UK: Failing To Break The Code Enigma

Last Updated: 3 February 2015
Article by Malcolm Dowden

The government has abandoned its attempt to overhaul the law relating to mobile phone masts and broadband infrastructure.  Reform proposals were set out in 60 pages of amendments introduced as a last-minute amendment to the Infrastructure Bill.  The timing of the amendments meant that there was no meaningful opportunity for Parliament to scrutinize an extremely complex, economically significant and far-reaching new legal code.  Bowing to pressure, Transport Secretary Patrick McLoughlin stepped in to withdraw the new code, and to confirm that the existing law will remain in force, for the time being at least.

Any further attempt to overhaul the code governing telecommunications infrastructure will now have to wait until after the general election.  That, at least, allows time for the flaws in the proposals to be discussed and resolved.

So what issues did the reform proposals throw up?

A major flaw related to the relationship between the new code and existing agreements.  During the cursory House of Commons committee debate on the proposals Minister of State John Hayes confirmed that the new code would have no retrospective effect, in that it would not apply to agreements in place before the new code was brought into force.  That statement was accurate if confined to the direct effect of the new code on existing agreements.  However, it missed the major indirect and retrospective loss of protection that would result from the repeal of the existing law relating to telecommunications infrastructure – Schedule 2 to the Telecommunications Act 1984 (known as "the Code").

The government's clauses directed that the Code "shall be omitted" from the 1984 Act and wholly replaced by a new code, to be inserted as Schedule 3A to Communications Act 2003.  Use of the words "shall be omitted" strongly suggested that the Code was to be repealed for all purposes and entirely deleted from the statute books.  That created a major question: if the new code was not to apply to existing agreements, and if the old Code was wholly repealed, what (if any) statutory protection would apply to those existing agreements?

The new code would clearly not apply to agreements made under the previous regime.  However, repeal of the old Code would remove extremely significant and valuable protection, such as the need for a landowner seeking to enforce a right to require removal of electronic communications apparatus to go through the "paragraph 21" procedure.  Under that procedure, a landowner is unable to enforce a right to require removal of apparatus must first serve notice on the telecommunications company that owns or uses the apparatus (the "operator").  Removal can be enforced only if the operator does not, within 28 days, serve a counter-notice.  If the operator serves a counter-notice then removal can be enforced only if the landowner obtains a court order. In deciding whether to make an order, the court must have regard to the public interest in access to electronic communications networks and services.  Loss of that protection would be a major blow to the UK's competitive telecommunications sector.

The only route available under the proposals to prevent that problem would have been to include transitional or saving provisions in the regulations that would be required to bring the new code into force.  However, that route faced a logical difficulty.   The old Code was to be wholly repealed and deleted.  Transitional or saving provisions would have had to deem that repeal and deletion ineffective for so long as necessary to ensure that existing agreements retained protection – an open-ended and possibly permanent situation.

Even if that problem had been addressed, the drafting of the new code contained the seeds of expensive disputes and possibly created a ransom opportunity for alert landowners.  Quite separately from the proposed repeal of the old Code, the new provisions included a trap that would exist even if the old Code remained in place.  It stemmed from the way in which the new provisions used the terms "code rights" and "code agreement".  In each case, those terms related only to rights and agreements created under the new code.

The new code included a complete replacement for the paragraph 21 procedure that governs a landowner's ability to require removal of electronic communications apparatus. The replacement procedure was set out in paragraph 37 of the new code.  A landowner would have to meet at least one of the conditions set out in that paragraph.  Crucially, the first condition read:

"the landowner has never been bound by a code right entitling an operator to keep apparatus on, under or over the land"

The problem was that the term "code right" would not include rights created or arising under the old Code.  Consequently, a landowner bound by a right created under the old Code could rightly claim to have met the first of the paragraph 37 provisions, and to be able to trigger the new notice procedure.  There would have been a legitimate, and extremely tricky, question about the relationship between the new paragraph 37 procedure and the status and security of any right under the old Code.  Without a specific, and unambiguous, saving provision all old Code rights would be vulnerable to opportunistic landowners.   Given the ability to trigger an expensive and time-consuming procedure likely to lead to court, landowners might suggest to operators that it would be more time- and cost-effective to make a payment to induce them to negotiate for the grant of rights under the new code.  Achieving clarity might have come at a significant price.

Lewison J (as he then was) described the old Code as "one of the least coherent and thought-through pieces of legislation on the statute book".  Many agree with that statement, and there was widespread optimism that the Law Commission's extensive consultation process, completed in 2013, would lead to an improved legal regime for this crucial sector of the economy.  The government's reform proposals included many positive elements – mainly where they followed the Law Commission's balanced and reasoned recommendations.  However, the attempt to force reform through at such a pace and with minimal opportunity for scrutiny came alarmingly close to landing the sector with a law whose deep flaws and unintended consequences might have worsened rather than improved the situation.  If a new attempt is made to reform the law after the general election, then it must be informed by proper consultation and be given the Parliamentary scrutiny its economic importance demands.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Malcolm Dowden
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