UK First-tier Tribunal further clarifies Electronic Communications Code agreement terms

In the latest decision under the Electronic Communications Code – Cornerstone Telecommunications Infrastructure Limited v The Chartered Institute of Personnel and Development – the First-tier Tribunal provided commentary on a number of terms that typically come into dispute between operators and site providers during the negotiation of Code agreements.

The commentary emphasises that the tribunal is required to strike a balance between the interests of the site provider and the operator. It is important that an operator and its customers are provided with certainty to ensure the effective operation of their telecommunications networks, while accounting for the site provider's interests and genuine concerns.

Dispute background

Cornerstone, a telecommunications operator, applied to the tribunal for the rights to install a new telecommunications site in a high-profile  location in central London, following the loss of a nearby site.

The site provider, a charity and the freehold owner of an office building in central London, initially opposed the operator's application on various grounds, but these were dropped by the site provider prior to the final hearing.

The final hearing dealt with the significant terms in dispute in the proposed Code agreement, including the site provider's redevelopment break, the "lift and shift" provisions, a condition precedent for roof repair works and the proposed plans.

Redevelopment break

The site provider gave evidence that it intends to sell the building over the next year; its position was that any purchaser is likely to redevelop and that the operator's apparatus would interfere with the redevelopment. It, therefore, sought to include an immediate rolling redevelopment break. Taking account of the evidence of proposed sale to a developer, the operator offered a redevelopment break that could be served on or after the fifth year of the term.

The tribunal favoured the operator's position, with some minor tweaks, and ordered a redevelopment break that can be exercised to take effect on or after the fifth anniversary of the term.

The tribunal acknowledged that it must weigh up both parties' interests – while the Code does not intend to stand in the way of genuine development intentions, the expenditure to be incurred by an operator in commissioning a new site and providing the operator with certainty, are both material considerations. In this case, the site provider gave no real evidence that there would be an imminent redevelopment, so a redevelopment break exercisable half way through the term was fair.

'Lift and shift' provision

The parties agreed that the site provider could benefit from a "lift and shift" provision enabling the site provider to serve notice requiring the operator to move its apparatus to enable the site provider to carry out works to the roof.

The site provider proposed that this should be exercisable on "reasonable notice". The operator required a minimum of six months' notice, unless a shorter period is agreed between the parties. The operator cited practical reasons – for example, the time taken to redesign the site, obtain consents and organise road closures for cranes. The tribunal favoured the operator's wording on the basis that a fixed timeframe provides greater certainty and six months is reasonable.

The operator sought to restrict the lift and shift so that it could only be used twice in the 10-year term at the operator's cost. The site provider wanted to increase this to eight times during the term, at the operator's cost for the first four times.

The tribunal favoured the operator on the basis that it is not reasonable for an operator to be required to move its equipment so many times during a 10-year term at its own cost on the first four occasions. The site provider should be able to pre-plan its works to avoid this.

Roofing works

The site provider gave evidence that the roof of the building needs to be replaced. It argued that the Code agreement should be conditional on the site provider first deciding whether to undertake, and then actually undertaking, the roofing works. This would have delayed the operator's ability to install its apparatus by up to eight months.

At trial, the operator gave evidence that it has significant experience in undertaking lift and shift works which would enable the site provider to carry out the roofing works whilst the operator's apparatus is in situ. The site provider also admitted it does not currently have the funds to carry out the required works.

Again, the tribunal favoured the operator's position and removed the condition precedent from the agreement. The tribunal gave weight to the fact that the operator has lost critical infrastructure in the area, which needed to be replaced without delay. The condition precedent would have created unnecessary delay and scope for contractual disputes. The tribunal accepted the operator's evidence that the roof installation works can be installed with the apparatus in situ, and the lift and shift provision can be utilised as required.

Demise plans

The site provider sought to amend the operator's proposed demise plans on the basis that they were incompatible with the site provider's window cleaning equipment. The tribunal dismissed the site provider's concerns and imposed the agreement with the operator's proposed plans.

The operator had spent considerable time working with the site provider's agent to accommodate the concerns, but the site provider could not be satisfied. The tribunal found that the site provider's concerns were overstated and unrealistic and their agent was criticised for failing to engage with the operator to provide any practical alternatives.

The tribunal emphasised that Cornerstone is a professional telecommunications operator and is required to comply with regulations for health and safety and design. The operator is therefore, best placed to prepare the designs.

Other terms in dispute

The tribunal also looked at other less significant terms in dispute:

• Interference. The tribunal favoured the operator and ordered that the site provider can only serve an "interference notice" in respect of its equipment which was in situ as at the date of the agreement to prevent frustrating the operator's use of the site.
• Works. The tribunal rejected the requirement for the operator to provide details of proposed works before accessing the site. This did not serve a useful purpose and would create an unnecessary burden.
• Disclosure. The tribunal refused to include a contractual disclosure provision proposed by the site provider. This would have introduced another avenue for unnecessary dispute.
• User clause. The tribunal agreed with the site provider that the primary liability for damage to the site provider's property should sit with the operator, who can join in / seek a contribution from third parties.
• Indemnity. The tribunal followed the decision in Cornerstone Telecommunications Infrastructure Ltd v University Of The Arts London and held that it is inappropriate for the indemnity to be subject to a condition that could cause dispute between the parties.
• Powering down. The tribunal agreed that it should be for the operator to decide whether its apparatus needs to be powered down, as they have the technical expertise. The tribunal also favoured the operator's limit to the number of times the powering down provision could be invoked (six, rather than 12 sought by the site provider).
• Road closures. The tribunal favoured the site provider's notice provision on the basis that the potential disruption caused by road closures outweighs the administrative burden to the operator of providing notification.

Osborne Clarke comment

The tribunal has made it clear that it considers that, in most cases, the operator will be the appropriate party to make technical decisions in respect of the suitability of its equipment and its ability to co-exist with a site provider's property. An operator has the requisite technical experience to design its telecommunications sites and is required to comply with relevant health and  safety and design regulations. 

The decision also provides a  reminder that, while an operator must take into account genuine concerns raised, those concerns must be supported by appropriate evidence. The tribunal also expects a site provider and their professional advisors to properly engage with an operator in order to find practical solutions in respect of concerns raised.

It is hoped that the tribunal's further guidance on terms will assist in facilitating negotiations between operators and site providers, in order to prevent disputes escalating and achieve the main objective of the Code - to provide access to high-quality electronic communications services.