FREE CHAPTER from ‘A Practical Guide to the New Electronic Communications Code for Property Lawyers’ by Kerry Bretherton QC & James Castle

CHAPTER ONE –  AN INTRODUCTION TO THE NEW ELECTRONIC COMMUNICATIONS CODE

This introductory chapter deals with the following topics:

  1. The development of the new Electronic Communications Code (“the Code”)1 to replace the old Electronic Communications Code (“the Old Code”);2

  2. The purpose of the Code; and

  3. An overview of how the Code operates, and its contents.

The Development of the Code

Electronic communications (“telecoms”) infrastructure is the beating heart of modern society in our digital age. This has never been truer than in the wake of the Coronavirus pandemic, which has prompted developed countries across the world to adapt to socially distanced life by embracing new remote means of communication. The United Kingdom’s telecoms apparatus is now relied upon heavily not just in our homes and businesses, but also by HM Courts & Tribunals Service, the National Health Service and even our schools.

The technology involved in maintaining these services develops at an alarming rate; as a result, electronic data transmission rates have been growing exponentially for decades. This is one of the reasons why the statutory regime governing the relationships in the United Kingdom between its telecoms network operators and the landowners on whose land they erect their telecoms apparatus ought to be regularly reviewed and updated.

But until 28 December 2017, the United Kingdom was still using its original telecoms code, the Old Code set out in Schedule 2 to the Telecommunications Act 1984. A code, drafted before the invention of the World Wide Web, that it was envisaged would regulate the rollout of landline telephones across the United Kingdom.3 Its draftsmen could barely have conceived of fibre-optic broadband or the 5G mobile network.

However, when the Law Commission published its independent review of the Old Code on 28 February 2013, its reasons for recommending reform were not limited to simply future proofing the existing statutory regime against emerging technologies.4 The Law Commission recognised that the Old Code has been condemned judicially as “not one of Parliament’s better drafting efforts… one of the least coherent and thought-through pieces of legislation on the statute book”,5 and recommended extensive reforms to (inexhaustively):

  1. Clarify the valuation principles for determining the consideration that landowners can charge telecoms network operators for the use of their land to host telecoms apparatus;

  2. Resolve inconsistencies between the Old Code and other legislation, such as the Land Registration Act 2002 and the Landlord and Tenant Act 1954;

  3. Clarify which third parties ought to be bound by rights conferred on telecoms network operators by landowners;

  4. Improve the procedure for resolving disputes arising under the Old Code;

  5. Clarify the process for terminating agreements falling under the Old Code; and

  6. Give limited new rights to telecoms network operators to upgrade and share their network equipment, given the emergence of new technologies that could enable telecoms network operators to save costs with the benefit of these new rights (passing those costs savings onto consumers).

In December 2014, HM Government’s Department for Culture, Media and Sport (the Department for Digital, Culture, Media and Sport since 3 July 2017 – our emphasis) announced that it would reform the Old Code based on the Law Commission’s recommendations. It consulted on its draft legislation between February and April 2015,6 and published its revised proposals for a new code on 17 May 2016.7

HM Government’s proposed reforms largely aligned with the Law Commission’s original recommendations. This included the recommendation that any new code does not have retrospective effect, but instead provides for the Old Code to become ‘naturally’ obsolete as agreements subject to the Old Code are either terminated or renewed under the new regime.

However, following independent economic analysis, HM Government did decide to adopt a new (and controversial) basis for the valuation of rights conferred under agreements falling within the remit of the new statutory regime. Whereas the Old Code valued rights on an open market basis, the Code values them on a ‘no scheme’ basis, dramatically altering the potential value of the rights.

The end result was the coming into force of the Code on 27 December 2017.8

The Purpose of the Code

We have set out above that the Code is designed to regulate contractual relationships between telecoms network operators and landowners. But the Code itself does not clearly state why it exists; what purpose the regulation serves.

Assistance can instead be drawn from Law Commission’s review of the Old Code. It says that a telecoms code needs to exist to (again, inexhaustively):

  1. Ensure that the availability of telecoms services are not impeded by telecoms operators having difficulties gaining access to land;

  2. Strike a fair balance between the rights of landowners and the public interest in the provision of telecoms services across the United Kingdom; and

  3. Make certain the legal consequences of agreements between telecoms operators and landowners on third parties.9

In the following chapters, we will set out the various ways in which these envisioned purposes indeed ring true in the Code. In particular, the reader will see that the issue of whether a fair balance is struck between the public interest and the rights of landowners is central to both the extent of the court’s power to impose code agreement terms on parties, and the new valuation basis for code agreements.

The Operation and Content of the Code and this Book

The Code creates a scheme whereby relevant telecoms operators can serve notice on landowners indicating a desire to acquire rights over their land for the purpose of furthering their telecoms networks. If the parties reach agreement on the terms of acquisition of those rights, then a qualifying agreement under the Code (“code agreement”) is created. If the parties are in dispute, the courts will adjudicate (in an expedited timeframe) and impose a code agreement if relevant criteria are met.

The core parts of the Code that are dealt with in this book are as follows:

  1. Part 1 of the Code, entitled ‘Key Concepts’ 10 sets out the various definitions that form the foundation for the Code. It deals with who the relevant telecoms operators are, what qualifies as telecoms apparatus and a telecoms network, and what core rights telecoms operators can seek to acquire under the Code (“code rights”). These matters are considered in more detail in Chapter 2;

  2. Part 2 of the Code, entitled ‘Conferral of Code Rights and their Exercise’ 11 is eclectic. It deals with the circumstances under which code rights can be exercised and the relevant persons who can be compelled to enter into code agreements (Chapter 3), and the third parties that may be bound by code agreements (Chapters 3 and 11);

  3. Part 3 of the Code, entitled ‘Assignment of Code Rights, and Upgrading and Sharing of Apparatus’ 12 is self-explanatory. The ‘bonus rights’ to upgrade and share telecoms apparatus are explored in Chapter 2, and assignment is considered in Chapter 11;

  4. Part 4 of the Code, entitled ‘Power of the Court to Impose Agreement’ 13 is far-reaching. It provides the power of the court to impose code agreement terms (Chapter 4), the formalities for code agreements and the kind of terms that can be included within code agreements (Chapter 5) and the new valuation basis (Chapter 6);

  5. Part 5 of the Code, entitled ‘Termination and Modification of Agreements’ 14 also contains the provisions for continuation and novation of code agreements. Continuation and termination are considered in Chapter 8, whereas modification and novation are found in Chapter 9;

  6. Part 6 of the Code, entitled ‘Right to Require Removal of Electronic Communications Apparatus’ 15 is dealt with in Chapter 10; and

  7. In addition, this book contains chapters on landowners’ rights to compensation payable under the Code (Chapter 7), the transitional provisions bridging the Old Code and the Code (Chapter 12) and on alternative dispute resolution, and the procedures and practicalities of litigating under the Code (Chapter 13).

This book does not pretend to comprehensively discuss every aspect of the Code. In particular, Part 4A of the Code 16 (which is not yet in force) and Parts 7 to 12 of the Code 17 lie outside the scope of this book. As does detailed consideration of the workings of the Old Code.

Summary

In summary:

  1. The Code was not brought in simply because the Old Code was not up to the task of keeping up with developing technologies. The Old Code had a number of serious flaws, including poor drafting, and required extensive reform to operate satisfactorily both in the modern day and in the context of other statutory regimes;

  2. The Code regulates the contractual relationships between telecoms operators and landowners chiefly to ensure that the former has sufficient access to the land it needs to provide services that are in the public interest, and also to ensure that third parties can be certain where they stand in respect of those agreements; and

  3. The Code operates by giving telecoms operators the power to compel landowners to enter into agreements with them for the conferral of code rights. Provided the relevant formalities are complied with, in default of agreement the courts will adjudicate the dispute and may impose a code agreement and decide its terms, including the payment of consideration and compensation. The Code also provides for the circumstances under which code agreements may be terminated (after which, when and how telecoms apparatus must be removed from the subject land) or varied.

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1 The Code can be found set out as Schedule 3A of the Communications Act 2003, and was inserted there by Section 4(2) and Schedule 1 of the Digital Economy Act 2017.

2 The Old Code was contained at Schedule 2 to the Telecommunications Act 1984, but is now repealed.

3 Albeit that it was substantially amended with effect from 25 July 2003 by Schedule 3 of the Communications Act 2003 to (1) comply with five Directives issued by the European Union and (2) reflect some developments in technology.

4 The Law Commission, The Electronic Communications Code (LAW COM No 336).

5 Geo Networks Ltd v The Bridgewater Canal Company Ltd [2010] 1 WLR 2576 at [7], by Lewison J (as he then was).

6 Department for Culture, Media and Sport, Reforming the Electronic Communications Code: Consultation Document, 26 February 2015.

7 Department for Culture, Media and Sport, A New Electronic Communications Code, May 2016.

8 The Code is yet to be substantially amended, but – following a consultation that ran from 27 January 2021 to 24 March 2021 – in respect of (1) obtaining and using code agreements (2) rights to upgrade and share apparatus and (3) expired agreements – it appears that HM Government has plans to make amendments to the Code. Those plans are presently contained in Part 2 of the Product Security and Telecommunications Bill, which was introduced in the House of Commons on 24 November 2021.

9 See Department for Culture, Media and Sport, Reforming the Electronic Communications Code: Consultation Document, 26 February 2015, Paragraphs 2.3 to 2.11 for a full digest of the Law Commission’s views on the purpose of a telecoms code.

10 Communications Act 2003, Schedule 3A, Paragraphs 1 to 7.

11 Ibid, Paragraphs 8 to 14.

12 Ibid, Paragraphs 15 to 18.

13 Ibid, Paragraphs 19 to 27.

14 Ibid, Paragraphs 28 to 35.

15 Ibid, Paragraphs 36 to 44.

16 Entitled ‘Code Rights in Respect of Lad Connected to Leased Premises: Unresponsive Occupiers’.

17 Which deal with: conferral of transport land rights and their exercise; conferral of street work rights and their exercise; conferral of tidal water rights and their exercise; undertaker’s works affecting electronic communications apparatus; overhead apparatus; and rights to object to certain apparatus installed on, over or under tidal water or lands.