An overview of considerations around access agreements between property owners and network operators for the deployment of digital infrastructure.
What is an access agreement?
If a communications network provider needs to use another party’s land in order to install, operate or maintain a digital communications network or system of infrastructure, they must obtain the other party’s agreement to do this.
The government recognises the importance of digital communications networks for the United Kingdom’s social and economic well-being. As a consequence, agreements between site providers and communications network providers take place against a specific legislative framework that aims to support digital communications deployment.
The legislative framework
The Electronic Communications Code 2017 (the “Code”) underpins all agreements between site providers and Code operators, dealing with rights to use land for digital communications purposes.
Code operators are individuals or bodies who have applied for, and been granted, operator status by Ofcom. This status recognises that the provision of digital communications networks forms an important public service. Consequently, agreements between site providers and Code operators are subject to special statutory rights and protections, as set out in the Electronic Communications Code.
The Code was recently reformed as part of the Digital Economy Act 2017. These reforms were intended to reduce the cost of providing communications infrastructure and make it easier for operators to deploy such infrastructure. The new Code came into force on 28 December 2017.
The government expects most agreements relating to the installation and maintenance of digital communications networks to be reached on a consensual basis. Where this is not possible, or where disagreements about an agreement arise, either party can apply to an independent tribunal for the dispute to be resolved. Measures available to the tribunal include powers to impose an agreement in certain circumstances and to determine, for example, what rights the operator should be allowed and how much the operator should be required to
The Code, and further information on the statutory framework supporting digital communications deployment, can be accessed at:
- Digital Economy Act 2017: Schedule 1-3, The Electronic Communications Code
- The Electronic Communications Code (Jurisdiction) Regulations 2017
Further information on the Code can also be found in the section on legislation and regulation.
Forms of agreement
In order for a network provider to successfully connect a home, a business or a school with telecommunications infrastructure, they must obtain the right to do so from a landlord by signing an access agreement. Access agreements may take different forms, which will often depend on the right being sought.
The most common forms of agreement in digital communications deployment are wayleaves and leases.
A wayleave is a contractual agreement between a landowner or landlord and a telecommunications provider, where the landowner grants the network provider a licence with the right to access land and/or property, to install and/or maintain electronic communications apparatus. Wayleaves are commonly used for the deployment of fixed-line broadband infrastructure.
A lease is a contractual agreement in which the owner of property grants a right to use the property for a specified period of time in return for specific periodic payments. Lease agreements are more common for mobile masts on land or rooftops.
In the case of a wayleave, the grantor of the wayleave receives a payment, either annually or one-off, and is commonly open-ended. The rights may include occupation but may simply be limited to rights to pass a cable or a fixed line on, under or over the land (and may not be precise as to the location).
A lease agreement is usually for a fixed period of time and confers occupational rights to a specific area of land or a building. For this reason, wayleaves are commonly used for the deployment of fixed-line broadband infrastructure, whereas lease agreements are more common for mobile masts on land or rooftops.
The difference between these forms of agreement had particular importance in the past, because the relevant form determined whether any subsequent purchaser of the land would be ‘bound’ (required to uphold) rights granted under the agreement and what Land Registry requirements applied. The Code reforms introduced in 2017 dealt with this issue. Regardless of form of code agreement (wayleave or easement), a successors in title (subsequent owners or purchasers) remain bound to code rights previously agreed.
It remains useful for local authorities to be aware of the different forms that an access agreement can take. However, in all cases, the key issues to consider when negotiating an access agreement are:
- what rights the network provider wants or needs to successfully install, maintain or operate their network
- whether the local authority is able to grant these rights
- what the appropriate terms should be
What does a good agreement look like?
An effective agreement will:
- be made in writing
- record the terms agreed between the parties
- help ensure the rights and interests of all parties are protected for the duration of the agreement
- include a mechanism to prevent and resolve disputes or misunderstandings
Agreements will vary, depending on the rights being sought and the terms agreed. However, there are a number of available sources that local authorities may find useful when considering what to include in their own agreements. These include:
Ofcom guidance on the Electronic Communications Code
This may be useful when negotiating an agreement granting Code rights. The guidance includes:
Standard terms (template agreement)
Template notices. This is an overview of appropriate legal terms for various actions around the code agreement.
Digital Infrastructure Toolkit
A template access agreement that has been developed for granting rights to use central government sites. This toolkit could also be useful for local authority solutions.
The City of London standardised wayleave
Of these model agreements, only the Digital Infrastructure Toolkit and accompanying documents have been developed by central government. The others are not endorsed by central government, but they may be useful starting points depending on the context and nature of the agreement being sought.
When agreeing individual terms, local authorities should carefully consider what the communications network provider needs to install and maintain their apparatus or network and have regard to the importance that government attaches to digital infrastructure deployment and the social and economic benefits that it delivers.
Agreeing financial terms
As with any other term of an agreement to host digital communications infrastructure, financial terms should be agreed, wherever possible, on a consensual basis between the parties. However – as with other terms – it is important to note that these agreements are underpinned by the statutory framework set out in the Code.
The Code sets out how a tribunal should determine the financial terms for rights under the Code (where these cannot be reached on a voluntary basis and the tribunal considers it appropriate for an agreement to be imposed). The statutory provisions on valuation in these circumstances were amended as part of the recent Code reforms.
Departments, valuation experts and legal advisers are directed to note Government’s clear expectation that these reforms will lead to significant reductions in the amounts paid for rights to install and maintain digital communications infrastructure. The Regulatory Impact Assessment which was published with the Digital Economy Act 2017, provides further information about this. The government expects public bodies and their advisers to have regard to this statutory framework at all times, but particularly when negotiating the financial terms of an agreement.
The Code contains provisions on two forms of remuneration: consideration and compensation. The concepts are not interchangeable and have specific and distinct meanings in the context of the Code.
Compensation and consideration
Compensation is what a tribunal can order a network provider to pay to a relevant person for any loss or damage that has been sustained or will be sustained by that person as a result of the exercise of the code right to which the order relates. On the other hand, consideration is what is payable by a network provider to a relevant person under an agreement imposed by a court order, representing the market value of the relevant person’s agreement to confer or be bound by the code right. Compensation and consideration are calculated separately.
Consideration is dealt with in paragraph 24 of the Code. Where a tribunal is required to determine the consideration payable by a network provider, their calculation must be based on: “an amount or amounts representing the market value of the agreement … to confer or be bound by the code right”, with “market value” for these purposes being assessed by reference to specific assumptions.
Compensation is dealt with in paragraph 25 of the Code and is intended to allow landowners to recover loss or damage that has been sustained or will be sustained as a result of an agreement to host infrastructure on land or buildings. Typical matters which could be taken into account as compensation might include:
- surveyors fees
- legal expenses
- access – e.g. the creation of a management and information system to handle enquiries for access
- disturbance – during the build and subsequent maintenance visits
- injurious affection – reduction in land value as a consequence of granting the rights
Additional factors to take into account when negotiating financial terms
In addition to the Code, when negotiating financial terms, local authorities are also asked to note:
- the economic benefits of making their area attractive for investment by network providers
- the social and economic benefits of digital connectivity for communities, and the UK as a whole
- state aid and financial propriety considerations
Commercial agreements that permit communications network providers to use public assets (which include local authority land and buildings) must be consistent with State Aid and any relevant financial propriety requirements.