I am pleased to introduce the Communications Regulation Bill, 2002, to the House.
The main purposes of the Bill are to create a commission for communications regulations; to dissolve the Office of the Director of Telecommunications Regulation and transfer its functions to the commission; to increase substantially penalties for breaches of licence conditions by operators; and to provide for the improved management of public road openings for the purpose of laying telecommunications infrastructure.
Before dealing with the details of the Bill I will outline the reasons for its introduction. The electronic communications sector has been experiencing a period of unprecedented change. During the 1990s, developments in technology, the Internet and in telecommunications services, as well as market liberalisation, enhanced the importance of the sector for economic and social development. The realisation that the sector was an indispensable building block for the development of the information society meant that it became an issue of public policy as well as a commercial opportunity. There has been substantial investment in the sector and, more recently, there has been a downturn in this investment. Confidence in the commercial health of the sector has been severely dented, but work on realising the vision of the information society must continue.
The electronic communications sector remains an important building block for the development of the information society. We need a communications sector which provides competitively priced products and services to all consumers. This should be done in a way that enables operators to make a reasonable return on their investment so that they can continue to invest in the sector. They must continue to find new ways of meeting the needs of consumers in a cost effective way. The best way to achieve a vibrant electronic communication sector like this is to have effective competition among operators. This is a situation where a number of operators are competing against each other to win customers and meet their needs and where customers can switch from one operator to another when they find a lower price available or better quality on offer.
The regulatory framework under which operators carry out their business has an important role to play in making this happen. For example, operators need to have low barriers to enter the market, such as the easy ability to get the facilities they need at wholesale level at a reasonable price to enable them offer services at retail level. However, the reality can be different. It is a feature of the electronic communications sector that operators need to obtain facilities from their major competitor to compete against that competitor. There is a natural tendency, therefore, for the major competitor to protect its own competitive situation. One of the key roles for regulation of the electronic communications sector is to ensure fair competition among the operators in this situation.
It may be asked why we still need such regulation over three years after full liberalisation of the sector. The reason is that there are still substantial differences in market power between operators and competition could be inhibited if there was no regulatory framework in place. Some operators continue to be dominant and abuse of that dominant position needs to be prevented. While competition laws and the powers of the Competition Authority are in place to address abuses of a dominant market position, those powers are normally invoked only after there has been a claim or evidence of an abuse. The regulatory framework for the electronic communications sector complements existing competition law by preventing abuse from happening in the first place. It is a valuable tool in a sector such as communications, where time is important. We all want to see the benefits of competition and the development of vibrant information society services sooner rather than later.
Another reason we still need specific regulation is to protect the interests of users. We have moved relatively quickly from a situation of monopoly to full liberalisation and competition. In the monopoly era the counterpart to the existing exclusive privilege of providing telecommunications services was the obligation to meet the reasonable needs of all users in the country, wherever located, at an affordable price. A concern that may be expressed is that new operators may take customers from the former monopoly operator in low cost areas, leaving the former monopoly operator to supply customers in the high cost areas. A related concern expressed has been that in trying to address those threats, the former monopoly operator would raise prices charged to vulnerable consumers, who therefore would not be able to find an alternative supplier at a cheaper price. However, it is the function of the regulatory framework to protect consumer interests in this area and, notwithstanding privatisation and liberalisation, this role will continue.
The task of regulating the communications sector lies with the Director of Telecommunications Regulation, Etain Doyle. I took up office on Thursday, 26 June 1997 and on Monday, 1 July 1997, she took up her post, for which she had been interviewed some months earlier. We were both new to our job and we have fared differently. It has been an interesting time for us both. Whatever else might be said, there is a telecommunications regulator, an aviation regulator and an electricity regulator. I have one philosophy for regulators: leave them alone and they will leave you alone. That is the way business can be done. It is meant to be done independently. It is not meant to be done on the basis where the political or administrative head can decide, at random, to run riot through the regulator's activities and pick and choose those in which he or she wishes to become involved.
Without having met the communications regulator I decided that, if a regulator has been established by law to act independently, then independent he or she should be and there should be no interference in his or her work. However, the burden of work is too much for one person. Ms Doyle has managed it expertly over the past five years but from now there will be three regulators operating under the umbrella of the commission. That is a good thing.
The functions of regulating the telecommunications sector, broadcasting transmission systems and managing the radio frequency spectrum were assigned to the Director of Telecommunications Regulation with effect from 30 June 1997. The functions of the office now encompass three areas: regulation of the electronic communications sector, encompassing both telecommunications and broadcasting transmission systems; regulation of the postal sector; and the management of the radio frequency spectrum.
The past five years in which the director and her office have carried out their functions have been challenging and I pay tribute to her and her staff for their achievements over that period. The challenges they have faced included the need to put in place all of the necessary measures to enable the successful implementation of full liberalisation from 1 December 1998, following my decision to bring forward the ending of the derogation on full liberalisation from 1 January 2000 to 1 December 1998. The measures which it was necessary to put in place included a licensing framework for new operators, an equitable telephone numbering system and the rights and obligations governing interconnection between Eircom's telecommunications network and the facilities of other operators.
I now turn to the reasons why we are proposing changes to the structure for the regulation of the communications sector. I initiated a consultation process that resulted in the publication of a paper in March 2000, Governance and Accountability in the Regulatory Process: Policy Proposals. Among the issues which I have considered, taking into account the comments received in the public consultation, are the composition of reglatory authorities, the terms and conditions governing their appointment, their period of office, decision making processes and the financial and functional accountability of regulatory authorities to the Oireachtas, the Minister and the public. The Bill provides for the implementation of proposals contained in the policy document.
Regarding the composition of regulatory authorities, I considered the relative merits and draw backs of an individual regulator and regulatory board and decided that, as a general rule, a regulatory authority should comprise three members. As stated in the governance and accountability policy document, many of the decisions to be made by the regulatory authority are significant for those involved in the regulated industries and for the economy as a whole. This is particularly the case in relation to the communications sector, where there has been a substantial growth in the regulatory workload and the tasks and rulings which have to be implemented have become increasingly complex and qualitative.
The existing legislative framework for telecommunications, which is based on European law, was designed primarily to manage the transition from monopoly to competition. Therefore, it was focused on the creation of a competitive market and the rights of new entrants. The market is now changing with ever-increasing speed in terms of market developments, in particular the convergence between telecommunications, broadcasting and IT sectors, evolution in technology and changes in user demand. The balancing of different interests, not only among industry players and between the industry and consumers, but also between the short-term and long-term economic and social interests of the State often requires that difficult judgment calls have to be made. A three-person commission would be in a better position than an individual to bear the burden of making such decisions.
This is no reflection on the performance of Etain Doyle as director. Again, I wish to acknowledge her achievements and welcome the fact that this Bill enables her to complete her term of office as a commissioner, bringing the benefit of her experience to the commission.
Regarding accountability, the transfer of regulatory functions from Ministers to independent statutory bodies requires that there be clear accountability mechanisms, without compromising their functional independence. In relation to the Director of Telecommunications Regulation, a number of provisions ensures appropriate accountability is in place, either in the existing legislation or through practice. This Bill proposes formally to put in place appropriate accountability mechanisms without compromising the independence of the commission.
Apart from reforming the organisational structure for the regulation of communications the Bill provides for the reform of the framework governing access to public roads for the construction of telecommunications networks. The growth of the electronic communications sector in recent years is one of the great success stories of the economy. If there has been one down side to this phenomenal growth, it has been that the laying of new electronic communications infrastructure has required an unprecedented volume of road openings. This has placed additional strain on traffic in towns and cities.
The Bill seeks to ensure that there is minimum disruption to the public and the environment dur ing the building of electronic communications infrastructure. Local authorities will be given increased powers to co-ordinate and control road openings by telecommunications companies. The new commission will also be able to bring about agreements on the sharing of electronic communications infrastructure and impose conditions on sharing agreements.
The sharing of electronic communications infrastructure will reduce the need for companies to open roads and lay their networks, making it much easier for new and existing companies to install such infrastructure. This should enable the delivery of state-of-the-art electronic communications services which are essential for the development of the information society.
Following a review of the provisions of the general scheme of the Bill and conscious of the necessity to focus on the key provisions to be enacted in the limited Oireachtas time available, I decided that some of its provisions can be more appropriately progressed through alternative legislative means. Accordingly, some provisions in the general scheme have not been included in the text of the Bill as published. The provisions relate to control of market power, appeals against regulatory decisions, certain provisions relating to the management of the radio frequency and telecommunications fraud.
Regarding the control of market power of electronic communications operators, these provisions are covered by the new European regulatory framework for the electronic communications sector, which consists of a package of five European Parliament and Council Directives as well as a decision. Four of the directives and the decision were adopted recently and the fifth directive is expected to be adopted later this year. These provisions will be transposed into Irish law by means of regulations under the European Communities Acts.
Regarding appeals against decisions made by the proposed commission, the advice of the Office of the Parliamentary Counsel to the Government was that there were legal policy difficulties involved in the insertion into the Bill of a single procedure for appeals against regulatory decisions. Related appeals processes are set out in various pieces of primary and secondary legislation. As many of these decision-making powers will be revised in the transposition of the new directives into Irish law by means of regulations to be made under the European Communities Acts, the transposition will provide the opportunity to put in place a consistent and appropriate appeals process. In the meantime, the rights of appeal to the courts as set out in the existing legislation apply.
Certain provisions relating to management of the radio frequency spectrum will be dealt with in a separate Bill to reform the Wireless Telegraphy Acts, the preparation of which is under way within my Department. In relation to telecommunications fraud, I believe that the provisions of the Criminal Justice (Theft and Fraud Offences) Act, 2001, will largely cater for the type of conduct which the general scheme sought to prevent.
Regarding the remaining provisions of the general scheme which are now included in the Bill as published, the main changes made relate to the enforcement provisions. I understand that substantial constitutional and legal policy issues arise from the measures proposed in the general scheme to enhance the ability of the commission to enforce regulatory decisions. One of the main legislative provisions for enforcement is the creation of offences with the power to prosecute on a summary basis given to the statutory body concerned. The maximum penalty for breach of a summary offence can be quite small. Substantial penalties can be imposed where indictable offences are created but only the Director of Public Prosecutions may initiate proceedings for breach of indictable offences.
Many of the offences applicable in the communications sector derive from regulations made under the European Communities Acts, transposing European directives into Irish law. Only summary offences can be created in regulations under the European Communities Acts. We considered whether this Bill could create indictable offences for breaches of obligations already specified in separate regulations but we were advised that such a provision would require substantial legal analysis by the Attorney General. Accordingly, it was not open for me to proceed at that time with some of the enforcement measures proposed in the general scheme. However, as previously indicated, the Bill does include a provision enabling prosecution on indictment of breaches of licence conditions, with a maximum fine of €1,000,000.
Since publication of the Bill, my Department has had further discussions with the Office of the Parliamentary Counsel and as a result I hope to move some amendments on Committee Stage which will advance the position regarding enforcement. In addition, my Department will, in consultation with the Attorney General's office, review the general question of enforcement in the light of the new regulatory framework for electronic communications to be laid down in accordance with the new directives.
I am confident that the provisions of the Bill give a sound economic and regulatory framework within which the commission will work. In framing the legislation and in line with the requirements for introducing new statutory measures, my Department carried out a public consultation on the proposals and has had substantial discussions with interested parties and with relevant Government Departments.
The Bill is separated into five main parts. Part I contains standard provisions covering the Short Title, interpretations, laying of orders and regulations before both Houses, etc. Part 2 deals with the establishment of the Commission for Communications Regulation. Part 3 details the enforcement provisions applicable to the new commission. Part 4 deals with transitional provisions arising out of the transformation of the Office of the Director of Telecommunications Regulation into the Commission for Communications Regulation. Part 5 caters for electronic communications infrastructure, road works and sharing.
Part 1 contains standard provisions in relation to the Short Title of the Bill, the interpretation of words and phrases used, procedures for laying orders and regulations before the Houses of the Oireachtas, the establishment day and the usual provision for expenses.
Part 2, sections 6 to 39, contains sections directly related to the establishment of the Commission for Communications Regulation and are similar to many found in other legislation establishing such regulatory bodies. There are provisions dealing with the transfer of functions from the director to the new commission, annual reports and accounts and the format of such accounts, the manner in which commissioners are appointed, as well as the chairman and staff of the commission. There is provision for the commission to account for its activities if called before a committee of one or both Houses of the Oireachtas and a proposed requirement for the commission to produce regular strategy statements in addition to a code of financial management.
The functions of the commission are set out in section 10. These are: to ensure compliance by undertakings with obligations in relation to the supply of and access to electronic communications services, networks and associated facilities; to manage the radio frequency spectrum; to ensure compliance by providers of postal services with relevant obligations; to investigate complaints regarding the supply of and access to electronic communications services and networks; and to ensure compliance in relation to the placing on the market of telecommunications equipment.
Section 12 sets out the objectives of the commission in carrying out its functions. This is an important new provision, setting out in legislation the key principles to guide the commission in its activities. Section 13 is another important provision, enabling the Minister to issue policy directions to the commission. This provision extends the scope of an existing power in the Telecommunications (Miscellaneous Provisions) Act, 1996, in relation to the radio frequency spectrum to enable policy directions to be issued in relation to the electronic communications sector and the postal sector. In order that the functional independence of the commission is not compromised, this power to issue directions is limited to issues of policy and must not relate to individual undertakings or persons. In addition, the Minister must publish the proposed direction not less than three weeks in advance.
Provisions in relation to the composition of the commission, its chairperson and its staff are dealt with in sections 14 to 27. These provisions follow recently enacted legislation establishing similar regulatory bodies. Section 20 allows the commission to appoint staff and provides for the transfer of staff of the director to the commission. Sections 26 and 27 allow for the creation of superannuation schemes for both members and staff of the commission to be agreed by the Minister with the consent of the Minister for Finance in line with the normal rules for these matters.
Sections 28 to 30 provide for the resources and revenues of the commission. The Minister may make advances to the commission and the commission may also borrow money subject to the consent of the Minister and the Minister for Finance. The main provision in relation to funding is the commission's power to impose a levy on the regulated entities, that is, electronic communications providers and providers of postal services. Provision also exists for the treatment of surplus income from year to year.
Section 35 provides for co-operation mechanisms in respect of the consideration of any matter which should be regulated by both the commission and the Competition Authority. The provisions in this regard are consistent with the recommendations set out in Governance and Accountability in the Regulatory Process. In view of the fact that similar provisions in relation to co-operation between the Competition Authority and statutory bodies are contained in the Competition Bill, 2001, I am considering whether section 35 of the Bill should be dropped.
Section 36 provides for the commission to take over responsibility for drawing up and maintaining the radio frequency plan which has heretofore been the responsibility of the director. Section 37 provides that the Minister may specify public service requirements in relation to certain types of licences or authorisations. This is a re-enactment of a provision contained in the 1996 Act.
Part 3, sections 40 to 47, deals with the enforcement powers of the new commission. In addition to the usual provisions relating to authorised officers, section 46 provides for prosecution on indictment for breaches of licence conditions, with a maximum fine of €1,000,000, increased from £1,500. Furthermore, section 47 provides for a maximum fine of €1,000,000 to be imposed on a person in breach of the price cap provisions of the Telecommunications (Miscellaneous Provisions) Act, 1996. As I mentioned before, I hope to table some amendments on Committee Stage which will advance the position regarding enforcement.
Part 4, sections 48 to 52, inclusive, contains standard transitional provisions relating to the transfer of property and liabilities of the director to the commission, the preservation of certain continuing contracts, the adaptation of certain documents, the continuation of certain matters by the commission and pending legal proceedings.
Part 5, sections 53 to 61, inclusive, provides for the reform of the legislative framework governing opening of public roads by telecommunications operators. In particular, section 54 provides that operators will be required to obtain the consent of local authorities which are responsible for roads in their areas before opening public roads to lay telecommunications networks.
Section 58 provides for the new commission to bring about agreements on the sharing of electronic communications infrastructure and to impose conditions in sharing agreements. Currently the director may only intervene in sharing negotiations at the request of one of the parties. This Bill enables network operators to inform the commission of any negotiations on infrastructure they enter into and it empowers the commission to intervene if agreement is not reached. I am confident the Bill will seek to ensure that road authorities will be able properly to control access to public highways by telecommunications operators without unduly inhibiting the installation of telecommunications infrastructure around the country.
The communications sector is an important contributor to Ireland's objective of being at the vanguard of the information society and electronic commerce. In order to ensure that we have an efficient and effective communications sector we need to have a regulatory framework for the sector which will maximise effective competition in the shortest possible timeframe. This Bill will set out a clear accountability framework for the new body in relation to Government, the Oireachtas, industry and the public. The framework for consents by road authorities set out in the Bill should provide for clarity and fairness as well as a consistent approach throughout the country. I therefore ask the House to facilitate the early passage of this Bill into law. I commend the Bill to the House.
