The new Electronic Communications Code, which regulates the legal relationship between landowners and the telecom operators that install apparatus on their land, creates several issues that landowners need to be aware of.

Background

On 28 December 2017, as part of a wider political agenda to improve the nation’s connectivity, a new Electronic Communications Code (ECC) came into force. The new ECC purports to make it easier for Code Operators to roll out electronic communications apparatus, and provide the public with a wide choice of high quality electronic communications services. Our experts have explored what this may mean for landowners.

  1. The prospect of unwittingly entering into code agreements

It is significant that there are few formal requirements for creating written agreements under the new code. Written agreements do not have to take the form of deeds or leases. They need only be in writing, signed by or on behalf of the parties to it, and contain terms specifying the length of time the Code rights will be exercisable for and the notice period required to terminate the agreement. As a result landowners are warned of the danger of unwittingly entering into a written agreement. Caution is advised when being encouraged to sign any form of document, and correspondence should be marked “subject to contract”.

  1. Money, money, money

Importantly, changes to the way in which consideration is to be calculated under court imposed agreements (being the sum representing the market value of the person’s agreement to confer or be bound by code rights, but assuming that the right does not relate to the provision or use of an electronic communications code network- a “no network valuation”) will have the effect of pushing down payments made by operators against those made under the old code.

  1. Loss of control over the original operator assigning their rights to a subsequent operator

The new code has made it significantly easier for the original operators with whom occupiers entered a code agreement with, to assign their code rights to a different operator. Any terms in agreements preventing, restricting, or imposing conditions on the operator’s ability to assign will be void. This takes away the control of occupiers to choose to enter agreements only with operators whose approach or financial standing they are happy with. One form of safeguarding to occupiers could be to impose a term in the code agreement requiring the assignor to provide a guarantee agreement, which will guarantee the performance by the assignee of the obligations in the code agreement. Please speak to one of our ECC specialists if you wish to explore this option further.         

  1. Uncertainty surrounding ‘upgrading’

As with assignment, any terms in agreements preventing, restricting, or imposing conditions on the operator’s ability to upgrade its apparatus will be void. Since there is no definition of ‘upgrading’ at this stage, landowners are advised that this could potentially mean anything from replacing apparatus with updated versions, to adding new apparatus in addition to the existing.

  1. The upgrading/ sharing loophole

In addition to the above issue regarding upgrading, a further issue is the current uncertainty surrounding the test which must be met to allow operators to upgrade or share their apparatus with another operator. One condition is that any changes to apparatus have a no more than a minimal impact on their appearance. However, it is unknown whether this comparison will be conducted over the whole timescale that the operator has been on site, or whether the comparison will be between the proposed apparatus and the apparatus in place at the time of the proposal. If it is the latter, it is possible that, if the operator upgrades or shares apparatus on a more incremental basis (rather than making drastic changes all at once) such proposals will satisfy the conditions on upgrading and sharing, which could result in considerable changes over time.

  1. Limitations on occupiers’ ability to terminate

Occupiers are warned that, having entered into code agreements, they may only terminate the same in limited circumstances. Overuse is not an accepted ground for termination. Accepted grounds include substantial breaches- however it remains unclear just how substantial this breach must be; and persistent delay in payments by the operator- however, since this would only be able to be established over a number of years, occupiers are unlikely to rely on this ground.

  1. A warning against fruitless claims

Landowners are advised that since under the new code, operators exercising a right in accordance with the agreed terms are treated as acting under a statutory power, any attempts to file a common law claim (for example in nuisance or trespass) in these circumstances will likely be unsuccessful.

  1. Considerations for freeholders

It is stated that the new code only allows written agreements to be entered into between operators and the occupiers of the land for the time being. This means that it is the tenants or licensees that enter the agreement, rather than the freeholder.   There appears to be an effort to safeguard freeholders against being bound by agreements entered into by a tenant or licensee, in that the Code does not allow an occupier to grant a Code right that exceeds the occupier’s interest in the land. However, where an agreement is imposed by a court order, rather than being reached on a voluntary basis, the court may impose such an order on the ‘relevant person’. Freeholders are therefore advised to be aware of the possibility of an aggrieved operator seeking to enforce an agreement.

  1. Considerations for prospective buyers of land

For individuals considering purchasing land, the potential lack of written evidence of code agreements may be problematic. The new code does not require code rights to be registered to be binding, and so agreements may not be obvious from inspection of the register. In addition, where an agreement is imposed by a court order, it is not required that a contract is drawn up to record the terms of the order. Of course, if installation of code apparatus has begun, then the existence of a code agreement will be obvious from inspection of the land. However, in the gap between a code agreement being reached, and the commencement of works to install the equipment, the buyer may potentially overlook the existence of a code agreement which is in place, and will bind them upon their purchase of the land.

  1. Time considerations

Landowners are advised that due to changes in notice procedures under the new code, the timescales for terminating an agreement and removing an operator from the site are expected to be significantly longer- in the region of two years, some experts predict. Similarly, where either party wishes to vary the terms of a written agreement and agreement cannot be reached between them, that party will only be able to apply for a court order after 6 months from the date the notice was served. Landowners are therefore advised to act swiftly and seek legal advice at the early stages of disagreement or dissatisfaction with the arrangements.

Katie Julian is a paralegal in the real estate team at Stephens Scown. If you have any questions about the implications of the new Electronic Communications Code, please contact Katie on 01872 265100 or email RealEstateCornwall@stephens-scown.co.uk