Tenants’ top tips on telecommunications


Author: Madeleine Holding


Madeleine Holding, Associate, Fladgate LLP (mholding@fladgate.com)


 

Gone are the days of communicating via smoke signals and carrier pigeons.  Billions of emails are sent every day. Telecommunications is therefore of vital importance to most, if not all, 21st century businesses. Many tenants’ focus is therefore on their ability to extend the telecommunications services at their premises. Broadly speaking, tenants are in a good position to do so as the new Electronic Communications Code (Code), which came into force on 28 December 2017, is weighted very much in favour of telecommunications operators and their customers.

Wayleave agreements are agreements under which a landowner gives an operator a right to install telecommunications equipment on its land.  The Code makes it potentially very difficult for landowners to enforce the removal of telecommunications equipment because, even where a wayleave agreement provides for the termination of the agreement on the occurrence of certain events, the agreement statutorily continues unless and until determined in accordance with the Code. Under the Code, a landowner may bring the agreement to an end by serving 18 months’ notice on the operator provided certain limited grounds are met. This could significantly delay a landowner’s ability to deal with its land as it wishes.

This will usually be of more concern to a landlord than a tenant, whose interest in the land is limited to a defined period of time. The main concern for the tenant is that it has telecommunications capability from the date it is able to occupy its premises. However, the effect of the Code is also that any tenant covenants in the wayleave agreement will continue until the agreement is terminated under the Code.

The tenant will be required to indemnify the landlord against all losses arising from the installation, retention and use of the telecommunications equipment and it remaining in/on the premises/building after termination of the agreement. A tenant should therefore insist that it is released from its covenants on any assignment of its interest in the land, which will usually be granted if the tenant procures a deed of covenant from any assignee.

A tenant should also ensure that the operator indemnifies it against such losses. We have had one operator refuse to provide an indemnity on the basis that it departs from its obligations under the Code and that the tenant could make a claim through their contract for services or by making a direct claim to the operator’s damage claims team. Whilst an indemnity is not anticipated under the Code, the Code does not prohibit operators from providing such an indemnity. Furthermore, any operator’s claims procedure will without a doubt contain limitations and liability caps. A stand-alone indemnity should therefore be demanded.

Conclusion

Whilst tenants usually assume that the process of installing telecommunications equipment is as simple as entering into a services agreement with their chosen provider, this is not always the case. A tenant should start the process of arranging a connection as soon as possible and, where it is required to be a party to a wayleave agreement, consider legal advice on the extent of its obligations as these could bind it indefinitely.

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