I move: "That the Bill be now read a Second Time."
I apologise that my officials have not arrived yet with the scripts but we thought this debate was to begin at 3.15 p.m. I am very pleased to be able to introduce the Communications Regulation Bill, 2002, to this House. I thank the Deputies, especially Deputy Jim Higgins and Deputy O'Shea – I am sure he does not know either that we are debating this now – for accommodating this important legislation following its successful passage through the Seanad. The main purposes of the Bill are to create a commission for communications regulation, to dissolve the Office of the Director of Telecommunications Regulation and transfer its functions to the commission, to strengthen the powers available to ensure that regulatory decisions are complied with and to provide for the improved management of public road openings for the purpose of laying telecommunications infrastructure.
Before going into the details of the Bill, I will give some background to the reasons for its introduction. The regulation of the communications sector involves a number of important tasks. A key role is to facilitate competition among operators but in a way that protects the public interest generally and also the interests of individual consumers. Another key role is to ensure that obligations imposed on operators in the public interest, such as universal service obligations, are complied with and that quality of service is assured. A further task is to manage and facilitate effective use of scarce and valuable resources, particularly the radio frequency spectrum. These tasks are important, not only because of the benefits they bring to consumers of communications services but also because of the wider importance of the communications sector to economic and social development as a whole. The communications sector has a major role in achieving the economic and social benefits that the information society will bring.
The electronic communications sector has been experiencing a period of unprecedented change. During the 1990s, developments in technology, the Internet and telecommunications services, together with 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. We have seen substantial investment in the sector. More recently we have seen a downturn in this investment and confidence in the commercial health of the sector has been severely dented. Despite this, realising the vision of the information society is a goal that we must pursue in the economic and social interests of the State.
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 the operators to obtain 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. I referred earlier to the role regulation plays in facilitating competition. Where there is effective competition among operators the sector will become stronger. This means that a number of operators will be competing against each other to win customers and meet their needs and that customers will be able to switch from one operator to another when they find a lower price available or better quality on offer.
The regulatory framework has an important role to play in making this happen. For example, operators need to have low barriers to entry to the market. They need the ability to get the facilities they need at wholesale level and at a reasonable price to 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. It is from that area that many of the ongoing rows, charges and counter-charges, cases and legal arguments spring.
There is a natural tendency for the major competitor to protect its own competitive position. One of the key roles for regulation of the electronic communications sector is to ensure fair competition among the operators in these circumstances. One can understand how this rivalry could come about – the main player in the market has seen its infrastructure build up over the years and it can find it difficult, despite European directives and instruments, to share in a competitive way with other people who wish to use that infrastructure so that, in turn, customers can get a better deal.
Why do we still need such regulation over three years after the full liberalisation of the sector? There are still such substantial differences in market power between operators that competition could be inhibited if there were no regulatory framework in place. Some operators continue to be in a dominant market position. Abuse of that dominant position needs to be prevented. While competition law and the powers of the Competition Authority are there to address abuses of a dominant market position, these powers are normally only invoked after there has been a claim or evidence of an abuse. The regulatory framework that we have for the electronic communications sector complements competition law by preventing abuse from happening in the first place. This 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, and prevention rather than cure is the way to achieve that.
Another reason we still need specific regulation of the communications sector is to protect the interests of users. We have moved relatively quickly from a monopoly to full liberalisation and competition. In the monopoly era the counterpart to the 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 is that in trying to address these threats the former monopoly operator could raise prices charged to vulnerable consumers who would not be able to find an alternative supplier at a lower price. However, it is the function of the regulatory framework to protect consumer interests in this area and this role continues, notwithstanding privatisation and liberalisation, and will continue.
The task of regulating the communications sector currently lies with the Director of Telecommunications Regulation. This post was created under the Telecommunications (Miscellaneous Provisions) Act, 1996. The functions of regulating the telecommunications sector and broadcasting transmission systems and managing the radio frequency spectrum were assigned to the Director of Telecommunications Regulation, Etain Doyle, and her office with effect from 30 June 1997. She has been there as long as I have been Minister and she may be there longer, depending on what the electorate says. 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 management of the radio frequency spectrum. The nature of these tasks is changing and they are in many respects becoming more complex.
This is not to say that the past five years in which the director and her office have been carrying out her functions have not been challenging. I pay tribute to the director and her staff for their achievements in meeting the various challenges they have encountered over that period. Among the challenges they have faced were the need to put in place all the necessary measures to enable the successful implementation of the full liberalisation of the telecommunications sector 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. Among the necessary measures were a licensing framework for new operators and establishment of the rights and obligations governing interconnection between Eircom's telecommunications network and the facilities of other operators.
In addition, the director established new licensing frameworks governing the transmission of television programmes by cable, MMDS and deflector systems and, in September 2000, took over functions in relation to the postal sector, in particular the supervision of the universal service obligation of An Post, including quality of service and tariffs.
I will now turn to the reasons we are proposing changes to structure for the regulation of the communications sector. With a number of regulatory bodies having been established to oversee activity in the energy, aviation transport and telecommunications sectors, I initiated a public consultation process on the governance and accountability of these bodies. In the main, that arose on foot of the many debates we had, when the select committee dealt with the Estimates each year, about the fact that there appeared to be a lack of accountability in the operations of Etain Doyle's office. This was not of Ms Doyle's doing. It arose by virtue of the fact that under the 1996 Act she was not obliged to act in an accountable manner. Members will recall that there was somewhat of a fracas at the time and she very nobly agreed – she was under no obligation to do so – to appear before the relevant committee. Since then proper reporting mechanisms have been in place.
There was also frequent informal debates about how we shifted from a position where the Minister was responsible – the Dáil has ultimate responsibility – to one where the powers were transferred to the regulator. We wondered if we were replacing a democratic process with a non-elective way of doing things where no one would have responsibility. The debate on this matter was always interesting and, having discussed it with my colleagues in Europe, I do not believe that any country has resolved it in a completely harmonious fashion. It would probably not be possible to do so.
The one thing of which I was sure on entering office was that the independence of the regulator would need to be protected. There could, therefore, be no stepping over the line. I was determined that this would be the case in all three areas: communications, energy and aviation. I do not believe in interfering in the work of regulators and I have not done so. If I may say so, with a little immodesty, it is somewhat of a credit to me and to our democratic system that we have quickly got to grips with the regulatory system. However, there is a need to shape that system to ensure the duties and rights of the Oireachtas and those of the regulator are clearly laid down.
The consultation process to which I referred earlier resulted in the publication of a policy paper in March 2000 entitled Governance and Accountability in the Regulatory Process: Policy Proposals. The paper, which is in line with the Government's commitment to regulatory reform, contains policy proposals forming the basis of my policy on the regulatory framework for the economic sectors coming within my ambit. Among the issues which I considered, taking into account the comments received in the public consultation, are the composition of regulatory authorities, the terms and conditions governing their appointment, their period of office, decision-making processes and 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 to which I refer.
With regard to the composition of regulatory authorities, I considered the relative merits and drawbacks 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 a regulatory authority are significant, both 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 nature of 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 primarily designed to manage the transition from monopoly to competition and was, therefore, focused on the creation of a competitive market and the rights of new entrants.
The market is 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 to bear the burden of making such decisions than an individual. This is no reflection on the excellent and most competent performance of Etain Doyle as director. I again acknowledge her achievements in the post and I welcome the fact that the Bill will enable her to complete her second term of office, bringing the benefit of her experience to the commission.
In respect of accountability, the transfer of regulatory functions from Ministers to independent statutory bodies requires that there be clear accountability mechanisms, without compromising, in any way, their functional independence. In relation to the Director of Telecommunications Regulation, a number of provisions to ensure appropriate accountability are in place, either in the existing legislation or through practice. However, the Bill proposes to formally put in place appropriate accountability mechanisms without, as I have said, compromising the functional 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. However, if there has been a downside it has been that the laying of new electronic communications infrastructure has required an unprecedented volume of road openings. Everyone is familiar with this problem, which has put an added strain on traffic in towns and cities. The Bill seeks to ensure that there will be minimum disruption to the public and the environment in the build-out of electronic communications infrastructure.
Under the Bill, local authorities will be given increased powers to co-ordinate and control road openings by telecommunications companies. The new commission will 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 continually open roads and lay their networks, and make it easier for both new and existing companies to install such infrastructure. This will I hope speed up the delivery of state-of-the-art electronic communications services which are essential for the development of the information society.
I am satisfied that the provisions of the Bill will create 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 public consultation on the proposals and has had substantial discussions, meetings and seminars with relevant Departments, interested parties and the public.
The Bill is separated into five main parts. Part 1 contains standard provisions covering the Short Title, interpretations, the 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 from the transformation of the Office of the Director of Telecommunications Regulation into the commission. Part 5 deals with road works.
The objectives of the commission in carrying out its functions are set out in section 12. This is a 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 1996 Act in relation to the radio frequency spectrum to enable policy directions to be issued also in relation to the electronic communications sector and the postal sector. In order not to compromise the functional independence of the commission, this power to issue directions is limited to issues of policy and must not relate to individual undertakings or persons. The section specifies that a direction may relate to the methods by which licences to use the radio frequency spectrum may be allocated. In addition, the Minister must publish the proposed direction not less than three weeks in advance of its issue and consider representations received.
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, namely, electronic communications providers and providers of postal services. A new provision enables early refund to the Exchequer of surplus income where, for example, highly valuable licences have been awarded.
Part 3, sections 40 to 47, inclusive, deals with the enforcement powers of the new commission. The Bill contains two provisions in particular, which will substantially enhance the enforcement of regulatory decisions compared with the current position. One of these new provisions is based on provisions contained in the Company Law Enforcement Act, 2001, and provides for the imposition of a fine of €1,000 in cases where the commission has reasonable ground for believing that a person has committed an offence under the provisions of a European directive. Where the person fails to pay the fine, the commission may proceed with prosecuting the offence in the courts where, I presume, the fines will be much greater.
The other new enforcement measure is section 46 which provides for prosecution on indictment for breaches of licence conditions, with a maximum fine of €4 million or 10% of the operator's turnover, whichever is the greater. This represents a substantial increase in the maximum penalty for a breach of a licence condition, which currently amounts to €1,900.
I am confident these provisions, which have given rise to vocal complaints, represent a significantly enhanced enforcement mechanism which will enable the new commission to enforce its regulatory decisions in today's rapidly evolving communications sector.
Part 5, sections 53 to 61, inclusive, provide for the reform of the legislative framework governing the 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. I am satisfied the Bill will seek to ensure that road authorities will be able to properly control access to public highways by telecommunications operators, without unduly inhibiting the installation of telecommunications infrastructure.
In order to encourage greater sharing of facilities among operators and thereby avoid unnecessary disruption, section 58 enables 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. The Bill now enables network operators to inform the commission of any negotiations on infrastructure they enter into and empowers the commission to intervene if agreement is not reached.
In conclusion, the communications sector is an important contributor to our objective of being at the vanguard of the information society and electronic commerce. In order to ensure 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. The 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.
I repeat what I said to Deputy O'Shea just before entering the Chamber. I am sure we will have a robust debate when we come to Committee Stage. It has not been my approach to curtail the debating time allocated to Bills, particularly with regard to the preparation and discussion of amendments. I am very conscious that, in the best interests of ensuring that this very necessary reform is passed, the Labour and Fine Gael Parties have made spokespersons available when the rest of the Chamber appears to be out on the highways and byways and I thank the Deputies present.