Property and telecoms: easy money, but at what risk?

It is estimated that in 2009 there were in excess of 70 million mobile phone connections in the UK.

Mobile operators each divide the UK into ‘cells’. Each cell contains a ‘base station’ (usually a mast or tower with apparatus) from which the signal is transmitted in due course to the telephone network of the recipient. It was estimated that at the end of 2009 there were 52,500 base stations in the UK.

Base stations can only handle a finite amount of traffic and increasingly mobile phones support many additional services, such as SMS, e-mail and internet access. One operator recently reported that 97% of its mobile phone traffic is now data rather than phone calls.

Demand, therefore, remains high and telecoms operators need to secure more new sites, as well as retaining existing sites.

There remains plenty of opportunity for landowners (both landlords and tenants) to generate additional income from telecoms operators in return for siting equipment on their property. However, landowners should be aware of the potential pitfalls in doing so, in particular the statutory protection that enables the operators to remain in occupation at the end of a licence or lease.

There are two key statutes that provide protection to a telecoms operator that may wish to keep its equipment or installations on a property after its agreement with the landowner has expired, even if the landowner objects to it doing so.

First, the Landlord and Tenant Act (LTA) 1954 deals with the landlord and tenant relationship.

Secondly, the Electronic Communications Code in Schedule 2 to the Telecommunications Act 1984 (as amended by Schedule 3 to the Communications Act 2003) (the code), which sets out the rights and procedures to regulate the installation and management of telecoms equipment, provides additional protection.

This article will review the statutory regimes and examine the difficulties that some landowners can face in compelling telecoms operators to remove their equipment from the property at the end of the agreement. It will also consider the recent case of Bridgewater Canal Company Ltd v Geo Networks Ltd [2010].

Who and what does the code apply to?

Ofcom is responsible for granting code powers to network providers and it maintains a register of those to whom the code has been applied. Ofcom licences all operators with code powers, of which there are currently in excess of 80 (see

All of the main landline and mobile operators enjoy code powers but, if there is any doubt in a particular instance, the register can be checked by contacting Ofcom.

The code covers all ‘electronic communications equipment’, defined as:

‘Apparatus which consists of or includes the sending or receiving of communications or other signals transmitted by means of an electronic communications network.’

This includes not just mobile phone masts and related equipment but also equipment such as underground cables, telephone exchanges and roadside cabinets. It, therefore, has a very wide application.

LTA 1954

If the agreement between the landlord and the telecoms operator is genuinely a ‘licence’ then, when it expires, the telecoms operator will have no further rights to continue to occupy under the licence. However, if the agreement is a ‘lease’ then, unless the lease has been formally contracted out of the protection of LTA 1954, the telecoms operator will have the right to a new lease on similar terms unless the landlord can satisfy one of the statutory grounds of opposition under s30 of LTA 1954.

In addition to, and irrespective of the position under LTA 1954, the telecoms operator has additional rights under the code.

The code

The code enables telecoms licenced operators (both mobile phone operators and fixed line operators) to provide electronic communications networks by installing and maintaining telecoms apparatus in, over and under land. Not only does it grant rights for them to do so on public land but also to do so on private land. Paragraph 2 of the code provides that a freeholder or a tenant (under a lease for a term of a year or more) may voluntarily agree in writing the right for the telecoms operator to execute any works on its land. In the absence of being able to reach an agreement with the landowner, the telecoms operator can rely on its other powers under the code.

It is important to note that the parties cannot contract out of the code.

Paragraph 5: power to dispensewith the need for required agreement (of landowner)

Paragraph 5 of the code enables the telecoms operator to serve notice on the landowner requesting its agreement for the operator to install equipment. If, after 28 days, the landowner does not consent then the telecoms operator may apply to the court for an order to compel the landowner to grant such consent.

The court will make such an order if:

  • it is satisfied that any prejudice caused to the landowner is capable of being adequately compensated by money; or
  • the benefit to those whose access to the telecoms network will be securedby the order outweighs the prejudiceto the landowner.

Paragraph 5, which has been compared to a compulsory purchase power, appears to have been infrequently relied on to date. However, with increasing pressure to find additional sites, it is quite possible that telecoms operators will look to rely on this provision more in the future.

Paragraph 20: power to require alteration of apparatus

Paragraph 20 provides that the landowner can serve notice on the telecoms operator if it requires alteration of the apparatus to enable it to carry out a ‘proposed improvement’ of the land.

‘Improvement’ is defined as including development and change of use. ‘Alteration’ is defined as including references to ‘moving, removal or replacement of the apparatus’. Paragraph 20 can, therefore, be used to simply require either its relocation within the existing site or indeed its removal from the site.

If the telecoms operator serves a counter notice within 28 days of receipt of the landowner’s notice, the landowner may apply to the court for an order.

The court shall make an order if it is satisfied that:

  • the alteration is necessary; and
  • it will not substantially interfere with any service provided by the operator.

The court shall not make an order if it is satisfied that, if an application had been made under paragraph 5, it would have been appropriate to make that order.

A point to note is that paragraph 20 can have adverse costs consequences for the successful landowner. Unless the court concludes otherwise, it shall require the person requesting the alteration (ie the landowner) to reimburse the telecoms operator in respect of any expenses incurred in connection with the execution of the works. Clearly this could be a costly exercise for the landowner.

Paragraph 21: restriction on right to require removal of apparatus

Paragraph 21 provides that:

‘Where a person is for the time being entitled to require the removal of any of the operator’s electronic communications apparatus… that person shall not be entitled to enforce the removal of the apparatus except… in accordance with the… provisions of this paragraph.’

The landowner can serve notice on the operator requiring the removal of the apparatus after which the operator has 28 days in which to serve counter notice. The landowner can only enforce the removal of the apparatus by applying to court to obtain a court order. A landowner is thereby restricted from using any self-help remedy for removing the equipment and indeed to do so could amount to a criminal offence.

Under paragraph 21, the landowner does not need to meet the costs of removal.

There is, however, a potential difficulty with reliance upon this paragraph that can create legal ‘stalemate’ between the parties. The problem is caused by the words ‘for the time being entitled to require the removal’.

In cases where the operator occupies pursuant to a license that has been terminated, or a lease that had been contracted out of LTA 1954 and that had terminated by effluxion of time, the landowner could be said to be ‘entitled to require the removal’ and so could then trigger the paragraph 21 procedure.

Where, however, a lease is protected by LTA 1954, the argument that some telecom operators run is that, until that tenant’s application is finally disposed of and a court order for possession is made, the landlord is not entitled to require the removal and, therefore, cannot rely on the paragraph 21 procedure. It is also argued that, as a result, a court will not be persuaded to make an order in the LTA 1954 proceedings because, due to the operator’s rights under paragraph 21, the landowner will never be able to secure possession and so the court should not make an order.

Clearly landowners will argue to the contrary, namely that a paragraph 21 notice can be served and determined by the court before the court determines the LTA 1954 proceedings.

Until this issue is clarified, landowners need to be aware that reliance on the paragraph 21 procedure is likely to create delay and needs to be taken account of in the landowners planning.

The drafting of the code has recently come in for criticism from the court, which described it in Bridgewater as ‘one of the least coherent and thought-through pieces of legislation on the statute book’. Unfortunately, there are very few reported cases that deal with the code and, therefore, there is little authority as to how the code should be construed.

Recent developments?

In Bridgewater, Lewison J had to consider paragraph 12 of the code in relation to linear obstacles. Geo Networks wanted to run an additional fibre optic cable under a canal (the linear obstruction). The judge had to consider whether ‘the right to carry out the works’ entitled an additional cable to be installed free of charge or whether the operator had to compensate the landowner. Geo Networks argued that the code did not require it to make payment for the right to lay an additional cable.

The judge held that payment should be made and, while not on a ‘ransom’ basis, it should be on a ‘fair and reasonable’ basis:

‘It does not seem to me to be fair that an operator should have something for nothing. If he acquires something of value to him, fairness seems to me to require that he pays for it.’ (Paragraph 50.)

It is interesting to see the court apparently construing the code in the favour of the landowner. However, the judge concluded that:

‘It will be apparent that, in my view, the code is extremely difficult to understand; and that the overall scheme of the code is difficult to fit into a coherent framework. I recognise therefore that others might take a different view from my own.’ (Paragraph 56.)

The judge granted leave to appeal and so we shall need to wait and see if the Court of Appeal takes a contrary view.

Summary: points to be alert to

  • Landowners should be careful when considering a request for consent to permit an operator to install equipment, as even the most informal ‘agreement’ (such as an e-mail) may well bind the landowner to permit the operator onto the land.
  • The landowner should take care to contract any lease out of LTA 1954 if possible, thus eliminating the potential ‘delay’ strategy under paragraph 21 of the code.
  • With existing agreements, make sure to plan well ahead if you wish the telecoms operator to either alter or remove its equipment to accommodate your plans for the future use of the property.
  • Statements in agreements that an operator will not rely on its powers under the code are helpful for a landowner. However, as parties cannot contract out of the code, it is questionable how much weight may be placed on such provisions.
  • Usually parties resolve these disputes by negotiation and there has been a reluctance to test the code by way of court proceedings – maybe this will change as competition for new sites increases.
  • If ‘letting’ a new site, is the income worth the potential risk that future use will be frustrated by a contested occupation by the telecoms operator at a later date?

In summary, the landowner should give serious consideration to the future use and/or development of the property and what impact, if any, the presence of telecoms apparatus may have on those plans.