It has been almost 18 months since the new Electronic Communications Code (Code) came into effect. In the past, the siting of telecoms equipment on land and rooftops provided a useful additional income stream for many landowners, with minimal interruption and disturbance. However, the introduction of the new Code has made it easier for network operators to install and maintain apparatus, such as phone masts, on public and private land and has led to an increasing unease felt by landowners, as the Code tips the balance in favour of network providers.
Two recent cases will be of interest to landowners with telecoms equipment situated on their land and for those contemplating entering into an agreement with a telecoms operator:
Agreements imposed on Landowners:
In Cornerstone Telecommunications Infrastructure Ltd (CTIL) (a joint venture between Vodafone and Telefonica) v University of London, CTIL sought an interim agreement to be imposed for access to the roof of premises owned by the University of London. CTIL wanted the agreement in place so they could investigate whether the site was suitable for the installation of equipment (it being likely that CTIL would have then made an application for a permanent agreement to be imposed on the University). The University refused. The Court decided that the right to carry out preliminary investigations was inside the scope of the Code and that there was no requirement for a concurrent application for permanent rights to be made. The decision is currently under appeal, but many are now concerned that operators will use the Court to impose agreements under the Code on landowners for site investigations where the landowners are not in agreement, particularly in key network areas.
A similar issue arose in EE Ltd and Hutchinson 3G Limited v Mayor and Burgesses of London Borough of Islington where the operators sought to impose an interim agreement to install apparatus on the roof of a block of flats owned by the Council, pending determination of a separate application for permanent rights. The Court considered whether there was a good arguable case for the installation of the equipment, considering the prejudice to the landowner versus the public benefit. It concluded that reducing or losing coverage for local businesses and the residential neighbourhood outweighed the limited prejudice to the Council by imposing the agreement. The prejudice to the Council was limited because the interim agreement imposed was only granted for a few months, carried no security of tenure risk (i.e. there was no right for the operator to renew at the end of the term) and was for adequate financial consideration.
Interestingly, four months after these initial cases, EE Ltd and Hutchinson 3G Limited returned to the Court and applied for permanent rights over the Council’s building. The Council dropped its opposition and the Court made directions for the parties to exchange a draft form of agreement. The Council failed to comply and as a result were not permitted to pursue any arguments about the terms of the permanent agreement proposed by the operator.
The Court was asked to consider the level of rent payable under the permanent agreement proposed by EE Ltd and Hutchinson 3G Limited. The Court considered in detail how the rent was to be calculated, the most significant impact being the application of the “no network assumption” i.e. that the assessment of the market should ignore the presence of other operators who might want to use the site to provide a network.
The Court placed only a nominal value on the roof space - £50 per annum, but ordered this should be increased to reflect the Council’s costs of running the building and keeping communal areas in good repair. On this basis, it ordered the rent payable should be £1,000 per annum. The Court subsequently accepted the operator’s higher submission of £2,551 per annum as being payable, but the landowner’s contention that the rent should be £13,500 per annum was rejected. This was a significant reduction on the rent that would have been payable under the old code.
Many landowners have experienced an increasingly bullish approach by operators when it comes to lease renewals, new leases and levels of rent payable and these latest cases are likely to make landowners think twice when they are contacted by network operators wanting to site telecoms equipment on their land.
The EE Ltd case marks a significant reduction in the levels of rent that a landowner might have expected to achieve under the old code and there is no doubt that landowners are increasingly nervous about both the imposition of agreements against their will under the Code and the risk of a reduction in levels of rent.
However, it is still early days after the introduction of the new Code and landowners, agents and lawyers alike are keeping a close eye on the market and the telecoms cases handed down by the Court to see how the Code is being implemented and the new level of market rents payable to landowners with equipment on their land. One thing that is clear, is that the Court is taking a very strict approach with any party that does not comply with Court directions that it has made - it is clear the Council in the EE Ltd case ended up in a much worse position than they might have done, by failing to comply with the Court directions to exchange draft forms of agreement.
Anyone who owns or is thinking of acquiring land which has telecoms equipment sited on it, will need to carefully investigate the implications and consider the terms of any agreements made with the network operators. Any landowner receiving any form of communication from a network operator (or their agents), particularly regarding proposals for the siting of new telecoms equipment or for the renewal of an existing agreement should also seek legal advice before responding.