CA-2024-002837 - [2025] EWCA Civ 1118

Before turning in detail to the evolution of the EU legislation, I note that Mr Ward relied on it to support five propositions:

I did not take the first four of these propositions to be controversial. Nor, however, do they provide much assistance in answering the question whether the content exemption operates before or after the “wholly or mainly” test is applied. If anything, as developed below, they point towards Ofcom’s interpretation.

The fifth proposition also does not assist, because it begs the question as to what is the intended scope of transmission regulation. If it is intended to capture any service which comprises (apart from content services) services consisting wholly or mainly in the conveyance of signals, then the purpose of the content exemption is to ensure that content is not regulated as an ECS, and no more. If, on the other hand, transmission regulation is intended to capture any service which comprises any overall service (including any content services component) consisting wholly or mainly in the conveyance of signals, then the content exclusion has a dual purpose: (i) to ensure that content is not regulated as an ECS; and (ii) to ensure that the transmission element of a mixed service is not regulated as an ECS if, overall, the service consists wholly or mainly of content services.

The story begins, relevantly, in 1990, with a package of Directives which formed the precursor to the common regulatory framework. One of these was Directive 1990/387/EEC, which established an internal market for telecommunications services through open network provision. This defined, by Article 2(4), telecommunications services as “services whose provision consists “wholly or partly” in the transmission and routing of signals on a telecommunications network, with the exception of radio broadcasting and television”.

Content in broadcasting was first regulated by Council Directive 1989/552/EEC. This included provision regulating television advertising and sponsorship (e.g. Article 12 prohibited television advertising which prejudiced respect for human dignity or included discrimination on grounds of race, sex or nationality) and protection of minors (by Article 22).

The CRF introduced a fully harmonised framework for electronic communications networks and services. It was introduced together with four other measures: Directive 2002/20/EC (on licensing and authorisations); Directive 2002/19/EC (on access and interconnection); Directive 2002/22/EC (on universal service and users’ rights); and Directive 2002/58/EC (on telecoms data protection).

The CRF was intended to be technologically neutral, as explained in Recital (5): “The convergence of telecommunications, media and information technology sectors means all transmission networks and services should be covered by a single regulatory framework.”

Recital (5) also referred to the need to “separate the regulation of transmission from the regulation of content. This framework does not therefore cover the content of services delivered over [ECNs] using [ECSs], such as broadcasting content, financial services and certain information society services…” It further stated, however, that:

“The separation between the regulation of transmission and the regulation of content does not prejudice the taking into account the links existing between them, in particular in order to guarantee media pluralism, cultural diversity and consumer protection.”

Recital (41) to the CRF provided: “In accordance with the principle of proportionality … this Directive does not go beyond what is necessary for [its] objectives.” Those objectives are as stated in Article 1(1): to establish “a harmonised framework for the regulation of [ECSs], [ECNs], associated facilities and associated services”.

The critical provision in the CRF, for present purposes, was the definition of an ECS, at Article 2(c):

“electronic communications service’ means a service normally provided for remuneration which consists wholly or mainly in the conveyance of signals on electronic communications networks, including telecommunications services and transmission services in networks used for broadcasting, but exclude services providing, or exercising editorial control over, content transmitted using electronic communications networks and services; it does not include information society services, as defined in Article 1 of Directive 98/34/EC, which do not consist wholly or mainly in the conveyance of signals on electronic communications networks.”

This effected three principal changes. First, a service would now only be an ECS if it “wholly or mainly” consisted of the conveyance of signals on an ECN, a material change from the previous test of “wholly or partly”. Second, transmission services for broadcasting were now explicitly included (having previously been excluded). Third, the exemption for content was introduced.

As Mr Ward submitted, the last two points would appear to be connected. Broadening the scope of the regulation to reflect a multimedia universe that includes broadcasting means that it now encompassed media that was far more likely to include content, which was subject to its own regulation. The intention to keep the regulation of content separate from that of communication was repeatedly stressed in the CRF.

That, however, provides no assistance in understanding whether the “wholly or mainly” test is to be applied before or after content services have been excluded. The range of telecommunications options in 1990 was vastly inferior to those that began to emerge at the end of the 20^th century (the internet did not start to come into general use until the early to mid-1990s). Moreover, the type of technology available in 1990 that was most likely to have any material content element – broadcasting and radio – had been excluded altogether at the time that the “wholly or partly” test had been applied. The recitals to Directive 1990/387/EEC had expressly excluded these, particularly cable television, because they needed “special consideration”.

In particular, I reject Mr Ward’s submission that Ofcom’s case “collapses the wholly or mainly test back into the wholly or partly test.” Rather, it applies the wholly or mainly test to that part of the overall service which remains having excluded the content element. Mr Ward’s submission might have had more traction if the “wholly or partly” test had previously applied in a regime in which the regulation of communications services extended to those technologies which were likely to be content rich, such as radio and television, and in circumstances where there was a specific exemption for content, but it had not.

Although the definition of ECS in the CRF did not have the same clarity of language as Article 2(4) of the EECC, there is nothing in the legislative materials I have quoted above which provides any significant support to Sky’s case as to the intended meaning of the content exclusion before the enactment of the EECC. There is certainly nothing which clearly pointed to that being the proper interpretation of the definition of an ECS in Article 2(c) of the CRF.

Sky also places reliance on the European Commission’s Communications Review, Towards a new framework for Electronic Communications infrastructure and associated services, published on 10 November 1999 (the “Review”), which preceded the CRF.

The Review laid the foundations for the principles which underpin the CRF, including that: regulation should be the minimum necessary to meet the CRF’s policy objectives; it should enhance legal certainty; it should aim to be technologically neutral; and it should be without prejudice to regulatory obligations (whether at EU or national level) which apply to the content of broadcasting services or other information society services.

Mr Ward placed particular reliance on the definition used within the Review of “communications services”, as “services normally provided for remuneration, the provision of which consists wholly or mainly in the transmission and routing of signals on communications networks”. This was important, he submitted, because it showed that the “wholly or mainly” test was initially proposed without the content exception, even though at that stage the intent was nevertheless to exclude content. I do not find this persuasive. The Review was a proposal for legislation, but did not purport to contain a draft of that legislation. The defined terms for the purposes of the Review were not the equivalent of defined terms in legislation, and are of little significance, when compared with the CRF, in seeking to construe the 2003 Act consistently with the CRF.

Mr Ward relied on the Review to support the proposition that the change from “wholly or partly” to “wholly or mainly” was deliberate. That is not, however, in dispute and without any further explanation for why the change was made, does not take either party’s case any further forward.

Mr Ward also referred us to a report on OTT services from the Body of European Regulators for Electronic Communications (“BEREC”) dated January 2016, proposing reform for how the existing definition of ECS should apply to OTT services.

BEREC was established by EU Regulation No.1211/2009, to act as a forum for cooperation among national regulatory authorities. Its aim was to ensure the consistent implementation of the CRF, including by assisting and advising those national authorities, the European Parliament, the Council and the Commission on any technical matter regarding electronic communications within its competence. It is a statutory body whose views are not binding, but might be persuasive.

At paragraph 3.2 of BEREC’s January 2016 report, it recited the definition of ECS (being the version contained in the CRF), and continued:

“Thus, according with the previous definition, there are three basic criteria according to which an ECS should:

1.

normally be provided for remuneration;

2.

consists wholly or mainly in the conveyance of signals; and

3.

exclude services providing, or exercising editorial control over, content.

Although this definition has been transposed by all Member States in equal or very similar terms, those criteria are, nonetheless, interpreted differently by NRAs when assessing whether specific types of services qualify as ECS. The analysis of the interpretation of these criteria is focused on the first two, the third being a “negative” one, that excludes services providing content but does not indicate which services are qualified as ECS.”

Mr Ward submitted that this supported Sky’s contention that the content exclusion was to come last in the analysis. When pressed, however, that was based on little more than the ordering of the criteria. There is nothing, in my judgment, to suggest that the ordering of the criteria was intended to be taken to identify a staged process by which an ECS was to be identified. Of more relevance is the last sentence of the quoted passage, to the effect that the exclusion of content services did not indicate which services qualified as ECS. On Sky’s case, the exclusion of content services does define the services that qualify as an ECS, because a service consisting of conveyance of signals forming part of a mixed service (i.e. one that includes both a content and transmission element) will on Sky’s case only be regulated where the content service is sufficiently small, relative to everything else, to mean that the transmission element is at least 50%.