Ofcom contended that it did not need the consent of DBI or SA to effectively shorten the licence period by changing the licence area, but the Administrative Court has now agreed that DBI and SA do have an arguable case. The future substantive hearing into this matter will, amongst other things, consider whether or not a licence is akin to a contract into which implied conditions and representations should be read.
A decision by the High Court on such matters may have a very considerable impact upon the value of Wireless Telegraphy Act licences held by a number of major UK companies. The case should determine whether the only boundary to Ofcom's power to effectively shorten licence periods is rationality, or whether a commercial and pragmatic approach should have sway. Such a decision could affect licences of companies as diverse as the television broadcasters and the Mobile Network Operators.
Justin Cadbury, the Chairman of both companies, said: "This case will decide whether Ofcom can simply change its mind and turn a 10 year licence into a five year licence overnight by salami-cutting the licence area away to nothing, or whether in fact the representations made by regulators about the licences they are granting and conditions implied into those licences have any meaning. In short, did we get what we paid for or not?"
DBI and SA were represented at the hearing by James Segan of Blackstone Chambers and Ofcom was represented by Jane Collier also of Blackstone Chambers, instructed by Ofcom's General Counsel Polly Weitzman.