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Digital Economy Bill [HL]

My Lords, when we talk about the digital economy, we are talking about every business that runs a website or transfers data digitally; every firm that sells goods online or whose creative or intellectual property is represented by digital content; and every business that enables these business models to exist. The Digital Britain White Paper set out our plans to upgrade the UK’s legal and physical digital landscape. Digital Britain includes plans, which are already being implemented, to ensure the availability of broadband to practically every home and business in the UK. The Bill is an important part of the wider Digital Britain agenda. It is a broad legislative agenda that stretches from new rules that for the first time make it an offence to sell 12-rated video games to children under 12, to a strong new commitment to public service news. I do not aim to be comprehensive or to touch on every aspect of the Bill today. I will focus on three key things: where the Bill takes us in modernising our digital infrastructure, in particular charging Ofcom to create new capacity for radio and mobile telephony and internet services; the measures that we propose here to update our copyright regime for a world in which we use digital content in radically new ways; and, finally, how we will protect and strengthen public service content both nationally and locally. I stress that the Bill and the wider Digital Britain agenda are about adapting our infrastructure, our copyright laws, our support for public service media content and the regulator that oversees all these things to quite revolutionary technological change. At the heart of what we are discussing today are the British creative and communications industries, which produce £125 billion a year and employ just fewer than 2 million people. Vital as they are, the Bill is not just about the communications and the creative industries; it is about the wider legal frameworks and infrastructure of an entire knowledge economy. It is therefore about future readiness in the economy, competitiveness and growth. A digital economy, just like any other economy, is built on infrastructure. We think of infrastructure as tying two places together across distance, but the digital economy collapses distance into nothing. Its infrastructure is more about spectrum, speed and capacity than geography, but, just like any infrastructure, it has to be in place for innovation and growth to happen. For that reason, the Bill creates a new obligation on Ofcom to report every two years on the state of Britain’s communications infrastructure. It also requires that Ofcom adapts its principal focus on promoting competition and the interests of citizens to the need to promote investment in infrastructure in the UK. The short-term goal of lowering prices for consumers has to be balanced with the necessary long-term goal of constant investment in the network itself. The Bill makes changes that will support the recommendations of the independent spectrum broker that we will implement to ensure that we have the mobile network capacity that we need. This will include arrangements for applying new pricing arrangements to already auctioned spectrum to make sure that it is used as efficiently as possible. We have also set out our vision for the future of digital radio, which will see the country shift to digital, when transmission coverage and audience numbers are wide enough, by the end of 2015. The Bill also represents a major evolution in our copyright system in Britain. That shift is a reflection of the unique challenge that digital content poses to industries whose survival depends on protecting content and rewarding creativity. I recognise that this House is probably the one place in Britain where peer-to-peer file-sharing is associated more with passing notes in the Lords’ tea room than with piracy, but, joking aside, this is a major problem for Britain’s creative industries. Our copyright regime is 300 years old this year, which means that our copyright infringement problem is also 300 years old. But the dimensions of the problem have been exponentially changed by digital technology. The ease with which data can be transferred and shared is the most powerful transformative force in the digital economy. For creative businesses, it is also its Achilles heel. An effective copyright strategy for the digital economy has to do a number of things. It has to make a compelling case, an educative one, to an internet-literate generation that protecting the creativity it enjoys means rewarding creativity, and that means protecting copyright. But it also means recognising that copyright infringement is the market’s way of telling us that we need to develop new business models that make digital content legally available at reasonable prices. This is a market challenge for content providers who need to reconnect with their customers. But this does not replace the need for government and for the law to protect the rights of content holders, so we are creating two new obligations on internet service providers: first, to send letters to their subscribers linked with an alleged online copyright infringement; and secondly, to record the number of these notifications with which each subscriber is associated, and to provide anonymised lists to copyright owners on request. This allows copyright owners to apply for a court order to get access to the names and addresses of serious infringers and target legal action. If, following a period of assessment, such warnings are not deterrent enough, we are also proposing a reserve power for the Secretary of State by secondary legislation to direct ISPs to impose technical measures and for Ofcom to consult on a code to regulate this obligation. The measures could include temporary account suspension and would be targeted only against the most serious infringers. These tougher technical measures will be exceptional and a last resort. Our central goal is for users to reconnect to a legitimate market for this content, not disconnect from it. Infringers would have clear and ample warning of the risks they appear to be taking and will have been advised clearly on how to access material legally. There would be a clear and independent route of appeal, including to a first tier tribunal. I realise that people expect these measures to be proportionate—and they are. ISPs already have and use the power to disconnect in appropriate circumstances. Critics have suggested that this policy focuses on coercion, but that is quite wrong. We are clear that there is a primary role for education about the value of copyright, and a very clear obligation on the creative industries to get their act together and build business models that provide access to content at a cost that makes the risk of breaking the law an unattractive option. But I do not accept that the difficulty of defending creative content from piracy in a digital economy should become an argument for not even trying. There will be no creative economy if we cannot preserve the value of creativity by protecting what it produces. To reflect the ever-changing nature of this market, the Bill includes a power to amend the Copyright, Designs and Patents Act 1988 in future, to reflect fast-changing technology. Such a power should not and will not be used lightly. That is why any use of the power would require full public consultation followed by approval of both Houses of Parliament, and it is why we have provided explicitly that the power may not be used to create or modify criminal offences. Finally, I want to point to the strong defence in this Bill of the principle and practice of support for public service content in broadcasting, both nationally and locally. The provision of high quality UK content—and news in particular—is the clear preference of the public. It reflects the fact—not universally acknowledged, I grant you—that a purely free market for media simply will not produce or preserve the plurality, diversity and impartiality of local news content that people demand. Keeping this function of our media strong means recognising that market pressures and structural changes are putting pressure on commercially provided news in the nations, regionally and locally. Some element of public support is needed if this provision is to be preserved. The Bill sets out a revised remit for Channel 4. This refreshed remit underlines the Government’s clear and continuing commitment to Channel 4 and to public service broadcasting more generally. But it also makes clear what the Government expect from public service broadcasters—that they help advance the development of a well informed, well educated and socially cohesive society. As an additional way of doing this, the Bill also creates the power in Ofcom to support independently funded news consortia to provide regional and local news services. The Government have announced their preference to maintain in the next broadcast licence fee settlement the existing top-up element and to use it to fund the new consortia. However, the multi-year funding settlement with the BBC is crucial to the BBC’s independence, so we do not intend to make a decision on this until nearer the 2013 rollout date. There are serious implications in this work for Ofcom. The Bill creates an adapted remit for Ofcom in three important ways. It requires Ofcom to balance its primary focus on consumers and competition with a new additional focus on ensuring investment in the long-term strength of Britain’s communication infrastructure. It also requires Ofcom to take a new forward role in ensuring that the British media market produces the right mix of impartial national and local news. This expanded role is critical and must be well defined and defended. It requires Ofcom to take a new role in shaping our response to online copyright infringement. There are some in the commercial sector who believe that the future of British media would be served by cutting back the role of the media regulator. They take this view because they want to commandeer more space and income for themselves and because they want to maintain their iron grip on pay-tv—a market in which many viewers feel they are paying more than they should for their movies and their sport. They also want to erode the commitment to impartiality—in other words, to fill British airwaves with more Fox-style news. They believe that profit alone should drive the gathering and circulation of news rather than allowing a role for what they call "state-sponsored journalism". The Government and this Bill reject this world view, and I hope that the whole House, including the Conservatives, will make it clear today that they think likewise, and that notably they will support Ofcom’s efforts to ensure that consumers are getting a fair deal in the pay-tv market. Ofcom represents an important means of securing media standards, strong public service content and investment in the future infrastructure of the digital economy. In my view, Ofcom should be strengthened, not emasculated as some Conservative spokesmen have suggested. Although this Bill is broad in the scope of issues on which it touches, every measure has a simple but powerful objective: to equip this country to get the very best out of the digital economy. I look forward to hearing the views of noble Lords today and to engaging with them in Committee. I beg to move.