The Digital Economy Act 2017

Gillian Cowie

Published by
Gillian Cowie

24th August 2017

Rejuvenating the Electronic Communications Code through the Digital Economy Act 2017 is central to boosting the UK Economy for the Digital Age

The Digital Economy Act 2017, which received Royal Assent shortly after the Government’s calling of the  General Election, will significantly impact on the UK economy, and in particular the telecoms industry.

As well as the biggest change in the telecoms sector in over 30 years, the new legislation also deals with other significant issues including rights to have access to broadband, to protect the public from spam emails and nuisance calls, and restricting access to on-line pornography.

The UK Government has stated a clear ambition for the UK to be a global leader in the next generation of mobile technology. The Digital Economy Act 2017, which is expected to come into force later this year, will see the Government introduce a new legislative framework to seek to address the requirements of both businesses and individuals that demand connectivity in their daily and working lives. The new legislation will radically overhaul the Electronic Communications Code contained in the Telecommunications Act 1984 which governs the relationship between landowners and mobile network operators. Commentators have described this as necessary arguing that the existing Code is outdated and not in keeping with modern technological advancements.

The main changes introduced by the Act that landowners and operators should be aware of are:-

1.            Operators can Assign, Share their Code Rights and Upgrade their Sites Subject to Conditions

The new Code contains provisions that enables mobile network operators to assign agreements, upgrade the electronic communications apparatus to which such agreement relates, and share the use of such electronic communications apparatus. This is a substantial change and means that operators will be permitted to automatically upgrade apparatus and share it with another operator. While previously landowners could potentially earn extra revenue from site sharing, the new Code will allow operators to share the apparatus at no extra cost.  Any Agreement that contain provisions that limit or prevents assignation, upgrading or sharing will render such agreement void.

The provisions are however subject to conditions. Firstly, the operator’s rights to upgrade  or share the site is conditional upon any changes as a result of such upgrading or sharing having no  “adverse impact” or no more than “minimal adverse impact”  on the site’s appearance. Secondly, the upgrading or sharing is not to impose an “additional burden” on the landowner.

2.            Court has power to impose Agreements

The existing Code made provision for the court to impose agreements on the landowners.

The rights afforded to operators have been strengthened in the revised Code and this is a direct response to the desire to boost investment in Communications Infrastructure.  Operators can apply to the Court to impose an agreement between the landowner and the operator to confer a code right on the operator.  The court may make an order if both of the following conditions are met:-

  • If the prejudice to the landowner can be adequately compensated by money; and
  • Will the public benefit outweigh the prejudice to the landowner?  In deciding this condition, the court must have regard to the public interest in access to a choice of high quality electronic communications services.

3.            Land Valuation

At the earlier stage in the legislative process there was a proposal to change the way land was valued from a market based system to a “no scheme” basis.  Following lobbying from stakeholders in the telecoms sector, in circumstances where an agreement is imposed by the court, the rent or consideration for possessing the land is to be calculated on the basis of market value.

The Code contains detailed provisions for assessing the market value, and it is to be calculated on the value of the right to the landowners and not relating to the provision or use of an electronic communications network.

Some agents believe this is an attempt to re-create a compulsory purchase system as used for other utilities and may result in reduced rents. A different view from other agents is that landowners will not see their rents reduced and in fact, rent will actually increase.

4.            Termination

The new Code contains new provisions in respect of termination which arguably will make it more difficult for a landowner to terminate an agreement.

Landowners must give notice to the operator stating the statutory grounds for ending the agreement and providing a specific date for terminating the lease. The specific statutory grounds must include substantial breaches by the operator of its obligations, or persistent delays in making payments, or an intention to redevelop.  18 months’ notice must be given to the operator.

As per the existing Code, operators have the ability to submit a counter notice.

Linked to this is the physical removal of the electronic communications apparatus from the Communication Site and landowners are the only party who can request the removal of the equipment by issuing a notice on the operator requesting the removal of the equipment. Importantly, land owners must give operators a “reasonable” period of time to remove kit.

5.            Dispute Resolution

The new Code according to the Government will reduce the tension between landowners and operators as the current inefficient dispute resolution process will be replaced with a more coherent system.  Almost all Code disputes will heard by land experts in the Lands Tribunal in Scotland and the Lands Chamber of the Upper Tribunal in England.

6.            Code Not Retrospective and Transitional Provisions

Considerable debate centred on whether the Code should apply retrospectively to pre-existing agreements. The Government are of the view that this is unwelcome and the new Code will not have retrospective effect.

While the new Code will not apply retrospectively, there are complex transitional measures and the new Code will phase in provisions that over time will apply to both existing and new agreements.

7.            Parties Cannot Contract out of the Code

The new Code expressly prohibits parties from contracting out of the new Code and the rationale behind this is to create an equal playing field that will bring uniformity. The Government’s research concluded that parties had been contracting out of the existing Code and they stress the need for a Code that will underpin commercial agreements at all times.

Conclusion

How the new Code will be used in practice is unknown, however the Government has put a new legislative framework in place with the intention of promoting the UK as a serious global player in the telecoms industry. The reforms mentioned are designed to enhance the economy by strengthening the rights afforded to operators.

Why WJM?

WJM has over 30 years’ experience in the telecoms sector, and we are well placed to assist operators, network infrastructure providers and landowners in relation to property work in connection with telecommunication network infrastructure.

Call our team of experts now on 0141 248 3434 or email: enquiries@wjm.co.uk

 

The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at August 2017. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.