On 28 December 2017, the 1984 Electronic Communications Code (“the old Code”) was replaced and repealed by the Electronic Communications Code 2017 (“the new Code”). One objective of the New Code was to bolster the expansion of the country’s communication networks. As outlined in our round-up at the time of the changes brought in by the new Code, it is generally acknowledged that the new legislation is more operator-friendly compared to the old Code, leaving developers and landowners in an uncertain position and many questions of interpretation to be considered.
Two years into its operation we now have welcome guidance from the tribunals on questions of interpretation and application of the Code. In this article, we discuss three recent decisions of interest to developers.
1. EE Ltd & Hutchinson 3G UK Ltd v London Borough of Islington 
This is the first case to deal with issues relating to consideration and compensation under the new Code.
The tribunal was asked to impose a Code agreement where an operator required a new site to install their telecommunications equipment whilst their existing site provider redeveloped their current site. In this instance, the court did impose a Code agreement between the Claimant and the Defendant and in doing so clarified the position that a Code right does not need to be established in a separate agreement. The tribunal may grant a code agreement in the form of a lease.
The new Code stipulates that any rent paid by an operator to the site provider should be based on its market value, which is defined as “an amount or amounts representing the market value of the relevant person’s agreements to counter or be bound by the Code right”.
The tribunal held that this should be interpreted on a “no network assumption”, ie the value of the land as a suitable site for telecommunications apparatus should not be considered. This assumption will depress the amount of consideration they can receive from an operator.
The precise way in which the tribunals will deal with issues of compensation under the Code remains largely to be seen. Paragraph 84 (2) of the new Code allows the payment of compensation to a party for any loss or damage sustained by the exercise of a Code right.
In this case, the site provider sought compensation for their expenses and the diminution in value of their land due to the imposition of a Code agreement (and the limited consideration awarded due to the “‘no network assumption’”). The tribunal held that the costs of agreeing a Code agreement could be awarded. However, in terms of diminution in value, the tribunal held that despite site providers being unable to realise the true value of their land under the “‘no network assumption’”, this could not be counterbalanced by an award for compensation.
It is now clear that an order for compensation under the new Code is flexible and does not need to be determined at the time that the Code right is imposed; an operator or site provider can make an application for compensation at any time.
2. Cornerstone Telecommunications Infrastructure Limited v The University of London 
A criticism of the new Code, from the viewpoint of an operator, has been that there is no express right for an operator to inspect or survey a prospective site, giving landowners and developers a large advantage in their negotiation position in reaching an agreement. In this case, the operator sought to gain access to a rooftop in Paddington to assess whether the site was suitable for the installation of its telecommunication equipment. It was held by the Court of Appeal that the right to inspect and survey is an implied Code Right (not least given the legislative purpose behind the Code).
Interestingly this can be sought in a freestanding application. The request for access does not need to accompany a substantive application under paragraph 20 for the imposition of a Code agreement.
Commentators have observed that this, along with the fact that interim rights under the Code can be granted for an indefinite period of time, may mean that operators will simply apply for an interim right to install on sites where they have a weaker negotiation position in reaching an agreement with a landowner or developer. Site providers may prefer operators to hold interim rights as it may mean that they can avoid strict regimes that accompany the grant of permanent rights.
3. Evolution (Shinfield) LLP v British Telecommunications Plc 
Finally, a cautionary tale when it comes to the question of who bears the cost of removing telecoms equipment that may affect a potential development site.
BT had installed telecommunications equipment under the old Code on a publicly maintained footway near a roundabout. Some years later, a consortium of developers were granted planning permission for a new housing development nearby. The equipment needed to be moved as its current position meant that it would be sitting on the proposed exit route to the development site from the roundabout.
The developers argued that paragraph 38 of the new Code applied here. This provision allows for the owner or occupier of neighbouring land to require the removal of an operator’s telecoms equipment on other land which “interferes with or obstructs a means of access” to and from the neighbouring land. The developers argued that a “means of access” could include one that was to be constructed in the future, whereas BT contended that it should only apply to a means of access that existed at the time of the equipment installation.
The tribunal found in favour of BT.
Developers will need to identify the existence of any equipment on or near potential sites early in their due diligence process. If apparatus exists on or near a site that has yet to be developed, the developers will be ordered to pay the costs for its removal, and this will need to be factored into viability and profitability reviews.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, March 2020