I beg to move, That the clause be read a Second time.

With this it will be convenient to discuss the following: Government new clause 25—Power of OFCOM to retain costs of carrying out spectrum functions.

Government amendments Nos. 241 to 243, 256.

Clause 1(3) and (4) of the Bill will allow Ofcom to borrow money commercially. That will enable Ofcom to smooth out uneven cash flows that may arise as the result of the unevenness of receipts. New clause 23 will allow the Secretary of State to guarantee Ofcom borrowing to ensure that it is able to obtain the most advantageous terms.

New clause 25 will enable Ofcom to retain out of its spectrum receipts an amount to cover the costs of carrying out its spectrum functions. Clause 390 of the Bill requires amounts received by Ofcom under the Wireless Telegraphy Act 1998 to be paid to the appropriate consolidated fund. In practice, an administrative arrangement will allow the necessary amount to meet the costs of Ofcom carrying out its spectrum functions to be netted-off from those moneys and paid to Ofcom. Under the new arrangement proposed in new clause 25, Ofcom would make a statement of principles, which would be approved by the Treasury, setting out the basis on which it would calculate the costs of carrying out its spectrum functions and retain the necessary amounts accordingly. I hope that the House will welcome that.

Amendment No. 243 requires that Ofcom should include in the account prepared under clause 390(4) the amount retained by it in accordance with any statement of principles it may make under new clause 25, and the cost to Ofcom of carrying out the functions to be covered by that retained amount. Amendments Nos. 241 and 242 are minor consequential amendments.

As a result of the requirements of clause 390 that some of the amounts received by Ofcom should be paid to the consolidated fund, Ofcom will be unable to comply with the duty in paragraph 8(1) of the schedule to the Office of Communications Act 2002 to secure that its revenues are at least sufficient to meet its obligations. Amendment No. 256, therefore, amends paragraph 8(1) to require Ofcom to conduct its affairs so as to secure that revenues from fees and charges which do not fall to be paid to the consolidated fund are at least sufficient to cover the cost of carrying out the functions to which they relate.

We welcome the new clauses, although we should prefer new clause 25 to go further. If the new clauses are accepted, the Bill will have more than 400 clauses. I hope that the House will recognise that this afternoon's debate brings to an end a lengthy process. Some of us have been engaged in it for the best part of three months, but it has been a happy time. As we progress through the afternoon, we will discover the joy of Government amendments that put into effect changes that we advocated in Committee. That shows that the Committee debate was a constructive process. The past 24 hours has been quite good, as we have seen that all our work did not come to nothing. We are grateful to the Minister for that.

However, if new clause 23 is relatively uncontroversial, new clause 25 addresses an issue that I raised with the Minister in Committee—the extent to which all the income payable to Ofcom could be used to defray some of the costs of its activities, instead of all of it being paid to the consolidated fund. I do not want to delay the House, as there is a lot of business to get through. However, the Minister will recall that I impressed on him my thought that, although I understand that Ofcom would not necessarily have an incentive to impose penalties if it could keep the money, it still seems a mistake for new clause 25(5) specifically to except the imposition of penalties and fines and some of Ofcom's enforcement powers.

We still believe that a lot of activity will be involved in policing the provisions of the Bill and ensuring that Ofcom achieves proper enforcement. The cost of that will still fall on all the organisations that must pay fees and administration expenses to the regulator, as we discussed in Committee.

Although there is not a complete meeting of minds between us on that matter, we are nonetheless grateful that the Government have accepted some of what we said. I hope that the Minister will recall the Opposition argument as the Bill progresses through the other place and when it receives Royal Assent. If I am right about it, we may need to return to the matter in the future.

I agree with the hon. Gentleman about the happiness of the past three months. He is right that the House has before it a number of amendments that reflect the discussions that we had in Committee. They deal with matters raised by the hon. Gentleman and other hon. Members, which is how the process should work.

We debated in Committee the matter that the hon. Member for Ryedale (Mr. Greenway) raises, and I think that he will welcome the change proposed in new clause 25, as far as it goes. It means that the arrangement will be much more transparent, and that people will be able to see how payments are being used to fund the work that Ofcom needs to do. We disagreed about penalties, for the reasons that the hon. Gentleman set out. I am satisfied that the proposals before the House today are the right ones, and I am grateful for the hon. Gentleman's general welcome for the changes.

I beg to move, That the clause be read a Second time.

New clause 24 grants discretion to the Department of Enterprise, Trade and Investment—DETI—in Northern Ireland to fund expenditure on telecommunications infrastructure and for any other purposes prescribed by regulations made with the approval of the Department of Finance and Personnel in Northern Ireland. Under the terms of the clause, DETI will have discretion to support financially the development of a regional telecommunications infrastructure, specifically in respect of the provision of electronic networks and services and improving the extent, quality and reliability of those networks or services. It will enlarge the legal framework for funding such expenditure in Northern Ireland. That is important because of DETI's role in developing a regional telecommunications infrastructure as an integral part of the Government's strategy for broadband, which is being led by my Department.

The Bill already contains a provision, which has been carried over, in part, from the Telecommunications Act 1984, for district councils in Northern Ireland to contribute to the costs of infrastructure. The new clause confers broadly similar powers on DETI and I hope that the House will welcome it.

Northern Ireland Members have pressing matters to address and we wish them success, but I am sure that were they here today, they would want to welcome the new clause. It appears at least to signal an opportunity for the increased roll-out of broadband in Northern Ireland.

When we debate new clause 2 a little later in our proceedings, I hope that we shall conclude that the Government's commitment to the roll-out of broadband in the rest of the United Kingdom will be undertaken with equal enthusiasm.

I, too, welcome the new clause; it clearly makes sense for DETI to be given the powers to make such expenditure. Although I would not oppose that, I have some questions for the Minister, especially on the relationship of the provision to expenditure in the rest of the United Kingdom.

The notes that the Minister kindly distributed to accompany the Government's many amendments and new clauses stated that the new clause was part of the DTI's broadband initiative. Can he flesh out how DETI's possible expenditure in Northern Ireland would relate to expenditure elsewhere? For example, is the anticipated DTI expenditure to be across England, Scotland and Wales, or is it to be broadly equivalent to the expenditure to promote broadband infrastructure made by the regional development agencies in England and their counterparts in Wales and Scotland?

Can the Minister clarify whether there will be comparability throughout the United Kingdom? We are all interested in the promotion of broadband networks, so it would be helpful to know where the Government imagine that the expenditure will come from. The new clause makes it clear that in the case of Northern Ireland it will come from DETI, but questions remain about the Government's intentions for their expenditure of public money in the rest of the United Kingdom.

Secondly, I want to raise concerns that have been expressed to me about Scottish Enterprise's investment and which may also apply to expenditure in Northern Ireland. Although we all welcome funding for broadband infrastructure from various regional and national bodies, it can have a distorting effect on the market. Concerns are being expressed by some service providers in Scotland that Scottish Enterprise's investment strategy is not ideal for creating the optimal market climate. Targeted investment of that sort can distort the market to the detriment of existing providers who could supply the services that people want without additional investment.

I am fully supportive of regional investment, but I want to put down a marker that regional and national investment within the United Kingdom must be made with the full co-operation of existing providers and complete understanding of the market or it could be counterproductive. The Scottish example suggests that conditions are being created such that internet service providers based in London, because they are being encouraged to enter the Scottish market, could end up with more favourable conditions than internet service providers based in Edinburgh. I hope that our regional investment strategies will not create such anomalies.

Northern Ireland is largely rural—rather like Scotland, as the hon. Member for Sheffield, Hallam (Mr. Allan) pointed out. How will the provision affect rural areas of Northern Ireland? What consideration has the Minister given to the wireless and satellite provision of broadband? He will be aware of the excellent document produced by the Communication Workers Union, which shows that Britain is 20th in the world for the provision of broadband.

I want to pursue the line of questioning taken by the hon. Member for Sheffield, Hallam. Will there be a distortion in the market? Assuming that the problems of the provision of broadband in rural areas can be overcome, will we find that Northern Ireland becomes a Mecca for the application of broadband while the rest of the United Kingdom is far from being so? The Minister will be aware, from the many hours that we spent on this subject in Committee, that many of us are concerned not only that broadband is not yet available in rural areas in England but also that it is not available in suburban areas and even some urban areas. How will he ensure that there is no imbalance between various parts of the UK?

Will the Minister comment on the fact that although we have the second highest growth rate in Europe for broadband, some locations are still struggling to make their case for broadband to service providers? Does he welcome initiatives such as that announced last week by the regional development agency for my area, the East of England Development Agency, of investment of about £5.8 million of its funds and Government funds to identify for network providers locations where broadband could be promoted? Of the two initiatives announced last week, one was in rural Diss, in Norfolk, and the other in urban Ipswich; both are good examples of the joint initiatives undertaken by the DTI and RDAs.

We have had a brief but interesting discussion on the roll-out of broadband and we shall come back to that subject in a later amendment.

I accept the important points made by the hon. Member for Sheffield, Hallam (Mr. Allan) about the need for care in the use of public spending on telecommunications infrastructure. I am aware of the case in Scotland to which he referred. There are clear rules about state aid problems and it is essential to respect and comply with them. None of the proposals is in conflict with that.

I agree with the hon. Gentleman that there is a role for public participation in some circumstances. As I said earlier, local authorities can already contribute to the costs of telecommunications infrastructure. The new clause simply allows DETI to do so as well.

It is becoming increasingly clear that such interventions are most helpfully made regionally. My hon. Friend the Member for Ipswich (Mr. Mole) rightly drew attention to the work of the East of England Development Agency. Last week, I visited Birmingham and held similar discussions with Advantage West Midlands. A growing number of interesting initiatives are being taken by the RDAs, using, in part, the £30 million broadband fund provided for them by my Department. Such initiatives help to extend the availability of broadband services to businesses and residential users.

The hon. Member for Lichfield (Michael Fabricant) asked about wireless provision. Several of the EEDA initiatives involve wireless. In rural areas, there will be an increasing use of wireless to extend broadband rapidly to places where it has not yet been possible to upgrade the existing telecommunications infrastructure.

The hon. Gentleman also mentioned satellite provision. SEEDA—the South East England Development Agency—has done some interesting work in subsidising small businesses, so that they can use satellite-based broadband services.

1 pm

I agree with the hon. Member for Lichfield in his statement of admiration for the Broadband Britain campaign, run by the Communication Workers Union. I was present at the launch of that campaign, and I very much welcome the contribution that it is making. Of course things are changing very rapidly. We reached only 1 million broadband connections last October; we are now past 1.5 million, and the number is increasing by in excess of 30,000 new connections a week. So we are certainly no longer in the position that we appeared to be in when the CWU document was published. As my hon. Friend the Member for Ipswich suggested, we have now got the second biggest broadband network in Europe—after only the German network—so a great deal of progress has been made.

Will the Minister take this opportunity to praise BT for reducing the threshold at which it will enable its exchanges when people have registered an interest in it? In many areas, but not all, the threshold has dropped from 650 to 350 people. However, will he use his particular powers of persuasion to ensure that the threshold is reduced to 350 people in all areas, not just some?

I very much welcome BT's announcement to reduce those thresholds. Of course, the level at which they are set is a commercial decision for BT. It should be recognised that the cable companies play an important part in extending access to broadband—they still have more than half the market, I believe—and there are about 200 resellers of BT services, so the industry is making a big effort, and I welcome the progress that has been made.

The House generally welcomes the change for Northern Ireland in the new clause, but it is important to underline my agreement with the points made by the hon. Member for Sheffield, Hallam about ensuring that such a route does not permit inappropriate state aid, and I assure the House that that will not occur.

That the clause be read a Second time.

At the outset, I remind the House of my declaration in the Register of Members' Interests—I am an adviser to Disney. However, this issue spreads much wider than a single company; it concerns the serious and growing problem of the dangers of piracy, counterfeiting, illegal copying and downloading across the internet of audiovisual material. That is already widespread in relation to music, and the music industry has suffered grievously.

The music industry is extremely important to this country. Our share of music production across the globe is about 16 per cent., and the threat to the music content industry from the illegal downloading of material is serious indeed. A recent poll in the United States found that 62 per cent. of the 18 to 29 age group—nearly two thirds of everyone in that age group—had copied or downloaded music or movies across the internet, and three quarters of those knew that it was illegal when they did so. That shows the extent of the problem that exists in relation to music.

Equipment capable of burning pirated material permanently on to CDs is readily on sale. Of course, that is possible in a narrowband environment with music. However, we are moving into a broadband environment, the development of which makes it possible to download not just music, but moving image material across the internet. Indeed, equipment now available in the shops enables pirated moving image material to be burned permanently into DVD form.

It may be instructive to consider what happened last year. In May 2002, "Spider-Man" and "Star Wars: Episode II" were released in the United States. Within seven days of those movies being released, 9 million attempts were made to download them across the internet from pirated copies that had been recorded at pre-release screenings. It is estimated that probably only about 2 million or 3 million of those 9 million attempts were successful in completely downloading the entire movie because in many cases the technology was not sufficiently sophisticated to enable that to happen, but that indicates the extent of the problem, the desire to download illegally and, as technology improves, the possible threat, particularly to the content industries.

The right hon. Gentleman makes a persuasive case about the amount of illegal material available on the web. However, during debates on the Bill in Committee and on Report, hon. Members on both sides of the House, particularly the Government, have made it clear how little control Ofcom will have over the internet. It is not a regulatory body for the internet, which will remain unregulated on the whole. How will the new clause, or any work by Ofcom, tackle that problem, as it involves the expression of free will through a medium with which we cannot interfere?

The hon. Gentleman is running ahead of me; I shall come to precisely that point in a moment. I am arguing not for control over the internet by Ofcom or anyone else, but for the ability of Ofcom to draw together all parts of the industry—both the content and the servicing industries—to identify technological solutions to the problem, but I will come to that point in just a moment.

Of course, the content industries suffer particularly from the illegal downloading of material. The obvious point to make is that, if material can be obtained for free across the internet, people are unlikely to pay for it, so less remuneration goes back into providing the content and it is much more difficult to provide content in the first place in the future.

I understand the right hon. Gentleman's concerns for the industry—I hope to catch your eye, Mr. Speaker, and to speak at length on the issue later—but it is helpful to say as we are talking about movies that cinemas are doing better than ever and more money is coming into the contents sector than ever. Yes, people are ripping off stuff by downloading it, but we should not pretend that that is the death of the movie industry quite yet.

The point that the hon. Gentleman makes is valid at the moment. The problem is that the technology is in an embryonic state at present. It is still quite difficult to download an entire movie across the internet, but that will not be so for all time, especially as broadband becomes much more readily available throughout the country, as we all hope it will. The ability to download moving image material, not just music and speech, will grow. The hon. Gentleman is right as far as things stand at the moment, but considerable potential exists for the problem to grow much more than it has done up to now.

I am anxious to establish whether the right hon. Gentleman believes that his proposal is merely necessary, or whether he judges that it is also sufficient. In the light of the concern that he has expressed, and the evolution of technology, does he think that his concerns will be adequately allayed by the passage of new clause 1, or does he believe that the scale of the problem will in due course necessitate an overhaul of copyright design and patent law?

The hon. Gentleman will be aware that the European copyright directive is on the table at the moment, and the Minister's Department is actively engaged in developing the legislation that will come before the House in due course about the implementation of that directive. These issues, particularly in the digital environment, are absolutely germane to that work on the development of copyright legislation. My new clause is by no means an entirely sufficient answer to the problem; it is an attempt to raise the issue and to develop some mechanisms for drawing together a cross-industry approach to try to find some answers. I doubt whether we will ever address the issue 100 per cent. If we can move towards that point, however, I will be much happier.

The new clause does not require Ofcom to do anything; it enables Ofcom. If Ofcom, in its judgment of the overall nature of television and film in this country and across the world, decides that it wants to act, under the new clause, it can. Nor does the new clause seek to enable Ofcom to impose anything on any parts of the industry: the telecoms companies, the content providers or any of the service providers. What it enables Ofcom to do is to draw all those parties together into a discussion, and, I hope, into a voluntary agreement to examine what technological standards can be introduced to try to make piracy more difficult. Although technology facilitates the activity, it also provides some of the answers to the problem, through digital signatures, watermarks, tracing the digital origin of material and so on. Those are examples of how technology can come to our assistance in combating piracy, counterfeiting and illegal downloading. To make that possible, we need common standards to be agreed across the industry as a whole. My new clause seeks to enable Ofcom to encourage that to happen.

My right hon. Friend makes a powerful argument. What would he do about companies that, in effect, make and sell the DVDs and music CDs, but also make the equipment that allows copying to be done? How do we combat that?

My hon. Friend makes a valid point. A number of companies are both equipment manufacturers and content providers. I do not think that we can prohibit the manufacture of particular types of equipment. What we can do, however, is remind companies of their responsibilities in this matter. I hope that some of them will listen carefully to what my hon. Friend says.

I am grateful to the right hon. Gentleman for tabling the new clause, which is very important, especially as technology changes. Does he think that all this is a question of hoping to have an effect? Is not the new clause an example of wish over practical application? Does not he think that it is rather wishy-washy? Does he really think that it will change anything?

I absolutely think that it has the potential to change things. I do not believe that we bring about change on every occasion by legislating to prohibit or require something. We can bring about change by legislating to encourage things to happen, which is precisely what the new clause seeks to do.

A very Conservative position.

In response to the sedentary intervention of the hon. Member for Buckingham (Mr. Bercow), that is not simply the preserve of Conservatism.

Before the right hon. Gentleman moves on from this point, I want to congratulate him on trying to find a technological solution to the problems of counterfeiting and piracy. I suggest to him that that is a long way from coming, and we will need to go a big distance before it is achieved. Does he have any comments about the general cultural environment in which many young people do not regard this activity as a crime and are happy to be involved in it? Does he think that we must tackle that type of culture, too?

The hon. Gentleman is absolutely right. There is a particular problem with the younger age groups, among whom this activity is regarded as an entirely natural phenomenon, even though, as I mentioned, many of them are aware that it is illegal. It is regarded in a way that is similar to the way that some people regard speeding on a motorway: they know that they should not do it, but they do it none the less. It is absolutely essential to change the culture and to get across the message that this is not a pain-free exercise and that doing it to too great an extent will kill the goose that produces the eggs in the first place. I hope that Ofcom and others can play a role in helping to change the culture in the way that the hon. Gentleman has described.

In proposing this new clause, I am seeking to put down a marker or two and I hope that the Government will accept that this serious issue requires a serious approach. We want as much broadband as possible, as rapidly as possible, in this country, but also want our creative industries, particularly the music and moving image industries, to thrive as they have done in the past and can do in the future. This country is very good at those industries, and long may that remain the case. To put those two things together, we need to achieve the best possible technological answers to ensure that those things can happen legitimately and that the digital reception of moving image material can be properly and legitimately done, rather than illegally done through piracy and counterfeiting.

I want the digital environment and the advent of broadband to be an opportunity for the content and creative industries, not a threat. To turn it into an opportunity, we need to make sure that structures and standards are in place to ensure that that can happen. Ofcom can play a role in making sure that that occurs. The new clause seeks to enable Ofcom to play precisely such a role.

I start by welcoming the overall thrust of new clause 1, which was moved by the right hon. Member for Islington, South and Finsbury (Mr. Smith). We sought to raise this issue several times in Committee. I moved an amendment to clause 3, on the general duties of Ofcom, the intention of which was not vastly dissimilar to that of the new clause. At that time, I expressed some reservations about Ofcom deciding the direction of technological development. I was glad, therefore, to hear the right hon. Gentleman say that his aim is not to allow Ofcom to impose a standard on the industry or decide between competing technologies. That would not be an appropriate role for Ofcom.

The right hon. Gentleman is right to say that the scale of the problem will have to be made clear to Ofcom. Piracy and illegal copying are not new developments—they have been going on for a long time. Nearly 20 years ago, I was a special adviser in the Minister's Department. At that time, we wondered whether a levy should be imposed on blank tapes in recognition of the fact that the vast majority of them were being purchased to record music off the radio or off vinyl albums; almost all those purchases probably breached copyright. The industry accepted that the practice could not be stopped and a second-best solution was offered—a levy on tapes that would be redistributed to the music industry as compensation for lost sales.

One of the limitations of copying on to blank tapes was that the quality of reproduction was not especially good. In addition, people had to buy an album before copying it. Since that time, there have been a succession of technological developments: the replacement of vinyl albums with compact discs of almost perfect quality; recordable CDs; DVDs; recordable DVDs; movies and music being made available on a massive scale through the internet; and MP3 players, which allow one to take music off the internet quickly and to keep it in a convenient format so that it can be reproduced at almost the original quality. All those developments are a huge threat to the music industry. In due course, they will be a threat to the movie industry, too.

In the past we have wrestled with the problem of illegal copying—piracy—by factories that produce counterfeit CDs in China or other countries. The CDs are then brought to this country and sold in car boot sales and elsewhere. That remains a huge problem.

The hon. Gentleman may know that the copyright directive, in its post-negotiated form, allows for different countries in the European Union to resolve this issue in different ways—in particular, in respect of video and cassette tapes. The directive allows countries to enforce a levy on blank tapes, but it also says that the levy may be a levy of nothing, because the British Government have insisted that we should maintain the system that allows individuals to copy for their own private use so as to time-shift. When the directive is eventually incorporated into United Kingdom law, would the hon. Gentleman wish us to abandon that tradition or to maintain it?

We have moved a long way from the issue of copying on to blank tapes, which is no longer the main problem. I have always regarded the levy as very much a second-best solution. In respect of the current problem, I do not think that a levy is necessarily the solution, and I want to pick up on some of the points made by the right hon. Member for Islington, South and Finsbury on what could provide a solution.

In the previous Session, the House passed a Bill on copyright theft to strengthen the penalties available to tackle illegal copying. All parties supported its passage, but the problem now is finding the resources to enforce it. Local authorities do not necessarily pay enough attention to enforcing the legislation. The industry has raised that matter with the Minister's Department and the Department for Culture, Media and Sport, which may have to get together to come up with a more co-ordinated approach.

The problem has changed from being one of mass reproduction of discs, in factories outside this country, which are imported and sold in car boot sales. The problem is now much more serious, because it goes on in children's bedrooms. Technology now allows young people, in particular, to burn CDs. They do not even have to purchase CDs in the first place; they can download music from the internet using peer-to-peer file sharing programs. That is a quick and simple procedure and it achieves a very high quality.

The root of the problem, to which the right hon. Gentleman referred, is the attitude of young people to the practice. He quoted a survey that shows that a majority of young people are now downloading and copying music and movies, and that the fact that they are in breach of the law does not stop them from doing it. Part of the problem has been the perception that taking music is somehow a right and that the only people who lose out are the big, fat record companies, which can well afford it. To some extent, that perception has grown because of the view that CDs have been priced higher in this country than elsewhere and the view that the record industry has been exploiting consumers. I have never believed that to be true. All the investigations that the Office of Fair Trading and others have conducted have shown that it is not true. However, even if that case was once arguable, it is no longer arguable. The record industry is on its back and one of the main reasons for that is the practice of copying. The really frightening thing is that the situation will get worse.

The right hon. Gentleman referred to an American survey. I understand that the survey concluded that it may now be impossible to save the music industry and that we may have to concentrate instead on trying to protect the film industry, which will be the next to suffer. In some countries, the number of blank CDs sold now exceeds the number of pre-recorded CDs sold. Even in this country, recent figures show that 308 million blank recordable CDs were sold in Britain. The industry estimates that about 128 million of those CDs were used to copy music rather than computer programs—although copying computer programs is not necessarily any better. The figures show the scale of the problem.

Will the hon. Gentleman suggest some answers to the question that I asked my right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) about companies that not only make the music and CDs but make recordable CDs and the recording equipment? What should we do with those companies?

Sony is probably the best example of a company in that position, and a question does arise about the responsibilities of manufacturers. When DVDs were first launched, regional encryption was used to protect copyright. The intention was that we in this country would purchase region 2 DVDs, and that if we purchased a DVD in the United States it could not be played on equipment purchased in this country. However, Dixons on Victoria street stocks multi-region DVDs—they are everywhere. Manufacturers have produced multi-region DVDs that are designed, I presume, to overcome the protection that the copyright owner has installed.

Someone who perfectly legitimately buys a copy of "The Two Towers" in the United States should have a perfect right to watch it in this country. The attempts to foil the interests of consumers are crazy.

I am sympathetic to the hon. Gentleman's point. I was about to say that the technological solution will always fail. Attempts to counter the problem by trying to build in technological safeguards merely provide a challenge to the hackers and those who seek to get round the safeguards. They will always win. That has happened in a number of cases recently. For example, a court in Norway dealt with the case of someone who was 15 when he developed a computer program to overcome the technology in DVDs that prevents copying. He was taken to court by the copyright owner, but the court upheld his right to do what he wanted with the DVD. That included copying it.

For the sake of accuracy, may I make it clear that the person accused in Norway had written the computer program to be able to play his legitimately purchased DVDs on the Linux and not the Windows operating system. That is why the court found in his favour. There was no suggestion that he was copying for resale or anything like that. He merely wanted to watch his DVDs and was smart enough to find a way of doing that.

As I understand it, however, the problem was that he made available on the internet the program that he had developed. It was then downloaded by millions of other people who used it not to watch DVDs on a different operating system but to crack the safeguards built into DVDs. That enabled them to copy them, which demonstrates the limitations of technology. Each time that someone develops a new method of trying to safeguard copyright through technology, someone else will find a way round it.

A couple of months ago, I read that the record companies in this country were developing something called Cactus data shield to try to prevent the copying of CDs. That gives rise to the question that the hon. Member for Rhondda (Mr. Bryant) asked. Once people have made a purchase, should they not be allowed to make a copy? I suspect that it will not be long before someone overcomes this technological constraint and finds a way of making copies.

The problem will get worse. At present, one at least has to have an original that has been purchased before one can copy it. The real danger, however, comes from the internet. At present, the copying of music is relatively simple using the normal broadband access that is available in parts of the country if not in others. We shall deal with that issue in the next debate. Even broadband is not capable of providing high-quality movie reproduction, but it is only a matter of time before it will be able to do that.

I visited Dolphin house, which is wired by ntl. It offers much faster access than conventional ADSL technology, and I believe that 2 or 3 megabytes a second are on offer. It is possible to log on to a site that streams DVD quality movies down the fibre direct on to the screen. It would obviously be very simple just to record that, and that constitutes the same threat to the movie industry that is currently destroying the music industry. If the practice of logging in free to sites that offer movies becomes widespread, and if those movies can be downloaded rapidly and simply on to a recordable DVD in a bedroom or an office, that will pose real dangers to the movie industry.

I have been following my hon. Friend's remarks with interest. Does he not realise that even now there is a danger resulting from the digital terrestrial and satellite transmission of movies and from digital audio broadcasting? In theory, there is nothing to prevent someone from burning a DVD of something taken off air with digital quality.

That is perfectly true. To some extent, it is a question of the desirability of the films involved. The right hon. Member for Islington, South and Finsbury referred to "Spider-Man" and "Star Wars: Episode II" and it will be some time before they become available on television. Part of the attraction is having a copy on DVD before one's friends have even had a chance to see the film in the cinema. My hon. Friend is right about the threat.

The new clause tabled by the right hon. Member for Islington, South and Finsbury is welcome in that, if nothing else, it allows us to talk about issues that are of huge importance to the industries concerned. I very much hope that Ofcom will at least be aware and take account of these issues in all its consideration of the development of technology and in its regulation of the communications sector in general. However, if an answer exists, I suspect that it does not lie in regulation by Ofcom. I do not think that it even lies in the technological solutions that we have been discussing.

If there is a solution, it is that of the industry exploiting the internet and viewing it as a new opportunity to make material available. It should try to persuade people to purchase products from internet sites rather than accessing them illegally and downloading material without any payment being given to the copyright owner. The way to do that is by providing added value. The music industry is now examining ways of making music available with all sorts of additional bonuses that come with its purchase from an internet site. The same approach could be adopted by the movie industry.

I have seen research from America that shows that a variety of additional items could be attached to the purchase. For example, additional material can be provided about the making of the product or concessions could be offered on theatre tickets. A variety of bonuses and attractions could be provided and they might persuade people that, rather than break the law and deprive copyright owners, artists and performers of the money to which they are entitled, they should go to a legitimate site that makes available the same product for a small payment. That is a market-based solution and the only long-term solution.

I do not decry the attempts of the right hon. Member for Islington, South and Finsbury to raise this issue and to get Ofcom to take account of it. I support those attempts, but the new clause will not solve a problem that will increase in the coming months and years. I suspect that the only answer is for the industry to adapt and to try to use the market opportunities in the way that I have suggested. If it does not do that, its future looks very bleak.

I, too, am delighted that my right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) has tabled the new clause, but I am hesitant about supporting it. I am broadly sympathetic to the thrust of the issues that he has raised in relation to piracy and counterfeiting. It must be a major concern to any right-thinking person that acts of theft occur on a daily basis as the result of organised crime. My hon. Friend the Minister for Tourism, Film and Broadcasting has been on a number of busts with the police and other organisations in the past three months, and he has tried to point out that the buying of CDs that have been manufactured deliberately to get round the copyright law is clearly wrong and immoral. However, I do not share the apocalyptic version of the future with which my right hon. Friend and the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) have presented us.

In the debate about piracy, we all too easily forget the role of consumers. As my hon. Friend the Member for Glasgow, Anniesland (John Robertson) pointed out, consumers are bombarded with two messages by the same companies. The first is "Come and buy our wonderful technology, which enables you to tape pieces of music from other sources and put them on to your own CD." The second is that they are engaged in an act of piracy that is wholly illegal and immoral. That presents a difficult problem for consumers. The marketing of some organisations has been downright hypocritical. In fact, when I worked for the BBC in Brussels and I was engaged at some length on the copyright directive, it was almost impossible to find a music or film industry company that was not in some way tied to a business that manufactured some kind of copying machinery or technology.

Can the hon. Gentleman not make a distinction between the young person sitting in his bedroom making a copy of a CD for his own use and the mass production of illegally counterfeited and copied products that one sees in marketplaces around the UK?

I am sorry that I am not making myself plain enough, as that is indeed the distinction that I want to draw. It is sometimes not drawn sufficiently clearly in the debate about piracy. My right hon. Friend the Member for Islington, South and Finsbury referred to the 62 per cent. of young people who think that it is perfectly legitimate to download music from the internet without payment. Probably 95 per cent. of the people with whom 1 was at school at the age of 18 copied "Top of the Pops" on to a cassette on a Sunday evening so that they could listen to it at various times during the week. I see hon. Members around the Chamber nodding, including Conservative Members and the hon. Member for Sheffield, Hallam (Mr. Allan)—who as I can remember his constituency will get intoHansard for having engaged in that illegal activity.

There is a real onus on the manufacturers, the record industry and the cinema industry to provide a new revenue stream of their own. It is simply inaccurate to say that a digital copy is a perfect copy, as there are many different qualities of digital copy. The hon. Member for Ceredigion (Mr. Thomas) said that the cinema is nevertheless doing well at the moment, and my right hon. Friend the Member for Islington, South and Finsbury said yes, but that will not be the case in future. I suspect that the cinema will continue to flourish owing to the simple fact that often people go to the cinema not only to see a new film, although that is part of it, but because they have a completely different experience as part of an audience in front of a large screen with digital stereo.

My hon. Friend is right that it is likely that people will still want to have a night out in front of a big screen at the cinema. All the evidence of the past 20 years, especially at the time when video technology was developing, confirms that, and I would not argue against it. However, he should bear in mind that the technological ability to download movies will rapidly increase, and we shall have to take that into account.

My right hon. Friend is right. I only wish that the capacity to download into the Rhondda valley was available rather swifter, as we seem to have no prospect of broadband technology for some years to come—2007 is the most likely date at the moment. I worry that we are perpetuating a gap between the information rich and the information poor.

Be that as it may, one of my concerns is this: when I was first elected, one of the first things that I did was to ask the Department of Trade and Industry when the copyright directive would be incorporated into UK law. I was originally told that it would be last March, then last July, then definitely by the end of the year—and it is still not quite ready. Major issues need to be resolved if we are to achieve the balance between the rights of the consumer and the individual and the rights of the industry, including the need for competition and for a strong music and cinema industry.

Some of the issues are recondite, but must none the less be swiftly addressed if we are to stand any chance of halting piracy. They include embedded phonograms, the time-shifting of recordings, and incidental reproductions in the many processes that are involved inside a computer of material that would otherwise be seen as copyright. The many exemptions from copyright that exist in this country—for the blind, for the hard of hearing, for libraries, and for many other public interest reasons—are still important, and we need to get the balance right. That is why the new clause is wrong and, furthermore, relates to the wrong part of the Bill. I simply do not believe that handing over such a power to Ofcom would be the right means of ensuring that there is a proper debate about piracy, that we properly strike the balance between the needs of consumers and the needs of industry—

If my hon. Friend does not think that Ofcom is the right place, where is?

My right hon. Friend pre-empts me, and I know that he is not in favour of pre-emption. I would merely say that the Patent Office, which historically has responded only to complaints and to changes in the law, should have a proactive role, and it is undoubtedly where the power should remain. Of course, different elements of the law are implemented in different ways. The private Member's Bill introduced last year by the hon. Member for Twickenham (Dr. Cable) would have ensured that certain aspects of the matter were dealt with much more robustly. That is why I do not support the new clause.

I find myself very much in sympathy with the comments made by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale). I remember that a famous battle of Maldon was fought a couple of millennia ago. The hon. Gentleman said that he did not think that hardware copyright protection was the right way forward. It is in that spirit that I rise to speak, because I am concerned that the thrust of the new clause is in that direction—a direction that has been very much advanced in the United States through measures such as the Digital Millennium Copyright Act 1998 and which is causing huge controversy between people in the industry. That is particularly true in relation to the internet, where people in Europe and in the US often represent different points of view.

We discussed "Top of the Pops" in Committee, and it was bound to raise its head on repeated occasions. I am grateful to the right hon. Member for Islington, South and Finsbury (Mr. Smith) for giving us another chance to talk about it. Yes, I freely confess that I was a "Top of the Pops" taper in my youth.[Interruption.] I am asked whether I drank R. White's lemonade. I was not such a slave to advertising.

Taping represented a system of "try before you buy". The important shift that has occurred in the music context is that the trying is taking place but the buying no longer necessarily does so. In the 1970s we would tape "Top of the Pops", and if there were a couple of songs we liked, we went out and bought them. We bought the vinyl because we liked having the record sleeve to touch—that is the added value that the hon. Member for Maldon and East Chelmsford talked about. We have not yet developed a comparable system in the digital world. The problem arises in trying simply to transfer what was done in the analogue world to the digital world. That is why I am sceptical about hardware protection. In the analogue world, one controlled the physical media—vinyl, compact disc or whatever—and had some way of policing them. In the digital world, there are no physical media to control. That creates a raft of problems, and the question is how to address them, not whether they need to be addressed.

There is a particular problem in the audio and music business in that the material can be shifted around and no comparable legitimate channel has yet been established. That is a specific market problem. The industry maintains as its primary distribution channel the traditional retail system whereby CDs cost in the range of £10 to £15, but those prices will not stand in the digital world. It is hard to maintain a system under which, effectively, one has two price ranges for the same material—one of £10 to £15 and another that perhaps reflects the real costs of distribution over the digital system, whereby the record company and the artist can still get the same amount of money, but have transferred the costs to the end consumer and taken out the distribution costs, so that the product sells more in the £3 to £5 range. It is therefore essential to develop that second digital distribution channel.

Does the hon. Gentleman agree that we need to shift from the ownership of a particular item of music to micro-billing or micro-payment for the rental of an item on demand, be it a video or music track? The challenge is that video-on-demand trials have not competed economically with the comparable physical space model, the video hire shop. Perhaps he would agree that when a video arrives in broadband form for the first time in the constituency of my hon. Friend the Member for Rhondda (Mr. Bryant), it should be called "A Fish Called Rhondda".

I will not follow up that last point.

rose—

No doubt the hon. Gentleman is about to say that he has never heard that one before.

Different competing models may be successful, and I think we agree on the objectives of finding a successful model.

I just want to say that a fish and chip shop in my constituency is called "A Fish Called Rhondda".

I am pleased to hear that.

The hon. Member for Ipswich (Mr. Mole) makes an important point about different competing models. One is the micro-payment at time-of-use model by which the customer pays by usage rather than for obtaining copyright material. I do not think that that is likely to work. The more effective model is to make a reasonable payment to obtain fair use, which is the traditional method. People could then do whatever time, format and space shifting—those are the technical terms—they wanted with the material. For example, they might have an iPod device or a computer for listening to MP3s. That approach is more likely to succeed than micro-payment at the time of use.

Surely the problem is lack of regulation of the internet. Records and movies will still be available for free if people place them on the internet. Until we have effective regulation that benefits the companies involved, such ideas and projects will fail.

The hon. Gentleman is right to mention the internet. The valid point has been made that by encouraging broadband access we are creating the conditions in which even more piracy can occur. If the Government succeed in meeting their target of millions of broadband users, they will create millions of potential piraters. Who would be liable for that? I fear that the new clause would steer us on the route of making internet service providers responsible for content. I am not convinced that that is right. I would be loth to tell an internet service provider that, as part of its licence condition, it must implement a particular hardware or software copyright protection, just as I would not want the Royal Mail to be prosecuted if people used it to send dodgy pirated videos. In general, the Bill establishes that internet service providers are more like the Royal Mail than a publisher, and that is the correct approach.

The people who should be prosecuted are those who put up the sites. We should go after the publishers of the material, and we can do that under current law. As someone who enjoys music and film, I find it offensive to see people with dodgy videos at car boot sales and people on the street with dodgy CDs. I want to crack down on them. The same is true of abuses of the internet. There is a debate on whether such controls should be extended to other jurisdictions. Certainly, the EU should have a common framework as part of the copyright directive. However, if people are malicious or stupid enough to have a site that says, "Come and get illegal pirated material here", and they have a locus in our jurisdiction, we should go after them under the general law. I do not think that the best way to deal with the problem is to create specific internet law because the legal provisions already exist.

Does the hon. Gentleman accept that the use of notice and take down is one of the most effective means to date of dealing with the problem? Under that approach, ISPs are made aware that materials are being downloaded from their servers which are in breach of copyright on a large scale. They then have to take some responsibility by removing the site that is making such material available illegally.

Absolutely, and more work could be done on that. There are specific issues for internet service providers, which have a legal responsibility in both directions. The problem is more than a breach of copyright material; it also involves libellous material. ISPs do not want people to use their services to publish such things, but they have a contract with the publisher and do not want to be sued for removing material.

The internet industry is rightly asking for greater legal certainty when it gets a request for notice and take down from a member of the music or film industry who thinks that material is illegal. The industry wants that to happen in a sensible, consistent and standardised way so that it does not get requests from every Tom, Dick or Harry. It also wants to be sure that when it responds, its position is governed by legal certainty so that it is not exposed to action by its customers. We could make considerable advances on that and allow something positive to come out of the debate. Improving the notice and take down procedures on copyright material would be welcomed by all the industries concerned. I do not know anyone in the internet industry who is keen to see their mechanisms abused in that way. They want them to be used sensibly, responsibly and legitimately.

As hon. Members on both sides of the Chamber have said, I hope that we can create a proper market for digital material in which artists and record companies receive fair recompense. By introducing over-elaborate physical protection measures for software or hardware, we may accidentally create a bigger incentive for people to go into the illegitimate market. If people cannot have fair use of their legitimately bought material, they will go for the illegitimate material that they can move between different devices.

I hope that we find a sensible approach. The debate is important in the context of Ofcom because the people whom it will regulate are creating the infrastructure over which the material will move. However, I agree with the hon. Member for Maldon and East Chelmsford that Ofcom does not have a specific role for dictating what material is transmitted across the internet.

This is one of the rare occasions on which my opinion has been swayed by the debate. Although I welcomed the new clause, I was not keen to include it in the Bill. I now think that it should be included, although I hold by the original view that I expressed when I intervened on the right hon. Member for Islington, South and Finsbury (Mr. Smith). The new clause is wishy-washy. Nevertheless, the problem needs to be addressed.

Cable and ADSL are delivering broadband at about 1.5 megabytes per second. My hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale) mentioned the Dolphin Square experiment, which is delivering broadband at between 2 and 2.5 megabytes per second. I have no doubt that in years to come we will be discussing the delivery of 5 to 6 megabytes per second. At that speed, it would be the same as digital terrestrial and digital satellite television, which makes even more prescient the point made by the right hon. Member for Islington, South and Finsbury.

People will be able to download entire film productions from the internet. There are grave dangers in trying to define a standard that would provide a block to that. As my hon. Friend the Member for Maldon and East Chelmsford said, 15-year-old hackers will always be able to work out a way to break through that block. The other problem is that the internet allows material to be originated anywhere in the world. We need international agreement because we will have a problem if an internet site originates in, say, the West Indies, where gambling sites are based, or China. The right hon. Member for Islington, South and Finsbury was right to raise the problem. Although people may prefer to go to the cinema, as the hon. Member for Rhondda (Mr. Bryant) pointed out, there will be a disincentive to creativity if people believe that they cannot maximise their return because their copyright can be breached by individuals downloading their material.

We are talking about restructuring the business model used by the audiovisual industry, particularly film and music. One of the expectations inherent in the decision to invest in broadband technology throughout the country is that consumers will spend significantly larger sums, perhaps £50, £60 or £70 a month, on audiovisual services. Is not the important thing to make sure that the money that is going to cable and other forms of digital television is getting through to the creators?

Yes, but it is important that the provision of such audiovisual services should involve a legally or morally binding provision. There was a debate in the Chamber way back in 1900 or 1910 about the provision of books to libraries. Members debated the question of whether authors should benefit from the availability of their books in libraries. Of course they should—if everyone read books from libraries and did not buy them there would be no incentive for creativity—there would be no incentive for authors to write or publish books, unless they simply wanted the gratification of seeing their name in print. Thinking about it, that probably satisfies the desires of most authors but, nevertheless, many of them want some income from their work as well.

I maintain that the issue has to be addressed. I was amused when the right hon. Member for Islington, South and Finsbury asked, "If Ofcom is not going to assume that responsibility, who is?" That is a good point. Ofcom, whose functions are defined in the Bill, is the ideal organisation to try to produce standards to ensure that digital piracy does not occur. It is all very well for Ofcom to perform that role, but I must enter a great caveat: if it does so in isolation, it will be pointless, as worldwide agreement is needed—[Laughter.] I do not know why the hon. Member for Rhondda is laughing from a sedentary position, if that is possible. If someone does not take the first step, there will not be worldwide agreement, so Ofcom should assume that role.

One can, indeed, laugh from a sedentary position.

One problem with the new clause as currently worded is that it is an enabling power that Ofcom may choose not to use. Historically, there has been phenomenal difficulty in getting the organisations listed in the new clause to co-operate and work together. Without a robust power and a duty, Ofcom would not stand a chance of getting anywhere. If the international community has to agree as well, that is cloud cuckoo land legislation.

By saying that such legislation is wishy-washy, the hon. Gentleman amplifies the point that I made in an earlier intervention, but someone has to start somewhere. Of course, he is right. He alluded in his speech to the fact that organisations such as Sony produce movies and music on the one hand and the very equipment that can be used to cut DVDs and CDs on the other. I accept that there is a problem but I repeat that someone has to start somewhere. No doubt, there are organisations similar to Ofcom, such as the Federal Communications Commission in the United States, but Britain ought to have a role too.

I agree with the hon. Gentleman. One reason why these technologies have become more pervasive is that they are the by-product of worldwide standards groups such as the Moving Picture Experts Group which defines the MPEG standard behind the DVD format and the MP3 music format.

I thank the hon. Gentleman for his intervention.

Going back to the intervention of the hon. Member for Rhondda, of course standards have to be established by the G7 and, beyond that, the World Trade Organisation. The fact that China has joined the WTO is a major achievement, because it was one of the main producers of illegal CDs and DVDs. Some Members may argue, even from the Front Bench, that that is still going on. We do not know whether that is so, but now that China is part of the WTO, at least there is a disincentive against such production and an incentive to obey international copyright law. However, international standards are needed. It is remarkable to hear that there is a peculiar system in which there are regional DVDs. One of the problems with analogue television is that there are different standards. There is SECAM in France—I do not know what that stands for, but many people think that it is "Contrary to the American method". In the United States, there is NTSC, which many people think stands for "Never twice the same colour". In Britain, we have PAL—peace at last. There are different standards. It only costs £190 to go to New York city and buy from Tower Records a DVD that one may not be able to play in the United Kingdom, not because the technology is not standardised but because people have deliberately made a system that is not compatible with other systems.

The problem needs to be addressed, and I congratulate the right hon. Member for Islington, South and Finsbury on tabling the new clause. I am persuaded that, if not in its present form, such a provision ought to be included in the Bill. If the Minister resists its introduction, I hope that a similar provision will be included when the Bill is considered in another place.

rose

Before I conclude, I will be generous and give way to the hon. Gentleman.

The irony of multi-region DVDs is that most manufacturers will sell a multi-regional DVD player in this country because there was a massive market in pirated software to replace the firmware in DVD players to enable people to play DVDs from other regions.

The hon. Gentleman is quite right. Where there is a will, there is a way, and where there is a 15-year-old hacker, he will hack through it.

We have had an interesting discussion. The Government certainly believe that copyright theft over the internet is a serious issue for many rights holders. It is essential that those who invest in creative activity can gain a fair reward from their work, whether in movies and music, as my right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) said, or in other parts of the publishing industry. I am grateful to my right hon. Friend for underlining the importance of the matter in new clause 1.

The lead responsibility, as my hon. Friend the Member for Rhondda (Mr. Bryant) said, lies with the Patent Office in consultation with the Department of Trade and Industry and the Department for Culture, Media and Sport. The Patent Office is responsible for intellectual property, including copyright, in the UK. The DTI and DCMS sponsor the affected industries. It is important not to confuse those responsibilities by suggesting that somebody else might share them.

The Minister is surely not suggesting that the DTI and more especially the Patent Office would pull groups of people together to try to agree international standards?

I am suggesting that the Patent Office can and does bring together different parts of the industry. Indeed, the Patent Office acts as the chairman for the counterfeiting and piracy forum, which brings together the relevant interests in the public and private sectors to discuss better co-operation and co-ordination against this crime. In the past year, for example, its members have discussed closer working between affected industries and the police hi-tech crime unit. In addition, the proposals that we have made in the context of the UK implementation of the copyright directive include a new criminal offence in copyright law to apply to those who wilfully make copyright material available on the internet without a licence in the course of business proceedings or on a commercial scale. That will assist enforcers seeking to deal with piracy of digital material.

Different approaches are needed to combat illegal private copying on the internet. The proposals for implementation of the copyright directive would strengthen the action to be taken against those who circumvent technical protection measures or provide equipment or services for doing so, which we discussed. Those are particularly important in the internet environment and provide copyright owners with statutory backing to develop their use of the technology. However, the copyright directive does not mandate the use of particular technology; that is an issue for rights holders to decide for themselves. The fact that recent pirate copies of films were reported to have been traced back to unprotected copies given pre-release to academy award judges suggests that the film industry needs to reflect on its own use of appropriate technology.

The recitals in the copyright directive emphasise the importance of all the parties involved—rights holders, intermediaries and equipment manufacturers—reaching voluntary agreements on standards. That must be the right way forward, not least in view of the inherently international character of the net.

Digital rights management is important for the content industries. We are already working with industry on that as part of the work of the broadband stakeholder group. It is aimed to create an inventory of current content management systems, and to spread wider knowledge about likely value chains and the major economic, legal and technical issues at different points in those chains. A framework is to be set up within which to evaluate the various elements of digital rights management. Much work is going on in this area. I hope that my right hon. Friend will be reassured that we are taking the issue seriously.

The hon. Member for Sheffield, Hallam (Mr. Allan) called for better procedures around notice and take-down for internet service providers. He has given us an example of why, the week before last, he was designated "internet hero" at the annual award ceremony of the Internet Service Providers Association. The e-commerce directive, which we have implemented in the UK, provides a defence for internet service providers as mere conduits. Officials are discussing with internet service providers whether there is a need for guidance on notice and take down—the point that the hon. Gentleman made.

I would not favour giving Ofcom a specific remit in this field, as that would have only tangential relevance to its core remits set out in clause 3(1) or to the functions set out in the Bill or in existing legislation that the Bill will transfer to Ofcom. Of course, there is nothing to stop Ofcom conducting the kind of discussion envisaged in the new clause and proposed by my right hon. Friend. I know that those at Ofcom will read with great interest the discussion that we have just had, and what he and others said in the debate. The issue is one to which the Patent Office is fully committed, in consultation with the two Government Departments. I believe that that is the right institutional lead for policy work in this area, and on that basis I hope that my right hon. Friend will withdraw the motion.

The debate has been extremely interesting and valuable. Part of my purpose in tabling the new clause was to ensure that the House had a chance to air some of the issues around the developing problem. Every contributor to the debate recognised that the issue is real. There is a serious problem, and as the hon. Member for Lichfield (Michael Fabricant) said, there is potentially a disincentive to creativity if unauthorised downloading of material takes off in a major way.

Various solutions have been proposed by hon. Members in all parts of the House, highlighting the need to change the culture, as young people in particular see unauthorised downloading as a natural activity; the need to get a move on with the implementation of the ELI copyright directive; the need to improve the notice and take down procedures where unauthorised material has been identified; the need to make the legitimate purpose of material more valuable, more desirable, more affordable and more accessible; and the need to make the opportunity to take material legitimately more attractive than the opportunity to take material in an unauthorised way. There may well be some technological answers too, especially if global agreement can be reached. I hope that all the issues raised will be taken into account by the DTI and DCMS, and even by the Patent Office, perhaps.

2.15 pm

That brings me to my final point. I was a little disappointed that the Minister placed such emphasis purely on the role of the Patent Office. One of the reasons for wishing Ofcom to take an interest in this area of activity is that Ofcom has the clout vis-à-vis the parts of the industry concerned. It is Ofcom that will be the regulator of broadcasting and telecommunications. It therefore has considerable muscle to persuade the various parts of the digital landscape to get together and find various means to tackle the problems. Ofcom has that muscle; the Patent Office does not. The Minister says there is nothing to prevent Ofcom taking an interest in this area of activity. I hope Ofcom will take note. As soon as Ofcom is up and running, I hope that it will discuss with the Patent Office how they can work together to develop the lines of attack necessary to make sure that the problem is taken seriously.

With that hope in mind, and with the hope that the matter may be aired in another place, I believe that it will assist the progress of debate if, at this stage, I beg to ask leave to withdraw the motion.

I beg to move, That the clause be read a Second time.

With this it will be convenient to discuss the following:

It is generally accepted that the rapid introduction of broadband technology in Britain is important to our country. Schools, universities, hospitals, medical practices, businesses and domestic consumers will all benefit from being able to receive and transmit web-based information. The Government, too, have a big interest in the roll-out of the technology. As the Confederation of British Industry stated, broadband is central to the growth of the knowledge-based economy.

Ministers have said that they are committed to a fast and efficient roll-out of broadband. The Government's target is for Britain to have the most extensive and competitive broadband market in the G7 by 2005—a target set by the Secretary of State herself when she was the e-Minister. In pursuit of that, the Government have promised to work to ensure that broadband is accessible in all parts of the country. They claim to have developed a strategy to achieve that goal and to measure our success. Unfortunately, the strategy is not yet working as effectively as everyone would wish. As the CBI points out,

"lack of competition in the telecommunications market has stalled investment in the required infrastructure".

The broadband stakeholder group estimated last November that terrestrial broadband services were still unavailable to a third of Britain's 24 million households. Two out of five people living in suburban areas are still excluded. The proportion of people who can access broadband in rural areas is so small that it is simply described as "significantly lower".

There is immense frustration that the Government are talking a good game while doing very little to deliver on their promises. The CBI states that Britain lies sixth among the G7 countries in terms of broadband connections and that few small and medium-sized enterprises are yet connected. According to the broadband stakeholder group, only one household in 25 is currently subscribing to broadband. Fewer than one household in every 30 that has a computer is hooked up to a broadband service, and in the business community, among firms employing more than 10 people, fewer than one in five has a broadband connection. In January this year, only 1.4 million households and businesses were connected to a broadband service. According to Oftel, Britain has only slightly more than half as many lines connected to broadband per head of population as Germany and just over a quarter as many as Sweden.

Of course, broadband is not yet attractive to everyone. Some users are content with lower speed and a lower price, but broadband offers such potential to enhance knowledge and deliver competitive advantage that I believe that it will not be long before it is as much a part of national infrastructure as the road system, the railways, mains drainage and telephones—

And in a better state.

As my hon. Friend says, we hope that it will be in a better state than the roads or railways.

It is the Government's job to create an environment in which broadband services are widely accessible. A critical part of such an environment is effective competition. The House will be aware that broadband is not synonymous with ADSL—asymmetric digital subscriber line—technology, but can be delivered by ADSL, cable, wireless or satellite. In this country, ADSL is associated with BT, whose subsidiary, BTopenworld, has roughly 50 per cent. of the market of retail broadband services based on ADSL infrastructure.

Technology changes and develops in unpredictable ways, so it would unwise for the Government or even the Opposition to be prescriptive about the form of broadband distribution that is used. In Britain, we are fortunate, as distribution is not confined to BT. Ntl and Telewest also provide cable modem services, although only to a minority of households.

In spite of Oftel's optimistic comments, it is worrying that the Government's targets are still not being met. There is a lack of clarity in the institutional and competitive framework that the Government have created, and their failure to create an adequate competitive environment is damaging. Actions and legislation that seek merely to promote broadband without regard to how that should be done are insufficient. The Government should have a duty to promote competition and reduce regulation.

Does the hon. Gentleman agree that, in requiring BT to carry out the local loop unbundling exercise, a framework was created for competition in the provision of broadband services in the local loop? The difficulty was that after the delay of carrying out the exercise, there was no apparent demand from other suppliers to act as competitors through the local loop.

The other suppliers might say that that had something to do with the terms of availability. In any event, I do not think that the speed with which BT addressed that objective is a cause for much congratulation. Different people will attribute to a variety of reasons the failure to develop a more competitive market more quickly.

The preamble of the American Telecommunications Act 1996 sets out a purpose that the House should take to heart. I have incorporated the words of that preamble into the new clause. The promotion of competition is an essential ingredient of a successful telecoms policy, especially when one major provider is a former state monopoly. The role of the regulator is to introduce conditions for a fair, open and transparent market, particularly where there has previously been market failure. Regulators must be free from day-to-day political interference and should not form part of the central planning apparatus of government.

Under Labour, Oftel's cutting edge has been eroded and its accountability reduced. Ministers have done that through the creation of the new and separate office of the e-envoy in the Cabinet Office—a typical prime ministerial initiative that owed more to spin and optimism than to analysis or hard work. Like many such initiatives, the e-envoy initiative is not proving conspicuously successful. The House will recall the fanfare that was given when the Small Business Service was set up in April 2000 under a chief executive whom we were told had direct access to the Prime Minister. Two years later, after heavy spending and little delivery, that privilege was quietly withdrawn.

The House will also recall the Prime Minister's endorsement of heady recommendations of the Cabinet Office's performance and innovation unit for the ill-named Consignia. Today's reality is a shrinking post office network, the withdrawal of cash payment benefits and a charge card that post office staff are unable to process. Similarly, the reality of the UK's broadband roll-out under the e-envoy initiative is a constricted footprint and lamentable take-up—the consequence of the Government's conviction that institutions and former state monopolies are better at delivering economic dynamism than commercial undertakings operating in liberalised markets.

The Government's approach can be seen in their grant of £30 million for broadband to the regional development agencies. According to the Secretary of State, her largesse was given so that

"a digital divide in high speed Internet access does not open up between urban and rural communities."

In Cornwall, the RDA took that as a signal to launch an advertising campaign designed to steer business customers to BT. In the east midlands, the RDA blames the lack of adequate broadband services on the Government's decision to induce telecoms companies to tender large bids for third-generation mobile phone licences. It plans to use its grant on a wired-up communities competition that will take three years to come to fruition. That same RDA blames the failure to provide a broadband service to rural areas on a slowdown in the international IT industry.

The RDAs are the last bodies that the Government should use. The futility of their efforts is illustrated in a test project named RABBIT—remote area broadband inclusion trial—that aims to tempt remote broadband users through a £700 grant to identify alternative sources of broadband supply whose prospects of success are uncertain. Instead of more rabbit stew, the Government should create a more competitive environment to encourage new entrants to the market. They should entrust the regulator with a remit to protect against market abuse until a competitive market evolves. It is for the regulator and not the e-envoy, and certainly not the RDAs, to protect users and consumers of national services and utilities and to stimulate national competitiveness. It is for the regulator to encourage progressive liberalisation of the marketplace to bring about universal access and a uniform and transparent tariff.

My right hon. Friend the Member for North-West Hampshire (Sir George Young), whom I see in his place, has identified BT's jealousy as an impediment to progress and pressed for greater transparency. Like other former state monopolies, BT honed formidable skills for protecting its interests. It is aware that opening up consumer access to broadband services potentially opens up access to its own competitors. It focuses on how it can meet the demands of the Government and the regulator to expand the service while ensuring that that is done not only at high profit levels, but in a manner that deflects the challenge from competitors.

I believe that the Government should restore the authority of the regulator. The regulator should impose a regime of greater transparency on BT, which should provide clear forward plans for its national ADSL footprint and reveal which exchanges are to be ADSL enabled and how many telephone connections they have. BT should explain the financial criteria and broadband targets by which such decisions are made. It should speed up the provision of unbundled loops and shared line access and the release of wholesale products, and targets should be published for those goals.

Without that transparency, the public will be disadvantaged. People cannot plan broadband investment through a cable network or alternatively through wireless or satellite. Business and individuals in rural areas and out-of-town communities are losing out. All that information would help individuals, businesses and community groups to make sensible decisions. It would help firms with competing technologies in broadband supply to fine-tune their investment criteria, attract funding and identify market openings. That information would build market confidence and stimulate competition in both ADSL itself and in respect of alternatives. It would encourage liberalisation of the market, which would lead to expanded choice and lower prices for service users throughout Britain.

Universal broadband access will drive economic growth and reduce rural isolation, and could slow the drift of employment and population to the south-east. It will help businesses large and small nationwide and enhance Britain's competitiveness. Due to the market-distorting actions of the Government, remedial action is needed. The new clause would impose a duty on the Government to promote competition in order to secure lower prices, increase choice and higher quality services for users of broadband services in the UK. I commend it to the House.

I am delighted to participate once again in the debate on the Bill, and I draw my entry in the Register of Members' Interests to the attention of the House.

Before entering Parliament, I worked for BT for 31 years and, unlike Opposition Front Benchers, I will not try to vilify or undermine BT or the work force, as I have much to thank them for. I shall not interrupt those Members as they do so, as only they can say why they want to mount an onslaught on a company such as BT, and the BBC for that matter. I am also chair of the all-party telecommunications group, so it might be said that I have a passionate interest in the subject.

Next year, Ofcom will replace the existing system of regulation, which dates from the last century. Telecommunications, television and radio developed more or less independently and could therefore be monitored individually. The existing regulatory framework is complex and the pace of convergence is still accelerating.

I draw the House's attention to the Bill's endorsement of interested parties as stakeholders. I am disappointed that employees are not identified as key stakeholders whereas others, such as businesses and consumers, are highlighted as such. At the last meeting of the all-party group, my hon. Friend the Minister for E-Commerce and Competitiveness and Lord Currie, the new chair of Ofcom, said that they recognise that employees have a large part to play and are, of course, stakeholders in the industry, but nothing in the Bill says so. Consequently, my hon. Friend the Member for Gloucester (Mr. Dhanda) and I have tabled amendment No. 151, which would close a loophole. Employees know the business from the sharp end and have much to contribute.

The communications industry has a number of endemic problems, which need not be the case as they could be addressed by the Bill, thus remedying them in the long term. The industry often fails to focus on key issues for employees—for example, skills levels, appropriate provision for training and personal development, which are not always expensive but are much needed. Those factors, among others, have resulted in difficulties in long-term retention of employees. Furthermore, some companies—in my experience, BT is one—place important emphasis on training and personal development, although perhaps not as much as they used to.

The problem is that when the industry is buoyant, the highly trained employees are head hunted by other companies that place little value on training. The European Union high level taskforce on skills and mobility reports that 80 per cent. of today's skills will be obsolete in 10 years. When such employees, who were once highly skilled, do not undergo sufficient training, that is detrimental to the industry, as employers cannot fill vacancies and a skill shortage becomes apparent. Ultimately, that makes it harder for employees to find alternative employment should the industry slump. I do not want to come back to the House in 10 years and say, "I told you so." That, of course, assumes that I will be re-elected. I hope I am, along with a Labour Government.

Lifelong learning is essential to tackle such shortages and mismatches, which hold back economic development and job growth. Since mid-1999, business throughout Europe has increasingly reported production constraints due to labour shortage. Although I have used these figures before, I shall do so again to illustrate the chronic skills shortage that we are set to see. According to the European Information Technology Observatory, the number of unfilled vacancies in the EU information and communications technology and e-business sectors is expected to rise from 2.23 million in 2001 to 3.67 million in 2003. That is an increase of 65 per cent. If the full economic and employment potential of the telecommunications sector is to be realised, a training responsibility for the sector's employers must be stipulated in the Bill. How else can we expect to fill those jobs in the years to come?

Unfortunately, the amendments to clause 24 tabled by my hon. Friend the Member for Gloucester and I were not selected, but what applies to that clause also applies to clause 3, and my points on a specific duty on Ofcom regarding the promotion of equal opportunities and training for employees are relevant to it.

The need to recognise employees as stakeholders is obvious, but that training mandate applies only to those working in the broadcasting industry. The communications industry has a key role to play in the development of the national skill stock, but such a mandate is not in the Bill. How can we expect to have "Broadband Britain" without a well-trained and motivated work force? Although I would have liked clause 24 to be amended to extend that duty to cover employees in the telecoms industry, I am pleased that my amendment to clause 3 has been selected. I hope that we can incorporate the issue of employees as stakeholders in the Bill for the reasons that I have stated.

I am concerned that, as the focus is so firmly on competition and consumer interest, the interests of employees could be disregarded. This is an opportune time to address those issues, and I would like Ofcom to have a specific mandate in that regard.

I shall address my remarks to amendment No. 3, which stands in my name and those of various Members from both sides of the Chamber. I shall also speak to new clause 27 and amendments Nos. 187, 188 and 189.

Amendment No. 3 and Government amendment No. 215 consider the wider public interest beyond that simply of the consumer. An important change is being made to the Bill, which will fundamentally alter what Ofcom is and what it does. The amendments are hugely significant. Last summer, a Joint Committee of the two Houses considered the draft Bill, and one of its recommendations was that the wider public interest ought to be added to Ofcom's general duties. That issue was debated at length in Standing Committee, and I am particularly pleased that Government amendment No. 215 has been tabled. It is important for Ofcom to have a wider perspective and wider duty.

The interests of consumers are important, and it is entirely right that Ofcom will have the duty to protect those interests, where possible through competition, but they are not the same as the interests of the wider public. Indeed, there can be circumstances in which the interests of the consumer may be contrary to those of the wider public.

There are instances in which economic forces can apply a perverse effect, so it is therefore absolutely right that Ofcom should have a wider responsibility. I am particularly pleased that the Government have arrived at that conclusion and have introduced their own formulation, which refers to the interests of the wider community. It will have much the same effect as the wording in other amendments. I am glad also that, having not initially accepted the recommendation made by the Committee last summer, the Government have been persuaded during consideration to reach that conclusion, which will make the entirety of the regime more effective. It will also make Ofcom more effective and make the Bill altogether more successful.

New clause 27 and amendments Nos. 187, 188 and 189 deal with interests of creators, whether they be composers, musical performers or other performers—indeed, creators of every kind. The UK's media creative industries are very strong, and are at the cutting edge of content creation in the communications revolution. Original creative input is a vital ingredient, and often serves as a stimulus for both the production of new services and the improvement of existing ones. Music, for instance, is fundamental to our existing television and radio services, and will become even more so with the arrival of multi-channel television.

The amendments would give Ofcom specific obligations to protect the interests of the creative sector. Given the intended revolution in ownership rules and the potential for greater American ownership of British media interests, British consumers might well not accept huge quantities of American content on our television channels, but I wonder whether they would be able to tell the difference between, say, British and American incidental music. If we are to go on giving creative industries and creators opportunities in the UK media, it will be important for Ofcom to consider their interests and future viability at all times.

The success of individuals and companies in our music industry depends heavily on opportunities for the creation of music for—and, indeed, the broadcasting of music by—national and regional radio and television services. Any reform of the regulatory environment on the scale that we are discussing will have a direct impact on all our creative industries. Composers and music publishers' earnings from the exploitation of music by television and radio exceed £100 million a year. Amendment No. 187 would ensure that our regulatory structures support and have regard to the impact of developments on creators and performers.

Amendment No. 188 suggests that the content board is the obvious part of Ofcom to secure the best conditions for the creation and supply of new creative content. Following the Joint Committee's recommendations last summer, the Government moved swiftly to authorise a review of programme supply, which was conducted by the ITC. That was welcome, but I do not think we should see it as a one-off: we need to keep the issues of programme and content under constant review.

The hon. Gentleman suggests that the creators panel would be part of the content board. As the content board has no real control over or responsibility for the content of the BBC's output, should the panel apply to the BBC? Or is this yet another Liberal Democrat proposal to micro-manage commercial broadcasting but not the BBC?

I do not accept the hon. Gentleman's premise. He and his colleagues are preoccupied with the idea that Ofcom has no responsibility for examining the BBC's activities, but that is not the reality that confronts us in the Bill. Of course I think that the content board's creators panel should look at creative issues in the widest possible sense—including, certainly, what goes on at the BBC. The board is the obvious body to look at such issues, which is why I suggest the inclusion of a creators' representative, preferably one with working experience of the creative industries. That would ensure that their interests were not just understood but taken into account in decisions that would have a direct impact on them.

The hon. Gentleman is, as usual, advancing an excellent argument. Does he agree that the content board should also consider issues involving the various regions and nations?

Certainly we should consider creative input in the widest possible sense, which would involve a good deal of national and regional diversity.

Amendment No. 189 suggests that the content board form and convene a panel whose chairman would be on the content board. The Bill would provide for the panel to take account of the creative contribution to broadcasting, and to ensure that the UK maintained its pre-eminent position. The new clause has the same aim.

I know that my hon. Friend the Member for Sheffield, Hallam (Mr. Allan) wants to say something about broadband. I hope the Government will look sympathetically on what I have said.

I am glad of the opportunity to speak on the Floor of the House after three months of debate in Committee. I begin by declaring an interest: like my hon. Friend the Member for Glasgow, Anniesland (John Robertson), I have a strong link with Connect, the union for professionals in communications. It helps to fund my researcher, who helps me by researching all aspects of the communications industry.

The Bill covers a wide range of issues, but I want to concentrate on amendment No. 151. My hon. Friend the Member for Glasgow, Anniesland and I tabled it as a result of ongoing investigations of, in particular, the position of employees in telecommunications. We discussed some of them in Committee.

Last year, when I spoke in a debate on Ofcom and declared my support for the creation of a unified regulator, we discussed traditional distinctions between telephony, radio, the internet and television. Those distinctions, which were still evident only a few years ago, have become increasingly blurred. We have seen that one type of equipment can offer the consumer multiple functions. Telecoms companies are exploring the possibilities of broadcasting, while broadcasters are moving into e-commerce and internet service providers are also providing television channels.

I accept all that, but I am worried that telecommunications employees are not mentioned in the Bill. My hon. Friend the Member for Glasgow, Anniesland and I tabled two amendments to clause 24, which were not selected but which sought to establish a clear requirement for Ofcom to provide training and equal opportunities for employees. The Bill already makes such provision for broadcasting employees, but it does not extend to those in telecommunications.

I know from meetings with the Minister and our debates in Committee that the decision to provide for training for broadcasting employees was historical. Such training has existed for many years, but telecommunications employees were excluded because there was no historical provision for training. The fact that I understand that does not necessarily make it right.

The entire Bill was designed to look forward to the convergence of the industry but, in failing to address this particular point, we are missing out by looking backwards at the tradition in broadcasting, rather than to the future. We must ensure that we get the Bill absolutely right. The paving Bill was important because it created Ofcom, but this Bill is all the more crucial because it represents our chance to ensure that the design of Ofcom is absolutely right and that its duties are stipulated in the Bill.

I share the Government's goal to make Britain the most dynamic broadband market in the G7, but we will not achieve our goals without a highly motivated work force. That is the key thrust of the amendment. Regulatory regimes should take account of the interests of employees as stakeholders in the industry. Ofcom should be given specific responsibilities to provide an overview of the employment resource in general, and, in particular, of the health and safety, skill levels, personal development and training of people working in the industry, quality of service provision and of emergency cover.

I speak in support of the overwhelming number of clauses in the Bill, and of the Bill generally, but I am keen to tighten up the areas that could improve it still further. The consultation that took place has given us a good Bill but, to paraphrase the Joint Committee's statement, we can always make a good Bill even better.

It is a pleasure to follow the hon. Member for Gloucester (Mr. Dhanda). Like him and the hon. Member for Glasgow, Anniesland (John Robertson), I used to work in the telecommunications industry. That was some 30 years ago, in the Post Office—as it was then called—and the challenges that confronted us then were to remove the electro-mechanical exchanges and to move over to System X. I tried to join a trade union—I think it was ASTMS—but I was drummed out by Clive Jenkins, who described me as a "pin-striped bovver boy".

New clause 2, which was ably moved by my hon. Friend the Member for South Suffolk (Mr. Yeo), covers a wide range of issues. I want to focus on the last two words in the new clause—"including broadband"—and particularly on broadband in rural areas, which is now emerging as a major political issue. Although I have been critical of BT, it is also right to pay tribute to what it has been able to do over the past 12 months. It has reduced the wholesale price of broadband, introduced a rolling programme of enabling exchanges, and set targets where it has been able to do so. So, although I have been critical, I recognise that BT has been doing what it can.

I recently received a letter from BT's director of public affairs, from which it is worth quoting to illustrate how the company views the issue. It is not "wholly uncritical" of the Government. The letter states:

"Ovum has calculated that less than $5 per head has been spent by the UK government on supporting broadband infrastructure, compared with $25 in France and $90 in Japan. On that basis, BT's performance in already delivering a wider ADSL footprint in the UK than has been achieved in the USA looks reasonably creditable."

BT therefore has its own dialogue to pursue in relation to its objective to roll out broadband.

I suspect that about 50 per cent. of my constituents cannot get broadband. It is available in Andover and Tadley, and villages such as Oakley and Highclere have recently hit the target and will be enabled in due course. However, some fairly significant small towns and large villages—Whitchurch and Overton, for example—have no hope as yet.

Is the hon. Gentleman aware that there are many people who cannot get broadband even where exchanges are enabled, because of old technologies and various other technical problems? Does he agree that it is incumbent on BT to resolve those problems—whether through wireless, broadband or whatever—as soon as possible?

I agree entirely with the hon. Gentleman, whose energy and initiative in this area I applaud. BT also told me:

"The average reach for each exchange is 94 per cent. of the population served by that exchange."

The hon. Gentleman is therefore right. Even when an exchange is enabled, some people remain outwith its reach. The advertising campaign has irritated a large number of my constituents. It has urged them to register and sign up for broadband, but they cannot do so. Although I would not describe myself as socially excluded, neither I nor the chairman of BT, who lives quite close to me, can access broadband in north-west Hampshire.

What is the position for people who cannot access broadband? A wide range of opportunities is, in theory, available to them. These people are, however, quite busy, and they take the view that broadband should be available without their having to ring up the South East England Development Agency or contact RABBIT, to which my hon. Friend the Member for South Suffolk (Mr. Yeo) referred. They are not sure that it is really their job to risk their own personal capital by investing in a system for their village. They do not want to take the risk of investing in communication masts. What they really mind about, however, is the uncertainty. If they knew that there was no prospect whatever of getting broadband, they might well consider some of the alternatives, but not knowing whether their exchange might be enabled at some point in the future acts as a disincentive and an understandable deterrent to looking at some of the other options.

The right hon. Gentleman might be aware that no rural exchanges are enabled in Scotland. There are none in my North Tayside constituency. May I suggest that what is wrong is the trigger policy that BT has employed to enable exchanges? The trigger level has been set far too high for towns and villages in rural areas. In my constituency, for example, 350 people would be required to sign up in a town of 5,000 to 6,000 people. How can we ever get people enabled when the trigger is set so high?

My hon. Friend the Member for South Suffolk mentioned transparency and openness. One thing that would help this debate would be to have in the public domain more figures showing the actual costs, so that some of the estimates might be challenged and we could see whether the costs were really as high as BT has asserted.

I want to raise with the Minister an issue about which I have written to him twice. I commend his enthusiasm for this subject. He kindly wrote back to me a few days ago in response to a question about the Prime Minister's commitment, made in November, that every school and GP's surgery would be on broadband by the beginning of 2006. I welcome that commitment and I am prepared to believe that the Prime Minister means to adhere to it. I have tried to find out from the Minister how that commitment is to be delivered. What is the mechanism by which the small village schools and the medical centres in the more remote villages in my constituency will be plugged into broadband? Will the Minister direct BT to enable the nearest exchange? Will there be some alternative delivery mechanism, such as fibre optics, wireless or satellite?

This is important because the solution for schools and medical centres is hugely relevant to everyone else in the area, and their not knowing exactly how that commitment will be delivered could result in an obstruction to some of the alternatives that might otherwise be considered. Will the Minister answer the specific question of how he can give a cast-iron guarantee that Overton primary school, for example, will get the service that the Prime Minister has promised it by the end of 2005? Once we have an answer to that question, some of the other questions can be answered. If the solution is to use one particular form of technology, it can be piggy-backed by everyone else in the village, and they, too, can get access to the services that they need. I hope that the Minister will be able to shed some light on that matter.

It would also be helpful if the Minister could commit himself to removing any regulatory obstacles that might confront Ofcom or Oftel in the roll-out of broadband. We do not want unnecessary regulatory hurdles to have to be cleared before we can realise our shared ambition of making this country internationally competitive by having more widely available access to broadband.

I am speaking broadly out of sympathy with new clause 2, which calls for a decreased role for regulation, and in support of amendment No. 3, which asks us to take on board a wider public interest. I shall be brief, because I have only one specific concern. I shall then leave the Floor to those who are more expert than I in the ways of the Communications Bill.

I shall concentrate on one specific consumer concern, and on the role of Ofcom and Oftel in addressing it. I have already raised the issue in an early-day motion; it relates to call waiting and telephone queueing systems. We all have experience of being kept waiting, at our own expense, for an answer that never actually comes, and with ringing off in frustration. I have taken up this matter with Oftel, which assures me that it has no powers to address the problem. It looks forward to the Bill's resulting in some codes of practice that will help it to do so.

3 pm

Telephone filtering creates some minor difficulties, but I want to distinguish that issue from call queuing, because although they are related, they create different problems. There are problems with disabled or old people using call-filtering systems when the timing is wrong for them, and there are also problems of access and clarity. I do not want to focus on filtering. Both filtering and queueing are aspects of modern call centres, which were initially introduced as a means of being efficient. Nowadays, they are run predominantly as a way of making a cost saving. We all accept that call centres are the modern sweatshops. We are all familiar with being kept waiting in queues, with endless piped music, with the spurious promise that one's call will be answered quite soon, with the irritating and increasingly common plugs for products that people do not want in the first place, and with the frankly dishonest messages saying that one's call is valued—but never valued enough to be actually answered.

The net effect on the nation is quite appreciable. It is bad for the blood pressure and it leads, I am afraid, to rudeness from us as consumers when we finally get through to someone who cannot answer the question that we have been waiting for a long time to have answered. There is a massive and unquantifiable cost across the country to individual firms and to individuals themselves. There is also an enormous opportunity cost, in terms of time wasted for individuals and businesses. Apparently, 30 per cent. of calls made to such institutions are futile, with people simply ringing off at a cost purely to themselves.

I understand the hon. Gentleman's point, but it is impossible to generalise about call centres across the piece. It is surely down to the business that wants to provide access for its customers to define the standard of customer relationship management that it wants to buy from a call centre or other provider, regardless of which facilities manager is offering the service. An excellent example is the company 24seven, which experienced an overload of calls to its call centre during November's poor weather. The essential question must be: what standard of customer relationship management did it purchase from its provider?

The question is probably simpler than that: what standards should we, as consumers, demand, and how should they be enforced? I recognise that good and bad practice exist, but the latter is currently predominant, and the public expect legislators to do something about it. There is wholesale abuse of the call centre system not simply by the centres themselves, but by people such as ourselves—heaven forbid—who sometimes need to make very long and expensive calls, and who do so on somebody else's telephone. A net effect of all this is substantial profits for the telecoms companies themselves. I should point out that some of these companies number among the serial offenders that profit from such misdemeanours. People are kept waiting, and they pay to be kept waiting.

Everyone recognises this abuse, and they regard it as a big consumer issue. The question is: what precisely is the solution? We need a measure of regulation, and I do not know whether current or foreseen legislation will accommodate it. There are alternative solutions. One could suggest the free market solution, whereby firms that provide a rotten service eventually lose out, but I do not think that that fully addresses the issue. Although firms that keep people hanging on get a bad reputation for call handling, they also make a substantial saving in terms of employee costs.

Secondly, telephone call queues are slightly different from other sorts of queues. One can see a queue in a supermarket and choose to go to another supermarket. One can see a queue at a taxi rank and choose to get the bus home. However, once one is in a call queue, a way out cannot be seen, and to withdraw from it involves a sheer loss.

Thirdly, the telecommunications industry involves a system of dishonest trading. In many cases, people are told that their call will be answered shortly, but in fact it will not be. That is misrepresentation, and at the moment it is not covered by legislation. The fourth reason why a free market solution will not work is because a lot of the calls that one makes are not of a routine character. One has little reason—hopefully—to telephone an insurance line frequently, so one cannot punish such a call centre by not phoning again, given that the reasons for ringing in the first place are far from routine.

The legislation appears to encompass a degree of self-regulation—a code of good practice. I have looked at such codes in this area, and they are wholly inadequate in terms of satisfying consumers that this problem will be dealt with. In any case, a code of good practice would be followed only by good firms; it would not be binding on bad ones.

A third way to resolve this problem—it has been alluded to—is an alternative to the regulation that most of us do not want unless it is really necessary: to hope that technology will so develop that the bad practices that have grown with it will eventually disappear through better technology. Since tabling the early-day motion to which I referred, several organisations that I have contacted have made that suggestion. They suggested that speech-recognition technology might be the way forward and that, some day, we will be able to converse with a mechanised voice at the end of the phone with as much satisfaction as we currently experience when dealing with human operators. A character such as Holly, from the programme "Red Dwarf", will speak to us, and everybody will be able to save money without in any way impairing the service provided to the consumer.

Some people suggest the use of ring-back technology. It is true that, should firms wish to implement it, such technology could be used to enable people to put down the phone yet keep their place in the queue, and to be phoned back at the appropriate moment. That could sharpen up the market, and good firms would undoubtedly adopt such practices. However, I believe that there is a case for regulation. High-volume call centres should, by law, have to advertise their average call waiting times, and they should do so when contact is first made and the phone is picked up. The consumer should have a right to complain to Ofcom and Oftel when those times are routinely exceeded, and Oftel should have the power to warn, and ultimately to penalise, firms that abuse the system. If, after investigation, the problem persists, there should be the potential for Oftel to take action. Such light-touch legislation—for that is all it need be—would save time, money and the nation's blood pressure. I want the Minister to clarify whether current legislation has the potential to incorporate a regulation as solid as this.

Finally, I should like the Minister to clarify a specific point. The winners in all this are the telecoms industry and the telephone companies, and as I said, some of their lines are the principal serial offenders. Is it currently permissible for a call centre firm and a telecoms firm to establish a profit-sharing contract whereby, in return for a discount, the call centre has a real incentive not to answer calls immediately, to mutual profit? That may be the case under current legislation, and I should like the Minister to clarify that point.

I am sure that the House is very grateful for an exposition on why the Liberal Democrats do not believe in the market economy. I agreed with little of what the hon. Member for Southport (Dr. Pugh) said, but I want to address my remarks to new clause 2, which was admirably moved by my hon. Friend the Member for South Suffolk (Mr. Yeo). Although it is common to say so in this place—indeed, it can be construed as a trite statement—I cannot for the life of me see why the Government should not accept the new clause. It is a perfectly reasonable provision, which would simply require Ofcom to ensure the operation of competition. The Government assure us that they believe in competition, but not in too much regulation; however, the reality seems to belie that. Of course, they also believe in broadband, so it seems perfectly reasonable to expect that they will accept the new clause.

My right hon. Friend the Member for North-West Hampshire (Sir George Young) illustrated more ably than I can the problems of accessing broadband in rural areas. He said that perhaps 50 per cent. of his constituents could access broadband, but I suspect that in my area the figure is more like 15 per cent., if that.

I have spent quite a lot of time over the past few months trying to ascertain how people throughout my constituency can access broadband. The problems are not unique to us, however, but are commonplace throughout rural areas. Extremely remote rural areas are affected, but so are areas such as mine, which abuts Cambridge city.

The Cambridge science park is in the parish of Milton in my constituency, not in the city of Cambridge. It is connected to the Cambridge exchange and is able to access broadband. Absurdly, however, the rest of Milton parish is connected to a different exchange and is not broadband enabled. Milton is only one of the villages—I use the word advisedly, as we are talking about settlements of several thousand people—so affected. Those villages are full of small businesses, many of them at the leading edge of the knowledge revolution and the knowledge-based economy, yet they are not able to access broadband, and many have no prospect of being able to.

Like my right hon. Friend the Member for North-West Hampshire, I shall not be too critical of BT. It has made some progress in the past year, and has reduced the threshold targets in some exchanges in my constituency, which I welcome. It has introduced thresholds in a couple of exchanges that did not previously have them, and that is a step in the right direction. It is also considering the idea of aggregating different exchanges.

One problem is that many consumers do not know what their exchange is. Many people confuse their exchanges with their STD codes. They do not understand why some people who share their dialling code are able to access broadband when they cannot.

As a result of the inability to access broadband via BT and the fact that there is no prospect of that being possible, businesses and individuals with specialist knowledge are trying to devise their own ways to access the facility, using one of the various systems. In some cases, the villages in my area are partly cabled. The work was done by the Cambridge Cable Co., now part of ntl. That makes the threshold problem harder. If part of a village can access broadband via cable, it reduces the scope for other providers to meet the threshold laid down by BT. However, cable facilities are usually confined tightly to the centre of the villages, and it is highly unlikely that they could be extended.

The upshot is that, in the village of Bottisham—not more than half a dozen miles from Cambridge—a group of people have put together a radio-based system. They lease a single copper line from Cambridge, and their system, which uses radio antennae, now operates through six parishes. These very advanced individuals have achieved this without recourse to a grant from the East of England Development Agency, mainly because in this matter they were ahead of the agency, which had not managed to get a grip. The agency now advocates all sorts of grants, but the people about whom I am talking had already got the system up and running and so received no grant money.

The group did get a small grant from the Countryside Agency, which was very helpful, but parishes now approach the group and ask to join the local network, and no grant money is available to facilitate that. Neither the EEDA nor the Countryside Agency will assist them, because the system already exists. The parish of Little Wilbraham in my constituency wants to join in the system that I have described, but the costs will now be huge, and that seems incredibly perverse.

The Bottisham entrepreneurs put the system together more than a year ago. I arranged for them to meet the then e-envoy, to discuss the problems involved. I hoped that they could pass their experiences on to the Government as an aid to policy. The envoy arranged an appointment at which he could meet my constituents and me, but the Minister, whom I am pleased to see in his place, wrote to me and said that he had taken over the envoy's responsibilities. He was not able to keep the appointment, which was a shame: my constituents were blazing a trail but were unable to present their case to the Minister.

The hon. Gentleman is making an interesting point, but he is describing what happens when there is competition. People can go against each other, and those in business must compete. Does the hon. Gentleman agree that we should consider the solution that he has outlined? Deutsche Telecom has not had the competition problems that we in this country have encountered. It has done quite well in making broadband access available.

I am afraid that I know nothing about the Deutsche Telecom system, so I cannot comment. However, I was not suggesting anything that is anti-competition. I was trying to draw the House's attention to the holes in the Government's policy for promoting broadband. As my right hon. Friend the Member for North-West Hampshire said when introducing the new clause, the development agencies are acting differently in different regions. My right hon. Friend said that the agency in Cornwall is getting on the back of BT, while other agencies are riding different horses. In the east of England, some people and businesses in my constituency are ahead, as the Bottisham example shows.

My right hon. Friend the Member for North-West Hampshire referred to the problem as it affects schools, other public facilities, GPs' surgeries, and so on. The point cannot be over-emphasised. The Prime Minister made his undertaking—although some of us have become sceptical about such things—but if he is to fulfil the undertaking, broadband will have to be extended to the very large number of villages that have a primary school. However, there is no present prospect that broadband access will reach those villages. Like my right hon. Friend, I am fascinated to know how the Prime Minister envisages that that will happen.

Is the hon. Gentleman aware of the east of England broadband project E2B? For some time it has been placing contracts, with the result that schools in Norfolk, Suffolk, Cambridgeshire, Essex, Hertfordshire and Bedfordshire have broadband access.

I am very much aware of the project. To the best of my knowledge it has not delivered anything to my constituency, although I stand to be corrected on that. My point is that if the primary school can access broadband, the technology needs to be in the village, as my right hon. Friend the Member for North-West Hampshire said. Logic implies, therefore, that at least some other members of the community could piggyback on that system. However, that is not yet happening.

I certainly do not want to get into arguments about technology; I am the first to accept that my knowledge is extremely limited. I am primarily concerned about many residents of villages in my constituency who are at the leading edge of the knowledge revolution. Currently, they have to travel to Cambridge, London or elsewhere to work, yet many of them could, and indeed would, work from home at least part of the time. If they could do so, it would comply with many of the objectives not only of the Government but of the House: it would reduce travel, congestion and so on. However, unless those people have access to broadband, they will have to continue to travel to areas where it is provided.

The new clause would enable the Government, through Ofcom, to roll out the provision of broadband far more effectively.

I agree with my hon. Friend; villages in my constituency, too, could piggy-back and take advantage of the provision of broadband in schools if it was undertaken correctly.

Recent surveys have shown that children—especially younger children—still prefer using books to using the internet. Although we want to ensure that broadband is provided, does my hon. Friend agree that we must also ensure that schools do not completely abandon traditional learning methods?

My hon. Friend tempts me to go down a wholly improper path, so I shall resist. However, I am sure that he will understand that I have some sympathy with his point. I am delighted that the sale of books has riot been as seriously affected by the development of the internet as many people prophesied.

I have taken enough of the House's time. I wholly support the new clause. Ofcom should have a specific responsibility to accelerate the roll-out of broadband so that a large geographic area and a significant proportion of the population, such as my constituents, can access the latest technology and continue to play their part—as we do in Cambridgeshire—in driving forward the economy of our country.

This is an interesting and important debate. I have three brief comments.

With the support of my hon. Friend the Member for North Tayside (Pete Wishart), I tabled a reasoned amendment to the Second Reading of the Bill. I did so because I believed that the Bill made insufficient provision for the public interest and that it would, over time, so support the principle of competition in the marketplace that it would seriously penalise a great many consumers and citizens. We have heard examples of that in various parts of the country.

Conservative Members may disagree, but I think that competition is failing to deliver what is required by our communities and what the Government say they want to deliver. The Government must address the fact that they are failing to miss their targets for the delivery of broadband and e-technology because the existing competition set-up will not permit them to achieve the necessary roll-out.

I very much welcome the import of Government amendment No. 215 and look forward to the Minister's comments on it. Although I am not yet fully convinced, I think that it has taken on board the questions raised in both the Joint Committee and the Standing Committee about addressing the needs of citizens. Many of us believe that "citizen" is the correct word in this context and that as citizens of the nations of the United Kingdom we benefit from ownership of those things that are done in the spirit of the public interest.

In Committee, we were told that "citizenship" had a particular meaning and that it applied only to nationality and immigration requirements. I am not convinced by that argument. After all, we have education for citizenship in our schools and so on, so surely it is relevant in a Bill dealing with communications. The words "to further the interests of the community as a whole", however, are a significant acceptance by the Government of the points made in the Committee, although I am not sure why the provision continues with the words "in relation to communications matters". In a Communications Bill, why do we have to specify that? It seems a little otiose. However, I shall wait for the Minister to explain.

My second point is related to my first. Members on both sides of the House support the Government in their targets for the roll-out of broadband, but how are we to achieve them? The new clause moved by the hon. Member for South Suffolk (Mr. Yeo)—

Is very good.

I agree. The clause is good and it is important. Strangely, however, in arguing for the hon. Gentleman's clause, his hon. Friends argued against pure competition. That is what it boils down to.

New clause 2 is important because it would put a duty on Ofcom to achieve something that, as is accepted, competition itself will not achieve. We will not roll out broadband to every part of these islands purely by using competition alone. We need to ensure that Ofcom works with those competitive providers with the spirit and intention of achieving that roll-out, and that where gaps exist, they will need to be plugged, probably by public investment.

The hon. Member for South Suffolk rightly said that such things are as important as rolling out this country's road, rail, gas and electricity infrastructures. This is our great infrastructure project for the beginning of the 21st century. We need to take it on board in the way that people faced development of the railways in the 1830s and 1840s, although we do not want to replicate the problems with the railways that we inherited from that time.

We need to have more of a sense of national purpose about how we achieve that infrastructure roll-out. For example, it did not take purely private, commercial or competitive companies to provide electricity connections; it took national investment. I want to make the point to the Government that national investment is needed to achieve broadband roll-out, working in cooperation, of course, with the public companies that can achieve it.

Does the hon. Gentleman agree that the hon. Member for South-East Cambridgeshire (Mr. Paice) hit the nail on the head with his stories about having too much competition

I am not sure about the phrase "too much competition", but I accept what the hon. Gentleman is trying to say. We have a market that is very attractive to the companies, albeit that it tends to be in the towns, cities and larger conurbations, where they can chase the same customers and play one customer off against the other. We see adverts in the papers, advertising broadband for £29.99, and the next company's price is £27.99. That is frustrating for my constituents, who cannot get broadband at all.

Aberystwyth is the only town in my constituency that is broadband enabled, but there is just one exchange. The important point has been made that broadband is not the same as the standard trunk dialling codes. Those who walk into the town on a market day expecting to be able to buy into broadband when they walk into Currys on the high street simply do not get what they deserve. It is the same as walking into Dixons or Currys and finding digital radio on sale, which people can do in Aberystwyth. Digital radio is a wonderful thing, but it does not come within 50 miles of Aberystwyth. I am not sure what those companies are trying to achieve by putting those products on their shelves. It is very frustrating for the consumer.

BT is still the major provider of telecommunications in Wales. Outside Cardiff and some of the south Wales valleys that have been cable enabled, there is no choice but BT, so I am trying to get the exchange in Cardigan enabled, as it is next biggest town in my constituency, although only 3,000 or 4,000 people live there. I am pleased that BT has agreed that that exchange should be enabled next.

Moreover, after several meetings, BT has decreased the threshold requirement—it is now down to 300 people for that exchange—but we have 71 signed up at the moment, so the gap is still fairly significant. Persuading SMEs to sign up to something when they cannot see the benefits is very difficult indeed.

Cardigan is facing 400 redundancies in two industries over the next year, although we have had an injection of finance from the National Assembly. I should like that money to be used to bridge the digital gap, so that we can invest in things such as broadband. I want Ofcom to be involved in such a public interest consideration, in conjunction with local communities, or with the regional development agencies in England or, in Wales and Scotland, with the Governments of those countries.

We can achieve broadband roll-out in other ways in rural areas—radio is an obvious one and satellite might be brought into play. The National Assembly for Wales has published the Welsh Development Agency's Ubiquity report on achieving broadband roll-out in Wales and, as hon. Members might expect, the targets are very similar to those of the UK Government. Again, delivering services to every school is part of that process.

One of the difficulties, however, is that the 3.8 GHz radio spectrum is about to be auctioned in Wales, as it was not auctioned last time round. The repackaging that has happened has split Wales into three parts, and has placed north, mid and south Wales with significant parts of England. That may not be a bad thing if it means that we can get things moving, but it creates the rather worrying prospect that one part will be successfully sold and auctioned, whereas another part will not.

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The Minister should be in receipt of a letter from Christine Gwyther, the Labour AM who chairs the Economic Development Committee of the National Assembly. The letter outlines the Committee's deep unhappiness about the way in which radio spectrum has been auctioned in Wales, as it is seen as an important weapon in achieving broadband roll-out in Wales. I hope that the Minister will carefully examine the situation in Wales, and that he will look again at how we can assist wireless provision, which will be one of the key aspects of achieving broadband roll-out in rural areas.

I welcome the progress that has been made on this Bill, but I very much hope that Members on both sides of the House will support those who are trying to secure broadband access for some of the most remote parts of the United Kingdom and will acknowledge the need to act in the public interest. We must be aware that competition does not yet show signs that it will achieve that. I hope that the Government will bear that in mind as they try to meet their targets.

While we have been debating these important matters, I understand that Nasser Hussain, the England cricket captain, has resigned following a no result in the Zimbabwe-Pakistan cricket match, and that England are eliminated from the world cup. I hope that, on some future occasion, we might have the opportunity in Government time to debate the issue.

First, I endorse the comments of my hon. Friend the Member for South Suffolk (Mr. Yeo) on new clause 2. I suggest to the Minister that nothing in the new clause is in any way at odds with Ofcom's duties under the Bill. On the contrary, all the key elements of new clause 2 are enshrined in the provisions of clauses 3 and 6, which relate to Ofcom's duties. Our new clause has four key elements.

I welcome the point that the hon. Gentleman has just made. Will he tell us why the new clause is necessary, because, as he rightly says, the point is already well covered in the Bill?

I cannot tell you, Madam Deputy Speaker, how grateful I am for the Minister's intervention, as that is precisely what I intend to do. He so clearly grasps the point that I need not dwell on it too much.

To explain the point briefly, clause 6 requires Ofcom to reduce regulatory burdens and clause 3(1)(a) requires it to promote competition and to further the interests of consumers—there is no better way of doing that than bearing down on prices and the provision of high-quality services. Clause 3(1)(b) on securing the optimum use of wireless telegraphy must surely include the deployment of new telecommunications technologies.

The Minister might argue, as he did in his intervention, that we do not need the new clause. However, new clause 2 adds something that is distinctly absent from the Bill: the two words that were pointed out by my right hon. Friend the Member for North-West Hampshire (Sir G. Young)—"including broadband". This debate has shown not only that all Members on both sides of the House regard this as a crucial issue for their constituents—I can certainly reflect what my hon. Friend the Member for South-East Cambridgeshire (Mr. Paice) said about his constituency, which is precisely the position in my constituency of Ryedale. The real point, however, is that there is no specific reference to broadband in the Bill. We hammered away on that issue in Committee because it is a serious omission. The new clause gives the House the opportunity to correct that omission.

Does the hon. Gentleman not consider broadband to be a telecommunications technology?

Many of the definitions in the Bill include or omit certain phraseology. We spent a lot of time on Report last Tuesday discussing whether music formed part of local material.

That is an important issue.

It is important, as the hon. Gentleman says.

This debate has shown a growing sense among members of all parties that the provision of broadband is riot being taken seriously enough. It is therefore important to make a specific reference to it in the Bill as part of Ofcom's general duties. I will say no more than that, suffice it to say that anyone listening to this important part of our deliberations cannot have failed to notice that, no matter which constituency hon. Members represent or to which political party they belong, there is a sense that not enough is being done to ensure that broadband is made available to more and more of our constituents. The importance that hon. Members have put on this issue makes it inconceivable that the Government would want to resist such a new clause.

I want to deal with the issues raised by the Government's amendments—in particular Government amendment No. 215 to clause 3. Clause 3 sets out Ofcom's general duties, and the Government amendment alters the structure and emphasis of the clause in three important ways. I want to probe the Minister on the Government's thinking, and I would also like him to clarify some points.

The amendment will for the first time impose a principal duty on Ofcom. There were once four duties of equal weight, as given in clause 3(1). However, under the amendment, in addition to Ofcom's duty, in carrying out its functions,

"to further the interests of consumers in relevant markets, where appropriate by promoting competition",

Ofcom must now

"further the interests of the community as whole in relation to communications matters."

The new wording replaces three of the four duties in clause 3(1). Those duties were:

"to secure the optimal use for wireless telegraphy of the electromagnetic spectrum",

"to secure the availability … of a wide range of television and radio services"

and to secure the application of standards. Those three duties have been relegated to a proposed new subsection (1 A), which sets out the things that Ofcom is required to secure in carrying out its principal duty. That is a significant departure from the Government's policy up to today, which has been to resist the introduction of a principal duty.

In Committee, the Minister for Tourism, Film and Broadcasting reminded us that the Government's response to the Joint Committee's report stated:

"'We are sure that the Committee will recognise how important it is that the duties properly reflect the breadth of all OFCOM's responsibilities, both economic and cultural, and follow the proposition set out in the White Paper that each duty is of equal weight."

He also said:

"I strongly believe that we should give a clear signal that no single duty under subsection (1) is more important than another; they are all equally important."

He added:

"Subsection (6) expressly enables Ofcom to resolve the conflict between duties in the way that it believes to be the best. That leaves it in control of the situation."

He went on to say:

"The Government have looked long and hard at clause 3, because, like other hon. Members, we recognised that we needed to get it right, and I believe that we have."

Well, there we are—not any more. He has changed his mind. He continued:

"It covers the breadth of Ofcom's responsibilities and reflects its role as an economic and cultural regulator. I believe that, in respect of the principles on which it is based and its drafting, the clause works for Ofcom and its stakeholders."—[Official Report, Standing Committee E, 10 December 2002; c. 74–81.]

As we can see, the Government have radically changed their mind. The phrase

"the community as a whole in relation to communications matters"

adds a new and somewhat wider perspective to the principal duty than the reference only to consumers and competition. It is considerably different from the present wording of clause 3(1) and relegates certain specific considerations in relation to others that the Government have hitherto insisted were an integral part of their range of equal duties. Perhaps it is now a case of all duties being equal but some being more equal than others.

I am delighted that my hon. Friend has alluded to Orwell, because the Government have very much introduced a piece of Orwellian newspeak. Does my hon. Friend have any suspicion about the reason for this sudden volte-face from equal duties to one primary duty? Does he think by any chance that there has been huge influence from Europe and that the Minister's officials did not agree with what he said in Committee and have tried to change the Bill at the last minute in the House?

On this occasion, I cannot go with my hon. Friend's conspiracy theory. The matter was debated at length in Committee. My hon. Friend the Member for South Cambridgeshire (Mr. Lansley) sadly cannot be here for this debate, but he made several comments about the issues that we are discussing. My hon. Friend the Member for Surrey Heath (Mr. Hawkins) agrees with the rest of my hon. Friends to judge by their reaction to my remarks. They have grasped that this change at this very late stage radically alters the architecture of Ofcom's duties in a way that has far-reaching implications for the rest of the Bill.

The second issue that I want to raise is the new duty to maintain a plurality of providers of television and radio. We need clarification from the Minister of the words in Government amendment No. 251 that refer to

"the maintenance of a plurality of different television and radio services".

That concept has hitherto been excluded from the Bill, but the provision may have a considerable impact on the way in which Ofcom deals with proposed mergers and acquisitions in the sector. The Minister owes us a detailed explanation about how the duty relates to the Government's newly revised framework for media ownership and control.

In Committee, Conservative Members argued that there should be a greater reliance on competition and less reliance on rigid restrictions and limitations. Until today—I am assuming that the amendment will be accepted by the House—we had an underlying move towards greater reliance on competition but with specific limitations and restrictions in place. However, plurality and competition now conflict with the specific restrictions and limitations in the Bill.

We know that the Government have decided that Channel 3 will be allowed to merge into a single company subject to general competition law, and that is a big qualification particularly in respect of television advertising. However, subject to that, the company will be allowed to merge into a single company that is owned by a single person or single organisation. Strictly speaking, that will represent a reduction in the plurality of Channel 3 providers from two main providers, Carlton and Granada, to one, with the smaller providers—Ulster, Scottish Media Group, Channel Television and others—perhaps being subsumed. Who knows whether that will happen even if it is not the proposal now? The Minister must tell us what the proposed new duty for Ofcom would mean for such a process. Is it possible that such a merger would be, after investigation, acceptable in the eyes of the Office of Fair Trading, but then rejected by Ofcom under clause 1(3) on the basis that it reduces the plurality of television providers? That is an extremely important question.

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Other broadcasters have raised similar concerns. The Commercial Radio Association has asked what impact the provision will have on the three-year ownership review process by which the Government have placed such great store. What if a merger were to reduce plurality—that is, the number of different providers of radio and television services—but improve the quantity, quality or range of programme content? The inclusion of the new duty may encourage Ofcom to value plurality for its own sake and to temper the priority that it previously would have given to the availability throughout the UK of a wide range of television and radio services which, taken as a whole, are of high quality and calculated to appeal to a variety of tastes and interests, irrespective of the number of different providers.

Similar questions apply to other scenarios. A purchase by a channel 3 owner or Channel 5, as permitted under the Government's liberalisation and subject of course to competition law scrutiny, would further reduce plurality, as would mergers or purchases involving other providers such as Disney, Viacom or BSkyB. In all instances, even if concerns under competition law were satisfied, the new duty will mean that residual doubts and uncertainties remain. It could give Ofcom the power to veto an acquisition by adding another layer of regulation to an area in which the Government have decided to introduce a more liberal regime. That appears to be taking away with one hand what they have given with the other.

Thirdly, I turn to the new duty to secure the availability of a wide range of electronic communication services—another addition. It would be helpful if the Government could explain why they have seen fit, again at this late stage, to introduce that concept into this part of the Bill. Electronic communication services are one important element in a wide range of matters that Ofcom must deal with, but it is unclear why those services have been singled out for particular attention. To anticipate the kind of intervention that my hon. Friend the Member for Surrey Heath might have made had he not left the Chamber, where did that idea come from? I do not remember discussing it in Committee. It comes as a surprise to us that the Government have made these serious changes, which fundamentally alter the architecture of Ofcom's powers. The explanation in the Minster's letter fails to acknowledge the far-reaching nature of the amendments.

I want briefly to mention two or three other Government amendments. Amendment No. 217 deals with Ofcom's annual report, enabling Ofcom to explain how it has resolved any conflicts between its duties. We discussed that extensively in Committee, and the amendment is welcome.

Amendments Nos. 219 and 220 address matters that we raised in Committee. Amendment No. 219 deals with the problem that we identified concerning wording of the Bill that gold-plates some elements of the directive. Amendment No. 221 is one that I proposed in Committee to help to ensure that there is a real opportunity for self-regulation in advertising. I warmly welcome the fact that the Minister has on consideration accepted that amendment and proposes to include it in the Bill.

I am grateful to the hon. Member for South Suffolk (Mr. Yeo) for giving us the opportunity to discuss broadband. This is the best chance that we have had to deal specifically with Ofcom's role in relation to broadband. I want to pick up on some of the comments made by the hon. Member for South-East Cambridgeshire (Mr. Paice) and the right hon. Member for North-West Hampshire (Sir George Young), who conveniently covered all points of the compass between them, and the hon. Member for Ceredigion (Mr. Thomas). They raised important points about the way in which broadband is being rolled out. There is broad agreement on the general thrust of the new clause. However, I add a note of caution about the way in which the market mechanism and the regulation mechanism will work. The experience to date has been that the biggest advance in broadband roll-out occurred with BT's significant price drop on the wholesale cost of broadband services. That was in some doubt. Regulation rightly sets out that BT has a duty not to be involved in loss leading or to use its telephone customers to cross-subsidise its broadband customers. We could have a public policy objective of getting cheaper broadband services and a regulatory framework that dictates that the regulator must prevent that from happening. We have to be aware of the limits of the regulatory framework when it is applied in such a mechanistic way to determine what aspects of a service come from which pot.

The hon. Member for South Suffolk made some good suggestions and was right to mention the transparency of costs. It is important that we understand the cost issues on which Ofcom will make the rulings that were carried out by Oftel. The hon. Gentleman suggested that BT should publish advance plans on its roll-out scheme for enabling ADSL exchanges. It would help to have a public debate on those instead of micro-decisions in individual areas.

It seems that BT has realised that it is better to have 5 million wholesale broadband customers who buy their retail service from the likes of AOL and Freeserve, which have the reach to sell broadband nationally, rather than 500,000 broadband customers who buy both retail and wholesale from BT. Under the old model, BT wanted to maintain the complete value chain by offering retail broadband services. However, there has been a change in leadership and BT is trying to increase its wholesale customers. It has accepted that AOL and Freeserve, as retail customer-facing organisations, may leap over it in terms of numbers, but that is not a problem because BT will make money on the wholesale service.

A specific problem remains, however, with the two products that BT offers: BT Openworld, which is its ISP, and the BT broadband only service, commonly called the bare-wire service. I am sure that all hon. Members have received complaints about the confusion that that causes. There is a genuine consumer issue about BT selling two products that are both called broadband from BT. One is an ISP-based service that is comparable to a service provided by Demon, Freeserve or AOL; the other is not. We need to tidy that up. There are also concerns about the possibility of cross-promotion by BT. People who choose to take their broadband services from another supplier still have a BT line, and I question the appropriateness of BT making a hard sell for its own retail broadband service via the billing mechanism, for instance. I accept that there are regulations that are intended to prevent that from happening, but the industry still raises concerns about the possibility of cross-selling.

The right hon. Member for North-West Hampshire and the hon. Member for South-East Cambridgeshire mentioned the concerns of constituents who live just outside the footprint of the ADSL-enabled exchanges. There was a proposal to roll out broadband primarily by local loop unbundling in which other companies would be responsible for the infrastructure that would deliver the service the last few miles to people's houses. That fell down the list of priorities as the investment climate worsened and the ISPs did not have the cash to deliver the infrastructure. Many of them would now prefer BT to be responsible for all the infrastructure while they concentrate on retail services. However, local loop bypassing, which has a huge potential, is starting to take place, as we have heard, in the village of Bottisham. The hon. Member for South-East Cambridgeshire referred to the village of Milton outside Cambridge and the fact that Cambridge science park is located there. A large broadband pipe goes into the science park, so it is perfectly possible, as the hon. Gentleman started to say, for it to be made available to other people using wireless technologies. There are some great experiments going on. The Minister was at the ISPs' awards ceremony, where West Dorset Internet, a tiny ISP set up by Tim Snape, won an award as a broadband supplier. The company is extremely imaginative, and has come up with solutions using wireless technology to extend reach. In many areas, such solutions will be more attractive than satellite and other proposals.

However, there are questions about regulation that need to be answered. Do we create a climate that encourages or discourages experimentation? If somebody has a broadband connection in their premises, under their contract they are not allowed to extend it outside those premises. We may need new forms of contract that encourage community groups to enter a community broadband contract. They would pay a fair price for the pipe that goes into the community system, but they would be able to do imaginative community outreach work. The hon. Member for Ceredigion talked about the radio spectrum and later, if we have time, we will talk about recognised spectrum access. A key question about such access is whether people will want a wireless local network and whether it will interfere with satellite systems.

There are also questions about the spectrum sale, auctioning and licensing at the end of the spectrum, where people want to roll out local networks. Ofcom could have a significant role in creating the conditions for people to do more wireless networking or preventing them from doing so.

Can I just explore with the hon. Gentleman the difficulty associated with his proposal to aggregate demand at the end of a broadband connection? Such connections are supplied by telecommunications operators based on the nature of expected traffic. It is not expected that users will constantly demand data at the full rate capability of the link. Such traffic will come in bursts. As more users are hooked to the end of a single link, demand is aggregated and traffic becomes continuous, so there are more implications for telecommunications operators' back systems. They can offer product at £29.99 because most of us will demand data, perhaps in large volumes, only for short periods.

The hon. Gentleman is entirely right about the technical aspects, with which he is familiar. I am not suggesting that everyone who has a £30 a month connection should link their village into that single connection. I was trying to suggest that there is a role for new forms of fairly priced contract that allow 10, 15 or 20 users to hang off the end of a connection. Ofcom has a role in encouraging, rather than discouraging, the rollout of the technology. We should applaud the experimentalism of the DIY approach taken by some people such as the Bottisham villagers. We should not encourage people to breach contracts, but we should encourage new uses of the technology and the imaginative search for forms of contract that allow such uses.

However, if people come up with solutions, I fear that they may be knocked back and told by a telecommunications company, "You have to wait two years until we enable your exchange." If a solution is available today, people should be able to have it, because in the meantime they are missing out on huge opportunities. That is particularly true of local companies. The time taken by a local architect's business to upload and download technical drawings is a critical factor in its viability and competitiveness. If it can get quick access today, we should find a way of making that work, instead of being unimaginative and slowing things down.

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Finally, it is helpful that one of the amendments proposes that broadband should be written into the Bill. However, much of the work being done on broadband is taking place at a community level. The magazineComputing has set up a group with which I know the Minister is familiar and which is doing much good work. The broadband stakeholders group has been mentioned. The fact that a huge number of hon. Members have become engaged with technology issues through broadband because the public are asking us to be engaged in such issues means that the debate is far wider.

I hope that as well as thinking about the Ofcom context, the Minister will assure us that he is considering the wider context. I hope that he will continue the dialogue, which has been constructive to date, with the wider industry and will respond positively to imaginative solutions that will enable broadband rollout to occur much more quickly than would otherwise be the case.

I shall begin by speaking to the Government amendments. The Bill is a complex piece of legislation addressing individuals as citizens and as consumers. It is about Ofcom taking responsibility for economic and cultural matters. Ofcom's general duties are crucial to its work, so we have studied particularly carefully the wording of clause 3, how that works with other provisions in the Bill and how it will shape Ofcom's decision making. There was much discussion about that in Committee, there has been discussion in public consultation and it was a major theme of the pre-legislative scrutiny work. We have therefore decided to change the way in which clause 3 is structured to make the position clearer.

Amendment No. 215 and the consequential amendments Nos. 216 and 218 are intended to remove any lingering doubt that the Bill will deliver our policy commitment to safeguard and further the interests of consumers and of citizens. I am grateful to the hon. Members for Ceredigion (Mr. Thomas) and for North Devon (Nick Harvey) who welcomed that change, which makes the position entirely clear.

The amendment uses the expression "community as a whole" rather than "citizens'. There was some suspicion among Opposition Members that the terminology had come from Europe, but I can assure them that that is not the case. We have used the expression "community as a whole" because the word "citizens" in legislation has connotations of nationality, which is not what we want in this context. The new wording meets the concerns expressed by a number of people in the debate over the past few months.

The public policy interests are embedded in the legislation—for example, through the provisions on media literacy and the public service obligations. They are also inherent in the current drafting of clause 3, but we wanted to make the position more explicit. We have now achieved that. We want to be certain that in any circumstance Ofcom will be able to consider the interests of consumers and the wider community without being open to challenge.

The hon. Member for Ryedale (Mr. Greenway) commented on the plurality duty in subsection (1A). The media ownership rules in the Bill will ensure that there are a number of different providers of TV and radio services. The amendment will mean that Ofcom will take plurality as well as diversity into account in carrying out its functions, including reviewing the media ownership rules. That is the key significance of the amendment: it ensures that Ofcom will be able to consider plurality in reviewing the rules. The rules are clear, but because of the change, Ofcom will be able to take plurality into account. Those are significant changes. We already have a good Bill, but the amendments improve it.

Amendment No. 217 follows one proposed by the hon. Member for South Cambridgeshire (Mr. Lansley). We said in Committee that we would respond with an appropriate amendment and we have done so. Ofcom will have to make some complex decisions and reconcile tensions between its general duties. The amendment will require Ofcom to include in its annual report a summary of such cases where they are important. That will provide observers with a valuable understanding of how Ofcom's decision making has developed. It will not be unduly bureaucratic for Ofcom but it will help to ensure that it is open and transparent.

Amendments Nos. 219 and 220 to clause 4 again follow amendments proposed by the hon. Member for South Cambridgeshire in Committee. We accepted the principle of those amendments, which bring the sixth of the community obligations set out in the clause—the obligation to encourage standardisation—more precisely into line with the directive.

The hon. Member for Ryedale has already correctly claimed credit for inspiring Government amendment No. 221. I am glad that he has acknowledged that it meets his objectives.

The hon. Member for North Devon spoke to amendment No. 3 and welcomed Government amendment No. 215, which deals with the concern that underpinned that amendment.

On amendment No. 151, the creativity and innovation drive of individuals in the communications industry must be one of the reasons for its success. In telecommunications, television and radio, very able people are working in the UK. That is why we have some world-class businesses. As my hon. Friend the Member for Glasgow, Anniesland (John Robertson) pointed out, the Bill contains provisions relating to employment in broadcasting. Clauses 24 and 327 require Ofcom to promote training, equality of opportunity between men and women and persons of different racial groups and the fair treatment of disabled persons in relation to employment with broadcasters. Those provisions are important in terms of the particular structure of public service broadcasting and in supporting greater diversity in programme making. A particularly large number of freelancers work in the broadcasting industry and there is a need to sustain the level of necessary skills development.

Those are the particular circumstances in broadcasting that have led us to include those provisions in the Bill. We cannot extend them to the telecoms industry, not least because, under the regulatory regime permitted by the communications directives, Ofcom will not have power to impose any such obligations on communications providers. I am not suggesting that the position of telecommunications employees is not one of the most important issues for the industry—it clearly is. However, the responsibilities for employment rights and skills will rest not with Ofcom, but with other agencies and bodies.

I am grateful to my hon. Friends the Members for Glasgow, Anniesland and for Gloucester (Mr. Dhanda) for drawing attention to those concerns. I point out that e-skills UK, which covers IT, telecommunications and call centres, is in the final stages of its development phase to become a new sector skills council. A decision on its application will be considered very soon. It will be an employer-led body that will bring together employers, trade unions and professional bodies in working with the Government to develop the skills that UK business needs to drive productivity and competitiveness in this sector. The Government are very active in that area and my hon. Friends were right to draw attention to its importance. However, the solution rests not with Ofcom, but elsewhere.

For rather different reasons, I also oppose amendment No. 187, which was tabled by the hon. Member for North Devon. I do so not because I do not recognise the essential contribution of creators and performers in producing quality content—I certainly do—but because I believe that requiring Ofcom to consider them in carrying out all its functions would place their interests above the general public interest in high-quality content. That would be a mistake. Regulating for the quality of content will draw on the work of creators and performers for the benefit of viewers and listeners, whose interests must be to the fore.

Clause 257 requires Ofcom to review public service broadcasting, including the quality of programme making and the professional skill applied in making programmes. We are also safeguarding the amount of original production in UK television and strengthening the contribution of the independent productions sector. Those and other specific measures will be more effective and better targeted than the approach taken in amendment No. 187.

New clause 27 and amendments Nos. 188 and 189 propose to give creators a statutory role within Ofcom. Hon. Members who followed the debates in Committee will be aware that the Government are committed to giving Ofcom flexibility to organise itself in the way that best allows it to deliver the objectives that we are setting out in the Bill. We know from experience elsewhere that that flexibility is essential. We need to be careful not to over-specify the way in which Ofcom is organised.

The content board—xthe only element of the internal structure of Ofcom that is required under the Bill—isthere to represent the public interest in the content of broadcasting services. It is not there to represent the interests of any particular group in the industry. That is an important safeguard.

Amendment No. 189 specifies that Ofcom may authorise the establishment of a creators panel, but Ofcom already has the power to authorise the establishment of any committee to advise the content board, so the amendment is unnecessary, as is new clause 27, for the same reason.

Much of this interesting debate has been about new clause 2, which was moved by the hon. Member for South Suffolk (Mr. Yeo). The hon. Member for Ryedale assisted the House by pointing out that there is nothing in that new clause that is not already in the Bill, except for the specific reference to broadband. The Bill refers to promoting innovation and encouraging investment—broadband will certainly be the beneficiary of that—but it is important for it not only to address what is undoubtedly one of the most important topics that we face, but to make sense in 10, 20 or 30 years.

Extending the availability of broadband is one of our top priorities, and I welcome the fact that there has been so much interest in that during the debate. I also welcome the growing political pressure on broadband availability. Availability continues to grow, and the point has been made that about 67 per cent. of UK households can access a terrestrial broadband service. That was right about three months ago, but the figure had reached 71 per cent. and rising at the end of last year. It is clear that it will reach 80 per cent. over the next year or two, but the big challenge will be how to get from 80 per cent. to 90 per cent. and over. We are working on that energetically. The point was also made that there are 1.4 million broadband connections in the UK, but that number is increasing at more than 30,000 a week, so we are well beyond it now.

The right hon. Member for North-West Hampshire (Sir George Young) asked me some particular questions, and he has been corresponding with me on how public service broadband capability will be achieved. There is the commitment that every school in the country will have broadband by 2006. The capacity will be at least 2 megabytes per second for every primary school and 8 megabytes per second for secondary schools. Those rates will be available symmetrically, which means that the discussion goes beyond what ADSL can deliver at present.

It would not be sensible, however, for me to announce from the Dispatch Box precisely how that will be determined—how Overton primary school, for example, should be connected up. Equally, it would not be right for us to say to Overton primary school, "Go away and work it out for yourself." It is increasingly clear that we can make such decisions and plan a strategy for achieving public sector broadband connectivity right across a region.

There are already regional broadband consortiums in education and we are considering how to bring the health service into the aggregation arrangements at regional level. Although scepticism has regrettably been expressed from the Conservative Benches about the effectiveness of the regional development agencies, we are seeing in a growing number of RDAs some imaginative and effective initiatives that will deliver broadband connectivity in every area that we are considering.

The Government have the strategy of aggregation of Government broadband demand and a lot of faith is being placed in the fact that they have made the clear commitment that they will achieve a connection for Overton primary school, or wherever else, in the expectation that other people can work from it. Is the Minister confident that the combination of Treasury rules and the way in which Government have to tender for services will allow them to draw up contracts with added public benefit, or will the Government end up with tight contacts saying, "If you want the cheapest price, to Overton primary school and no further."?

I am confident that we will be able to achieve suitable contracts. There is work to be done, but we are doing that work and I am confident that we can deliver. Of course, the Prime Minister also articulated a commitment that every school would have internet access. We have delivered that commitment, and we will deliver this one as well.

The hon. Member for South-East Cambridgeshire made some interesting points about Bottisham, about which I have heard a good deal in the past couple of months. I regret that it was not possible to have the meeting envisaged—if I remember rightly, the e-envoy was due to visit in the autumn—but I welcome further discussion of what is happening there. Perhaps there might be a visit as well, at some point.

4.15 pm

There is much to be done, but I do not think we need to amend the Bill. I agree with what has been said about the importance of competition: we need competition to drive broadband into every part of the country, just as it has driven mobile communications into every part of the country. That is, of course, the basis of the Bill. The regulator will have all the powers that the hon. Gentleman advocated, as his colleagues who sat through the Committee stage will tell him: but we want the legislation to last, and I therefore think our current formula is right.

The hon. Member for Southport (Dr. Pugh) mentioned the severe problem of call centre queueing. Clause 124 allows Ofcom to act against any person who persistently misuses a network service to cause annoyance, inconvenience or anxiety, or increased blood pressure. The measure is aimed principally at those who make calls, but I suppose that in an extreme case consideration could be given to its use against a recipient such as a call centre. The hon. Gentleman's aspirations could be met by the Bill, although whether that will indeed be possible may be debated elsewhere.

This has been an excellent debate, whose breadth reflects that of the Bill itself.

I join my right hon. Friend the Member for North-West Hampshire (Sir George Young) in acknowledging the efforts made by BT over the last year to speed up access to broadband. Perhaps I did not make that clear earlier. My right hon. Friend spoke of the difficulties experienced by rural communities, and mentioned the Prime Minister's proposal to connect schools. The Minister seems unwilling, or possibly unable, to explain exactly how that will happen. I only hope that his confidence will be borne out in practice.

The constituency of my hon. Friend the Member for South-East Cambridgeshire (Mr. Paice) is not unlike my own. Its problems are typical of those in rural areas, and the prospects of any real progress are bleak for some of his constituents in the more remote villages.

The hon. Member for Ceredigion (Mr. Thomas), with whom I had the pleasure of visiting Caernarfon recently, described his frustration at the inadequate access to broadband in his constituency. I welcome his recognition that broadband is part of the infrastructure. I dare say his constituency is about as well served as mine by some of the transport infrastructure as well. Let us hope that broadband will not follow that model.

My hon. Friend the Member for Ryedale (Mr. Greenway) explained, I thought rather eloquently, why the new clause was necessary. I am sorry that the Minister did not entirely accept what he said. My hon. Friend made a number of powerful points about other issues, on which I will not comment except to say that I did not think all of them were dealt with adequately by the Minister.

I welcomed the support of the hon. Member for Sheffield, Hallam (Mr. Allan) for the new clause. I hope it will be reflected in the Lobby shortly. I particularly welcomed his recognition of the need for more transparency.

The Minister spoke of the continuing progress in extending broadband. I acknowledge that the figures are increasing more quickly than they were, but for many people that is not enough. Not even the promise of a visit from the Minister will satisfy all broadband users.