UK: Ensuring Tenants' Access To Gigabitcapable Connections

Last Updated: 8 August 2019
Article by Rob Shaw, Ben Rogers, Daniel Lavender and Meena Kamath

Government Consultation on the 2017 Electronic Communications Code ECC

On 29 October 2018, the Department for Digital, Culture, Media and Sports published a consultation that focuses on addressing the issue of compelling landlords to consider the telecoms connectivity of their tenants and allowing Operators to install infrastructure where landlords are unresponsive.

The consultation specifically sought views on proposals to support residential and commercial tenants that want to receive gigabit-capable connections. This includes ways to improve the response rate of landlords to requests for access from Operators and the options available to Operators when a landlord fails to respond.

Although clearly some cases under the New Code are starting to come through, at the moment it would appear that Operators are reluctant to take the issue to the Upper Tribunal (or, in Scotland, the Lands Tribunal) as they want to keep landlords on their side for commercial reasons and the process of going to the Tribunals can take considerable time (an estimated 7-12 months).

The consultation states that for the implementation of access or wayleave agreements, Operators have informed the government that a high number of landlords (particularly in relation to multi-dwellings) are not responding to requests for access. The result has been that as the Operators are prevented from providing services, they have removed the properties from their build plans altogether. This is due to the additional administrative burden in chasing up unresponsive landlords which is not cost effective for the deployment of new infrastructure.

Essentially the proposals seek to amend the New Code using primary legislation to encourage landlords to engage with Operators where a tenant requests a service. The intention is to amend the New Code so that an obligation is placed on landlords to facilitate access once they have been suitably notified by an Operator or where a service request is made by a tenant. Where a landlord is absent or unidentifiable, access may be granted via a warrant of entry issued by a magistrates' court (or Sheriff court in Scotland) which is similar to powers that already exist in relation to gas, water and electricity.

This court enabled access is intended to be temporary, allowing the Operators to install and maintain electronic communications apparatus and will remain valid until such time as the landlord engages with the Operator and a negotiated voluntary agreement is put in place (or, presumably, one is imposed under the existing provisions of the New Code). The proposal states that the Operators will be able to apply 2 months after first contacting the Landlord. There will also be stipulations on the mode and frequency of how the Operator has contacted the Landlord prior to applying to the magistrates' court (or the Sheriff court in Scotland).

The consultation closed on 21 December 2018 and the government is currently analysing any responses received.

The New Code: Cases so far

Access rights to telecoms sites:  CTIL v University of London [2018]

The new Electronic Communications Code (New Code) came into force on 28 December 2017 with its aim being to update telecommunications operators statutory rights to enable the installation, maintenance and use of telecoms equipment in order to operate their networks or provide an infrastructure network.

Much of the drafting contained within the New Code has left some ambiguity on how it will operate in practice with the first substantive decision on the New Code being CTIL v University of London [2018] UKUT 356.

The case concerned operators' interim access rights at sites under the New Code and the Upper Tribunal's (Tribunal) ability to impose an agreement for access where terms cannot be agreed with a site owner. An issue for operators of telecommunication services is that due to the perceived stringent nature on site owners of the New Code provisions, site owners are often reluctant to allow operators to install equipment on their land and in this case, even grant access to operators for the carrying out of surveys to assess the suitability of sites.

In this instance the operator, CTIL, believed that the most suitable site for a new telecoms mast in the Paddington area of London was a building owned by the University of London. CTIL approached the University and asked for permission to survey the rooftop, but the University refused permission. CTIL therefore served a notice under Paragraph 26 of the Code seeking interim Code Rights.

The first question before the Tribunal was whether interim access (under Paragraph 26) for the purposes of a survey was a right granted to operators pursuant to the New Code i.e. a "Code Right". The Tribunal held that the Code Rights should be interpreted widely in line with the overall objective of the New Code, that is to enable easier and faster installation of telecommunications infrastructure. As such the decision was clear that interim access for the purpose of surveying a site to assess its suitability was a Code Right, within either paragraph 3(a) or 3(d) of the New Code:

Paragraph 3: 'a "code right" ... is a right:

(a) to install electronic communications apparatus on, under or over the land,

(d) to carry out any works on the land for or in connection with the installation of electronic communications apparatus on, under or over the land or elsewhere'

Amongst other reasons, such an approach was also supported by the need to avoid a situation where the New Code was undermined by allowing landowners to ransom access to sites.

The University contested a second point that if an operator intended to seek an agreement for interim rights, then this needed to be twinned with an application for permanent Code Rights as when deciding whether to grant interim rights paragraph 26 refers to a lower standard of proof – that being the operator has a "good and arguable" case. The University contended this presented a way around the more stringent test for permanent Code Rights.

However, the Tribunal was satisfied after analysing the New Code that there was no condition that an application for interim rights must be twinned with or be a precursor to an application for permanent rights.

This decision is welcome clarification on the provisions of the New Code. It bolsters the operators' position when looking to rollout and maintain their networks and demonstrates that the Tribunal seem minded to view drafting within the New Code with a broad lense that seeks to achieve the purpose of the New Code – making installation and maintenance of telecommunications networks for operators more straightforward.

Transitional Compensation Arrangements between the New Code and the Old Code:

Elite Embroidery Ltd v Virgin Media [2018]

Elite Embroidery Ltd v Virgin Media concerned the transitional arrangements surrounding compensation from the 1984 Electronic Communications Code (Old Code) following the implementation of the New Code.

The case concerned a site owner that had acquired a site for development. A fibre optic cable was discovered in 2016 which had been mistakenly installed at the site rather than under the adjoining pavement in the mid-1990s (when the Old Code applied).

The developer chose not to remove the cable and decided instead to accommodate the cable at an additional expense and delay which in turn resulted in the developer missing out on government grants. The site owner claimed all these amounts as compensation from the successor operator who had acquired the business of the original operator who had incorrectly laid the cable.

The developer argued that:

1. their claim was brought under the New Code (as the Tribunal has no jurisdiction in relation to the Old Code);

2. the operator had no right under the Old or New Codes to install the fibre optic cable in its current location; and

3. the operator had no right under the New Code to retain or make use of the cable.

As the developer had argued that the installation of the cable had not been under any New Code rights the Tribunal found that the provisions concerning compensation in Part 14 of the New Code had no application as they can only be used where a New Code right has been conferred.

Instead the Old Code would apply in relation to compensation as the transitional provisions from the Old Code to the New Code did not prejudice any previous right relating to compensation under the Old Code. The Tribunal was clear that the New Code only gave the Tribunal jurisdiction on matters set out in the New Code.

A case on lift and shift under the Old code

PG Lewins Ltd v Hutchison 3G UK Ltd and EE Ltd (Bristol County Court, 9 March 2018)

This case, brought under the Old Code, involved the all too familiar scenario encountered in a "lift and shift" situation, where the landowner attempts to relocate the operator's apparatus and the operator claims it does not have sufficient time to comply. The issue at the heart of this case was whether the operator could be liable for damages caused by the subsequent delay to the landowner's works programme.

The landowner in this case had served a relocation notice in accordance with the terms of the written agreement but the operator did not move its apparatus in accordance with the time limits in that notice. It argued that it was not obliged to comply because the landowner had not served notices and obtained court orders under paragraph 20 of the Old Code (which governs relocation/alteration).

The court disagreed, finding that where a landlord has the benefit of a contractual relocation clause, it is entitled to rely on its terms and need not make use of the statutory procedure under the Old Code. Paragraph 20 simply provided the landowner with an additional mechanism for requiring relocation and, as specified in paragraph 27(2) of the Old Code, the Old Code rights are without prejudice to any rights or liabilities set out in the contractual agreement. Here, the operator had breached the terms of the contractual agreement and therefore could not be said to be acting lawfully; the argument that the Old Code somehow provided full protection from breach of contractual terms was firmly rejected by the court.

Remember that there are no statutory lift and shift provisions under the New Code equivalent to paragraph 20 in the Old Code - any such provisions now have to be inserted into the agreement expressly if the landowner is to benefit from a right to require the operator to relocate its apparatus.

The Electronic Communications Code – New case sheds light on Tribunal's jurisdiction to impose an agreement under the Code

Cornerstone Telecommunications Infrastructure Limited -v- Compton Beauchamp Estates Limited [2019] UKUT 107 (LC)

The Upper Tribunal recently issued another decision under the new Electronic Communications Code (the Code) on its jurisdiction to impose an agreement pursuant to paragraph 20 of the Code.

In summary, the Tribunal has no jurisdiction to impose rights under the Code in favour of a Code operator where a third party is currently occupying the land.

The facts

Compton Beauchamp Estates Limited (Compton) is the freehold owner of farmland near Swindon. Vodafone had in 2004 been granted a ten year lease over part of the land for its telecoms mast (the Site). The lease expired on 25 March 2014 yet Vodafone remained in occupation of the Site pursuant to a tenancy at will. After negotiations for a new lease broke down, Compton sought to repossess the Site from Vodafone.

On 19 June 2018, the operator in the case, Cornerstone Telecommunications Infrastructure Limited (CTIL), served a notice on Compton pursuant to paragraph 20 of the Code requesting Compton grant a lease which would allow CTIL to occupy the mast site and to exercise the full range of Code rights. CTIL then made an application requesting that the Tribunal impose an agreement on Compton under the Code – that agreement to be the proposed lease.

The decision

The Tribunal decided that it did not have jurisdiction to impose a Code agreement between Compton and CTIL under paragraph 20 of the Code for two reasons:

1. Code rights must be conferred by the occupier or, where there is nobody in occupation "the person (if any) who for the time being exercises powers of management or control over the land". 'Occupation', for the purposes of the Code, was a question of fact, rather than a matter of legal status: it means "physical presence on and control of the land". In this case, the 'occupier' was clearly Vodafone. For that reason, Compton could not have complied with the paragraph 20 notice given to it by CTIL as Compton was not the occupier and could not enter into an agreement to confer Code rights without first going into occupation. It could not do that without Vodafone's agreement, because Vodafone's apparatus was lawfully on the Site. This complication could have been overcome with Vodafone's cooperation, but the agreement which CTIL asked the Tribunal to impose made no reference to Vodafone.

2. The Tribunal considered that even if it was wrong about the extent of its jurisdiction, it could, at best, impose an agreement contingent on Vodafone voluntarily giving up its rights of occupation of the Site. However, Compton had not been asked to agree to a contingent right and the Tribunal decided that it could not impose an agreement on a different basis to that which CTIL had claimed and for which it had argued.

Having disposed of CTIL's application, the Tribunal went on to consider other issues of potential significance for operators and landowners:

Public benefit test – The Tribunal considered whether or not CTIL's application would have met the 'public benefit' test set out in paragraph 21(3) of the Code, which must be satisfied where the Tribunal is to impose an agreement. The Tribunal concluded that CTIL would have done so, given the precarious nature of Vodafone's rights over the Site. However, this would not necessarily have been the case if Vodafone still had a right to possession of the Site, as provided for by the original lease.

Consideration/compensation – The Tribunal commented on the consideration and compensation provisions in the Code. The Tribunal was clear that it would be unimpressed by valuations on the part of any party that resulted in figures that were improbably high or low. The Tribunal said that it hoped the evidence presented in future references involving rural property will focus more closely on specific transactions in relevant comparable situations.

Comment

The case demonstrates the Tribunal's strict interpretation of the new Code and clarifies that full account needs to be taken of who is the "occupier" of the land and being requested to enter into a code agreement. If an operator wishes to install telecoms apparatus on a piece of land, the occupier of the land must be served with the notice under paragraph 20 of the Code. The occupier could be the tenant or the freehold owner – this is a question of fact. If CTIL had applied to the Tribunal to impose an agreement between itself, Vodafone and Compton, this could have been granted.

Therefore, if an operator wishes to bind a freeholder who is not in occupation, the operator should serve a notice under paragraph 20 on both the occupier and the freeholder and either:

(a) enter into a Code agreement with the occupier and a separate agreement with the freeholder; or

(b) create a tripartite agreement between the parties to confer Code rights.

The Electronic Communications Code – First Tribunal Decision on Consideration and Compensation payable by Operators

EE Limited and Hutchison 3G Limited -v- The Mayor and Burgesses of The London Borough of Islington [2019] UK UT

The Upper Tribunal recently issued its first decision under the new Electronic Communications Code on the consideration and compensation payable by an operator to a site provider.

Operators will welcome the decision as it supports their view that lower amounts are payable for Code agreements. The decision is also useful for the guidance it offers on: (1) how a Code agreement is put in place when the Tribunal is asked to impose one; and (2) whether the Tribunal could impose an agreement by way of a lease.

The facts

The operators identified the rooftop of a block of flats belonging to The London Borough of Islington (Islington) as an appropriate site to install their telecoms apparatus. The operators and Islington failed to agree on terms for a Code agreement. The operators therefore referred matters to the Tribunal for determination.

The decision

1. Form and mechanics of imposing a Code Agreement

The Tribunal decided that the Code did not restrict the type or form of agreement to be entered into between the parties and that it had jurisdiction under the Code to impose an agreement by way of a lease. In addition, the Tribunal's order, by itself, was sufficient to confer Code rights on an operator and would bind a site provider. There was no need for the parties to enter into a "parallel" agreement once the Tribunal had made its order.

2. Consideration

Paragraph 24 of the Code provides that the consideration "must be an amount or amounts representing the market value of the relevant person's agreement to confer or to be bound by the Code right". Market value is the amount a willing buyer would pay a willing seller for the agreement and various assumptions are to be made, principally that the rights that the transaction relates to do not relate to the provision or use of an electronic communications network. The Tribunal referred to this as the "no network" assumption.

The operators argued that the roof top site only had a nominal rental value, on the basis that the only use of the site was for telecoms equipment and that this use had to be discounted because of the "no network" assumption. The Tribunal decided that:

  • an operator is not able to use the absence of demand, by itself, to drive the consideration payable down to such a level that the site provider would not be willing to enter into an agreement;
  • the value of the land in each case will depend on its characteristics and potential uses and not only on the number of potential bidders in the market; and
  • transactions under the old electronic communications code could not be used as comparables to assist with calculating consideration under the new Code.

The Tribunal expressed that the consideration for the grant of the Code rights had a nominal value but that the consideration must also take into account the "risks and obligations" which Islington would be subject to as a site provider (such as Islington's expenses of running the building). By referencing the service charges paid by flat owners in the building, the Tribunal assessed the consideration payable by the operators as GBP1,000 per year.

3. Compensation

In addition to the consideration payable, the Tribunal may order (under paragraphs 25 and 83-86 of the Code) the operator to pay compensation for any loss or damage that has been, or will be, sustained by the site provider due to the exercise of the Code rights by the operator. In this instance, the Tribunal ordered that Islington was entitled to:

1. its reasonable legal and valuation fees in connection with seeking to agree terms for a Code agreement (but not costs incurred in resisting an agreement from being imposed by the Tribunal); and

2. compensation for the temporary use of its land at ground level for a working compound and the site of a crane whilst the operators' apparatus was installed.

However, Islington was not entitled to compensation for any diminution in value of the land.

Whilst the "no network" assumption would prevent a site provider from realising the true value of its land this did not give rise to a loss for which compensation was payable. The Tribunal highlighted that it could not have been Parliament's intention to treat the entry into a Code agreement as being an event that would give rise to loss or damage under the compensation provisions in the Code. Islington's other claims for compensation were dismissed as being speculative or unfounded, although Islington is still entitled to bring future compensation claims.

Ultimately, the Tribunal imposed a 10 year lease on the parties with an annual rent of GBP2,551.77 (which the operators had already indicated they were prepared to pay) and otherwise on the terms of the agreement proposed by the operators.

Comment

While the case is likely to be considered a win for operators, there are still many grey areas to be clarified by the Tribunal. There are likely to be more cases on the new Code as both operators and site providers are still keen for clarification on how the Code is to be applied.

One further point from the judgment worth noting is that Islington failed to comply with directions made by the Tribunal to propose amendments to the draft agreement prepared by the operators. As a result the Tribunal debarred Islington from being able to call evidence or make submissions on the terms of the agreement proposed by the operators, except for on the issues of the consideration and compensation. The Tribunal has thus issued an early warning that it will not tolerate non-compliance.

* Please note that these cases are decisions of the English Upper Tribunal and Court. The New Code and the Old Code extend to the whole of the UK and it is likely that these decisions would be followed in the Scottish Courts

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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