Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

At the end of the sitting this morning, we were talking about ways of achieving the roll out of broadband. There was universal agreement among members of the Committee that one of our key challenges was to achieve wider access. Another challenge is to try to achieve a more competitive market. In some ways, those challenges may conflict. In other ways, however, it can be argued that achieving a more competitive market may increase the availability and, hopefully, the take-up of broadband.

There has long been discussion that such an increase in availability and take-up can be linked to local loop unbundling, which has been around for some time. However, it is fair to say that not much progress has been made to date. The local loop is, in effect, the pipe between the exchange and the home, and is the final stage of the telecommunications journey. It can be used to deliver various services, and it is envisaged that one way of achieving greater competition will be to open up the local loop—the final stage of the journey—to operators other than BT.

As I said this morning, broadband access may eventually be delivered in various ways, of which ADSL over a fixed wire looks to be the most promising. BT is clearly investing a great amount of money in promoting it. There is also the existing cable network. That is not to say that there are no other potential mechanismsthere is cable, satellite, wireless and local loops. However, in the immediate term, it is fair to say that the mechanism is likely to be fixed-wire delivery.

The purpose of local loop unbundling is to try to achieve a degree of competition in that particular sector of the market. It is unrealistic to argue that we will achieve a competing infrastructure. It would clearly be almost impossible for a new entrant into the market to invest in an entirely new network. It would also be fairly pointless. The sector is now firmly governed by European directives, as are subsequent clauses and a large part of this one.

It is worth noting that the European regulation on local loop unbundling states:

''It would not be economically viable for new entrants to duplicate the incumbent's metallic local access infrastructure in its entirety within a reasonable time. Alternative infrastructures such as

cable television, satellite, or wireless local loops do not generally offer the same functionality or ubiquity for the time being''.

For that reason, the European Union has attached great importance to the success of local loop unbundling.

It has been argued, particularly by BT, that it is perhaps unfair that it should be singled out to be required to unbundle its local loops. It has pointed out that the cable infrastructure now passes some 12 million homes—about 50 per cent. of all properties—and that the same condition should therefore apply to cable operators. To date, Oftel has felt that it is not necessary to request cable companies to open up access to the local loop, although we need to continue to monitor the situation. Does the Minister envisage imposing such access-related conditions on cable companies in due course?

Mr Michael Fabricant (Lichfield, Conservative)

Does my hon. Friend agree that cable companies have at least invested in the latest technology? They provide services to people's homes by coaxial cable, with all its advantages, rather than by copper twisted pair, which causes all the difficulties with ADSL. The prime difficulty is the limitation of 5.5 km from the main exchange, which has to be provided by a fibreoptic feed. Would it not be preferable if fibreoptic feeds, or at least coaxial cables, were provided to every home, which would then have not ADSL but DSL?

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

Clearly that would be hugely preferable. As we discussed earlier, ADSL represents a considerable step forward on the narrow-band access. However, the speeds that will be possible if we achieve the fibreoptic network to which my hon. Friend refers will be vastly faster and will offer a far greater range of services than even ADSL—

Mr John Robertson (Glasgow, Anniesland, Labour)

The hon. Gentleman may be unaware that copper wire will give all the necessary service. Fibreoptic is not required. So much goes into it that the cost would be astronomical. It would be far more advantageous to put the money into the copper network.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

To some extent, it depends what is going to go down the wire. I agree that it is ambitious to expect fibreoptic cable to go to every doorstep in the foreseeable future, however desirable that would be. We shall have to take advantage of the existing network. Fibreoptic cable offers great opportunities for linking exchanges, but I am sure that the hon. Gentleman is right in the case that we are discussing—the final stage of local loops going to each home.

Mr Brian White (North East Milton Keynes, Labour)

Is the hon. Gentleman aware that in countries such as South Korea and Sweden, which have a lot of dark fibre in their ground, the public authorities have invested in it and then opened it up to competition? Is he advocating that the Treasury should allow public service investment in fibre?

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

Given the competing demands on public expenditure, I suspect that if the hon. Gentleman were to talk to the Chancellor he might find that he had other priorities. In due course, the market might supply such investment anyway. However, for now we have to work with the existing position. We are dealing with copper wire in the local loop.

Let us briefly consider the history. For a time, it appeared that the regulator, Oftel, now to be replaced, was trying to encourage the alternative infrastructure. Although it recognised the potential of local loop unbundling, it even talked about building separate buildings next to existing BT exchanges. It concluded that for the time being direct competition to the BT access network would adversely affect the development of competition and would not be in the interests of the UK consumer.

A development in Oftel's thinking took place when the current director general, David Edmonds, took up his position. He suggested that trying to encourage infrastructure competition was unlikely to provide the immediate boost to competition that was desirable, and therefore gave a higher priority to achieving local loop unbundling. His main reasons for reopening that issue were that the European Union had already identified it as a priority and that it would be a way of achieving the rapid expansion of new technologies. In 1999, he announced that BT should be required to permit access to its local loops. A target was then set whereby such access should be achieved by July 2001.

I do not want to spend a great deal of time going through the entire history of the subsequent, somewhat unhappy, negotiations between BT and the alternative providers that sought to take advantage of the new opportunity of gaining access to the local loop through the exchanges. It was initially suggested that they should focus on a limited number of exchanges—the so-called bow wave process—and that was followed by a great argument as to which exchanges should be opened up first. Companies were then invited to apply for particular exchanges.

It was decided that the first exchanges to be opened up should be those where there was a relatively low level of demand—in other words, where there were not a large number of companies asking for access to the same exchange. It can be argued that the consequence of that was that the exchanges that were identified as priorities for opening up were not in the areas where demand was highest. That approach was criticised. Indeed, the Select Committee on Trade and Industry concluded:

''If the first Bow Wave list has now been largely disregarded, the wisdom of proceeding down that route in the first place must be open to question.''

Apart from that false start, there was also criticism of BT and Oftel. Several of the other licensed operators—those who sought to take advantage of the situation—had complained to Oftel that BT was deliberately thwarting the progress of local loop unbundling. Several words were thrown around. Operators complained of BT's ''recalcitrance''. The director general of Oftel said:

''I think there was a series of examples during those months in the early part of—

the introduction of the process—

''when BT were deliberately holding back on information, when BT were not progressing the roll-out of local loop unbundling as fast as we would have wished.''

He went on to talk about ''bitter conversations'' and finally, in a phrase that has been widely quoted, he said that the relationship between Oftel and BT was

''almost trench warfare for much of the summer.''

Certainly, BT was not as accommodating to those who sought to take advantage of local loop unbundling as some would have wished.

At the same time, some operators were critical of Oftel, saying that it should have moved much more quickly and done more to put pressure on BT to open up its exchanges. One company, Thus, remarked of Oftel's interventions:

''many of the steps they took were helpful 'but it is a question of too little too late.'''

The Computing Services and Software Association said:

''It is now evident that Oftel has failed markedly in its quest to have BT provide access to other carriers at the local loop level.''

It went on to say:

''At best Oftel is revealed as an organisation basically powerless to push BT into opening up the local loop. At worst, Oftel will be cited in history as a stunning example of the captured regulator''.

I do not intend to spend my time being rude about BT because it is moving strongly in the right direction, and to some extent we are revisiting the past in examining its history. That history obviously relates to the clause, however, because it is precisely the challenge with which the new regulator, Ofcom, will have to deal in trying to achieve greater progress if the Government still take the view that local loop unbundling is a priority in achieving a competitive market and wider access to broadband, which we were talking about earlier.

It is noticeable that our record in this area does not compare well with the achievements of our partners elsewhere in Europe. Not long ago, the Financial Timessaid:

''Attempts to foster competition in Europe's local telephone networks have failed, with Britain among the worst offenders in opening up the market.''

Figures produced by the European Competitive Telecommunications Association, which is the telecommunications trade body, reveal that less than 0.01 per cent. of European local loop lines have been unbundled to new entrants. On the scale of the achievement in Britain, whereas the Government had set a target of widespread unbundling, earlier this year out of 29 million lines in the hands of BT some 164 had been unbundled. The figure is a little higher now, but 164 out of 29 million gives hon. Members a good picture of the progress that we have made. That compares with 623,000 unbundled lines in Germany, where unbundling started in 1998, and 40,000 in Denmark. The ECTA also noted that France and Spain have barely got off their starting blocks. The figure in France was 400 and in Spain it was 10.

Because of the difficulty that a number of companies have had in gaining access on fair terms

to exchanges, the number of companies in the market has fallen dramatically, which is worrying. Originally, some 40 companies were interested in competing in BT's exchanges, but I understand that the present figure is three. It is clear that at the moment local loop unbundling has stalled. Indeed, in some respects it has gone backwards since some lines that had been unbundled have been lost because one of the companies responsible for unbundling, OnCue Telecom, which had unbundled 40 lines, went into liquidation. The number of lines actually fell from 180 about one year ago to about 150.

My conclusion is that local loop unbundling is not really happening. The question for the Minister is whether the Government still regard it as a priority. What does he think that Ofcom can do in order to get it going again? Those alternative operators that still think that local loop unbundling represents a viable commercial prospect say that there are things that could be done to allow progress to be made. They also recognise that Oftel has achieved more in recent months and has certainly begun to chip away at some of the barriers that have been erected.

I do not want to go into the details, but there are options such as co-mingling, unescorted access—which should remove the need for expensive, purpose-built equipment rooms—line sharing, perhaps a compensation payments scheme to incentivise BT to reduce delays, and the cost-oriented pricing of back hall circuits. Those elements should help the process along, but in order to get local loop unbundling really going again, we must remove the remaining cost and process barriers, including pricing of back hall, and gain proper access to BT's operational information systems. Continued intervention from the regulator will be required to achieve that.

I want to take advantage of the opportunity in this debate about access-related conditions to invite the Minister to comment on the Government's attitude to local loop unbundling. Clearly, it is still a requirement under the European directive and, therefore, we must implement it. In the past, the Government have set ambitious targets to achieve local loop unbundling, but we cannot claim that we have made any progress at all towards achieving it. We are essentially stalled.

Mr Chris Bryant (Rhondda, Labour)

Is the hon. Gentleman aware that the Conservatives in the European Parliament voted on four separate occasions to delay local loop unbundling?

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

I was not aware of that. Clearly, I will have to have words with my colleagues. I am sure that they had exceptionally good reasons for doing that, and I shall be extremely interested to have a conversation with them and discover what they objected to in the directive. I do not believe that they would disagree with the overall objective of local loop unbundling. On that point, I shall conclude my remarks. I hope that the Minister will take advantage of this opportunity to tell us about the Government's attitude.

Mr Richard Allan (Sheffield, Hallam, Liberal Democrat)

I am pleased that the hon. Member for Maldon and East

Chelmsford (Mr. Whittingdale) raised local loop unbundling, which is entirely appropriate in a discussion about access-related conditions. This clause, like many others in the Bill, will become increasingly important over time, because it is the one by which, effectively, Ofcom takes on board the powers to dictate to infrastructure owners that they must allow others to use their facilities. The hon. Gentleman rightly mentioned the position of cable companies. Indeed, mobile telephone companies and satellite platform owners may also be affected by the clause.

It is important to remember first principles: we want the consumer to receive a good range of competitive services through whatever infrastructure is in place. In order for that to occur, investment in infrastructure and services by a range of players is essential. We are trying to reconcile through the Ofcom regulatory framework an inherent tension: if there is too much uncertainty in the market, investment fails—we may be in that situation at present—but if there is too much rigidity, innovation and competitiveness fail. We are trying to balance the two.

Our market has developed in a very odd way. The first era was based on the General Post Office-British Telecom investment infrastructure. It was right that that investment was treated differently, because the money was raised under a different premise—the public ownership premise—and the infrastructure was established on that basis.

During the second era, which was 1980s Conservative deregulation, cable companies were encouraged to enter the market and were given a different set of rules. Essentially, the premise was that they would not be forced to open up their infrastructure to competitors if they brought in investment and met certain conditions. As private investors with a protected position, they were in a different position. If one considers the current value of cable companies' shareholdings, it is hard to argue that forcing them to open up would enable the creation of more competing infrastructure. In fact, given the current state of investment, the reverse might be true.

Then there was the third period, which was the 1990s information and communications technology boom—the dotcom boom, as it has been called. A whole load of different players came in. They were knocking on doors, as the hon. Member for Maldon and East Chelmsford said, and asking for loop unbundling—it was a popular concept. People really wanted to get into the telecoms market but felt that the regulatory structure prevented their doing so. At that time, they could raise the money to do it.

If the interest has gone out of local loop unbundling it is, as much as anything, because the people who would have been knocking on doors saying, ''We have the money to put the kit into exchanges to deliver the services'' can no longer deliver that finance. The whole market sector is down and there is a slow rate of return on what is now very reliable telecommunications equipment. Once the equipment is installed, a low unit cost on the services offered is charged, and the rate of return is long. The investment climate has moved against local loop unbundling.

Mr John Greenway (Ryedale, Conservative)

There is another side to the hon. Gentleman's point. During the third phase that he so eloquently describes, many small businesses were attracted to the concept of developing their business through access to broadband. To pick up on this morning's debate, that simply is not happening, whether in urban or rural areas. Does the hon. Gentleman agree that it behoves the Government to make their mind up whether they want to tangible development? If they do, how are they going to achieve it?

Mr Richard Allan (Sheffield, Hallam, Liberal Democrat)

The hon. Gentleman is right. The investment climate could well improve, just as it became worse. When such improvement occurs, we want to attract entrants into the market who will deliver broadband and a whole range of other services. They will be knocking on the door again. We should not limit ourselves to thinking about the BT network. We need to ensure that there is certainty when people raise cash across the infrastructure to offer new services. When making investment decisions people must be certain about the sort of framework for access that Ofcom is to set out.

Mr John Robertson (Glasgow, Anniesland, Labour)

I have been following the hon. Gentleman's speech with great interest. He has covered several points, but he has not covered the fact that we cannot sell broadband at this moment in time. Even if the unbundling of the local loop happened tomorrow, the fact is that we could not get people to go into telephone exchanges to install their equipment in order to sell broadband. Will the hon. Gentleman tell me what he would do about unbundling?

Mr Richard Allan (Sheffield, Hallam, Liberal Democrat)

The hon. Gentleman tempts me into a broad area. In respect of encouraging investment in broadband services, there is a potentially strong market for some of the services touched on already, especially entertainment-related content, which has already been identified as an important area. There is also a range of functionality in areas such as open source software, which generate a great amount of interest in accessing broadband services. If one wants to download operating systems and applications from the internet, as is increasingly becoming possible, a current dial-up connection will not work very effectively. We are on the brink of a huge explosion in interest. It is a little like the chicken and the egg—which comes first, the exciting content or the access? We need both together. I have no doubt that the functionality that people can achieve through a broadband connection will drive up interest dramatically in the near future.

Clause 69 is where the access-related conditions will be critical. People may want to build on the infrastructure, or may feel that the only way to develop services is to create an entirely new infrastructure. That would be wasteful in terms of national resource and will also hold back development, as was the case with local loop unbundling.

Mr Brian White (North East Milton Keynes, Labour)

This is an interesting history lesson, and the lesson that comes out of it is that regulators can undermine Government policy. That is one of the key relationships, and the clause is key in ensuring that

the relationship between a regulator and Government policy is right.

Mr Peter Atkinson (Hexham, Conservative)

Order. Before the hon. Gentleman replies, I should say that he mentioned that he was coming back to the subject of clause 69. Without wishing to stop him, may I remind the Committee that we are talking about what Ofcom should do in the future? Will hon. Members focus on that rather than history?

Mr Richard Allan (Sheffield, Hallam, Liberal Democrat)

I am grateful for your guidance, Mr. Atkinson. I was immediately hoping to head in the direction that you have suggested.

I want to look at the issues that Ofcom will address. Clearly, the Government have a strong policy on encouraging the use of broadband, now and in future. Ofcom will have a critical role in that. The relationship between the Government and the regulator, and the way in which the regulator, although acting independently, will be able to take guidance, will be essential. We could take the opening up of the gas market as an example of a steer from Government through which, to use a rugby metaphor, the ball was taken by the regulator and carried forcibly over the line until a touchdown was achieved. Whether Ofcom can deliver the same is critical.

It would be a mistake to limit ourselves to thinking about the British telecom networks. Another matter on which Ofcom may be expected to adjudicate is whether it would be appropriate for the cable networks to open up in future to, for example, competing internet service providers that currently cannot access cable networks. The cable operators keep that within their domain, and can choose whether to offer access outside that.

The second matter that will be increasingly important is access to the mobile network infrastructure. Issues such as mast sharing have been raised and are very important. Clearly, there is a public desire for mobile phone services, a public dislike of mobile phone masts, and a general interest in reducing the number of masts. However, a potentially anti-competitive interest may need to be reconciled if infrastructure were shared to the extent that operators and markets were no longer competing, and those markets and operators ossified. Those issues are wrapped up together. Access adjudications may become critical when people begin to say that they do not need to set up an infrastructure as long as Ofcom uses its regulatory powers to allow them access to someone else's infrastructure. We will have to judge whether that should be the case.

The satellite market has grown dramatically and is now the primary platform for digital television. I do not think that that was envisaged initially; the Government envisaged a much quicker roll-out of the terrestrial digital market. Certain satellite operators have a significant position, and questions about that might be raised in future. I think that it was the hon. Member for Milton Keynes, North-East (Brian White) who said that the clause is critical and is likely to become more so.

The operators will not want to miss the boat again, as happened with local loop unbundling. If there is a market opportunity and money is flowing through the markets, ready to be invested in producing better services for the consumer—that is what we are concerned with—we should not miss the boat because there is no avenue in which that investment can take place, the routes through being insufficiently open. Ofcom will not have much time to adjudicate on some of those issues. It will need to respond quickly if investment is to take place and if we are not to end up with a better regulatory framework only when the market has collapsed again.

Mr Andrew Robathan (Blaby, Conservative)

I shall not come back to clause 69; I shall stay with it. As two members of the Committee have said, the clause is vital for the future development of the telecommunications market and, indeed, to the Bill. It is important that we discuss the clause and tease a few things out of the Minister about the future.

Local loop unbundling has, so far as I can work out, been a success only in the eyes of BT, which told me that people complain unjustly about it. However, take-up has not been anything like what was expected for reasons which the hon. Member for Sheffield, Hallam (Mr. Allan) identified. There are many reasons, but to suggest that there is not a large market for access to the network through broadband is ludicrous. The market is massive. I come to the subject as a shadow Department of Trade and Industry Minister. Small and medium businesses throughout the country are desperate to get access to the network through broadband. That is why the matter is so important.

I am sorry that the Minister for E-Commerce and Competitiveness is not here, because he is a bit of an expert on the subject. He was about to illuminate us on many things before he was cut off in his prime this morning.

Dr Kim Howells (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Pontypridd, Labour)

I may not be an expert, as my hon. Friend the Minister for E-Commerce and Competitiveness is, but I know a little about broadband and broadband access. One of the great problems is often the lack of knowledge of the virtues of broadband among small businesses. It is often difficult to get enough businesses to sign up for the clusters so that broadband access can go ahead. It is not a one-way story.

Mr Andrew Robathan (Blaby, Conservative)

I do not disagree with the Minister. His time at Hornsey college of art was obviously not wasted. He particularly picked up when the hon. Member for Sheffield, Hallam made the rugby analogy, which was perhaps something to do with the Welsh rugby team. I do not intend to stray from the debate, which is about the future of telecoms, not the past. It is about how businesses can proceed.

Mr Peter Atkinson (Hexham, Conservative)

Order. The debate is about not how businesses can proceed, but the future role of Ofcom.

Mr Andrew Robathan (Blaby, Conservative)

Indeed, and conditions of access. We should hear more from the Minister about how he sees that and the role of Ofcom developing. Will it sit on

top of conditions or will it allow them to proceed to the benefit of us all?

Mr Michael Fabricant (Lichfield, Conservative)

But not before the Committee has heard from me. So far, we have had an interesting debate on clause 69. It is an important part of the Bill, but let us ask ourselves why. At present, the provision of broadband is at an early stage. There are various platforms by which it can be delivered. We heard this morning that there is to be satellite provision, although that has its problems because of satellite delay, despite lower orbit satellite constellations being made available as we speak.

My hon. Friend the Member for Maldon and East Chelmsford mentioned microwave provision and that has worked particularly effectively. Clause 69(2) is required because of local loop unbundling. The position is analogous to that on the provision of electrical power. The successors to the Central Electricity Generating Board are the backbone of the provision of electrical power, while contractors can provide power and distribute it from that network. That, in its own way, has been a successful form of local loop unbundling. As has been pointed out, it has not been too successful at present. I agree with the Minister. While I have no doubt that, if people saw the virtues of broadband, they would want to use it or have access to that e-economy, I do not believe that they understand its real benefits. Sir Christopher Bland of British Telecom said in his letter, to which I referred this morning, that a trigger level of 650 is required for the provision of an ADSL service in Burntwood, but only 174 have so far applied. The reason for that is that people do not understand the benefits of broadband.

Mr Peter Atkinson (Hexham, Conservative)

Order. I was listening carefully to the hon. Gentleman. I gather that the Committee had an extensive debate on broadband this morning. Clearly, the hon. Gentleman has not exhausted his enthusiasm for the subject, but in all seriousness we are discussing clause 69, which, I reiterate, looks to the future powers of Ofcom.

Mr Michael Fabricant (Lichfield, Conservative)

If sufficient people wanted ADSL, and BT were providing it through the twisted pair, there would be less pressure on Ofcom to provide the local loop unbundling, which is provided for under subsection (2) of the clause. However, that is not the case for the reasons that have been outlined. Incidentally, will the Minister say whether there is a role for the Government to promote how broadband can be used in e-commerce? For example, the Information Committee saw a demonstration yesterday of the virtual private network on broadband, which I must confess seemed slower than citrix, although I am sure that that is not the case. If people saw the benefit of broadband, they would want to use it.

I turn to a point to which the hon. Member for Sheffield, Hallam alluded when he talked about interoperability in the mobile phone network. Ofcom will have a clear and important role on that. Real questions need to be answered, not only about network provisions made between operators such as One to One, Vodafone, Orange and so on, but about whether roaming should be permitted. That question is

important, and must be covered by the clause. Ofcom will have to address it.

The Minister will know that if he takes his cellphone—mobile phone, as we say in this country—abroad, he can access another network through roaming. However, it is an unfortunate fact that if someone is in a part of the UK where his network does not have coverage, he cannot gain access to another network. Does that subject not come under clause 69? Does the Minister think that Ofcom will be able to say that in the UK, if my Vodaphone mobile phone does not work in an area but there is a signal from 02, I should be able to use that network through roaming? That already happens in the US, and there is no technical reason why the system should not work here.

Dr Kim Howells (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Pontypridd, Labour)

I am glad that the hon. Gentleman has raised the matter. A year ago, when in the wilds of Romania, I was astounded to see that precisely what he has described was happening. As one moved quite short distances, it was possible to access different networks successfully.

Mr Michael Fabricant (Lichfield, Conservative)

That is because the British cellphone companies have mutual agreements with cellphone companies outside the UK. They do not have agreements within the UK except for one provision, which is emergency calling. I shall pick on Vodaphone as an example simply because I have a Vodaphone SIM card. Although on the whole that network has good coverage, there are places that it does not cover. If a Vodaphone phone is in an area that the network does not cover, one can access another cellular network only for emergency calls.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

I am delighted that my hon. Friend has raised the issue, as it is interesting. I have been as puzzled as him about it. I too am a Vodaphone customer, but my phone has a button that allows me to search for different networks. The phone will actually come up with four networks, but only in this country can people not access anything other than their own network. If people are in any other country and do the same thing, they can choose which network to use. One will generally be cheaper than the others, because there will be some arrangement between the companies. The technology is clearly there, as the phone identifies it. We would move towards a more competitive market if we could have an arrangement whereby we had the same ability in this country that we do abroad.

Mr Michael Fabricant (Lichfield, Conservative)

My hon. Friend is absolutely right. There is no technical reason why that should not happen. It does not happen simply because the agreement is not established, and there has been a commercial decision not to establish it. Subsection (4)(a) mentions the ''technical or operational nature'' of conditions. Have the provisions not been made available for technical or operational reasons? The answer is clearly no.

Mr Chris Bryant (Rhondda, Labour)

I am sorry to stop the hon. Gentleman's Clement Freud impersonation. Does he not understand that, when someone takes out an

agreement with the mobile phone operator, they enter into an agreement with the network? Why should one network let someone wander off to other networks day in, day out? That would oppose the whole point of the commercial relationship into which one has entered. That is the nature of the competitive environment that the hon. Gentleman praised in Committee only a week ago.

Mr Michael Fabricant (Lichfield, Conservative)

I rarely have to say this, but the hon. Gentleman has got it wrong. The reason why Americans can do just that in the United States—

Mr Chris Bryant (Rhondda, Labour)

They cannot.

Mr Michael Fabricant (Lichfield, Conservative)

They can. Americans can do that because when they move into the area of another network, the billing system works in such a way that Vodaphone—if it were Vodaphone—benefits: a cross charge is made.

The hon. Gentleman shakes his head in disagreement—now he is nodding in agreement—but operators in the United States and Canada have entered into a commercial agreement that allows people to roam between networks, and the operators benefit because of cross-billing. When one signs up for a SIM card with a particular network, although, as the hon. Gentleman will know, SIM card technology is not widely used in the United States, one looks to see whether that network has roaming agreements with other networks, and those networks that do not have such agreements do not tend to do very well. I shall give way to the hon. Member for Falkirk, West (Mr. Joyce), who is famous for his wheel.

Mr Eric Joyce (Falkirk West, Labour)

Just to clarify that point, Vodafone has an agreement with companies abroad, so that when we go abroad, we can tune into other networks. That is analogous to the situation in the airline industry, where there is Star Alliance and Oneworld Alliance. It is up to the companies whether they have inter-relationships, such as some companies in the United States do, but they do not all have them. It is simply a function of the market.

Mr Michael Fabricant (Lichfield, Conservative)

The hon. Gentleman makes a sensible point, but that is necessary in the United States because it covers such a large area. In the United Kingdom, it was initially thought that there would be universal access to all networks, but that is clearly not the case. The hon. Member for Rhondda (Mr. Bryant) should know that. I often go walking in Wales and find that I can get a signal, but not from Vodafone.

Mr John Greenway (Ryedale, Conservative)

My hon. Friend keeps talking about the United States of America, but one need not go that far. If I cross the channel into France, I find that my mobile phone operates in Europe, although it does not operate in the United States. On the whole, in Europe, my phone will automatically tune into four, if not five, different networks. It beggars belief that Ofcom will not have to address that issue because, as the Minister conceded, the standard of service provided to mobile phone customers here is not as good as it is on the continent. How on earth does he think that mobile phone companies will be able to persuade people to

sign up for text images without interoperability between networks?

Mr Michael Fabricant (Lichfield, Conservative)

I do not want to correct my hon. Friend because he is a very good friend, but there is a slight difference. There are no such agreements within France, so someone visiting the United Kingdom from France will find that he or she can access perhaps all the British networks because that person is travelling abroad. My point is that, within the United States, a person who subscribes to a United States network can access other networks in the United States and, indeed, in his or her own state.

Mr Andrew Robathan (Blaby, Conservative)

I want to draw my hon. Friend's attention to the role of Ofcom and the issue of access. Surely, the role of Ofcom, the regulator, is to look after not only the industry, in its broadest sense, but consumers. Of course some commercial companies do not wish to enter agreements because they may do better by not entering agreements, but is not the whole point of having a regulator, which is especially relevant to the subject of conditions of access covered by clause 69, so that he can look after the interests of consumers and encourage, or perhaps cajole, companies to enter such agreements?

Mr Michael Fabricant (Lichfield, Conservative)

My hon. Friend has made a powerful point. Ofcom has a clear and important duty to protect the consumer, and clause 69 is of paramount importance in achieving that. It is to the benefit of all networks to see that there is interoperability between them and, as I said to the hon. Member for Rhondda, they would benefit financially from that. I hope that those who refuse to co-operate will be condemned by Ofcom under the clauses and conditions discussed earlier this morning. I am interested to hear from the Minister whether he envisages a real role for Ofcom in respect of the roaming that he talked about in—was it Romania?

Dr Kim Howells (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Pontypridd, Labour)

Yes.

Mr Michael Fabricant (Lichfield, Conservative)

I do not believe that in Romania, as in France, there is sharing between networks, if there is more than one network there. Why cannot the United Kingdom do as they do in the United States and Australia and share?

Mr Brian White (North East Milton Keynes, Labour)

I am very confused, because I thought that the argument from the Opposition was to remove the powers of the regulator to deal with aspects of the market and to withdraw regulatory authority. Yet everything they are saying at the moment is about regulatory creep and adding to the role of the regulator.

Mr Michael Fabricant (Lichfield, Conservative)

The hon. Gentleman has got it wrong. This party cares for the vulnerable and in this instance mobile telephone users are vulnerable. With mobile telephone calls charged as they are, there should be interoperability.

Mr Chris Bryant (Rhondda, Labour)

While the hon. Gentleman is dealing with that, I should point this out. Is he really suggesting that Ofcom or the Government should ensure that every mobile operator will make provision that every time someone switches on a mobile telephone they can choose which network to use? That is the direction in which the hon. Gentleman

seems to be going. If so, he is suggesting a level of intervention in a market—mobile telephony—which he and his colleagues said last week was functioning perfectly. I think most people would be surprised to hear that.

Mr Michael Fabricant (Lichfield, Conservative)

I do not think that they would, but that is not what I am suggesting. I am suggesting that when a mobile phone is switched on it automatically homes in to the network according to the SIM card. Only when it is out of range does it start to roam. That is how the GSM network works in any event.

Let me move to a different issue: charging for calls from mobile phones to land-lines and calls from land-lines to mobile phones. Although this appears later in the Bill, in order to ensure fair charges, we must ensure that the technology is made available to enable interoperability between land-lines, GSM and other mobile network calls. Does the Minister see a role for Ofcom in that? Does he agree that we need to limit the cost of calls from mobile phones to land-lines and from land-lines to mobile phones, and that to help to limit that cost it may be necessary to introduce technology that is compatible between all networks. Does he believe that Ofcom has a role in that?

Another area in which there should be interoperability of networks—the hon. Member for Sheffield, Hallam may well agree—is encryption of e-mails. He will know that if an e-mail is encrypted and sent out of a particular local area network or through an operator such as AOL, the e-mail often does not reach its destination. If e-commerce is to be successful, as I hope it will be with the spread of broadband—I also hope that the Minister will answer the earlier point about how broadband can best be promoted—does he agree that e-mails will increasingly have to be encrypted? He will know that when one orders a book from Amazon—[Interruption.] I am sorry, I did not hear that.

Mr Peter Atkinson (Hexham, Conservative)

Order. We are going wide again.

Can I say to the Committee that it was often said that the best Committees were those on which Members had no knowledge of the issue being debated? I am beginning to believe that there may have been some truth in that.

Mr Michael Fabricant (Lichfield, Conservative)

Clause 69(3)(a) talks about access-related conditions where there is shared use of electronic communications apparatus. I think that that includes not only hardware but software. Would the Minister like to see Ofcom, if not imposing rules, at least providing guidance to ensure that encrypted emails can be transferred from one network to another?

That will be very important. The Minister probably knows that, at the moment, if he orders a book from a website such as Amazon.com he will fill in a web form. That form will automatically be encrypted when he gives his credit card details. On the whole, it is a reliable system. However, if one books a hotel abroad and then e-mails the hotel, the hotel may then ask for credit card details. Perhaps I am unwise, but if that happens to me, I then e-mail my details to the hotel

abroad. That is not encrypted, so someone could have access to my credit card information via my e-mail.

Does the Minister not agree that people will increasingly want to send encrypted information abroad and in the United Kingdom, but that they are currently often unable to do so because they are crossing networks? What will Ofcom's role be in ensuring that universal encryption can be achieved if necessary and that, where required, encrypted e-mails can cross the boundaries between networks? [Hon. Members: ''None.''] Several Government Members say none, but I suspect that that is because of their lack of understanding of the way in which business works.

The present situation demands that there are encrypted e-mails to enable people to send, as I have mentioned, credit card data and perhaps other data. Ofcom must address such matters. After all, its whole raison d'etre is to address the new technologies. Those include projects such as Ocado, which Waitrose is using, and others, for the home delivery of food. Again, one sends encrypted information across network boundaries containing one's credit card, or John Lewis account, details. There must be security, and Ofcom has a role in that. How does the Minister see that role being performed? Will it be through guidance, or through the imposition of very strict rules? If the latter, does he think that there is a danger of going too far, and imposing conditions that might limit the spread of broadband and other networks, and increase the ultimate cost to consumers?

There is a golden opportunity here for Ofcom to create a new e-commerce. It is up to the Minister to decide whether that opportunity will be seized.

Dr Kim Howells (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Pontypridd, Labour)

I know that it will be deeply unfashionable, Mr. Atkinson, but I shall deal with clause 69.

The preceding group of clauses—61 and 68—dealt with universal service obligations, the way in which universal services are to be determined and how that provision is to be assured throughout the United Kingdom. We now turn to access-related conditions. As hon. Members will recall, under clause 42 access-related conditions will be imposed case-by-case on individuals or communications providers and persons who make associated facilities available. They are unlike the general conditions, which apply to all communications providers or all providers of a particular description.

The conditions can be imposed on any communications provider or persons who make available associated facilities—in certain cases, they can be imposed on any person—where that is necessary to meet the objectives of the EC communications directives in respect of securing access.

The clause sets out the permissible content of access-related conditions. There are four permissible types of access-related conditions. First, Ofcom may set access-related conditions for the purpose of

ensuring a level of network access and interoperability that will secure efficiency, sustainable competition and the greatest possible benefit to end users. I will try to link my answers to hon. Members' questions to those conditions. Clause 70 provides more specifically for types of conditions within the category.

Secondly, Ofcom may set access-related conditions to secure the sharing of apparatus or of costs incurred by those to whom the electronic communications code applies, in cases in which there is no viable alternative. That enables Ofcom to mandate the sharing of infrastructure and other facilities where is no viable alternative.

We have heard a great deal about global unbundling. As someone who recently has an ADSL link in my constituency of Pontypridd, and who has got it to work—after a month—I want to say that the point made by the hon. Member for Lichfield (Michael Fabricant) bears making again—although perhaps not at the same length. It is a real problem trying to get enough businesses to realise the virtues of broadband and to come together in order to get access to it.

The hon. Member for Lichfield asked me about promoting broadband. I believe that the hon. Member for Sheffield, Hallam said that content is the most important element or variable in the equation—if he did not say that, he should have done. Call me old fashioned, but I cannot see why anyone would want to get broadband unless there was something to watch or access on it or unless it was going to provide a superior service. Content is important.

The hon. Member for Lichfield is right: we have to do a great deal to educate people about the virtues. I do not normally think that the role of Government includes bailing out private companies, so my next point may come as a surprise. Ofcom probably has a role to play in relation to the functions of promoting media literacy, which were dealt with in clause 10. It has some remit for doing that.

Mr Brian White (North East Milton Keynes, Labour)

Does the Minister envisage the prime role of Ofcom in terms of access conditions or in terms of promotion and generally making people aware?

Dr Kim Howells (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Pontypridd, Labour)

Those functions are not necessarily exclusive. I have spoken to my hon. Friend about this point before. Ofcom's role in ensuring that access is there is very important, but that sits nicely alongside a broader discussion about the virtues of broadband and what might or might not be possible in respect of ensuring that people take advantage of it.

An interesting experiment is currently taking place in my constituency. It is a pilot project involving Radiant, a company that provides a wireless mesh system—I hope that I have remembered the correct technical term. That offers tremendous potential in areas where the topography is difficult such as the constituency of my hon. Friend the Member for Rhondda and my constituency. I understand that it is working in partnership with BT. I hope that that pilot project continues because it is important. We have heard a lot this afternoon about local loop unbundling, copper wires and coaxial cables. There is also satellite. The technical and financial achievements

of BSkyB have been extraordinary. It is doing a lot of work—

Mr Michael Fabricant (Lichfield, Conservative)

And taking big risks.

Dr Kim Howells (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Pontypridd, Labour)

Certainly, it is taking big risks in developing the technologies for us to access broadband and work with it in ways that are not possible at the moment, although I am convinced they will be in the future. We should not assume that one technology will transform this country. There are many possibilities and we must look at them all.

Mr Chris Bryant (Rhondda, Labour)

My hon. Friend makes a valid point. Different technologies may well solve the problem of access to broadband services. Indeed, the Welsh Assembly is making sure that the pricing structure for satellite is subsidised to match that for ASDL through BT; the price is the same. That will enable rural and semi-rural areas to have access to broadband services much faster. Does he think that Ofcom will have a role in overseeing subventions such as that introduced by the Welsh Assembly?

Dr. Howells rose—

Mr Peter Atkinson (Hexham, Conservative)

Order. Before the Minister answers that question, I remind him that we are not having a general discussion about broadband. We are talking about access-related conditions.

Dr Kim Howells (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Pontypridd, Labour)

Yes, Mr. Atkinson. I apologise. I will press on. I will not be drawn by my hon. Friend's intervention to defend the Welsh Assembly, keen fan though I am.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

The Minister said that he has finally got access to ADSL. I assume that he has got that from BT and not as a result of an unbundled local loop. He also referred to wireless mesh networks, satellite and other potential ways of distributing broadband. That adds to the impression that a number of people have about local loop unbundling. It was held out as being the way to obtain more competitive markets and to roll out broadband access, but because progress has been so appalling people have rather given up on it and are looking at alternative technology to achieve that objective. Does he feel that too, and do the Government still attach the same priority to local loop unbundling as they did two or three years ago?

Dr Kim Howells (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Pontypridd, Labour)

I firmly believe in what I said a few moments ago about alternatives and the progress that has been made with BSkyB and other technologies. I stand by that. The Government have to be technology neutral in much of this. I would certainly expect Ofcom to keep the situation firmly under review. The hon. Member for Maldon and East Chelmsford mentioned that over the past year Oftel has completed a step change in the way in which it has dealt with this. I am keen to see bundles of local loops unbundled as soon as possible. There is no question about that.

It would sound strange if I said that I did not have confidence in this creature that we are creating in the Bill to ensure that, wherever necessary, steps are taken both to review what is happening in that market and to act in a way that will enable competition to help all the other technologies that I have mentioned. I will

certainly not pin my colours to the mast of local loop unbundling. There are many other techniques, both current and future, that could help do the job equally well.

Thirdly, Ofcom may set access-related conditions of a technical or operational nature to ensure that the operation of an electronic communications network remains consistent with any network access obligations that may be imposed under clause 83(3). The obligations may be imposed either on the operator who is required to provide access to the network, or on the beneficiaries of the access.

Fourthly, Ofcom may set access-related conditions in respect of conditional access systems. Clause 71 deals in greater detail with conditional access conditions.

Mr Michael Fabricant (Lichfield, Conservative)

I do not want to press the Minister if he is unable to answer fully now, but I suspect that he saw the logic behind my point about roaming within the United Kingdom where one's own network is unavailable. Would what the Minister just said apply to access from one mobile network to another and, if so, should Ofcom have a role in ensuring that roaming within the UK between UK telephone networks is made available?

Dr Kim Howells (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Pontypridd, Labour)

I certainly believe that Ofcom should examine that issue. One of its central remits is to promote and encourage competition whenever possible, so it should examine the contractual arrangements presently in place. As my hon. Friend the Member for Rhondda made clear, that is what we buy into when we purchase our mobile phones. We enter into a contractual arrangement, which will have certain limitations. Incidentally, I am appalled to hear that the hon. Gentleman takes a mobile phone with him on walks. It drives me insane when I am walking in the Welsh mountains, where one hardly sees a soul. If I hear a phone going, it is usually Peter Hain. [Hon. Members: ''Who?''] I should say my right hon. Friend the Secretary of State for Wales, who, though a keen and fine walker, simply cannot leave his mobile phone at home. [Hon. Members: ''He's probably lost.''] My right hon. Friend has never been lost.

The powers are necessary in order to secure and support effective competition in the provision of communications services, so the clause should stand part of the Bill.

Question put and agreed to.

Clause 69 ordered to stand part of the Bill.