Electronic Communications Code: Expect the expected?

When the Electronic Communications Code (the 'Code') was introduced on 28 December 2017, one of its major objectives was to assist the establishment of a dynamic and successful electronic communications network in the UK. As a result, the expectation (if not the explicit aim of the government) was that the Code would be more favourable to operators than the pre-existing Telecommunications Code. In some ways (for example, the ‘no scheme’ valuation regime), that this would be the case was obvious from the outset. However, the approach of the Upper Tribunal to cases brought before it was also going to be of great interest to operators and landowners to see to what extent this expectation would become reality. Building on the decision in Cornerstone Telecommunications Infrastructure Ltd v The University of London, a recent flurry of cases from the Upper Tribunal on key issues has provided further confirmation that the expectation was accurate.

'Rent' Payable under Code Agreements

EE Limited and Hutchinson 3G UK Limited v The Mayor and Burgesses of the London Borough of Islington

Key Facts

• The Claimants, EE and Hutchinson 3G UK, sought rights under the Code entitling them to install and operate electronic communication apparatus on the roof of a block of flats owned by the Borough of Islington. The parties disagreed on the consideration and compensation payable by EE and Hutchinson 3G UK.

• The case was the first major decision on the consideration and compensation provisions in the Code and, in particular, the application of the ‘no scheme’ valuation regime in which the valuer must assume that the right granted does not relate to the provision or use of an electronic communications network.

Decision

The Tribunal found that:

• whether there are any alternative uses for a site (other than as a telecoms site) will be of key importance to the valuation of consideration under the Code
• consideration payable to the landowner may be nominal if there is no real use to the land and nobody would pay anything for it. However, consideration will not necessarily be nominal because of the absence of competition in the market which is implied as a result of the 'no scheme' assumption
• in this particular case, consideration of £1,000 per annum would be payable. This was above a nominal value because the Borough of Islington was inconvenienced by having an electronic communications site on the roof. Interestingly, this was less than half the consideration originally proposed by EE and Hutchinson 3G UK
• in relation to compensation, the landowner could not receive compensation for being prevented from realising the value of its land as a telecoms site
• compensation payments should not result in double counting; no compensation was awarded for loss already taken into account when consideration was assessed.

Removal of Equipment under Paragraph 38 of the Code

Evolution (Shinfield) LLP and Others v British Telecommunications PLC

Key Facts

• The Claimants were the freehold owners of a large development site who sought the removal of a telecommunications cabinet (the 'Cabinet') from a publicly maintained footway. Under the planning permission for the development, the Cabinet impeded the proposed access to the development site.

• The landowners sought to rely on Paragraph 38 of the Code, which enables the owner of neighbouring land to require the removal of apparatus kept on other land as long as the apparatus 'interferes with or obstructs a means of access to or from the neighbouring land'.

Decision

The Tribunal found that:

• 'a means of access' meant an existing access and not a prospective or future means of access
• on this basis, the landowners did not have the right to require the removal of the Cabinet under the Code
• the Tribunal did not consider that it was Parliament’s intention for operators to bear the cost of removing apparatus when the works would facilitate a proposed development and benefit the landowners.

Imposition of Code Agreements

Cornerstone Telecommunications Infrastructure Ltd v Keast

Key Facts

• The Claimant, Cornerstone, sought to acquire rights pursuant to the Code over a farm in Cornwall. The landowner was unwilling to grant rights and asserted that Cornerstone had failed to satisfy the test in Paragraph 21 of the Code which an operator is required to satisfy in order for the Tribunal to order that a Code agreement be imposed on a landowner.
• The test in Paragraph 21 requires (1) the prejudice caused to the landowner by the imposition of a Code agreement to be capable of being adequately compensated by money and (2) the public benefit likely to result from the making of the order to outweigh the prejudice caused to the landowner. In whether the second condition is met, the Tribunal must have regard to the public interest in access to a choice of high quality electronic communications services.
• The parties sought a ruling on the following four preliminary issues of law:
  • whether the rights which Cornerstone was seeking were different from the rights which it claimed in its Paragraph 20 notice (the notice which triggers the process of imposing a Code agreement)
  • whether Cornerstone was seeking Code rights over 'electronic communication apparatus' which the Tribunal could not confer under the Code
  • whether Cornerstone was seeking rights which were not Code rights
  • whether the application of the Code to Cornerstone by Ofcom was sufficient to enable Cornerstone to acquire the rights it was seeking.

Decision

The Tribunal found in favour of Cornerstone on all four issues. It found that:

• The rights sought by Cornerstone in its Paragraph 20 notice did not differ from the rights sought in its Statement of Case.
• As a matter of principle, the Tribunal could confer the rights sought by Cornerstone under the Code. The landowner had argued that the electronic communications apparatus ('ECA') had become part of the land and, as a result, Cornerstone was not requesting rights over 'land' as defined at Paragraph 108. It went on to argue that the Tribunal did not therefore have jurisdiction to impose an agreement as Code rights can only be ordered over land, not over ECA. This argument was rejected by the Tribunal on the basis that, under Paragraph 101 of the Code, ECA installed pursuant to Code rights do not by virtue of that attachment become part of the land.
• Cornerstone was not seeking rights that the Tribunal did not have jurisdictions to confer. Paragraph 23 of the Code contains no restrictions upon the terms that may be imposed on the landowner.
• The direction of OFCOM designating Cornerstone as an operator (which enables it to acquire Code rights over land) was not limited to the provision of conduits and applies to the provision of infrastructure. The landowner had argued that as OFCOM’s direction was made before the Digital Economy Act 2017 amended sections 106(5) of the Communications Act 2003 by replacing the word 'conduit' with 'infrastructure', the direction was limited to the provision of conduits.

Implications

These cases provide useful insight and clarity as to how the Tribunal will interpret the provisions of the Code, particularly in relation to the valuation of consideration under the Code (London Borough of Islington) and the extent of the Tribunal’s jurisdiction on granting Code rights (Keast).

The expectation that the Code would be more operator friendly than the previous regime has been borne out by the approach of the Tribunal to date. Although limited to their facts, these cases show that the judicial trend is to ensure that Parliament’s objective to assist the establishment of a dynamic electronic communications network is achieved, even if it is perceived to be achieved at the expense of landowners.

This article was written by Chris Preston and Georgina Tyas. Chris Preston acts for both landowners and operators clients on Code and telecoms-related issues. For more information, please contact Chris or your usual Burges Salmon contact.