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The Price of Rural Connectivity


The Price of Rural Connectivity

Digital Economy Bill sheds some light on how the new Electronic Communications Code will regulate agreements between landowners and phone network operators.
We recently blogged about landlords potentially losing out over phone mast rules changes, the proposals to reform the Electronic Communications Code have now been brought together in the Digital Economy Bill. The Bill casts further light on how the new Code will regulate agreements between landowners and network operators. These proposals are not yet binding law and the Bill may still be amended further.

The intention is to provide a boost to rural businesses and encourage economic growth by connecting rural Britain to reliable and fast broadband and mobile networks. At Government level, the Code is intended to underpin consensual agreements between network operators and landowners and where agreement can’t be reached, allow the courts to impose rights for the benefit of the network operator.

On a practical level the Code deals with the installation and maintenance of telecommunications infrastructure, such as mobile phone masts. The needs of the UK consumer are paramount so the Code aims to cut the cost of expanding networks to rural areas, but at what cost to landowners?

New Rights for Network Operators

As with the existing Code, a network operator must contact a landowner to seek their express permission to install and maintain equipment on their land; however under the new Code permission also confers the rights in Schedule 1 of the Bill on to the network operator. Some of the most notable differences between the existing and new Code rights that will affect landowners are:

Price: The new Code aims to facilitate a consensual agreement on price between the parties and currently goes no further than that on setting a pricing structure for land take or wayleave agreements. A ‘no scheme’ pricing structure can be set by a court if the parties cannot come to an agreement. This means that the value will be based on the value of the land to the landowner, rather than the value to the network operator. This makes the payment levels more akin to those of compensation as opposed to a rental which of course means a much lower payment to the landowner. This is likely to give network operators the upper hand in negotiations on price in all dealings and will almost inevitably mean a reduction in rents.

Upgrades: Network operators will have unrestricted rights to upgrade and renew their equipment without renegotiation of the agreement. Under the current Code, rents are often based on the mast height and the amount of equipment that can be installed so upgrades usually mean increased rents. This will no longer be the case once the new Code becomes law.

Site Share: Network operators will gain unrestricted rights to site share or assign the lease to another operator. Site share top-up payments were common a few years ago and the extra payment was often seen as the cherry on top by many landowners. Nevertheless, due to advances in technology and a reduction in the number of network operators in the market, site sharing is less common now-a-days.

Summary

The new Code will only apply to agreements put in place after it comes into force and will not be retrospective. As agreements are in place on average for 20 years the transition to the new Code could be slow, albeit concerns have already been raised that network operators may push to terminate existing agreements to replace them and benefit from the more favourable new Code rights. Nearly all leases give operators a break clause, but occasionally there may be preconditions – for example the equipment is no longer economically viable or the operator licence has been revoked. The Code contains no provisions to counter this possible strategy of early lease renewal.

Taking professional advice as soon as possible is key if any communication is received purporting to terminate an existing lease - you may be able to keep it in force. Be wary of signing anything however innocuous it may look as it could be regarded as your consent and tie you into a new agreement.

This is not the first time that rural landowners have been confronted by a situation where the interests of the UK consumer are paramount. In time, it will become clear whether the government has underestimated the importance of the voluntary cooperation of landowners in its bid to connect rural communities.

Christopher Lindley is a Solicitor in our specialist Land & Rural Business team. If you need any advice about phone masts on your land, please contact Christopher on 01738 621212, email clindley@thorntons-law.co.uk or alternatively contact a member of the Land & Rural Business team

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