Cutting Room: COMUGS and the EU


After a delay of nearly 12 months, the Court of Appeal finally handed down judgement on February 10 in the case of Ofcom versus former GSM Gateway operator Floe Telecom.

The principal issue was whether or not a mobile licence could be used – including by the mobile networks themselves – to authorise Commercial Multi User Gateways.

The Court said “no”. So all Commercial Multi User Gateways (COMUGs) are illegal. There are no compatibility problems with EU law in this regard because a mobile licence does not constitute UK law.

However the Court of Appeal also noted it would not express any view about what the Competition Appeals Tribunal (CAT) said about other EU incompatibility issues, raising the key question of what would have happened in cases other than Floe’s.

In the Floe case, a decision on this point was not necessary because the Court of Appeal had already decided Floe had not asked permission from Vodafone to operate Gateways when it should have done so. 

Under EU law there is a strong case to say CE-marked GSM Gateways should be permitted, as the recent pro-Gateway decision in the German Courts demonstrates.

The Court of Appeal also rejected Ofcom’s request to strike down individual paragraphs in the CAT’s decision and observed EU incompatibility issues might have an impact on future cases and would best be left for a case in which a decision is necessary.

EU issues have a clear impact on the case of GSM Gateway operator VIP, which until this judgement had been stayed. 

In this long and bloody dispute, the stakes are now even higher for the mobile networks. If Gateways were, in fact, legal under EU law, how many actions might be lurking in other countries?

The potential damages bill mounts daily if the Gateway operators win the European argument.

On the other side, after six years fighting, the Gateway operators have nothing to lose by fighting on.  

As a result of Ofcom taking the CAT decision to the Court of Appeal all that has happened is the matter has still not been fully resolved – because of peculiarities unique to Floe’s case.

If there was no merit in the Gateway operators’ case, it seems unlikely it would ever have reached the Court of Appeal in the first place, let alone last as long as it has. 

What of the contractual positions of companies encouraged to run GSM Gateway operations on the basis of contracts that could not have authorised Gateways in the first place? 

Someone is responsible. The question remains, who?

A final twist is the Court of Appeal judgment is said to be about public rather than private Gateways, yet these terms did not exist at the time of Floe’s dispute. Confused? We are.