The government is currently consulting on the draft of a new Electronic Communications Code.

Though many of the underlying principles remain the same, the new code is a fundamental rewrite of the old, existing one. That's just as well, considering that the old code has been labelled by Lewison J "as one of the least coherent and thought-through pieces of legislation on the statute book."

Main principles

The guiding principle behind the code (both old and new) is that nobody should unreasonably be denied access to an electronic communications network.

Like the old code, the new code gives wide rights to telephone companies and other operators of electronic communications networks to install apparatus and related infrastructure on land owned by others.

Not all operators of electronic communications networks are entitled to the benefit of the code. Those who do are listed on the OFCOM website.

In particular, the new code sets out a governing framework for agreements between operators and landowners for the installation of apparatus and infrastructure.

If a consensual agreement cannot be reached in free negotiations between the parties then the code empowers the court to "impose an agreement", subject to the payment of “market value” (as to which see the box below) to the landowner. (There is a simplified procedure where the operator merely wishes to run overhead lines over land.)

The market value basis, as currently drafted in the proposed new code, gives rise to two concerns:

  1. The government is to be entitled to make further regulations to replace the market value basis with an “existing use value” basis, which will mean less money for the landowner.
  2. The operator's right to share (see more on this below) is to be disregarded in the calculation of market value.

Security of tenure

Moreover, like the old code, the new gives operators security of tenure. That is, when the contractual term of an agreement comes to an end, the code provides for the agreement to continue automatically. The landowner may only then bring the agreement to an absolute end by complying with the notice procedure set out in the code.

The form of notice is to be prescribed by OFCOM. It must contain an end date that falls after a period of 18 months beginning with the day on which the notice is given.

The notice must also state the ground on which the landowner proposes to bring the agreement to an end. The available grounds are:

  • substantial breaches by the operator;
  • persistent delay by the operator in making payments to the landowner;
  • the landowner intends to redevelop the land;
  • the prejudice suffered by the landowner if the agreement continues cannot be adequately compensated by money AND that prejudice outweighs the public benefit of the agreement continuing.

The agreement will then come to an end unless the operator serves a counter-notice on the landowner within three months AND (within a further period of three months) applies to the court for an order.

The court is given wide discretion and is entitled to order the continuation of the agreement, its modification, its termination or replacement with a fresh agreement.

In determining what order to make, the court must have regard in particular to:

  • the operator's business and technical needs;
  • the use that the landowner is making of the site;
  • the amount of money payable by the operator to the landowner under the existing agreement.

Rights to share and upgrade

In a departure from the old code, operators under the new code are to be given rights to upgrade any of the apparatus to which an agreement relates or "share" the use of any apparatus with another operator (so long as any such changes have no adverse impact on the appearance of the apparatus nor impose any additional burden on the landowner).

Such operator rights, in particular the right to share, are giving landowners much cause for concern. Landowners will lose a significant degree of control that is currently available under the old code.  They will also lose additional time and money when, for instance, they wish to bring a code  agreement to an end, because they may have to deal with numerous additional operators with whom the original operator is now sharing the site.

Also, as mentioned above, the operator's right to share is to be disregarded in the calculation of market value payable to the landowner by the operator under an agreement imposed by the court. In other words, an operator will be able to generate income from sharing apparatus without recompensing the landlord.

No limitations on assignment

In a further departure from the old code, any term in an agreement (including a lease) under the new code will be VOID to the extent that it limits assignment of the agreement to another operator.

The assignor will not be liable for any breach of the agreement after the assignment so long as it gives written notice of the assignment to the landowner. (Section 5 of the Landlord and Tenant  (Covenants) Act 1995 is to be amended accordingly, to make it clear that this notice requirement applies to leases.)

However, a term in an agreement that requires the operator to guarantee the obligations of the assignee (i.e. in the case of a lease, an AGA) will be permissible.

Land Registry

Like the old code, the new makes it clear that code agreements will be binding on landowners' successors in title. But, unlike the old, the new makes it clear that code agreements do not require registration at the Land Registry (except for leases for more than seven years). Instead, they will be expressly treated as a new category of overriding interest under the Land Registration Act.

No contracting out

Contracting out from all of the major provisions of the code is prohibited.

Status of old code

The old code will continue to apply to agreements that pre-date the introduction of the new one.

Landlord and Tenant Act 1954 - tenancies granting rights under the new Electronic Communications Code

Following on from the previous item, the government is also to amend the 1954 Act, to make it clear that leases governed by the new electronic communications code will fall outside the security of tenure provisions of the 1954 Act. That’s because any such leases will benefit from security of tenure under the regime imposed by the new code - see previous item.

The government recognises that any duplication of security of tenure between the new code and the 1954 Act would be pointlessly bureaucratic.

However, the duplication will continue to apply to leases governed by the old code.