Telecommunications technology has made significant advances since the early days of mobile phones and the internet. Digital communication, once considered to be a luxury, is now a basic need in a similar category to electricity.
The current regime in the form of the Electronic Communications Code was enacted in 1984 to give telephone companies a statutory basis to install and keep landline equipment on land. Therefore, in the event that a landowner refused to agree to the installation of telecommunications equipment on their land, operators have the power to apply to Court for a Court Order enabling them to do so.
Why does it need to be updated?
While the Code was extended in 2003 to recognise new forms of digital technology, times have changed and the Code it is now widely regarded as anachronistic, complex and difficult to apply; sentiments which underpin the rationale behind the reform of the code.
In introducing a new Code, the government seeks to promote investment in new communication technologies and bestow on operators the ability to expand and improve their networks with greater freedom than the present regime allows. The Code therefore looks to favour operators with their rights being brought closer to with those of other utilities providers.
Key changes to the Code
The main reforms can be summarised as follows:
- Rents: The government seeks to bring rents in line with those paid by utilities companies and providers of other essential services with the introduction of a rent valuation system known as the "no scheme" valuation. The value of the land will be assessed on the basis of its value to the landowner, rather than the operator. This is likely to reduce the rents paid and compensation awarded for the loss of land. In addition, it is envisaged that costs will escalate for landlords due to disputes that may arise in determining the rate of compensation for the use of a particular piece of land.
- Site sharing, additional apparatus and assignability: In the same vein, in order to facilitate the rapidly evolving nature of digital technology and to encourage the growth of the network, operators will no longer have to seek consent to upgrade or share their apparatus. This will bring an end to the landlord’s ability to earn extra income from each additional piece of apparatus or site sharing arrangement. Similarly, in the event an operator assigns its rights in the equipment and lease, there will no longer be the opportunity for landlords to negotiate new terms.
- Contracting out of the Code: To the extent that contracting out of the old Code was ever a viable option, it is now explicitly not possible with the result that landlords will not have the ability to negotiate terms which are more favourable than those set down by the Code.
- Dispute resolution: In the event that landowners refuse consent to the installation of equipment on their land, the new Code will provide for a more efficient dispute resolution procedure.
- Security of Tenure: Operators will not be able to rely on 1954 Act security of tenure provisions under the new Code. This removes one layer of protection from the operator. Landlords however will still be bound by the termination procedures in the code. Under the current code, the onus is on the landlord to start proceedings to have apparatus removed. However, there is little clarity as to in what circumstances the code rights will be brought to an end and apparatus removed. It is thought that the new code will seek to increase clarity by reducing the number of disputes and their associated costs and that in the event that the operator does not issue a counter-notice on the landlord requiring the apparatus to stay, then the landlord can remove the equipment when code rights expire.
- Retrospectivity: The new Code will only apply after the law comes into effect and will not apply retrospectively to existing contracts.
In introducing a new Code, the government seeks to promote investment in new communication technologies and bestow on operators the ability to expand and improve their networks with greater freedom than the present regime allows.
Points to note for landowners
- Under the current regime, rents have been favourable making provision of land for telecommunications equipment an attractive option for landowners. However, the new "no scheme" valuation system is likely to bring an end to relatively healthy rent levels once enjoyed by landowners agreeing to host equipment on their land. This, twinned with the inability to contract out of the Code will arguably put landlords in a weaker position than under the old code given their inability to negotiate more favourable terms than the code will allow.
- Landowners should therefore be alive to the possibility of operators trying to terminate existing arrangements so as to bring replacement contracts within the auspices of the new and more favourable code.
- The new Code is expected to come into force in Spring 2017 so landowners would be well advised to conclude any ongoing lease negotiations sooner rather than later to benefit from the current valuation regime and possible extra income from site sharing arrangements or installation of additional apparatus.