Digital Economy Act 2010

Standard Note: SN/HA/5616 Last updated: 29 June 2010

Author: Grahame Danby Section Home Affairs Section

The Digital Economy Act 2010 implements aspects of the former Government’s policy on digital media set out in the ‘Digital Britain’ White Paper published in June 2009. The present Government has no plans to repeal any of the Act’s provisions. Key areas are:

• requires Ofcom to report on communications infrastructure and media content

• imposes obligations on internet service providers to reduce online copyright infringement

• allows the Secretary of State to intervene in internet domain name registration

• requires Channel Four to provide public service content on a range of media

• provides more flexibility over the licensing of Channel 3 and Channel 5 services

• modifies the licensing regime to facilitate switchover to digital radio

• allows variation of the public service provision in Channel 3 and 5 licences

• provides Ofcom with additional powers in relation to electromagnetic spectrum access

• extends the range of video games that are subject to age-related classification

• includes non-print formats in the public lending right payment scheme

Following amendments in the House of Commons Committee Stage, the Act does not contain measures originally in the Bill to provide for the appointment of providers of regional and local news. Provisions in relation to extending copyright licensing and orphan works were also removed. Detailed background to the Bill prepared for the House of Commons second reading debate on 6 April 2010 is in Library Research Paper 10/30 (29 March 2010)

This information is provided to Members of Parliament in support of their parliamentary duties and is not intended to address the specific circumstances of any particular individual. It should not be relied upon as being up to date; the law or policies may have changed since it was last updated; and it should not be relied upon as legal or professional advice or as a substitute for it. A suitably qualified professional should be consulted if specific advice or information is required.

This information is provided subject to our general terms and conditions which are available online or may be provided on request in hard copy. Authors are available to discuss the content of this briefing with Members and their staff, but not with the general public. Contents

1 Introduction 2

2 OFCOM reports 2

3 Online infringement of copyright 3

4 Powers in relation to internet domain registries 3

5 Channel Four Television Corporation 4

6 Independent television services 4

7 Independent radio services 5

8 Regulation of television and radio services 5

9 Access to electromagnetic spectrum 5

10 Video recordings 6

11 Copyright and performers’ property rights: penalties 6

12 Public lending right 7

1 Introduction The Digital Economy Act 2010 received the Royal Assent on 8 April 2010 following accelerated debate in the House of Commons as part of the pre-election “wash-up”. The present Government has confirmed that there are no plans to repeal any of the Act’s provisions.1

2 OFCOM reports Sections 1 and 2 of the Act cover new reporting duties by Ofcom – to include communications infrastructure, internet domain names and public service content on media services (not just television as before).

During wash-up a clause was lost that would have required Ofcom, in the execution of its general duties, to have regard to the need to promote investment in communications infrastructure and public service media content. During second reading, the then Opposition spokesman (Jeremy Hunt) argued against the clause in the following terms:

For this Government, the answer is not to do something but to lay yet another regulatory duty on Ofcom. In this case, that duty is unnecessary, bureaucratic and costly, and it will go.2

1 HC Deb 21 June 2010 c16W 2 HC Deb 6 April 2010 c847

2 3 Online infringement of copyright Measures to tackle internet piracy survived the wash-up process at the end of the last Parliament: sections 3-18 of the Act cover online infringement of copyright.

Following amendments in the House of Commons committee stage, any secondary legislation to do with section 10 (Obligations to limit internet access) would be subject to a superaffirmative procedure which means the relevant statutory instrument would be consulted upon and could only come into force if both Houses of Parliament approved it. Furthermore, no order may be made under this section for at least a year – this being the period during which “initial obligations” (a warning system backed up with the potential for court action) would be given a chance to work.

Section 10 inserts a new section (124H) into the Communications Act 2003 which states that the secondary legislation may specify the criteria for [the Internet Service Provider] taking the technical measure concerned against a subscriber. The secondary legislation could also specify the steps to be taken as part of the measure and when they are to be taken. The technical obligations would further be regulated by an Ofcom code (section 11). Section 12 contains the criteria that the code must meet (to Ofcom’s satisfaction) – these include provision for subscriber appeals. Details about these are in turn described in section 13: subscribers would be able to appeal to an independent person (yet to be specified) and make a further appeal to a First-tier Tribunal.

One clause (Preventing access to specified online locations for the prevention of online copyright infringement) was removed in the House of Commons committee stage. It was replaced by two new clauses, now sections 17 and 18 of the Act:

• “Power to make provision about injunctions preventing access to locations on the internet”

• “Consultation and Parliamentary scrutiny”

In brief the effect of these sections is to replace the website blocking provisions of the original clause3 by a power to bring in regulations for website blocking – subject to a superaffirmative procedure.

The Secretary of State could make the relevant regulations – but only a court could order the blocking of a website once (if ever) such regulations provide for this.

Finally, the Bill as first introduced into the House of Lords contained a controversial clause4 (Power to amend copyright provisions). This would have given the Secretary of State wide powers to amend copyright legislation by statutory instrument. The clause was amended, and finally removed, before the Bill entered the Commons.

4 Powers in relation to internet domain registries The Internet has become a crucial part of the national infrastructure, supporting and facilitating: commercial transactions, information exchange and social networking. It is underpinned by a specific address system of domain names, e.g. www.parliament.uk, which is overseen internationally and supported by a network of registries at country level.

3 Clause 18 Bill 89 2009-10 4 Clause 17 HL Bill 1 2009-10

3 Registries, like the Internet itself, tend to operate on a principle of self-regulation which UK policy supports. However, the Act (sections 19-21) provides reserve powers for the Secretary of State to intervene in the operation of domain name registries, when there are serious concerns about their operation relating to UK-related domains. This precautionary approach has been prompted by recent governance concerns about Nominet (the .uk registry), misuse of domain names and the potential advent of new registries for UK-related domains.

The intervention can include the government appointment of a manager, paid for by the registry, and the application for a court order to alter its constitution.

The internet domain registries measures were passed during the House of Commons committee stage on 7 April 2010 unamended and without debate.

During the second reading debate in the House of Commons, the Liberal Democrat spokesman, Don Foster, said:

... I reject the view expressed by some that only a few elements of the Bill have universal support and are not especially contentious. In fact, I believe that large chunks of the Bill are important but not controversial, and that they should go through. An example would be the proposal, to which reference has already been made, to change the power of the Secretary of State in relation to internet domain registries. Another example, which has not been mentioned so far, is the proposal to extend the remit of Channel 4.

Another example that has been touched on but not developed is the proposal to adopt the pan-European games information classification system for video games, and another that has not been mentioned before is the proposal to change the definition of public lending rights to include audio books and e-books. All those important measures, and many others, are in the Bill. There is a great deal of support for them, and I hope that we will find a way to get them through.5

5 Channel Four Television Corporation Sections 22 and 23 of the Act extend the functions of Channel Four beyond television to media more generally. The categories of content that must be provided go beyond what was hitherto stipulated in the Communications Act 2003 which the two sections amend.

The Channel Four measures were passed during the House of Commons committee stage on 7 April 2010 unamended and without debate.

6 Independent television services Sections 24-28 update the statutory framework for the Channel 3 (including ITV1) and Channel 5 licences and the public teletext service licence. The sections recognise the commercial pressures these broadcasters have been subjected to over recent years as well as the emergence of ITV1 as a broadcasting brand for the whole of England and Wales. Teletext's news and information service had already been switched off by the time the Act came into force.6 Section 29 removes the requirement for the Channel 3 licensee, STV, to show Gaelic language programmes. All these measures were passed during the House of Commons committee stage on 7 April 2010 unamended and without debate.

5 HC Deb 6 April 2010 c854 6 http://www.teletext.co.uk/aboutus/companyinfo/ (accessed 29 June 2010)

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The Digital Economy Bill that arrived in the House of Commons from its House of Lords stages (Bill 89 of 2009-10) included “clause 29” that made provision for the appointment of providers of regional and local news. This clause was removed at committee stage for reasons referred to during the earlier Commons second reading:

Mr. Foster: The Minister knows that I entirely agree with him on that point, but the hon. Member for Selby (Mr. Grogan) warned us earlier to beware what Chief Whips say, and I am receiving messages that the Government Chief Whip has acknowledged that clause 29 will be dropped by the Government. Can the Minister confirm that that is categorically not the case and that they will press it as far as they can?

Mr. Timms: We certainly will press the clause as far as we can. We have heard the Conservatives describe their red lines and, as the hon. Gentleman knows, those on the Conservative Benches are in a stronger position at this stage in the process than would otherwise be the case.7

Three pilot schemes of “independently funded news consortia” were recently set up by the Labour Government to offer an opportunity for some local media involvement in the provision of news on, for example, ITV1. However the present Government has cancelled these pilots in favour of developing broadband infrastructure and alternative models of local media ownership. One hope is to foster the development of local TV stations.

7 Independent radio services Sections 30-36 introduce changes to the licensing regime for independent radio services to facilitate a migration to digital services. No digital radio switchover date appears on the face of the Act, though the Labour Government had targeted 2015 as a date when radio stations carried on DAB8 would cease to simultaneously broadcast on analogue.

The clauses on independent radio services were passed during the House of Commons committee stage on 7 April 2010 unamended and without debate.

8 Regulation of television and radio services Section 37 of the Act allows the Secretary of State to alter the conditions of public service provision that Ofcom must include in television and radio broadcasting licences; a change over pre-existing legislation is that the conditions could be re-imposed at a later date. A significant motive for the measure is to allow the public service conditions applied to Channel 3 and Channel 5 to be more responsive to market conditions. The relevant clause was passed during the House of Commons committee stage on 7 April 2010 unamended and without debate.

9 Access to electromagnetic spectrum Sections 38 and 39 cover access to electromagnetic spectrum. Their function is to enable the licensing regime administered by Ofcom to be used to reallocate spectrum currently used by mobile network operators. The Wireless Telegraphy Act 1996 sets out all of the legislation under which Ofcom manages spectrum. Sections 38 and 39 make some key changes to the current licensing arrangements set out in the 1996 Act:

7 HC Deb 6 April 2010 cc923-4 8 Digital Audio Broadcasting

5 • To allow for the application of Administered Incentive Pricing to spectrum that has previously been auctioned.

• To extend Ofcom’s existing powers to take enforcement action where there has been a breach of a licence condition to include the imposition of monetary penalties for breach of certain conditions.

• To permit or require, in certain specified circumstances, payments by operators purchasing relinquished spectrum to those who relinquished it.9

The clauses on electromagnetic spectrum were passed during the House of Commons committee stage on 7 April 2010 unamended and without debate

10 Video recordings Sections 40 and 41 provide for the age-rated classification of video games.

Section 40 amends section 2 of the Video Recordings Act 1984 to remove the general exemption from the Act’s regulatory regime that video games have hitherto enjoyed. Like video works in general, an exemption will continue for educational works or those concerned with sport, religion or music (provided they do not depict to any significant extent certain, specified,10 types of harmful material). It will become illegal to sell video games in breach of the age rating if the game is only suitable for persons aged 12 and above.11

Section 4 of the Video Recordings Act 1984 allows the Secretary of State to designate any person as the authority responsible for the classification of video works. This role is fulfilled by the British Board of Film Classification. Section 41 of the Digital Economy Act 2010 would allow a different authority (the intention is for this to be the Video Standards Council) to be so designated for video games.

The video recordings measures were passed during the House of Commons committee stage on 7 April 2010 unamended and without debate

11 Copyright and performers’ property rights: penalties Section 42 increases the fines in connection with infringing articles and illicit recordings.

Following amendments in the House of Commons committee stage, the Act no longer includes provisions in relation to extending copyright licensing (clause 43 of Bill 89 2009-10). Among other things this would have facilitated the exploitation of “orphan works”, something photography groups had opposed. During the second reading debate in the House of Commons, the then Opposition spokesman, Jeremy Hunt, said:

I am happy to reiterate my opposition to clause 43, and to say that we are not prepared to let it through as part of the wash-up process. What is needed is a proper reform of copyright law, and my hon. Friend the Member for Windsor (Adam Afriyie) has said that under a new Conservative Government he will ensure that such proposals are put before the House.12

9 BIS Spectrum Modernisation Factsheet (February 2010) 10 Section 2(2) and section 2(3), Video Recordings Act 1984 11 Video Game Classification: Factsheet, BIS, IPO and DCMS, November 2009 12 HC Deb 6 April 2010 c848

6 12 Public lending right Section 43 provides for the extension of public lending right to cover non-print media – allowing producers of audiobooks and e-books to benefit from library loans of their work.

An uncontroversial measure, this was left unamended by both the Lords and Commons with relatively little debate.

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