In February 2013 the Law Commission published a long-awaited report outlining its recommendations to reform the Electronic Communications Code.
The Code governs the relationship between landowners and “operators”, that is licensed providers of electronic communications services. Broadly it allows and facilitates the construction, operation and use of the operators' physical network of base stations and other infrastructure; and confers security of tenure on the networks and apparatus of operators.
The Code was in desperate need of reform due to it being outdated, complex and difficult to apply. It was famously described judicially as “..one of the least coherent and thought-through pieces of legislation on the statue book.” The real problem for landowners and occupiers has been in recovering possession of land occupied by an operator and in the interface between the Code and the separate form of security of tenure under the Landlord & Tenant Act 1954. The two conflict and simply do not fit together. The Code also lacked clarity around how to assess the level of payments for the grant of rights, enforcing the termination of those rights and a swift and effective route to resolving disputes.
Since February 2013 the Government has been considering the recommendations to reform the Code. The Law Commission made no recommendations on the wording of the revised code, only the policy that it should embody. It was for the Government to draft and implement a revised code. Suddenly, with little announcement or opportunity for comment, the Government has now published a proposed amendment to the current Infrastructure Bill, proposing the incorporation of an entirely new Electronic Communications Code. Land owners and operators alike will be scrutinising the new Code, which (if approved by Parliament) will be included as a new Schedule in the Communications Act 2003.
The Law Commissions recommendations sought to address the shortcomings of the present Code whilst retaining its basic principles. This new Code is a complete rewrite of the Code, in modern language, with the aim that the new Code will be clear and effective in both its drafting and, crucially, its application. Whilst the new Code appears to adopt many of the Law Commission’s recommendations there do appear to be a number of areas of complexity and ambiguity in the drafting. Assistance may come in the form of a Code of Practice to accompany the new Code which OFCOM will be required to prepare and publish. Early press reports have quoted one industry commentator as stating that “the mobile operators are horrified by the text as it stands”. The current Parliamentary session will end on 30 March, in readiness for the General Election on 7 May. There seems very little time for Parliament or the industry to debate, comment upon or influence the content of this vast last minute addition to the Bill on such an important area of law.
The key provisions under the new Code include the following:
Conferral Of Code Rights And Their Exercise
- Code rights can be conferred not only on an operator but also on a person who provides infrastructure services for operators.
- Code rights will still be granted by written agreement between the operator and the occupier of land. Those Code rights will continue to bind successors in title and other parties. The Courts retain the right to impose Code rights if the parties cannot agree, subject to the payment of compensation for loss or damage (see below).
- The Law Commission recommended that the revised code should allow early access for operators, but only on an interim basis. Under the new Code an operator may apply to the Court for the grant of “interim code rights” for a specific period of time or until the happening of a specified event.
- Where an operator has applied to the Court for an order to impose an agreement (as the parties cannot agree) the operator may apply to the Court for the grant of “temporary code rights” in relation to existing apparatus on land and in circumstances where the removal of apparatus cannot be enforced pending determination of either (i) proceedings to impose an agreement; or (ii) a land owner’s application to remove apparatus (see below). The stated aim of this provision is to ensure the service provided by the operator’s network is maintained and the apparatus is properly adjusted and kept in repair in the interim period pending determination of either set of proceedings.
Sharing, Upgrading And Assignment Of Code Rights
- Any term which prevents or limits assignments of the agreement to another operator or makes the assignment subject to conditions (such as the requirement for additional payment) is void. The notable exception to this is a term imposing an obligation on the current operator to give an authorised guarantee agreement.
- Subject to compliance with three conditions an operator is permitted to upgrade apparatus and to share the use of such apparatus with another operator. The conditions require (i) exclusive possession of the apparatus; (ii) no adverse impact or no more than a minimal adverse impact on the appearance of apparatus changes as a result of sharing/upgrading; and (iii) that the sharing/upgrading imposes no additional burden on the occupier.
Termination of Agreements
- The new Code makes provision to govern the continuation of code rights after the expiry of an agreement and how that agreement is terminated. The Code also introduces a new procedure for making payment under an agreement whilst disputes relating to the removal of apparatus are resolved.
- The provisions regarding the removal of apparatus do not apply where the primary purpose of a lease is not to confer Code rights and it is a lease to which the security of tenure provisions under Part 2 of the Landlord and Tenant Act 1954 apply. There will be a consequential amendment to the 1954 Act to confirm this. The new Code therefore removes the “double whammy” of operators resisting the landowner seeking possession under both the Code and the 1954 Act.
- Where the code agreement has come to an end the operator may continue to exercise that right and the site provider will continue to be bound subject to the termination procedure. As with the existing Code the site provider must first give notice to the operator citing the grounds on which the code agreement should come to an end and the date. At least 18 months’ notice is required. The new Code sets out four grounds upon which the site provider can rely. The grounds will be readily recognised from section 30(1) of the 1954 Act and include substantial breaches of the agreement by the operator and an intention to redevelop.
- Upon receipt of the notice the operator then has three months to give counter-notice stating that (i) the operator does not want the agreement to come to an end, (ii) that the operator wants the site provider to confer/be bound by the existing code rights on new terms, or, new code rights. Within three months of the date of the counter notice the operator must apply to the Court for one of a series of orders that can be granted. If the Court determines any one of those grounds are made out then the Court must order that the code agreement comes to an end. Otherwise the Court must make an order which permits the operator to continue to exercise the code rights in accordance with the existing agreement, on modified terms, with additional rights or by entering into a new agreement, the terms to be agreed or determined by the Court in the absence of agreement.
- The Court may also order the operator to make a payment akin to an interim rent under section 24 of the 1954 Act and assessed by a prescribed formula. Further, pending the determination of the application a site provider may seek agreement upon the payments to be made by the operator (i.e. existing payments or a different level of payment). Such payment can be determined by the Court in the absence of agreement.
Removal Of Apparatus
- A site provider has a right to require the removal of apparatus where one or more of five conditions are met (such as the code right having come to an end following determination by the Court; or the apparatus no longer being used in connection with the operator’s network).
- The site provider must first give notice to the operator requiring removal of the apparatus and the making good of the land within a reasonable period of time. If the site provider and operator are unable to reach agreement within 28 days of the notice upon (i) whether the operator will remove the apparatus, (ii) restoring the land (iii) the timing for removal or (iv) the timing for restoring the land then the site provider may make an application to the Court for an order which requires the removal of the apparatus and the restoration of the land by the operator within a stated period.
- If the site provider fails to comply then the site provider can apply to the Court for an Order to enable the site provider to remove/sell the apparatus and restore the land. The site provider is entitled to recover the costs of such action from the operator or retain such costs from the proceeds of the sale of the apparatus.
- The Court may order the payment by the operator of compensation for loss and damage suffered by the site provider as a result of the presence of the apparatus during the period when the site provider was entitled to require the removal but unable to enforce that.
Compensation Under The Code
- Under the new Code the Court has the power to order an operator to pay compensation where an agreement is imposed or where apparatus is removed. Compensation for loss and damage includes expenses (including reasonable legal and valuation expenses), diminution in the value of land and the cost of reinstatement. The new Code sets out provisions for assessing diminution in value of land applying, with modifications, the provisions under Section 5 of the Land Compensation Act 1961 for assessing compensation for the compulsory purchase of any interest in land.
- The general principles of calculation are set out in section 5 of the 1961 Act. Broadly, they set out the rules for assessing compensation and require assessment of the open market value.
- The new Code gives the Secretary of State the power (through regulations) to specify that the appropriate forum for resolving disputes will be the First Tier or Upper Tier Tribunals, rather than the County Court.
Code of Practice/Standard Terms
- OFCOM will be required to prepare and publish a Code of Practice which deals with, amongst other things, the operation of the Code generally and specifically the conduct of negotiations and the conduct of operators. OFCOM will also be required to prepare and publish standard terms which may, but need not, be used in agreements under the Code.
Impact On Existing Agreements
- The new Code will not have retrospective effect. It will not affect rights/liabilities arising under an agreement to which an operator is already party.
- As the new code will not be retrospective, existing leases will remain subject to the split regime but new leases granted after the enactment of the Code (where the primary purpose is to grant code rights) will be outside the 1954 Act and therefore subject only to Code rights. Gradually as new arrangements are formed or renewed under the new Code, arrangements under the existing Code will eventually become obsolete.