The Law Commission's recommendations to revise the Electronic Communications Code

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

The Law Commission's recommendations to revise the Electronic Communications Code

Summary

On 27 February 2013, the Law Commission issued a report making recommendations to form the basis of a revised Electronic Communications Code. The report is to be welcomed for addressing many of the concerns about the existing unsatisfactory Code. However, no draft legislation is provided by the Law Commission, so we must await the Government's draft of a revised Code and the devil will lie in the detail. For the moment, we are left with the current Code, warts and all.

Detail

The Code sets out the regime that governs the rights of designated electronic communications operators to maintain infrastructure on public and private land. It applies to the infrastructure forming networks which support broadband, mobile internet and telephone, cable television and landlines. The rights to access private land are often agreed with the landowner. However, if this does not happen, the operator has the power to apply to the court for an order to dispense with the need for agreement. Where the court does this, it will also make a financial award in the landowner's favour. The potential right for the operator to apply to court to prevent the removal of electronic communications apparatus is the great concern and uncertainty about permitting its installation in the first place.

The current Code has been criticised by courts and the people who have experience of it as out of date, unclear and inconsistent with other legislation. The reforms that the Law Commission recommends include the following. References to operators are to Code operators.

The revised Code should be drafted afresh; changes to the current text will only add to its complexity and to legal difficulties.

The revised Code should be technology-neutral, providing a legal framework that is as appropriate to the laying of cables as to the siting of masts.

A clearer definition of the market value that landowners can charge for the use of their land, giving them greater confidence in negotiating and giving operators a better idea of what their network is likely to cost. The compensation for loss provisions are simplified.

Clarifying the conditions under which a landowner can be ordered to give an operator access to his land, bringing more certainty to both landowners and operators and helping them to reach agreements more easily. A new test is recommended which will enable Code rights to be imposed, where the prejudice to the landowner can be compensated in money and, additionally, the public benefit outweighs the prejudice to the landowner. In carrying out that balancing exercise, the tribunal will bear in mind the public interest in access to a choice of high quality electronic communications services. The tribunal will not be able to grant Code rights if the landowner can show he intends to redevelop the site and could not reasonably do so if Code rights were ongoing.

Simpler provisions about the owners and occupiers of land. For instance, if a tenant with a 3-year lease grants to an operator a wayleave to place a cable in the land, and the operator does not also obtain agreement from the landowner to do so, the operator's rights will not be exercisable against the landlord after the tenant's lease has expired.

The revised Code should not give to landowners and other site providers any additional rights (beyond those expressly agreed or conferred on them as part of the terms on which Code rights are granted or imposed) to have electronic communications apparatus repositioned or removed. Essentially, the existing paragraph 20 of the current Code is not repeated in the revised Code. Those who grant Code rights have the opportunity to negotiate appropriate terms and should be relied on to negotiate "lift and shift" clauses, arrangements for structural repair of buildings on which apparatus is sited, break clauses in case of redevelopment etc.

When Code rights are granted, they only bind the person who granted them, successors in title and those whose interests in the land are derived from that person's interest. For example, if a tenant with a 10-year lease grants a 5-year lease of a plot to an operator to place and operate an equipment cabinet, the Code rights generated by that agreement with the operator do not bind the freeholder. This principle should be carried through to rights to remove apparatus, with the result that the Code should no longer restrict the rights of a person who is not bound by Code rights in respect of apparatus to have it removed from land.

Resolving the inconsistencies between the current Code and other legislation, in particular, Part II of the Landlord and Tenant Act 1954 and the Land Registration Act 2002. Importantly, a lease granted primarily for the purpose of conferring Code rights on an operator should not fall within the scope of the 1954 Act; and other leases should not attract the provisions of the revised Code for the continuity of Code rights.

There should be clear provisions about what happens to apparatus after an agreement with a landowner has expired. Code rights to keep apparatus installed require protection so as to ensure network continuity, but where those rights have ended, landowners should have clear rights to remove equipment. The provisions will be similar to those in Part II of the 1954 Act so that Code rights and obligations - in particular, payment obligations - will continue until they are brought to an end. If a landowner has granted a 5-year lease of a site to an operator to install and operate a mobile phone mast, the lease continues in force even at the end of the five years as would a business lease under Part II, until it is brought to an end under the Code or a new lease is granted. The Law Commission has not recommended that the parties should be able to contract out of those provisions.

The Commission considers that this will ensure the continuity of electronic communications networks. However, it is also important to ensure that landowners are able to bring Code rights to an end where their need to do so outweighs other considerations.

Therefore, under the revised Code, the landowner will be able to give the operator 18 months' notice to bring the Code rights to an end, stating the ground(s) on which termination is sought. The operator can then give a counter-notice within three months if it does not want the Code rights to end. If it fails to do so, the Code rights will expire at the relevant date. If the operator serves a counter-notice, the rights will still expire, unless the parties reach an agreement before the notice expires, or the operator applies to the Tribunal for new Code rights to be imposed. In contrast to the current position, therefore, if the operator does nothing, the landowner can remove the equipment when the Code rights expire.

If the operator applies for new Code rights, the Tribunal will refuse them if:

(1) the operator has substantially breached its obligations under the current agreement;

(2) the operator has been persistently late in paying rent under the current agreement;

(3) the landowner can show it intends to develop the site in a way that requires the termination of the Code rights;

(4) the test for the imposition of Code rights is not satisfied.

There is a similar procedure, involving 6 months' notice, when either party is happy for the equipment to stay on the land, but desires a change in the terms on which Code rights are held.

Specifying limited rights for operators to upgrade and share their network equipment, and operators should be able to assign rights to other operators.

Improving the procedure for resolving disputes under the Code- the Lands Chamber of the Upper Tribunal should have jurisdiction over such disputes.

The grant, by the Tribunal, of interim access for an operator to begin installing apparatus on land before Code rights have been formally agreed, or imposed by the Tribunal. Such rights can only be granted if the landowner is properly protected by the right to remove the equipment if terms are not subsequently agreed or ordered, and only where it is likely that the operator would be successful in obtaining access at a final hearing. This possibility of interim access should assist in reducing delay where the only issue in dispute is the price.

The revised Code would operate prospectively only. It will only relate to arrangements put in place after it came into force. It would not change arrangements between Code operators and landowners which are already on foot, unless and until they were renewed under the revised Code.

For the Law Commission's Summary, please click here.

For the full report, please click here.