Since its revision in 2017, the Electronic Communications Code (the Code) has been the subject of much debate and confusion on the part of both operators and occupiers (being the landowner or person who is able to grant Code rights) as parties struggle to align their conflicting interests and objectives with regards to the implementation of electronic communications networks. As disputes have come before the courts, further guidance on the interpretation of the Code has been forthcoming, but the mere existence of these cases serves to highlight the fact that the Code is far from perfect in its current form. The government has acknowledged that further changes are necessary, and following a consultation last year, it has now published the draft Product Security and Telecommunications Infrastructure Bill (the Bill) which will implement a number of reforms to areas of the Code where the government believes change in practice will be most beneficial.

So what changes to the Code does the Bill look to implement?  Broadly, the issues identified in the consultation fell into three categories:

Negotiation of agreements and dispute resolution

  • Anyone who has been involved in a negotiation of an agreement conferring Code rights on operators will appreciate that the process is usually lengthy and oftentimes, frustrating. Many operators report a lack of engagement from occupiers when seeking the grant of Code rights in respect of their land. On the flipside, occupiers are often frustrated by operators’ lack of willingness to move away from what they consider to be their “standard position” when negotiating a Code agreement. These issues have already been addressed in part in respect of the residential sector, where legislation has been implemented to allow for the imposition of code rights by the court where a landlord of a multi-tenanted residential building has failed to reply to a request from an operator for Code rights. The government now intends to mirror this approach in the commercial sector, so that where occupiers completely fail to engage with operators, a new statutory process will allow an operator to apply to the First Tier Tribunal, asking it to impose temporary Code rights on the occupier for a maximum of six years. It is hoped that the threat of the court imposing rights on to an occupier will encourage them to engage with operators when approached.
  • For occupiers who are frustrated in their dealings with operators, and to try and promote better engagement between parties, the government is intending to introduce a duty for operators to consider the use of Alternative Dispute Resolution before making an application to the courts and to put in place a complaints procedure to handle any complaints about the operator’s conduct in relation to the negotiation of Code agreements.

Dealing with expired agreements

  • When the 2017 Code was introduced, it contained procedures for dealing with the termination and renewal of expired Code agreements. However, not all Code agreements currently in existence are dealt with under the relevant provisions of the Code (namely Part 5), such as leases granted within the Landlord and Tenant Act 1954 (LTA 1954). The government intends to align the treatment of all expired Code agreements, so that they reflect the intention of the Code, whether they are new agreements or expired agreements which are subsequently renewed. As such, the government will amend the other statutory frameworks that apply to such agreements (such as the LTA 1954) to ensure consistency of approach to the procedures for dealing with any renewals and for ensuring that the terms of any new Code agreement are more closely aligned. Note however, that any statutory protections offered by the LTA 1954 or equivalent will still apply.
  • One of the particular quirks of the Code as currently drafted is that when an operator is the sole occupier of the land upon which its equipment needs to be placed, and their existing agreement has expired, there is then no counterparty who can grant Code rights to the operator, because they are both the occupier and the operator, and cannot contract with themselves. The Bill contains provisions to amend the law so that in such circumstances, the operator will be able to obtain Code rights from whomever would grant them were the operator not in occupation (ie. the landowner).
  • The government will also be expanding the provisions in the Code relating to interim orders which can be applied for where there is a dispute in relation to an expired Code agreement. At present, it is only the occupier that has the right to apply for such an order, but the proposal in the Bill would allow either party to do so, and the scope of that order will no longer be limited to changing the financial terms of the Code agreement.

Rights to upgrade and share equipment

  • Whilst a number of the consultation proposals for amendment to the Code provisions governing the rights of operators to upgrade and share equipment have not been taken forwards by the government into the Bill, they have concluded that paragraph 3 of the Code needs to include a specific right to share apparatus with other operators, in order to bring it into line with other rights such as upgrading (which is already expressly set out in paragraph 3). The intention here is to make it clear that rights to upgrade and share apparatus outside the scope of those contained in paragraph 17 of the Code (being automatic rights that cannot be excluded) can be agreed by the parties to a Code agreement.
  • On the basis that the automatic rights to share and upgrade described above only apply to Code agreements completed after the 2017 Code came into effect, the government has concluded that in order to level the playing field to a certain degree, a restricted version of this automatic right should apply to all apparatus, regardless of when it was installed, and for pre-29 December 2003 apparatus, whether or not there is a current Code agreement in place. The restrictions that will apply to this right comprise the following:
    • the apparatus must be situated under land;
    • the upgrading and sharing will have no adverse impact on the land and will impose no burden on anyone who has an interest in the land; and
    • any activity required to upgrade or share the apparatus can be carried out without accessing private land (unless an agreement permitting such access is already in place).

The measures that the government are seeking to implement are aiming to streamline and improve the delivery of a high-speed electronic communications network, for the benefit of all. However, it remains to be seen whether the proposed amendments will lead to improved relations between operators and occupiers/land owners.

For further information please contact:

Nicholas Turner
Nicholas Turner
Partner, Real Estate, London
+44 20 7466 2640
Aaron White
Aaron White
Partner, Corporate, London
+44 20 7466 2188
Kate Wilson
Kate Wilson
Professional Support Lawyer, Real Estate, London
+44 20 7466 2650