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Changes to the Electronic Communications Code

Icons CourtThe Department for Digital, Culture, Media and Sport has commenced a consultation on changes to the Electronic Communications Code 2017 (the “Code”). James Nelson, Lillee Reid-Hunt and Natasha Barlow report.

The introduction of the Code brought about a major overhaul to pre-existing telecommunications legislation, namely in relation to agreements concerning telecoms apparatus on land. However, the new law has raised numerous concerns for landowners about the wide range of rights afforded to operators under the Code, often to the detriment of landowners.

The government has commenced consultation on the basis that the practical operation of the Code has, in some circumstances, not had the desired effect originally intended. In many instances, negotiations between operators and landowners since the inception of the new law has been far from collaborative and judges have repeatedly tried to reemphasise the fact that parties needed to make a better effort to come to agreement.

The consultation does not set out any detailed proposals at this stage, but identifies three main areas at issue for which it invites participation from both landowners and operators:

  • Issues relating to obtaining and using Code agreements;
  • Rights to upgrade and share; and
  • Difficulties specifically relating to the renewal of expired agreements.

1. Obtaining and using Code agreements

The consultation sets out that there are issues and delays concerning the negotiation of Code agreements – specifically stating that there is a reported ‘lack of engagement and collaboration’ between operators and landowners. Further, the failure of parties to consider or abide by the tenets of the Ofcom Code of Practice (in relation to the Code) is quoted as another area of potential reform, with the consultation raising the possibility of updating and/or strengthening the Code of Practice.

Controversially, the government has confirmed that the ‘no scheme’ method of valuing sites will not be considered for amendment under the consultation. Arguably the most contentious feature of the new Code, the ‘no scheme’ element has made entering into Code agreements a far less endearing offer to many landowners, as the rental payment they receive in return for providing their land is perhaps the only direct benefit they gain in return. A new campaign called ‘Protect and Connect’ is seeking reform on this exact point – citing in some instances that there has been a 90% reduction in rent for landowners as a consequence of the new legislation – leading the campaign to denounce the current legislative regime as the ‘great mobile mast rip off’!

It isalso proposed that a statutory process is introduced for monitoring and raising complaints relating to non-compliance with the Ofcom Code of Practice, alongside a new Alternative Dispute Resolution Scheme specifically for Code disagreements. There is also discussion of a faster and more cost-effective process allowing operators to proceed where landowners are unidentifiable or unresponsive. The consultation seeks views on how this process would work in practice.

A further issue the government has identified is that while the parties can vary the terms of a Code agreement during its term, changes cannot be imposed by the court if the parties cannot come to an agreement. The consultation proposes that circumstances be set out where modified changes to rights or terms under Code agreements can be imposed by the court. It is suggested that a public benefit test be put in place (similar to that which decides whether a Code agreement is enforced in the first place) to determine whether an agreement can be modified.

The potential issue for landowners is that public benefit test (being that the public benefit of having high quality telecoms services outweighs the prejudice to the landowner) is difficult to overcome unless there are compelling prejudicial reasons at hand. If this proposition becomes law, operators may have another very useful weapon in their armoury to utilise should they wish to vary or remove agreed terms in the interest of the ‘public good’.

2. Rights to upgrade and share apparatus

One of the government’s core aims regarding the rollout of digital infrastructure is to reduce the cost, time and volume of apparatus required for operators to develop their networks. It is reasoned that this will increase the number of operators in a given area, providing greater competition and choice to consumers.

The Code confers automatic rights on operators to upgrade their own apparatus and share the use of it with other operators, provided it will not have an adverse impact on the appearance of the apparatus or impose an additional burden on the landowner. However, this causes disagreements between landowners and operators, exacerbated by the lack of clarity around what constitutes an adverse impact.

The consultation proposes amending the wording of these automatic rights to make it clear what measures operators can take without requiring the permission of the landowner. It is further recommended that automatic rights are extended to operators subject to pre-2017 agreements in limited circumstances. This would amount to retrospective legislation and begs the question: what has changed in four years, especially given that the government decision in 2017 not to apply the new law retrospectively was on the basis that cost savings would be limited (and the consequential effect on investment and coverage would also be relatively small)?

While the circumstances proposed in the paper are narrowly prescribed to cover only upgrades or sharing that have very little or no impact on the landowner, this would still reduce a landowner’s control over the land in a way which may not have been anticipated at the outset of an agreement.

3. Expired agreements

There is a reported lack of clarity with regards the expiration and renewal of Code agreements. Under Part 5 of the Code, once an agreement expires, the operator can continue to occupy the site unless a new agreement is completed or the landowner requires the operator to vacate. Currently, Part 5 only applies to certain Code agreements, but it is proposed that it is extended to all agreements, including those entered into prior to 2017, to address this inconsistency.

It is also suggested that all disputes under the Code should be subject to a six-month limit for the court to hear the case. Additionally, the proposal that either party should be able apply for an interim order relating to a renewal agreement would remove any benefit to one of the parties in delaying negotiations in order to maintain the terms of the old agreement – such measures are therefore intended to encourage prompt negotiations between the parties. Following such an interim order, if the court subsequently imposes the renewal agreement, it would be able to backdate the financial terms.

Concluding Remarks

The proposed consultation serves to address key areas of reform in a fast-moving area of law that has seen its fair share of litigation over the past four years. Few would disagree with the notion that the legislation should adapt to the constantly evolving landscape of telecommunications technology and digital infrastructure – nevertheless, the law should strike a fair balance where possible.

Whilst the majority of proposals will be welcomed by operators, landowners may be concerned that some of the suggested modifications to the law further tip the balance of power in favour of operators. The refusal to re-address the valuation scheme in particular could conceivably continue to be a barrier to successful negotiation between operators and landowners.

While it is clearly important that operators are able to widen networks to extend connectivity throughout the country, parity is important and the safeguards of landowners should not be unduly forfeited to make way for this phase of digital transformation.

The closing date for responses to the consultation is 24 March 2021.

If you are seeking expert advice on your rights and options in connection with the Code, an existing agreement or a proposed agreement, then please get in touch with James Nelson or Lillee Reid-Hunt.

James Nelson is a solicitor, Lillee Reid-Hunt an associate and Natasha Barlow a trainee solicitor at Sharpe Pritchard LLP

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