What is it?

The Digital Economy Act 2017 is a new piece of legislation designed to replace previous legislation which governed telecoms sites- namely the Telecommunications act and the Communications Act. The previous laws introduced a telecoms code which set out guidelines for the implementation and maintenance of phone mast sites and sought to resolve disputes between landlords and telecoms operators. The New Code will apply to telecoms sites where any loss able to be compensated by money and building the site is in the public’s interest.

What has changed?

Under previous legislation, operators could use their powers under the code to remain on site and use the guidelines to determine the rent and contractual terms. The Digital Economy Act has made changes to the mechanism used to calculate rent and provided the operators with additional rights to share the site with other operators and upgrade sites freely.

The calculation of rent has cause the most controversy and discord among landlords as it moves away from the traditional calculation of a market rent, based on comparable evidence and towards a ‘no-scheme valuation’. This means the landlord will be compensated for the use of their land. The compensation is intended to leave the landlord no better or worse off than they would be without the phone mast.

The burden of proof lies with the landlord to prove their loss. This could be for the loss of land/space, the disturbance, effect on value of surrounding land, crop loss etc. Traditional land valuation for compulsory purchase can produce very low values, especially for remote farm land.

How/when will the New Code be used?

All new leases will be governed by the new code- this includes new telecoms sites and the renewal of existing leases. If you have an existing lease which has not yet expired, the new code will not apply until the lease ends. However, it is likely that operators will look to operate a tenant break clause if the lease contains one, in order to force a new lease under the new code- especially where they require additional rights (more equipment/sharing/additional land).

It is expected that operators will first attempt negotiation for a limited period in order to try to reach agreement with the landlord on terms for a lease. However, if agreement cannot be reached, they will be quite robust in serving a Code Notice at which point the provisions of the new law will apply. This route will take negotiations towards a Land Tribunal where both sides will need to set out their position with supporting evidence. All arguments will need to be relevant points under the New Code and evidentially well supported to succeed.

Spurious arguments will not be looked favourably upon and failure at tribunal could lead to the operator’s costs being awarded against you.

What does it mean for me?

The Digital Economy Act has the potential to negatively affect all telecoms landlords throughout the UK. However, the extent of the impact will largely depend on the specifics of your site. We are expecting to see an attempt to reduce ‘rents’ and shift towards a lump sum compensation. Many landlords could be facing a significant reduction in their phone mast income.

In addition to the financial implications, the new code will allow operators to share a site with other telecoms operators. This normally resulted in a ‘payway’, additional income for the landlord. However, as sharing will now be permitted, payways will become a thing of the past and in theory, you could have multiple operators transmitting from a mast for which you receive incredibly little.

The new code affords similar rights for the tenant to upgrade their equipment. In the past, a lease could limit their right to do this and the landlord could ask for more money for allowing the upgrade. This will no longer be an option.

What can you do about it?

The Phone Mast Company can help. We have been busy since this change in law was first proposed, gathering information, analysing options and developing ideas to try to help landlords mitigate the impact of this new law. Working closely with solicitors, we have devised strategies which we believe can seriously improve the situation for landlords.

We would strongly advise landlords who have been approached about having a new phone mast NOT to allow any access to the site until they have spoken to us.

The new law allows for the landlord to be compensated for reasonably incurred fees (including an agent). For more advice, please contact us on 01691 791543 and we will be happy to help.

The new law allows for the landlord to be compensated for reasonably incurred fees (including an agent). For more advice, please contact us on 01691 791543 and we will be happy to help.