Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

Given that this is the first clause in the part of the Bill that deals with spectrum use, it might be appropriate to say a few words about the main issue that we will address. Clause 147 is obviously the prime underlying clause that will determine all Ofcom's activities when it comes to exercise its responsibilities for the management of spectrum.

I cannot resist the temptation to quote from the report of the Joint Committee on the Bill, which, on examining these provisions, said:

''We have found these some of the most difficult provisions to examine for several reasons. First, the provisions seek to give effect not only to policy proposals in the White Paper and requirements of the EC Directives but also to some proposals in the independent review of radio spectrum management issued by Professor Martin Cave . . . but we have had to conduct our inquiry in ignorance of the Government's response to that review.''

Of course, since the Joint Committee conducted its inquiry, the Government have published a response to Professor Martin Cave. However, the Vote Office denies the existence of that response, and although the Library accepts that it exists, I was told that the cupboard that contained it was locked, and when the cupboard was at last opened, it was discovered that the relevant document had been removed. I am therefore not much better off than the Joint Committee when it comes to taking account of the Government's response, although I think that the Bill itself constitutes a response.

The Joint Committee report went on:

''Second, the provisions on spectrum use and management are an exemplar of the wider problem of a Bill that proceeds by amending earlier Acts, requiring those seeking to understand the provisions to navigate through a thicket of previous enactments.''

Thirdly, and finally on that subject, it says that

''spectrum management depends for its success on a number of technical considerations relating, for example, to interference management on which we do not purport to have any expertise.''

I probably speak for a number of Opposition Members when I say amen to that. The Joint

Committee is essentially saying that the provisions that we are discussing are very complicated. None the less, we will do our best, because they are terribly important.

In many ways, everything that Ofcom will do results from the fact that there are limits on the amount of spectrum available. That is justification for intervention and regulation by Government, for television companies being subject to restrictions on ownership and content, and for the management of telecommunications. Almost everything that the Bill covers flows from the fact that that spectrum is limited and that there is, therefore, a need for the state to intervene and control how it is used.

I cannot resist telling the Committee that it was in Chelmsford, which I have the great pleasure to represent, that the first radio broadcast was made by Guglielmo Marconi in 1920. The Marconi name is important in Chelmsford, although it has had its ups and downs in recent times. Nevertheless, we are proud of the fact that Chelmsford is the birthplace of British broadcasting. That first radio broadcast was made on 15 June 1920, and was of a concert by Dame Nellie Melba.

In those days, the issue of spectrum scarcity did not arise. There was a huge amount of spectrum that nobody was doing anything with until Nellie Melba was broadcast across the airwaves—there was no shortage of the stuff. However, in the past 80 or so years, ever more uses have been found for spectrum. That has led to steadily growing congestion and to debate on the best use of spectrum and the allocation of frequencies for different purposes.

Mr Michael Fabricant (Lichfield, Conservative)

I always hesitate to correct the Front-Bench spokesman—that is probably why I remain on the Back Benches—but my hon. Friend is wrong to say that there was a considerable amount of spare spectrum available in 1920. He should read the excellent history of broadcasting by Asa Briggs, who was the vice-chancellor of Sussex university, where I took my masters degree.

Mr Andrew Robathan (Blaby, Conservative)

He was provost of Worcester college, Oxford, as well.

Mr Michael Fabricant (Lichfield, Conservative)

Indeed he was. In that book, Briggs wrote about the criticism made in the past by Morse code users about the amount of bandwidth used for voice broadcasts. Much of the spectrum that is now available—in the gigahertz region, as well as in the megahertz region—was not available at that time.

Mr Roger Gale (North Thanet, Conservative)

Order. At the end of the sitting of this Committee, I intend to make a small award for the longest intervention, and the hon. Gentleman is in danger of breaking his own record.

I do not want to intervene in the debate, but as I am on my feet, I will say that I think that the first radio broadcast was from Brownsea island in Poole harbour to the Isle of Wight.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

I am grateful to my hon. Friend the Member for Lichfield (Michael Fabricant) for his remarks which, although lengthy, were informative.

What he said proves that the debate has been going on for longer than I had thought. I had the pleasure of sitting next to Lord Briggs at the Booker prize dinner not so long ago, and I would not dare to question anything that he has written, as he has great authority. However, I do not think that what has been said reduces the importance of my point, which is that the matters with which we are dealing with in this section of the Bill, and to which the clause primarily relates, have become steadily more complicated to administer over the past few decades.

I am sure that the Minister will be happy to join me in paying tribute to the Radiocommunications Agency. Of the five bodies that are being brought together to form Ofcom, the Radiocommunications Agency is in many ways the one that gets the least attention. Yet it is also the one that employs the most people: its staff comprise the majority of the staff that are going to Ofcom. In general the agency has succeeded in carrying out its functions extremely efficiently. Britain is regarded as a leader in the development of radio spectrum management techniques. The Bill will introduce several new aspects to that endeavour, and they will be examined with considerable interest overseas.

Every time a new technology develops—they seem to arrive with ever-increasing speed—new pressure will be put on existing users of radio spectrum, and new and more difficult issues will be raised for those who manage it. That is of huge importance, not only because modern life depends to an increasing extent on telecommunications and broadcasting, but because some users of spectrum are vital to national security, such as the Ministry of Defence, which is one of the biggest users of spectrum.

The emergency services are completely dependant on reliable communications that are not subject to interference. Interference is a vital aspect of the work of the Radiocommunications Agency, which is soon to be transferred to Ofcom, but we will talk about that later. Furthermore, as hon. Members of all parties know, the House of Commons would now be almost impossible to operate if our pager systems did not work efficiently. In some respects, it could be argued that the House of Commons would operate rather better without them, but they have become an indispensable part of the modern politician's life.

Mr John Greenway (Ryedale, Conservative)

An example of the point that my hon. Friend just made appeared on my pager at 1.34 this morning. The message just said, ''J U.'' If he has any idea what that means, perhaps he would let me know.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

I shall resist the temptation to speculate. My hon. Friend might need to resolve that with the Whips Office. There are a variety of possible explanations, which I shall not explore any further.

Each of the developing technologies is welcome. Mobile telephony is regarded by the younger population as essential to modern life, and internet access has the potential to become more important, particularly if we succeed in rolling out broadband any further through ADSL. Those technologies relate to existing users, but others technologies are beginning to

come down the pipeline and, in time, those will offer enormous potential. Two such technologies—software-based radio and ultra-wide broadband—appear in Professor Cave's report. I will not try to explain them in detail, because, to be quite honest, that would defeat me. However, I am told that they are very promising technological developments.

Professor Cave has said that it is impossible for us to predict the likely demands on the radio spectrum in future. Ours is a relatively small island, not only in geographical terms, and because of that the potential for interference and congestion that could result from the spectrum usage is greater. That makes it all the more important that we get spectrum management right. Initially, the Government took the view that the right approach to the problem was to conduct a kind of beauty parade, with people saying, ''This is a good idea. We think that it will provide the necessary benefits. Please can we have a chunk of the spectrum in which to do it?'' Essentially, the Government were to look at the merits of what was suggested and then decide whether to grant a licence.

The Wireless Telegraphy Act 1998 introduced incentive pricing, which sought to attach a value to a part of the spectrum, rather than charge the user for the administrative cost of licensing it. That development was useful and it began to introduce a market function into the determination of the allocation of spectrum. The type of centralised planning that was originally used to allocate spectrum is probably impossible now—it would defeat a genius to consider all the various possible uses, both now and in the future, and to achieve an efficient allocation. I have never been a great fan of central planning at any time, and that is a classic example of a situation in which even if the biggest supercomputer were available, central planning would be inferior to a market mechanism. I think, therefore, that the proposals contained in Professor Cave's review should be implemented under the clause.

The professor's recommendations are, in the main, sensible. The first of two main developments is the introduction of the ability to trade spectrum, which will clearly introduce a market mechanism for those who have existing licences for chunks of spectrum, and will, we hope, provide an incentive to spectrum holders to increase the efficiency with which the spectrum is used. Spectrum holders might release for sale a part of the spectrum that they use, because it will have a monetary value once trading is established. That will facilitate the drive towards the introduction of technology, which may lead to efficiency improvements in spectrum usage, as well as stop the hoarding of spectrum on the off chance that it might prove useful one day.

Mr Brian White (North East Milton Keynes, Labour)

One of the key issues is that much spectrum use is determined by international agreement. How does the hon. Gentleman envisage spectrum trading within international agreements?

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

That is an interesting question. I hope that in due course such trading might be possible, but that would require another level of international agreement. At the moment, we are concentrating on

trading spectrum within the bands that have been allocated by international agreement for each particular purpose.

Mr Michael Fabricant (Lichfield, Conservative)

Will my hon. Friend allow me to intervene on that point?

Mr Roger Gale (North Thanet, Conservative)

Order. I will allow the hon. Gentleman to intervene if the Front-Bench spokesman wishes, but as clause 163 relates to the wider issues, it may be that it is more appropriate for the Committee to debate the matter then. I accept that all these matters are inter-related, but clause 147 relates very specifically to the powers of Ofcom, which I have scarcely heard mentioned so far.

Mr Michael Fabricant (Lichfield, Conservative)

Thank you Mr. Gale. Does my hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale) believe that Ofcom should have the power to intervene with the World Administrative Radio Conference to ensure that the frequency spectrum allocated by WARC can be traded between one nation and another?

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

It would be rather difficult for us to give Ofcom that power. Other members of the conference would not necessarily recognise our all-powerful ability to tell them what to do. That too is an interesting point.

Mr. Gale, you are right that clause 163 deals specifically with the issue of trading. I want to explore further some of the problems that have been identified with, or might arise from the issue of spectrum trading. It is a desirable objective, but there is no doubt that is raises potential difficulties that the Committee should rightly address. The same will apply to auctions, of which we have had some experience. We will need to examine that when we reach the relevant clause of the Bill.

Returning to Professor Cave's report, it is the function of Ofcom, under clause 147, to implement Professor Cave's recommendations. He makes a persuasive case for the general move that will result from this part of the Bill, towards a more market-based approach to the allocation of radio spectrum.

One huge issue will have an enormous effect on the activities of Ofcom in the allocation of radio spectrum and will clearly be a major consideration in almost everything Ofcom does in this respect. Professor Cave concludes his report with the following paragraph:

''The switchover from analogue to digital broadcasting offers the UK the biggest potential efficiency gain in spectrum use in the next decade. The review's proposals would make it easier to achieve digital switchover.''

That is the underlying agenda throughout the part of the Bill that we are considering now. Clearly, the possibility of analogue switch-off will have a traumatic effect on spectrum use; it would certainly free up a large chunk of spectrum, allowing it to be used for other activities. It is probably common ground throughout the Committee that, in principle, analogue switch-off is a desirable objective.

Surely it is of economic benefit to the nation to have digital broadcasting. It enables many more services to be provided: it enables interactivity, better quality of

transmission and, at the same time, it allows us to free up a huge amount of spectrum for alternative uses.

Inevitably, another factor is the beady gaze of the Treasury. My hon. Friend the Member for South Cambridgeshire (Mr. Lansley) will remember that in the previous Parliament, when all parties were seeking extra resources to devote to good purposes such as the health service and education, the prize of achieving analogue switch-off and the potential revenue from the sale of that spectrum was very tempting. Recent events have demonstrated that perhaps it is not quite as big a prize as some had originally hoped. Figures of £20 billion, which were bandied around at one time, seem to have shrunk dramatically. I heard £500 million quoted recently. I would be interested to know the Minister's view. Clearly, everything that we are debating in relation to Ofcom's management of the spectrum will be affected by our progress towards analogue switch-off. I hope that the Minister will say a word about the Government's view of progress towards that objective. Analogue switch-off is one of the biggest issues; it affects everything that we are debating in the Bill. It is almost impossible to consider this part of the Bill without taking into account the consequences of analogue switch-off for spectrum management.

It is certainly true that analogue switch-off will be much more difficult to achieve than some first thought. The hon. Member for Ceredigion (Mr. Thomas), who is not in the Room, will be particularly aware of the difficulty in rural areas. There is also a need to ensure that there is 95 per cent. digital take-up before we consider turning off the analogue signal, or at least a need to put in place mechanisms to achieve that kind of take-up.

There are huge complications relating to that simple technical exercise. It is easy to say that 80 or 90 per cent. of the population now have access to digital broadcasting; I have access to it through the television in my living room, but not through the one in my kitchen. Almost the majority of the population are becoming two—or even three or four—television homes, so it is not sufficient to say that because people have a digital receiver, we can happily turn off their analogue signal as they do not use it any more. Such issues create real difficulties that we need to address before we reach a decision on analogue switch-off.

The same applies to video recorders. Hon. Members will recall the exercise in relation to adjusting the tuning of video recorders that had to be conducted before Channel Five could start transmission. That was a minor exercise in comparison with what will be necessary for analogue switch-off. There have been real doubts about the cost that will be incurred before we can achieve that.

There may be mechanisms that Ofcom can use to make faster progress towards analogue switch-off. I suspect that one of Ofcom's prime objectives will be to encourage take-up of digital broadcasting so that we can get to the switch-off point faster. In particular, I would be interested to hear whether the Government

stand by their existing target for switchover. It is inevitably a fairly wide target, but there have been suggestions recently that even that wide target is slipping, and that the Government may be having second thoughts about its achievability.

It will be difficult to debate this part of the Bill and what Ofcom will do in relation to spectrum management unless we have a firm idea of exactly when the Government believe that it will be possible to achieve analogue switch-off and release a huge extra amount of spectrum. That release will allow Ofcom to debate the best use of that extra spectrum and to allocate it for other uses. There are many questions to which we shall want to return in detail when we consider the clauses individually, but this question is so enormous, and so looms over everything that we will consider today, that I hope that the Minister will say a word about it, so that we will be better informed for the rest of our debate.

Several hon. Members rose—

Mr Roger Gale (North Thanet, Conservative)

Order. We are in danger of embarking on a Second Reading debate on chapter 2. I appreciate that a lot of interrelated and complex issues arise in this very technical debate, and I am reasonably willing to accommodate them on the clear understanding that we do not cover the same ground later. I shall pass on that information to Mr. Hood and Mr. Atkinson.

Mr Richard Allan (Sheffield, Hallam, Liberal Democrat)

I wish to draw attention to the general functions of spectrum use. The hon. Member for Maldon and East Chelmsford helpfully set the matter into context, particularly when he referred to our being positive when referring to digital switchover, but being a little more critical when referring to analogue switch-off, which will probably be of most public interest when discussing spectrum, given that it is otherwise a dry, technical subject.

As for giving advice on the use of wireless telegraphy, I turn to the extent to which Ofcom, when giving advice on the use of wireless telegraphy, must or must not pay attention to the value of the spectrum. Great furore surrounded the auction of the 3G mobile licences. It was seen as a helpful revenue-raising exercise for the Government, with significant amounts of money coming in. Some time ago, I asked about the digital switchover and the valuation that the Government had put on the additional spectrum that would be made available at the time of the switchover because, clearly, they can achieve revenue from the additional spectrum. I was told that the Department for Culture, Media and Sport had made no estimate of the potential value of the spectrum.

People will want to know whether decisions about the use of spectrum are made purely in the public interest and the services that they receive over the spectrum or whether the Government's ability to raise revenue from the spectrum will be a factor. When considering how Ofcom will operate, it will be interesting to know whether the Minister's expectations are that Ofcom will be advising the Government from a public service viewpoint. What basket of services will be the most appropriate that can

be achieved over a limited spectrum? Will Ofcom be expected to have a sense of the cash value of the spectrum when it is auctioned by the Government for specific purposes?

We shall discuss spectrum access under later clauses. Will it be carried out primarily for a cash-raising exercise or is it about gaining efficient use of the spectrum? There is tension between the Government's desire to raise cash and the public interest in respect of who should have access to the spectrum and whether the costs should be passed on. We sympathise more or less with the 3G companies, but the fact remains that the costs of the 3G exercise will be passed on to the consumer. The 3G companies paid for that spectrum; it was their choice but, as representatives of the consumers, we worry about the extent to which costs are fair, given what the consumers will eventually pay.

I come now to grants under subsections (5) and (6). It is interesting that Ofcom will have the power to make grants to promote

''the efficient use in the United Kingdom of the electro-magnetic spectrum . . . the efficient management of that use''.

That raises the matter of digital switchover and the problem in regard to the last analogue television sets that will exercise the Government, when digital terrestrial penetration reaches a certain level. A number of analogue television sets will still be out there, perhaps in poorer households where individuals are unable or unwilling to switch? How will the Government deal with that problem? One solution would be for the costs of the switchover to be met by the Government rather than by the individual. Ofcom has power under the clause to make grants. Will it have the ability to fund the last 5 per cent. of switchovers, when they are of public importance? That may be defensible. It may be a sensible approach. Does the Minister envisage that happening in relation to grants or will matters be on a much smaller scale? What does he mean? Will grants cover digital switchover in digital or terrestrial television?

Mr Brian White (North East Milton Keynes, Labour)

Just to show you how sad I am, Mr. Gale, I spent Christmas rereading the Cave report and I am not sure that I am any wiser than when I first read it. That was the third time that I had read it and, even though I had seen it before, as it was drawn to the attention of the pre-legislative scrutiny Committee, I still do not understand it. The Government's proposals on implementing Cave are correct in principle, but there will be problems with the detail. I am sure that we will come to that presently.

I have two questions about Ofcom's function under the clause. First, the hon. Member for Sheffield, Hallam (Mr. Allan) spoke about grants, but one constraint in the clause is that Ofcom must go to the Treasury every time it wants to make a grant, so there is a question about broadband and how that sector is to develop quickly. Ofcom might want to facilitate some innovations, but the procedures—going through Treasury committees and so on—prevent that from happening. As a consequence, something that might have been useful at the time would no longer be

appropriate. I ask the Minister to consider how that will work and to tell us about the relationship between Ofcom's ability to act in the national interest and in the interest of improving spectrum according to the terms of the Bill, and about its relationship to the Treasury. I fear that there might be a blockage that the Government do not intend to create, but which might be a consequence of the measures.

Secondly, an issue that emerged from evidence given to the pre-legislative scrutiny Committee was Ofcom's role in dealing with and across Departments. The hon. Member for Maldon and East Chelmsford mentioned the Ministry of Defence—to which I am sure we will return. How do the functions of Ofcom relate to that ability, which is currently exercised by committee across Government? How would that work, and what would the relationship be, given the functions that are described in clause 147?

Mr John Greenway (Ryedale, Conservative)

Following from the points that were made by the hon. Member for Milton Keynes, North-East (Brian White), it would be helpful if the Minister were to give some examples of the sort of grant that it is envisaged that Ofcom would make under subsection (6). Like the hon. Gentleman, I am at a loss to know whether Treasury approval for granting public money is a valuable safeguard, or an unnecessary interference with Ofcom's flexibility.

The notes on clauses are excellent, but the notes on clause 147 leave us none the wiser about what the grants are for, to whom they would be made, what their specific purpose is, and what would be the measurement of outcome. One presumes that public money would be involved, but equally one presumes that the clause contains that facility because the Government envisage Ofcom having a valuable role in ensuring that we get the maximum use from the available spectrum.

The hon. Gentleman anticipated my train of thought. If grant enables a speedier roll-out of digital delivery, it would be to the good, particularly if it were in respect of radio. As my hon. Friend the Member for Maldon and East Chelmsford said, there is concern that the timetable for analogue switch-off and the roll-out of digital television may be slipping. I think that an increasing number of people are getting enjoyment from radio—I certainly do, so it is a great sadness that progress towards a digital era in radio has barely started. If the making of grants were to encourage and facilitate a speedier roll-out of digital radio, that would be valuable.

Given that grants can be made to any person, including

''a person holding a wireless telegraphy licence'',

I presume that they could be made to the BBC. If that is the case, the Minister should tell us. He should also try to give us some idea of what the Treasury's role will be, not only in deciding whether the grant can be made, but—in the words of subsection (7)(b)—in the setting of

''the terms and conditions on which such a grant is made.''

That is particularly relevant because, as subsection (6)(b) makes clear, there is potential for the

requirement for the grant to be repaid ''in specified circumstances.'' Those terms are extremely vague, but they are also quite powerful, and we ought to be given some sort of explanation.

Turning to another interesting feature of the clause, subsections (8) and (9) give Ofcom charging powers separate and additional to the general powers in clause 25. It would be helpful to the Committee, and to those whose livelihoods depend on the outcome of our deliberations, if the Minister were to give us some idea of how high those charges might be and in what circumstances they might be levied. Perhaps he might also, in general terms, give us some examples.

This clause raises many issues and the Minister might be able to respond only to some of them today. If any of my more detailed questions are more appropriately answered at a later date, I am happy to accept that. The Committee has a responsibility to ask questions. Where the Bill has anything to do with money, we should pause and reflect on what that means and what the consequences are both for the public purse and the wider interests of consumers and the communications and broadcasting industry.

Mr Michael Fabricant (Lichfield, Conservative)

I do not intend to repeat the issues raised by my hon. Friend the Member for Maldon and East Chelmsford, whose speech was a tour de force—

Mr Chris Bryant (Rhondda, Labour)

A tour d'horizon.

Mr Michael Fabricant (Lichfield, Conservative)

A tour d'horizon aussi. My hon. Friend pointed out very well the problems with the application of frequency spectrum, not only now, but in the past. As several of the issues that are relevant to clause 147 are also of relevance to future clauses, I intend to raise many of them later on. However, I wish to make two points now. The first is about analogue switch-off. I am about to say something that I think will confine me to the Back Benches permanently: I congratulate the Department for Culture, Media and Sport on making the right decision when it recently gave the digital terrestrial television licence to Freeview, which is a consortium of the BBC, BSkyB and Crown Castle.

I see that your face has adopted a studied expression, Mr. Gale. You might be wondering whether the whole area that I am about to explore—and which was explored in some detail by my hon. Friend the Member for Maldon and East Chelmsford—is relevant to clause 147. It is relevant because analogue switch-off would make available frequencies that are not currently available for other use, such as telephony, telecommunications, and further forms of broadcasting other than television.

It is important to explain that digital terrestrial television and other digital forms of broadcasting not only have the advantages outlined by my hon. Friend—such as improved picture in many, but not all, cases—but allow far more television channels to be squeezed into the same amount of frequency spectrum, thanks to digital compression techniques. Many of those techniques were developed by the old Independent Broadcasting Authority's engineering

division at its headquarters at Crawley Court near Winchester, with which you might be familiar, Mr. Gale.

I congratulate the Department for Culture, Media and Sport; it was right to identify the fact the Freeview bid, under which Freeview said that digital terrestrial television should be made available free of charge, or free to air, was the only way to provide an incentive for people to gain access to the additional channels other than by using cable or satellite. Freeview cannot have the same number of channels as cable or satellite, because the frequencies are not available, but even having—if memory serves—24 digital television channels and six or seven audio channels is a major improvement on the five available on the analogue system.

I should be interested to hear whether the Minister thinks that the target date for analogue switch-off—if one has been set—is reachable. It seems to have altered: 2005 at one point, it is now 2010. My hon. Friend the Member for Maldon and East Chelmsford pointed out the difficulties of a switchover when he talked about the introduction of Channel Five, but my memory—and yours, I suspect, Mr. Gale—[Interruption.]

Mr Roger Gale (North Thanet, Conservative)

Order. It is the duty of the hon. Member on his feet to seek to hold the attention of the Committee, but I must ask hon. Members to refrain from private conversation.

Mr Michael Fabricant (Lichfield, Conservative)

Thank you, Mr. Gale. I am sure that you remember the problems of switching over from VHF to UHF television transmission. You may even have possessed a dual-standard television set, which consisted of a very clunky control that switched over not only from VHF to UHF, but from 405-line transmission on bands 1 and 3 of VHF, to 625-line transmission on UHF.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

My hon. Friend makes an interesting analogy. He might be interested to know that the Independent Television Commission compared the task of switchover from 405-line to 625-line with the task of achieving analogue switch-off, and warned that analogue switch-off would be likely to take at least as long, if not longer. It said that, as a result, 2018 was the earliest date imaginable.

Mr Michael Fabricant (Lichfield, Conservative)

That is substantially different from the date that I have heard the Secretary of State for Culture, Media and Sport talk about. I should be interested to hear the views of the Minister for E-Commerce and Competitiveness on when we will be capable of analogue switch-off, although I recognise that he is a Minister at the Department of Trade and Industry, not the Department for Culture, Media and Sport.

I recall that people hung on to their old black-and-white 405-line sets for years and that it took some 15 years before the old VHF television transmissions could be switched off, during which period there was simulcasting on UHF for BBC 1 and ITV. If that trend continues, 2018 might well be a realistic target. That would be very unfortunate, if only for the Treasury, which, I suspect, thinks that it will raise considerable amounts of money from the sale of frequencies—

Mr Roger Gale (North Thanet, Conservative)

Order. I appreciate that the future availability of spectrum is related directly to analogue and digital adjustments, but I remind the hon. Gentleman that the clause deals specifically with spectrum and Ofcom's functions in relation to it. He should either bring his remarks to a conclusion, or come back to the point.

Mr Michael Fabricant (Lichfield, Conservative)

I was just about to move on to the next subject of concern with which I hope the Minister will deal. It arises from subsection (5), which deals with

''the efficient use in the United Kingdom of the electro-magnetic spectrum for wireless telegraphy''.

The Minister will be aware that several companies, such as Orange, O?2? and Vodafone, hold mobile telephony licences. Will it be Ofcom's duty to ensure that geographical elements of those licences cannot be sold to competing companies? As a satisfied Vodafone user, I shall use that company as an example of my argument, although I hasten to add that I have no reason to believe that the company intends to act in the way that I shall describe.

Vodafone would claim that its network covers a certain percentage—say, 90 per cent.—of the United Kingdom. Will Ofcom be in a position to stop Vodafone selling off frequencies in some rural areas in future to another company, such as O?2?? Apart from its tariff structure, I and other customers chose that particular company because of its coverage. If it could sell off its frequencies, I would be unable to use my mobile in certain areas of the country where, previously, I had been able to use it, unless the roaming position were changed, whereby I could use other telephone companies, but that would cost more. Will Ofcom have a locus, under the Bill, to stop the selling of some frequencies? Moreover, the Minister will be aware that the 07 band of telephony applies not only to mobile telephony, but pager use. Is there anything to stop inter-trading between pager companies and mobile telephone companies?

Mr Roger Gale (North Thanet, Conservative)

Order. I am listening carefully to the hon. Gentleman and I am trying to be as generous as I can in my interpretation of the clause, but he is now talking about trading and that is covered under later clauses.

Mr Michael Fabricant (Lichfield, Conservative)

In that case, I shall sit down. I will raise the matter and those to which my hon. Friend the Member for Maldon and East Chelmsford referred when we discuss future clauses.

Mr Andrew Robathan (Blaby, Conservative)

I will not detain the Committee, but I wish to reinforce the argument of my hon. Friend the Member for Maldon and East Chelmsford. Nowhere in this leviathan of a Bill is there mention of analogue switch-off, but that will have a direct impact on the lives of a vast number of our constituents who probably are not concentrating on each word that has been said in this marathon of a Committee. Naturally, mobile telephony, broadcasting law and so on will also have an impact, but people will not notice it so directly as the impact of the switch-off of analogue television.

The switch-off will be enormously important to many people, particularly the elderly who probably do not have digital television. How it comes into effect will change their lives. As we know, many elderly people sit at home watching television and they will want to know the impact that the matters that we are discussing in Committee will have on their lives. The change is inevitable; as you will recall, Mr. Gale, it was debated at length during discussions on the Broadcasting Act 1996. I accept that the matter is a DCMS responsibility, but I hope that the Minister for E-Commerce and Competitiveness can explain to us and to our constituents what impact the change will have and how the Government envisage such an enormously important measure being introduced.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I am sure that there are many matters that we can discuss under clause 147, but I shall touch on only one. I was prompted to intervene by what the hon. Member for Milton Keynes, North-East and my hon. Friend the Member for Ryedale (Mr. Greenway) said about the grant-making powers of Ofcom. I understand why they exist, but it may be useful to take into account the structure. Ofcom has a number of functions that have been transferred to it from the pre-commencement regulators. In order to meet their costs, the regulators, with the exception of the Radiocommunications Agency, have pre-existing arrangements to secure charges upon people whom they currently license or will regulate in future. The Office of Communications Act 2002 includes a provision that Ofcom would make an account and, at the end of the year, if there is excess, the Secretary of State can direct those funds to be paid into the Consolidated Fund or used for some other purpose.

The Radiocommunications Agency operates differently. Sums received by the Radiocommunications Agency were paid to the Secretary of State and so were automatically paid into the Consolidated Fund. Clause 386 sets out the basis upon which money paid to Ofcom, in respect of wireless telegraphy licences and grants of recognised spectrum access is automatically paid into the Consolidated Fund. For this purpose, it would also apply to auctions, so we are potentially dealing with very large sums of money. Money that Ofcom spends in relation to its functions under the Wireless Telegraphy Act will be the subject of a grant to Ofcom by the Secretary of State, with the consent of the Treasury. That will include amounts required by Ofcom to undertake purposes of this kind that are grants from Ofcom to other persons, in relation to wireless telegraphy functions.

Given where we are in the Bill, this may be the point at which to ask: ''Am I right about that? Does that mean that there will, in effect, be an accounting separation between Ofcom's wireless telegraphy functions and its other functions?'' Many people, in particular those who are involved in broadcasting, and the telecommunications industry, may realise that Ofcom will have functions ranging from telecommunications regulation to spectrum. They may be concerned that money payable for licences and recognised spectrum access and auctions—in relation to wireless telegraphy licences—does not get

siphoned off to the Treasury via the Consolidated Fund, and consequently an inadequate grant is made to Ofcom to carry out its functions in relation to wireless telegraphy, effectively cross-subsidised by charges made upon telecommunications providers or broadcast licence holders. I seek an assurance that the accounting separation, given the different flows and the way in which money received by Ofcom is treated, will relate not only to Ofcom, but also of Ofcom's wireless telegraphy functions. We must see that money paid to the Treasury is then paid back to Ofcom, sufficient to meet all its expenses relating to those functions.

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

Let me begin by referring to the point of order at the beginning of our sitting and inform the Committee that we will provide the paper that was requested in time for the debate on clause 193.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

I am delighted to hear that from the hon. Gentleman, but could he elaborate on what he means by ''in time''?

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

I mean before the debate on clause 193.

Mr Michael Fabricant (Lichfield, Conservative)

On a point of order, Mr. Gale. Will you clarify whether that is a satisfactory answer? Does it prevent us from tabling amendments, or will you allow amendments the night before the meeting begins, when we receive the document?

Mr Roger Gale (North Thanet, Conservative)

I made it abundantly plain at the start of this sitting that the provision of documents supporting, but not directly related to the Bill, are entirely a matter for the Minister. The delivery of those papers is a matter for the Department; it is not a matter for the Chair. On the hon. Gentleman's question concerning the tabling of manuscript amendments, that policy is abundantly plain and the answer is no.

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

We will make the paper available as soon as possible.

Radio spectrum is a key raw material for the communications sector. Wireless networks are indispensable for mobile communications. Wireless links can be rolled out quickly and cost effectively to provide new fixed infrastructure, and the great majority of television and sound-radio broadcasting, which allows us all to listen to Dame Nellie Melba and others, depends on the allocation of the finite resource to which the hon. Member for Maldon and East Chelmsford referred.

Making spectrum available for new innovations is crucial for the economy, and managing the radio spectrum is a principal function of Ofcom as an integrated communications regulator. I was grateful to the hon. Gentleman for the well-deserved tribute that he paid to the Radiocommunications Agency for the effective way that it carries out it vital, but often unsung, tasks. Over the past seven months or so, I have become aware that it commands enormous respect from its international counterparts and from those who are on the receiving end of its work in the United Kingdom.

Clause 2 and schedule 1 will transfer the core functions of licensing and enforcement to Ofcom. This clause completes the picture by conferring on it additional related functions such as providing services, maintaining records and giving advice, all of which are integral parts of the remit of the spectrum manager. They all reflect functions that are currently exercised by the Secretary of State, so there is nothing new in this list; what is new is that the functions have been vested in the new integrated regulator—Ofcom.

Spectrum management involves a wide range of activities, from tackling interference to domestic TV reception to taking part in international negotiations with WARC and others. Ofcom's functions must be broad enough to allow it to undertake the full range of activities that it needs to.

I agree with what the hon. Member for Maldon and East Chelmsford said about the attractions of market mechanisms helping to make spectrum allocation decisions. Those arguments have been set out well in the report by Professor Cave that my hon. Friend the Member for Milton Keynes, North-East has read three times—greatly to his profit, no doubt. I am sorry that the hon. Member for Maldon and East Chelmsford has been unable to get hold of a copy of the Government's response to that report; I will ensure that one is sent to him forthwith.

In a few minutes' time we shall debate amendments that would constrain the way in which those market mechanisms can be used. I will resist them on the basis of the benefits—which the hon. Gentleman described—of being able to use market mechanisms in spectrum allocation decisions.

Mr Michael Fabricant (Lichfield, Conservative)

Does the Minister not take on board the point that was made very well by the hon. Member for Sheffield, Hallam that there is a tension here between services that need to be universally available and market forces? Has new Labour become so capitalist that it has gone off the scale, or does he think that there must be some control of market forces with regard to frequency allocation?

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

Of course I do. Those constraints are set out in the Bill, and we will debate how they will work.

Several hon. Members asked me about the progress that is being made towards achieving digital switchover. Those who have followed the fortunes of digital television over the past 12 months or so have been on something of a rollercoaster ride. I freely acknowledge that at one stage last year things looked rather bleak after ITV Digital went into receivership last year. However, in a remarkably short space of time the Independent Television Commission was able to reallocate the licences that had been held by ITV Digital to the Freeview consortium, which the hon. Member for Lichfield (Michael Fabricant) mentioned. That has been successful and those who expressed much scepticism earlier last year about the timetable for the digital switchover should have been encouraged by the progress of digital broadcasting in the past months.

The position set out by the then Secretary of State, the right hon. Member for Islington, South and

Finsbury (Mr. Smith) was that we could look forward to digital switchover at some point during the period 2006–10. There is no reason to believe that that cannot be achieved.

Mr Michael Fabricant (Lichfield, Conservative)

As the Minister implicitly corrected me by saying that it was the ITC—not the Secretary of State—that awarded the licence, can I withdraw my praise to the Department for Culture, Media and Sport and transfer it to the ITC?

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

All those who were involved should be congratulated for the success of that exercise.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

Regarding the date for digital switchover, Committee members will be aware of a number of Government amendments, which we will discuss later, that are designed to allow the expiry date of licences to be shifted from 2014 to some other unspecified date. That is because the Government are not 100 per cent. confident that digital switchover will happen between 2006 and 2010 and they do not even appear to be sufficiently confident to insert some other time parameters in order to establish those in the Bill. Why does the Minister suddenly shift to such uncertainty?

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

I look forward to the debate on those amendments when we reach them.

There is no reason to depart from the view that we set out some years ago, which was that we could look forward to switchover during the period 2006 to 2010. I have had discussions with Ministers from other countries and it is striking that they are considering much the same period for switchover. That is already happening in Berlin. We can be optimistic about the timetable being met.

Mr Chris Bryant (Rhondda, Labour)

The Minister has already referred to the great success of Freeview since its launch, but there are still problems relating to the signal and the use of the spectrum in many areas of the country. Only 75 per cent. of England and 60 per cent. of Wales is covered by Freeview. Does the Minister think that Ofcom's powers in relation to spectrum management and its slightly interventionist approach will give it a more active and proactive role in ensuring that Freeview and digital terrestrial television, and does he think that issues relating to the signal can be resolved?

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

We have set out a changeover plan—available on the web—that addresses all the issues that must be resolved in order to achieve a successful switchover. The hon. Member for Maldon and East Chelmsford referred to second sets and video recorders—those must be addressed. We must also address the points that my hon. Friend the Member for Rhondda (Mr. Bryant) made about availability. One of the criteria set out by my right hon. Friend the Member for Islington, South and Finsbury in 1999 was that everybody who can currently get the main public service broadcasting channels in analogue form must be able to receive those on digital systems. It is essential that questions about access are resolved successfully by all those who are working on the switchover, including the industry, the regulator and the Government. I am confident that we will be able to do that successfully.

The hon. Member for Sheffield, Hallam asked me to comment on the valuation of the spectrum. Undoubtedly, the figure assigned by the market would be lower now than it would have been some years ago, but I do not want to give a figure at the moment. The valuation will continue to vary. However, the issue is significant for making decisions on how digital spectrum will be allocated across the country in order to enable the switchover to take place.

There are some quite difficult questions and cost-benefit issues relating to how digital spectrum will be allocated to facilitate digital television. There are more expensive options that would free up more spectrum, and less expensive options that would free up less spectrum. A cost-benefit view will need to be taken on the valuation of the freed-up spectrum, so that a decision can be taken on how much investment is warranted if that spectrum is to be released. Those issues are being considered.

We are not driven by revenue-raising ambitions; I give hon. Members that reassurance. At no point in the Bill have we introduced measures simply because we think that there is an opportunity to raise extra money. That is not the concern driving the clause, or any other part of the Bill. My hon. Friend the Member for Milton Keynes, North-East wondered whether the arrangements set out for the relationship with the Treasury will be a problem. I do not think so; the arrangement included under subsection (7) is entirely conventional, and I do not think that Ofcom will have difficulty working successfully under it.

My hon. Friend and others asked about the grant-making powers under the clause. Those mirror existing powers under section 5 of the Wireless Telegraphy Act 1998. It takes time to move assignments by regulation because of the need to consult and give due notice, and grants can accelerate that process by smoothing the way for incumbents in part of the spectrum to move voluntarily. Such grants are subject to value-for-money and additionality tests. Also, they require Treasury consent under section 5, and must comply with state aid rules, so there are constraints on what can be done.

Those are the reasons why the powers exist. They have existed since 1998, but no grants have yet been paid, although some cases are under consideration. The Radiocommunications Agency announced at the end of November that the Treasury had approved £2.5 million for grants to support research into improving radio spectrum efficiency in the coming financial year. The possibility of grant-making is also under consideration in the context of accelerating the reformatting of the spectrum for fixed wireless access, although the agency has not yet make a commitment to that.

Finally, I shall respond to the points raised by the hon. Member for South Cambridgeshire. I shall say more on spectrum and the accounting arrangements that he asked about when we reach clause 386, but I give the hon. Gentleman and the Committee the assurance that an arrangement will be put in place that broadly translates the existing arrangements, which he rightly identifies as being different in respect of the

Secretary of State and Ofcom. The Treasury and Ofcom are currently discussing the precise handling of those arrangements, but I can assure the hon. Gentleman that spectrum management functions will be adequately funded—as they are now.

Question put and agreed to.

Clause 147 ordered to stand part of the Bill.