What do I do if...I'm redeveloping a property and need to relocate the fibre optic cabling?

00:00:05 David Lee, Host

Hello I'm David Lee, and welcome to ‘Podcasts by Brodies’. In this series we take an in depth look at some common and not so common questions and scenarios Brodies lawyers have faced over the years. This series relates to English law and in each episode we talk to Brodies legal experts and some special guests about a specific issue. We hear their insights and experiences that allow them to take the right approach when they're asked the deceptively simple question, ‘What do I do if...?’.

Today we're asking the question, ‘What do I do if... I'm redeveloping a property and need to relocate the fibre optic cabling?’. I'm joined to discuss this important topic by two Brodies partners, Lucie Barnes and Manus Quigg, welcome to you both.

Lucie, first of all, when we talk about fibre optic cabling, what do we actually mean in laypersons terms?

00:01:03 Lucie Barnes, Partner

In very simple terms, broadband. In today's telecoms world, we're specifically talking about the rollout of superfast broadband and those who've listened to our previous podcasts will know that we've spoken about Project Gigabit, and that's the five-billion-pound government infrastructure project to deliver fast and reliable connectivity across the UK and that seeks 85% Gigabit coverage by 2025, so in this context it's the rollout of that super-fast broadband.

00:01:38 David Lee, Host

Can you give us some examples of the circumstances in which fibre optic cabling might need to be relocated and who's responsible for that?

00:01:50 Lucie Barnes, Partner

In the current market it's the redeveloping of property, that's the common scenario, so where you've perhaps had old cabling of broadband and something needs updating, in the redevelopment stage, that's the scenario. Also major redevelopments of residential blocks of flats in particular, there's a lot of that going on at the moment out in the market.

In terms of who's responsible, you might say that there is a default position that the landowner is ultimately responsible because they have control over the building, but ultimately, it'll come down to what has been agreed in any redevelopment contracts, possibly any existing telecoms agreements between the landowner and the broadband provider.

00:02:43 David Lee, Host

Manus, if I can bring you in here, what are the risks if you engage in a project like this and have to replace the broadband or cabling in a block of flats?

00:02:58 Manus Quigg, Partner

The risk is interesting because in reality the installation of new cables is relatively straightforward for contractors and that's a risk they can price and take for. The more complicated issue is whenever, as is often the case, the existing fibre optic cables aren't where you expect them to be for whatever reason. It can be either the existing cables aren't where you anticipate, and even though full surveys have been carried out of the site to establish where they are, and the second issue is obviously the taking of a contractual risk for relocating the services and dealing with the statutory undertaker.

First of all, there's the cost of the relocation itself, but one of the key problems is that a contractor won't have any control over how long a statutory undertaker will take to either, approve moving of cables that have been identified, or coming and carrying out that process itself.

So that can be a considerable risk, and for a contractor, what that can mean is delays to the completion of the project, exposure to delay damages and an inability to recover your prolongation costs for taking so long.

For the developer, equally there's a risk as well, because the flip side of that is if they carry the risk it can mean paying prolongation cost to a contractor for delays and an inability to recover the delay damages, plus, there's relocation costs themselves.

00:04:20 David Lee, Host

Is it inevitable that this will always happen when there's a redevelopment just because of the pace at which broadband speeds are increasing and just the expectations that we've all got at the moment? Is it something that will always happen?

00:04:34 Lucie Barnes, Partner

I think in the current market, how many G’s have we had three, four now we're onto five. I think this is something that we are seeing a big increase on. Predicting what further G’s might come down the line, certainly on the wireless side and on the superfast broadband side, predicting what that looks like, how fast is super-duper fast and where do we get to? That's a little bit finger in the air.

One of the key drives at the moment, certainly around the residential blocks of flats, is obviously the defective cladding issues. That's prompting a relook at redevelopment projects and projects going forward so it's very much a hot topic in the market at the moment.

00:05:16 David Lee, Host

Coming back to you Manus, you talked a little bit about some of the risks, what can a contractor actually do to mitigate those risks and make it less likely that there will be challenges in the project?

00:05:34 Manus Quigg, Partner

A number of things, and the most simple thing is don't accept the ground risk at all. That's the liability for identifying and relocating cables but sometimes that's not always possible. As a negotiating position, do you want the contract or do you not? Sometimes you just have to take the risk.

What often happens though, is that investigation reports are provided in the tender pack and then the contractor is just told that they cannot rely upon that data and the developer can't warn the accuracy of the information provided for obvious reasons, because quite often the cables aren't always where they're expected to be.

So don't accept the ground risk, but if you are going to then seek specific relief for delays, it's particularly in relation to the relocation of cables or delays caused by the statutory undertaker and the performance of their obligations. And that relief can be either in terms of an extension of time or entitlement to more time for the completion of the project, therefore relief from liquidated damages, or more money, so prolongation costs. Or thirdly, just don't take responsibility for the costs of relocation. So three main ways.

00:06:35 David Lee, Host

Lucie, what about the legislative side of this, what are the legislative powers that can force the removal of fibre optic cabling?

00:06:47 Lucie Barnes, Partner

The key piece of legislation is the electronic communications code and that came into force at the back end of 2017.

That's the legislation that governs all telecoms apparatus in the UK and there are other ancillary pieces of legislation and regulations that underpin it, but that's the key piece of legislation, and that governs both wireless and fixed line cabling, obviously the fixed line cable is what we're talking about today.

Under the code, it's the landowner who has necessary powers to terminate any agreement to remove cabling should that be a scenario that that might occur. But that's only where certain criteria has been met, and the scope is incredibly limited in terms of powers there. But the basis is that redevelopment of a property can be a terminating ground under the code.

00:07:47 David Lee, Host

Manus what about guidance, in addition to the legislation? What's out there and what’s the implications against specifically for contractors?

00:07:57 Manus Quigg, Partner

Bang up to date on the 4th of October there was a new guidance approved document issued, "infrastructure for electronic communications," and that was issued under the building regulations. That's an approved document issued to tell parties how to comply with the building regulations when it comes to inbuilding physical infrastructure for high-speed electronic communications. That comes into force on the 26th of December, so it doesn't impact on developments before that date, but it may impact after and it tells you how to comply with, or, gives you guidance on how to comply with the building regulations.

00:08:34 David Lee, Host

We're in quite a fast changing environment here by the sound of it Manus, what is the level of knowledge among contractors about this area? Presumably they do need specialist advice, this is a very complex area.

00:08:50 Manus Quigg, Partner

It is complex and state of knowledge is patchy I think is probably the best way to describe it.

There are those who will specialise in this area, contractors particularly, specialised in this field, who will probably have been watching for the new guidance coming out and will be fully aware of all developments. But others will not, where perhaps this is a small part of the overall development and therefore they'll have to rely on specialist input from others, lawyers, specialist advisors to guide them through it.

I think the key message here is to be aware of the risks and know where to find the advice.

00:09:25 David Lee, Host

Lucie, a patchy knowledge, but hopefully not patchy broadband, particularly when the new cabling has been installed. Let's talk a bit about the telecoms code - what is the relevance of the code in this area and how does that link in with the legislation, the guidance that we've talked about already?

00:09:47 Lucie Barnes, Partner

As I sort of touched on the telecoms code the relevance of it is those powers that can influence the parties and perhaps the deal that they might seek to do around dealing with this issue.

The new guidance that Manus has talked about, it's very prescriptive, and one of the key pillars within it is that it requires the developer and the broadband service provider to agree who will install the infrastructure. So readily you can see a scenario - well who's going to pay for this?

Relocating or putting in new cabling to facilitate telecoms infrastructure obviously has costs involved with it and the telecoms code has the potential to influence those negotiations. There's also an underlying risk then it can be used as a weapon in that negotiation so it has the potential to cause and also resolve disputes where parties can't agree in advance.

00:10:58 David Lee, Host

Is this likely to be an area of challenge between contractors and telecoms providers?

00:11:10 Lucie Barnes, Partner

I think there is a challenge for the parties in this scenario because the duties that are being placed on them by the new guidance, there is this responsibility to try and agree what's going to happen. Who is going to pay for that? If this is a major redevelopment and is it the land owner? Is it the developer? The contractor? Is it the telecoms operator themselves?

Given that there are a number of competing commercial interests and just a number of parties, that could be difficult to manage.

00:11:52 David Lee, Host

Manus, what liabilities can arise if these issues are not handled at an early stage, presumably it is very important to try and address this at the very early contract stage of the of the discussion.

00:12:05 Manus Quigg, Partner

It is, the number of liabilities - the first one is the regulatory liability because, effectively, what you're going to do is your design will be in breach of the building regulations if you don't comply. So you're going to have an enforcement risk by the relevant authority.

Second is the contractual risk that comes from it, so there's going to be the cost of rectification, there's going to be delay costs, damages costs and then consequential losses as well. So if you're the party who's procuring the building, for example, you're not going to be able to generate any income using that building whilst you're stuck in disputes and in dealing with the rectification required to make the building comply. So, a whole range of liabilities can flow from it.

00:12:47 David Lee, Host

Lucie, anything to add to that?

00:12:51 Lucie Barnes, Partner

I chime with everything that Manus has said!

00:12:55 David Lee, Host

In general, Lucie, again coming back to this point, this is a complex area.

Can you summarise your high level advice to client who are thinking about doing some redevelopment, who might be affected by this issue? What are the key points they need to remember?

00:13:13 Lucie Barnes, Partner

Hopefully we've not flogged it too much, but seeking early specialist advice is really key when planning these redevelopments.

Construction contract advice on these redevelopments is probably a no-brainer for most people involved, but do not ignore the specialist expertise that's required on telecoms in particular.

Dialogue - talk, talk and more talk and talk again! This is telecommunications we all are trying to connect and be connected - do not stop talking, have open dialogue.

And early dispute avoidance and advice here is key as well, as I've touched on it, these issues have the potential to be contentious and have unintended costs and liability consequences.

When ultimately the driver is to complete a wonderful new development project, it's important to keep that driver in mind and have resolved these issues before it gets to that dispute stage.

00:14:21 David Lee, Host

Manus, final word from you?

00:14:23 Manus Quigg, Partner

I would say that the fibre optics is probably going to be one of the smaller aspects of the overall development and the less you know about it, the greater the onus should be on you to seek advice. Both in terms of technical but particularly contractual, so you have awareness of what exactly it is you are signing up to and what the consequences can be if it all goes wrong.

Whenever we're dealing with construction disputes, that's quite often the case, that lack of knowledge of the sector where the dispute arises can cause clients to really regret the contract they ever signed up to.

00:15:02 David Lee, Host

As you touched on before Lucie, this is something that is a hot topic at the moment, it is something we may well see more of, particularly with so many redevelopments going on at the moment, and the rapid "growth of the G’s" as you put it earlier on.

00:15:17 Lucie Barnes, Partner

This isn't going away and I think COVID, working from home, has really turbocharged what's happening in the wireless and broadband world but particularly in this area. There is a desire to have this super-fast broadband in these properties, it is not currently in those properties and when redevelopments are occurring we need to be really addressing the issue in advance, it's not going anywhere.

00:15:52 David Lee, Host

Thank you very much to Lucie Barnes and Manus Quigg, just to summarise what we've heard today; act early, make sure you do get that specialist advice on the contractual and the technical side and always engage in dialogue at that early stage because it's "good to talk," other slogans are available!

You've been listening to ‘Podcasts by Brodies’ where some of the country's leading lawyers and special guests share their enlightened thinking about the issues and developments currently having an impact on the legal sector and what that means for organisations, businesses and individuals across the UK.

If you'd like to hear more, you can subscribe to ‘Podcasts by Brodies’ on all your favourite podcast platforms and for more information and insights, please visit brodies.com.