Telecoms Code Agreements: Is it a lease or a licence?

A lease confers an interest in property, whereas a licence is said to be a personal right granted to the licensee only – albeit this is not always the case. The key features of a lease are the grant of exclusive possession of the property, for a fixed term and at a rent.

In the case of agreements granting rights to house electronic communications apparatus or equipment, the lease/licence point matters to establish the status of agreements existing at the time the Electronic Communications Code (Code) came into force, to determine if or how they may be renewed in line with the new Code regime.

Agreements entered into prior to the Code were governed by "old Code" legislation under the Telecommunications Code in Schedule 2 to the Telecommunications Act 1984 (as amended). Those agreements qualify as subsisting agreements for the purposes of the new Code (within the meaning of paragraph 1(4) of the transitional provisions in Schedule 2 to the Digital Economy Act 2017).

The catch is that paragraph 6(2) of these transitional provisions provides that Part 5 of the Code does not apply to a subsisting agreement, which in England and Wales is a lease of land if it is a lease to which Part II of the Landlord and Tenant Act 1954 (1954 Act) applies and no contract excluding the 1954 Act has been entered into. If the agreement takes effect as a lease within Part II of the 1954 Act, any renewal of it will governed by the 1954 Act, not the Code. If the agreement takes effect as a licence or lease outside of Part II of the 1954 Act, the 1954 Act would not apply and renewal might be effective via the Code regime.

A recent tribunal decision looked at the distinguishing features of a telecoms lease and licence to establish the status of ongoing renewals of telecoms agreements. It was held that where an agreement confers exclusive possession but lacks a term certain it will be a licence, but where the agreement provides a term certain it will be a construed as a lease.

If you are an operator, infrastructure provider or landowner dealing with termination and renewal of telecoms agreements, or you have any concerns or questions about the impact these issues may have on you or your business, please do not hesitate to get in touch with our Telecoms lawyers or your usual Brodies' contact.