The Electronic Communications Code – any clearer three years on?

Since the wholesale replacement of the Electronic Communications Code in December 2017, landowners, infrastructure providers and operators have been coming to grips with the new reality and the tribunal has been busy clarifying some areas of dispute.

The Electronic Communications Code (the Code) had been in force for the best part of a year before the tribunal handed down its first decision, giving guidance on the issue of interim rights (EE and Hutchison 3G v London Borough of Islington [2018] UKUT). Since then, the tribunal has endeavoured to clarify a number of additional bones of contention between operators and landowners. This article highlights some of those key decisions and discusses their practical impact.

Surveying for new sites

The right to enter onto a prospective site in order to undertake preliminary surveying works and assess its suitability to host telecoms apparatus has been confirmed as being a Code right.

If a landowner refuses to voluntarily grant access for such purposes, an operator can therefore apply to the tribunal for an order imposing access rights Whilst the operator will be obliged to make out a good arguable case for the imposition of such rights, in practice this is likely to be a low threshold in most cases (Cornerstone v The University of London [2018] UKUT).

When will the tribunal refuse to impose an agreement?

Paragraph 21 of the Code states that a new Code agreement can only be imposed on a land owner if (i) the prejudice caused to the landowner is capable of being adequately compensated in money and (ii) the public benefit likely to result from the making of the order outweighs the prejudice to the landowner.

The tribunal has confirmed that the level of prejudice to the individual landowner must be very high indeed in order to outweigh the public demand for and dependence upon telecoms networks.

However, set against the backdrop of an intended major redevelopment (albeit not one that the landowner itself intended to undertake), it was recently held that the difficulties that the landowner might suffer in recovering vacant possession from the operator and the subsequent very high risk of it being exposed to stressful and reputationally damaging litigation, was a prejudice that could not be compensated for in monetary terms.

As to how the public benefit test itself should be calculated, the tribunal has rejected the argument that it must take into consideration any wider public ‘disbenefit’ caused by the imposition of an agreement i.e. if an operator were seeking to install a mast on a prospective site for a children’s playground, the fact that it might prevent that public amenity from being constructed is not relevant (Cornerstone v University of the Arts London [2020] UKUT).

Assessing consideration

The tribunal appears to have approved a three-stage stage approach to be followed when valuing the consideration that should be payable to a landowner upon the grant of a Code agreement:

• Assess the alternative use value of the prospective site (being either the current use or of the most valuable, realistic non-network use). This will depend entirely on the location of the site and the land values in that location.
• Consider any additional benefits that will be conferred upon the operator i.e. a well-maintained and fully-insured building upon which to locate a rooftop site or a 24/7 manned gate outside the site.
• Consider any additional adverse effects that the Code agreement may have upon the landowner as compared to the alternative use assumed at stage one i.e. the cost of supervising access to a rooftop that would otherwise not be accessed. Alternatively, this third stage could potentially be dealt with as compensation.

When it comes to the subject of comparables, the tribunal has also made it clear that:

• Neither pre-new Code lettings nor re-lettings of existing sites can be taken as being particularly reliable.
• Where consensually negotiated agreements provide for the payment of a lump sum, rather than separating out the consideration and compensation elements, these will need to be treated with caution.
• The parties should share comparables, rather than deliberately withholding information. Where it feels a party is not doing so, the tribunal is prepared to order disclosure and in which case, an adverse costs award is likely to follow.

Finally and no doubt controversially, the tribunal has given a steer that it anticipates consideration levels for residential roof-top sites, regardless of the geographical location, to be in the region of £5,000 per annum (Cornerstone v London & Quadrant Housing Trust [2020] UKUT).

Sharing and upgrading rights

Paragraph 17 of the Code states that operators who have entered into Code agreements may upgrade their apparatus and/or share it with other operators, but only if this (i) results in a no more than minimal adverse impact on its appearance; and (ii) imposes no additional burden on the landowner.

The tribunal has now determined that these potentially restrictive paragraph 17 rights are a floor, rather than a ceiling and thus represent the bare minimum that operators will be entitled to. However, any operator that seeks the imposition of ‘enhanced’ sharing and upgrading rights will need to justify why they are necessary and the tribunal will bear in mind the requirement for the agreement to impose the least possible loss and damage upon the landowner (London & Quadrant Housing Trust).

Renewing agreements

• Agreement expired prior to 28 December 2017 and not protected by the Landlord and Tenant Act 1954 (the 1954 Act)

The operator has no right to renew its agreement or to seek the imposition of a new agreement enabling it to remain on the same site, although the operator will theoretically be entitled to seek a new agreement over immediately neighbouring land i.e. relocate from one side of a roof top to the other (Arqiva v AP Wireless II (UK) [2020] UKUT). This decision is in the process of being appealed and it is considered likely that it will be overturned.

• Agreement expired either pre or post 28 December 2017, but protected by the 1954 Act

The operator can only renew its agreement in accordance with Part II of the 1954 Act and cannot seek the imposition of a new agreement under the Code. (Cornerstone v Ashloch [2020] UKUT).

However, whilst the level of rent for the renewal agreement must be assessed in accordance with section 34 of the 1954 Act, it should be assumed for valuation purposes that the existence of the Code and the no-network assumption have been taken into account (Vodafone v Hanover Capital [2020] UKUT).

• Agreement expired after 28 December 2017 and not protected by the 1954 Act

When either party applies to the tribunal under paragraph 33 of the Code seeking the modification or wholesale replacement of an expired agreement, the onus will be on that party to justify why it is seeking a new agreement. Simply stating ‘general policy considerations’ is not sufficient and a specific technical or business need relating to the specific site must be demonstrated (EE and Hutchison 3G v Duncan and Others LTS/ECC/2019).

Whilst this has come from a Scottish decision, it is considered likely that it will be followed by the tribunal in England and Wales.

Terminating agreements

One of the four statutory grounds upon which a landowner can seek to terminate an operator’s continuing rights of occupation under part 5 of the Code (and which will, in practice, probably be the most often cited ground) is that they:

‘intend to redevelop all or part of the land to which the Code agreement relates, or any neighbouring land, and could not reasonably do so unless the Code agreement comes to an end’

This wording is similar to the redevelopment ground for termination under the 1954 Act, in relation to which there is an abundance of case law.

The tribunal has confirmed that, whilst the case law associated with redevelopment under the 1954 Act is not binding upon it when considering the redevelopment termination ground under the Code, it will apply the main principles where relevant. As such:

• Where a landowner’s intentions have changed over time, it is the intention at the date of the hearing that is relevant.
• What is required is a firm intention to carry out a redevelopment plan and a realistic prospect of being able to do so.
• A redevelopment conceived purely to obtain vacant possession, which the landowner would not pursue if Code rights were not sought, will not satisfy the test (EE and Hutchison 3G v Trustees of the Meyrick 1968 Combined Trust [UKUT] 2019).

Summary

The Code remains a complex and highly contentious piece of legislation and despite repeated calls for the landowner and operator communities to try and work together more collaboratively, it continues to have a polarising effect on the community.

Furthermore, whilst the decisions to date have gone some way to giving a greater sense of structure and depth to the Code, the rate at which they are being appealed suggests that there is still a long and arduous road ahead.