completing that infrastructure.
We have the strong statement that file-sharing is not acceptable and that we do not live in a society where that is the done thing. The Bill will ensure that legal, online services have time to develop, unhampered by having to compete with illegal free music. It is very difficult to get legal services going when you are competing with people who give them away for free. The Bill is directed at the most serious serial file-sharing offenders, and, according to the legislation, is a last resort. It incorporates in the system education about the process. I believe that it will begin to move us towards a fully functioning online market for the creative industries. We should not ignore people's complaints about the Bill but no one wants to go beyond the remit or make problems worse rather than better. In Committee and on Report we will have the opportunity to consider that. I very much welcome the principles and detail of the Bill.
Baroness Buscombe (Conservative)
My Lords, I declare an interest as chairman of the Press Complaints Commission, but I want to be absolutely clear that it is not my role at the Press Complaints Commission, or my intention in this debate, to champion the interests of the newspaper industry. I speak in favour of the Bill as a longstanding passionate advocate of the UK's creative industries, which I believe are the best in the world. This has been an area of long-term interest for me and I am heartened that there are many more speakers today than in 2005, when only the Front-Bench spokesmen contributed to a debate I initiated to highlight the importance of valuing intellectual property and the creative industries.
I feel, too, that we have come a long way from the Communications Act 2003 in recognising what is actually happening due to media convergence. Noble Lords will recall that the Act recognised the reality of the digital age in only one area, and that was as a result of an amendment in your Lordships' House to support the expedition of universal provision of broadband services. In addition, one of the key shortcomings of that Act was that it focused very much on the plurality of choice of media, including the provision of choice of public service broadcasting, without proposing any solutions regarding how creative works would be properly rewarded, particularly in light of convergence-a development that was already becoming a reality at that time.
My contribution today reflects my enduring interest in the UK's vibrant creative economy. The creative sector is set to be an engine of growth out of the recession, especially as other sectors of the economy continue to struggle. It is important that the Government reaffirm and recognise the value of creative works, both to individuals and to the UK economy. I also have concerns regarding freedom of speech and possible regulatory creep beyond public service broadcasting into other editorial content, a concern that could directly impact the future of self-regulation for the press and online news. I will come to that a little later.
When the Digital Britain report was published, there was much talk about the focus being too much upon the pipes and not enough upon the poetry, that the Government had addressed the relatively easy bits, the hardware, but what about the valuable software, the creative content, both in terms of its future viability and protection from piracy? Digital copyright theft, including illegal peer-to-peer file-sharing, is, as we have heard this afternoon, severely damaging the UK's creative industries, such as music, audio-visual, publishing, retail and sports broadcasting.
Clearly, online copyright infringement seriously threatens the sector and it should be for an artist, singer, composer, author, photographer, filmmaker or publisher to decide whether they should give their work away for free. Measures are needed to tackle both illegal peer-to-peer file-sharing and non-peer-to-peer forms of infringement. The Bill has to be proportionate, effective and fair to media owners, ISPs, rights holders and consumers-a tough challenge. I hope the Bill will not only reduce the levels of online copyright infringement, but also ensure the development and growth of legal online services. Quality of content and high professional standards are vital across the media and to all the creative industries.
The Bill focuses on a number of important areas which I hope will be carefully scrutinised through its passage. For example, this may sound like one small area and it is one that is often overlooked, but I focused on it back in 2005. It concerns the issue of orphan works. I said then:
"Without adequate protection the photographic image-tomorrow's cultural heritage-and those who create it will cease to have true value, and without adequate protection a profession dies".-[Hansard, 22/6/05; col. 1690.]
Take photographers who are concerned that, in a digital age, information about copyright and the creator supplied with the digital image is stripped away, often automatically, so that in a matter of moments the world is awash with so-called orphan images. Almost five years on, in a world where digital is now the universal norm, this is surely an even more pressing issue that must be carefully thought through by your Lordships.
I hope that this will be an enabling Bill rather than a restrictive one. New laws should seek to encourage consumers into legal services and deter them from using illegal sites. In this regard, I have been struck by the degree of concern across the creative sector regarding the proposal in the Bill to allow for, in the words of Liberty,
"future Governments to sidestep traditional criminal and civil law standards and procedures in favour of administrative systems controlled by the Executive".
As other noble Lords have said, future Governments will have the power to change even the fundamentals of copyright without parliamentary debate through the use of statutory instruments. Of course we must also accept that with the speed of change in the creative environment, both in terms of technology and the marketplace, there must be flexibility, and the process of primary legislation is slow and often inflexible. There is a difficult balance to strike here, and I believe that it is important that we wrestle further with this issue in Committee.
As chairman of the Press Complaints Commission, the body responsible for independent regulation of the press, I must express some concern at the extension of the scope of Ofcom's reviewing and reporting obligations beyond television. Considering public service media content on other platforms and applying stringent statutory impartiality rules has worrying implications for freedom of speech and expression. The exact shape, scope and range of the new regional news providers-the Minister referred to the new news consortia-the IFNCs, has yet to be finally determined by the Government and clarification is required.
Otherwise, the risk is that impartiality rules will be expanded into areas of the media for which they were not intended and in which they will constrict freedom of expression. It is right that the Government acknowledge that we need funding and investment for a vibrant digital economy, and that they recognise the huge new opportunities for the creative industries that digital technology provides. New ideas, content and products must be fairly rewarded and protected, so it is also vital that the Government find a way to achieve a difficult balance between the rights of the individual and copyright protection.
In terms of investment, however, are the Government satisfied that Ofcom will be able with confidence to promote the right and sufficiently flexible infrastructure, given the speed with which technology is changing? The need to create new business models fairly to reward creative works is crucial, and I am concerned that the Bill still has not addressed that and seeks to rely on old economy solutions to new economy problems. My worry is that the Bill is in danger of missing the opportunity seriously to consider funding for creative content. After all, its proper focus on illegal file-sharing masks the underlying problem of how content providers can survive when the public now expect free content online.
In essence, perhaps the Bill has the wrong title. It should surely be called the creative economy Bill, to keep reminding us all that, no matter how much law is put in place to protect creative content, unless it is paid for in what is a fiercely competitive global marketplace, the quality of our creative works will decline such that there will not be a digital economy at all.
Lord Roberts of Llandudno (Liberal Democrat)
My Lords, I venture to enter this debate with a short contribution looking at the Bill through Welsh eyes. What does digital mean? Of course it means television and radio, but it also means broadband. I am sure that we will discuss this when the Finance Bill comes to us in March, but unfortunately we are now looking at a Bill based largely on the interim report of the noble Lord, Lord Carter, Digital Britain, which pledges to give us universal broadband access at 2 megabytes per second by 2012. However, the report did not outline how that is to be achieved. I read that Tim Johnson, the chief analyst at the broadband think tank Point Topic, warned that the commitment presents a massive challenge.
The promise of universal access to broadband is vital, but the scale of the task of making that a reality should not be underestimated. Figures show that Wales is still lagging behind much of the country when it comes to broadband access and speeds. We need to look at how to prioritise areas that cannot currently access broadband. I appreciate that it is important that broadband expansion is carried out in a manner that is commercially viable, but we must not lose sight of the fact that accountants must not have the last word. Some areas cannot receive broadband at all.
Many individuals and businesses, especially in rural Wales, still do not have access. That is damaging both to individuals who are missing out on the benefits that broadband provides and to rural businesses, not just the agricultural sector, but people who need high-speed internet to remain competitive. This morning, I spoke to the National Farmers Union secretary for Montgomeryshire, Mr Aled Griffiths. He emphasised the needs not only of agriculture but of businesses in rural areas, which are increasingly trading internationally, and the needs of rural tourism.
In Wales, tourism is now our main industry, and 10 per cent of our workforce are employed in tourism. Welsh tourist organisations-I spoke to them this morning-are unanimous that broadband access is vital. We remember that in attracting tourists we compete not only with the rest of UK but with the rest of the world.
The problem of providing broadband in our rural areas causes real concern. We are glad that the Houses of Parliament and the National Assembly in Cardiff are looking seriously in this direction. It is not only a problem in rural areas but in the valleys of Wales, which have long been known to have special problems and much deprivation. If we look at the tables, we see that Merthyr Tydfil, the Rhondda valley and other places have problems of high unemployment, difficult health situations and low incomes. They are vulnerable places that feel increasingly helpless. Will they have the opportunity to engage in the high-tech developments offered to us?
Today, I looked at the figures for radio listeners in Wales who have ever listened to digital audio broadcasting. I shall not go through the whole list, but in Cardiff, it was 27 per cent, while in the valleys, it was only 4 per cent. That is the difference. The most needy areas will not have the opportunity to benefit from these new high-tech developments. There is a pressing need for an extension of broadband, not least because of the commitment already made by the Government that fibre optic broadband should be prioritised in "notspots", where other technologies have also failed.
In London, 93 per cent of the population is in reach of 8 or more megabytes per second; in Wales, it is 38.4 per cent. In Wales, 26.9 per cent of the population is out of reach of 2 megabytes per second; in the London area, it is 1.2 per cent. We have problems. Last year, the European Union Telecommunications Commissioner said that many people in our rural areas still find that they can not get broadband under the current arrangements. In rural areas, not just in Wales, but in Scotland and parts of England, people find that they cannot get broadband under the current arrangements. The promise to have broadband available to every home is a massive challenge, but it is a target for us to aim at. It is important that areas with historically poor broadband access are targeted.
Once the UK Government have decided a way forward, the Welsh Assembly Government should seek assurances that Wales will be given the tools that it needs to deliver that pledge. Since 2003, the Welsh Government have operated their Regional Innovative Broadband Support project. It has largely been successful, but there are still many people who are not able to access the service. The geographical conditions create that difficulty. In this modern day, broadband is essential to reach the whole of the world, not only the whole of the UK; but it is not an end in itself, but a means to an end that can improve the lives of so many people in so many different ways.
Lord Maxton (Labour)
My Lords, I welcome what the last speaker has just said, because I think that he is absolutely right. I wish to concentrate on the fact that the Government are committed to giving every household broadband by 2012. Yes, it will be 2 megabytes in some cases; but for the vast majority of people, it will be considerably higher than that. For instance, Virgin Media is offering me, in an urban situation in Scotland, 50-megabyte access to the internet, which allows me to watch television-or it would if I were prepared to pay the extra £10-and it is experimenting with 100-megabyte service in some parts of the country. BT will be rolling out the same sort of speeds when it puts in its fibre optic cabling. We have to concentrate on that. I was rather surprised by what the noble Lord said about parts of rural Wales not being able to get at least 2 megabytes. I have a house on the Isle of Arran and can get 2 megabytes. You really cannot get much more remote than the Isle of Arran in some ways, but it has created exchanges to ensure that we get it.
I welcome the commitment, which we must fulfil because even now a digital divide is developing between those who can access broadband and the internet and those who cannot; between those who wish to be part of the internet and those who do not-some Members in this House are like that; and between those who can afford to be part of the internet and those who cannot. Some of our older people find the internet more difficult. I have an 85 year-old father-in-law who has access to the internet and uses it, but he is relatively rare among those of his generation. We must have this commitment, because if we do not have it we will have this divide.
I doubt whether I will do any of my Christmas shopping this year in a shop; I will do almost all of it online. I will buy books and records from Amazon and other things from other people. I even buy theatre tickets to give to people if that is the appropriate present. I am an early adopter of modern technologies-I bought my first mobile phone for £2,500 and my first computer for the same sort of money; it was a BBC computer and it had 400 kilobytes, not megabytes-and I have been slightly surprised throughout this debate by the almost negative approach to the internet. If you were a parent, or any other normal person, listening to the end of the speech of the noble Lord, Lord Birt, you would never take up the internet. You will lose a fortune to swindlers, your children will be at great risk from paedophiles, and you will wonder why on earth you would take it up.
The internet needs to taken up because even now we have this divide. Moreover, what will be the next development? Noble Lords have already mentioned 50 megabytes and high-speed cabling for broadband, which will allow us to use all sorts of video services. I have been saying for a long time that we should stop talking about broadcasting because the future is narrowcasting: watching what you want to watch on the internet where you want to watch it. The benefits will be enormous. Someone mentioned football matches. Ultimately, that is exactly how you will watch football matches. Manchester United will not continue to have 10 matches a season on Sky when it can have every one of its matches live on the internet throughout the world and collect a fee for it. The fee might be quite small-it might be only £1 a time-but if millions of people are watching it, that is an awful lot of money every week. That will happen, and that will be the way in which the internet develops. There will be an enormous increase in the number of services.
Unlike many people, I will not be worried if the BBC becomes the sole provider of news in a particular area, because there will be access through the internet to a whole range of other news. If I want to find out how the local football team is getting on-or the local rugby team, in my case-I do not wait until the local paper comes out on the Thursday or the Friday; I look at the internet 10 or 15 minutes after the game has finished and then read the report on the local rugby team's website. If I want to know about a local planning decision, I do not wait until the local paper comes out; I go on to the local authority website and find out almost immediately after the committee has met-if I cannot actually watch the committee discussing it on the internet, which is possible in some cases.
I want to be brief, so I shall finish by mentioning a problem that people raise constantly, which is how they cannot get their performing rights paid for on the internet. The problem is that in this country, among our young people in particular and to some extent all of us, we are very used to not having to pay directly-across the counter, if you like-for what we watch. I pay for a television licence for the house, and therefore my wife and my children who live with me watch television for nothing. They do not pay to watch ITV, and now they do not pay for a lot of material on the internet either. I can watch BBC iPlayer on the internet and I do not pay anything extra for doing so. Our youngsters are accustomed to this, so we have to educate them on how they have to pay for people's performing rights so that we continue to support the creative economy, but it is going to be a difficult task.
There are dangers in what the Government are proposing. Most of the Bill is very good and takes the digital economy forward, but I have concerns about the idea of cutting off broadband access. If I am right, broadband will become as important to our households as our gas, electricity and water supplies. We have come a long way in trying to stop the utility companies from actually cutting people off if they do not pay, and we have to adopt the same attitude towards broadband access. We will have to look at other ways of dealing with the problem, and it is something that we will look at in Committee. As I say, a lot in this Bill is excellent, but in some areas, while it deals with today's problems, I am not sure that it deals with those of tomorrow. That is something we will also have to look at in Committee. I am sure that we will give the whole Bill very careful scrutiny, but on the whole I give it a warm welcome.
Viscount Bridgeman (- Shadow Minister (Also Shadow Minister for Northern Ireland), Shadow Minister, Shadow Minister, Shadow Minister; Conservative)
My Lords, I must first declare an interest in that I am a non-executive director of the Bridgeman Art Library, a company owned by my wife and family. The company is a photographic archive and a member of the British Association of Picture Libraries and Agencies. In turn, the association is a member of the Creators' Rights Alliance, which represents a wide spectrum of organisations in the music and photographic fields. There are certain aspects of the Bill which are of concern to that organisation and others, and I will attempt briefly to address them.
The first is the subject of the use of works whose creators cannot be identified-orphan works. It is a logical and legal absurdity to make such provision while there are significant groups of authors who do not have the right to be identified as authors of their work under the Copyright, Designs and Patents Act 1988. The right is given by Section 77 but, for many, is taken away by Section 79. The groups include news reporters and photographers, and all authors and performers who produce work under contracts of employment. Authors and performers should have an unequivocal and universal right to be associated with their work and to defend its integrity.
I suggest that there are two key moral rights which need to be considered. The first of these is that society and democracy have a profound interest in clear attribution, especially for news reporting, with the corollary that identified authors should take responsibility for their work. Secondly, authors and performers should be able to enforce their moral right to object to uses of their work that, in the words of the governing international law of the Berne convention, are,
"prejudicial to [their] honour and reputation".
For example, authors and performers should be able to prevent works being distorted by manipulation or being used in misleading or offensive contexts.
I shall say something about extended collective licensing, if I may. Clause 42 would allow the Minister to make regulations by statutory instrument to permit extended collective licensing-the extension of licensing agreements to all authors, not only those who are members of the collecting societies that negotiate them. I shall come back to that later. Such a provision exists in UK law to facilitate cable redistribution of TV programmes, but making the works of authors and performers available on the internet from where they may so easily be copied for gain, whether by individuals or corporate pirates, has a much wider impact and requires much stricter safeguards. I note that a famous web search engine is already distributing creators' works without permission and, on the face of it, is in breach of national and international law, in the hope of changing the law to exploit forms of extended licensing. That is a quite different matter from licensing to genuinely public institutions, such as the British Library.
We believe that legislation should enshrine the principle that all uses of a work permitted under extended collective licensing must be accompanied by full credits for the author and other metadata which not only detail the source of the work but also give information such as agency contact details, thus ensuring that the work is traceable and attributed. There is a particularly relevant point here. As is well known, litigation on infringement of copyright is cumbersome and expensive in relation to likely returns and is rarely used. I pay tribute to the Minister for the way in which he set out the intended policing of copyright infringements. I hope that the noble Lord, Lord Davies of Oldham, will pass that on to him.
The massive fall in licensing fees following the advent of online publishing has meant that the paternity right is ever more essential to photographers and other creators being able to trace and gain recompense for uses of their works. The right to a credit must be safeguarded, together with a suitably high level of compensation by transgressors. It is a further reason why metadata-the textual accompaniment to an image or other work-must remain linked by law. It will simply be a matter of survival for many photographers.
There is a theoretical prohibition under the Copyright and Related Rights Regulations 2003 on removing such information that attempts to implement the relevant provisions of the EU directive on copyright in the information society. The Consumer Rights Alliance believes that it is defective; it provides that a creator or other rights holder has the same rights as he has in respect of an infringement of copyright, which is to sue for the value of the infringement. What is that worth?
We believe further that the Bill should make it clear what kinds of organisation should be authorised to implement either licensing of orphan works or extended collective licensing. I am concerned that under Clause 42, proposed new Section 116B, there is scope for an institution to become self-licensing, and I would welcome an assurance from the Minister that the possibility of closing this anomaly, or at least clarifying the position, will be addressed. To revert to that point, Clause 45 enables decisions on collective licensing by the Secretary of State by way of statutory instrument. As a member of the Opposition, I have a natural suspicion of this form of legislation, and in this context I consider it to be particularly serious. We must have regard to the attitude of future Governments and also bear in mind that there are in this environment some very big beasts with massive resources for lobbying.
The Bill rightly seeks to strike an equitable balance between creators, stakeholders and users. If this clause is not modified the balance could well be upset. The collecting societies are, in effect, the monitors of this balance. A great responsibility lies with them, and it is for this if for no other reason that I urge the Government to consider regulating them in the body of the Bill rather than by way of secondary legislation, with all the power that that would give to one individual-the Minister.
Baroness Miller of Chilthorne Domer (Liberal Democrat)
My Lords, I have a great interest in the creative industries. I come from a family of newspaper owners. My early career, before politics took over, was in publishing and bookselling. I should declare an interest in that I am now related by marriage to a successful, Pulitzer prize-winning playwright and screenplay writer. I absolutely share the Government's ambition to make the UK one of the world's creative capitals.
Do the provisions of Clauses 4 to 17 actually make the UK a better place in which to innovate? When he opened the debate this afternoon, the Minister spoke of the unique challenge to the creative industries that the digital age has created. Many today have spoken of the particular opportunities that have also been offered. I join the noble Baroness, Lady Morris, who spoke so eloquently of the new business models that need to be made the most of. There are great opportunities out there and they need to be encouraged.
The Government could have chosen to go down one of two paths with this Bill. One is to encourage those models. The other is to take a fairly heavy hand to protect the old model. The Government in this Bill have emphasised that protection model. This is not the best method of encouraging new innovation, and it threatens to make the UK a rather unwelcoming place in the digital age.
My noble friend Lord Razzall said at the beginning of the debate that education is the most important issue in discouraging illegal file-sharing. He is absolutely right and other noble Lords have made that point. For most 18 year-olds it is the norm to share. I am sorry for the lack of emphasis on education here-it is not even mentioned in these clauses.
This debate takes me back to my own dissertation, at the end of my college course some 35 years ago, on the problem for the book industry posed by copyright piracy in the developing world. The invention of the photocopier and the lack of copyright law enforcement in the developing world would, it was said, lead to the worldwide collapse of the publishing industry. Centuries earlier, the scribes who transcribed books in longhand had similar feelings about Caxton when he invented the printing press. They worried that it would put them out of business. In fact, a whole renaissance of art and learning blossomed with the wider spread of the book. Throughout the ages, the old style of creativity has fought tooth and nail against change.
That is why the Government are making a mistake in this Bill. While understanding the wish of industry for protection from the tides of change, the Government have, in Clauses 4 to 17, laid the emphasis too much on stemming that tide and not enough in channelling it into the new business models. Can the Minister elucidate the most successful, established and emerging business models for monetising online content? Noble Lords have mentioned Spotify, micro-payments and other forms of payment for content. How will they be made easier and more convenient? What vision do the Government have for this? What studies have they done to see how free, ad-funded models might also succeed? These are some of the questions that need to be answered as we move into Committee.
The other thing I find difficult to understand is that this Bill seeks to make one industry that has seen phenomenal growth, investment and innovation-the internet service providers-pay for the protection of another sector. That does not seem a reasonable principle to pursue. The Minister will say that Clause 15 talks of sharing costs, but we do not know on what basis those costs are to be shared. That is to be in secondary legislation. I am glad to hear my noble friend on the Front Bench say that he will try to amend this and make it clearer in the Bill.
I fully accept that those who create a product should end up with some recompense for their labour if the market wants the product. At the moment, I doubt we have the balance right in the Bill. I share the sentiment expressed so well by the noble Lord, Lord Lucas, that we need to look more closely at the effect on the individual citizen. He said that the Government should have in mind the proper interest of the citizen. The Bill has been brought forward by DCMS and DBIS, so it has laid the emphasis on the creative industries. What representations has the Minister received from the Home Office or the security services?
My other problem with these clauses is the effect that their provisions could have on security and law enforcement. These provisions could drive the more persistent file sharers to use encryption and then there would be an enormous difficulty as regards the crime fighting use of interception. Using encryption is not something that needs would-be file sharers to be highly technically sophisticated. They can buy encryption software which they can download, so the problem for the copyright holders would not be solved. However, the problem for the police, SOCPA, CEOP and so on would be immense. The sheer volume of encrypted material could mean that the ease with which terrorists or child porn criminals will be able to smuggle their material around will be massively enhanced. I am deeply concern by what the Home Office has said about these propositions.
We need to think about what sort of country we want the UK to be in the future. Will it be one where the digital world enhances community life and education and increases access for all both within the community and in the wider world? I believe that is the model we want. Earlier, the right reverend Prelate spoke about inclusion but this Bill will make life very difficult for the future of internet cafes and other shared networks because it will place obligations on the owner of the account for the behaviour of users. That is fine for those who can afford broadband and have absolute knowledge of those who use it. However, just at a time when Swindon is planning to become the first wi-fi town in Britain and offer free internet use for its 186,000-strong population, the Government are liable fatally to undermine that community provision. I understand that Ohio in the States has used a similar model to become a wi-fi town but that it has been put under threat because the Motion Picture Association of America managed to shut down its municipal wi-fi network after a single download. Perhaps the Minister can confirm whether that has been looked into.
The noble Lord, Lord Maxton, was particularly farsighted when he spoke of the right to utility connection being something that we should think about as regards the internet. I think it should become a right and that Finland is moving to make broadband access such a legal right.
Against that background, the provisions in the Bill either to cut people off from broadband or to throttle it-a particularly difficult term which I believe means to reduce the band width-are ones that we need to explore as regards the code. It is particularly sad that we have the Bill before us but not the code, which is such a critical part of the provisions. We need to know that the code is appropriate, fair and proportionate. At the moment, we do not know what will be regarded as serious enough to warrant a disconnection as we do not know how the threshold will be defined. There is no doubt that disconnection would affect families, businesses and, potentially, whole communities.
I am also concerned that under this Bill the accused will have to prove their innocence and probably will have to pay if they want representation. As soon as suspicion falls on them, they will automatically be put on a list from which they will have to appeal to be removed. There are a lot of worries that we will need to scrutinise in Committee. I very much look forward then to exploring the detail.
Lord Whitty (Labour)
My Lords, I am deeply grateful that the noble Baroness, Lady Miller, has spoken in the way that she has. Until that point, I thought that this was becoming a dangerously unbalanced debate, with the notable exception of the noble Lord, Lord Lucas, and, to some extent, my noble friend Lord Maxton. There was acceptance of the approach of going down the line of sanctions to transform the position on illegal file-sharing and downloading.
In the interests of balance and, possibly, of time, I have scrapped the part of my speech which was supportive of many of my noble friend the Secretary of State's proposals. However, I assure him that there are large parts of this Bill and the objectives of the digital Britain programme that I strongly support. There are also significant parts which I find very difficult to support and I will raise these issues as we go through the stages of the Bill. I do so in part-I declare this interest-as the chair of Consumer Focus and thereby speak on behalf of millions of consumers, who do not really understand copyright law, who do not know whether what they are doing is legal or illegal and who, to some extent, as my noble friend Lord Maxton, has said, now expect a free service and will be resentful of and resistant to attempts to curb that. That is not to excuse it, but to face up to the reality of the modern age.
I do so in part in relation to my role with Consumer Focus. But I do also-this is why I am slightly surprised at the balance of the debate-simply as a Member of the House of Lords. Normally, your Lordships' House is deeply diligent about issues of human rights, privacy, due process, the rule of law and the need to provide proof in cases of criminality and the equivalent. It is also very insistent on the principles of better regulation, which this Government and many opposition parties have embraced, relating to proportionality, transparency and enforceability of the regulations that we have passed.
This law is ultimately not enforceable in the sense that it will get rid of illegal downloading. The background to this Bill refers to 6.5 million illegal downloaders. My rather limited understanding of the teenage world suggests larger numbers than that and that the number of transactions which each of them could be accused of engaging in illegally will amount to hundreds of millions of individual transactions. You will only ever scrape the surface of that. As the noble Baroness, Lady Miller, has just said, those who are making serious money out of it will be able to engage in encryption and other ways to avoid detection and enforcement. I agree again with the noble Baroness, Lady Miller, that the Government should have chosen a different road.
There have been many references, including that of the right reverend Prelate, to this being the equivalent of theft. It certainly falls under the context of the commandment, "Thou shalt not steal". I am told by the noble Lord's officials, and I made the analogy myself, that technically it is not theft because, at present, it is enforceable through the civil courts and not the criminal courts. But even if we accept that it is theft, the shoplifters who steal the actual DVD, which is worth a lot more than the rights of an individual download to the rights holders, have a fair trial and are subject to due process. They do not receive a letter, but, at the first attempt of enforcement, they are subject to due process. However, in this system, due process enters the equation only at appeal stage and then as a result of strong counterlobbying by among others my own organisation. There is a real problem about the impact assessment and about how much you could actually recover for rights holders. The noble Lord, Lord Lucas, made the point that the £200 million -or the £400 million which is allegedly the figure the rights holders are missing out on-is a purely notional amount. If you actually enforce this and the downloading finishes, not a penny automatically goes back to the rights holders. It is not a figure equivalent to any other area where we use sanctions in order to recover money on behalf of those to whom it is due.
I recognise there ought to be some return to rights holders. I am not denying that. But I am saying that the way forward must be to develop education and alternative business models and technical models on the lines of iTunes and Spotify and the very many other-I think one noble Lord referred to 35 now-different providers in this field of legal downloading. They have higher quality, are easier to use, easier to do and are relatively cheap compared with illegal downloading.
Surely the main way forward should be to develop legal ways in which the interests of rights holders can be met and to which consumers can relate, not engaging in sanctions that raise serious issues of consumer rights and human rights. That is happening but it is happening slowly and, as other noble Lords have said, it is happening far too late. The main focus of this debate and the main focus of this Bill should be to develop those alternative measures. Instead, the headline of this part of the Bill regrettably is on sanctions. It is on criminalising people who are unwittingly engaged in downloading and it is setting in statute and through the regulations that Ofcom will be required to produce sanctions that are not proportionate to the loss to the original rights holders. They are not necessarily the original rights holders because, as the noble Lord, Lord Lucas, said, most of the rights are actually owned by monopolistic companies, not individual creative persons. The sanctions are disproportionate in the sense that not only is the individual who actually committed the breach of copyright likely to be affected but also his or her whole family and in some cases businesses. It is also not clear whether there are exemptions to this in relation in libraries and schools and institutions which provide multiple access on the same e-mail address.
You are not simply penalising the individual who breaches the copyright but a whole range of other people whose livelihoods may well depend on access and unthrottled access to the internet. I am profoundly concerned about provisions in Clauses 4 to 17. I accept very much that the Government have moved from the position which was originally being urged on them, principally by the industry. I am prepared to accept that the first stage of the process that they outlined, which places the duty on Ofcom to look at how we can develop more legal ways of provision, is sensible but that is the provision that ought to be the main part of resolving this problem, not the sanctions. I still have profound objections to the sanctions as they stand in stage two of the process.
I hope that we can look at some of these issues in Committee. We may be able to move the Government further towards emphasis on developing alternative business models and the introduction of a fair use provision in copyright law that would enable most users to escape from being criminalised and ensure that where sanctions still apply they are in line with the principles of law and of protection of the citizen which are normally central to the concerns of this House and rightly so.
Lord Clement-Jones (Liberal Democrat)
My Lords, first, I thank the Secretary of State for his lucid introduction to the Bill and pay tribute to the noble Lord, Lord Carter, who presides in a sense over some of his legacy today-although he thinks that it is just the beginning of a continuum of activity towards digital Britain. He always made the distinction between the plumbing and poetry involved in moving to digital Britain. I am afraid that my speech will be mainly plumbing, but some of the speeches today have demonstrated real vision and excitement about the prospects. I have certainly enjoyed enormously hearing today's debate.
We on these Benches broadly support the Bill and the four key objectives put forward by the Government-the creation of a competitive infrastructure, the protection and development of our creative industries ensuring the continuing health of public service broadcasting, and the essential need for digital security and safety. This is a very skeletal Bill, however, which depends hugely on regulations and codes to deliver its intentions. There is not even a pig in the poke; the pig has not even arrived, in some cases. Our attitude to the Bill will be whether critical amendments are made, whether some of the crucial questions are answered and whether vital assurances are given by Ministers during its passage through this House.
I shall not go over all the ground trodden so ably by my noble friends Lord Razzall and Lady Bonham-Carter, but I want to highlight some of their points. First, we support the extension of the duties of Ofcom. However, we believe that the National Audit Office should have an extension of its powers to ensure efficiency among public service broadcasters. We also, like the noble Lord, Lord Fowler, believe that the BBC Trust has had its day and that the governance system for the BBC needs replacing. We need a proper public service broadcast regulator-an overarching regulator for all public service broadcasting.
My noble friend Lord Razzall set out very clearly the principles on which we support the Government's proposals on online infringement of copyright. Our position is that it is vital that creators have protection from those who infringe their copyright and deny them financial payment for their work. However, in the words of the chairman of UK Music, Feargal Sharkey:
"Our focus is not to disconnect, but to reconnect. To reaffirm and recognise the value of creative works, both to individuals and to the UK economy".
That is not a negative. Much was made today by my noble friend Lady Miller and the noble Lords, Lord Lucas and Lord Maxton, of the need for new models. Of course, there is a need for new models for creative exploitation, such as Spotify; we agree. But there needs to be a backdrop of protection for the creative industries to enable innovation to take place. That is the basic point. It is clear that if no action is taken the UK creative content industries will suffer massive losses in displaced content sales. Give or take the impact assessment that sets it all out, some of that might be overegging it slightly-but it is there or thereabouts.
We broadly share much of the Government's intention in offering protection to creators while ensuring digital access for the public. However, we are very clear about the conditional basis of our support for the provisions in this Bill. First, the terms of the all-important initial obligations code must make it clear what those thresholds are. The thresholds must be proportionate and must not be set too low. We should know what they are before the Bill goes through the House. There are also potential problems, as my noble friend Lady Miller pointed out, for an internet access service that has to take responsibility for people using its system, such as an internet café, wi-fi router connections and so on. Who will be liable in those circumstances? Who bears responsibility? Will this kill off community wi-fi services and internet cafés? We must be very clear about the impact of this.
My noble friend Lord Razzall made the point about the concerns of mobile broadband providers. Particularly dangerous are the retrospective provisions set out in the Bill, whereby they may be obliged to build massive, expensive databases just against the possibility that they go over the thresholds and have to start notifying customers-in which case, they would need to retrieve all the past information. It is crucial that those retrospective provisions are taken out. It is also crucial under the initial obligations code that there are provisions that relate to the assessment of the quality of the data provided by rights holders. Many noble Lords have raised this issue in terms of the attribution of IP addresses to individuals. Who will ensure that this is of sufficient standard? Ofcom? An independent body? This is a crucial aspect.
Of late, we have seen a proliferation of lawyers' letters, acting for the pornography industry, as the noble Lord, Lord Lucas, pointed out, often against innocent people asserting copyright claims and threatening court action. Which? and others are right to raise these cases, but I hope that the provisions of the new code will obviate the need for this heavy-handed type of action.
Clause 10 gives the Secretary of State power to direct Ofcom to assess whether technical measures should be imposed, take steps to prepare for them and report to the Secretary of State. On these Benches we are deeply concerned that it does not explicitly say that the Secretary of State must wait for a year before beginning this assessment and preparation for technical measures to give adequate time to assess their effect. This should be only after a compulsory report from Ofcom.
As regards Clauses 12 and 13, and the contents of the technical measures code, there needs to be clarity on limits to the period of any account suspension or limiting, and we need clarity on the administrative body and the tribunal and appeal process and where the onus of proof lies. My noble friend Lord Razzall has raised the issue of sharing of costs. There needs to be much more about the equitable sharing of costs between the ISPs and the rights holders in the Bill.
Clause 17 is the most controversial clause in the whole of the Bill. There are many Henry VIII clauses in the Bill, but this is the most sweeping, and I see that Google, eBay, Facebook and Yahoo are also concerned about it. The amendments to the Copyright, Designs and Patents Act 1988 give the Secretary of State power to amend Parts 1 and 7,
"for the purposes of preventing or reducing the infringement of copyright by means of the internet".
The argument is that the Secretary of State needs to respond to new technological developments. But the Secretary of State could completely rewrite the law of copyright relating to the internet without any primary legislation. There has been no urgency displayed by Ministers in implementing many of the Gowers committee recommendations even in this Bill, despite the opportunity to do so. It would be quite wrong for copyright law in the digital era to be exclusively dealt with by secondary legislation in such a sweeping way.
I understand that the reason for this provision is so that the Government can deal with the enforcement of copyright against so-called cyberlockers which do not involve P2P file-sharing as such. But if this is the intention, why not put it in the Bill? Why is it not an amendment to the Communications Act rather than the Copyright Act 1988?
In other parts of the Bill, powers in relation to internet domain names on the face of it look like a perfectly reasonable provision. But I was very interested to hear what the noble Lord, Lord Lucas, had to say. Can the Minister clarify whether the provision has been notified to ICANN and what its response has been? After all, that is the global independent body responsible for the security and stability of the internet. What advantage does it see in having these provisions in UK domestic law?
My noble friend Lady Bonham-Carter has made our views positively clear on the extended remit for Channel 4. But as the noble Baroness, Lady Howe, said, where is the finance going to come from for this extended remit? We heard about a £100 million deficit for Channel 4 coming down the track-where is the additional subvention going to come from? We all need to know whether there are answers to that, and I know that the noble Lord, Lord Carter, laboured long in the vineyard trying to put together various solutions.
I come to ITV. As my noble friend Lady Bonham-Carter also said, we are very much in favour of these provisions, which reduce the regulatory burden on Channel 3, or ITV. We are also in favour of the new pilot projects for IFNCs starting in Scotland, Wales and the Tyne Tees and Borders ITV regions next April. It seems peculiar, however, that there have been no decisions on continued funding. Surely, to start those trials without a clear idea of where the future funding will come from, once the full rollout takes place, is going to be a big mistake. It is building up false expectations if that funding cannot be provided in future.
I put another marker down, as my noble friend did, that we would not support top-slicing to support that particular aspect of additional independent news provision on ITV. My honourable friends in Scotland are extremely concerned, as we are, about the Gaelic television provisions, which are potentially no longer going to be with STV. I know that there is optimism about them being provided by Alba, but that is not a done deal and it may deprive those who depend on Gaelic television in Scotland.
I move on again, to independent radio services. We broadly welcome the provisions for digital switchover. Of course, full switchover will only happen on a specified date if certain criteria for uptake are met, and the only way that one will get further adoption is by setting a firm date. I hope that the Minister will confirm that we are currently working off a 2015 date, but there are concerns among smaller radio stations that the digital multiplex regions that have been defined are too large. Small, local stations will be broadcast across the whole of a large region covered by a multiplex, and may be expected to pay a rental reflecting that. That would be unfair on some of those small stations. Many of them are arguing for DAB plus, a technology which would be, I believe, much more in tune with their requirements. I would be grateful to hear what the Minister says in that respect.
Coming to access to the electromagnetic spectrum, on these Benches we have not yet decided whether to support the Government's proposals on that. The impact assessment claims that this will have,
"the maximum possible effect in terms of promoting and sustaining competition in the mobile sector".
If the changes in the Bill cannot be implemented by Ofcom, it is said that some mobile network operators may have to delay the rollout of 4G. Yet are we selling a valuable resource, one which is worth billions more than will actually be derived under the Government's proposals, too cheaply? Selling the spectrum piece by piece, rather than in the package proposed by the Government, could perhaps get us a much better return. Government plans are not in line with how other countries in Europe are dividing up their spectrum.
Those who have talked to us on these Benches have also argued that there should be some provision for a new entrant to the market in the auction of new spectrum in the 2.6 gigahertz and 800 gigahertz spectrum-a section of spectrum that no existing holders can bid for. That was the case with the original auctions; why is it not being proposed in these circumstances? Are we simply ensuring that existing mobile operators are deriving an unfair advantage over the fixed-line ISPs or are the Government putting forward some real advantage, such as a public service obligation for the mobile operators? That does not exist at the moment, but is there some proper quid pro quo taking place?
We have a diminishing number of mobile operators, and it looks as if they are going down from five to four. At present, the current arrangements look like a carve-up between those mobile operators. If we could find further funds from that mobile spectrum auction, surely those could go toward some of the new, superfast broadband delivery or some of the future ITV news requirements. Would that not be beneficial? The Government set great store by the Independent Spectrum Broker's report, but no one seems to have seen the remit given by the DCMS to the Independent Spectrum Broker's report, so it is very difficult to judge whether the spectrum proposals are proper and the right way forward. We strongly support the adoption of the enhanced PEGI standards for video recordings. We believe that it will be a tougher regulator and it is, of course, the only pan-European regulator.
There are a number of matters missing from the Bill. We very much look forward to the super-fast broadband levy in due course. It would be useful if the Minister, in winding up, could address the press reports that have been made about exactly what that levy will consist of. We generally support the principle of a levy to support the rollout of super-fast broadband. I have to finish now. We have not seen any statement in the Bill about the new digital delivery agency. There is nothing in there on media ownership rules and there are any number of copyright provisions that have not been included, as mentioned by my noble friend Lord Razzall in terms of format switching. That, of course, should be included but is not. I very much hope that in Committee we can make a number of amendments to improve the Bill.
Lord Howard of Rising (- Shadow Minister (Also Shadow Minister for Treasury and Culture, Media and Sport), Shadow Minister, Shadow Minister (Also Shadow Minister for the Cabinet Office and Treasury), Culture, Media and Sport, - Shadow Minister (Also Shadow Minister for the Cabinet Office and Culture, Media and Sport), Shadow Minister; Conservative)
My Lords, it is nice to see the noble Lord, Lord Carter, back in the House. I am sure that, with his great knowledge of the subject, he will be very helpful when we get to Committee.
Welcome though it is overall, the Bill has its disappointments. As my noble friend Lord Fowler pointed out, a number of matters remain to be addressed. There was an opportunity for Her Majesty's Government to make Britain, in digital terms, one of the most advanced countries in the world. In the case of broadband-conspicuous because of how little there is in the Bill about this crucial matter-the very low target for 2012 will merely confirm that Britain is in the digital dark ages. How regrettable that there is no chance to debate the Government's plan, or rather lack of one. So far all that has been suggested is a new tax, but there is little information on how the money raised will be spent. Spending money without proper examination creates the danger of leaving the UK with an expensive infrastructure that is already out of date and not responsive to consumer or industry needs.
The Government should be looking at the regulatory regime in this area and reviewing how outdated and burdensome piles of red tape could be got rid of to assist and encourage private sector investment. This is urgent. Already the internet system is creaking, with mobile networks crashing, and we are still in the early stages of the revolution in communication that is taking place. It is shaming to read Cisco's report Britain is only 31st out of 66 countries in broadband speed.
Broadly speaking, as the Secretary of State has explained, the general duties of Ofcom are amended to extend investment in infrastructure and promote investment in public service media. This is done by amendment to the Communications Act 2003. However, the 2003 Act already seems to cover everything included in the Bill. Could the Secretary of State let the House know what in particular will be achieved by the proposed amendments to the Act, that could not have been achieved without the Bill that we are discussing today? For example, under chapter 3 of the framework directive, "Tasks of National Regulatory Authorities", Ofcom already has a duty to promote efficient investment in infrastructure.
In addition, the explanatory document repeats the obligation under the 2003 Act to further the interests of citizens in relation to communication matters. Does this not cover any conflict between short-term and long-term objectives? How can the interests of citizens not allow, or, indeed, encourage, a sensible view to be taken of long-term considerations?
Another concern is the promotion of appropriate levels of investment in public service media content. What is "appropriate", and to what does it apply? Does it, for instance, apply just to the public service broadcasters' online activities, or to all online content which could conceivably count as public service? Is it the amount of money invested, or is it where it is invested? Is it a requirement for the BBC, the largest public service provider, to invest in making programmes specifically for the internet, rather than using the internet to reproduce and promote its television and radio content? We think that the BBC news website, for instance, is a good thing, but would not want it to use this clause as an excuse to expand its online activities beyond their core purpose. These are matters for Committee, but it would be helpful if the noble Lord could tell the House a little more precisely what this clause is trying to achieve. It is broadly drafted and raises many questions.
No one could argue with the aim of Her Majesty's Government to tackle the massively important area of illegal file-sharing, but the lack of detail in the provisions is disappointing. The lack of certainty is a particular concern for internet service providers, especially mobile broadband providers, who are unsure about the cost of compliance. It is possible that these clauses will set up a proportionate, fair and effective regime, but, bearing in mind the dissatisfaction so many stakeholders have expressed, there must be doubts about how well the provisions will work. These provisions will need to be scrutinised very closely in Committee, especially Clauses 11 and 17. I listened closely to what my noble friend Lord Lucas said. The noble Lord, Lord Clement-Jones, also made some most pertinent comments on Clause 17.
Clause 11 appears to imply that the Secretary of State does not need to consult Ofcom before introducing technical measures. We would be reluctant to see the Secretary of State given such comprehensive and unchallengeable powers. As he himself has pointed out, the latter clause on copyright needs to be updated to take account of new media forms, but this clause does not do that; it just allows the Government to do whatever they want at any point in the future. Although some future-proofing may be necessary, it is regrettable that such a large and important part of a modern digital economy should be left to secondary legislation, with the corresponding lack of scrutiny and certainty. Will the Secretary of State confirm that, as my noble friend Lady Buscombe pointed out, Clause 17 would in effect enable him to rewrite the entire basis of British copyright law by statutory instrument?
It is hoped that the current system of domain name registration can continue to operate in the interests of consumers and businesses without the need for government intervention. There is a case for government obtaining reserve powers to take action where serious failures may be identified, but greater detail is required on how these powers will be used, and what will trigger their use. Could the Secretary of State tell us how he will decide whether a domain registry is responsible for a serious failure, and what criteria will be used?
The Bill has provision for public subsidy to prop up regional news. Despite the well argued plea from the noble Lord, Lord Mandelson, I believe this would be quite wrong. The situation would arise of news providers pursuing subsidy rather than their rather more important task of pursuing news. Worse still, in today's world of spin, one body funding all news carries the hideous potential danger of that body seeking to influence the news. If outdated and restrictive regulations on commercial service providers were removed promptly, the necessity for subsidy could be avoided.
While we on these Benches support the switch from analogue to digital radio, it is a sensitive area. It would be good if the Government could give some assurances of what criteria will be used to decide when will be the appropriate time for the changeover. Will the Government be guided by the criteria set out in the Digital Britain White Paper, referred to by the right reverend Prelate the Bishop of Manchester? If so, we remain unconvinced that the 2015 target date is realistic and worry that millions of listeners and hundreds of local stations will be disadvantaged.
There are many for whom the digital switchover will cause problems: the elderly or the lonely, who may have had a wireless for many years which has become almost a companion; the blind person who will not be able to work the digital radio because the instructions are on a screen that they will not be able to see. I hope that the Secretary of State can reassure the House that proper care and attention will be paid to the needs of those who will encounter difficulties with the transition.
On these Benches, we welcome the moves to a single classification for video games. We are concerned, however, that the Government have not taken this opportunity to address the loophole in video classification laws that allow violent, sexual and other harmful content to escape age verification if they are part of music or sports videos and films.
Among other comments, my noble friend Lord Bridgeman made some pertinent remarks on Clause 45 about collective licensing. What is the Minister's view on this potentially tricky subject? In the Bill, much of the devil will be in the detail and we on these Benches look forward to the Committee stage where the detail and the Government's future intentions can be examined thoroughly.
Lord Davies of Oldham (Deputy Chief Whip (House of Lords), HM Household, Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs; Labour)
My Lords, I am grateful to all noble Lords who have contributed to this most interesting debate. I, too, am pleased to see my noble friend Lord Carter present, as he did so much work earlier this year on the concepts underlying the Bill. The only thing I would say in reply to his comment that the Bill team has done a good job is that they are only in the foothills-we are nowhere near the Himalayas yet. I assure him that the Bill team has to earn its medals through a great deal of work as we go through Committee, Report and Third Reading on the Bill.
I am of course grateful that the opposition parties have indicated their broad support for the Bill. The opening speeches therefore filled me with some joy. I was grateful to the noble Lord, Lord Fowler, for his constructive approach to the issue, not only because he was the first opposition speaker but also because he chairs the important Communications Committee. We therefore always take his views on these matters with the greatest interest and seriousness. I was pleased that he emphasised one dimension which did not get much coverage in the debate-the difficulties, perhaps reaching crisis proportions, surrounding local and regional news. The noble Lord, Lord Birt, reinforced the point that the noble Lord, Lord Fowler, made, so I make no apologies for the fact that the Bill addresses this issue-it is important. There is no doubt that the wider public take a very great interest in local news, and as the opportunities and the provision contract, it is a very real loss to them. I am grateful to both the noble Lords, Lord Fowler and Lord Birt, who emphasised that dimension and said that it is an important issue that the Bill addresses.
I also want to address the issues about Ofcom. I emphasise that this Bill is not about expanding Ofcom's remit, it is about ensuring that we can take account of future investment in infrastructure and public service media content when considering Ofcom's duties to promote competition and protecting consumers. That is a proper obligation to put on Ofcom in this rapidly changing world, where it is obvious that it needs to take account of such opportunities. We are strengthening the Ofcom remit; we are not seeking to grow or extend it.
I say to the noble Baroness, Lady Buscombe, who emphasised this point, that we are expecting more from Ofcom under the Bill, but, after all, she chairs a self-regulating committee, the Press Complaints Commission, so she will recognise that as a regulator, Ofcom has much to be proud of. Ofcom is an organisation that is certainly fit to take on the new and revised responsibilities that the Bill introduces. I bring to the House's attention the fact that Ofcom has been voted the best telecoms regulator in Europe by the European Competitive Telecoms Association every year since the ECTA scorecard was introduced in 2005, so it has good credentials.
Baroness Buscombe (Conservative)
I am grateful to the Minister for allowing me to intervene to say that I in no way intended to criticise Ofcom or its role. I was concerned about the possibility of the unintended consequences of ensuring impartiality in the provision of online news in the new consortia, when part of the consortium may involve news provision by newspapers-newspaper websites online-which, of course, are not impartial in their provision of news. We need certainty and clarity. We need to think about that at further stages of the Bill.
Lord Davies of Oldham (Deputy Chief Whip (House of Lords), HM Household, Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs; Labour)
My Lords, I recognise that point, and I have not the slightest doubt that it will be discussed intensively in Committee. However, we are on Second Reading and therefore discussing general principles. I sought to establish the general principles of the Bill as it concerns Ofcom. We can address some of the more detailed dimensions later in Committee. That is bound to be the case with the wide range of contributions that I have heard today. To answer every point would keep me here until close to midnight and would scarcely win favour. In any case, I would not be doing what a wind-up speech on Second Reading should do, which is to meet the central points and give some reassurance that the Government have thought seriously about the Bill, so that we can go to Committee and refine our arguments there. However, I am not for one moment discounting the obvious fact that there are some substantial points that have created a degree of a controversy.
I thought earlier that the Government were being reassured about the Bill because of the extent to which those on the Front Benches were-although indicating their reservations about crucial parts of the Bill in the sanctions to be applied in defence of the copyright position-expressing broad support for the Bill. My noble friend Lord Whitty made sure that I was brought up short because he said that there would be formidable challenges on those terms. He was preceded by the noble Baroness, Lady Miller of Chilthorne Domer, who also expressed worries about that.
I emphasise that the sanctions are meant to be applied sensitively. I was asked whether the initial letter will be expressed in sympathetic terms. Of course we would expect that. I accept entirely what my noble friend Lord Whitty said, and the noble Baroness, Lady Miller, expressed similar sentiments. People may innocently transgress; not everybody is as knowledgeable as they should be about these matters. These companies have to write to their customers on other matters in any case. For example, if people do not pay their bill in time, the companies will write to them. We expect that the approach will be one of concern for the individual who has carried out an infringement. That does not alter the fact that the Government are convinced of the necessity for effective sanctions when the transgression is obvious, repeated and serious.
I am grateful to noble Lords who indicated the problem with a copyright law that goes back over 300 years, and has had limited updating since in a modern age when the capacity to infringe copyright is so readily available through technology. That is the nature of the problem we face. I recognise that in Committee we will have substantial debates about these issues. The Government's drafting of the Bill reflects the fact that in this crucial area we must safeguard the rights of the industry. We do that because of the point made my noble friend Lady Morris, the noble Lord, Lord Fowler, in his opening speech, the noble Lord, Lord Birt, and nearly all noble Lords who contributed to this debate about the significance of our creative industries. They paid due respect to their significant and rapidly growing role in the economy and to the fact that in certain areas they are among the fastest growing parts of the economy. Those rights must be safeguarded because, as my noble friend Lady Morris so graphically identified, the industry is fast-growing, but it is vulnerable to downloading without cost. That creates circumstances where a substantial part of the British economy-its intellectual and creative industries-is vulnerable. We went to the industry and looked for proposals on the way in which this issue could be resolved without the sanctions that we are suggesting in the Bill, although they build up gradually and are meant to be applied sensitively. However, we could not get agreement on that position, which is why we are obliged to legislate.
One feature that has come out from all sides of the House in this debate is the extent to which the development of the digital economy is crucial in terms of the number of people it employs. It is important in its contribution to the economy, and is also, as my noble friend Lord Maxton and other noble Lords indicated, an enhancing facility of great moment for our people. I am grateful to the noble Lord, Lord Roberts, for identifying the problems when the services are not available. People can engage in learning and information and have access news and educational opportunities and development at their command, provided we meet the points that the noble Lord, Lord Roberts, indicated. Resources are not part of the Bill. He will know that, separate from the Bill, we are determined to ensure that rural areas have access. Not only rural areas of Wales have limited access but other areas of Wales have it too. That is also true of England and Scotland; there can also be blind spots in urban areas. We intend to address the broad structure through this measure, but the noble Lord will know that we have already addressed the question of resources. I assure noble Lords that we will use these opportunities for expansion with great care.
The right reverend Prelate the Bishop of Manchester indicated the issues that arise with the digital switchover. I emphasise that we will not make the switchover for radio until there is already 90 per cent coverage in the United Kingdom and until 50 per cent of hours of radio are listened to via digital stations. We have criteria before we actually make the move. This follows on from points about the switch from analogue to digital television. I take on board his point that it is important that any changes that are made benefit people and do not shock them with a possible loss of services and extra cost. That point has to be addressed.
I reassure the noble Baroness, Lady Howe, about the important dimension which she brought to the debate-I think probably uniquely-from her background and the work that she has done in the past. Of course we are concerned about harmful content slipping under the video classification radar. Music, sports and religious videos lose their exemption from classification if they depict certain content: including sexual activity, mutilation, gross violence or a number of other practices that are likely to cause offence. If unclassified videos are on sale when they should not be, it is for the appropriate enforcement authorities to take action. Those providers must also abide by other laws, the Obscene Publications Act being one of them. However, I take on board her point that the new technology gives rise to fresh issues in this area. I know that she will pursue them in Committee, but I assure her that the Government have been concerned to address these matters. That is why the Bill is framed as it is.
The noble Lord, Lord Lucas, indicated that he hoped that those on his Front Bench would vote against Clause 17 in its entirety. I do not know whether he has persuaded them yet, but he may feel that he has some support there. The noble Lord, Lord Howard, may also have detected that there are rather varied opinions about enforcement, so I hope that these matters will be addressed with care in Committee. We on the government side will emphasise that Clause 17 is a very important part of the Bill. In fact, it is absolutely crucial to that issue.
I emphasise that I have very much appreciated the demonstration of commitment to and expertise on this issue, which is probably the most important of the constructive economic issues that we will address over the next few months. That is because of the potential of this industry. The Bill encompasses very big and real issues and has to address them. I do not have the slightest doubt that the digital economy is an absolutely crucial growth sector and will be in the future, and that we have to act as speedily as we can. As the noble Lord, Lord Howard, said, we are not at the forefront of provision among advanced countries. We have ground to make up, but on the basis of this Bill, we can do more than that. We can make provision which is as good as anywhere in the world, and it is crucial that we should do so. The sector is now considered to account for almost £1 for every £10 produced in the economy each year. That is how important it is, and that is why the Bill is concerned not only with enhancing the capacity for development, but also with the crucial issue of protecting certain aspects of intellectual and property rights.
I am mindful that I have not been able to address all the points that have been raised in the debate. The noble Viscount, Lord Bridgeman, raised some detailed and very important issues and I am well aware of them. They will have to be addressed in detail in Committee, and I hope that we will be able to give him the reassurances he seeks. At this stage, I do not have much proof to offer him, but we have considered these matters and I think that I have satisfactory answers to his specific points. However, this is not quite the opportunity for me to go into such detail.
The noble Viscount and other noble Lords have indicated that we will have a most interesting and challenging Committee stage. It would not be the first time that we have conducted considerations in Committee of some intensity and at some length even when on all sides of the House the Second Reading of a Bill has been greeted with acclaim. I cannot quite suggest that this Bill has been welcomed with acclaim, but I am encouraged that all noble Lords who have spoken referred to the significance of the subject and the importance of the advance of the digital economy. It is against that background that we will go into the important details and, in one or two instances, the important principles that underlie several clauses. I look forward, along with other noble Lords, to the Committee stage.
Bill read a second time and committed to a Committee of the Whole House.