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Government publishes proposals for revised Electronic Communications Code - Landlords beware!

With an ever-increasing dependency on the telecommunications network, the Government has recently published proposals for a revised Electronic Communications Code, governing the relationship between telecoms providers and landowners.

The key points that Landowners should be aware of are:

1. Changes to the way that land is valued.

The revised code will ensure that Landlords receive a fair payment for their land, but there will also be an acknowledgment of “the economic and social value to all of society created from investment in digital infrastructure”. As such, communications providers will have similar rights to utilities companies, reducing their rental expenditure and creating greater incentives for investment. It is likely that rental figures currently achieved by landowners will reduce, particularly in circumstances where landowners have previously taken advantage of “ransom rents” i.e. a unique site position securing higher rates.

2. Operators will have new automatic rights to upgrade and share their equipment.

It is argued this ensures that any new technology can be deployed quickly and efficiently. However, many landowners currently require their consent to be given before any site sharing, so that they know who is on site and may charge site sharing fees. The proposals make it clear that communications providers cannot be charged extra fees where there is minimal adverse visual impact or burden to landowners (which may include an effect on the landowners’ enjoyment of the land, any additional expense or inconvenience). Again, this is likely to limit the income stream currently available to landowners.

3. The new code will enshrine reassignment of code rights.

As infrastructure assets are acquired or sold by communications providers, there will be no option for Landlords to negotiate new terms for existing contracts. Landlords will need to keep under review exactly what this will entail and consider whether they will be able to retain controls when an assignment of an agreement takes place.

4. There will also be a policy to prevent "contracting out" of the Code.

This means that all agreements will give providers a form of security of tenure i.e. the right to renew at the end of the term, save in very limited circumstances, meaning it will be very difficult to seek the removal of the equipment at the end of the term.

5. Code rights will continue to apply to contracts signed after the law has come into effect and will not apply to existing contracts retrospectively.

However, the Government intends to make transitional arrangements that will make clear how and when existing arrangements transition to the provisions of the new Code. This means there is a risk that in the future, existing agreements may be reviewed and a transition to the new Code takes place. This must be borne in mind by any landowners who are considering entering into new agreements.

6. The Code rights will continue to apply to land when it is bought and sold, without any requirement to register those rights.

Purchasers will need to be mindful of any telecoms equipment located on land intended to be purchased, as the arrangements will not always be evident from a review of the registered title by the purchaser’s solicitor or be revealed as part of the due diligence process.

7. The new Code will also make practical administrative changes.

Reforms will be made to ensure that disagreements between landowners and providers are resolved as effectively as possible and the dispute resolution procedure will be moved from the ordinary courts to specialist tribunals, which will increase the speed in which Code rights can be enforced. Whilst an efficient process would be welcomed, this is likely to be of concern to landowners in disputes with providers, as it may mean the outcome of the tribunals leads to more favourable treatment/outcomes towards providers.

8. The new Code will also contain provisions that will allow fast interim access to sites for communications providers in appropriate circumstances.

This will enable operators to access sites even while the site valuation is being resolved. Again, this is likely to be unpopular with landowners who often seek to limit access to certain times or upon reasonable prior notice only. This is also particularly important for landowners in the education sector who will be sensitive to access taking place during exam periods.

Historically, many Landlords have been caught out by the protective provisions of the existing Electronic Communications Code which effectively grants a form of "security of tenure" to telecoms providers, making it very difficult for Landlords to seek the removal of their equipment at the end of the term. Landlords will certainly be apprehensive about these new proposals which tip the balance firmly in favour of telecoms providers. Tenants and landlords must therefore exercise great caution when entering into any new arrangements with telecoms providers, particularly as the Government intends to make transitional arrangements which may result in existing agreements transitioning to the provisions of the new Code. We always recommend that legal advice is sought before Landlords enter into any form of arrangement with telecoms providers so that they can be made fully aware of the implications of the Code, which may not be obvious when reviewing any papers received from the providers.

Landowners will also be interested to know that The City of London Corporation has also has a standardised wayleave agreement on their site. The standardised agreement is intended to speed up the process for businesses to get new broadband connections in London.

The draft agreement takes into account the views of developers, landlords, broadband operators, the Royal Institution of Chartered Surveyors, British Property Federation and other interested parties. The document has the backing of the Government and the Mayor of London and will be promoted for use in major commercial property developments across London.

The Digital Infrastructure Toolkit also contains supporting documents, including a guidance note to help businesses through the process of agreeing a wayleave and a key steps flow chart

Autumn 2016