Telecoms: New legislation - A beacon of clarity or still a cloud of confusion?

The Product Security and Telecommunications Infrastructure (PSTI) Act 2022 received Royal Assent on 6^th December 2022, amending the Electronic Communications Code 2017 (ECC), to support the quick and efficient rollout of gigabit-capable broadband and 5G networks across the UK. 

The purpose of the ECC was exactly this when it was introduced in December 2017, but legislative ambiguity has resulted in the complete opposite occurring, and so the Bill is seen by the Government as providing the needed clarity to the ECC to unlock the current deadlock in negotiations in lease renewals and for agreements for new mast sites. This does, however, impose new duties and responsibilities on site providers and has the potential to impact rents.

PSTI Changes

A key change introduced by the PSTI Act is the amendment to the Landlord and Tenant Act 1954, which now aims align the procedures for renewal disputes and imposing new agreement terms more closely with Part 5 of the ECC.

Previously, any lease that falls within the protection of the 1954 Act would need to be renewed first in accordance with the 1954 Act’s renewal procedure. The new lease would then be an agreement, governed by the Code. When that lease comes to an end, the operator could then rely on the procedure under Part 5 of the Code to modify any existing rights under that new lease. Now, the PSTI Act modifies the assessment of rent under the 1954 Act so that telecoms renewals adopt the valuation provisions applied under the Code. 

Other major amendments include:

• Alternative Dispute Resolution (ADR): operators must consider using ADR to settle disputes or narrow disputed issues before making an application to the court. Operators must make landowners aware that ADR is an available option in correspondence with them and when serving notices on them, explaining the consequences of refusing to engage in ADR. The courts will be required to take into account any unreasonable refusal to engage in ADR when awarding costs.
• Unresponsive occupiers: operators can quickly obtain Code rights over certain types of land where a site-provider or landowner is unresponsive to their attempts to engage. Where the subject of the operator’s request for Code Rights continues to be unresponsive, the matter can now be decided by a court order which will grant those rights regardless.
• Clarification of sharing and upgrading rights: limited rights for operators to upgrade and share equipment installed before the Code, provided there is no material impact on the owner or occupier of private land. This change is very helpful to Code operators, particularly passive infrastructure sharers whose business model relies on a wide-ranging ability to share apparatus but is concerning for site providers faced with operators being granted unlimited rights to share or upgrade apparatus on their land. 
• Grant of Code Rights over operator occupied site: Code Rights to be imposed on non-occupiers of mast sites who exercise management or control over that land.  This now deprives site providers in certain circumstances of leverage they were previously able to exercise under the Code.

The Government proposed that the PSTI Act will “amend the Electronic Communications Code to support the quick and efficient rollout of gigabit-capable broadband and 5G networks in a way that balances the interests of landowners, telecoms operators, and the public” but the changes introduced would appear to certainly tip the balance even more in favour of the operator. 

Rents

New Code Agreement negotiations continue to stall mainly in respect of the rents being offered by operators.  Whilst the PSTI Act changes to how 1954 Act rents are to be assessed, which will be particularly unwelcome with qualifying landowners who would have previously enjoyed more favourable valuation provisions under the 1954 Act, guidance is much clearer now than since the ECC came into effect, following recent headline decisions on cases at Tribunal.  The RICS state the RICS are clear in their view that “in light of the emphatic and repeated guidance from the (Upper) Tribunal, it is clear now that the latest version of the Affinity Water table must be the starting point for any Code Valuation and that good reason will need to be shown to justify departure from those values”.  Despite this the range of rents being offered by operators for similar sites ranges significantly, with no one consistent approach seemingly being taken. 

Whilst much of the confusion has been allayed by the changes introduced by the PSTI Act, the sector still has its challenges and remains far from plain sailing. If you have been approached by a telecoms operator or agent concerning a new or existing mast site and require further advice on this topic, please contact Tom Phillips on 07585 961166 or tom.phillips@brown-co.com, or speak with your local Brown&Co office.