Broadcasting – Ofcom – Property rights – Variation

R (on the application of (1) Data Broadcasting International Ltd) (2) Simpleactive Ltd) v Office of Communications: QBD (Admin) (Mr Justice Cranston): 28 May 2010

The claimant broadcasting companies (X) applied for judicial review of the decision of the defendant Ofcom to vary their broadcasting licences and sought a declaration that their consent was required to the variation and damages. X were sister companies both of which delivered data broadcast services within the UK.

X held licences under the Broadcasting Act 1990, authorising them to broadcast data for commercial purposes by using spare capacity in the analogue terrestrial television frequencies. The spare capacity used to broadcast the services, under the statutory scheme, existed only while analogue television services were available. The government decided to switch off analogue television signals on a region by region basis and replace them with digital signals.

Ofcom notified X that it proposed to vary their licences in line with the analogue signals being switched off under condition 22 in their licences. X contended that Ofcom had no power to vary their licences as the licences should be regarded as contracts giving rise to private law rights and obligations. X submitted that the variations in their licences involved a variation of the period for which a licence was to continue in force and as such Ofcom was required to seek consent.

X argued that they were entitled to damages for breach of contract or under section 8 of the Human Rights Act 1998 for violation of protocol 1 article 1 of the European Convention on Human Rights 1950.

Held: (1) Ofcom’s power to vary the licences was derived from section 3(4) of the 1990 act. The statutory provision and condition 22 both distinguished between the licensed period, which could only be varied with the consent of the licensee, and other conditions, which could be unilaterally varied by Ofcom. It was clear that the scope of the licensed period was separate from the licensed area.

Ofcom’s variation of the licensed area was contemplated by condition 1(1). Ofcom had varied the licensed area and not the licence period. The variations to the licences fell under condition 22(b) and accordingly could be made without X’s consent. That interpretation would not create scope for abuse by Ofcom as any abuse of power would be unlawful and challengeable by way of judicial review. Ofcom was required to act in accordance with fairness and not for an improper purpose.

(2) Whether or not the licences were varied, X would be unable to provide services in areas where the analogue signal had been switched off. It was the digital switchover and not the variation of the licences that had that effect. The variation of the licences simply avoided the situation in which X would have been unable to fulfil their obligation under condition 2(1).

If Ofcom had left the licences unchanged X’s position would, in practical terms, be no different but they would be unable to comply with their licence conditions. Ofcom was under a statutory duty to do all it could to prevent such a situation under section 263(2) of the Communications Act 2003.

(3) The licences were not contracts but were public law instruments. They constituted statutory authorisation, permitting X to undertake activities that would otherwise be unlawful. Regardless of any negotiations that had taken place when the licences were renewed, they were issued pursuant to a comprehensive statutory scheme, Floe Telecom Ltd (In Administration) v Office of Communications [2009] EWCA Civ 47, (2009) Bus LR 1116 considered. If licences were treated as contracts Ofcom would be exposed to unlimited liability for damages for breach of contract which would be inconsistent with the statutory scheme.

(4) There had been no interference with X’s rights to the peaceful enjoyment of their property under protocol 1 article 1 and X were not entitled to damages.

Application refused.

Pushpinder Saini QC, James Segan (instructed by Taylor Wessing) for the claimants; Dinah Rose QC, Jane Collier (instructed by in-house solicitor) for the defendant.