The Electronic Communications Code (the Code') is due to become law in mid-2017, as part of the Digital Economy Bill. Announcing the reforms in the Queen's speech in May, the Government pledged to help "communications companies promote greater long-term investment in digital infrastructure".
The proposed Code introduces a revised market value in the "no scheme" world for mobile-telecom masts and wayleave rights. "Details need to be clarified but it seems certain this is likely to devastate telecom rents for landowners, including farmers reliant on this revenue," said Mike Reid, Head of Utilities and Energy at CKD Galbraith. "A standard 15-metre mast on a rural hillside currently attracts annual rent of around 5,000. This could fall to less than 500."
The proposals include no additional payments to landowners for site sharing, which along with upgrading equipment, assignation and access would be unrestricted for telecom operators.
There is also confusion over when the rules might actually take effect. The original Government announcement said the Code would not be retrospective but come into force as existing agreements came to an end. However, this is not necessarily the case as the draft Digital Economy Bill includes provisions for telecom operators to end existing agreements and invoke the new Code if they have an unconditional break clause. Many agreements are likely to have an unconditional break clause as they are a standard provision requested by the operator.
Landowners could find that current agreements, with over 10 years to run, are terminated and a new agreement is sought. With no physical changes on the ground, income could reduce to a nominal value as rent reduces and site sharing payments disappear.
"The likely effect of these proposals is that the majority of landowners won't want a telecom mast on their land and operators may be compelled to rely on their Code powers, which could end up being a more costly and slower process to obtain a new site than a voluntary agreement," said Mike Reid. "We are already seeing landowners becoming unwilling to consider new sites on their land, particularly on rooftop sites, due to the proposed new Code. At the very least the Government needs confirm that that new Code won't be retrospective, in order to allow agreements to be reached before the new proposals take effect."
EE needs to build some 500 new sites imminently for the new emergency services network, to replace the current Airwave system, so police, fire and ambulance services are properly equipped to do their job in the modern world. The majority of EE's new sites will require contracts with landowners who may not want to accommodate these sites, particularly if the new Code can be operated retrospectively.
Mr Reid said: "Far from modernising and improving the UK's emergency services communications infrastructure, the Government may in the short term oversee major delays in the transition to the improved service."
He said landowners should check existing agreements and consider acting soon to mitigate the potential impact. Anyone approached about a new telecom agreement, or changes to existing ones, should ensure appropriate terms are agreed that address the proposed changes.