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DWF advises O2 on successfully opposing Ofcom appeal

21 February 2020
DWF, the global legal business, has advised Telefonica UK Limited (O2) on successfully opposing Ofcom's appeal. The Court of Appeal has today upheld the High Court's decision that Mobile Network Operators (MNOs) had overpaid to Ofcom the annual licence fees (ALFs) issued between October 2015 and November 2017.
Andrew Whalley (Partner) and Lyndsay Crowder-Barton (Senior Associate) acted for O2 along with Counsel, Tom de la Mare QC and Tom Richards of Blackstone Chambers

Case history

The Wireless Telegraphy Act required ALFs levied by Ofcom for the use of radio spectrum to be set out in a statutory instrument made by Ofcom.  The Wireless Telegraphy (Licence Charges) Regulations 2011 (the "2011 Regs") lawfully set the level at which ALFs were payable by the MNOs in respect of their spectrum holdings in the 900 MHz and 1800 MHz bands of the radio spectrum. By Article 6 of the Wireless Telegraphy Act 2006 (Directions to OFCOM) Order 2010 (the "2010 Direction"), the Secretary of State directed Ofcom, after completion of an auction of spectrum in other frequency bands, to revise ALFs for the 900 MHz and 1800 MHz bands ‘so that they reflect the full market value of the frequencies in those bands’.  With effect from 15 October 2015, Ofcom made the Wireless Telegraphy (Licence Charges for the 900 MHz frequency band and the 1800 MHz frequency band) (Amendment and Further Provisions) Regulations 2015 (the "2015 Regs").  Ofcom made the 2015 Regs in an attempt to give effect to the 2010 Direction.  The 2015 Regs purported to amend the 2011 Regs and increase the level of ALFs payable by the MNOs.

For the period 15 October 2015 to 22 November 2017, each of the MNOs paid to Ofcom ALFs demanded by Ofcom at the rates purportedly set by the 2015 Regs. The 2015 Regs were unlawful and quashed for the reasons given by the Court of Appeal in a judgment dated 22 November 2017.  The MNOs only statutory obligation to pay ALFs in the period 15 October 2015 to 22 November 2017 was to pay ALFs at the rates set by the 2011 Regs.  It was submitted that Ofcom had no statutory power under the Wireless Telegraphy Act or otherwise to set ALFs with retrospective effect.  On Ofcom’s case this was irrelevant because Ofcom did not rely on any such power. The MNOs issued claims in the High Court (Commercial Court) in May 2018 against Ofcom for restitution of the difference between (i) the sums paid by the MNOs under the unlawful 2015 Regs and (ii) the sums that were properly due under the lawful 2011 Regs.

Mr Beltrami QC, sitting as a Judge of the High Court, ruled on 17 May 2019 that the MNOs could recover the difference between the ALFs paid under the quashed 2015 Regs and the amounts that were legitimately due to Ofcom under the existing and still valid 2011 Regs.

Further Reading