New rights given to telecoms operators could delay redevelopment plans
The new Electronic Communications Code, which affects all telecommunications lettings, came quietly into force on 28 December 2017, overhauling existing commercial relationships between telecommunications operators, developers and landowners. Whilst it provides operators with greater powers, anyone looking to redevelop or build on land with telecoms apparatus in place must not forget that they still have rights to terminate agreements and negotiate terms of new ones with operators.
The new Code will apply to all existing agreements and any new telecoms agreements from 28 December 2017. Ofcom has also produced a Code of Practice which is not part of the legislation, but provides a framework to support all parties involved, including landowners, developers and operators during transactions. This document sets out the principles and expectations of party-to-party conduct, and includes examples of draft notices to be served under the new Code and standard terms for telecoms agreements.
Due to the significant power shift caused by the changes, now is the time to begin negotiations with operators to ensure that struggles over telecoms apparatus do not delay any ambitious redevelopment plans.
A benefit of the new Code is that it compels all parties to act at specific stages throughout the negotiation process
The new Code proposes an updated assessment of the rent paid by an operator to a landowner for their use and occupation of a site and it is widely expected that this will reduce the rent payments. For anyone considering whether incorporating apparatus into future redevelopments is a viable option, this could have a serious impact. Sites will now be assessed on their value to the landowner not the operator, essentially disregarding the value to the operator for the benefit of its network and the telecoms use.
Additionally, any new agreements that are entered into after the new Code came into force cannot limit operators from sharing, assigning or upgrading apparatus, essentially allowing free reign over the land demised to it. However, any existing agreements which contain provisions restricting this activity will remain unaffected.
The timescales for terminating leases have also changed, with landowners having to serve an 18-month notice to operators. For those working in conjunction with developers, this will mean planning ahead and starting the process long before construction begins on the site. Suitable grounds for termination must also be given, for example substantial breaches of an operator’s obligations under the agreement, or more commonly, the desire to redevelop the land.
If an operator refuses to vacate following a successful termination process, the landowner will need to serve additional notices enforcing the removal of the apparatus and the restoration of the land. This may involve gaining a Court Order.
It is clear that the new Code seeks to substantially increase nationwide connectivity, making it more difficult for landowners to remove operators from their land, which can be particularly problematic if new redevelopment projects are on the horizon. However, this doesn’t mean that construction projects have to be put on hold; there are still options available.
A benefit of the new Code is that it compels all parties to act at specific stages throughout the negotiation process. After a landowner serves notice requiring vacant possession of a site, there are a number of steps to be taken by both parties during the preceding 18-month notice period; it is not just a case of sitting and waiting. Introducing hard deadlines for the submission of documents to both parties enables the process to continue moving, reducing the risk of delays to the project.
Alongside this formal process, informal negotiations should be taking place between the parties and this is where landowners and developers can formulate creative solutions to help reach agreement with operators.
If external advice is sought early on in the process, there may be scope to offer a temporary ‘peripheral’ site to an operator. This may be useful if there is a space in a corner of the new development that could be utilised by the operator for a short period whilst a new site is located, either for permanent installation or until the original site is ready.
This isn’t always possible, so offering an operator a site on a neighbouring or nearby property could also suffice. If the developer does not own any other property in the vicinity, then a telecoms surveyor can help identify other suitable local sites by liaising with other developers or landowners to seek relocating of the apparatus.
A key point to remember throughout the process is that unless an operator has somewhere to move, it is very unlikely that they will relocate at all.
Compulsory acquisition rights under the new Code lie in favour of operators, who can serve notice to landowners, with the intention of installing new telecoms apparatus. Failing to agree to this could result in the operator seeking a Court Order. Landowners could defend an application like this, stating their intention of redevelopment, however it is yet unclear how this will work in practice.
By identifying whether telecoms apparatus needs relocating and/or addressing this early on in the project planning phase, developers can ensure that the brakes aren’t applied to any ambitious construction plans.
Justine Ball is a real estate disputes associate and telecoms specialist at Shakespeare Martineau