The Government, in a push to promote investment in new communication technologies, introduced a new Electronic Communications Code (“the Code”) in the Digital Economy Act 2017, which came into force on 28 December 2017.
Since 1984 the Code has provided licensed telecoms operators’ statutory rights to construct, keep and operate equipment on public and private land. The new Code has been designed to take into consideration the vast changes in digital communications that have taken effect over the last 30 years. The wide range of reforms contained in the new Code will be of importance to network operators, landowners and occupiers, but it is of particular importance to landowners to note the modifications in the new Code heavily favour the operators.
Under the new Code, landowners will be restricted in their ability to charge random premium prices for the operators’ use of their property. The new Code introduces a “no scheme” valuation system meaning that whilst supposedly being calculated on market value, any calculation excludes the value of the proposed use by the operator. Usually the sites are small greenfield only areas which hold little value to the landowner as bare land and have few other suitable uses. As a result it is likely rents paid and compensation awarded will reduce. With an anticipated increase in the number of disputes over determining rates of compensation a further concern for landowners is their increase in legal/ surveying costs.
Operators’ rights have under the Code improved allowing them in very limited circumstances to upgrade or share their apparatus without the consent of the landowner. This can prevent landowners from gaining additional income for new or additional operator uses or for additional pieces of apparatus. Landowner consent is no longer a requirement for assignment save that landowners can insist on receiving a guarantee agreement.
Security and termination provisions no longer have double protection under the Code and the Landlord and Tenant Act 1954. The 1954 no longer applies under the new Code, meaning operators no longer benefit from Code rights and 1954 Act rights simultaneously. The new Code provides its own continuation regime akin to that of the 1954 Act albeit with longer notice periods and different grounds for termination.
The new Code provides that Code agreements can be terminated if the landowner wants to redevelop however at least 18 months’ notice is required. The new Code no longer contains provisions to allow the landowner to relocate apparatus, as such it is beneficial for landowners to ensure they have a lift and shift provision within the agreement.
Landowners who currently have telecoms tenants should be aware that the new Code will only apply to contracts created from 28 December 2017 and will not apply retrospectively to existing contracts. It is likely an operator may try to bring its current agreement to an end by triggering tenant break clauses in order to enter into a new agreement under the benefits of the new Code.
Nicole Cleaver, Trainee Solicitor