The new electronic communications code and how it affects landowners.

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The introduction of the new electronic communications code by the government in December 2017 was designed to encourage rapid advances in communications technology by giving operators greater rights to use public and private land for its apparatus.

However, it also has significant consequences for landowners, with the industry predicting lower rents and reduced income as a result.

There should also be some benefits, including clearer resolution procedures, simplified processes and greater rights to terminate code agreements for landowners who want to develop land in future.

But the bottom line is that landowners should prepare for the prospect of lower income streams and fewer rights when current code agreements reach their expiry dates.

Here is a run down of the key elements of the new legislation:

What are the origins of the Electronic Communications Code?

First introduced in 1984, long before the digital age transformed communications, the code was introduced to provide statutory rights to licensed telecoms operators to construct, keep and operate equipment on both private and public land.

What has changed and why did it need to be updated?

So much has happened in the world of communications since 1984 that it was obvious the code was in need of updating. In April 2017 the Digital Economy Act was passed, reforming the electronic communications code in the process – and it came into force on 27 December, 2017. Ofcom says the reforms are ‘wide-ranging and are of particular significance for network operators, landowners and occupiers.’ [1]

The original code was out of date, complicated and often caused problems not just for land owners and landlords but for operators too. It was famously described as “...one of the least coherent and thought-through pieces of legislation on the statute book." [2]

So what exactly is it?

The code was originally designed to give telephone companies rights to install and keep landline equipment on land – including the ability to apply for a court order to enable them to do so.

Now, with communications networks so important to every area of life, there is a need for a clearer statutory framework. The government wants to encourage operators to invest in new technology and expand networks – and is handing them greater freedom to do that.

In that sense, the new code favours the rights of operators above those of landowners – and the government has set firm targets to improve 4g and 5g coverage across the country as well as internet speeds.

The overall aim is for the code to improve network connectivity and expand coverage while also taking into account the interests of the public, the communications industry and public and private landowners.

What are the key changes to the code?

1 Rents
The government aims to bring rents paid by operators to use public or private land into line with utility companies, by introducing a new rent valuation system. Under this system the value of the land will assessed on its value to the owner rather than to the operator. Landowners fear that in many cases the ruling could see rents decrease. For instance, an unused piece of wasteland that is of key strategic importance to an operator, but not of great value to the land owner, could drop in value.

2 New rights for operators
One important new right, missing in the original code, is the right for operators to connect to a power supply. [3]

They will have the right to share their equipment with other companies, so long as certain conditions are met. This is an automatic right – and any attempt to prevent or limit it (for example by demanding extra fees) is banned. So landowners will not be able to financially benefit from multiple operators sharing a site.

Additionally, agreements in which a landowner takes a cut of income generated from the sharing arrangements are no longer permitted.

Operators will also have the right to assign or transfer their leases without landowner consent (regardless of the terms of any written agreement.)[4]

3 Additional apparatus
Landowners and landlords have traditionally earned extra income from each extra piece of apparatus a communications company installs on their land. However the government wants to encourage rapid strides in introducing new digital technology and is giving operators new rights to install extra apparatus, or upgrade it, without needing to seek consent – and without being charged an extra fee.

4 Contracting out of the code
Whereas in the past landlords theoretically had the ability to generate higher revenue by negotiating more favourable terms with operators, now the ability to ‘contract out’ of the code has been entirely removed. Landlords will not be able to negotiate terms which are more favourable than those which are expressly included in the new legislation.

5 A new dispute resolution procedure
Should landowners refuse consent for an operator to install equipment on their land, the code aims to provide a more efficient resolution procedure. This has yet to be seriously tested.

6 Termination and removal
In the past, landowners were only required to give operators 28 days’ notice to terminate a code agreement. The new code requires 18 months’ notice.[5] In addition the new code acknowledges a difference between termination and removal – meaning landowners may need to serve a further notice after termination to require removal of apparatus within a ‘reasonable’ time frame.

Important things for landowners and landlords to note:

  • The code will not be applied retrospectively to contracts which existed before it was brought in.
  • The new code is bound to cause uncertainty in the short term. Landowners are advised to take stock of which operators are in occupation on their properties and of any planned or potential developments ahead.
  • Some people believe costs will escalate for landlords due to disputes which may arise in determining the rate of compensation paid, especially with predictions that rents will decrease and extra fees can no longer be charged for the installation of additional apparatus.
  • Operators will no longer be able to rely on the 1954 Security of Tenure Act, which made it complicated to remove equipment at the end of a contract – and the system to achieve this is being simplified. It is still down to the landlord to start proceedings to have apparatus removed when code rights expire. But importantly the new code provides for termination of code agreements if a landowner intends to redevelop the site. This could be a major positive for landowners.
  • Given that rents are likely to decrease, and landowners are no longer able to ‘opt out’ of the code, operators may look to try and terminate existing, more expensive contracts. Landowners should be aware of their legal rights and check details of current contracts.

 

[1] https://www.ofcom.org.uk/consultations-and-statements/category-1/electronic-communications-code

[2] https://www.ashfords.co.uk/news-and-events/general/the-new-electronic-communications-code-what-does-this-mean-for-landowners

[3] https://www.blplaw.com/expert-legal-insights/articles/new-electronic-communications-code-to-come-into-force-on-28-december-2017

[4] https://www.michelmores.com/news-views/news/new-electronic-communications-code

[5] https://www.blplaw.com/expert-legal-insights/articles/new-electronic-communications-code-to-come-into-force-on-28-december-2017

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Patricia Jones

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