Law Report: Director was entitled to relax conditions

R v Director-General of Telecommunications, ex p Cellcom Ltd and others (Mercury Personal Communications Ltd and anor intervening) Queen's Bench Division, Crown Office List (Mr Justice Lightman) 26 November 1998

THE DIRECTOR-General of Telecommunications was entitled to relax conditions in licences granted to new entrants to the mobile telecommunication services market.

The application of 11 independent service providers (ISPs) in the field of mobile telephony for judicial review of decisions of the Director- General of Telecommunications, made pursuant to the powers conferred on him by the Telecommunications Act 1984, was refused.

The decisions challenged were, inter alia, to the effect that Mercury Personal Communications Ltd (MPCL) and Orange Personal Communications Services Ltd (Orange) would not be required to comply with provisions in their mobile telephony network licences which required them to provide airtime on a wholesale basis to ISPs such as the applicants for resale to customers.

The Director had made his decisions in order to promote competition between MPCL and Orange, as new and loss-making entrants to the mobile telecomunications market, and Vodafone and Cellnet, who were well established and profitable.

The issues which arose on the application were whether, as a matter of construction of the 1984 Act, the Director was entitled, by making the modifications in question, to give effect to his view that to free MPCL and Orange from the restrictions on distribution of their airtime would be more likely to give rise to effective competition and better serve the interests of users than to continue to restrict them, and whether on the evidence the Director could rationally maintain that view.

Peter Roth QC and Aidan Robertson (Paisners) for the applicants; Richard Fowler QC and Rabinder Singh (Treasury Solicitor) for the Director-General; David Pannick QC and Pushpinder Saini (Bird & Bird) for MPCL and (Baker & McKenzie) for Orange.

Mr Justice Lightman said that it was the applicant's case that the language of section 3(1) of the Telecommunications Act 1984 was apt to require the Director to secure the entitlement as of right of any service provider or end-user to telecommunication services from the network operator of his choice so long as the choice was reasonable; that the test of reasonableness was an objective, not a subjective test; and that the Director was in breach of his duty under section 3(2)(a) and (b) to exercise his functions in the manner he considered best calculated "to promote the interest of consumers, purchasers and other users" and "to maintain effective competition between persons engaged in commercial activities connected with telecommunications".

Section 3(1) of the Act required the Director to carry out his functions in the manner which he considered was best calculated to secure that there were provided "such telecommunication services as satisfy all reasonable demand for them".

The criterion for determining whether a demand was reasonable was whether all reasonable demands for tele-communication services in general were met, and not whether all reasonable demands for the particular telecommunication services supplied by any specific network operator were met. The test whether a demand was reasonable was, however, an objective test.

Section 3(2) of the Act imposed on the Director a variety of duties which in any given situation might be in conflict or require different courses of action, and in such a situation the Director was given the choice which duty to implement, to what extent, and how.

His decision that the priority was to ensure that there was secure long- term competition at network level, and that the necessary step to promote such competition was the removal of the impediments in the way of MPCL and Orange in the form of the restrictive conditions of their licences, was not in any way irrational.