• Tribunal asks OFCOM to start again in the Floe Telecom case
  • December 14, 2004
  • Law Firm: Watson, Farley & Williams - New York Office
  • On 19 November 2004, the Competition Appeal Tribunal ("CAT") issued a judgment in the case of Floe Telecom v Office of Communications ("OFCOM", formerly the Director General of Telecommunications ("the Director")). This case arose from a complaint by Floe to OFTEL, one of OFCOM's predecessor regulatory bodies, that Vodafone had infringed the Chapter II Prohibition, Competition Act 1998 ("CA '98"), by discontinuing its supply of telecommunications services to Floe, a provider of low cost routing services to business customers and GSM gateways ("the Decision"). The Director found that the services provided by Floe were illegal on the basis that it was providing public GSM gateway services but was neither licensed to use GSM gateway equipment under the Wireless Telegraphy Act 1949 ("WTA"), nor expressly authorised to do so in writing under Vodafone's WTA licence. Therefore, Vodafone had been objectively justified in discontinuing the services. Floe appealed the Decision to the CAT, who decided to set aside the Decision and remit it to OFCOM for reconsideration. The CAT felt that the Decision could not stand as the Director's reasoning that Floe was not authorised to provide the public GSM gateway services under Vodafone's WTA licence was incorrect and/or flawed. Furthermore, the CAT identified that the case raised a serious enforcement issue that had not been adequately dealt with by the Director, namely whether Vodafone was objectively justified in disconnecting Floe without first referring the matter to the Radiocommunications Agency ("RA") and allowing them to take enforcement action, and that this is something that OFCOM should address in a new reasoned decision.

    With the case remitted to OFCOM, the issues relating to the scope of WTA licences, and the legality, or otherwise, of public GSM gateways looks set to continue. Given the potential implications of this and the ramifications for mobile network operators, industry participants should be watching OFCOM's progress with interest and looking to participate in the decision making process where possible. Industry involvement should play a key role, particularly given the concerns expressed by the CAT in relation to OFCOM's approach to this appeal. The arguments put before the CAT by OFCOM in relation to the scope of the WTA licence were not only new arguments that had not formed part of the Decision, but in fact were contrary to the approach taken in the Decision. The CAT chastised OFCOM stating that "it is generally likely to be unheplful to seek to argue an appeal before us on an entirely new basis which is without foundation in the decision", and that in such circumstances it would not be appropriate for the CAT to uphold the Decision. This is yet another indication that the CAT will not be tolerant of regulators taking a sloppy approach to investigations and applying inadequate reasoning to decisions, and is a clear warning to the regulators that the thinking behind any case must take place when the initial decision is taken, and not merely when it is challenged. The focus is now on OFCOM to produce a spotless decision in this case, with the CAT indicating that in the event such a new decision is appealed to the CAT, then the CAT would be minded to allow all parties in the industry, with a sufficient interest, to intervene in the proceedings.