Court backs telecoms infrastructure provider in upgrade and sharing dispute

Out-Law News | 09 Dec 2021 | 12:22 pm | 5 min. read

A telecoms operator and wholesale infrastructure provider has secured unrestricted rights to upgrade and share electronic communications apparatus on a rural site over the next 10 years, despite objections raised by the landowner.

The Court of Appeal in London ruled that the tribunal that had earlier considered the case was “amply justified” in providing such flexibility in the upgrade and sharing rights to be provided for over the term of a new 10-year agreement between the operator and the landowner. The likely advance of technology during the term was said to create a “practical need” for rights to upgrade, and the right to share was considered “key” to the operator’s business as a neutral host of other providers’ electronic communications networks.

Foo Alicia

Alicia Foo

Partner

This judgment helpfully acknowledges and underlines the importance of the operators' ability to share and upgrade apparatus to futureproof the UK's digital economy

“This judgment examines the debate around the breadth and ambit of the sharing and upgrading rights under the Electronic Communications Code 2017, which has been a significant battleground between site providers and operators,” said property disputes expert Alicia Foo of Pinsent Masons who acted in this case. “It helpfully acknowledges and underlines the importance of the operators' ability to share and upgrade apparatus to futureproof the UK's digital economy, especially infrastructure providers whose statutory purpose under the Code is to facilitate sharing between operators and upgrading of vital telecoms equipment.”

Pierre Smith, also of Pinsent Masons, said: “This is especially welcome news for operators at a time when the government is proposing reforms to the 2017 Code but has confirmed that it does not plan to introduce new rights for operators to modify Code agreements during the term. Getting sufficiently flexible rights to upgrade and share at the outset of an agreement will now be vital to enabling better connectivity in the future.”

The case before the Court of Appeal concerned a dispute between On Tower UK Limited, formerly Arqiva Services Limited, and landowner JH & FW Green Limited. Pinsent Masons acted for On Tower in the case.

On Tower was seeking to replace an agreement of an existing greenfield site located in an area of woodland on the Dale Park Estate, South Downs, on which it had installed a mast and other electronic communications apparatus. The existing agreement was granted more than 20 years earlier under the ‘old’ Code but had expired. On Tower’s proposals for the new agreement included a right for On Tower to add to the apparatus and to upgrade and share that apparatus with other providers of electronic communications networks, without limitation. JH & FW Green did not object to the grant of a new agreement in principle but sought to restrict the equipment that could be kept on the land in future; and to limit On Tower's rights to carry out future upgrades and to share the equipment to those prescribed in paragraph 17 of the 2017 Code.

In December 2020, the Upper Tribunal (Lands Chamber) for England and Wales ruled in On Tower’s favour. The tribunal is responsible for imposing an agreement between site providers and operators under the 2017 Code in the event of a disagreement between the parties.

In its decision, the tribunal found that the rights sought by On Tower were essential to its business as a neutral host of infrastructure and noted that other terms of the proposed agreement and planning law served to protect JH & FW Green and addressed its concerns. Amongst other things, the tribunal considered the fact the proposed agreement forbid On Tower from causing nuisance on the site, giving the landowner remedies if those terms were breached. The tribunal also referred to the 2019 Court of Appeal Compton Beauchamp decision, which is the subject of an appeal to the UK Supreme Court but which, on current application of the case law, would prevent On Tower seeking additional Code rights from the tribunal once the agreement was imposed.

JH & FW Green lodged an appeal against the tribunal’s decision before the Court of Appeal. It argued, amongst other things, that the tribunal had misunderstood both the significance of the terms of the existing agreement and paragraph 17 of the 2017 Code.

Paragraph 34(12) of the Code requires the tribunal or court, when considering the terms to be included in a new agreement, to have regard to the terms of the existing agreement. JH & FW Green argued, drawing analogies to similar wording in the Landlord and Tenant Act 1954, that this required the tribunal to treat the terms of the existing agreement as the starting point and that there was a heavy onus placed on the party seeking to depart from those terms.

The Court of Appeal rejected this argument, stating that the 2017 Code pursued a different policy to the Landlord and Tenant Act 1954 and that the weight to be attached to the existing agreement will turn on its consistency with that policy. It pointed out that agreements which pre-date the 2017 Code were less likely to accord with its purposes.

Pierre Smith said: “The Court of Appeal has scotched the view that the principles applied to the Landlord and Tenant Act 1954 are to be slavishly followed.”

The Court of Appeal pointed out that the tribunal was, in any event, not invited to consider the terms of the existing agreement as both parties were seeking to depart from its terms.

Paragraph 17 of the 2017 Code provides for an operator to be entitled to upgrade or share if any changes to the electronic communications apparatus have "no adverse impact, or no more than a minimal adverse impact, on its appearance" and the upgrading or sharing "imposes no additional burden" on the site provider.

The tribunal had held that paragraph 17 “operates as a floor” and not a ceiling, in that they specify the minimum rights that operators enjoy, but that it is open to the tribunal to grant broader rights.

In its appeal, JH & FW Green argued that paragraph 17 does not merely operate as a floor. It claimed it “sets a benchmark or standard” that UK law makers had considered, when forming the Code, to provide a fair balance between the interests of site providers and operators. It accepted that it is open to the tribunal to grant more extensive rights to operators than are provided for in paragraph 17 but argued that there must be “sufficient justification for doing so” and that this was not the case in respect of On Tower’s request.

The Court of Appeal, however, considered evidence relating to the formulation of the Code and said it supported claims made by On Tower that the onus on it to justify extended rights was “not a heavy one”. It held that the tribunal was “amply justified” to provide for complete flexibility in the equipment upgrade and sharing rights to be written into the new lease with JH & FW Green. It cited that the uncertainty as to what demands technology will require in the future presented a “compelling basis” for unrestricted rights and a “very good reason” to go beyond paragraph 17.

Pierre Smith of Pinsent Masons said: “The Court of Appeal’s judgment will, by acknowledging that operators like On Tower should be able to upgrade infrastructure and share with other operators, ensure that the public can be offered access to the latest technology as it is rolled out across the UK in years to come.”