Contact one of our advisors now Call 0800 088 6004

The New Electronic Communications Code and its Impact on Landowners

The Electronic Communications Code* (“the Code”) grants rights to telecommunications providers (“providers”) to install and maintain equipment such as masts, cables and cabinets, on both public and private land. The Code regulates the relationship between a land owner and a provider and, in some cases, can grant providers rights over land.

The Code has long been criticised as being outdated, unclear and complicated to understand.

In 2013, the Law Commission recommended that the Code be completely rewritten to make it more accessible. This led to the Government’s proposal for a new Code which is contained in Schedule 1 of the Digital Economy Bill 2016-2017.
The New Code
“No Scheme” Rule
The new Code proposes to completely change the way that land is valued; focusing on the land value to the landowner, not the provider.
This reflects the Government’s view that landowners should not be benefitting from the economic value of the telecommunications services which are in ever increasing demand. Going forward, this value will remain solely with the provider of the services, and not the landowner who is merely facilitating the provision of services.
It is expected that this “no scheme” rule will significantly reduce the amount of rent that landowners will be able to charge the providers. It is also anticipated that disputes will arise when determining the amount of compensation payable to a landowner for the use of their land.
Rights of Upgrade and Sharing
Under the new code, providers will be able to upgrade their equipment, but also share this with another provider. This is on the condition that a) the upgrade or sharing has no adverse impact on the appearance of the equipment; and b) no additional burden is imposed on the landowner.
This has an advantage to the providers, of enabling them to make better use of the sites they have, without incurring any additional costs. Landowners have previously been able to negotiate with providers before granting these rights, however, under the new Code, the providers will be granted these rights automatically.
Landowners will find it harder to identify which provider operates on their land if this provision is enforced. Shared equipment will then have the potential to be under the control of a number of providers, with no identifiable link to a specific provider.
As with the “no scheme” rule, the conditions mentioned above have the potential to cause a dispute between landowners and providers based on what each party believes the adverse impact and addition burden to entail.
Right to Assign Code Agreements
An assignment of a Code agreement will usually render the agreement void. The only exception would be where the agreement is a lease under the Landlord and Tenant (Covenants) Act 1995. In this case, a landowner can require providers to supply an authorised guarantee agreement.
Under the new Code, an assignment can take place freely and landowners will have difficulty in identifying which provider operates on their land. They will also lose the ability to negotiate when the current agreements expire.
Application and the transition between the two codes
The new Code will not apply retrospectively; meaning that all agreements made before the new law comes into force will remain unaltered.
There will be transitional agreements detailing when the existing agreements will adopt the provisions of the new code.
This new Code appears to favour the providers of services as apposed to the landowners who accommodate them. The new Code has the major impact of removing the vast majority of incentives for landowners who accommodate or plan to accommodate these providers.
Landowners will need to consider their current agreements under the Code, as providers may begin to terminate their rights in the agreements early and apply the provisions of the new Code when it comes into effect.
Prospective purchasers will need to thoroughly inspect properties before they acquire them. Lack of inspections could become costly to the new owner in relation to the development potential of a particular site.
Whilst it may seem that the new Code favours providers, there are some benefits for landowners. The new code states that security of tenure provisions will not apply to a lease. The main purpose of this is to grant rights under the Code. The grant of these rights will not constitute a disposal giving rise to a tenant’s right of first refusal.
Attempting to strike a balance between protecting property, whilst enabling developments in connectivity, will be a difficult task. Only time will tell how this new Code will be received by both landowners and providers.
*The Electronic Communications Code (“the Code”) is contained in Schedule 2 of the Telecommunications Act 1984 and amended by Schedule 3 of the Communications Act 2003
To see how we can help your business with all its commercial property needs call 0800 088 6004 today.