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Hot Topic Highlight – RICS Guidance Note Electronic Communications Code 1st Edition

Updated: Oct 28, 2023

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What is today's blog about?

In this week’s blog, we look at the RICS Guidance Note Surveyors Advising in Respect of the Electronic Communications Code (1st Edition). This is essential reading for any RICS APC or AssocRICS candidates involved in the telecommunications sector.

You can download a copy of the Guidance Note here.

Any surveyors advising on the Electronic Communications Code (ECC) matters must also be aware of and adhere to the Ofcom Code of Practice. This includes guidance on the service of notices and acting reasonably, professionally and respectfully.

What is the Electronic Communications Code (ECC)?

In 2017, the Digital Economy Act 2017 introduced the ECC to facilitate the roll out and maintenance of digital electronic communications infrastructure, e.g., television, radio, fixed and mobile broadband, voice and text services, cable television and landlines.

The ECC replaced the former Schedule 2 of the Telecommunications Act 1984 (old Code). The ECC is included at Schedule 1 of the Digital Economy Act 2017 and introduces Schedule 3A to the Communications Act 2003.

Old Code agreements may benefit from security of tenure under Part II of the Landlord & Tenant Act 1954. Agreements under the ECC do not benefit from security of tenure if the primary purpose is to grant Code rights.

The ECC provides a statutory framework for the relationship between network operators, infrastructure providers and site providers (i.e., landowners or landlords). This includes agreements to install, operate and maintain apparatus.

What are the aims of the ECC?

The ECC aims to balance the interests of these key stakeholders, as well as working in the public interest. This will help to clarify the more flexible rights of operators and facilitate the sharing of network apparatus.

Who are network operators?

Network operators are split into two categories; those who are Code network operators with powers under section 106 of the Communications Act 2003 and non-Code operators. Ofcom hold a list of Code network operators online.

What types of electronic communications networks are there?

There are a number of types of network, including:

  • Fixed-line

  • Wireless

  • Satellite

What types of infrastructure installations are there?

There are a number of types of infrastructure installations, including:

  • Greenfield, i.e., in rural areas or in urban or suburban areas along transport infrastructure routes

  • Rooftop

  • Street-based

  • Subterranean

  • In-building

How do ECC (new Code) agreements work?

The ECC aims to reach a negotiated agreement between the parties, rather than mandating a set of specified terms. However, if agreement cannot be reached then the parties can refer the matter to the Upper Tribunal (Lands Chamber).

The ECC is not retrospective, i.e., it does not automatically apply to old Code agreements. However, there are some transitional arrangements that do apply.

How do payments work under the ECC?

The ECC makes provisions for consideration and compensation under paragraphs 24 and 25 and Part 14.

Payments are generally in the form of an annual rent encompassing all payments (as per EE Ltd and Hutchison 3G UK Ltd v The Mayor and Burgesses of the London Borough of Islington, 2019). Alternatively, a one-off capital sum may be paid.

How is consideration assessed?

Surveyors must be conversant with the Red Book Global 2022, applying mandatory PS 1-2 in any valuation work relating to the ECC.

Market Value under the ECC differs from the VPS 4 definition, as it requires special assumptions to be made including that ‘the right that the transaction relates to does not relate to the provision or use of an electronic communications network’.

This introduces what is known as the ‘no network’ assumption to ‘exclude from the assessment of consideration any element of value attributable to the intention of the operator to use the site as part of its network’.

This is based on the ‘no scheme’ rule taken from compulsory purchase valuation principles and reflects the value to the landowner rather than the value to the operator and tied to future use as a telecommunications site.

Paragraph 24 (2) of the ECC defines Market Value specifically as:

‘the amount that, at the date the market value is assessed, a willing buyer would pay a willing seller for the agreement:

(a) in a transaction at arm’s length

(b) on the basis that the buyer and seller were acting prudently and with full knowledge of the transaction and

(c) on the basis that the transaction was subject to the other provisions of the agreement imposed by the order under paragraph 20.’

This assessment is subject to the following specific provisions of paragraph 24 (3):

‘The market value must be assessed on these assumptions:

(a) the right that the transaction relates to does not relate to the provision or use of an electronic communications network

(b) paragraphs 16 and 17 (assignment, and upgrading and sharing) do not apply to the right or any apparatus to which it could apply

(c) the right in all other respects corresponds to the code right and (d) there is more than one site which the buyer could use for the purpose for which the buyer seeks the right.’

In short, the new ECC basis of Market Value generally leads to much lower valuations than under the old Code.

How is compensation assessed?

Compensation is dealt with in paragraph 25 of the ECC and requires:

  • A causal connection between acquisition and loss

  • A loss that is not too remote

  • The claimant should seek to mitigate the loss and avoid incurring unreasonable expenses

Surveyors need to be aware of and avoid double counting between consideration and compensation.

How do alterations, upgrades and sharing work in the ECC?

Paragraph 17 of the ECC deals with these issues, including an impact and burden test.

As a starting point, new agreements should include a photographic schedule of condition and as-built drawings.

The ECC provides for an automatic right to assign Code agreements. However, the agreement may require the outgoing operator to act as guarantor to the immediate incoming operator (similar to providing an AGA under the Landlord & Tenant (Covenants) Act 1995).

The ECC also provides operators with an automatic right to share or upgrade apparatus, providing the following conditions are met:

  1. The upgrade or sharing of apparatus should have no adverse impact, or more than a minimal adverse impact, on the appearance of the apparatus

  2. The upgrade or sharing of apparatus should not impose any additional burden on the landowner

  3. An additional burden includes agreeing that

    1. It has an additional adverse effect on the other party’s enjoyment of the land; or

    2. It causes additional loss, damage or expense to that party.

How do access rights work?

Access is a key term to consider in ECC agreements. Normal and alternative access routes should be agreed, along with the process, notification and frequency of site visits.

How can ECC agreements be terminated?

There is two stage process to terminate an ECC agreement:

  • Part 1 – the site provider must give at least 18 months’ notice to the operator citing one of four grounds (roughly based on Section 30 of the Landlord & Tenant Act 1954). This includes substantial breaches, persistent delays in paying rent and redevelopment. The operator then has 3 months to serve a counter-notice either opposing or agreeing to the termination and a further 3 months to apply to Court for a Court order, the nature of which will depend on the circumstances.

  • Part 2 – the site provider must give notice to the operator to remove their apparatus and make good the land. Again, a Court order be applied for if needed.

How can we help?

Stay tuned for our next blog post to help build a better you.

N.b. Nothing in this article constitutes legal, professional or financial advice.


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