I am pleased to present the Communications Regulation (Amendment) Bill 2007 for the consideration of the House. This Bill is a key part of the Government's priority legislative programme and, when enacted, will greatly strengthen the power of the Commission for Communications Regulation, ComReg, to enable greater competition in the electronic communications market.
It is a result of consultation between officials of my Department, the Commission for Communications Regulation, the key market players and other stakeholders in the industry. Before going into the details of the Bill, I would first like to give Senators some background on the electronic communications sector in Ireland and the rationale for the Bill. The electronic communications market is of key importance to the national economy and is a significant factor in determining national economic competitiveness. It is estimated to account for over 3% of GNP, with total revenues for fixed, mobile and broadcasting markets now estimated at almost €4.5 billion per annum.
Creating an open and competitive market is the key challenge for the national regulatory authority, ComReg. The EU regulatory framework for the electronic communications sector, which is in place since 2003, is based on competition law principles. The framework was designed to reform the European regulatory structure for the sector in light of the experience of market liberalisation. It replaced the previous system of telecommunications licences with a new general authorisation system and changed the way the significant market power of operators was determined and regulated.
The regulatory framework aims to ensure fair competition between service-providers, some of which are dominant for historical infrastructural reasons and, as a result, enjoy a market advantage. Relevant remedies are applicable under the regulatory framework to stimulate competition and discourage the abuse of dominance, thus leading to a better range of competitively priced services for consumers. It is essential the framework be implemented in full in Ireland to realise the objective of promoting competition for the benefit of consumers.
ComReg primarily operates in a commercial environment where decisions in respect of operators can have a significant financial impact. In analysing telecommunications markets, ComReg has found significant market power in both fixed and mobile markets. Where dominance is found, ComReg is obliged to impose remedies to improve the competitive environment.
To encourage compliance among market players, especially the larger players, ComReg requires a suite of enforcement options ranging from minor sanctions for less serious breaches of the regulatory framework to more stringent sanctions for major breaches. Enforcement is a key element of effective regulation, and appropriate remedies and sanctions are vital to secure regulatory compliance.
It is in that context the enforcement proposals in the Communications Regulation (Amendment) Bill 2007 have been drafted. Both ComReg and the European Commission have cited the lack of strong enforcement measures as an obstacle to the implementation of the regulatory regime in Ireland. The primary purpose of the Bill before the House is to increase the enforcement powers of ComReg in order that it can better achieve its primary function, the promotion of competition in the market, thereby leading to better and more competitively priced electronic communications services for consumers.
Apart from the regulation of the market, the Bill also provides for the establishment of an emergency call answering service, ECAS, to be operated by a private sector undertaking. The ECAS is currently being provided by Eircom and funded from its own resources.
Eircom has approached the Department and has indicated that it is no longer minded to provide that service. It is proposed, therefore, that the service be provided by a new undertaking and funded by a fee per call, to be determined by ComReg and paid by public-access telecommunications providers that forward emergency calls to the centre. It is also proposed that ComReg monitor the quality of the service and report annually to the Minister on its operation.
The Bill also provides for the regulation of the .ie Internet domain name by ComReg. With the increasing importance of Internet addresses to economic activity, there is also an increasing need to ensure the operation of the .ie domain name is technically and operationally secure.
I now turn to the text of the Bill itself. As a detailed explanatory memorandum on the Bill has been published, I do not propose to go into the detail of the text but rather to highlight the main provisions of the Bill in the order they appear in the text.
The Bill is divided into four Parts. Part 1 contains standard preliminary provisions. Part 2 contains the main provisions giving additional functions and enforcement powers to ComReg. Part 3 amends the Electronic Commerce Act 2000 to provide for the regulation by ComReg of the .ie domain name. Part 4 of the Bill amends the Competition Act 2002 to give ComReg powers under that Act to investigate and prosecute offences such as the abuse of dominance.
In Part 1 of the Bill, section 5 amends the Communications Regulation Act 2002, hereafter referred to as the principal Act, to confer additional functions on ComReg. The following additional functions are included: monitoring the operation of the ECAS, to be established pursuant to section 17 of the Bill, to which I will return later; collecting and disseminating information from undertakings for the purpose of contributing to an open and competitive market, and for statistical purposes.
While ComReg has a variety of information-gathering powers under the regulatory framework, none of them clearly envisages their being used for general statistical purposes such as the compilation and publication of ComReg's quarterly key data reports on the Irish communications market. While most operators comply with ComReg's quarterly report data requests, the regrettable fact remains that some of the major operators either do not provide data for some quarters or fail to supply any of the data that ComReg requires.
There is also a lack of any express power in the various regulations implementing the regulatory framework for ComReg to collect data for the purpose of market analysis. That is a far from ideal situation, since the market analyses that ComReg conducts are the cornerstone of its regulatory function. Any regulatory intervention by ComReg in the market must be evidence-based. Such evidence must be reliable and thorough. In that regard, accurate statistical data are crucial. ComReg also has reporting obligations to the EU Commission and to the Central Statistics Office and supplies data from the quarterly reports to the OECD and the International Telecommunications Union on a voluntary basis.
Deficiencies or delays associated with the provision of information to ComReg have a direct effect on its ability to share information with other organisations. It should be noted that ComReg is mindful of the burden that data collection imposes on operators and has sought to assist operators by specifying particular data requirements that do not apply to them.
A third additional function conferred on ComReg by Section 5 is to carry out investigations on its own initiative. Currently, ComReg can carry out investigations only as a result of complaints from undertakings and consumers. This widening of its powers to carry out investigations into matters relating to the provision of electronic communications services, networks or associated facilities on its own initiative will increase its effectiveness as regulator of the industry.
Section 6 is a new provision that enables the Minister to obtain information from ComReg and undertakings that will assist him or her in formulating policies and plans to deal with network and security issues that may arise. Section 7 provides protection for whistleblowers who disclose appropriate information to ComReg. That provision will encourage employees of undertakings to report any wrongdoing to ComReg and conforms with Government policy to provide such protection in new legislation.
To improve the transparency of ComReg's operations to the industry and public, I have included new provisions under section 10 requiring it to prepare and publish, before the end of each financial year, annual plans and associated budgets setting out the principal activities that it proposes to undertake in the following year. It is reasonable that companies in the communications and postal sectors that fund ComReg's activities should have more information on how the levies paid to ComReg are spent. Those provisions will enhance the transparency of ComReg's operations.
Section 11 provides ComReg with the power to require persons to appear before it to give evidence or produce a document that relates to a matter concerning the performance or exercise of any of its functions or objectives. That power will assist ComReg in its investigative functions and will improve ComReg's ability to gather information on suspected breaches by operators of their obligations under the regulatory framework.
Under the principal Act, authorised officers have the power to enter, search and inspect premises and take copies of books, documents or records relating to the provision of electronic communications services, networks or associated facilities or postal services. That power, however, may not be appropriate in all circumstances. Many of the regulated firms are very large and occupy several sites. Without precise knowledge of what documents or files may be stored in a particular location, those search powers represent a blunt instrument. The power to require persons to appear before ComReg to produce evidence or documents would allow ComReg to place on the operator the onus of producing relevant documents and answering questions about them.
That power, which will substantially increase the effectiveness of ComReg's investigatory powers, is important in the context of proper enforcement and is based on a similar provision in the Competition Act 2002 that empowers the Competition Authority to summons witnesses to attend before it.
Section 14 introduces a new offence of overcharging by an undertaking. The current regulatory framework provides ComReg with powers regarding consumer protection but does not specifically allow ComReg to investigate overcharging. The Director of Consumer Affairs has the primary role in consumer protection, but given ComReg's overarching regulatory remit for electronic communications, I consider it appropriate to extend ComReg's consumer protection role to include powers to allow the specific investigation of overcharging. Previous incidents of overcharging by operators highlighted ComReg's absence of powers to intervene in such matters. The provision will rectify that situation.
Any investigation of suspected overcharging under this section may, if ComReg considers it necessary, include an audit of an undertaking's billing system to ensure its accuracy and to determine whether the overcharging arises from a system failure or from one-off or other factors.
The current regulatory framework under which ComReg operates was transposed into Irish law by regulations made under the European Communities Act 1972. Section 3 of that Act prohibits the creation of indictable offences. Accordingly, the current regime only provides for summary offences with a maximum fine of €3,000 and the option of civil proceedings for non-compliance with obligations under the regulatory framework.
Section 15 of the Bill provides a mechanism to enable me to create indictable offences for the purpose of ensuring that penalties in respect of certain serious breaches of obligations are effective and proportionate and have a deterrent effect. As I already stated, enforcement is a key element of effective regulation and appropriate remedies and sanctions are vital to secure regulatory compliance.
In reports on the Implementation of the EU Telecommunication Regulatory Package, the European Commission has found that effective competition is often precluded by the lack of enforcement of national regulatory authorities' decisions. In particular, in its 11th report published in February 2006, it identified the limitations of the power of the Irish national regulatory authority, ComReg, to enforce decisions as an obstacle to the further development of competition in the fixed and broadband markets. Where a national regulatory authority has strong powers of enforcement, this of itself encourages operators to comply with their legal obligations.
I am also making provision in section 15 on civil and criminal proceedings on the admissibility of expert evidence, the provision of documents to juries, presumptions as to the authenticity of certain documents and the admissibility of statements contained in certain documents. These provisions are based on similar provisions in the Competition Act 2002. As in competition law, legal proceedings relating to the electronic communications regulatory framework can be technical, specialised and complex and these provisions will facilitate the effective administration of such proceedings.
Section 16 provides for an amendment to section 57 of the principal Act, which provides for physical infrastructure sharing by infrastructure providers. Currently, where agreement cannot be reached on physical infrastructure sharing, ComReg can intervene to ensure access to the operator who requests it. However, sharing can only be enforced by ComReg against operators through conditions attached to their authorisations.
Some physical infrastructure providers, such as property developers, who are not subject to an authorisation, have entered into exclusive contracts with only one operator to provide electronic communications services to the occupiers of new developments, thus denying other operators the opportunity to provide a service. In such situations, ComReg cannot ensure access to other operators. In some cases the universal service provider — in this case Eircom — cannot gain access to provide a service which it is obliged to do under the universal service regulations.
The amendment to section 57 will enable ComReg to enforce access to physical infrastructure against operators and other infrastructure providers by way of an application to the High Court for a compliance order with a decision made by it in any dispute on sharing. ComReg may also apply to the court for an order directing the respondent to pay to ComReg a financial penalty of such amount as is proposed by ComReg having regard to the circumstances of the non-compliance. The effect of this provision should be increased competition between operators, more choice for the consumer and lower prices for services.
Section 17 inserts a new Part 6 into the principal Act that provides for me as the Minister to enter into a contract with an undertaking for the provision of an emergency call answering service. This section also provides for ComReg to regulate the price the undertaking shall charge for the handling of emergency calls. It also provides for a payment regime where the undertaking shall charge the operator who forwards emergency calls on a per call basis.
Part 3 amends the Electronic Commerce Act 2000 to provide for the regulation of the .ie domain by ComReg. It provides for the powers given to me as Minister, pursuant to the Electronic Commerce Act, to be transferred to ComReg. This Part also provides ComReg with powers to designate an interim authority and to have access to the registry files to ensure that the functioning of the .ie Internet domain name is secure at all times.
At the National Telecoms Summit in April of last year, I announced that I proposed to give ComReg competition law powers in an attempt to improve the competitive environment in the broadband sector. In order to improve access and services in this sector, full local loop unbundling is essential. It increases competition, innovation and choice on the DSL network for consumers. It is also a legal requirement under the EU regulatory framework. Without it Ireland will never reach its potential.
Part 4 amends the Competition Act 2002 to provide ComReg with the same power that the Competition Authority has under that Act, to investigate and prosecute breaches of sections 4 and 5 of the Act relating to restrictive agreements and practices and abuse of a dominant position — but only in the communications sector. These powers are similar to those which the UK regulatory authority has in the telecommunications sector and which have proven effective in opening up the broadband market in the UK. Strong powers to prosecute specific anti-competitive behaviour are needed in order to encourage compliance among market players, especially the larger players.
The Competition Authority is the national agency responsible for enforcing Irish and European competition law. However, given ComReg's detailed sector specific knowledge of the dynamic and rapidly changing electronic communications sector, the Minister, Deputy Noel Dempsey has decided, in agreement with my colleague the Minister for Enterprise, Trade and Employment, that ComReg be given similar powers of investigation and prosecution as the Competition Authority has under Part 2 of the Competition Act 2002. Such powers will only apply to suspected instances of anti-competitive agreements, decisions and concerted practices and abuse of dominance in the electronic communications sector. These powers will significantly enhance ComReg's powers to enforce the competition law principles on which the EU regulatory framework is based. I am confident that they will strengthen ComReg's ability to open up the broadband market to more market players and I look forward to an increase in broadband penetration throughout the country as a result.
This Bill is an important measure in contributing to a fully open and competitive electronic communications market in Ireland. The proposals it contains are measured and proportionate responses to the challenges facing the Commission for Communications Regulation in meeting its mandate. They do not radically change ComReg's enforcement functions, but merely enhance and strengthen them within the existing framework. Unless ComReg's decisions can be adequately enforced, its overall competence to carry out its functions is restricted. As I stated in my opening remarks, enforcement is a key element of effective regulation and appropriate remedies and sanctions are vital to secure regulatory compliance.
I am confident that the strengthened enforcement powers being made available to ComReg will result in improved services and more choice for the consumer, particularly in the broadband market, and will provide the regulatory certainty to encourage more players to enter the market. Operators will also benefit from a growing market and compliant operators will have nothing to fear from the proposals contained in this Bill. At the end of the day, however, it will be the individual consumer, the business sector and the wider economy that will benefit from increased competition and a broader range of services, and that is the ultimate aim of this important Bill.
Apart from some amendments of a technical legal nature that are being examined in conjunction with the Attorney General's office, I do not intend to introduce any substantive amendments to the Bill on Committee Stage. I look forward to hearing the views of the Members of this House on the Bill and their assistance in facilitating its early passage into law. I commend the Bill to the House.