Digital Economy Bill

Written Evidence submitted by Fisher German on behalf of various clients (DEB 47)

New Electronic Communications Code (as part of the Digital Economy Bill)

We write in order to make further comment on the above named document. Please note that we act on behalf of approximately 7500 clients who have telecommunications infrastructure located on their property throughout the UK and that this representation is made on their behalf. For your information, these clients host approximately 10000 individual telecoms installations on their properties and currently have a good relationship with many operators which has been nurtured and developed over many years (including both the major providers as well as the much smaller data producing companies) dating back 24 years. It is of note that the operator intrusion onto many of these operational sites, the monitoring of which is extremely labour intensive, has been borne in consideration of the income that this use produces for our clients.

1.0 We initially note that reference has been made to liaison having taken place with a range of stakeholders, particularly within the communications and landowner industries and would like to point out that the majority of our clients have not been invited to any such discussions, in spite of the fact that we submitted a representation on behalf of all of these clients during the open consultation period in early 2015, and that this previous consultation requested that we be notified of all future progress. We trust that this assists in explaining the late nature of this representation, considering the potential risk to the continuity of provision of telecommunications services throughout the UK which the new Code may have.

2.0 In the first instance, we consider it somewhat misleading to introduce the new Code as new legislation that will "strike the right balance of interests between site providers, communication providers and, most importantly, the public interest." Consideration of the new code appears to reflect close consultation with the operators only, to the detriment of land owners. The new Code raises some serious concerns for many of our clients. The only alternative that will therefore be available to them will be to withdraw the availability of their sites to all providers in as much as this will be possible, or at best, become a ‘hostile landlord’, as the providers’ continued use of their sites will become untenable. This could have an alternative detrimental effect on the provision of already established telecoms connectivity, which is in complete opposition to the intentions of the new Code. Note that some of our largest clients are very substantial property owners in areas such as Westminster, Kensington & Chelsea, Lewisham and other London Boroughs and their potential withdrawal of support to the provision of telecommunication services will have a significant effect on the operator’s future rollout programmes and the maintaining of current leasehold interests in property which they currently enjoy.

3.0 The primary concern is the inability for any parties to opt out of the new Code. We believe there should be exceptions to the no contracting out principle. We urge you to reconsider the ability for public bodies such as councils and other such organisations such as essential utility providers (water companies), to be permitted the ability to opt out of the Code in its entirety. We stress again that this ability is essential for many of our site providers who have a primary duty of care to the public. First and foremost, it must be remembered that their sites are operational buildings and land, all of which have a high standard of security and an obligation to keep their on-site staff safe. The Code should not have the ability to over-ride the importance of these sites, which provide a more essential service to the public as a whole.

4.0 We believe that public bodies and other such organisations such as essential utility providers can legitimately be regarded as a special case so far as the draft Code is concerned, given the statutory functions they perform, and should therefore be excluded from the new Code’s provisions. Many of our clients have granted leases to providers for many years, on terms which have been carefully drafted to protect and preserve the operation of their sites. In particular our clients have endeavoured to secure controls over the matters listed below. On this basis our clients have worked very successfully with the providers for many years. To change the basis of this long standing relationship will seriously compromise the working relationships, force our client’s into the situation whereby they have no choice but to become a ‘hostile landlord’, and will expose some of our client’s to potential breach of their statutory functions: -

4.1 Access: To ensure that the operational functioning of these sites is given priority and to maintain security to the sites generally.

4.2 Equipment Rights: The number and type of dishes/antennae is designed by the providers in liaison with our clients, in order that our clients operational functioning of their sites are not compromised.

4.3 Protection Of Staff: The electro-magnetic emissions of the providers’ equipment is monitored and up to date plans held on site in order to protect our clients staff.

4.4 Flexibility: The exclusion of the leases from the security of tenure provided by the Landlord and Tenant Act 1954 in order that flexibility of our clients operational functioning of their sites can be maintained. New statutory protection through the Code compromises this exclusion.

4.5 Transmission Of The Provider’s Interest: A strong landlord/tenant relationship is essential to secure the observance of the provider’s covenants in relation to the above issues.

5.0 Without detracting from the core of our representation above, we also comment nonetheless on the drafting of the new Code by providing explanation as to the major issues of concern, the first of which relates to the automatic right to upgrade, assign and share equipment, and permit unfettered access: -

5.1 The automatic power for operators to upgrade, assign and share apparatus on many of our client’s properties, are a huge concern and will create serious health and safety, and security risks and will interrupt the ability of many of our client’s properties to remain operational. Fundamentally the introduction of such automatic powers removes a large level of control that many of our clients essentially require. It is of upmost importance that my clients retain control with regard to access to their sites, at all times, in order that they are capable of providing an efficient service to the public, as well as safeguarding their own employees.

5.2 It is also essential that our client retains the ability to make a clear legal relationship with every operator at each of their sites. It would be detrimental to the operation of my client’s properties to remove the control that they have over these operational premises, and completely inappropriate to be rendered unable to impose restrictions or impose conditions at their sites.

5.3 It is also worthy of note that a high proportion of upgrade works in the past, have been commonly delayed by the requirement to gain full planning permission prior to adding additional equipment on to a site. This is a matter that many of my client’s insists that the providers adhere to. We fear that the automatic sharing rights will not only render many of my client’s unable to provide their statutory duties, but also lead to open exploitation of the planning system by the operators by allowing them to upgrade sites unchecked.

5.4 We would like to add that we previously found reference (in the draft Code during the previous consultation) to the right of an occupier to grant interests which are then binding on the landowner, which we found to be confusing and extremely worrying for many of our clients. Many of our client’s grant leases to a variety of differing entities, across their property portfolio’s. It is extremely concerning for any landowner to speculate how far such occupiers may grant interests (under the new Code) which then become binding on them.

5.5 It should be pointed out that whilst we oppose an open-ended, assigning and sharing free-for-all at all provider’s sites, our client’s in the majority of cases have accommodated the operator’s wishes, and market reality generally, by agreeing to permit sharing and assigning on their sites, but only on the basis that the sharers and assignees have a direct legal relationship with them, or own equal shares in a holding company who is the tenant. The general principle of sharing and assigning of interests is therefore not disputed in its entirety, provided they are under these strict controls which permit tight controls.

6.0 The basis of valuation: -

6.1 We understand that it is proposed despite the previous advice and recommendations of the Law Commission that the new code will limit the value of consideration, by changing the basis of valuation to a ‘no scheme’ rule. Primarily, it should be borne in mind that the providers are essentially running a lucrative business, whereby rental considerations should be thought of as part of the overhead costs. Site providers, should not be subsidising the providers’ business in this regard. The proposal to treat the providers in a similar way to utility companies is completely unwarranted. Most importantly, utility conduits do not disturb the running of a site and generally run underground and out of site, and are therefore able to be built over. Quite to the contrary, telecoms use blights a site, by sterilising the area surrounding the antennae equipment with exclusion zones. The current leases are also already notoriously difficult to terminate, even with the 18 month notice period that many of my client’s agreed to provide at sites that they wish to redevelop/upgrade for their own operational purposes. They therefore effectively devalue the sites they are located on. It is quite unreasonable to therefore enforce a situation whereby land owners are not suitably compensated for this intrusion.

6.2 It should also be noted that dealing with access requests (which is an essential part of maintaining the operating function of sites and the safety of our client’s employees, as well as effectively policing the work that the providers undertake on site) is a vastly time consuming and management intensive job, for which the consideration paid for a site, by the providers, helps to cover. The loss of these considerations will effectively result in all of my circa 7500 clients subsidising the telecoms industry.

6.3 As an aside, we particularly note a continued reference to ‘ransom rents’ which has been raised by the operators and to which the new proposed basis of valuation has been introduced to combat. We are interested in viewing the research that was undertaken in this respect. We suspect that such sites are an anomaly. In practice it is invariably becoming more common for operators to enforce confidentiality clauses to all agreements with site providers, which extend to rental payments agreed. Therefore, the relevant information required in order to form an understanding of market value is controlled by the operators and is not available in the public domain. We make this point to underline the fact that the current valuation regime is already controlled by the operators whom, we are certain, effectively deflate the market. This practice already prevents fair negotiation; however, the new Code will extend this bias even further.

7.0 Summary

We ask that serious consideration be given to permit public service and essential utility providers the ability to opt out of the Code in its entirety. The lack of such a provision, and disregard of the issues raised above, could ultimately have an alternative detrimental effect on the provision of telecoms connectivity, in complete opposition to the intentions of the Code.

October 2016

 

Prepared 18th October 2016