Precis

On 8 April 2016, Ofcom released a statement amending the Wireless Telegraphy (Exemption) Regulations 2003 (the “Regulations”) in relation to commercial single user gateways (“COSUG”). The amendment implements the Court of Appeal judgment in Recall Support Ltd v Secretary of State for Culture, Media and Sport (the “Recall Case”) and entered into force on 28th April 2016.

What?

A mobile gateway is a device that incorporates one or more SIM cards issued by a mobile network operator allowing the device using the SIM card to originate calls on the mobile operator’s network. This results in the recipient’s network treating calls from fixed lines to mobile networks as if they were made by a mobile phone using a SIM card in the gateway instead of having originated from a fixed line; resulting in the cost of the call being significantly lower.

Gateways can be used in a number of ways including: (i) by single customers in their own business (self-use gateway); or (ii) where electronic communication services are provided by way of a business: (a) to a single end user so that all the calls directed through the gateway come from one user (commercial single user gateway or COSUG); or (b) to multiple end users so calls come from multiple end users (commercial multi-user gateway or COMUG).

Under section 8(3) of the Wireless Telegraphy Act 2006 (the “WTA 2006”), Ofcom may introduce regulations exempting the establishment, installation or use of wireless telegraphy stations or wireless telegraphy apparatus from the licensing requirements contained in section 8(1) WTA 2006, either absolutely or subject to conditions. Section 4(1) of the Regulations provides an exemption in relation to the establishment, installation or use of “relevant apparatus”, with relevant apparatus including cellular radiotelephone systems. However, section 4(2) stated that such exemption does not apply to relevant apparatus which is established, installed or used to provide or to be capable of providing a wireless telegraphy link between electronic communications apparatus or an electronic communications network and other such apparatus or system, by means of which an electronic communications service is provided by way of business to another person. Gateways were therefore only exempted from the requirement to obtain a licence to the extent that they fell within the provisions of section 4 of the Regulations. The effect of this approach was that where Gateways were used by way of a business to another person they were caught by the restrictions – the restriction therefore applied to both COSUGs and COMUGs (the “Commercial Use Restriction”).

The Recall Case addressed whether the restriction contained within section 4(2) of the Regulations was lawful. The major issue identified by the Court of Appeal in the Recall Case was whether the restriction could be justified on the grounds of public security. The original justification cited for the restriction was that when a call is routed through a GSM Gateway the caller line identification of the originating party is replaced by that of the SIM in the Gateway so the identity of the caller is effectively masked which gives rise to serious public security concerns for law enforcement agencies when investigating and preventing terrorism and serious crime.

The Court of Appeal confirmed the initial findings of the lower court that:

• the legality of the Commercial Use Restriction needed to be assessed against the Authorisation Directive, and in that regard the UK may, as a matter of EU law rely on arguments relating to (i) public security; (ii) the need to avoid harmful interference and; (iii) the need to ensure the efficient use of spectrum to justify the Commercial Use Restriction;

• on the facts, the Department for Culture Media and Sport can rely on public security concerns to justify imposing the Commercial Use Restriction on COMUGs; and

• the Commercial Use Restriction is not justifiable in relation to COSUGs and therefore constituted an infringement of EU law.

So what?

As a result the Regulations have been amended so that COSUGs, like self-use gateways, will now be exempted from the obligation to obtain a licence under WTA 2006. To achieve this section 4(2) has been amended to make reference to a new exception set out in section 4(5) which relates to “where apparatus is established, installed or used to provide an electronic communications service by way of business to more than one person within a single body”. This change was considered necessary so as not to remove the Commercial Use Restriction from applying to COMUGs.