Thanks for U-turning on biz-killing ban, Ofcom – now cough up, say GSM gateway bods

Brit regulator urged to fork out tens of millions in compo

Man looks at his mobile - mildly surprised or shocked about something. Photo by shutterstock

A former GSM gateway operator is threatening to reactivate a £20m legal claim against Ofcom after the UK regulator's past policies killed his company, according to documents seen by The Register.

The unnamed operator is asking the telecoms regulator to enter alternate dispute resolution rather than going straight into court proceedings.

"I should have benefited from the correct and lawful determination on COMUG [Commercial Multi User Gateway, a synonym for GSM gateway] on 25 July 2003," says the letter seen by El Reg. "In reality Ofcom and/or the Home Office unlawfully rendered it unlawful for me to build or maintain my operations, which brought about their demise and my severe financial loss."

Another former GSM gateway operator, Tom McCabe, told us: "They stopped us illegally ... We've been doing this for 14 years. I've gone bankrupt, my wife has gone bankrupt. We're looking for justice for our financial and emotional loss. We will be compensated under the law."

The letter from the unnamed former operator suggests that Ofcom imposes a windfall tax on mobile network operators in order to pay any compensation ordered by the courts. The regulator is funded entirely by subscriptions from those it regulates.

In 2003 Ofcom banned GSM gateways. These mildly controversial devices enabled consumers to make cheap calls abroad by routing international calls through local mobile operators' SIM cards and making use of free call deals. At the start of this century, before the days of fat data packages and WhatsApp, this was a big deal: local calls alone were normally charged at pennies per minute and international calls could get seriously expensive within a short space of time.

Established mobile network operators (MNOs) saw GSM gateways as a way of diddling them out of revenue – termination rates, to be exact – and welcomed the move to ban them.

The letter alleges that after the 2003 ban, Ofcom invited GSM gateway operators to "bring their operations under the MNO's licences [so as to be compliant]", something the letter's author said resulted in his company being "hung out to dry".

Earlier this month Ofcom U-turned on the GSM gateway ban, having concluded that the public justification for it – that they interfered with quality of service by reducing the number of channels available on nearby mobile masts for genuine customers – no longer stood up to scrutiny. The Register understands, however, that the Home Office intends to effectively reimpose the ban by issuing a section 5 direction under the Communications Act 2003.

We have contacted the Home Office for comment and will update this article if we hear back. Last time we asked the Home Office about GSM gateways was when we caught them secretly lobbying Ofcom to keep the ban in force. The Home Office insists that this was “human error” and says it “absolutely refutes” the notion that it was secretly lobbying Ofcom via the public consultation. ®

Update

We asked the Home Office whether it intends to ban the use of COMUGs. A departmental press officer said: “We are disappointed with Ofcom's conclusion that the use of commercial multi-user gateways should be exempt from the licensing requirement the Wireless Telegraphy Act 2006.

“In the Home Office response to the consultation, we made clear that the use of these devices would hamper the work of law enforcement and emergency services, potentially putting lives in danger.”

El Reg understands that this latter point stems from the Home Office argument that members of the public might call a gateway while trying to dial 999, with the gateway's call forwarding stripping out automatically collected location data.

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