Telecoms – New Code Coming into Force

One way in which landowners can obtain extra profit is to allow telecoms operators to put masts and other equipment on their land in exchange for rent payments.

In addition to the terms of any agreement or lease entered into with a telecoms operator, the parties are also subject to the rights and restrictions contained in the 1984 Electronic Communications Code, also known as The Telecommunications Code (the Existing Code).

The world of telecommunications has evolved exponentially since 1984, particularly with regard to the growth of internet and mobile phone technologies. Telecoms operators are under enormous pressure to grow the UK’s telecoms infrastructure, but have for many years argued that the Existing Code is insufficient to enable the roll out of the new infrastructure required to meet demand.

Reform has finally arrived by way of a new Electronic Communications Code contained in the Digital Economy Act 2017 (New Code) which is to replace the Existing Code. The Act received royal assent in April of this year, but the New Code is yet to take effect.

Some key changes in the New Code are:

  • Rents – Under the Existing Code, rent is agreed by negotiation with the operator and the level of rent is largely driven by the operator’s need for use of the land. Whilst this will continue, under the New Code, if agreement on terms cannot be reached, the operator may apply to court for an agreement to be imposed with terms including the rent payable by the operator. However, the rent decided by the court is expected to be much lower than the rent currently being enjoyed by landowners and is likely to be closer to the more modest rents paid by utility companies. Under the New Code, if the rent is imposed by the court, it will be based on the open market value of the land (if it wasn’t required by the operator), rather than the operator’s need for use of the land. This is likely to have a significant impact on negotiations between landowners and operators.
  • Security of Tenure – Operator’s will not benefit from security of tenure under the Landlord and Tenant Act 1954 and there will no longer be a need to expressly contract out of these provisions in the agreement or lease.
  • No contracting out – The parties to the agreement or lease cannot contract out of the terms of the New Code. Any terms of an agreement or lease which contradict the New code will be unenforceable.

The Department for Digital, Culture, Media & Sport (DCMS) has announced that draft regulations (to bring the New Code into force) are listed to be put before Parliament with the New Code expected to take effect in December 2017. The New Code will apply to all new agreements and leases entered into with telecoms operators.

We will provide an update once the New Code is in force but if you would like further advice on this topic, please contact Triya Maicha or Graham Davies.

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