OFCOM revises its Code of Practice: Telecommunications Code

The aim of the revised Code of Practice is to better facilitate positive and productive engagement between registered Operators and Site Providers.

Site Providers have for some time viewed Operators with suspicion. Telecommunications site agreements (known as 'Code Agreements') often attract very low rents; confer very broad and disruptive rights on Operators; and can be difficult to terminate. If a Site Provider refuses to grant a Code Agreement, the Operator can apply to the Lands Tribunal to impose a Code Agreement on the Site Provider. The cost of negotiating Code Agreements can often dwarf the rents at stake. The negotiation and agreement of Code Agreements can therefore become very contentious.

Since the introduction of the Electronic Communications Code, there have been numerous cases in which judges have criticised parties' failures to engage reasonably in discussions, which has resulted in significant additional costs for both sides.

The revised Code of Practice has been amended in three ways to try to avoid these issues:

General clairification

First, the Code of Practice has been generally rewritten, to give better guidance on some of the more contentious issues that typically arise, including access for surveys and Operators' rights to share and upgrade apparatus.

These changes are unlikely to affect the way that Operators or represented Site Providers, who are familiar with these issues, approach negotiations. However, it is hoped that these amendments will help unrepresented Site Providers to understand what is being asked of them.

Alternative dispute resolution

The revised Code of Practice requires Operators to consider using 'alternative dispute resolution' (such as mediation) if practicable before making any application to a Court or Tribunal. The Code of Practice states that the Court or Tribunal may take into account any parties' unreasonable refusal to engage in 'alternative dispute resolution' when awarding costs.

It is hoped that this will help both parties to resolve any points of difference more quickly and cheaply, without recourse to Court or Tribunal proceedings. However, it remains to be seen whether alternative dispute resolution will simply be seen as another stage of the process, which only increases costs and does little to change the positions of intransigent parties.

Payment of costs

Under the Electronic Communications Code, Operators are required to pay the reasonable professional costs incurred by a Site Provider in negotiating and agreeing a Code Agreement.  However, the parties often have different ideas of what this means. Site Providers often expect all of their costs to be paid, while Operators often expect to pay only a contribution. This has led to satellite disputes about the proper level of costs that are payable.

The Code of Practice has been amended to clarify that Site Providers are principally responsible for their own professional costs, but that Operators will reimburse costs that are reasonably incurred. The Code of Practice also now refers to reimbursement 'within pre-agreed parameters' to make clear to the parties the importance of agreeing at the outset what costs are likely to be reimbursed.

In reality, most Operators and Site Providers already discuss these parameters at the outset and continue to discuss them in parallel with negotiations for the Code Agreement. By emphasising the need to agree parameters at the outset, there is a risk that parties will refuse to negotiate the Code Agreement itself, until the costs parameters have been agreed. This amendment could therefore be counterproductive if misunderstood. For further information regarding OFCOM's Code of Practice, refer to the guidance.

If you are a Landowner who is considering entering in to a Code Agreement, we strongly recommend you obtain legal advice beforehand. Telecommunications rights are extensive and difficult to terminate once granted.

For further advice, please contact Phil Sheppard on 0117 314 5621 or Sam Winter-Alsop on 0117 992 9719 in our Real Estate team. Alternatively, please complete form below.