08 Jan 2018

A few wires and cables - what could go wrong?!

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The 2017 Electronic Communications Code took effect on 28 December 2017 – why is that important?

The classic scenario

You own a high quality investment property. It's let on a number of leases that expire over the next five years. Once they've all expired, you intend to comprehensively re-develop.

A prospective tenant asks you to confirm that you're happy for a telecoms operator to install a few wires and cables through the common parts of the property and into their premises. Sounds pretty harmless, but what key points do you need to be aware of?

The new Code

If the agreement is entered into after 28 December 2017, then it will be caught by the 2017 Electronic Communications Code (the "Code").

Termination

Because you intend to redevelop, you make sure that the license agreement with the tenant and the operator permitting the works terminates when the tenant's lease ends, so you're covered, right? Wrong – the Code will override that agreement and means that the agreement will continue until terminated in accordance with the Code itself.

So what do I have to do to terminate the agreement?

The Code says that you must give the operator at least 18 months' notice to terminate the agreement and also that you have to state the reason for termination. There are only a limited number of acceptable reasons, but redevelopment is one of them. If the operator accepts the notice then all well and good, but it has three months to challenge the notice. If it does challenge the notice, then a court order will be needed to secure possession. So if you are intending to redevelop the whole process is likely to take about two years.

Assignment

OK, the notice provisions are not ideal, but because you know about them in advance you can accommodate them. You're happy with the telecoms operator, but you wouldn't want them assigning their rights without your blessing.

Unfortunately, the Code says that you can't restrict assignment. The outgoing operator is released from all of its obligations on assignment, but the Code does permit you to require a "guarantee agreement" from the outgoing operator for the immediate assignee (however you can't then stop the assignee from on-assigning). Some comfort can also be taken from the fact that any qualifying operator has to be designated by OFCOM, so assignments to shell companies for the purpose of avoiding liabilities are not possible.

Sharing and upgrading

So long as you know who you're supposed to be dealing with you're prepared to accept the position on assignment, but you want to control who is putting equipment on your property and what equipment is being installed. As such you intend to prohibit sharing with other operators and upgrading of equipment unless you have consented to it (acting reasonably). Unfortunately, the Code stymies you again, because it says that you can't restrict sharing with other operators or the upgrading of equipment. That said, it is permissible to state that rights to share and upgrade are subject to there being no material adverse impact on appearance and no additional adverse burden or additional damage/cost.

Too much trouble?

This is beginning to sound like too much trouble. Why not just refuse consent to the cables? Well aside from the fact that commercially you'll probably lose your tenant (or if it was an existing tenant you might be breaching the terms of the lease), if you refuse to grant Code rights the operator can apply to court for Code rights. If the court thinks that the benefit likely to result from granting rights outweighs the prejudice caused to you and that any prejudice to you can be adequately compensated by money, then it may impose Code rights. The overarching principle is that the court must have regard to the public interest in having a choice of high quality electronic communications services.

Teething

The new rules are detailed and will take a while to bed in. A lot will turn of the specific facts of each scenario, and if you do have any questions, we'd be delighted to help.

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KEY CONTACT

Simon Brading

Simon Brading
Partner

T:  +44 20 7809 2525 M:  +44 7557 284 641 Email Simon | Vcard Office:  London

Stephen Laud

Stephen Laud
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Robert Newman

Robert Newman
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Ben Stansfield

Ben Stansfield
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James Trundle

James Trundle
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Jonathon Wilkes

Jonathon Wilkes
Partner

T:  +44 20 7809 2522 M:  Email Jonathon | Vcard Office:  London

James Styles

James Styles
Consultant

T:  +44 20 7809 2529 M:  Email James | Vcard Office:  London