Code reforms can bolster UK digital connectivity

Out-Law Analysis | 05 Jan 2022 | 11:18 am | 3 min. read

The often-strained relationship between landowners and telecoms companies risks undermining improvements to the UK’s digital infrastructure, but reforms proposed to UK law intend to change this.

The proposals concern the Electronic Communications Code, the legislative framework that governs dealings between landowners and Government approved operators over the installation, operation and maintenance of telecommunications equipment – such as fibre cables, masts and cabinets.

The Code, enacted in 2017, was designed to make it easier and cheaper for telecoms operators to roll-out next generation digital infrastructure deemed vital to the UK's economic growth. However, both landowners and operators have raised concerns with how it is working in practice and, following a consultation exercise earlier this year, this has spurred the government to act: proposed updates to the  Code were set out in the Product Security and Telecommunications Infrastructure Bill presented to parliament in November.

Problems arising currently

Reconciling private property rights with the need to speed up the delivery of new digital infrastructure is a challenge. Landowners understandably want to minimise disruption that can be caused by works and be fairly compensated for the use of their property, while operators want to expand networks and upgrade equipment without delay.

The Code represented an attempt to strike the right balance between the competing interests. However, disagreements over how the Code applies have persisted. A slew of cases have been brought before the Upper Tribunal (Lands Chamber) (England & Wales) and Lands Tribunal (Scotland), and appeals to the higher courts – including three conjoined appeals due to be heard in February 2022 in the UK Supreme Court.

Some disputes have centred on the rights of operators to move from ‘old’ agreements, formed under the previous Code, to new agreements governed by the Code under which operators enjoy greater rights. Other disputes have concerned interpretation of the Code and its transitional provisions, the rights to upgrade and share apparatus and the value of rights. Further problems have arisen due to the unresponsiveness of parties in negotiations.

The combination of legal uncertainty, an uneasiness and sometimes hostility in relations between parties, and a marked uptick in disputes is a barrier to better digital connectivity.

Solutions proposed by the government

A series of measures to improve engagement and collaboration have been proposed.

The government wants to encourage more disagreements to be resolved via alternative dispute resolution (ADR) rather than via litigation. ADR will not be mandated, but the proposals are to place operators under a duty to consider ADR, improve awareness of ADR among landowners and occupiers, and require the courts to take account of any unreasonable refusal to engage in ADR when awarding costs.

Clarifications around rights to upgrade and share apparatus have also been drafted. Operators already enjoy an “automatic” right to upgrade or share apparatus provided this has minimal impact. That right is to be retained without the government expanding on what such impact means. However, the right for the courts to impose, or parties to agree, rights which go beyond those automatic rights is acknowledged. To mirror the position with upgrading, a new right to “share” apparatus will be added to the list of Code rights which can be agreed or imposed.

Further, as the automatic right was only available for agreements entered into after the Code was enacted, it is said that a significant proportion of the UK’s existing networks could not be upgraded or shared – an issue particularly relating to fixed networks. To address this, a new, more limited, sharing and upgrading right will be available for apparatus installed before the Code took effect and, for certain installations, whether or not there is a Code agreement in place.

The government has also recognised the difficulties created by the current law in terms of where an operator is already in occupation of the land under an expired agreement, but where it needs to obtain new Code rights. It intends to change the definition of ‘occupier’ to entitle operators to renew expired agreements and obtain new Code rights. The UK Supreme Court is due to rule on this issue amongst others under the Code in February 2022.

The disagreements over the correct valuation mechanism to apply to renewals of contractually expired pre-2017 agreements which are protected under the Landlord and Tenant Act 1954 should also diminish as the government plans to apply the same valuation mechanism under the Code to these renewals.

The government also plans to bring in rights for either party to seek interim orders, pending resolution of renewals, on financial or other terms to enable resolution efficiently and flexibly.

A new process will make it easier for operators to obtain Code rights – for up to six years – in cases where there are unresponsive landowners or occupiers of land. This is to resemble the process set out in the Telecommunications Infrastructure (Leasehold Property) Act 2021 in relation to buildings. The proposals are aimed at tackling delays in installing new digital infrastructure which can result in reduced connectivity and higher costs for the targeted communities.

The proposals are likely to attract debate as the Bill passes through parliament. Though landowners may argue that the plans represent a further erosion of their property rights, and operators might claim that the proposals do not go far enough, the Bill should provide the legal certainty and improved mechanisms sorely needed to encourage greater collaboration over the delivery of the digital infrastructure UK businesses need to thrive in a global economy.

Michael Smith and Pierre Smith are experts in property dispute resolution at Pinsent Masons. A version of this article was first published by Estates Gazette.