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The Electronic Communications Code

The Electronic Communications Code (or "Telecoms Code" as it used to be known) is in need of reform. The Code was introduced in 1984 as a result of the privatisation of BT. It now applies to all forms of electronic communications, such as fibre optic cabling and broadband as well as mobile phone masts and rooftop installations. In other respects, however, the Code has hardly changed. There are still large parts of the country without fast 3G mobile reception, and even those areas that are connected will soon need to be upgraded to 4G to provide the superfast broadband technology that is now commonplace in many other developed countries.

While the cost of rural rollout plays a major part in the lack of a nationwide 3G service, the Code is also partly to blame for this. It fails to provide a fast and cost-effective way of resolving disputes. There is a balance between, on the one hand, an operator acquiring a site on cost-effective terms that allow it to roll out broadband to less profitable rural areas and, on the other hand, the interests of a landowner whose core business could be adversely affected by the installation.

The Code is also badly drafted and leaves many important issues up in the air. Landowners are wary of allowing an operator on site because, if the landowner wishes to redevelop, the Code makes it almost impossible to do so without the operator's consent. If consent is not forthcoming, the cost of regaining possession is prohibitively expensive.

Operators are not keen on relying on their Code rights either. Securing permission to install apparatus is a long, drawn out and costly process and most operators would rather avoid the bad publicity of being seen to stop someone from redeveloping their land. The outcome is, therefore, more often than not a messy compromise.

The government has, therefore, asked the Law Commission to come up with something better. A consultation has been launched and anyone with an interest in the outcome is urged to respond by no later than 28 October, when the consultation closes. You may wish to get in touch with Mark East of Telecoms Property Consultancy Limited (details below), who are coordinating a response on behalf of landowners. Clearly, many telecoms operators will be putting their point of view across and there is a danger that, if landowners do not respond to the consultation, their views will not be heard. Landowners should remember that, even if they do not currently have a Code operator on their land, they may have at some point in the future.

So, let's get down to the detail. Some of the Law Commission's recommendations will be of concern to landowners:

  • Compensation - at the moment, the Code is very unclear about when, and how much, compensation is payable to a landowner who is either forced to allow an operator to install apparatus on its land or who is unable to redevelop because the operator refuses to relocate its apparatus. Clarity would, therefore, be welcome. However, the Law Commission is proposing that compensation be assessed by applying market value based on compulsory purchase principles, using the second rule in section 5 of the Land Compensation Act 1961. This means that a "no scheme world" must be assumed and that all Code networks are, in effect, disregarded. This could mean that landowners receive significantly less compensation than they do at present, potentially receiving only a nominal payment. There is an argument that, as telecoms companies are run for profit, they should pay the full market price.
  • Upgrade, assignment and sharing rights - it is proposed that all telecoms operators should have a statutory right to upgrade, share and assign their telecoms rights regardless of the terms previously agreed with the landowner. This would result in an unacceptable loss of control over a property and potentially unlimited equipment appearing on rooftops or land at no additional rent. At the very least, a landowner should be entitled to a market rent for any additional apparatus.
  • Removal - the Law Commission proposes that the parties should be allowed to contract out of the Code restriction on removing apparatus from a property. This is a welcome reversal of the current position. It is the main issue putting some landlords off leasing space to telecoms operators, so this is bound to help the market. As a minimum, vacant possession for redevelopment, change of use (to residential) or recovery for the landlord's own use (e.g. air-con plant) should be eligible for contracting out. This certainty would open up the market by encouraging more site providers. This would, in turn, help rents remain at a sustainable level.
  • Lift and shift - landowners have a right to relocate or remove equipment but only if the landowner can show that there will be no substantial interference with the network as a result and it pays all associated costs. Under the Law Commission's proposals, it will not be possible to contract out of this provision. However, there is a strong argument for saying that freedom of contract should prevail. If the parties agree more flexible "lift and shift" arrangements, why should the law intervene?
  • Dispute resolution - as things currently stand, the County Court is the only option. The proposal to refer disputes to the Lands Chamber is a more cost-effective option and is likely to deliver a quicker outcome. Alternative dispute resolution such as mediation, arbitration or independent expert should, however, also be available, depending on the circumstances.
  • Landlord and Tenant Act 1954 - the security of tenure provisions in part 2 of the Landlord and Tenant Act have never sat well with the Code, so the proposal that telecoms installations be exempt from the 1954 Act is welcome. Obviously, it needs to be clear that it will still be possible to contract out of a normal commercial letting even where the operator may have installed electronic communications apparatus such as microcells or switch sites, as these should be considered ancillary to the primary commercial use.
  • Land Registry - as regards whether an operator needs to register its lease at the Land Registry, the proposal is that this should be optional. We disagree. The land register should be as conclusive as possible so that anyone dealing with that property knows what rights affect it. Telecoms leases should be treated no differently from any other lease: if the term is longer than seven years, the lease should be registered; if the lease is shorter than that, it should not need to be.

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