The Code, as it currently stands
The theory behind the Code was to ensure the UK was equipped for the ‘digital age’, by enabling telecommunications operators to provide the public with “a choice of high quality electronic communications services even if it does so at the expense of landowners.
Under the Code, operators can apply to the Upper Tribunal for an order imposing an agreement to install equipment on the land of an owner where the owner has no desire for any such agreement and even where such agreement may detrimentally affect the value of the owner’s premises. In addition to this, it is difficult for owners to remove telecoms equipment from their premises, with at least 18 months’ notice required to be given to the operator. Owners must also rely on one of four grounds under paragraph 31 of the Code in order to give notice to terminate a telecoms agreement:
- Substantial breaches by the operator of its obligations under the agreement
- Persistent delays by the operator in making payments to the site provider under the agreement
- Intention by the owner to redevelop all or part of the land covered by the agreement and could not reasonably do so unless the agreement comes to an end
- The operator is not entitled to an agreement as it cannot adequately compensate the owner for damage caused by the operator or if the public benefit of having apparatus at the premises does not outweigh the detriment to the owner
The above grounds mirror some of those under section 30(1) of the Landlord and Tenant Act 1954, and there are clear parallels when it comes to caselaw, too. For instance, in the 2019 case of EE Ltd and Hutchison 3G UK Ltd v. Sir James HE Chichester & Others, an owner sought to oppose an intentional redevelopment, and they applied against EE for a telecoms agreement to be imposed on the basis that it intended to redevelop the land. The Tribunal applied the test set out by the Supreme Court in S Franses v. Cavendish Hotel (London) Ltd [2018] that the owner had a genuine, firm, settled, and unconditional intention to carry out the works and would do so even if the operator left voluntarily. In the end, the Tribunal determined that the works (which partially related to designing new telecoms masts at the premises) were designed to prevent the operator from occupying the premises, and, as such, the owner had no genuine intention to carry out the works.
Problems with the Code?
With operators attempting to roll out new digital infrastructure across the UK as quickly as possible (including 5G), the Code goes some distance to enable operators to do this at the expense of private property rights. However, disputes between owners and operators still arise on a daily basis, fundamentally slowing down the process. Disputes between owners and operators are surprisingly frequent in respect of whether or not an agreement should be imposed and what the terms of such an agreement should be, with crucial issues for owners being:
- Disruption caused by the operator (in carrying out works, upgrades, etc.)
- The amount of compensation/rent payable under Code agreements, with the current valuation mechanism not taking account of the value of property attributable to its use as an electronic communications network
From an operator’s perspective, with many owners being reluctant to grant rights to operators, this can lead to a lack of responsiveness between parties and the need for more applications to the Tribunal than was perhaps envisioned by the Code.
Reforms and continuing struggles for owners
Some of the key changes to the Code introduced by the Bill include:
- Enabling operators to automatically upgrade and share apparatus which was installed prior to 2017 (pre-Code), whereas under the current Code, a new agreement would have to be put in place
- A new procedure to allow operators to have temporary rights of access to land where an owner is unresponsive
- Streamlining the renewal of expired telecoms agreements
- Streamlining the timescale for court/tribunal proceedings
- Active encouragement for alternative dispute resolution
With its implementation, the Bill effectively serves to bridge gaps which remained between the Communications Act 2003 and the Code. The amendments to the Code greatly facilitate upgrades to telecoms apparatus, which, given the fast-changing nature of technology, will be welcomed by operators.
In theory, the amendments will speed up the process of finalising new telecoms agreements (particularly with unresponsive owners), although it remains to be seen whether this will be true in practice and, crucially, whether it will significantly reduce the current amount of litigation. While this can be seen to benefit both parties, owners – who may already believe that their rights are neglected under the Code – will likely continue to feel hard done by as the Bill does not address the prevailing issue of compensation in terms of rent. Unless this changes – and there is still time before the Bill receives Royal Assent – it is difficult to see owners being as excited as operators are about the Bill, with private property rights disregarded at the expense of the fast-paced roll-out of digital infrastructure.
Reed Smith is experienced in advising on telecommunications issues and disputes. We are available to advise landlords on the steps to take to protect their position insofar as is possible in light of the Code and the new Bill.
Client Alert 2022-064
