Lessons from ICO v Ofcom for satellite operators

On 30 July 2010, the Administrative Court refused an application by ICO Satellite Limited (ICO) for judicial review of a decision by the Office of Communications (1) (Ofcom) to request the International Telecommunication Union (ITU) to cancel ICO’s filing in the ITU’s Master International Frequency Register (MIFR) for the ICO-P mobile satellite communications system (ICO-P satellite network)(2).

The ICO v Ofcom(3) decision highlights the role of Ofcom, as the national administration in the UK for interfacing with the ITU in respect of spectrum rights at the international level, in monitoring the use of spectrum assignments by satellite operators. Ofcom’s Procedures for the Management of Satellite Filings (Guidance)(4) sets out details of reports on the status of the implementation of an assignment that operators are required to provide to Ofcom, evidencing any variations from the operator’s business plan, and providing details of the spectrum coordination progress and status. If Ofcom believes that insufficient progress is being made against milestone commitments, based on the information supplied by the operator, it has the power to take action to cancel a filing at the ITU.

This bulletin seeks to draw out some of the key lessons from the decision for satellite operators.

Radio spectrum: its nature and coordination by the ITU

The use of radio spectrum and orbital positions, limited and valuable resources (especially in a world with ever increasing demand for mobile telephony and wireless broadband services), are coordinated at the international level by the ITU, a United Nations agency with 191 Member States, including the UK. Such coordination is necessary to avoid harmful interference to the transmission of radio communication signals and to ensure rational, economical and efficient use of the resource.

UK operators wishing to submit an application to the ITU for the management and processing of a satellite filing must do so through Ofcom. It is necessary to submit such an application to the ITU so that the radio spectrum that the operator wishes to use can been registered in the MIFR and receive international recognition.

The relevant facts in ICO v Ofcom

At the heart of the dispute between ICO and Ofcom were the following facts.

In January 2004, Ofcom notified the ITU that the ICO-P satellite network had been “brought into use” in accordance with the ITU regulatory regime, an event which resulted in the ICO-P filing being recorded in the MIFR. In its business plan to Ofcom, ICO had indicated that the ICO-P satellite network would comprise a network of 12 satellites, and that all the satellites would be launched by 2005. To this day, ICO has launched only one of the ICO-P satellites.

Three days after Ofcom’s notification, ICO terminated its satellite construction and launch contracts with Boeing due to a dispute as to contractual performance. The dispute has since resulted in a judgment for ICO in the first instance before a United States court, but Boeing’s appeal remains pending. At the time, Ofcom was not informed by ICO of the matter, and had instead learnt about the development from media reports.

Correspondence regarding the change in ICO’s circumstances between the parties followed, culminating in a letter from Ofcom to ICO in December 2006 (Ofcom Letter), requesting that ICO provides evidence to Ofcom by June 2007 that ICO has:

• contracts in place to complete and launch the remainder of the ICO-P satellite network; and
• secured the necessary funding to finance the bringing of the ICO-P satellite network into commercial operation.

In April 2008, on the basis that ICO had not provided evidence that sufficient ICO-P satellites were ready to launch, that the necessary contracts were in place to launch the additional satellites or that ICO had funding in place to complete the deployment of its ICO-P satellite network, Ofcom notified ICO of its provisional decision to request the ITU to cancel the ICO-P filing in the MIFR, subject to further representations made by ICO.

In February 2009, Ofcom notified ICO that it had made a decision to write to the ITU to request that the ICO-P filing be cancelled (Ofcom Decision). Central to the Ofcom Decision was a finding that ICO had not shown evidence of the two matters as requested in the Ofcom Letter.

The grounds of ICO’s challenge

ICO sought judicial review of the Ofcom Decision on three grounds:

• that Ofcom had regard to an irrelevant factor, namely, an erroneous basis that it had a duty under the ITU regulatory regime to cancel ICO’s filing by reason of the delay in bringing the ICO-P satellite network into full use within the time period specified by Ofcom;
• that Ofcom failed to have regard to relevant considerations, namely:
  • the lack of any pressing need to cancel the ICO-P filing in the MIFR at the time, in the absence of any prejudice to third parties;
  • the adverse impact of the Ofcom Decision on ICO;
  • the possibility that the dispute with Boeing might be resolved during the appellate process in the United States; and
  • Article 13.6 of the ITU Radio Regulations, which contemplates that a range of actions could have been taken in the circumstances, of which cancellation is only one; and
• that the Ofcom Decision was in all the circumstances disproportionate.

The Court’s decision

Justice Lloyd Jones of the Administrative Court rejected all three grounds of ICO’s challenge.

Firstly, Ofcom was not influenced by an irrelevant consideration in taking the Ofcom Decision; it had not proceeded on the basis that it had a duty under the ITU regulatory regime to cancel ICO’s filing in the circumstances. Rather, Ofcom was merely acting in accordance with the Guidelines (which was not challenged by ICO); in particular, Ofcom was entitled to ask ICO to provide evidence of the two matters required by the Ofcom Letter, and that the Ofcom Decision was made solely on the basis of ICO’s failure to meet the requirements of the Ofcom Letter.

Secondly, Ofcom had not failed to have regard to any relevant
considerations. In particular, his Honour held the following.

• There is nothing in any of the ITU regulatory instruments or the Guidance which suggests that it is necessary or appropriate to consider whether prejudice might be caused to any third parties in maintaining a filing before moving to cancellation. To require Ofcom to have regard to the question of possible prejudice to third parties would be “entirely unworkable” because it would simply not be feasible for Ofcom to carry out an assessment of the prospects for all other relevant satellite filings and potential filings.
• There is also nothing in the ITU regulatory instruments or the Guidance which supports the view that the impact of the cancellation of a spectrum assignment to the operator concerned is a relevant consideration. The mere fact that “immense sums” of more than $3 billion had been invested into the ICO-P filing by ICO which was not being used in accordance with its notified characteristics could not provide any immunity from cancellation; on the contrary, the Court observed that to attach any weight to such considerations might frustrate the regulatory regime’s objectives of rational, economical and efficient use of radio spectrum.
• That Ofcom did in fact give careful consideration to the possible outcome of the dispute with Boeing, but that Ofcom was “clearly entitled” to conclude that ICO had not provided any evidence that ICO would be able to conclude the relevant contracts with Boeing. ICO did not fail to have regard to Article 13.6 of the ITU Radio Regulations.
• Finally, on the question of proportionality, the Court noted that the real issue was whether the Ofcom Decision was more than what was necessary to accomplish the objective of the Guidance, and in particular, whether a less extreme action could have been taken by Ofcom in the circumstances. The Court held that where a national administration has come to the view that a filing is not being used in any real sense and that there is no evidence to suggest that this position will change, then neither retention nor modification of the filing at the ITU level would be appropriate; cancellation was necessary and there was “no other effective remedy available”.

Key implications for satellite operators

For UK satellite operators which submit filings through Ofcom to the ITU, the ICO v Ofcom decision has the following key implications.

• Firstly, the decision highlights that some of the due diligence requirements set by Ofcom in its Guidance go beyond the requirements under the ITU regulatory regime. In particular, under paragraph 5.3 of the Guidance, Ofcom requires detailed commercial information from applicants in order to be satisfied that the proposed satellite network has adequate financial backing.(5)
• Secondly, Ofcom will monitor the progress of an operator’s “bringing into use” of its spectrum assignments by reference to the business plan (including systems specifications and milestones) that the operator files with Ofcom. Accordingly, care and caution should be taken by a satellite operator in preparing its business plan in support its filing at the ITU; in particular, a satellite operator should seek to build flexibility into its business plan to anticipate potential contingencies (for example, disputes with a critical supplier, accidents etc) which could affect its use of the radio spectrum.(6)
• Finally, the decision highlights the importance of the need for satellite operators to engage appropriately and as early as possible with Ofcom, especially in circumstances where the operator’s ability to deploy its satellite system in accordance with the characteristics notified by the operator has changed beyond its control. ____________________________________________________
  

(1) As the national administration that acts as the notifying administration in respect of ITU satellite filings.
(2) ICO-P is a constellation of medium earth orbit satellites planned to operate in the 2 GHz mobile satellite service frequency allocations. The original proposal from ICO was for a constellation of 10 satellites in orbit, providing global coverage.
(3) [2010] EWHC 2010, available here.
(4) Ofcom, Procedures for the Management of Satellite Filings
(27 March 2007), available here.
(5) We do not wish to discuss the pros and cons of this here, but simply to note the point.
(6) Ofcom would also need to be able to accept such flexibility.