Since the introduction of the Electronic Communications Code in 2017, property investors and telecoms operators have been at loggerheads. The rent paid by telecoms operators has significantly dropped since 2017, and for property investors with redevelopment ambitions, the presence of a telecoms aerial can prove problematic. Consequently, telecoms operators often face resistance from property investors when seeking to install new equipment on their buildings.
The telecoms code was designed to ensure the public receives fast digital communication services. 5G networks generally require a higher number of telecoms aerials as compared with 4G networks, to maintain the same coverage. As such, as the country transitions from 4G to 5G, telecoms operators need to acquire more sites for their equipment. Yet, the reluctance of property investors to cooperate is creating challenges for telecoms operators.
Why is the Electronic Communications Code problematic for property investors?
The code presents several challenges for property investors with redevelopment plans. If it is not possible to develop around an existing telecoms aerial, the investor must take additional steps, which include terminating the telecoms operator's contractual right to be on the site, ending the telecoms operator's statutory right to remain on the site, and applying for the removal of the equipment.
Assuming the lease has ended or can be terminated early, the property investor must give the telecoms operator 18 months' notice to terminate the operator's statutory rights, citing one of the statutory grounds for possession. If the telecoms operator contests the notice, the matter must be resolved through a dispute resolution process or in the courts. Where the property investor is terminating in reliance of the redevelopment ground for possession, the property investor must prove that it tends to redevelop all or part of the site and could not reasonably do so unless the telecoms operator's statutory rights have been terminated. If the matter goes to court, this can delay development by years.
Relocation of telecoms equipment
Some agreements allow for property investors to request that a telecoms operator relocates telecoms equipment to a nearby site, which has been identified by the property investor. However, finding a suitable site can be difficult, as neighbouring landowners are often unwilling to host telecoms equipment.
Court orders
Telecoms operators can seek a court order to force property investors to host telecoms equipment, provided the investor can be adequately compensated and the public benefit outweighs the prejudice to the investor. Given the importance of the 5G rollout to the Government, it is hard to imagine a scenario where the public benefit does not outweigh the property investor's prejudice. Historically, courts have tended to favour telecoms operators.
Consideration and compensation
If the Court requires a property investor to host telecoms equipment, it can determine the payment the telecoms operator should make for the code rights. This payment is based on the market value of the property investor's agreement to confer or be bound by the code right. Market value is assessed as to what a willing buyer would pay a willing seller in an arm's length transaction, excluding the site's use for a telecoms network and assuming other sites are available. As the use of a telecoms network is ignored, the rent is solely based on its value to the property investor, and the effect has been to artificially depress the rents as compared with those seen prior to the introduction of the telecoms code.
The Court can also award that the telecoms operator pays compensation for any loss or damage that has been sustained or will be sustained by the property investor as a result of the exercise of the code right. Further compensation can also be awarded by the Court for the property investor's expenses; diminution in the value of the property investor's land; and costs of reinstatement.
Conclusion
The Electronic Communications Code aims to enhance digital communication services, but it has created significant friction between property investors and telecoms operators. Property investors face challenges in redeveloping sites with existing telecoms equipment, while telecoms operators struggle to expand their networks. As the demand for 5G grows, finding a balance between public benefit and property investor rights will be crucial.
