Why is the new Code not working and what should be done about it – a summary?

Why is the new Code not working and what should be done about it – a summary?

There has been so much hype over the last 10 years or so about a thing called 5G. The last time the telecoms industry caused so much chatter was in the late 1990’s early 00’s when 3G was being launched. That resulted in huge over bidding (£22bn paid in total) on the five 3G (UMTS) operating licences which were auctioned off by the UK Government. This was money which, instead of being spent on infrastructure investment, was sucked into government coffers and never heard of again.

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This is when the financial pressures on UK networks really began. On top of the huge sums spent on 3G licences, massive investment in towers and sites was required to support 3G networks. Competition for sites was fierce and one new starter (H3G, later the three network), had to start from scratch. It was able to piggyback on another operator’s network to begin with. However, that was always a short-term strategy and one that 3 had to plan without after a few years.

In 2011 an arbitrator made an award in a case involving a route across the Bridgewater Canal in Manchester. The award was appealed and eventually one of the senior members of the Judiciary commented that the legislation behind telecommunications infrastructure (the telecoms code – then Schedule 2 to the Telecommunications Act 1984) was one of the least coherent and well thought out pieces of legislation on the statute book.

The Law Commission was asked to look at reforms to the telecoms code. As part of its initial review, the Commission concluded that the market was not perfect, but just about functioning and the legislation was outdated and not fit for purpose. Everyone agreed that the infrastructure required for the latest communications networks is absolutely essential for a successful UK. This importance has only increased since then. Society’s reliance on good communications infrastructure is greater now than it ever has been. However, the infrastructure should not be installed if it involves the gross-expropriation of private property.

The Government took the Law Commission’s findings on board and drafted a detailed bill to go in to the 2015 Infrastructure Bill. This appeared to be progressing well, until it was suddenly removed from that Bill at the last minute.

In mid 2016, the UK Government announced in a fanfare of glory that a new electronic communications code was on the way. It was very similar in wording to the attempt which was made to incorporate it into the earlier Infrastructure Bill, but for one crucial change: The market value assumptions were changed to take account of the value of the site to the site provider, rather than the value to the operator. This more or less killed the site provider/operator rental market over-night.

The argument was that Site Providers had had it too easy for too long. Some were abusing the market and holding operators to ransom. The dispute resolution system being based in the County Courts made resolving code disputes long and costly. The planning system also did not help network roll-out. Faced with a renewal demand from a site provider which seemed out of kilter with the market, operators had few options other than pay the price demanded or move off site. The planning system wouldn’t let them do that though. It was and still is, so difficult to get planning permissions for new sites that operators and infrastructure investors couldn’t properly consider the option to move from one site to a cheaper replacement.

This inadequate support from the planning and judicial systems gave site-providers an opportunity to exploit the operators’ need to remain on a site, almost no matter what the cost. Most people in the sector agreed that something needed to be done.

The proposed change to the valuation regime was heralded by those in Government as a pioneering way forward. One which would redress the balance between site providers and operators. Site providers would receive a fair value for their land or buildings being used for telecoms installations. Compensation would be available for costs, losses and damages incurred by site providers in hosting a site.

Those who understood the market could see what was likely to happen. The supply of available sites would dry up. Wiling site providers would almost cease to exist. This has resulted in a broken system and less than four years after the legislation was introduced, more reforms are proposed to the code. It doesn’t work. It’s still too inflexible and expensive to resolve disputes which arise in negotiations between site providers and operators.

So what can be done to free up the market and get more infrastructure rolled out?

First of all, introduce an assumption in favour of permitted development for well-designed masts and towers, subject to some periods of consultation up to 25m or 30m if they are shared. What constitutes good design is quite subjective? Relax constraints relating to installations on buildings. Any installation within a certain volume of radio cabinets and antenna/dish steelwork installations protruding no greater than 5m above the highest point of a building should be permitted where there is no other special designation to the site such as listed building (grade 1, 2 or 2* only), conservation area or world heritage site.

Applications to add further equipment to an existing tower should be permitted unless that tower needs to be replaced due to over-loading. If a height increase is required this should be permitted up to 30m total height or 25% of the existing tower height if it is more than 25m.

All applications should be determined within 28 days of submission to the local planning authority. Full disclosure with planning/licence notifications should be required of the emissions levels and how they relate to ICNIRP permitted levels.

On public highways land (including special roads such as motorways and trunk roads) introduce permitted development rights for “streetworks” sites up to 25m height (or 15m in residential/suburban areas).

Secondly, revise the electronic communications code in ways which addresses the main barriers to roll-out i.e. the shortfall in the supply of available sites and the length of time that site providers have to wait to terminate a code agreement. This dreadful piece of legislation has been an albatross around the neck the UK telecoms industry since the first draft of the final bill was introduced in mid 2016. Introduce an assumption in favour of site providers being paid at the outset of an agreement, for all reasonably foreseeable losses, costs and damages and make operators responsible for all costs arising from their occupation of the building, such as ongoing management costs, increased operational costs allowing for any reasonable changes that the owner has to make because of the presence of the apparatus. Reduce the period of time for an agreement to be terminated, to six months maximum.

Operators need to be encouraged to take a less aggressive approach to new Code valuations and applications to the Lands Tribunals. More clarity is needed on the values to apply to the Site Provider’s land and a presumption in favour of burdens they will reasonably and foreseeably incur.

Other barriers include the strange definitions in paragraph 17 of the Code, relating to upgrading and sharing equipment. If there is an equipment addition which is permitted by planning legislation, it should be permitted in the agreement with the site provider. Any sharers on site should not have rights under the Code. If the Owner serves a single notice on the Operator named on the Code Agreement, that notice should bring to an end all operator and sharers equipment serving or using that site at the date of its expiry.

The dispute resolution process is also prohibitively expensive. Many disputes could be resolved by alternative methods of resolution, such as arbitration or mediation. An arbitration process may take a month or six weeks to conclude. A mediation even less. The two methods could be used to resolve valuation or commercial issues. In the above scenarios Site Owner X might ask for the process to be resolved by mediation, so his concerns on rooftop repair costs and structural loading could be properly addressed. If the valuation is disputed, this could be referred to arbitration. Instead of paying six figure sums for each case by each side, the matters could be resolved for fractions of that amount.

So where do we go from here? Well the industry is so badly polarised just now, that any thinking which is not seen as 100% neutral is viewed with huge scepticism by one side or the other. 49/51 in favour of the Operator means being pilloried by the site providers market and vice-versa. DCMS is running a series of workshops to try to reach consensus on how to reform the code and make the industry work better. Many experienced industry practitioners are investing a great deal of time in these workshops. Whether they provide any real steps forward remains to be seen. For them to be effective, all parties with an interest in the market have to buy in to the reforms and proposals.

For a conversation about how we can help you with your electronic communications code issues, whichever part of the market you’re involved with, please get in touch with us here at 4M info@4mpropertiesgroup.com

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