Electronic Communications – A welcome revenue boost or an unexploded time bomb?
As the title above suggests, whilst the revenue from such operators may be a welcome income boost, this may also be something of a ticking time bomb. Should the property owner wish to terminate the agreement because it wants to redevelop the building on which the electronic communications equipment is located or to relocate the equipment elsewhere, it may face resistance from the operators claiming Code Powers and refusing to move. Bearing in mind the well publicised (but as yet unproven) health and safety fears over such equipment, especially in residential accommodation or where there is a potential for residential development, the proliferation of such equipment on the property owner's buildings may also be a concern.
What are code powers?
The Code referred to is the Electronic Communications Code which is contained in Schedule 2 of the Telecommunications Act 1984 as amended by the Communications Act 2003. The purpose of the Code is to give operators wide ranging powers to install and keep electronic communications equipment on premises so enabling them to run their systems and protect them from eviction by landowners. The overriding principle pervading the Code is that "no one should unreasonably be denied access to a telecommunications system". In short, the Code potentially provides such equipment with a "status of immoveability" if Code rights are asserted by the operators and upheld by the Courts.
When does the code apply?
The Code applies as soon as there is a 'written agreement' between the parties. That agreement can be as informal as the 2 or 3 page agreement referred to above, an 'early access' agreement, a letter licence, a letter, fax or even an email. No formal lease need be in place for the Code to apply. The Code also applies where there is no such written agreement but against your wishes an operator obtains a Court order which allows equipment to be placed on a property owner's buildings. Consent can be given "inadvertently" to equipment installed by a sub-tenant. Many "agreements" are also not contracted out of Part II of the Landlord and Tenant Act 1954 (which gives business tenants security of tenure), so these operators are potentially in an even stronger position to resist giving up possession when their agreements are terminated.
Can the code be overcome?
Its effects can be mitigated. There are 2 ways; the first is preventative (through careful drafting of agreements to include putting in place mechanisms for maximising revenue share from the operators and 'contracting out' of Code Powers where permitted); the second is by adopting a strategic approach (ie. planning carefully how best to terminate the agreements/relocating the equipment, by utilising various parts of the Code and by engaging in negotiations with the operators at an early stage). This is where we at Pinsent Masons have the expertise to assist you. Both our contentious and non-contentious property lawyers have a wide experience of advising various land owners, occupiers and operators on their rights and obligations under the Code. This broad experience enables us to have a deep understanding of the issues affecting each group of people and to provide tactical, pragmatic advice in any situation.
Pinsent Masons' recent experience include :
- Acting for landowner clients whether University clients, property developers, property owners/corporates who wish to sell their land for development; hospital trusts, investment clients, government clients against all the usual operators e.g. Orange, Telefonica O2, T-Mobile, Vodafone, 3 (Hutchison), (and more recently in their joint venture guises MBNL/Cornerstone and Everything Everywhere) and BT in relation to termination of telecommunications leases and removal of telecommunications equipment including;
- Advising on a legal strategy for facilitating the installation of IT equipment into central London premises;
- Acting for BAA in advising on and developing a system for the rationalisation and minimisation of telecoms equipment and Code rights at their airports;
- Advising Tesco on the ramifications of the existence of telecommunications equipment on new development sites;
- Commencing legal proceedings for the termination of telecoms leases and removal of equipment within the context of lease renewals for Tesco, Legal and General and Fujitsu;
- Advising mast owners such as Arqiva concerning Code disputes arising out of its property portfolio;
- Advising investment clients such as CBRE Investors and Portman Estate in negotiating and advising on new licence agreements with the various operators;
- Preparing a comprehensive review/health check for corporate clients of the Code interests on their portfolio of properties and advising on a strategy for removal/relocation;
- Acting for Staffordshire Fire and Rescue Service advising on vacant possession from telecoms operators (MBNL); following settlement meeting drafting new licence agreements.