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Brit telcos can keep £218m licence fee repayment from Ofcom after penny-pinching regulator loses Court of Appeal case

But will you see your phone bills decreasing?

The UK's four main mobile network operators (MNOs) can keep the £218m Ofcom was set to repay after overcharging them for spectrum access, the Court of Appeal ruled today.

Three senior UK judges ruled that the companies had been entitled to claw back several hundreds of millions in overpaid licence fees. The £218m figure is greater than Ofcom's entire £196m income for financial year 2018/19 (PDF).

BT's EE can reclaim a whopping £82.4m, with Vodafone and O2 due to receive £54m each and Three getting its hands on £26m. The case was brought over licence fees paid for the 900MHz and 1800MHz LTE bands.

Sir Geoffrey Vos, one of England and Wales' most senior judges, said in today's judgment: "The issue before the court in this appeal is beguilingly simple… what part of the [annual licence fees] can the MNOs recover as a matter of law?"

'Principle of legality' upheld despite Ofcom's efforts

Back in 2015 the comms regulator made a new set of regulations jacking up the annual fees payable by telcos for their use of electromagnetic spectrum to power their mobile phone networks. Irritated by this, the artists currently known as EE reached for their lawyers and got the new regs quashed. They followed that up by suing Ofcom to get their overpaid fees back after the regulator started quibbling over the exact sum due.

Last year the other UK telcos joined in – and won, much to Ofcom's chagrin. Today's ruling saw the regulator comprehensively defeated as the telcos' legal arguments about precisely how much they were owed were upheld by the court in full.

Ofcom had tried arguing that the mobe networks should only have clawed back "the difference between what the MNOs paid under the quashed 2015 Regulations and the amounts that Ofcom would have charged the MNOs, had it acted lawfully by way of executive action, instead of implementing the ultra vires 2015 Regulations."

In other words, Ofcom wanted to convince the judges that the telcos should only have been allowed to recover a smaller sum of money based on what Sir Geoffrey called hypothetical steps that were only taken in a "parallel world." The Court of Appeal dismissed this argument by saying if Ofcom were right, it would sweep aside a longstanding "principle of legality" that stops public sector bodies from unlawfully enriching themselves by overcharging people and companies alike.

A delighted Vodafone spokesman told El Reg: "We are pleased with today's court ruling. Ofcom has previously acknowledged that it failed to follow proper process in raising the licence fees and the Court of Appeal has now reconfirmed that the over-payments should be returned."

Just to rub it in, he added: "The repayment of these fees will enable us to invest in the country's digital infrastructure and deliver the best possible service to our customers. The courts play a vital role in ensuring that the law is properly applied, providing the legal certainty businesses need to be able to operate and invest."

Three UK declined to comment, while we are still waiting to hear back from EE, O2 and Ofcom have yet to comment on the record. Nonetheless, The Register understands that Ofcom has already repaid the telcos in full following last year's High Court judgment in this case – and has not yet decided whether it will appeal against this ruling. Such an appeal would end up in the Supreme Court – and El Reg will be watching. ®


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