New UK telecommunications infrastructure law brings changes to the Electronic Communications Code
Published on 26th Jan 2023
Significant changes for network operators and site providers expected throughout 2023
The new Product Security and Telecommunications Infrastructure Act 2022 received royal assent on 6 December 2022. At present, only a limited number of provisions have come into force, including sections 76-78 and 80 which cover the power to make transitional or saving provisions deal with the regulations made under the Act and the jurisdictions the Act extends to. The remainder of the Act (including the key changes mentioned below) are coming into force in accordance with regulations to be passed by the Secretary of State, which are yet to be made. While it is therefore not yet known when the rest of the Act will come into force, it is expected to be later in 2023.
The Act has two parts, Part 1: Product Security, and Part 2: Telecommunications Infrastructure. It is the latter part that has the greatest significance for telecoms network operators, infrastructure providers and site providers as it brings about a number of changes to the Electronic Communications Code in Schedule 3A to the Communications Act 2003 (as amended by Digital Economy Act 2017) which governs their relationship.
What is the aim of the Act?
The introduction of the Act followed lengthy consultations with stakeholders, and was intended to assist operators with the rollout of gigabit capable broadband and 5G networks across the UK to achieve the government's commitment to improve connectivity. The explanatory notes section to the bill provide some insight into the background to this policy and how it might work in practice.
The new law seeks to overcome the administrative and legal obstacles that have been encountered by operators, and to address some of the concerns raised by site providers under the Code. Combined, these problems have caused delays to deployment of electronic communications apparatus since the reform of the Code in December 2017.
What Code issues does the Act resolve?
Following the consultation in January 2021, a number of telecommunications issues were identified as needing reform, including:
- the rights to share apparatus and optimise existing networks;
- the alignment of procedures for the renewal of expired agreements;
- the need for quicker negotiations and better co-operation between operators and landowners; and
- a method for dealing with unresponsive landowners or occupiers who fail to deal with requests for Code rights.
To attempt to address these areas, there are a several notable changes within the Act that will be coming into force once the accompanying regulations are implemented.
Rights to upgrade and share apparatus
The Act has introduced two principal changes. Firstly, it introduces express Code rights to share apparatus with another operator and to access land to carry out any works associated with that sharing. Secondly, it makes amendments to the transitional provisions to the Code, so that sharing and upgrading can apply to agreements that were in place before the Code came into force (defined by the Code as "subsisting agreements"). This allows operators an automatic right to share and upgrade in respect of these sites subject to the limitations imposed by paragraph 17 of the Code (which provides that these rights are only exercisable where there is no burden on the site provider and no adverse impact on land where the apparatus is situated). Similar provisions have also been introduced where there is no subsisting agreement and apparatus was installed before 29 December 2003.
The first of these changes deals with a peculiar gap in the original paragraph 3 Code rights but (as a matter of practice) operators have simply sought the ability to share apparatus as a condition of any Code agreement and so it may have little practical impact.
The second change is more significant and may unlock upgrading and sharing disputes on certain existing sites, however operators may find that the limitations on the scope of the right (relating to equipment under land) means that they will not be able to carry out all the works that they consider necessary, but it may help operators providing fibre connections.
Amendments to the Landlord and Tenant Act 1954
This is likely to be the most significant change where telecommunication lease renewals are concerned, so that it brings the valuation method under section 34 of the 1954 Act in line with the Code (that is, the "no network" assumption).
In practice, this will mean that there is no longer a valuation based on the market value although with more comparables available in the market, market value has tracked in line with Code valuation in recent years. Changes have also been introduced to bring the right to claim interim rent in telecommunications lease renewals.
New provisions have also been inserted to give the court powers to order compensation to be paid to site providers for damage and loss incurred as a result of the exercise of any of the code rights conferred by the new tenancy. These damages include payment for expenses, diminution in value of the land and costs of reinstatement and bring the 1954 in line with the existing provisions in the Code.
While renewals under the 1954 Act are currently dealt with in the County Court, the Secretary of State may, in its regulations to be passed, give jurisdiction to the First-Tier Tribunal and Upper Tribunal to deal with cases under Part 2 of the 1954 Act which involve subsisting agreements. It should be noted that similar provisions are to be inserted in respect of business tenancies in Northern Ireland.
Refusal by reason of national security
The tribunal can refuse an application to impose a Code agreement (whether it is permanent, temporary or an interim agreement) when it is provided with certificate issued by the Secretary of State where such an imposition would prejudice national security, defence or law enforcement. In practice, this situation is likely to occur in limited circumstances.
The new law inserts a new procedure where an operator can apply to the tribunal to impose an agreement where the landowner is unresponsive to repeated notices given by the operator seeking agreement to confer or otherwise be bound by the rights. This is likely only to have limited utility as the procedure only applies in the following circumstances:
- in respect of rural land (so the land must have no buildings or be used as a garden, or other recreational uses);
- in respect of apparatus installed under or over land (not on the land); and
- where four notices have been served by the operator. Taking the notice periods together, the operator must wait at least 84 days before they can apply to the tribunal and a mere acknowledgment by a landowner will suffice as a response.
Given the relative ease with which a landowner can block the procedure it remains to be seen how effective these provisions will be, but the government still recognises the importance of installing electronic communication apparatus to improve connectivity.
ADR and complaints
The legislation also introduces new requirements on both operators and site providers to engage in alternative dispute resolution or face the possibility of costs sanctions for failure to engage. This applies in respect of notices served under paragraphs 20, 32 and 33 of the Code. It also introduces a new duty for Ofcom to handle complaints against operators.
There is a fear by landowners that this will be used merely as a tick-box exercise, but there is genuine desire by operators to resolve disputes quicker and more cost effectively in order to achieve a faster rollout of gigabit broadband and 5G networks.
The Act also introduces provisions dealing with power to fly lines (section 60), interim arrangements pending code rights (section 68) and rights of network providers to infrastructure (section 73).
Osborne Clarke comment
The changes should be welcomed by landowners and operators as they bring clarity to a number of the issues discussed above, particularly in relation to the sharing of apparatus. While some of the changes are limited in application and scope, it is hoped that the amendments will bring about the change intended.
There are however some missed opportunities, such as the removal of the proposed amendments to the definition of "occupier" prior to royal assent; the reason being that this was dealt with by the Supreme Court in the case of Cornerstone Telecommunications Infrastructure Limited v Ashloch Limited. However, it may have been sensible to cement this within the legislation rather than leave it for parties to apply the decision in Compton Beauchamp.
There will be a feeling from network operators that Parliament could have been braver and more robust in the amendments it has brought in, in order to truly grasp the issues faced by operators and landowners alike within the telecoms sector, and in order to achieve its commitments to the rollout of gigabit broadband and 5G networks across the UK.