- Senior Associate
Many rural farms and estates will have over the years let land to telecoms providers for a radio or broadcast mast. With ever increasing digital communication it is unsurprising that telecoms operators have sought to expand their network and increase the number of sites to place their equipment. In 2017 the Digital Economy Act introduced the Electronic Communications Code (“the Code”) which now governs all new agreements which landowners enter into with telecoms operators. The Code gives operators stronger rights than under previous legislation with operators now having statutory powers under the Code to install apparatus on, over or under land and thereafter to maintain this apparatus.
If you are approached directly, one of the first points to note is that the rent or consideration offered by telecoms operators is much less than under the old regime. The Code specifically sets out that when considering the amount to be paid by an operator to a landowner there is a ‘no network assumption’ meaning that the fact that the site is to be used for telecoms equipment is to be completely disregarded. This principal applies if the Court is setting the terms of an agreement between the landowner and the operator, with the parties having failed to come to an agreement themselves. However, most operators have taken this principle and used it as a starting point for negotiations with rents, meaning that some initial offers from operators open with a very low rental payment.
Previously, lease agreements with operators would include the right for the landowner to be paid a share of any payments received by the operator for permitting other third-parties share the site. However, the Code permits the operator to share the use of the equipment, a right which has recently been strengthened by the Product Security and Telecommunications Infrastructure Act 2022, with other third-party operators allowing operators to carry out works on the land to allow third-party operators to share the equipment. The landowner cannot seek further payment for the exercise of these rights by the operator, or the third-party, as sharing is a Code right.
The key consideration in this scenario is on what basis the existing agreement continues to run. If the term of the agreement has expired and it is running on what is called ‘tacit relocation’ then it is likely the operator is seeking a consensual agreement to enter into a new agreement at the end of that period of tacit relocation. If, the term of the existing lease has not expired then it may be possible for the operator to seek to modify the agreement under the Code. If you are approached by an operator in relation to an existing site we would strongly recommend that you first seek legal advice before entering into negotiations to ensure you know where you stand in terms of the existing lease.
If there are immediate plans to develop or redevelop the land then the landowner cannot be forced into entering into an agreement. The Code specifically provides that the courts cannot impose an agreement if there is an intention to develop and such development couldn’t go ahead if the agreement was entered into.
However, if development is something the landowner may wish to do but has no settled plans at the point the agreement is being considered then it is important that the landowner agrees with the operator that terms are written into the agreement such as a break clause for redevelopment at a certain anniversary of the agreement and statutory compensation clauses for the loss of value of the land to protect their position.
It’s important to bear in mind that operators now have statutory powers and while nearly all operators will seek a consensual agreement in the first place, the operator can apply to the courts to have an agreement imposed. Operators tend to use this power most often where they have approached the landowner for an agreement but heads of terms have not been agreed or the negotiations are not moving as fast as the operator would like.
The key message running through each of the above considerations is that if approached by a telecoms operator with terms to enter into an agreement, a landowner should first and foremost seek professional advice on both the legal and commercial terms of the agreement. We would recommend that before signing heads of terms you contact a solicitor and a land agent who can advise the best course of action.
If you have questions on any of the issues raised above, please contact Kate Bond.
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