R (Data Broadcasting International Ltd and Another) v Office of Communications
| Jurisdiction | England & Wales |
| Judge | Mr Justice Cranston |
| Judgment Date | 28 May 2010 |
| Neutral Citation | [2010] EWHC 1243 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/900/2009 |
| Date | 28 May 2010 |
[2010] EWHC 1243 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Before: Mr Justice Cranston
Case No: CO/900/2009
Pushpinder Saini QC and James Segan (instructed by Taylor Wessing) for the Claimants
Dinah Rose QC and Jane Collier (instructed by Office of Communications) for the Defendant
Hearing dates: 12, 13 May 2010
Mr Justice Cranston:
Introduction
The claimants in these proceedings hold licences under the Broadcasting Act 1990 which authorise them to broadcast data for commercial purposes by using spare capacity in the analogue terrestrial television frequencies allocated to Channel 3 (ITV) and Channel 4. The spare capacity used to broadcast these services, which are known as “additional services” under the statutory scheme, exists only as long as the analogue television services are available. The government has taken a policy decision to switch off analogue television signals and replace them with digital signals, a process known as the digital switchover. The analogue signals are being switched off, region by region. In the areas where analogue signals have been switched off the claimants are no longer physically able to provide services. Channels 3 and 4 do not have licences to provide an analogue service on those frequencies in these areas, and therefore the spare capacity which has been used by the claimants no longer exists. Ofcom has varied the claimants' licences, by removing specified stations from the licensed area as defined in the licences, at the same time that the analogue signals in each area are switched off.
In these circumstances, the claimants have brought proceedings for judicial review, challenging the variations made to their licences. In broad terms they allege that Ofcom has no power to vary their licences in this way, and assert that their statutory licences are to be regarded as contracts, giving rise to private law rights and obligations. The claimants' primary ground of challenge is that the variations in their licences necessarily involve a variation of the period for which a licence is to continue in force and that Ofcom was therefore obliged by section 3(4) of the Broadcasting Act 1990 and condition 22 of the licences to seek their consent. It did not do so. They seek a declaration to that effect and an award of damages. The damages they seek are substantial, in the region of £9 million, for alleged breaches of contract by Ofcom, or for violation of their rights under Article 1 of the First Protocol to the European Convention on Human Rights.
The parties and their operations
Data Broadcasting International Ltd (“DBI”) and Simpleactive Ltd (“SA”), the claimants, are sister companies, both of which deliver data broadcast services within the United Kingdom. The data is carried by using spare capacity in analogue terrestrial television signals. Commercial applications include transferring data to prevent credit card fraud, conveying financial data and offering sporting information. DBI has held a licence under the Broadcasting Act 1990 since 1 January 1993 to deliver its services via spare capacity in the broadcasts of Channel 3. Following renewal, that licence is due to run to 29 September 2011. SA has held a materially identical licence since 1 July 1995 in respect of Channel 4. Following renewal, SA's licence is due to run to 1 January 2014.
In broad terms the way DBI and SA use spare capacity is possible because analogue television pictures are sent over their assigned frequency to the television receiver as a series of picture frames. Each frame is made up of 625 lines, split into two fields. Older analogue television receivers display each line in sequence on the picture tube of the television by firing a beam of electrons at the screen. Because of the way this beam is controlled within the television receiver, it takes time for it to return to the start of each line and a longer time to return the beam to the top of screen after each field. In early television receivers, it took a relatively long period of time to reset the beam to the top of the screen, and the broadcasters inserted what is known as a blanking interval into the signal to allow this fly-back operation to be completed before the start of the next field. This is the vertical blanking interval and it comprises 25 lines per field. As receiver performance improved, not all of the 25 lines were required to achieve the fly-back operation, so some of the lines became available for other uses. During the 1970s, some of the unused capacity was used to launch data services such as Teletext, Ceefax (the BBC text service) and subtitling.
The licences which DBI and SA hold are commercial additional services licences. These were created to ensure that there was no wastage of space once a television signal and any teletext signal has been inserted into a frequency. DBI's licence is for 6 lines of spare capacity on the ITV analogue signal, that is, 3 lines per television field, while SA's licence is for 6 lines of spare capacity on the Channel 4 analogue signal, that is three lines per television field. Commercial additional services licences piggyback off the television licences: there must be a Channel 3 and Channel 4 signal in which they sit, and there must be spare capacity within that signal which can be used for additional services.
The Office of Communications (Ofcom) is the licensing authority for DBI and SA. Ofcom's main powers and functions are granted by the Communications Act 2003. Under the Act it has a number of functions, powers and duties in relation to the electromagnetic spectrum. Section 3 of the Act sets out as its principal duties to further the interests of citizens in relation to communications matters, and to further the interests of consumers in relevant markets, where appropriate by promoting competition: s. 3(1). The things which Ofcom is required to secure in the carrying out of its functions include, in particular, the optimal use for wireless telegraphy of the electro-magnetic spectrum; the availability throughout the United Kingdom of a wide range of electronic communications services and of a wide range of television and radio services which are both of high quality and calculated to appeal to a variety of tastes and interests; and the maintenance of a sufficient plurality of providers of different television and radio services: s. 3(2). Under section 3(3) Ofcom must have regard, in all cases in performing its duties, to the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed, and any other principles appearing to Ofcom to represent the best regulatory practice. Section 3(4) provides
“(4) Ofcom must also have regard, in performing those duties, to such of the following as appear to them to be relevant in the circumstances –
…
(d) the desirability of encouraging investment and innovation in relevant markets;
…
(f) the different needs and interests, so far as the use of the electro-magnetic spectrum for wireless telegraphy is concerned, of all persons who may wish to make use of it”.
Ofcom's licensing of the use of the electromagnetic spectrum is exercised under the Wireless Telegraphy Act 2006 (the “WTA 2006”), as well as its related functions, for the purpose of ensuring the effective management of that spectrum in the public interest. Ofcom's spectrum management functions were originally contained in the Communications Act 2003. However, chapter 2 and other parts of that Act were repealed and replaced in very similar terms by the WTA 2006. (The WTA 2006 also consolidated and replaced the various Wireless Telegraphy Acts, including the Wireless Telegraphy Act 1949 (“the WTA 1949”)). In addition to Ofcom's duties under section 3 of the Communications Act 2003, section 3 of the WTA 2006 requires Ofcom to have regard to the extent to which the electromagnetic spectrum is available for use, and to demand for that spectrum, now and in the future. In carrying out its functions, Ofcom must also have regard, to among other things, the desirability of promoting the efficient management and use of the part of the electromagnetic spectrum available for wireless telegraphy, the economic and other benefits that may arise from the use of wireless telegraphy, the development of innovative services and competition in the provision of electronic communications services: s.3 (2)(a)-(c).
If a party is to use a frequency on the spectrum to provide a service two licences are required. First, there is the licence allowing the broadcasting company, be that a television, radio or an additional services company such as DBI and SA, to produce a service which is transmitted over certain frequencies. This is done by granting Broadcasting Act 1990 licences, and within those licences, listing the stations and frequencies over which the service is to be carried. DBI and SA have this type of licence, in their case a licence to provide commercial additional services. The second type of licence is one allowing the transmitter operator physically to transmit the wireless signal. This is done by assigning frequencies in WTA 2006 licences. The transmitter operator relevant to this litigation is NTL, known as Arqiva from January 2005 (“NTL/Arqiva”). NTL/Arqiva owns and operates the network of transmission stations from which the analogue...
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