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31st May 2017

Power to the telecom operators

There have been vast changes in the world of digital technology over the last 30 years and the current legislation is widely regarded as outdated. As part of the Digital Economy Bill which received Royal Assent in April, the existing Code governing the relationship between landowners and telecoms operators is set to be updated with a new Electronics Communication Code. Ofcom are currently carrying out a consultation with the industry which will close on 2nd June and the Code will come into force on a date to be decided. In the meantime it is the existing Code that regulates telecoms equipment.

Changes

One major change is the price operators will pay for renting the land on which their equipment resides. Under the new Code a valuation scheme is proposed whereby the value of land is assessed on its value to the landowner, rather than the value of the proposed use of the land to the operator. This means landowners will suffer a major disadvantage as it is likely they will be paid considerably less rent.

Should a landowner wish to terminate an agreement under the new Code, there will be a two stage process for termination, potentially involving two applications to the court and a timescale of at least two years to achieve vacant possession. Termination will also be based on limited grounds. The time scales appear to be much longer than under the existing Code. Although in practice it is likely landowners will continue to negotiate with operators to leave early, landowners risk having to pay a higher price to operators who seek to take advantage of the longer notice periods involved.

In addition, landowners will lose out on receiving the benefit of additional payments from other operators sharing the site. There are also provisions missing from the new Code, such as the right of landowners to allow apparatus to be relocated, which landowners would need to ensure was included in any contract.

Operators are also given a new automatic right to upgrade and share the apparatus with other operators with only limited grounds on which the landowner can object and without the landowner having a say on the new terms or able to charge more. This potentially could result in much bigger equipment being installed, with the landowner almost powerless to do anything about this.

 

Court Order

With the changes in the law forthcoming, any landowner may wish to think twice about entering into a new arrangement with a telecoms provider and the changes arguably remove much of the incentive for landowners to voluntarily grant Code rights to telecoms operators.

Worryingly for landowners, even if they decide not to enter into a contract with a telecoms provider, the telecoms operator could apply for a court order compelling the landowner to agree terms in a contract if they feel a particular site is necessary for their telecoms network.

As long as the landowner can be adequately compensated by money and any prejudice caused can be outweighed by the resulting public benefit, it is likely the landowner is going to face a real struggle preventing the telecoms operator using their land.

 

Application of the Code

The new Code will only apply to new contracts after a date that will be set by regulations following the end of the consultation. Unfortunately for landowners they will be unable to opt out of the new Code and if they try to impose any conditions which are prohibited by the Code, such as the removal of the right to upgrade and share equipment, the agreement will be void.

There will be transitional arrangements which will apply to existing contracts when they come up for renewal, which may also make it more difficult for landowners to terminate any arrangement.

With the government’s clear drive to improve the country’s digital infrastructure and place telecom operators on a similar footing to the rights utility companies have, these are worrying times for any landowner who is likely to see a reduction in income and experience far less control over land affected by the new Code.

For further information please contact Sarah Baron by calling 01223 461155 or click here to email Sarah.