ON APPEAL FROM QUEEN'S BENCH DIVISION
The Hon. Mr. Justice Lloyd Jones
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE TOULSON
LORD JUSTICE SULLIVAN
| The Queen on the Application of:
ICO Satellite Limited
|- and -
|Office of Communications
Christopher Vajda QC and Ben Rayment (instructed by Ofcom) for the Respondent
Hearing dates : 10 June 2011
Crown Copyright ©
LORD JUSTICE PILL :
The statutory framework
"In using frequency bands for radio services, Member States shall bear in mind that radio frequencies and any associated orbits, including the geostationary-satellite orbit, are limited natural resources and that they must be used rationally, efficiently and economically, in conformity with the provisions of the Radio Regulations, so that countries or groups of countries may have equitable access to those orbits and frequencies, taking into account the special needs of the developing countries and the geographical situation of particular countries."
"It shall be the duty of OFCOM to do, as respects the United Kingdom, such of the following things as they are required to do by the Secretary of State -
(a) provide representation on behalf of Her Majesty's Government in the United Kingdom on international and other bodies having communications functions;
(b) become or serve as a member of an international or other body having such functions;
(c) subscribe to such a body;
(d) provide representation on behalf of Her Majesty's Government in the United Kingdom at international meetings about communications."
"5.1 ITU Resolution 49 requires national administrations to make submissions to the ITU in respect of the construction and launch (including timings) of its satellite networks. Administrations should, therefore, implement these obligations by imposing administrative due diligence requirements on operators. The purpose of these due diligence requirements is to ensure that filings are only submitted to the ITU where there is a reasonable prospect that the proposed network will be brought into operation within the relevant time period. It also serves to address the problem of reservation of orbit and spectrum capacity without actual use and has an impact, together with other relevant mechanisms, in reducing paper filings and in bringing more transparency to the filing process.
5.2 The ITU-BR relies on the confirmation provided by administrations, under No. 11.47 of the Radio Regulations that a frequency assignment has been brought into use, to assess compliance with the regulatory time period set out in No. 11.44. The latter provision states that the notified date of bringing into use of any assignment to a space station of a satellite network will not be later than seven years following the date of receipt by the ITU-BR of the complete API [Advance Publication Information] information under No. 9.1 or 9.2 of the Radio Regulations. Any frequency assignment not brought into use within the required period will be cancelled by the ITU-BR after informing the relevant administration.
5.3 In addition to the requirements of Resolution 49, Ofcom requires to receive commercial information from applicants, as set out in Table 1, for the purposes of due diligence in order to be satisfied that a proposed satellite network has an adequate financial backing, that all relevant commercial and other contracts are in place or are about to be entered into and that there is a reasonable probability that the network will be brought into operation."
The requirement in 5.3 to provide commercial information goes beyond the ITU due diligence requirements in Resolution 49.
"whenever it appears from reliable information available that a recorded assignment has not been brought into regular operation in accordance with the notified required characteristics as specified in Appendix 4, or is not being used in accordance with those characteristics, the Bureau shall consult the notifying administration and, subject to its agreement or in the event of non-response after the dispatch of two consecutive reminders, each within a three-month period, shall either cancel, or suitably modify, or retain the basic characteristics of the entry. A decision of the Bureau to cancel the entry in the event of non-response shall be confirmed by the Board."
"As required by No. 11.44.1 of the Radio Regulations, the bringing into use of the assignments and receipt by the ITU-BR of notification information and Resolution 49 data must all have occurred before the expiry of the seven year regulatory period. Failure to do this will normally result in the filing being cancelled by the ITU-BR."
"In the majority of cases for proposed networks in FSS, MSS and BSS the submission of due diligence information to the ITU-BR is required in accordance with ITU Resolution 49 of the Radio Regulations. Resolution 49 requires administrations to impose certain administrative due diligence requirements on satellite networks for which they act as the notifying administration, including specific information relating to the contractual status of the satellite and launch vehicle. Therefore, before registering a prospective system with the ITU-BR, it is incumbent on an administration to satisfy itself that there is a realistic likelihood that the satellite will be launched and will not block a valuable orbital slot or frequency assignment because it subsequently fails to be developed. It is also incumbent on an administration to monitor progress against pre-specified milestones for the deployment of the satellite network."
"12.6 As stated in section 5 of this document, applicants will provide Ofcom with due diligence documentation and progress reports for each satellite network indicating any variations from the previously submitted business plan and also details of their coordination progress and status, including whether the original network is likely to enter into commercial service according to the timescale envisaged. Ofcom will use such information to assess whether the applicant's project is meeting the criteria that had been set and will be completed within the satellite network's regulatory time period. Ofcom will assess the facts, circumstances and next stages of each case individually.
12.7 If, in Ofcom's opinion, there is insufficient evidence of progress as against the milestone commitments on the basis of the information supplied by the operator, Ofcom will consult with the relevant operator. Ofcom will provide the operator with an opportunity to remedy the situation, to ensure that progress is brought into line with the milestone commitments, within a specified timeframe.
12.8 Ofcom would expect that if the operator fails to remedy the situation within the specified timeframe, referred to in section 12.7, Ofcom may cancel the filing or may seek to reassign it to another operator in accordance with the procedures set out in sections 12.1 to 12.3.
12.9 Ofcom will consult with the Secretary of State prior to taking any action to cancel a filing in accordance with section 12.8."
"The appellants have not complied with the Regulations. What should Ofcom do?"
"Ofcom's procedures in its Guidance similarly do not make the absence of disruption to another identified operator a factor in deciding whether to cancel an assignment. This has always been the approach (as far as we understand it) underlying the ITU regime."
Moreover, in summary grounds for contesting the claim, Ofcom stated, at paragraph 36, that "whether or not there is evidence of other persons wishing to use the assignments granted to ICO-P is irrelevant to the question of whether Ofcom, consistently with the Guidance, was entitled to cancel the assignments because of ICO's failure to comply with Ofcom's requirements".
"Ofcom does not accept ICO's contentions that it has met the relevant milestones. Neither does it accept it has imposed additional unnecessary, untargeted or disproportionate obligations on ICO. In exercising its functions Ofcom accepts that it is required to have regard to the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed. As explained earlier, the aim of the filing system is to ensure that the most efficient use is made of spectrum which is a scarce and valuable resource. The RA and Ofcom Guidance sets out a scheme which is appropriate and necessary to meet this objective. In this context Ofcom has set lawful and appropriate requirements with which ICO has failed to comply. Cancellation of the filing as a result of ongoing failure to comply with those requirements is therefore no more than is necessary to secure the objective which they were designed to achieve."
"25. It is now more than seven years since the original planned date at which the ICO-P system was supposed to commence operations and four years since Ofcom accepted ICO's assurances that it would bring its system into operation in 2005 and notified the ITU that the frequency assignments were in operation.
26. Given the continued lack of evidence of any realistic prospect of ICO bringing the ICO-P satellite network into commercial operation by any of the dates it has suggested, we have concluded that we have no alternative but to cancel the ICO-P frequency assignments, thereby removing this obstacle to other operators making productive use of this spectrum.
27. Subject to the Secretary of State's comments, Ofcom proposes to notify ICO as soon as possible thereafter of our intention to cancel the ICO-P frequency assignments. This decision will be implemented after a grace period. This grace period will give ICO reasonable time to consider our notice before the irrevocable step of cancelling the filing is made. A draft of this letter is attached.
28. We would be grateful if the Secretary of State could provide us with views by 4 April 2008."
"There is some limited, and generally accepted, flexibility in the way that satellite operators are allowed to meet these requirements. For example, it might be considered disproportionate for an administration to cancel a filing when an operator is very close to bringing their satellite service into operation as intended, recognising that a cancellation in these circumstances could destroy significant future value (on the back of very significant investments up to that point in time)."
"The UK has played an important role in encouraging administrations to abide by the spirit of the rules through tightening up rules in the past (notably to promoting the adoption of Resolution 49 at the 1997 World Radio Conference which established the due diligence requirement referred to above) and by challenging situations where we believed that the rules have not been followed. In addition, we have always had a set of due diligence requirements on satellite operators filing through the UK in order to manage the risk of paper filings and in order to allow us to act in cases where assignments are not being brought into use. We also have a set of additional reporting requirements to monitor ongoing use after a filing has first been notified as having been brought into operation. This is important in terms of:
- maintaining the fundamental integrity and ongoing viability of the arrangements for managing satellite operation across the world; as well as
- freeing up scarce spectrum resources in individual cases where an operator is sitting on a filing, and thereby denying other satellite operators the opportunity to create value through use of that spectrum."
"Having reviewed the information provided by ICO since Ofcom's letter of 16 April 2008, Ofcom is of the opinion that ICO does not have in place contracts for the completion and launch of the remaining ICO-P satellites and has not provided any evidence that funding is in place to bring the ICO-P network into commercial operation. It remains the case that there is no evidence of any realistic prospect of ICO bringing the ICO-P satellite network into commercial operation by any of the dates it has suggested and it is likely that it won't be able to within the next few years."
"In view of ICO's failure to operate in accordance with its recorded characteristics and business plan; the continued lack of evidence of progress towards bringing the ICO-P system into operation; and the absence of any evidence that the ICO-P network will be brought into commercial operation within a reasonable timescale, we have concluded that we have no alternative but to cancel the ICO-P frequency assignments."
"Having carefully considered the arguments you have put forward and the background to the proposed action, I am content with your decision to proceed with the cancellation and to send the letter to ICO informing them of that decision."
"It was clear to Ofcom that ICO had made insufficient progress against key milestones for the ICO-P network as shown by ICO's failure to provide satisfactory evidence in response to its letter of 13 December 2006. However, as ICO had raised its litigation with Boeing as the reason for its inability to fulfil Ofcom's requirements, and as the trial had now commenced, Ofcom decided to seek further information in order to consider the impact of the US proceedings on ICO's ability to satisfy Ofcom's requirements before deciding whether to write to the ITU to cancel the ICO-P filing."
". . . was based squarely on ICO's failure to provide evidence of compliance with the conditions for the maintenance of its assignment. As explained above the use of scarce spectrum and orbital resources is controlled by ensuring that those operators that benefit from assignments are using them in accordance with their notified characteristics rather than by attempting to identify specific operators who may be affected by the filing, which may be impossible."
"22. As a practical matter, it would not be remotely feasible for one national administration to carry out an assessment of the prospects for all other relevant satellite filings coming into use within the seven year regulatory period, even were we able to obtain the necessary information relating to each filing . . . there are 715 filings at the API stage, and 118 at or beyond the coordination stage, in respect of the 2 GHz MSS frequencies covered by ICO-P. Quite apart from the scale of the task, and the degree of judgement likely to be required (bordering on the speculative in some cases), we have no powers to obtain relevant due diligence information from the other 190 administrations around the world and the satellite operators themselves would be very unlikely to supply the information to us (both for reasons of commercial confidentiality and because they have no incentive to subject themselves to due diligence by administrations other than the administration through which they file)."
"As explained above, notifications to the ITU operate on a first come first served basis. Attempting to second guess what another operator further down in the list of satellite filings may or may not do when determining whether or not to cancel a filing that is ahead of it in the 'queue' could distort the ITU filing system. . . Maintaining a filing that is not in use in these circumstances plainly defeats the basis on which priority in the MIFR is intended to operate, namely that filings will be brought into use in accordance with their notified characteristics. This is also consistent with Article 44 of the ITU Constitution which requires the efficient use of radio frequency bands. In the view of Ofcom it cannot be consistent with the efficient use of those frequency bands to allow them to be blocked by an assignment that is not being used in any real sense . . . . or that has in Ofcom's judgment no realistic prospect of being used.
What Mr Bagley [who made a statement for the appellants] is really suggesting is that unless Ofcom can prove the negative that there is no affected third party ICO is entitled to retain its assignment and the priority that goes with it. Given the difficulties in this regard this could make it effectively almost impossible to cancel the ICO-P assignment irrespective of whether or not it is not being used in any real sense or there being any realistic prospect that it will be, as Ofcom judged to be the case here."
"In parallel with this request and in line with the well known principles which the membership has deemed important enough to embed in the ITU Constitution, Convention and Radio Regulations calling for the equitable, efficient and rational use of the limited spectrum/orbit resources and their use to the minimum extent essential to meet requirements – the Bureau also considers itself bound to have recourse to certain provisions of the Radio Regulations (e.g. No. 13.6), and where appropriate, to enforce the removal of unused frequency assignments from the MIFR when their use has not been suspended in accordance with the Radio Regulations. This is in the best interest of all administrations and operators and, at the initiative of some administrations, the Bureau is currently pursuing action along these lines in several cases.
I take this opportunity to inform you that, in parallel with the above, the Bureau also intends to undertake similar action at its own initiative in application of the relevant provisions of the Radio Regulations in appropriate cases (e.g. cases in which there are fewer satellites than the GSO positions of satellite networks 'activated' by those satellites, the bringing into use of several GSO networks on the same date by the same administration and operator, etc.).
The Bureau urges your and all other administrations to cooperate in these efforts that employ the scrupulous and diligent application of the principles and provisions of the ITU Constitution, Convention and Radio Regulations, in order to reduce, and to the extent possible remove, the obstacles impeding the development and bringing into operation of new satellite networks."
Second ground of appeal
"Equally if an assignment has been brought into use, it is required to remain in use in accordance with the registered characteristics in order to maintain its status in the MIFR. If it does not do so, the national administration is expected to cancel the assignment in order to fulfil its obligations under the ITU Constitution . . ." (emphasis added)
Later in the statement, Mr Jenne referred to "the obligation to cancel assignments in such circumstances in the general interest of the system . . . " (emphasis added). Lord Pannick accepted that the reference was to a different stage in the procedure.
"As you know we are trying our best to clean the MIFR from the paper satellites but this particular case would be an action in completely opposite direction if we implement any type of cancellation.
We have also received communication from other administrations expressing their desire to avail MSS from the ICO-P hence we would like to see ICO-P become fully operation ASAP."
Lord Pannick accepted that the message can be relevant only if it is concluded that the decision was based on an "expectation" of the ITU's position.
Conclusions on first and third grounds of appeal
"What has to be emphasised is that it is only when the statute expressly or impliedly identifies considerations required to be taken into account by the authority as a matter of legal obligation that the court holds a decision invalid on the ground now invoked. It is not enough that a consideration is one that may properly be taken into account, nor even that it is one which many people, including the court itself, would have taken into account if they had to make the decision."
"Some considerations are required to be taken into account by decision makers. Others are required not to be. But there is a third category: those considerations which the decision maker may choose for himself whether or not to take into account."
"A discretionary decision is not in any event vitiated by a failure to take into account a consideration which the decision-maker is not obliged by the law or the facts to take into account, even if he may properly do so."
LORD JUSTICE TOULSON :
LORD JUSTICE SULLIVAN :