Tue 11 Feb 2020

The New Electronic Communications Code - An Update - February 2020

The Telecommunications Code was first enacted in the Telecommunications Act 1984.  In 2003 the Code was extended to cover all electronic communications and the Digital Economy Act 2017 introduced  an entirely new code on 28 November 2017 (the "New Code").

Not many new leases have been completed since the New Code was introduced.  Rents have been driven down significantly and that has effectively become a blocker to new deals.  Morton Fraser is aware of offers with rents of as little as £3 per annum for a greenfield site and £50 per annum for a roof-top site being made by Operators.

In these circumstances it is easy to see why Landowners may wish to avoid dealing with Operators: however, under the New Code, Landowners are arguably in a very poor position.  The whole thrust of the New Code is that it is to facilitate connectivity and the New Code gives Operators extensive powers to lease their chosen sites. In addition, although there has not been a significant number of Court cases since the New Code was introduced, those that there have been, have tended to suggest that the Courts may support the drive for greater connectivity.

This is a complex topic, but a few highlights to be aware of are as follows:-

  1. The New Code applies to Operators under Section 106 of the Communications Act 2003.  Check you are dealing with an Operator by accessing the list on the Ofcom website.
  2. Landowners are now neither able to prevent or limit assignation of an agreement to another Operator nor make assignations to another Operator subject to conditions to be met by the Operator, including conditions requiring the payment of money. A Landowner can however require a guarantee agreement from the outgoing tenant.
  3. An Operator may upgrade and share the use of apparatus with another Operator provided that the changes, as a result of the upgrade  or sharing, have no adverse impact or no more than a minimal adverse impact on the appearance of the apparatus and that the upgrade or sharing imposes no additional burden on the Landowner.
  4. Restrictions on assignation, and sharing do not apply in respect of agreements entered into before the New Code came into force if the existing agreement contains restrictions.
  5. Under the New Code the Courts have the power to impose an agreement on Landowners.  If an Operator gives a notice in writing setting out both their Code rights and all the other proposed terms of the agreement and advises that the Operator is seeking agreement to those terms, the Landowner only has 28 days in which to agree which failing the Operator may apply for a Court Order imposing the agreement.  The Court can make an Order in favour of the Operator if it decides that the prejudice caused to the Landowner is capable of being compensated adequately by money and if they view the public benefit likely to result from the Operator proceeding as outweighing the prejudice to the Landowner. 

There are also changes in the New Code as to how a Code Agreement can be brought to an end.  It is now a two-stage process involving  termination and removal, and in most cases a minimum of  18 months notice must be given. The grounds for ending the lease are substantial breach, substantial delay in making payments due under the lease, redevelopment of the land if the agreement ends and the Operator's failure to meet the public benefit test. 

In terms of land redevelopment, the landowner need not have planning permission, but we are aware of one  case where the Operators have tried to argue that landowners cannot successfully terminate their leases with an Operator by engaging with a developer who is interested in redeveloping the land. 

At Morton Fraser we have experience advising Operators and Landowners and have the benefit of understanding the objectives of both. It is important that, as a Landowner, if approached, you do not bury your head in the sand. Start by getting advice from a Telecoms Surveyor who will be able to negotiate and advise you on your position and, if appropriate, negotiate Heads of Terms for you. Remember to ensure that you also ask for legal and professional fees from any Operator who wants to engage with you since costs can rise steeply and quickly.

We at Morton Fraser would be happy to advise you about appointing a Telecoms Surveyor and to negotiate any appropriate legal documentation.


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