Telecoms infrastructure: change in the statutory landscape

Telecoms infrastructure: change in the statutory landscape

With the ever-increasing demand for mobile technology, it’s not surprising that telecoms giants want to keep pace with this expansion by maintaining their infrastructure in existing locations and expanding into new ones. More and more we are seeing that the business landscape is changing between telecoms giants and the landowners in dealing with this expansion.

By way of background, telecoms operators have to construct infrastructure and install equipment on land in order to provide a comprehensive coverage for their network. Since the Telecoms Communications Code came into effect in December 2017 the amount of revenue received by landowners has significantly reduced, and their rights have fundamentally changed.

In the recent case of EE Ltd v Islington London Borough Council the telecoms operator EE wanted to install and operate telecoms equipment on the roof of a building which was owned by the Council. The negotiations between the parties had been going on since before the new telecoms Code came into force, during which time both parties had agreed in principle that EE would pay the Council £21,000 per year to use the roof of the building for their equipment. However, no agreement was actually reached.

When the new Code came into effect, both parties ended up referring their dispute to the Upper Tribunal (Lands Chamber) to determine a number of issues, one of which was the amount which EE should pay for siting their equipment on the Council’s roof. The Tribunal ordered that EE should only have to pay £1,000 per year. This figure took into account the fact that EE would be entering into a 10-year lease which included obligations on the operator as well as payment towards the service costs of running the building.

Nevertheless, the reduction in money which equates to an annual loss of £20,000 in revenue for the Council represents a seismic change from the level of payments which landowners have been used to receiving from telecoms operators. A new landscape is being established ensuring that telecoms operators’ objective to provide comprehensive coverage and connectivity is being given priority over landowners’ revenue.

Under the new Code the amount which the Tribunal will award is based on the market value of the landowner’s agreement. This is almost inevitably going to result in far lower payments being made to landowners because in assessing the market value under the new Code, the Tribunal must take into account a number of assumptions, including:

  • A ‘no-network assumption’: this means that the Tribunal must ignore the fact that the operator is to use the site as part of its telecoms network
  • A ‘no transaction assumption’: this means that there is no lower financial limit below which it would be assumed that the landowner simply would not enter into an agreement with the operator

The landowner does have a right to claim compensation if loss or damage is sustained by the landowner as a result of the telecoms operator using their land, however reliable evidence is needed for any claim to be accepted by the Tribunal. The main causes of loss for which compensation is payable are:

  • The reduction in the value of land because it has become subject to a Code right. The value of the land subject to the acquired right may be less than it was beforehand, and the difference in compensation may be payable. However, the Tribunal said that a landowner who allows its land to be occupied and receives in return the market value of that occupation does not suffer loss or damage from being kept out of the use of the land or from being deprived of the opportunity to let it to someone else
  • Loss or damage sustained as a result of the exercise of the Code rights. This would include the cost of disruption to a business or physical damage to a building caused by the installation
  • Expenses

The Council put forward 29 separate claims for compensation, but the Tribunal rejected all but two. The Tribunal awarded compensation for the legal and surveying costs which had been incurred, and for the physical damage resulting from the actual installation of the telecoms equipment on the building.

The Tribunal has made it clear in not only the EE case but also in other cases, that they are absolutely disinterested in parties:

  • acting unreasonably
  • pursuing unrealistic and speculative claims
  • incurring costs disproportionate to the amounts involved.  As a new benchmark message to all, the Tribunal in one case even reduced a claim for costs of the successful party from £100,000 down to £5,000

A landowner faced with this changing landscape is well advised to take legal advice in any new dealings with telecoms operators, and to recognise that a new order is emerging which is very different to that of the past.

This article was first published in the September 2019 edition of South East Farmer.