Digital Economy Act 2017

Policy background

Access to digital services

3. The 2015 Conservative Party Manifesto committed to roll out universal broadband to ensure everyone is part of the digital economy. Improved connectivity is essential for any ambitious nation, driving economic growth, quality of life, education, and engagement with public services. The January 2014 UK Broadband Impact Study further sets out the benefits of fast broadband.
4. "Superfast" broadband is a term used to describe broadband capable of delivering download speeds of at least 24 Mbps, which cannot be delivered through previous generation broadband technology. A range of technologies can deliver superfast broadband. The United Kingdom’s superfast broadband networks are largely provided through Virgin Media’s cable network and through BT Openreach’s "Fibre to the Cabinet" ("FTTC") solutions. FTTC is currently the main technology being used to extend superfast broadband coverage through publicly-funded projects but other technologies including "Fibre to the Premises" ("FTTP"), wireless, and satellite also have roles to play. In 2013 the government set an ambition that, by the end of 2017, 95 per cent of premises would be able to connect to superfast broadband. To ensure that coverage extends to areas where it would not be commercially viable for the private sector, the government, Local Authorities and devolved administrations are investing nearly £1.7 billion in improving broadband. There are also a number of projects trialling technologies to extend coverage to the final five per cent and in May 2016 it was announced that BT had confirmed more than £200 million would be available for reinvestment, because its contracts with government require it to return money to local authorities once certain take-up thresholds have been reached.
5. As the world goes increasingly online, those without internet access risk social and economic exclusion. The government therefore wanted to ensure that, where superfast broadband remains unavailable, a good quality broadband service is nonetheless available. In December 2015 the government launched a scheme offering a subsidised satellite broadband connection (including the option of superfast speeds) to homes and businesses unable to obtain an affordable broadband service of at least 2 Mbps. This scheme formed part of the government’s commitment to make sure every home and business in the United Kingdom could access speeds of at least 2 Mbps by the end of 2015. This commitment is termed the "Universal Service Commitment" and currently acts as a non-statutory safety net.
6. In November 2015 the then Prime Minister announced that government was planning to create a broadband Universal Service Obligation ("USO") with the ambition to give people the legal right to request a broadband connection with speeds of 10 Mbps by the end of the Parliament. Unlike the non-statutory Universal Service Commitment, a broadband USO would be a legal right to request a connection, similar to the way the existing USO operates to request a telephone line or equivalent arrangements for utilities. On 23 March 2016 the government published A new broadband Universal Service Obligation, consulting on the proposal. On 17 May 2016 the government published its response to the consultation confirming plans to legislate. On 11 October 2016 the government published a statement of intent setting out the principles that would guide the design of the broadband USO.
7. The government expects the broadband USO to work in a similar way to the telephony USO that is enabled by section 65 of the Communications Act 2003 ("the 2003 Act") and implemented through the Electronic Communications (Universal Service) Order 2003 (SI 2003/1904). A provider or providers are designated to provide the service. In the case of BT, who is a designated provider under the telephony USO, a telephone connection is provided on request unless the cost of installing the connection exceeds £3,400 in which case the customer has the option of paying any additional costs. The government commissioned Ofcom to provide technical analysis and recommendations on the design of the broadband USO and on 7 April 2016 Ofcom published Designing the broadband universal service obligation, inviting views from industry and others on how the detailed operation of the broadband USO would work. On 16 August 2016 Ofcom published a summary of responses and on 16 December 2016 they published their advice to government, Achieving decent broadband connectivity for everyone. This Act amends section 65 of the 2003 Act to provide adequate vires for a broadband USO to be introduced following consultation.
8. In addition to ensuring the availability of broadband connectivity, the government believes that consumers need to be well informed about services available to them, be able to easily switch provider and be compensated if things go wrong. Ofcom also shares this belief and set out a similar position in their recent strategic review of digital communications, Making communications work for everyone, published on 25 February 2016.
9. The government believes that consumers should be able to more easily switch communications provider. In 2014 just 6 per cent of consumers switched their broadband or fixed line telephone provider, half the rate of switching of gas or electricity providers. For pay-TV the switching rate was just 2%. Since June 2015 Ofcom has successfully implemented gaining provider-led switching across the Openreach network. This means that customers wishing to change their fixed voice and/or broadband service provider only need to contact their new provider, and no longer need to contact their existing provider to obtain an authorisation code that they must then give their new provider. The government supports this model and on 25 May 2016 published Switching Principles Action Plan setting out how the government wishes to ensure switching continues to be made simpler.
10. Ofcom has powers to require communications providers to adopt rules on switching under section 51 of the 2003 Act. The government is keen to see an extension of the 2015 switching reforms to the Openreach network extended to other electronic communication services, especially as many consumers now buy services in a bundle including mobile services and pay-TV. With the aim of ensuring that Ofcom is able to achieve these reforms in a timely manner, the Act clarifies that section 51 may be used to require communication providers to comply with switching conditions.
11. Electronic communications, and in particular broadband, are increasingly essential services like utilities, without which it is difficult to operate. Delays in connection and re-connection can be inconvenient and unless the consumer actively complains there is little incentive for the provider to improve quality of service. Consumers who suffer a power cut are protected by Ofgem’s Quality of Service Guaranteed Standards, which are service levels that should be met by each distribution company. If they fail to meet the level of service required, then customers may be entitled to a payment. The government wishes to see a similar scheme set up for those who have their communication services disrupted. The Act clarifies that Ofcom is equipped with powers to achieve this.

Digital infrastructure

12. The electronic communications code ("the code") enables electronic communications network providers to install and maintain electronic communications networks by giving network operators certain rights. Under the code, operators have rights to install and keep electronic communications apparatus on land. Generally, the code requires that operators secure the agreement of the land owner before installing apparatus, but also provides that when permission is not given by the land owner, an operator can apply to the County Court or Sheriff Court in Scotland for permission. The previous code was found in the Telecommunications Act 1984, pre-dating the introduction of mobile networks in the United Kingdom and was widely considered to be out of date and in need of reform.
13. The government asked the Law Commission to review the code in 2012. The Law Commission published a detailed report on 28 February 2013, including detailed recommendations for reform of the code, but also advised government to carry out further consultation and research in some areas before proceeding.
14. Following formal consultation in February 2015 and further analysis work, on 17 May 2016 the government published A New Electronic Communications Code, setting out plans to legislate. The Act reforms the underpinning rights that communications providers have to acquire land - moving to a "no scheme" valuation regime that ensures property owners will be fairly compensated for use of their land, but restricts their ability to profit from the public need for communications infrastructure. In this respect, it will put the telecommunications sector on a similar footing to utilities like electricity and water, and reduce the cost of providing infrastructure.
15. The new code also provides new rights to upgrade and share infrastructure. The government intends infrastructure sharing to assist future deployment of technology such as 5G. Administrative changes to court processes are intended to allow for faster dispute resolution, making sure that disputes do not delay construction and maintenance of communications infrastructure.
16. The Act also enables an existing temporary relaxation of the rules for installing communications apparatus to be made permanent in order to further facilitate broadband infrastructure rollout. Communications network providers with rights under the electronic communications code ("code operators") are permitted to construct infrastructure on public land and take rights over private land. In addition to these rights, code operators are subject to conditions and restrictions relating to the installation, retention and use of electronic communications apparatus as set out in the Electronic Communications Code (Conditions and Restrictions) Regulations 2003 (SI 2003/2553) made under section 109 of the 2003 Act ("the 2003 regulations"). Section 109 was amended by the Growth and Infrastructure Act 2013, subject to a sunset provision, enabling changes to be made to these regulations relating to the installation of broadband cabinets and poles, relaxing the notification requirements placed on code operators, as well as the general requirement placed on them to bury new overhead lines underground. Complementary changes were made to planning legislation that enabled the installation of the infrastructure. The Act allows the sunset provision in the 2003 regulations to be removed.
17. In 2013 the government consulted on the proposed planning changes. In response to concerns expressed in the consultation that the removal of prior approval requirements might lead to the insensitive siting of cabinets and poles, it was agreed that communications providers and planning authorities would develop and commit to a code of practice on the siting and appearance of apparatus to safeguard against this. On 5 March 2015 the Minister for the Digital Economy made a written statement announcing the outcome of a review of the operation of the code of practice. The review was conducted by a working group comprising representatives from a range of industry and sector organisations including the Planning Officers Society, English Heritage, the National Parks Authorities, BT, Virgin Media and the UK Competitive Telecommunications Association (UKCTA). The working group jointly agreed that overall the code appeared to be working well. A further review was conducted in 2016 and reached a similar conclusion. An updated version of the code of practice was published on 22 November 2016. The government believes that the planning changes have been proven to work well and that the removal of the sunset provision will support continued rollout of superfast broadband and future technologies.
18. The Act also contains a number of measures relating to spectrum and wireless telegraphy licences. Spectrum is the term generally given to the electromagnetic frequency range from 3kHz to 300GHz, considered the part of the electromagnetic spectrum that can be used for wireless communication. The government considers that making better use of spectrum is essential to facilitate the development of the United Kingdom’s digital communications infrastructure. Spectrum is national asset owned by the government, which is then licensed by Ofcom to a wide range of civil uses. Ofcom is responsible for managing and granting rights of use in relation to spectrum through duties and obligations under the 2003 Act and the Wireless Telegraphy Act 2006 ("the 2006 Act"). The Act implements a number of measures that were first announced in the 2013 strategy paper, Connectivity, content and consumers: Britain's digital platform for growth.
19. White spaces are unused parts of allocated spectrum. These frequencies are not always used at a specific time or in a specific location. They are a technical consequence of the way spectrum bands are allocated, but they are also wasted space. The government is keen that better use is made of white space, and new technologies known as white space devices will share spectrum bands with existing users. This process is known as dynamic spectrum access and it enables white space devices, operating in frequency bands authorised by Ofcom, to connect to geolocation databases which identify when and where spectrum may be available for use. These databases are not regulated under existing legislation. The Act allows Ofcom to register and then regulate such database providers so that it is better placed to undertake its spectrum management duties and prevent interference and to help facilitate dynamic spectrum access.
20. Currently, where there is a contravention of a provision, term or limitation of a spectrum licence, Ofcom can revoke (or vary) the licence or prosecute. In limited circumstances, Ofcom may impose a financial penalty. The government’s view is that the current enforcement powers available to Ofcom in relation to such a contravention are not necessarily proportionate or sufficiently flexible in all cases. For example, spectrum licences granted to mobile network operators contain requirements to achieve certain rates of coverage, such as the term in the 900 MHz and 1800 MHz licences requiring 90% coverage of the United Kingdom’s landmass by the end of 2017. If these requirements are not met Ofcom’s only available sanction is to revoke the licence. The Act provides Ofcom with powers to issue financial penalties if matters such as coverage requirements are not satisfied.

Online pornography

21. The 2015 Conservative Party Manifesto committed the government to measures to restrict access to harmful sexualised content online, by requiring age verification for access to all sites containing pornographic material. In February 2016 the government published Child Safety Online: Age Verification for Pornography, consulting on how to implement the commitment. The government believes that commercial providers of pornography (material designed primarily to cause sexual arousal and stimulation), should have age verification controls in place where it is accessed online in the United Kingdom. The Act introduces such a requirement and gives the Secretary of State the power to designate a regulator. The Act sets out the functions and powers of the regulator. These include powers to notify payment providers such as credit card companies of non-compliant sites to enable them to consider whether to withdraw services. Similarly, non-compliant sites may be notified to ancillary service providers. In addition, the regulator can require internet service providers to take steps to prevent access to offending material.

Intellectual property

22. The 2015 Conservative Party Manifesto committed to protect intellectual property and to make Britain the best place in Europe to innovate, patent new ideas and set up and expand a business. The Act contains a number of intellectual property measures to support creative industries.
23. The Public Lending Right Act 1979 provides a right for authors, known as the "public lending right", to receive payments from a central fund in respect of such of their books as are lent out to the public by local library authorities in the United Kingdom. The Digital Economy Act 2010 extended the public lending right to e-books, but only where they are downloaded on the library premises. The 2015 Conservative Party Manifesto committed the government to assist public libraries in embracing the digital age by working with them to ensure remote access to e-books, rather than just access on the library premises. The Act updates the public lending right to enable this.
24. The main ‘physical’ criminal copyright offences in the Copyright, Designs and Patents Act 1988 ("the 1988 Act") carry a ten-year maximum custodial sentence but the provisions governing online infringement, introduced using secondary legislation in 2003 in the course of implementing the Information Society Directive 2001/29/EC, provide for a maximum two-year sentence. In March 2015 the government published Penalty Fair, a study of criminal sanctions for copyright infringement available under the 1988 Act. This recommended that the offence for online copyrights infringement was increased to achieve parity with physical copyright infringement. In July 2015 the government published a consultation on changes to the penalties for online copyright infringement. On 21 April 2016 the government published a response to the consultation announcing its intention to legislate to increase the maximum sentence for online copyright infringement to ten years, achieving parity with the physical offence, and also to re-draft the offence to address wider concerns about the offence provisions themselves. The Act implements the necessary changes.
25. Registered design owners can stamp or label their products with the word ‘registered’ and the relevant registered design numbers in order to ensure that anyone who infringes the design cannot later claim they were unaware of the registration, and so be excused from paying damages to the owner. The optional marking of a product in this way to make others aware of the intellectual property protection afforded to the product is sometimes called providing "constructive notice". Multiple rights may subsist in a single product, and these may lapse or be revoked at different points in time. As it is an offence to represent falsely that a design in any product is a registered design, products had to be re-marked when the details changed, which is costly, both in terms of time and money. The Act amends the Registered Designs Act 1949 to provide design owners with the option of marking a product with the address of a website which links the product with the relevant registered design numbers as an alternative way of providing constructive notice.
26. Section 73 of the 1988 Act exempts cable platforms, such as Virgin Media, from paying copyright licence fees to retransmit the core public service broadcaster channels, such as ITV1. The provision exists to support the specific policy objective of supporting the development of cable television infrastructure in the 1980s and 1990s. In March 2015 the government published: The balance of payments between television platforms and public service broadcasters: Options for deregulation, consulting on, amongst other things, repealing section 73. It was proposed that the measure was no longer relevant with the development of multi-channel and digital TV on satellite, terrestrial and increasingly internet based platforms. The Act repeals section 73. In the government’s view, with over 4.5 million cable subscribers across the country, many of whom use the service for far more than just television, the objective of developing cable infrastructure is now met through other legislative measures such as reform of the electronic communications code – as above. Following consultation on transitional arrangements following the repeal of section 73, on 10 February 2017 the government concluded that section 73 can be repealed without a transition period.

Digital Government

27. In November 2012 the previous government published the Government Digital Strategy setting out the objective of delivering government services as "digital by default". The government’s view was that the public increasingly expects to access services quickly and conveniently, at times and in ways that suit them, often online. The strategy identified that, up to that point, the government had been hindered in delivering better services because of a reliance on digitised versions of pre-digital business processes, layered on top of legacy IT systems, some of which were over 30 years old. It was stated that outdated back-end systems prevented effective data sharing.
28. In 2013 the government started on a two-year programme of open policymaking to find a way of overcoming the legal barriers to the better delivery of public services, better research and better statistics (www.datasharing.org.uk). In February 2016 this process culminated in the government’s publication of Better Use of Data in Government, consulting on proposed reforms, ahead of the Government Transformation Strategy, published in February 2017, which set out in more detail how the government intended to develop government services in response to the "internet age" and make government a digital organisation. The Strategy’s objectives include making better use of data within government while taking security into full account.

Public Service Delivery

29. For a public authority to access information held in another part of the public sector it requires appropriate legal powers, which are often provided by express legal gateways to disclose information. The government believed that the previous set of data-sharing powers for public service delivery was complex and inconsistent across public services and organisations. This lack of a clear framework of rules risked hindering the ability of public authorities to offer citizens timely and appropriate interventions and to respond quickly to a changing social and policy environment. 
30. The Act provides a gateway to enable specified persons, listed in Schedules, to share information for tightly constrained objectives. Those objectives must be set out in regulations, must be for the improvement or targeting of the provision of a public service or the provision of a benefit to individuals or households, and must also have as their purpose the improvement of the well-being of individuals or households. Objectives must support the delivery of a specified public authority’s functions, which includes the administration, monitoring or enforcement of the delivery of the function. To use the gateway, the proposed sharing of information must be for the purpose of one of the specified objectives, and those undertaking the share must be specified persons in relation to that objective.
31. The public service delivery chapter also contains powers to share information for the purpose of assisting people living in fuel poverty and water poverty.

Civil registration

32. The Act provides a gateway in England and Wales to enable civil registration information to be shared in certain circumstances. Most transactions to prove eligibility for public services still rely on individuals providing paper birth, marriage, civil partnership and death certificates as evidence. The Act will allow for electronic verification between public authorities and the General Register Office, removing reliance on paper certificates. The government’s view is that this will also reduce the risk of fraud in relation to forged or altered certificates. Further, the Act will enable access to civil registration data on births, deaths and marriages, for example to use that information to prevent public authorities from inadvertently sending letters to people who are deceased.

Debt and Fraud

33. The government is seeking to help manage debts owed to the public sector more effectively. The Act creates a new gateway enabling information to be shared between specified persons, listed in a Schedule on the face of the Act, in relation to debt owed to public authorities or the Crown. This is with a view to improving efficiency in dealing with debt owed to the public sector, and using effective data-sharing to get a more informed view of a customer’s individual circumstances and their ability to pay. Each proposed data-sharing arrangement under this power will be subject to a pilot process which will be set out in a statutory code of practice to measure the effectiveness of the information-sharing.
34. Government agencies work to detect and prevent fraudulent activity against the public sector. Similar to the debt power, the Act enables bodies listed in a Schedule on the face of the Act to share information with a view to taking action in respect of fraud against a public authority. These data-sharing arrangements are also subject to a pilot process, which will allow new methods of information-sharing to be trialled and measured for effectiveness. It is intended that more effective data-sharing in this area will make it easier, for example, to spot conflicting information across different public services that could suggest patterns of fraud for further investigation by officials.

Revenue Authorities

35. The Act provides a general power for Her Majesty’s Revenue and Customs, the Welsh Revenue Authority and Revenue Scotland to disclose non-identifying information in the public interest, including for purposes that are not related to the specific functions of those revenue authorities. The Revenue and Customs is also given powers to share employer reference information with the Employers’ Liability Tracing Office, an independent body which helps people who have suffered personal injury as a result of their employment to trace liability policies.

Research and Statistics

36. Official statistics produced by the executive arm of the United Kingdom Statistics Authority ("UKSA"), the Office for National Statistics ("ONS"), are intended to support the development of economic and public policy and inform decision-makers. The Act provides the Statistics Board access to administrative data from across government and businesses. The government’s view is that this will provide more accurate, frequent and timely statistics, instead of relying on surveys.
37. The Act also provides for the use of de-identified (de-personalised) data to support accredited researchers to access and link data in secure facilities for the purpose of carrying out research for public benefit.

Data Protection

38. The Digital Government measures in the Act operate within the framework of the Data Protection Act 1998 and the Human Rights Act 1998, and all processing of information under these powers must be carried out in compliance with that legislation. The Part 5 powers of the present Act explicitly state that information cannot be disclosed if to do so would contravene the Data Protection Act 1998, which provides a framework of principle-based safeguards on processing personal data, including requirements for fair and lawful processing and for data minimisation.
39. In particular, the provisions in and the codes of practice produced under the Act will be subject to the "Data Protection Principles" set out in Schedule 1 to the Data Protection Act 1998 which require that use of personal data must be proportionate (i.e. that only the minimum amount of data required to fulfil a given objective is to be shared). The powers are limited to ensure that information can only be shared for the specific purposes set out in the Act.
40. The General Data Protection Regulation or "GDPR" (Regulation (EU) 2016/679) was adopted on 27 April 2016 and must take effect by 25 May 2018. In the government’s view the measures in Part 5 of the Act are also consistent with the GDPR.
41. Information cannot be disclosed under Part 5 if to do so would be prohibited by any of Parts 1 to 7 or Chapter 1 of Part 9 of the Investigatory Powers Act 2016 (or, until those provisions are fully in force, is prohibited by Part 1 of the Regulation of Investigatory Powers Act 2000).
42. The information-sharing powers in Part 5 are supplemented by statutory codes of practice or statements of principles, each of which is required to be consistent with the Information Commissioner’s Data sharing code of practice. Persons who disclose information under Part 5 are also explicitly required to have regard, in so far as they apply to the information in question, to certain codes of practice issued by the Information Commissioner under section 51(3) of the Data Protection Act 1998.

Miscellaneous

Ofcom reports and information

43. Ofcom already has several powers to require communication providers to provide information for various purposes, in particular the power in section 135 of the 2003 Act that allows it to collect information for the purpose of fulfilling its regulatory function in respect of electronic communication services. The powers are limited and in particular Ofcom can only require communications providers to make data publicly available themselves for specific purposes such as consumer protection, but not to promote competition. Ofcom can publish information on its own website but it is limited in its ability to release information directly to third parties, such as price comparison websites. Further, a provider is not obliged to give Ofcom information that it does not presently have, either because it has not collected the information, or having collected it, has not retained it. The Act provides Ofcom with a broader information collection power that the government envisages could be used to obtain address-level data on broadband line speeds, in formats suitable for third party intermediaries to use to present comparisons; and for Ofcom to use for monitoring speed prediction accuracy. This could address one of the key problems consumers face: that providers only advertise estimated broadband speeds within wide ranges, often only at postcode level and the speed can vary significantly where premises are further down the road from the nearest curbside cabinet.
44. In addition to this new information gathering power, the Act also amends some of Ofcom’s existing powers to collect information. Ofcom’s general information gathering power in section 135 of the 2003 Act will be widened to enable them to access customer experience data held by communications providers to ensure visibility of metrics such as the number of complaints received and the time taken to be resolved. Ofcom’s power to publish reports on the state of the country’s communications infrastructure every three years under section 134A, as inserted by the Digital Economy Act 2010, will be added to so that Ofcom can report more frequently where necessary in fast developing areas such as 4G coverage where the government has a target of achieving 90% coverage by the end of 2017. The Act also gives Ofcom the power to publish comparative data that it already collected under section 136, and which the government believes could aid the consumer in determining which provider is offering a higher quality product.

Ofcom appeals

45. Sections 192 to 196 of the 2003 Act set out the rights of appeal against the majority of Ofcom’s decisions regarding the regulation of electronic communications networks, services and spectrum. These provisions also apply to appeals against Ofcom’s decisions in respect of radio and television regulation that are made under powers in the Broadcasting Act 1990, the Broadcasting Act 1996 and Part 3 of the 2003 Act for a competition purpose. These appeals are heard by the Competition Appeal Tribunal ("the CAT"), which the 2003 Act requires to carry out a review of Ofcom’s decisions "on the merits". In the case of appeals against price control decisions, the CAT must refer the case to the Competition and Markets Authority ("the CMA") and then decide the matter in accordance with the determination of the CMA.
46. The government believes that an "on the merits" standard of review is overly burdensome. A 2013 analysis by the Department for Business, Innovation & Skills found that the average length of an appeal to the CAT reviewed "on the merits" was 11 months. The high costs of continuing litigation and subsequent delays in the regulatory regime can hinder effective regulation that must be able to keep pace with technological advances in the sector. The CAT itself has stressed "an appeal before the Tribunal is not a de novo hearing" (BT v Ofcom [2015] CAT 6). The government wanted to ensure that this is clear in legislation. A judicial review standard will ensure that appellants can still challenge Ofcom’s decisions, but litigants will no longer be able to seek complete reappraisals of Ofcom’s fair decision making.
47. Regulation of the telecommunications sector in the United Kingdom must comply with the Framework Directive (2002/21/EC) for electronic communications. Article 4 of the Framework Directive requires Member States to provide a right of appeal for any user or network or service provider that is affected by a decision of the national regulatory authority to an appeal body. Member States must ensure that "the merits of the case are duly taken into account and that there is an effective appeal mechanism". The government’s view is that a requirement for the CAT to decide appeals "on the merits" goes further than is required by Article 4, and that a judicial review standard of appeal is appropriate. The intensity of judicial review is flexible, dependent on the circumstances, and can therefore duly take into account the merits of the case as required by the Framework Directive.
48. There is precedent for regulatory appeals to be decided on a judicial review standard. Section 120 of the Enterprise Act 2002 provides a right of review to the CAT of certain decisions of Ofcom, the Secretary of State or the Competition and Markets Authority in relation to mergers. The CAT is required to determine the application by applying the same principles as would be applied by a court on an application for judicial review. Similarly section 57 of the Postal Services Act 2011 provides for an appeal against Ofcom decisions on a judicial review standard.
49. There have been three consultations on this issue since 2010. Most recently, in June 2013 the Department for Business, Innovation & Skills published a consultation entitled Streamlining Regulatory and Competition Appeals, consulting on a range of reforms to the regulatory system, including the option of changing the basis of appeals under the 2003 Act to a judicial review standard. The Act implements this reform.

Regulation and functions of the BBC

50. On 12 May 2016 the government published the white paper: A BBC for the future: a broadcaster of distinction, in which it was announced that Ofcom would be appointed as the external independent regulator of the BBC, as recommended by the independent review by Sir David Clementi. The Act amends section 198 of the 2003 Act to broaden the ability of Ofcom to regulate the activities of the BBC, giving Ofcom expanded regulatory powers in relation to the BBC’s activities. This is an enabling measure and the detail of what functions Ofcom will be required to carry out is set out in the BBC’s Charter and Framework Agreement.
51. As part the summer 2015 agreement between the government and the BBC, the BBC agreed to cover the full costs of the so-called ‘over-75s TV licence concession’ and to take on policy responsibility for the concession from 2020. The Act transfers to the BBC the function of making provision for a concession by reference to age (for persons who are aged 65 or over). The Secretary of State will retain the power to make provision for all other concessions as set out in the 2003 Act.

Ofcom powers relating to criminal content

52. The 2015 Conservative Party Manifesto committed to strengthening Ofcom’s role so that tough measures can be taken against channels that broadcast extremist content. Broadcasters must hold a licence from Ofcom to broadcast television or radio in the UK and Ofcom already has powers to set conditions on these licensees to keep seriously harmful content off air. This licence regime has developed over time and in response to technological developments. Different licence types apply depending on the way in which content is broadcast. The Act contains measures to ensure that Ofcom can enforce conditions on Digital Television Additional Service ("DTAS") licences. DTAS licences include those given to channels that are only accessible to owners of "smart" televisions, which are capable of viewing channels that can only be received over internet-protocol.
53. The Act also amends Ofcom’s powers to suspend radio service licences for broadcasting content that incites crime and disorder. Ofcom possesses a power to immediately suspend the licence of a cable or satellite radio station that has broadcast incitements to crime or disorder. When it comes to an analogue or digital radio station, however, Ofcom first had to seek representations before a licence could be suspended, allowing repeat violations before enforcement could commence. The Act ensures that Ofcom always has the necessary powers to take swift action.

On-demand programme services

54. Ofcom is the regulator of UK video-on- demand ("VoD") services. VoD services include TV catch-up, online film services and those providing a library of archive content. Ofcom are required to encourage the providers of VoD services to ensure that their services are progressively made more accessible to people with disabilities affecting their sight or hearing or both. They do not, however, have the power to require compliance with particular accessibility requirements. This contrasts with Ofcom’s position in relation to linear television broadcasting, where Ofcom can require compliance with a Code of Practice setting out accessibility service requirements, including the meeting of specified targets, as conditions of broadcasting licences. The Act allows the Secretary of State to require providers of VoD services to provide designated levels of subtitling, signing and audio-description. In the government’s view this will improve accessibility to such services for people with disabilities affecting hearing and/or sight.
55. Ofcom also regulates editorial content on VoD services. Under Part 4A of the 2003 Act, VoD services must not contain any "specially restricted material" unless the material is made available in a manner which secures that persons under the age of 18 will not normally see or hear it. "Specially restricted material" specifically includes material that has been given an R18 certificate and material that it is reasonable to expect (if it were submitted) would be certified as R18. The age verification requirement in Part 3 of the 2003 Act also applies to R18 certificate material and equivalent material, but additionally it applies to 18 certificate material (and equivalent) produced solely or principally for the purposes of sexual arousal. To ensure better consistency between the two regulatory regimes, the Act amends Part 4A of the 2003 Act to ensure that age verification is also required by VoD services offering certificate 18 (and equivalent) pornography.

Direct marketing code

56. The Act contains measures that the government believes will contribute to reducing the number of unwanted direct marketing telephone calls. The Information Commissioner’s direct marketing guidance sets out best practice to ensure that the law is complied with. The Act places this guidance on a statutory footing by requiring the Information Commissioner to issue a statutory code of practice on direct marketing. It is the government’s view that this will make it easier for the Information Commissioner to take enforcement action against those organisations in breach of the direct marketing rules under the Data Protection Act 1998 and the Privacy and Electronic Communications Regulations 2003 (SI 2003/2426) ("PECR").
57. Direct marketing without consent from targeted consumers is an offence under PECR. Consent for direct marketing does not last indefinitely and in PECR consent is referred to as only being given ‘for the time being’. The Information Commissioner’s direct marketing guidance is that if an organisation is making contact by telephone, text or email for the first time it should not, in most circumstances, rely on any indirect (third party) consent given more than six months ago, even if the consent did clearly cover that organisation. The Commissioner frequently sees situations where third party consent is taken to last indefinitely and to apply to any number of different companies and products. Fines imposed may be challenged and where the quality of consent is a core issue, enforcement has proven difficult to sustain. The Act will aid enforcement of the regulations.

Other provisions relating to Ofcom

58. In most regulated sectors the regulator is required to have regard to government priorities. For example, Part 5 of the Energy Act 2013 provides for the Secretary of State to set out the strategic priorities, and other main considerations, of the government in formulating its energy policy for Great Britain, and the particular outcomes to be achieved as a result of the implementation of that policy. Ofgem must have regard to the strategic priorities when carrying out regulatory functions; further, the Secretary of State and Ofgem must carry out their respective regulatory functions in the manner each consider is best calculated to further the delivery of the policy outcome. Section 2A of the Water Industry Act 1991 (as amended by section 24 of the Water Act 2014) allows the Secretary of State to publish a statement setting out strategic priorities and objectives for Ofwat in carrying out relevant functions relating wholly or mainly to England (section 2B makes equivalent provision for Wales). Ofwat must carry out those functions in accordance with any such statement. Telecommunications infrastructure is of vital importance to the UK’s economy and radio spectrum is a limited resource subject to increasing demands from technologies dependent on mobile connectivity. It is the government’s view that a strategic approach is needed to regulate these matters. The Act makes provision for Ofcom to have regard, when carrying out its functions relating to telecommunications, the management of radio spectrum and postal services, to a statement setting out the strategic priorities of the government.
59. The government believes that economic regulators should be independent from government and funded by industry. Ofcom is largely funded through fees from industry for regulating broadcasting, postal services and communications networks. Additionally Ofcom is funded by government to perform statutory duties that do not permit the raising of fees or charges from industry, such as its duty to tackle silent and abandoned calls. Ofcom is prohibited from charging fees to cover these costs. As referred to above, Ofcom is also tasked with managing and granting rights of use in relation to spectrum and levies fees and charges on those who use the radio spectrum under the 2006 Act. In 2014/15 there were 79,910 2006 Act licences in issue, covering a wide range of frequencies, technologies and methods of use. Ofcom collects the money raised from these licences and pays it to into the Consolidated Fund. The government returns approximately £50m of these receipts as grant in aid to Ofcom to fund its spectrum management and other activities. The Act allows Ofcom to cover all its non-fee raising activities from spectrum management receipts and then only return the net proceeds to government. This will not increase costs or fees (other than for satellite filings – see below) but will create an accounting mechanism that aims to allow Ofcom to be fully independent.
60. The Act enables Ofcom to charge for the satellite filings work it does in relation to obtaining or maintaining international recognition of assignments of radio frequencies to satellite stations under the International Telecommunication Union’s Radio Regulations. The International Telecommunication Union is the United Nations agency for information and communication technologies. Satellite filings facilitate equitable access to and rational use of the natural resources of the radio-frequency spectrum and the geostationary-satellite orbit. The International Telecommunication Union manage this through the maintenance of a Master International Frequency Register so that frequency assignments and any associated orbits obtain international recognition and there is less chance of interference. Ofcom’s existing powers to charge fees do not currently cover satellite filings so they provide this service free of charge, with the cost of filings being covered by public money. The Act corrects this anomaly, allowing Ofcom to charge, as is already the case for regulators in many other countries who charge for providing this type of service.
61. The Scotland Act 2016 implemented the Smith Commission Agreement, which was published in November 2014 having gained all‐party agreement in Scotland. The Smith Commission Agreement provided that Scottish Ministers should have the power to appoint a member to the Ofcom Board, Ofcom should lay its annual report and accounts before the Scottish Parliament and submit reports to, and appear before, committees of the Scottish Parliament. Sections 65 and 66 of the Scotland Act 2016 have implemented this. The government has agreed with the Welsh Government and the Northern Ireland Executive to make equivalent provision for those jurisdictions. This Act makes provision for Northern Ireland. Section 68 of the Wales Act 2017 makes equivalent for provision for Wales.

Secondary ticketing

62. The government recognises that the process for distributing and buying tickets can often be a cause for public frustration and concern. New rules regarding tickets offered for sale on the secondary ticketing market were introduced in the Consumer Rights Act 2015 ("the 2015 Act") . These came into force on 27 May 2015 and related mainly to the information that should be provided to purchasers using the secondary ticketing platforms.
63. The Act builds on the 2015 Act, introducing a new duty to require secondary ticketing sites and sellers to provide a unique ticket number where one has been assigned originally. The unique ticket number may be used to verify the validity of tickets with events organisers. The Act also provides the power to introduce a criminal offence in order to address the use of automated software to purchase tickets for a recreational, sporting or cultural event in excess of the maximum set by events organisers.

Payment and securities settlement systems

64. The government is committed to creating a more competitive financial services sector. Greater competition in financial services creates better outcomes for consumers, lowering cost and broadening the range of services available. In June 2016 the government and the Bank of England announced further support for financial technology, in particular, widening access to central bank settlement accounts and to the UK’s payment systems to non-bank payment service providers. Measures in the Act will allow HM Treasury to apply the existing Settlement Finality regime to non-bank payment service providers. This allows these providers to benefit from the preferential treatment concerning Settlement Finality (i.e. ensuring that transactions are settled without being unwound by creditors), in the event of a provider becoming insolvent while it has unsettled transactions in the system. Inclusion within the Settlement Finality regime is an access requirement of interbank payment systems.
65. HM Treasury has powers in the Banking Act 2009 to recognise payment systems for the purposes of regulatory oversight by the Bank of England. These existing powers only apply to systems involving banks and building societies. The Act allows HM Treasury to recognise non-interbank payment systems, so that all payment systems may be covered. This ensures that HM Treasury and the Bank can respond in a timely manner to potential financial stability risks that could be created by a systemically important non-bank payment system.

Qualifications in information technology

66. On 1 October 2016, the government announced plans to make training in basic digital skills free for adults lacking relevant qualifications. The government is under an existing duty to provide training in literacy and numeracy as found in section 88 and schedule 5 of the Apprenticeships, Skills, Children and Learning Act 2009 and implemented by the Adult Skills (Specified Qualifications) Regulations 2010 (S.I. 2010/733). The Act makes equivalent provision for digital skills. The government intends to consult on the level of qualification to which the new duty will apply.

Guarantee of pension liabilities under Telecommunications Act 1984

67. The British Telecommunications Pension Scheme is a defined benefit private pension scheme. When British Telecom was privatised, the Telecommunications Act 1984 created a Crown guarantee for the BT Pension Scheme, covering the liabilities of BT plc to the Pension Scheme in the event that the company entered insolvent winding-up. The guarantee has never been called upon.
68. Openreach is the division of BT Group that develops and maintains the UK’s main telecoms network used by other communications providers as well as BT’s own retail business. On 29 November 2016, following consultation on proposals to address competition concerns, Ofcom published their update on plans to reform Openreach, concluding that they were minded to order legal separation of Openreach from the rest of BT Plc unless a voluntary agreement could be reached. On 10 March 2017 Ofcom and BT agreed proposals on a voluntary separation of the Openreach business. The Act provides powers to maintain the coverage of the Crown guarantee for pension liabilities relating to members of the Pension Scheme who transfer employment from BT plc to the separated Openreach business.