Inmarsat’s European Aviation Network wins big in ECJ ruling

After years of escalating appeals and conflicting decisions the European Court of Justice handed down the ultimate decision today: Inmarsat‘s European Aviation Network (EAN) is legal. Or at least not illegal; some objections remain in play.

Inmarsat welcomed the news, with General Counsel Brad Swann issuing a statement:

Inmarsat welcomes the ruling of the European Court of Justice rejecting our competitors’ arguments aimed at limiting the operation of the European Aviation Network. EAN is an asset for Europe as a whole and it is proving very popular with passengers and airlines. Inmarsat looks forward to continuing to provide the rapidly growing number of EAN users with a world-leading in-flight connectivity experience.

With this decision secured the airlines currently flying with the kit installed (Vueling, British Airways, Iberia) can feel confident about their investment. Moreover, it boosts the opportunity for Inmarsat to sell to additional customers that may have been cautious about committing amid legal uncertainty.

The ECJ guidance now returns to lower courts to be applied in the pending cases.

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At issue was the heavy dependency on ground stations – the terrestrial network built and managed by Deutsche Telekom and SkyFive – rather than the S-band satellite to deliver the vast majority of the network’s capacity. Viasat and Eutelsat argued this was a distortion of the EU’s definition of “complementary ground components (CGCs)” in the design of the offerings. The court disagrees.

The increased use of ground components is possible provided that there is no distortion of competition and the satellite component of the system has real and specific usefulness.

– ECJ Ruling

Massive win for Inmarsat’s European Aviation Network

A key factor in the ruling proves to be the EU’s decision to not define “complementary” in its initial draft of the regulations. Viasat and Eutelsat took the position that it should mean supporting or secondary. Inmarsat held that it simply means the ground components improve availability in geographical areas where communications with one or more satellites cannot be ensured.

The ECJ notes in its ruling, “it is not possible to draw any conclusion from the use of the word ‘complementary’ in the term ‘complementary ground components’, since that word is silent on the relative importance of the two components.”

The filing continues:

Consequently, it cannot be considered that a mobile satellite system, which includes both a satellite and CGCs, has to be principally based, in terms of capacity of transmitted data, on the satellite component of that system.

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Fighting Back

The ruling holds that compliance must avoid “distortion of competition and that that satellite component has real and specific usefulness…” That last clause may prove just a formality as the terrestrial network continues to grow, even into overwater portions of the coverage map.

Or it may prove a critical factor. Viasat and Eutelsat could continue to argue that the satellite component is not useful to the network, undermining the general approval otherwise granted. In response to the ruling Colin Ward, Vice President, Chief Litigation Counsel at Viasat states,

We appreciate the European Court of Justice’s (ECJ) evaluation of the European Aviation Network (EAN). This is a highly-complex lawsuit, which requires in-depth evaluation and review—at both the ECJ and national levels. We stand by our position that the EAN is illegal. Inmarsat has deployed a mobile satellite system that does not actually depend on the real and specific use of satellite communications—an element required by today’s ECJ decision. We will continue to advance our arguments in national courts and pursue this case to its completion on the merits.

Viasat previously argued that a 50% share of traffic across the satellite network would prove the utility and necessity of that part of the system. Courts have generally rejected that argument so far, but with 99%+ of traffic passing across the ground segment Viasat continues to push that claim and believes it is supported – or at least not precluded – by the ECJ ruling.

But bringing an additional option to the market should be seen as the antithesis of distorting competition.

A further portion of the ruling eliminates one condition under which local authorities could choose to deny rights to Inmarsat for deployment of the ground component. Member countries are required to license the associated ground components within their territories despite its activation later than initially promised:

[T]he competent authorities of the Member States are not entitled to refuse to grant the authorisations necessary for the provision of complementary ground components of mobile satellite systems to that operator on the ground that that operator has failed to honour the commitment given in its application.

Viasat is quick to point out, however, that the ruling leaves option other avenues for rejecting the system, specifically round utility of the satellite component.

More cases pending

The ruling here is based on a case initially filed in France and led by Eutelsat. Other cases in Belgium, Germany, Spain, and Italy were also in play. This ruling should shape the decisions in those cases, however, massively narrowing the chances for Viasat or Eutelsat to find victory down the line.

This story has been updated since initial publication with comments from Viasat and Inmarsat.

Summary filing is available here.

Full judgement is available here.

Additional coverage of the lawsuits:

• French court rules, refers on EAN licenses
• PaxEx Premium: Viasat, Inmarsat continue the EAN legal battle