The UK Government has published the first draft of the new Digital Economy Bill.
The draft includes an update of the Telecommunications Code originally enacted in 1984, and will lead to major reforms to the rights communications providers have to land; the basis for valuing the sites; and site sharing arrangements, as well as administrative changes to how disputes are handled.
The Bill makes provision about electronic communications infrastructure and also proposes to update the existing Telecommunications Code, which, some would argue, has not kept pace with changes in digital technology or demand for communications services. Almost 76% of all adults in the UK now have a smart phone and many have more than one. It is fair to say the technology in place in 1984 when the Code was first produced was vastly different to that of today, with individuals, families and businesses having multiple hand-held and tablet devices, as well as laptops and desktops.
Whilst the Bill is subject to further parliamentary scrutiny, the policy behind it has been agreed by the UK Government and therefore extensive changes are not anticipated. The final Bill is expected to receive approval in January 2017 and receive Royal Assent by April/May 2017 and to be effective from June/July 2017. The main proposed changes to the Telecommunications Code can be summarised as follows:-
1. Access to land
Currently, under the existing Code, an operator must have the agreement of the landowner, or a court order, to allow equipment to be installed on land. This will not change under the new rules; the agreement of the owner will still be required to confer “code rights” on an operator.
However, Code Rights will be laid down in statute and will include:-
- rights to install and keep electronic communication equipment, and apparatus on or over land;
- rights to inspect, maintain, adjust, alter, repair, upgrade, or operate equipment or apparatus on or over land;
- rights to carry out any works on land for or in connection with the installation, maintenance, adjustment, alteration, repair, upgrade or operation of electronic communications equipment;
- rights to enter the land to inspect, maintain, repair, adjust, repair, upgrade or alter any equipment which is on, under, over the land or elsewhere;
- rights to connect to a power supply;
- rights to interfere with or obstruct a means of access to or form the land
- rights to lop or cut back or require another person to do so, any tree or vegetation which interferes with or may interfere with equipment
Most of these rights exist to some degree in existing leases. The difference will be that in setting these rights out in legislation, there is no scope for contractual restrictions on the type and quantity of equipment or access routes.
Agreements between landowners and the communications providers will still require to be in writing signed by both parties. It is likely therefore that a lease of some kind, or perhaps an agreement akin to a wayleave will be entered into between the parties.
2. Assignation of Code Rights, upgrading and site sharing
Under the new Code, any clause which seeks to prevent or limit assignation will be unenforceable giving mast operators a free hand in assigning their leases to another network operator or third party. More importantly, an operator will have a statutory right to share the apparatus with another network operator and as such, site share licence fees are likely to be swept away. The draft Code provides any that any agreement which requires an operator to do something, including making payment to permit site sharing, will be void and unenforceable. The Code as drafted is not retrospective and therefore existing site sharing arrangements will remain in place until the existing lease terminates.
3. Potential effect on rental income
Many landowners have seen a reduction in levels of rent paid by mast operators over the last 10 years as operators seek to reduce infrastructure costs resulting from technology improvements and a move from 3G to 4G to 5G. Operators are routinely looking for consolidation of use of equipment and site –sharing for no fees. It will be in the interests of all landowners to try and agree the level of rent than rely on the new “no scheme” basis of valuation which is proposed will be akin to utility provider payments for electricity cables or gas pipelines.
As currently drafted, the legislation is unclear on whether a “compensation” based regime will be put in place or whether “market value” will continue to be the basis for determining payment levels. One thing is certain it will remain important for landowners to seek professional advice to ensure they secure the terms being offered are at least fair within the seemingly limited negotiating structure.
The Bill is at an early stage and we will be monitoring its progress through the parliamentary system where will likely be subject to amendment. Many landowners hoped the new Code would readdress the imbalance between landowners and operators; however, as currently drafted, if negotiations fail, network operators will be able to rely on compulsory powers to acquire rights for apparatus and communication connections to provide a network service which is now expected as standard for modern living.