On 15 April 2021, the Court of Justice of the European Union (“CJEU”) handed down its highly anticipated decision in Eutelsat SA v. Autorité de régulation des communications électroniques et des postes (“ARCEP”) and Inmarsat Ventures SE (“Inmarsat”). In what was the main thrust of the decision, the CJEU ruled that telecommunication regulations should not be read in a way that “hold[s] back innovation and technological progress”. The CJEU therefore found that, under relevant European Union (“EU”) regulations, a hybrid terrestrial-satellite system does not have to be principally based on the satellite component of that system, as long as it does not distort competition.
In particular, the CJEU clarified how and when complementary ground components (“CGCs”) can be used for the operation of a hybrid terrestrial-satellite system. CGCs are terrestrial components of an overall hybrid satellite-terrestrial communications system that are designed, primarily, to overcome the interference that can occur with signals from a satellite by blocking objects like mountains and buildings. The use of CGCs to buttress satellite-based communications is of particular importance. CGCs represent technology that can make satellite-based data transmission more viable, especially in profitable urban areas. At the same time, CGCs can be controversial because they can cause competition with incumbent terrestrial operators and others.
The decision is instructive for States and regulators around the world considering similar applications for hybrid terrestrial-satellite communication systems. It is also relevant for those litigations and other disputes where issues of hybrid satellite communications systems can arise.
Background
Inmarsat, a UK domiciled company, developed a system called the European Aviation Network to provide in-flight connection services to planes flying over the EU.
On 22 February 2018, ARCEP authorised Inmarsat to operate CGCs within the framework of the European Aviation Network. The decision of the French Regulatory Authority (ARCEP) followed a European Commission (“EC”) decision (Decision 2009/449/EC) selecting Inmarsat as one of the operators of mobile satellite systems authorised to use 2 GHz frequency band (the so-called S-band).
Eutelsat, a European satellite operator based in France and a competitor of Inmarsat, brought an action before the Conseil d’État (French Council of State) seeking annulment of the ARCEP decision. Eutelsat claimed that the system put in place by Inmarsat, particularly its ground component, was not consistent with the 30 June 2008 decision of the European Parliament (Decision 626/2008/EC) setting out the criteria for the selection and authorisation of systems providing mobile satellite services (“MSS decision”).
The Conseil d’État asked the CJEU to determine, by way of preliminary ruling: (a) whether a mobile satellite system needs to be principally based on a satellite component and whether CGCs may be installed to cover the entire EU territory; (b) the legal criteria that are to be used in identifying a mobile earth station; and (c) whether the competent authorities of the Member State are entitled to refuse authorisation to operate CGCs if the selected operator has not complied with the commitments as to geographical coverage of mobile satellite systems within the time limit provided in the MSS decision.
The CJEU’s ruling
The CJEU significantly ruled that “that the principle of technological neutrality. . . requires that the interpretation of the provisions at issue does not hold back innovation and technological progress.”
The CJEU also made the following significant rulings:
- First, that, under relevant EU regulations, a mobile satellite system does not have to be principally based on the satellite component of the system, at least in terms of the capacity to transmit data.
- Second, that, nonetheless, the satellite component needs to have a “real and specific usefulness” for the functioning of the system as a whole.
- Third, that there is no upper limit on the number of CGCs that can be used in a hybrid system, at least under relevant EU regulations.
- Fourth, that a “mobile earth station”, as defined in the EU regulations, does not have to be able to communicate with the satellite without the use of separate equipment.
Finally, the Court determined that, in the event an operator has failed to provide mobile satellite services by the deadline set in the MSS decision, the competent authorities of Member States are not entitled to refuse to grant the authorisations necessary for the provision of CGCs of mobile satellite systems to that operator on the ground that that operator has failed to honour the commitment given in its application.
As such, the CJEU rejected Eutelsat’s challenge against ARCEP’s authorisation.
Effect of the CJEU’s ruling
Applications to develop CGC-based hybrid systems are now a common element of many private space operator’s business plans. They have also been at issue in various litigations and arbitrations (for instance, in paragraph 386 of the decision of quantum of the tribunal in CC/Devas v. India, which discusses potential hybrid uses for S-band spectrum in India in the context of that dispute). The CJEU’s decision confirms that an imperative of EU law in this space is to permit technological progress, albeit without affecting competition and in line with EU regulations.
For more information on this client alert, please contact Gunjan Sharma (gunjan.sharma@volterrafietta.com) or Robert G. Volterra (robert.volterra@volterrafietta.com).
