Happy (?) Anniversary to The New Electronic Communications Code 2017

So, here we are on the 1st anniversary of the implementation of the new Electronic Communications Code (ECC) and what do we have to show for it?

Unfortunately, the Operators, whilst trying to place the blame on the Landlord (Site Provider) community, have, in my opinion, created the chaos and uncertainty in the market.

As a bit of background, the reason given by the Operators for demanding that the existing legislation be reviewed, was to enable them to rollout and upgrade sites quickly, and more specifically, to assist them in rolling out sites in rural areas and where Site Providers have held them to ransom demanding extortionate “ransom rents”.

The Operators are self-righteously claiming that the new Code was brought in as the Government recognised the fact that mobile telephony is an essential utility in today’s world, as is an electric or water supply. The Government wants a better connected Britain and we cannot provide this without the new ECC. Why should we be treated differently, they claim?

So why do I contend that it is the Operators that have caused the chaos and not the Site Provider community?

The Operators' argument that they could not roll out sites in rural areas due to greedy Site Providers is spurious at best. At the recent RICS Telecoms Conference, Peter Williams from the Welsh Government told at length how the village of Pontrhydfendigaid in Ceredigion grouped together to pay for a mast to be installed as the Operators would not do so. Operators simply will not spend money in areas that are not profitable! Where were the "greedy" Site Providers? As someone who worked for 12 years as a consultant surveyor to all the Operators, I can say, with knowledge of their processes, if the construction, electricity or fibre connection for a proposed site is too high, the site will not get built. Rural areas suffer because the installations will not make the Operator a profit but a loss. The Operators have had rights for years to install equipment in the Adopted Highway. This costs them nothing in terms of rental payment, however, we do not see a proliferation of installation on the Adopted Highway in rural areas. Poor rural coverage has nothing to do with the rents the Site Providers demand.

There are numerous arguments why the Operators are and should be treated differently than say the other main utilities. The key reason? When the Operators began rolling out sites in the UK, it was done on the basis of agreement. A willing buyer and willing seller. From this grew a multi-million pound market and even an market emerging with leases being sold to investors. To pull the rug from under the feet of the feet of the Site Providers and the investors was never going to end well.

Maybe this was recognised in the form of the OFCOM Guidance - that in the first instance, the parties should try and negotiate a consensual agreement and only if that does not work, to go to the Lands Tribunal to apply for it to confirm whether it is in the public interest to have an agreement imposed on the Site Provider.

Unfortunately, the Operators' heavy handed tactics have not been received well by the Site Provider community and little progress has been made in 12 months. The Operators definition of consensual is baffling. There are approximately 40 cases sat on the list of the Lands Tribunal, compare that with the couple of cases brought to the Courts under the old legislation. Whilst the old legislation was inadequate, it’s inadequacy created a situation where both parties knew they had to make it work.

So what is it that the Operators have been doing since the new ECC has been implemented? Besides claiming that the new ECC gives them very wide rights, similar to the rights they would agree under a lease before the new ECC, they are also insisting that a consensual agreement means that the site must be valued in the same was as it would be if it was an imposed agreement. But again, it must follow their interpretation of how this valuation is carried out. They are therefore offering payments of Consideration less than £10 per annum for both rooftop and greenfield sites with the add on of a Compensation payment for matters the Site Provider can show they need compensating for. Average Rents before the new Code were approximately £5,000-£6,000pa for a Greenfield site and £8,000 - £15,000pa for a Rooftop sites with sites in Central London up to £35,000pa. 

One of the few cases that have been heard by the Lands Tribunal was what has become known as the University of London (UoL) case. So what was the UoL case all about? CTIL wanted access to carry out a survey on the rooftop of a property owned by the UoL. The UoL advised that they were not interested as they had plans to redevelop. CTIL insisted they had rights under the ECC and then served notice on the UoL and applied to the Lands Tribunal to confirm this right. Whilst the Tribunal found in favour of CTIL and confirmed that access was a Code right (although we wait to see if this decision will be appealed by UoL), and the Operators have made a lot of noise about their victory, the Operators fail to acknowledge the significance of the whole situation.

The whole case came about because a Site Provider did not want to engage. So instead of seeing this as a wakeup call to the new reality they have created, the Operators think it is a big win.

The reality is, that if the Operators continue along the path they have taken, there is no incentive for Site Providers to allow an installation on their property and the Operators will likely need to apply to the Tribunal every step of the way. Not only that, even if the Operators get their way and obtain an imposed agreement on the Site Provider, a hostile Landlord is not going to be helpful for the many visits that an Operator needs to maintain the site and is not going to get out of bed in a hurry if a site goes down and the Operator needs emergency access.

Bleating on about the benefit to the Site Provider and the increase in value to the property for having an installation on it, is not going to work. Comparing themselves to the other utility providers is not certainly not going to work. When a pylon is installed, it sits there and is rarely visited, similarly, an underground pipe or cable. However, the mobile operators visit sites on a regular basis, their contractors and sub-contractors often cause havoc and leave damage and destruction in their wake. Saying that the Site Provider should co-operate as its for the greater good is not going to work either.

There have been reports of the some of the Operators offering £5,000 “bonus” payments to try and induce Site Providers to sign up quickly without reference to specialist advice. However, it is clear from the number of cases in the Lands Tribunal that this is not working either.

What will work is when both sides sit down and negotiate a consensual agreement. The Site Providers should expect rents to drop, as certain rights in the lease cannot be rentalised any more, but nothing like the levels being offered at the moment. The Operators can then use the new ECC to deal with the "greedy" Site Providers who will not agree a sensible agreement, and enjoy rollout and upgrade of sites, whilst making a not insignificant cost saving in the process.

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Dovid Pink is a Chartered Surveyor who has worked for more than 22 years in Telecommunications. Initially working in a practice providing Acquisition, Planning & Estate Management work for all the Operators, in 2008, he set up Amsy Chartered Surveyors as a practice that specialises in Telecommunications matters working solely for Landlord’s. He can be contacted at dovid.pink@amsy.co.uk