UK: The New Electronic Communications Code – It's No Beauty Contest

Last Updated: 16 November 2018
Article by Jan Willem van den Bos, Bryan Johnston and Emma Broad

Cornerstone Telecommunications Infrastructure Ltd v. University of London is the first substantial case on the new Electronic Communications Code (Code), which came into force in December 2017. It considers the circumstances in which an operator can seek interim rights pursuant to paragraph 26 of the Code to go on to a site to undertake preliminary surveys and investigations to determine whether the site is a suitable location for electronic communications equipment. Unsurprisingly, given the policy objectives behind the Code, the decision is very much in favour of the operator. However, the decision will also be of interest to landowners as it provides guidance as to how parts of the Code should be interpreted, which in turn may help landowners with how they oppose or otherwise respond to requests for access.

Background

Cornerstone is a joint venture company formed by mobile operators Telefonica UK Ltd (O2) and Vodafone Ltd. It is an operator but does not itself provide an electronic communications network. Instead, it installs and maintains apparatus which it makes available to its two shareholders. Having been forced to move equipment from one of its sites near Paddington Station, and relying on a temporary site to keep the local network going, Cornerstone approached the University of London requesting access to survey one of its halls of residence with a view to permanently locating its equipment on the roof. The request was not greeted with enthusiasm and, after a stand-off, Cornerstone applied to the Upper Tribunal (UT) for an order for interim Code rights.

To recap, under the new Code it is possible, subject to various conditions, for an operator to seek an order for interim Code rights. These are Code rights granted for a limited period of time which do not benefit from the statutory continuation provisions.

There were three issues before the UT:

Issue 1: Is a right of access to undertake a survey a Code right?

The UT helpfully clarified that paragraph 3 of the Code setting out the Code rights is a menu rather than a single right which must be acquired either in its entirety or not at all. So, when granting Code rights an agreement may impose some but not all of those rights.

The UT concluded that an agreement conferring the right to install equipment (paragraph 3(a) of the Code) necessarily entitles an operator to undertake preparatory steps required as a prelude to the installation itself. It also concluded that the right to do works in connection with the installation of equipment (paragraph 3(d) of the Code) was broad enough to encompass these preparatory works. By way of explanation, the UT stated: "'install' connotes a variety of tasks or works undertaken for the purpose of providing equipment on a site; 'works in connection with the installation' connotes a still wider range of activities." To construe the Code otherwise would create a possible ransom situation in which landowners could insist on, at the preliminary stage, a share in the economic value of the operator's network, something that is contrary to the principles on which the Code has been designed (the Code has been drafted on the basis that landowners will not share in the economic value of the network – this is encapsulated in the "no scheme" basis of valuation for consideration).

Issue 2: Is an operator entitled to request an interim right without also, at the same time, seeking a permanent right?

The University argued that an application for an order imposing interim rights must be "parasitic" on an application for an order seeking permanent rights.

The UT looked at the language of paragraph 23 of the Code and concluded there was no requirement for the operator to seek a permanent right at the same time as it sought an interim right.

Issue 3: Had the claim for interim rights been made out in the case?

One of the conditions that has to be satisfied before the UT can make an order for interim Code rights is that "the court thinks that there is a good arguable case that the test in paragraph 21 [of the Code] for the making of an order under paragraph 20 [of the Code] is met". To recap, that test is that: i) the prejudice caused to the relevant person (here the University) by the order is capable of being adequately compensated by money; and ii) the public benefit likely to result from the making of the order outweighs the prejudice to the relevant person and for this purpose the court must have regard to the public interest in access to a choice of high-quality electronic communications services. The question here was whether this test had been satisfied.

First the UT considered the standard that should apply when considering whether a claimant has made out the "good arguable case". It endorsed the view from Canada Trust v. Stolzenberg (No. 2) that this concept is not capable of precise definition, which reflects that the claimant must "properly satisfy the court that it is right for the court to take jurisdiction" and that it means "one side has a much better argument on the material". The expectation is that such applications will be dealt with on a summary basis – so without oral evidence or cross-examination and without full disclosure of documents. The onus is on the operator to provide sufficient information to demonstrate it has a good arguable case.

On the facts of this case the UT held that Cornerstone had demonstrated a good arguable case that the test set out in paragraph 21 of the Code (being the test prescribed by paragraph 20) had been satisfied. In coming to this decision it made the following observations, that will be of interest to others involved in Code disputes:

  • as part of its case the University actually quantified the costs it would incur for each site visit undertaken by Cornerstone. This inadvertently showed that the prejudice could be compensated in money;
  • while the onus of proof is on the operator to show that the prejudice can be compensated for by money, it is not required to speculate about any particular difficulty or inconvenience that will be caused to the site provider which the site provider has itself not chosen to identify. Nor is the operator required to adduce evidence concerning the amount of compensation or consideration that might be due; and
  • the focus of the second limb of the test (the public benefit likely to arise) does not require a comparison to be made between the public benefit that would arise from the use of the site in question and the public benefit that might arise from use of another site. "The choice of sites is left by the Code to the judgement of operators. It might possibly be argued that the availability of an alternative site was relevant to the exercise of the Tribunal's discretion ... but, generally, a comparison between sites is not required to demonstrate satisfaction of the second paragraph 21 condition."

In conclusion the UT held that "where, as in this case, the agreement sought is limited to a right of access on a few occasions during a limited period, the prejudice caused to the University is likely to be small and the public benefit required to overtop it need itself only be relatively modest".

Under the Code the UT has discretion, even if a good arguable case is established, not to grant the order. The University suggested that the conduct of Cornerstone and its lawyers was such that the UT should exercise its discretion not to grant an order. The UT rebutted this: while some of Cornerstone's correspondence had been unattractive (for example, describing the terms of the proposed agreement as "non-negotiable"), ultimately "this is not a beauty contest". Therefore such conduct was given little weight.

Accordingly, the UT made an order imposing an agreement for interim Code rights sufficient to enable Cornerstone to undertake the surveys and investigations required to establish whether the University's building was an appropriate site for Cornerstone's apparatus.

Commentary

This case should be of interest to all landowners. It establishes that an operator is entitled to apply to the UT for an order granting it the right to go on to private property to undertake surveys and preliminary investigations to establish whether the site is a suitable location for electronic communications equipment. The legal threshold that operators have to meet appears to be relatively low and going forward it is going to be difficult for landowners to deny operators access for surveys and other preliminary matters.

Unfortunately, the case did not discuss the consideration that would be due to the University in relation to the interim rights. This area will be a key concern for landowners. It is likely that such figures will be low – the Code is predicated on the principle that operators should not be held to ransom by landowners and that landowners are not entitled to share in the economic value arising from the use of the site for electronic communications equipment.

The decision confirms that the priority under the Code is the provision of a choice of high-quality electronic communications services to the public rather than the interests of individual landowners.

At the time of writing it is not known whether the University is going to appeal, though it is likely that there will continue to be future challenges to the imposition of Code rights from landowners keen to preserve their property interests.

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