In the sweep-up sessions just before Parliament was dissolved earlier this month, the Digital Economy Act 2017 received Royal Assent. The Act, once brought into force, includes a new Electronic Communications Code. What is it and why does it matter?
Property owners are often happy to allow telecoms operators to install equipment on otherwise redundant parts of their properties, such as the roof, and enjoy the revenue stream. But there’s a catch. Once installed, it can be extremely difficult to get rid of the equipment if the owner wants vacant possession in order to redevelop. The existing Electronic Communications Code provides statutory rights for telecoms operators to keep their apparatus on privately owned land. There are ways in the Code to remove operators, but they are contradictory and complex, resulting in landowners often having to resort to paying a cash settlement to the operator for them to go.
The existing Code has also struggled to keep up with advances in technology and is famously quoted by a senior judge as being “one of the least coherent and thought-through pieces of legislation on the statute book”.
So, has that been fixed with the new Code? Leaving aside termination of Code rights and removal of equipment, it is largely based on the existing Code. Operators can enter into an agreement with property owners to install equipment, which now needs to meet certain formalities, or they can apply to court for an order imposing Code rights. The test for whether a court will impose Code rights has now been placed on statutory footing, as has the method of compensating any owner or occupier for the imposition of rights. This removes any ransom value that the owner or occupier previously held, which is particularly important for operators in rural locations where there are limited sites to extend their network and provide the coverage expected by consumers and businesses today. But arguably, it removes much of the incentive for owners or occupiers to grant Code rights voluntarily.
The biggest change, however, is the process for terminating Code rights. The new Code removes the dual protection currently enjoyed by operators under both the Code and the Landlord and Tenant Act 1954. Once the new Code comes into force, an operator can either have Code protection or 1954 Act protection, but not both.
For agreements under the new Code, there will be a two stage process for termination, potentially involving two applications to the court and a timescale of at least 2 years to achieve vacant possession. At first blush, this might horrify landowners as the timescales in the existing Code appear much shorter. In practice, existing timescales tend to be similar where an operator contests the removal of equipment. Once the new Code is in force, it is likely that landowners will continue to negotiate with operators to leave early, but they may have to pay a higher price as operators may leverage the longer notice periods involved.
Another key change is that the new Code enshrines the automatic right for operators to upgrade and share their equipment. Any restrictions on those rights in agreements granted after the new Code comes into force will be void.
There is an intricate set of transitional provisions and any landowner who wishes to obtain possession against an operator under an existing agreement after the new Code comes into force should seek legal advice before acting.
The new Code is not without criticism and a number of areas have already been identified as ripe for dispute. There is no indication at this stage when it will be brought into force, but watch this space.