Top Tips: Understanding the new Electronic Communications Code

On 28 December 2017, a new Electronic Communications Code (the "Code") came into force which can be found at Schedule 1 to the Digital Economy Act 2017. The Code sets out rules governing the installation and operation of telecommunications equipment and replaces the Electronic Communications Code in Schedule 2 to the Telecommunications Act 1984 (the "Old Code").

Rights under the Code or under the 1954 Act?

Under the new Code, telecommunications leases can no longer enjoy protection under the under both the Landlord and Tenant Act 1954 (the "1954 Act") and the new Code. This addresses an issue that could arise under the Old Code and makes the position clearer for all concerned. Instead, telecommunications providers will enjoy security of tenure under the New Code only, unless:

the grant of Code rights is not the primary purpose of the lease; and
the lease is one to which Part 2 of the 1954 Act applies (disregarding whether there has been an agreement to exclude security of tenure).

The Code will therefore apply to telecommunications leases of which the primary purpose is to grant Code rights (as set out in Part 1 of the Code) and the 1954 Act will continue to apply to other leases where the primary purpose is not to grant Code rights. This means that telecommunications providers will no longer enjoy dual layers of security of tenure.

Part 5: Termination

Part 5 of the Code sets out the procedure by which a landlord must follow in order to terminate a telecommunications lease granted after 28 December 2017.

A landlord must give the telecommunications provider at least 18 months' notice to quit which cannot expire before the end of the contractual term.
Notice must be served in the form prescribed by OFCOM.
Notice must refer to one of the following prescribed grounds:

substantial breaches by the telecoms provider of its obligations under the agreement;
persistent delay by the telecoms provider in making payments due under the agreement (e.g. rent);
landlord intends to redevelop all or part of the land, or neighbouring land, and cannot reasonably do so unless the agreement is brought to an end;
prejudice caused to the landlord of having the agreement in place cannot be adequately compensated by money; or
prejudice caused to the landlord outweighs the public benefit of the having the agreement in place.

These grounds are more limited in comparison to the grounds available to a landlord when opposing lease renewals under the 1954 Act. Despite the removal of the dual protection, the Code still gives considerable protection to telecommunications providers.

A telecommunications lease will be terminated on the date specified in the landlord's notice unless the telecoms provider:

serves a counter notice within three months of the date of service of the notice; and
makes an application to court within 3 months of the date of service of the counter notice.

A telecommunications provider can oppose the termination of its lease merely on the basis that it does not want it to come to an end and can also request new terms or new Code rights (as set out in Part 1 of the Code). The court has the power to either order that a lease comes to an end, continues in its existing form or continues on modified terms.

Part 6: Removal of apparatus

Part 6 of the Code sets out the additional procedure by which a landlord must follow in order to enforce the removal of apparatus once a telecommunications lease has been terminated.

A landlord must give the telecommunications provider notice to remove its apparatus and restore the land to the condition it was in before the apparatus was installed.
Notice must be served in the form prescribed by OFCOM.
Notice must specify a date by which the removal and restoration must be completed. This must be a reasonable period and will depend on the specific circumstances.

A telecommunications provider must respond to the notice within 28 days from the date of service of the notice to confirm that it will comply or request an alternative date by which to remove and restore. If no agreement is reached within 28 days, a landlord can make an application to court ordering removal or sale of the apparatus.

Our comments

The Code is intended to improve on the Old Code in light of technological developments and the increased demand for electronic services. However, it is anticipated that the new Code will continue to create difficulties for landlords. Although there is no longer any dual protection provided by the Old Code and the 1954 Act, telecommunications providers still enjoy considerable protection afforded to them by the limited grounds for termination and protracted termination process set out in the Code.

Top tips for landlords

What can a landlord do to ensure that it complies with the Code when terminating a telecommunications lease?

Remember that any agreement to contract out of Code rights will be void.
If a telecommunications lease was granted before 28 December 2017, different transitional provisions apply in relation to termination, broadly in line with the Old Code.
Ensure that any notices served are in the form prescribed by OFCOM. If they are not, the notices will be invalid.
Remember that termination and removal of apparatus is a two-step process with the potential to result in a substantial period of delay and two court hearings. Forward planning is critical for landlords if they intend to redevelop.