Member Article

The Digital Economy Act 2017 introduces a new electronic communications code, intended to facilitate widespread connectivity and address some of the critical issues that currently beset the telecoms industry.

The current electronic communications code was issued in 1984 and it was designed to facilitate the installation and maintenance of fixed line communications networks. It was extended in 2003 in recognition of the development and availability of new forms of digital technology. It has long been considered complex, out of date and unsatisfactory for landowners, operators and infrastructure providers alike.

In theory, at least, the new code future proofs ongoing connectivity. It introduces a series of measures to support and encourage investment and to promote the roll out of digital communications infrastructure. These include some inbuilt freedoms for operators to improve and change their networks.

This key focus suggests that the new code will chiefly benefit operators but the new code also seeks to balance operators'' interests with those of landowners and infrastructure providers where they have redevelopment plans and it addresses some of the more problematic aspects of the existing code.

Some of the key changes to be introduced by the new code are:

Security of Tenure

The current code was drafted with no reference to property law and the security of tenure that might be available to operators under the Landlord and Tenant Act 1954. In practice, this has meant that operators have benefited from security of tenure under both the 1954 Act and the telecoms code. That double layer of protection will now be removed meaning that where a landowner has a genuine need to recover possession it should be able to do so under the applicable regime. Where the primary purpose of an agreement is to grant code rights, that agreement will be excluded from the Landlord and Tenant Act 1954. Where the primary purpose is something else, the termination provisions of the 1954 Act will apply instead.

Site Sharing and Transfer

The new code allows operators the freedom to assign a code agreement (although an authorised guarantee agreement can be required) and to share sites with other operators. This flexibility reflects the needs of a rapidly evolving market in which the main operators have already consolidated their sites through joint ventures and site sharing in an effort to reduce operating costs.

Equipment Upgrade

In future, code operators will have an automatic right to upgrade their equipment provided that that will have little or no adverse impact on the appearance of it and the upgrade will impose no additional burden on the landowner/infrastructure provider concerned. Operators will see this as fundamental to the provision of a high quality telecoms'' service as it will allow them to roll out new technologies swiftly and without recourse to a landowner for permission to do so first. Landowners will be quick to argue that any additional equipment will constitute an additional burden - that is if they are aware of the upgrades in the first place. Operators will have no obligation to first notify landowners of an upgrade.

Consideration

Under the current code, payment made by operators for the right to install and maintain apparatus is based on a ''fair and reasonable'' assessment. The new code stipulates that consideration will be based on market value subject to a number of assumptions. However one assumption requires the assessment of value to be based on the amount that a landowner would accept in a ''no telecoms code world'' so that the purpose of the site for an operator''s telecoms provision cannot be taken into account. Much has been made of this in the press with warnings that this change will significantly reduce the rents payable to landowners. However it is anticipated that surveyors acting for landowners will come up with inventive alternative use scenarios for the sites, to counter the operators'' position.

As yet there is no date fixed for the introduction of the new code. Before it can be brought into effect the prescribed notices which parties must use under the new code need to be published as does the Code of Practice referred to in the new code.

At present the new code is anticipated to come into effect in late 2017.