The new Electronic Communications Code - What does this mean for landowners?

Since 1984, the Electronic Communications Code ("the Code") has provided licensed telecoms operators statutory rights to construct, keep and operate equipment on both public and private land.

Created before the first commercial internet domain name had been registered, the Code was outdated, complicated and caused problems for landlords and operators alike. It was famously described as "…one of the least coherent and thought-through pieces of legislation on the statute book." The Government, in line with its push to promote investment in new communication technologies, brought a new Code (to replace that in the Telecommunications Act 1984) within the Digital Economy Act 2017 and this came into force on 28 December 2017.

The new Code was designed to take account of the vast changes in digital communications that have taken effect over the last 30 years. Whilst the wide-ranging reforms contained in the new Code will be of importance to network operators, landowners and occupiers, it is important for landowners to note that the modifications in the new Code heavily favour the operators. As such, it is important that landowners with telecoms tenants understand the key changes to the Code.

Rent

Under the new Code, landowners will be restricted in their ability to charge premium prices for the operators' use of their property. The new Code has introduced a "no scheme" valuation system which means that, whilst still supposedly being calculated on a market value basis, any calculation will exclude the value of the proposed use by the operator. Typically, the sites in question are a small area which hold little value to the landowner as bare land and have few other suitable uses. As such, it is likely that rents paid and compensation awarded will reduce. In addition, a further concern for landowners is that their costs could escalate with an anticipated increase in the number of disputes over determination of the rate of compensation.

Upgrades, Site Sharing and Assignment

Operators rights under the Code have also improved. Subject to very limited conditions, operators will no longer have to seek landowner consent to upgrade or share their apparatus. This will prevent a landowner from earning additional income for new or additional operator users or for additional pieces of apparatus.

Landowner consent is also no longer a requirement for assignment save that landowners are able to insist on receiving a guarantee agreement making redundant the landowner's opportunity to negotiate new terms.

These greater assignment and sharing rights may make it difficult for a landowner to identify the current operator(s) occupying his property at any one time.

Security of Tenure

Security and termination provisions have now been brought under one roof with the end of double protection which telecoms tenants previously enjoyed under the old Code and the Landlord and Tenant Act 1954. The 1954 Act no longer applies under the new Code  and as such, operators will not be able to benefit from Code rights and 1954 Act rights simultaneously.

The New Code instead provides its own continuation regime akin to the LTA 1954, albeit with much longer notice periods and different grounds for termination.

It should be noted however, that if an agreement is deemed to be a property lease and not a Code agreement (if the main purpose was not the grant of Code rights), then the LTA 1954 security of tenure rights would govern the document rather than the Code’s termination rights.

Lift and Shift

The new Code provides for Code agreements to be terminated if the landowner wants to redevelop however at least 18 months' notice is required. Unlike the old Code, the new Code does not contain provisions to allow the landowner to relocate apparatus. As such, it would be beneficial for landowners to ensure that they have a lift and shift provision within the agreement itself, rather than relying on the Code.

Contracting Out

Whilst it is arguable that the old Code was never capable of being contracted out, it is now unequivocally not possible under the new Code. This means that landowners will not have the ability to negotiate terms more favorable that those set down by the Code.

Landowners who currently have telecoms tenants on their property should be aware that the new Code will only apply to contracts created from 28 December 2017 and will not apply retrospectively to existing contracts. As such, it is likely that a switched on operator might try to bring its current agreements to an end in order to be able to begin a fresh agreement under the new Code.

There are concerns that the new Code is badly drafted and unlikely to deliver on the Government's express policy "to have have the best superfast broadband network of any country in the European Union by 2015". However, only time will tell …