Electronic Communications Code 2017 - Ringing the changes?

A new version of the Code took effect on 28 December 2017. The government’s aim is to make it easier for operators to secure and retain Code rights.

One of the most important changes made in the new Code is the significantly longer notice period for termination of Code agreements. The landowner now has to give at least 18 months’ notice to terminate. This is in sharp contrast to the much shorter 28-day notice period that applied under the old Code and could have a major impact on the timing of plans for redevelopment of property subject to Code rights.

Under the old Code, agreement was often reached between landowners and operators without using the formal termination procedures. The longer notice period under the new Code means landowners will need to serve termination notices.

Some of the principal changes are discussed below, together with some practice points for telecoms wayleaves.

Acquiring Code rights

Code rights can be acquired by agreement between the parties or, in default of agreement, by order of the court.

An operator who has been unable to secure agreement can apply to court to impose an agreement. The court may do so where it considers the prejudice to the landowner can be adequately compensated by money, and the public benefit (the provision of access to telecoms services) outweighs the individual prejudice.

Statutory protection, termination and removal

Upon contractual termination or expiry, a Code agreement statutorily continues unless and until determined in accordance with the new Code.

Notice of termination: timing

To terminate a Code agreement the site provider has to:

• give a notice in the form prescribed by Ofcom;
• specify the termination date (which must be no earlier than contractual expiry or an earlier date for termination provided in the agreement);
• give at least 18 months’ notice; and
• specify one of four statutory grounds for termination. The most common ground is likely to be that the landowner intends to redevelop and cannot reasonably do so unless the Code agreement ends.

The new Code leaves open the question as to how intention to redevelop is to be evaluated. While not itself a guide to the new Code, an Ofcom Code of Practice provides the landowner should produce evidence of a “genuine” intention to redevelop and operators should act reasonably and in a way that does not hinder the landowner. Operators may argue that the same test as for the Landlord and Tenant Act 1954 should apply.

Notice and counter-notice

The landowner’s notice will terminate the Code agreement on the date stated unless the operator gives a counter-notice within three months of the landowner’s notice and then applies to court for an order within three months of giving the counter-notice.

Practical implications and timing

The new termination provisions, in particular the requirement to give 18 months’ notice and the need to satisfy one of four specified grounds, calls for a change of approach to terminate a Code arrangement. Additional time will need to be factored in where vacant possession of a site is required.

Removal and restoration

Landowners will also have to allow additional time to secure the removal of the operator’s apparatus if operators do not in fact vacate by the required date.

A reasonable period of notice has to be given by the landowner for such removal and restoration, but in the absence of agreement within 28 days the landowner can apply for a court order. The court has the power to order the operator to pay compensation for the period during which the apparatus remain on the land after the right to remove has arisen.

Upgrading and sharing apparatus

Subject to certain conditions, the operator can upgrade its apparatus or share the apparatus with another operator. Any provision seeking to impose conditions which restrict upgrading / sharing will be void.

Compensation

Where there is a court-imposed agreement, any compensation that the court may order the operator to pay under the new Code is assessed using a new valuation formula which assumes the transaction does not relate to the provision or use of an electronic communications network, so that any additional value that might otherwise be attributable to such use is not taken into account. The existence of new Code rights to assign, upgrade and share are also disregarded.

Subsisting agreements made under the previous Code: transition

Subsisting agreements will be subject to the new Code, but with modifications, including the following:

• the provisions relating to assignment, upgrading or sharing do not apply to subsisting agreements;
• while (other than for subsisting leases as referred to in the next point below) the new termination provisions will apply to subsisting agreements, those which on 28 December 2017 had an unexpired term of less than 18 months will have a termination notice period which is the greater of (a) 3 months and (b) the residue of the term as at 28 December 2017; and
• the new Code termination provisions will not apply to a subsisting lease protected under Part 2 LTA 1954, nor to a subsisting lease where the primary purpose is not to grant Code rights and that lease has been contracted out of LTA 1954 protection.