UK Supreme Court widens Electronic Communications Code rights for operators

The Supreme Court has issued its first decision on the Electronic Communications Code – which came into force in 2017 – in a joint ruling of CTIL v Compton Beauchamp Estates Ltd, CTIL v Ashloch Ltd and AP Wireless II (UK) Ltd, and On Tower UK Ltd v AP Wireless II (UK) Ltd

The new Electronic Communications Code's main objective has been to provide access to high-quality electronic communications services and to help to roll out digital infrastructure more easily.

Two UK mobile infrastructure services companies, Cornerstone and On Tower, which operate telecommunications equipment and provide infrastructure to operators, brought the appeals that focused on the interpretation of paragraph 9 of the new code.

The most significant point in the Supreme Court's joint ruling was that a telecoms operator with apparatus already in situ on land can apply for additional rights under paragraph 20 during the term of the agreement under which it is in situ.

Overturning the Court of Appeal, the Supreme Court determined that the applicant operator is not to be regarded as the occupier under paragraph 9 of the code and there is no bar to such an application accordingly.

What judgments were under appeal?

The findings in the three decisions of the lower courts covered two key points. Firstly, the operator, by virtue of having installed equipment on a site, is the occupier of the site; this means that an operator could not obtain additional rights over a site during the contractual term of its agreement with the site provider.

Secondly, operators could not use the code to regularise the basis on which their equipment is installed or to change the terms of its occupation, where the renewal procedures under the code or the Landlord and Tenant Act 1954 do not apply.

One example where these would not apply is where the equipment was installed on the basis of an expired agreement that was contracted out of the 1954 Act, which is a common circumstance given that operators were protected from the forcible removal of their equipment in this scenario under the previous Telecommunications Code (which was in force up until 2017).

What was the impact of the lower court judgments?

In practical terms, this resulted in two changes for operators in respect of new and existing sites. For new sites, operators were forced to seek every possible right available to them under the code in the very first agreement for the site, which, in turn, required higher site payments and could deter operators from installing equipment at some sites.

For existing sites, where the renewal procedures under the code or the 1954 Act do not apply, operators would be forced to vacate the site in order to obtain any additional or modified rights. The Court of Appeal acknowledged that, in respect of these sites, operators were "left out in the cold".

What was the judgment of the Supreme Court?

The Supreme Court's starting position was that the definition of occupier in the code must give effect to the intention of the code. It determined that the practical consequences of the decisions of the lower courts contradict the intention of the code to encourage the roll-out of new digital infrastructure across the country. On that basis, the Supreme Court held that the context of the code requires that the occupier and the operator are not one and the same.

On that basis, the practical consequences have largely been reversed going forward. However, the Supreme Court highlighted the following boundaries to the ambit of its decision:

• Only the operator that is seeking additional rights under the code is not to be regarded as the occupier. Accordingly, if a second operator seeks rights in respect of a site on which an operator already has equipment installed, the second operator must seek those rights from the operator already in situ.
• Where an operator is seeking to modify its existing rights, it still must so under the renewal mechanisms under the code (where these apply). Operators cannot use their new-found ability to seek additional rights during the contractual term to side-step those mechanisms.
• Where the underlying agreement is protected by the 1954 Act, it must be renewed under that Act.

Osborne Clarke comment

The Supreme Court's judgment is undoubtedly a major improvement towards facilitating the underlying policy of the code, including the rollout of 5G; however, there remain matters to be resolved before this policy can be fully realised. In particular, the Supreme Court has recognised that the distinction between modification of existing rights and obtaining additional rights will in some circumstances be a fine line.

As numerous cases were stayed in the Upper Tribunal pending the outcome of this appeal, undoubtedly litigation will be on the increase as these cases proceed and fresh cases are referred to the tribunal.

The industry will also now turn its attention back to the progress of the Product Security and Telecommunications Infrastructure Bill, which is in the advanced stages of the legislative process, and, in particular, its provisions that overlap with the Supreme Court judgment. The Bill will allow an occupying operator to seek new code rights by statutorily disregarding its occupation and will amend the 1954 Act to align its rental valuation provisions for telecommunications leases with the operator-friendly site payment provisions under the code.