Firms sue Government for £415m over 1999 GSM Gateways ban


Six telecoms companies in court to challenge Government rule changes they claim were unlawful; they argue telecom regulator’s banning order goes against European law

Six telecom firms have appeared in court seeking damages totalling £415 million over a 1999 Government ban on commercial GSM Gateway services which they claim was “unlawful”.

The trial, ‘Floe vs the Secretary of State for Culture, Media and Sport’, began last week at the Royal Courts of Justice and is set to last 19 days.

The companies involved are VIP Communications Ltd*, Floe Telecom, EasyAir – all of which have since gone into liquidation – Edge Telecommunications**, Packet Media and Recall Support Services.

They claim in 1999 telecom regulator Ofcom – then known as the Radiocommunications Agency – made it illegal to use GSM Gateway equipment as part of a commercial communication service to another person or organisation.

However, confusion over the rules meant a number of firms continued the trade until around 2003, at which point operators began terminating partner agreements over it, including those with VIP (T-Mobile, 2004) and Floe (Vodafone, 2003).

Both T-Mobile and Vodafone  have repeatedly backed the ban, saying it causes “harmful interference” on their respective networks.

Ban illegal?
But the claimants, represented by Ted Mercer (pictured) of law firm Matthew Arnold and Baldwin, dispute the operators’ claims.

They argue the GSM Gateways ban goes against EU law, as the business model is still a legal trade in Europe.

It has also been proven that the use of GSM Gateways does not cause interference to operator services, it is claimed.

According to EU treaty, all member states must abide by the same directives.

VIP is seeking damages of £62 million, while Floe is seeking £41 million. EasyAir, which was terminated by Carphone Warehouse-owned Opal in 2004, is seeking £46 million.

Edge, Packet Media and Recall are seeking £141 million, £89 million and £36 million respectively.

Mercer and Brendan McGurk of Monckton Chambers, who will represent DCMS, refused to comment as the trial began.

A source close to the case told Mobile News: “Under European law the six companies involved had a right to run these GSM Gateways. GSM Gateways don’t create harmful interference. It should have been lawful, but it was made unlawful in the UK.”

*No association with Hull-based VIP Communications Group
**Not Surrey-based Edge Telecom (UK) Ltd