It was over five months ago that the New Electronic Communications Code (New Code) was introduced. John Wood takes a look at the drivers behind recent legislative changes and what the impact of these changes is likely to be.
So, what does the New Code do? It helps to regulate the relationship between network operators and site providers (landlords/landowners) underpinning agreements relating to the citing of communications apparatus on land and property.
The telecoms market has changed significantly since the Code was originally introduced in 1984, so one could view the New Code as a much-needed refresh.
There have been vast changes in technologies, but of vital importance is the huge rise in demand for digital services. Put simply, communications is no longer a luxury but a basic need.
UK Plc is way behind other European countries in the connectivity league table and the government has been determined to bolster long term investment in the UK’s digital communications infrastructure and the New Code has been designed to support this critical objective.
Most of us expect fast broadband and excellent mobile coverage regardless of where we are. Despite massive investment in the networks over recent years, which has resulted in faster broadband speeds and increased mobile usage and coverage, the UK continues to lag behind other countries in this area.
The cost of rents in the telecommunications industry have been considerably higher than those paid by other utilities and providers of essential services. By allowing greater sharing and facilitating future consolidation of networks more easily, operators will be able to more effectively make use of their portfolio of sites, reduce their cost base and accelerate investment in their networks.
The New Code has therefore introduced changes to the way land is now valued. The basis of valuation for agreements after 27th December 2017 has shifted to a ‘no scheme’ approach reflecting the underlying value of the land. This is a fundamental change but in essence the New Code is just bringing the approach to communications infrastructure in line with the other utilities like electricity, gas and water.
A valuation based on compulsory purchase principles was considered key by the government to achieving greater investment and connectivity improvement. In broad terms the calculation of rental value (now consideration) ignores the value of the site as a telecoms facility and any ransom value is ignored as it is assumed there are alternative sites available which a communications operator could use.
Values will vary with location but these may in time become more generic. Parliament has always taken the view that good citizens should co-operate with compulsory purchase, and large schemes such as Crossrail and the Olympic Park have thrown up a significant number of claims. Some of these cases were taken to the Upper Chamber and decisions were made at £50 for many small sites after consideration of the true loss caused. Clearly cases will depend on the evidence but many will be broadly in line with scales of payment made by water and electricity companies.
The government is extremely keen for all stakeholder groups in the industry to work together to bring about a smooth implementation of these reforms and OFCOM has introduced a code of practice to support this position.
Without a doubt the introduction of the New Code represents a major market shift and it will take time for some site providers and their agents to adjust to this. However, by implementing these changes the government has rightly put the public interest first and its digital strategy centre stage. Property owners will be fairly compensated for the use of their land and for any reasonable loss suffered, which mirrors the approach for many years in the other utility sectors. The telecoms industry is finally catching up, having established its importance to the UK’s economy and its citizens.