On 27 April 2017, the UK’s new Digital Economy Act came into force. Following the calling of a snap General Election for 8 June, it was brought into force during the final parliamentary wash-up. Whilst some proposals were withdrawn or watered down, a number of important provisions, notably reform of the UK’s electronic communications code which governs the relationship between telecoms operators and landowners, were brought into force without significant amendment.
What has changed?
The Act is something of a grab-bag of policies, without a particularly coherent focus. In his press release, Minister of State for Digital and Culture, Matt Hancock said:
I’m delighted the Digital Economy Act has become law. This legislation will help build a more connected and stronger economy. The Act will enable major improvements in broadband rollout, better support for consumers, better protection for children on the Internet, and further transformation of government services.
The press release went on to explain that Act includes includes provisions which will:
- give every household a legal right to request a fast broadband connection
- give consumers and businesses better information about communication services, easier switching and automatic compensation if things go wrong
- cut the costs for new infrastructure and simplify planning rules
- enable stronger enforcement of direct marketing laws
- create civil penalties for online pornographers who do not verify the age of their customers, and ISP level blocking of non-compliant sites
- help protect consumers from “bill shock” by requiring mobile network operators to offer a bill capping facility
- provide powers to ensure that the Crown guarantee of BT pensions has the necessary flexibility to allow BT and Openreach to be separated
- provide powers to tackle the problem of ‘bots’ in the online secondary ticketing market,
- an extension of the public lending right to cover e-books
- provision to ensure that on-demand television is accessible to people with disabilities”
Reform of the electronic communications code: telecoms operators access to land
When the UK first liberalised its telecoms market in the 1980s, the Government wanted to stimulate investment and network build. As part of that process, they put in place some rules in the UK to make it easier for new entrants to build new networks. Amongst those rules were statutory entitlements for specified telecoms companies to install, maintain, adjust, repair or alter electronic communications apparatus on public and private land. Whilst these rules worked in practice, they became increasing cumbersome to apply and were memorably described in 2010 by Lewison J as:
… not one of Parliament’s better drafting efforts. In my view it must rank as one of the least coherent and thought-through pieces of legislation on the statute book.”
Following review by the Law Commission and extended consultation, the reform and updates to this area are changes that have been broadly welcomed by most stakeholders. Some of the main updates in the Act are:
- Better drafting. The plain English approach in the new draft makes the new Code easier to understand than its predecessor.
- Clearer interaction with the Landlord and Tenant Act 1954 in relation to seeking to recover possession. The proposed Code amends the 1954 Act to provide that tenancies, the primary purpose of which is to grant Code rights, cannot benefit from the security of tenure rights under the 1954 Act.
- Conferring of Code rights. Code rights are only conferred by written agreement between the occupier and the operator, and the agreement only binds the occupier’s landlord if he agrees to be bound. There is a power for the court to impose an agreement by order if: (a) any prejudice caused is capable of being adequately compensated by money; and (b) the public benefit in access to a choice of high quality electronic communications services, likely to result from the making of the order, outweighs any prejudice. However, an order may not be made if the court thinks that the relevant person intends to redevelop all or part of the land to which the Code right would relate, or any neighbouring land, and could not reasonably do so if the order were made.
- Consideration and compensation. Any court-imposed agreement must deal with the consideration to be paid, being an amount representing the market value of the relevant person’s agreement to confer or be bound by the Code right. The market value is assessed on the basis of the value to the telecoms operator of the agreement (not to the landowner) and having regard to the use which the operator intends to make of the land. The court may also order compensation for loss or damage and the legislation sets out the bases for compensation. At the core of the new Code is the change to the wayleave valuation regime, which essentially moves valuation away from pure free market principles by requiring the use of the RICS Red Book. According to the Government’s Impact Assessment, this is expected to lead to a 10% reduction in wayleave payments (such as lease payments) from operators to landowners. It is expected that this will result in landowners’ revenue from wayleave payments decreasing by £30 million per year.
- Interim agreement. The new code allows an interim order to be made, which would allow operators to gain access and commence service, then with matters such as compensation decided at a later and fuller hearing without delaying service commencement.
- Assignment of Code rights/upgrading or sharing use of apparatus. Operators can assign Code rights (although can be required to enter into an authorised guarantee agreement), upgrade or share the use of electronic communications apparatus subject to certain conditions and anti-avoidance provisions.
- Continuation of Code rights and bringing agreement to an end. A site provider who is a party to a Code agreement may bring the agreement to an end by giving a notice to the operator. The notice must state the end date, which must fall no earlier than after the end of 18 months from the day on which the notice was given,and also state the ground on which the site provider proposes to bring the agreement to an end (this includes that the site provider intends to redevelop all or part of the land to which the agreement relates or any neighbouring land, and could not reasonably do so unless the agreement comes to an end). Where such a notice is given, the Code agreement comes to an end in accordance with the notice unless within three months from the day on which the notice is given, the operator gives the site provider a counter-notice, and within three months from the day on which the counter-notice is given, the operator applies to the court for an order. However, if the court decides that the site provider has established the redevelopment or other ground, the court must order that the agreement comes to an end. Otherwise, the court can make one of a number of orders specified in the legislation. The operator may be required to make interim payments. There is also a procedure for changing an agreement, which again may involve applying to court for an order.
- Removal of apparatus. There are also rights for a landlord to require the removal of apparatus if one or more of five conditions are satisfied, including if the apparatus is no longer used for the purposes of the operator’s network or there is no person with a Code right to keep the apparatus on the land. There is a procedure to enforce removal of the apparatus.
As previously discussed, Ofcom is already consulting on an updated template wayleave agreement.