The Electronic Communications Code from 2003 has long been criticised for being unfit for purpose and for holding back the roll out of new telecommunications technology. Finally, on 28 December 2017, it was replaced and the new Electronic Communications Code (‘the New Code’) came into force.
In this blog, I will look at three areas where the New Code has made significant changes that are likely to affect landowners.
How will the new Electronic Communications Code affect rent?
There is a widely held view that telecoms operators will now offer lower rents for sites. This is because the compensation payable, if there is no agreement, will be assessed on a ‘no scheme basis’. The court will look at the value of the land to the landowner and will not consider the value of the site to the operator, which would be much higher. I expect operators to aggressively pursue lower rents when negotiating new agreements or renewing agreements. I strongly recommend that landowners seek advice from experienced valuers at an early stage in the negotiations and certainly before heads of terms are agreed.
Is site sharing and upgrades affected?
Operators are now entitled, automatically, to assign agreements without obtaining the landowner’s prior written consent. The landowners can still require the assigning operator to guarantee the obligations of the new operator, but not anyone else, e.g. the new operator’s successors in title. Anything in the agreement that attempts to change this position will be ineffective.
Generally, operators will be entitled to upgrade their apparatus or share it with other operators without obtaining the landowner’s consent. However, this is subject to the changes not having ‘adverse impact’ on the appearance of the apparatus and no more than a ‘minimal adverse impact’ on the landowner, also the exercise of the right must not impose ‘an additional burden’ on the landowner. Again, any attempt to restrict these rights, or impose conditions, e.g. requiring the payment of money to the landowner (formerly known as ‘payaway agreements’), will be ineffective.
At this stage, it is too early to know how these conditions will be interpreted. Landowners and operators will take very different views of the phrases used in the New Code and it may take some time, or even a court case, before a commonly accepted position becomes clear. In the short term there will be uncertainty.
How will the termination of agreements be affected?
The New Code has made it clear that ‘Code Agreements’ are not protected by the Landlord & Tenant Act 1954. However, under the New Code, landowners must now give at least 18 months’ notice to terminate a Code Agreement and must specify one of four grounds to end the agreement. The operator has three months to serve a counter-notice and must also apply to the court promptly for an order to allow the agreement to continue. If the operator protects its position in that way, the agreement will only end if the landowner can persuade the court that the relevant ground has been made out. The whole termination process is likely to take more than two years and possibly up to two and a half years.
In this blog, I have briefly touched on the most significant changes made by the New Code but there are many other points and changes included in the New Code. It’s vital that landowners obtain advice from professionals before agreeing any terms with operators, either for new sites, or on the renewal of any existing agreement.
For more information and advice on how the Electronic Communications Code may affect your agricultural property or development, please contact Stewart Smith on 01244 305919.