The English Upper Tribunal (Lands Chamber) have published their judgment in the case of EE Ltd & H3G UK Ltd v Stephenson & AP Wireless (II) UK Ltd. The case discusses when and how applications to the Tribunal for a new code agreement under the Electronic Communications Code 2017 ("the 2017 Code"), replacing an existing agreement, can be made.
The 2017 Code was introduced as part of government policy to improve digital connectivity by supporting the rollout of digital communications infrastructure. Compared to previous telecommunications codes the 2017 Code is considerably more favourable to operators. For example, the way rent is calculated was changed - resulting in lower rents and operators have more rights under the 2017 Code to upgrade and share apparatus without requiring the landowner's agreement. For these reasons, it is generally in the interests of the operator to renew an agreement to bring it under the 2017 Code, whereas landlords' interests are better served by pre 2017 code agreements.
In this case, the operators made an application to terminate an existing agreement (which was an expired lease that had been granted before the 2017 Code came into force) and to enter into a new agreement under the 2017 Code.
The key points of the decision are as follows:
The recent Scottish appeal decision in EE Limited & Hutchison 3G UK Limited v Duncan applies in England and Wales. In determining if a new code agreement should be imposed, the court is required to take into consideration various factors, including the telecoms operator's "business and technical needs". The Upper Tribunal agreed with the Duncan decision that when considering the operator's business and technical needs, they did not require the operator to go beyond the general benefits provided by the 2017 Code, and they did not need to demonstrate a site-specific need for a new agreement.
The principle that there is a generally applied presumption against change of lease terms by the court, and the onus is on the party seeking the change to justify it in terms of overall reasonableness, does not apply to the 2017 Code, stating that "site providers are required to put up with a degree of change in the public interest of facilitating the provision of a choice of high quality networks".
Where notice is served to terminate an existing agreement and replace it with a new agreement (as happened in this case), the operator cannot apply to the court for modification of the existing agreement on different terms. Instead a fresh notice has to be served, or the site provider has to waive this requirement.
Implications of the decision
It will be of particular interest both north and south of the border that the decision in Duncan applies in England and Wales. This latest decision in favour of the operators further strengthens the position of telecoms providers in relation to Code agreements.
If you have any concerns or questions about the impact of the 2017 Code on your telecoms agreement or how the changes brought about by this decision might impact your business and what you can do about it, please do not hesitate to get in touch with our Real Estate Disputes team or your usual Brodies' contact.