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Digital Economy Bill [HL]

My Lords, as has been mentioned already this afternoon, I have some previous interests that are relevant to the Bill. However, as I am currently languishing in post-ministerial purdah, I do not believe that I have any current interests or conflicts which I need to disclose. Earlier, in opening the debate, my noble friend the Secretary of State rightly highlighted the importance of the digital economy, the need for adaptation due to changes in technologies, and the increasing industrial importance of being future-ready as a knowledge and service economy. The triple effects of the death of distance, the crescendo of new creativity and the insurgence of the internet have created a new world and there is a clear need for legislative adaptation so that we may adjust to those changes. For my part, one of the unexpected and possibly unintended consequences of my post-ministerial cooling-off period has been to spend time working abroad and observing in some detail other countries’ developments and approach in this area. Whether it is the emerging markets, the ever-more powerful Chinese economy, the vision of the smaller Scandinavian countries, the aggression of the newer European countries or the clear approach of our more significant European partners, all of them have plans for and investments in their digital economies. It is increasingly clear that a digital future is central to industrial and governmental strategies around the world. The explosion of distribution systems, applications and the increasingly borderless nature of the content markets highlights those countries which are either ahead or behind in the digital future. The debate within our Government was whether, at this stage in the political cycle, a small but perfectly formed Digital Economy Bill could do enough of the heavy lifting to merit inclusion in a final Queen’s Speech, or whether it would be more coherent to wait until we were at a different point in that cycle and more fulsome legislation could be considered in the round. As the noble Lord, Lord Birt, rightly highlighted, could we go in a year from a consultation document, through a White Paper and a Green Paper, to a Bill, and avoid major mistake, major omission or a significant diminution of quality? In politics, as in life and business, waiting for the perfect moment is rarely advisable. In my experience, a good decision on Monday is often preferable to a perfect one on Friday. This Bill therefore has a number of merits which I believe will bear the scrutiny of this House. First, it lays down a marker by its very existence, by not being solely a piece of broadcasting legislation, while at the same time seeking to address some if not all of the issues facing our public service broadcasters, but in the context of the modern digital economy. Secondly, in the critical areas of investment, infrastructure, spectrum liberalisation and the digitalisation and deregulation of sound radio, it provides a framework for innovation, development and investment. Thirdly, in a whole range of detailed areas—from content protection and the value of rights, to video games classification, domain name registration and protection, the future remit of Channel 4, the broader issues of public service content, and the provision of funding, albeit short-term funding, for independent impartial news—it seeks to play catch-up with some of the capabilities of the technologies and the changing nature of consumer preferences. As to its very existence, I do not think that it is merely a matter of nomenclature that this is a Digital Economy Bill rather than simply a piece of communications or broadcasting legislation. As I have commented before in this place and in others, one of the remarkable features of the 550 pages of the Communications Act 2003 was that the internet was not mentioned at all by name and only once by an oblique reference to an obligation on the regulator to consider the importance of high-speed data services in remote locations. On the strategic elements of the Bill, and in particular the proposed updating and amending of the regulator’s primary duties, I would urge noble Lords not to underestimate the importance of the proposed changes. Regulators are creatures of statute, of their leadership, of their governance structures and of the environment and the context of the times in which they operate. Their independence, their objectivity and their quality is often valued only when it is absent. Many of us have lived through—some of us in rather too close proximity—the seismic events in the financial services sector, and an interesting question to pose is whether a gentle but firm amendment, ahead of time, to the primary duties of the Financial Services Authority might have produced a different response and emphasis in its approach to its regulatory duties. In this country we do not have a crisis in the communications sector. In many ways we have enormous strength, significant competition, highly competitive retail pricing and, in the content and applications market, world-class levels of innovation and entrepreneurialism, and a number of globally admired companies. However, as I said in my opening comments, the rest of the world is not only catching us up but, in many instances, overtaking us. Two much-discussed elements of the Digital Britain White Paper are not in the Bill, either because legislation is not required, as is the case for the delivery of the universal service commitment, or because it was a tax measure, albeit a hypothecated one, and will therefore be dealt with in a Finance Bill. But perhaps I may make two related comments on these two issues, not least because they are often elided together as the same thing, and sometimes wilfully misunderstood and misreported. The first proposal in relation to the universal service commitment allows this country to fund, from the underspend in the digital switchover, some hundreds of millions of pounds of public funds to ensure that every community, and possibly even those residents in Hambledon who are not BT employees, has access to a basic level of connectivity and a minimum level of broadband connectivity. The separate but related proposal for a hypothecated levy intended to generate seed-corn public funding that could be made available at an appropriate coupon rate for commercial players is a modest attempt, I would be the first to acknowledge, to bridge the gap that exists in this country today for the need for capital investment in our infrastructure set against the market’s ability to fund it. It may help produce a fixed fibre infrastructure that extends further. It may combine in part with some of the liberalisation measures in this Bill relating to the electromagnetic spectrum to allow for the creation of fixed and wireless combined capabilities. In truth, the technology solution should not concern this House; what matters is our willingness to recognise the importance of the communications sector and the need for investment upgrade in infrastructure. At the same time we need to see that the real future value is in the applications and services that will and can be delivered on such an infrastructure capability. That is the digital economy. As a country we are still broadly willing, with some notable objectors, to spend £142.50 per household per annum, with appropriate exemptions for certain households, in a hypothecated tax called the licence fee to provide us with high quality public service British content and the broadly beneficial multiplier effect that the money has on creating commercial businesses in the content markets. It seems a credible proposition that we should be more than willing to invest £6 per household per annum, with appropriate exemptions for certain households, to facilitate and accelerate our infrastructure upgrade. For our digital economy it is far from the final answer. It is in truth only the beginning and that is probably a useful summary of this Bill—it is only the beginning, as the noble Lord, Lord Fowler, rightly pointed out. It is the first digital economy Bill. It contains a series of measures and proposals that are tightly drafted, broadly necessary and, in some areas, will have a much greater and profound difference than some have anticipated. It does unashamedly seek to lay the groundwork for the next Government to return to this sector and look at it more broadly than Parliament has traditionally done through what has often been a broadcasting-only telescope. I share the view of the noble Lord, Lord Birt, that there is a machinery of government change that merits further thought and far-reaching work. I share the view of the noble Lord, Lord Fowler, that there is a need for a proper and measured parliamentary debate on the BBC, and that needs to be done in an environment where discussions can be had around structure, reach and governance without the hysteria of attack and defence polluting the debate. Overall, this is a Bill that I am sure will be improved through discussion and debate in this House, but I would hope that, when that debate is finished, there would be cross-party and cross-Benches support, as it is a Bill that it will be more than helpful for the British economy to have on the statute book. If I may, and I hope I am not breaking convention, I would like to close by recording my admiration for the Bill team which, despite rather irritating ministerial changes, has produced a focused and well drafted Bill that makes up for its limited clauses in the ground it manages to cover in 49 of them. I look forward to the Committee debate.