By Rob Shaw, Senior Associate and Ben Rogers, Legal Director – DLA Piper

Proposals for reform of the Code have gathered pace recently; on Tuesday the Department of Culture, Media and Sport released the Government’s proposals to reform the Code and yesterday it was announced that the new Code will be part of the Digital Economy Bill (as announced in the Queen’s Speech).

The Code was originally enacted in the Telecommunications Act 1984 to allow for the placing of landline telephone equipment on land. The Code was extended by the Communications Act 2003, recognising that regulation of all electronic communications, not just telephony, was crucial. Since then, we have seen dramatic change in the telecommunications sector with ever increasing demand for services and the development of new technology.

The existing Code has been widely criticised by telecommunications operators and landowners for being outdated and lacking clarity. The issues with the existing Code are well known to us from our experience of acting for Hibernia Networks, a major multinational telecoms operator, on the installation of their UK network. The proposed new Code aims to address the criticisms of the existing Code and prepare for future developments in technology.

The proposed new Code incorporates new rights for operators to help promote greater long term investment in digital infrastructure. The intention is that the new Code will be implemented through primary legislation (the Digital Economy Bill) as soon as possible.

Key Code proposals:

1. Valuation of land – A new basis for valuation of land to limit rents and to reflect the underlying value of land. The aim is to reduce rents and premiums to encourage greater investment and improve network coverage. The Government is clear that landowners should receive a fair value for use of their land, but that this should not include a share of the economic value created by high public demand for services provided by the operator. In order for this to be a smooth transition operators will need to work closely with landowners.
2. New rights to upgrade and share apparatus – The existing Code does not provide for any automatic power to enable the operator to share or upgrade its apparatus. The new Code, however, will permit operators to share or upgrade apparatus without any prior agreement of the landowner provided that there is minimal adverse visual impact caused by the apparatus. The intention is that this will allow operators to make more effective use of sites, thus reducing their infrastructure footprint and costs without impairing network provision.
3. Dispute resolution – To resolve disputes between landowners and operators as effectively and efficiently as possible, the dispute resolution procedure of the existing Code will be moved from the ordinary court system to specialist tribunals.
4. No contracting out of the Code – It will now no longer be possible for parties to exclude themselves from some or all of the provisions of the Code through commercial agreements as it is the Government’s view that this undermines the effectiveness of the Code.
5. Registration of Code rights – Code rights will continue to be binding on successors in title without such rights falling within the ambit of the land registration rules. The Government deems that the current arrangements in this area are sufficient and do not need to be reformed.
6. New Code will not apply retrospectively – The new Code will only apply to new agreements – it will not apply retrospectively to existing agreements as, in the Government’s view, this could give rise to disruption and uncertainty.

Whether or not the Government’s proposals make it onto the statute books remains to be seen (those with knowledge of the history of proposed reforms to the Code won’t be holding their breath!). We can envisage that some of the proposed reforms will not go down well with landowners, especially those who see rents reducing having made sites available to operators. The government’s stated goal of reforming the Code to help develop the UK communications network may, in practice, have the opposite effect as landowners adopt a more cautious approach to opening up sites to operators.

DLA Piper will monitor all further developments in respect of the proposed new Code and provide regular briefings on the progress of this proposed new legislation.