Product Security and Telecommunications Infrastructure Bill

Written evidence submitted by the British Property Federation (PSTIB12)

Property owner perspectives on the Electronic Communications Code (ECC) and Product Security and Telecommunications Infrastructure (PSTI) Bill

The British Property Federation

1. The British Property Federation (BPF) represents the real estate sector – an industry which contributed more than £116bn to the economy in 2019 and supported 2.4 million jobs.

2. We promote the interests of those with a stake in the UK built environment, and our membership comprises a broad range of owners, managers and developers of real estate as well as those who support them. Their investments help drive the UK's economic success; provide essential infrastructure and create great places where people can live, work and relax. 

3. We would be happy to provide further information on any aspect of this submission. Please contact Ion Fletcher at: ionfletcher@bpf.org.uk, or on 020 7802 0105, if you would like to discuss any of the points raised.

Background

4. Property owners stand to gain immensely from the fast rollout of high-speed telecommunications. Both residential and commercial buildings with good connectivity are more productive, more attractive to tenants and better places to be. The UK is also clearly lagging behind its international counterparts when it comes to the rollout of fast connectivity and the sector supports radical interventions that right this.

5. There are however some significant problems with the how the Electronic Communications Code (ECC) is working, despite amendments made to the legislation in 2017. These issues are discouraging property owners from hosting telecommunications equipment, encouraging poor and aggressive behaviour from telecoms operators and ultimately hampering the advancement of connectivity.

6. Our concerns – as well as recommendations for improving the system to encourage greater buy-in and participation from property owners – are set out in detail in our ECC briefing paper. These concerns mostly stem from the unlevel playing field that our members feel exists as between property owners and network operators, with the latter being granted such strong rights under the ECC that there is very little incentive for them to seek Code agreements consensually.

7. Negotiations are as a result often one-sided, with members reporting that operators often resort to the implicit or explicit threat of legal action and the considerable costs that would entail to persuade property owners to make sites available. The inevitable consequence of this is that property owners are increasingly nervous about working with network operators.

Potential impact of the PSTI Bill

8. We are deeply concerned that the provisions of the Product Security and Telecommunications Infrastructure (PSTI) Bill will exacerbate these issues by:

8.1. Extending the ‘no scheme’ valuation basis into agreements currently governed by the Landlord & Tenant Act 1954 (clauses 63 and 64 of the Bill). This will greatly expand the number of arrangements where operators can offer very low compensation and consideration payments, in turn greatly reducing the incentive for property owners to provide sites; and

8.2. Further strengthening the rights of network operators in a way that reduces their incentive to meaningfully engage with property owners and come to consensual agreements. We believe there is likely to be an increase in network operators resorting to or threatening legal action to impose agreements. This will needlessly delay the rollout of fast internet.

9. Perhaps of most concern is that there has been no comprehensive assessment of the impact of the 2017 changes to the ECC (which we believe have had a negative impact on internet rollout) before the laying of the PSTI Bill before Parliament. The Bill therefore risks failing to learn from the lessons of the past and further entrenching challenges to making fast internet more widely available.

10. We would like to highlight the following two issues that the PSTI Bill could end up magnifying.

Impact of ECC on redevelopment

11. This issue features in our briefing paper but it is such a principal concern for our members that we feel it appropriate to repeat the point in this submission. One reason some property owners are justifiably resistant to hosting equipment concerns the impact doing so has on their ability to redevelop their properties. The process of moving an operator’s equipment off a property often means redevelopment takes 6 to 12 months longer than it otherwise would.

12. This is because while the Code sets out a break right for the property owner of 18-months in cases where there is a settled intention to redevelop, a developer can expect to have to wait 24 months as an operator can seek a further 6 months in which to remove equipment. Furthermore, uncertainty exists if the operator cannot find a suitable alternative site, leaving the developer at the mercy of factors outside of their control.

13. A good example of this was when one of our members’ redevelopments was delayed by 18 months due to a legal dispute that broke out between an operator and the entity that was to provide a new site for the equipment, prior to the equipment being moved.

14. As recognised in the Government’s recent Levelling Up White Paper, our towns and cities are in need of substantial investment. Property owners will play a critical role in providing the investment and expertise to help places transform themselves, but barriers and obstacles such as that posed by the ECC’s development break right requirements will no doubt slow down such valuable activity.

15. Accordingly, we propose that the development break right offered in the Code be shortened to 12-months. Alternatively, there should be a requirement for the Upper Lands Tribunal to decide on any challenges to a break notice within a six month period to provide property owners with certainty as to when they will be able to regain control of their property for redevelopment.

Weak adherence to the OFCOM Code of Practice

16. As set out in our briefing paper, both parties need to use the Code of Practice more. This document helps both sides understand each other’s positions better. Like the standard template agreement, the Code of Practice was developed after much discussion between operator and property owner representatives.

17. Yet, some seemingly still ignore the responsibilities set out within it and we have, since the ECC’s introduction, continued to hear of examples of poor or disjointed operator conduct, including:

17.1. An operator approached a BPF member with a view to placing equipment on one of their buildings. Our member highlighted that they had disposed of substantially all of their interest by way of granting a 999 year lease and so could not provide the operator with access to the site. Ignoring this information, the operator sought a court order under section 26 of the ECC and served this on our member, even though their lack of economic interest in the property rendered it effectively meaningless.

17.2. Two adjoining sites in Southwark were subject to Multi-Skilled Visit (MSV) requests a number of months apart, notwithstanding that our member had highlighted to the operator that planning had been secured for redevelopment and site works were underway. The operator did not appear to be tracking responses, resulting in duplication of work and generally wasted effort on the part of our member in dealing with these applications.

17.3. A member had a few years ago agreed in principle a five year agreement with an operator for a site in Moorgate that is potentially up for redevelopment in 2027. This agreement seemed to "fall off the operator’s radar" until more recently the operator proposed a ten year term with a break after five years. This was not acceptable to our member as they will not know 18 months ahead of the end of the five year break whether they will be able to secure vacant possession to start development. Of concern is that the operator appeared to carry out a site survey without seeking authorisation from our member.

18. Consideration urgently needs to be given to whether the Code of Practice can be made more binding and there need to be clear avenues through which to complain about poor conduct. This is after all the telecoms operators’ own industry and they rely on property owners in order to broaden their coverage and reach their customers. If operators are held accountable for ensuring better communication with property owners the industry at large will benefit.

March 2022

 

Prepared 18th March 2022