In May this year, the Department for Culture, Media and Sport announced its proposals for the new Electronic Communications Code and said it would implement the reforms by primary legislation at the earliest possible opportunity.
The Digital Economy Bill was introduced in the House of Commons earlier this week, on 5 July, and Schedule 1 of the Bill contains the proposed new Code.
Reform of the Code has been on the agenda for some time. The Code was first introduced in 1984 and provided a statutory basis for telephone companies to place landline telephone equipment on land. The Code was extended in 2003 to cover all electronic communications.
The Code is now more than 30 years old and, given the advance of new technologies and the increase in demand for services, it has been criticised as being out of date and no longer fit to meet the needs of present day technology. The Government considers that reform is necessary to increase and incentivise investment which, in turn, will allow greater coverage and better quality of service for consumers.
Under the current regime, there is a delicate balance of interests between landowners on one hand and communications providers on the other and disputes frequently arise. The new Code will shift that balance in favour of operators making it easier for them to deploy and maintain their infrastructure with new rights to upgrade and share apparatus. This will allow new technologies to be rolled out quickly as they become commercially viable but this will be at the cost of landowners who, until now, have benefited from additional payments where additional rights have to be secured by agreement.
The new Code will make major changes to the way land is valued. There will be a shift to a "no scheme" regime for valuing land. This will reduce the cost of rents for communications providers and is intended to tackle the perceived issue of landowners charging "ransom rents" where limited availability of sites has led to significantly inflated rents in some cases.
Operators will have new automatic rights to upgrade and share apparatus without requiring agreement or making payment to landowners, provided there is minimal adverse visual impact or additional burden on the landowner. The intention is to allow new technologies to be rolled out quickly as they come to market.
The new Code will also allow reassignment of Code rights. As infrastructure assets are sold or acquired by communications providers, under site sharing arrangements for example, there will be no option for landowners to negotiate new terms for existing contracts.
There will be a prohibition against "contracting out" of the Code to ensure that the Code underpins commercial negotiations at all times.
Whilst parts of the new Code will apply to existing contracts, the transitional provisions exclude the reassignment of Code rights and the upgrading and sharing provisions from existing agreements. We will therefore see a gradual move to the new Code as existing contracts come up for renewal.
As telecommunications is a reserved matter, the new Code will apply across the whole of the UK.
The reforms clearly favour communications providers and will be welcomed within the industry. Landowners, however, will lose out so that the public can benefit from having networks that meet the needs of society in the digital era.
If you have any queries, please contact Scott Logan. Scott is a Managing Associate specialising in compulsory purchase, telecoms and utilities.
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