Connectivity has long been a buzzword for the public, business and government alike as business and domestic consumers increasingly consider fast reliable broadband to be a basic need. The government's response to this demand takes the form of the Digital Economy Bill which is anticipated to be enacted in Spring 2017. The Bill contains a new Electronic Communications Code which seeks to incentivise investment in telecoms infrastructure to deliver better broadband and mobile network connectivity.
Whilst this is likely to delight those of us unwrapping new smartphones on Christmas Day or committing to New Year’s resolutions to start new businesses, the new Code is unlikely to be viewed in the same way by landowners who have grown used to earning a decent income from telecoms operators.
So, what do landowners need to know about the new Code?
"Market value" with (some rather important) exclusions
The rent paid by the telecoms operator will no longer be based on "real world" factors such as the availability of potential sites and the potential profitability of the site for the operator. These have been specifically excluded from what constitutes "market value" under the new Code.
On the face of it, this will significantly reduce the rent that can be demanded by landowners especially where the underlying value of the land is low. However, the position may be rosier for landowners whose underlying land value is high or where there is development potential as the market value definition may assist in cushioning the decrease in rental levels anticipated as a result of the new Code.
Operators permitted to assign and share with other operators
Operators will have the right to share a site with, and even assign the benefit of any agreement to, another operator without the landowner's consent. This is an issue for landowners as it puts them at risk of having an unknown party occupying their land.
No express “lift and shift" provisions
The new Code does not provide expressly for landowners to be able to relocate apparatus.
Security of tenure
In a rare positive development for landowners, the Digital Economy Bill (when enacted) will amend the Landlord and Tenant Act 1954 to specifically exclude a tenant with Code rights from security of tenure under that Act. This will spare landowners from the requirement to contract out of the 1954 Act or having to deal with the termination of rights under both the Code and the 1954 Act. The right for telecoms operators to remain in occupation, however, is preserved in the new Code.
Retrospective (with some exclusions)
The new Code will apply to existing telecoms agreements. However, the Code specifically excludes the new provisions relating to the assignment of code rights and the upgrading and sharing of equipment. As a result, if landowners are in negotiations with telecoms operators now, they will be better off seeking to complete those agreements prior to the enactment of the Digital Economy Bill.
If you would like any further information, please contact James Sutherland or another member of our real estate disputes specialist team.