Telecoms update: Tribunal provides guidance on six preliminary issues under the Electronic Communications Code

1. Lease v licence?

• Yet again, the Tribunal was asked to determine for 5 sites whether the existing agreements in question were either leases to which Part II of the Landlord and Tenant Act 1954 applied or licences to which Part 5 of the Code applies
• The Tribunal, applying the analysis of the Upper Tribunal in AP Wireless II (UK) Limited v On Tower UK Limited [2024] UKUT 263 (LC) and EE Limited v Edelwind Limited [2020] UKUT 271 (LC) held that all 5 agreements were licences, dismissing APW's position
• The absence of an enclosed compound or clearly defined area of exclusive possession was key and the Tribunal did not agree with APW's argument that the presence of locked cabinets (supported by steelwork or on concrete plinths) amounted to exclusive possession
• The decision reinforces the key distinctions the Tribunals have now repeatedly made between rooftop and greenfield telecommunications sites. The language and structure of rooftop agreements focuses on Code rights and makes provision for the disaggregated installation of equipment and apparatus.

2. Changes made to apparatus installed should not automatically be considered an alteration to the demise

• The Tribunal was asked to consider whether, for the site in question, a licence to assign and vary the existing agreement had the effect of a surrender and regrant of the agreement
• Despite the Tribunal finding in the operators favour under the first preliminary issue that the agreement in question was a licence, APW submitted in the alternative that the variation would take effect as a surrender of the licence and the grant of a lease
• The Tribunal disagreed, making a finding of fact that there was no evidence that the proposed works in the licence to assign and vary would alter the demise
• Changes to equipment or technical specifications will not automatically result in a surrender and regrant. The question is simply whether there has been a variation of the demise.

3. Early access agreements and 'contracting out' of the Landlord and Tenant Act 1954

• The Tribunal was asked to consider whether a letter (from over 20 years ago) noting early access arrangements between the original site provider and operator amounted to an agreement contractually binding the operator to take a lease before the subsequent 'contracting out' procedure was completed by the parties
• The Tribunal held that these types of early access arrangement lacked sufficient certainty to amount to a binding agreement for lease
• The 'contracting out' procedure completed prior to completion of the lease was therefore effective and APW's position that the agreement for the site in question had not been correctly contracted out was dismissed
• The Tribunal's comments provide useful guidance on the treatment of early access letters and heads of terms which are frequently seen in telecoms transactions

4. What is a "term of years certain" for purposes of Landlord and Tenant Act 1954?

• The Tribunal confirmed that an agreement can still be for a term of years certain in circumstances where the commencement date is triggered by a future event, provided the event has occurred and the agreement has a fixed end date
• Agreements with conditional commencement provisions are common place in the sector and the Tribunal's analysis here will be welcome news that they can still satisfy the requirement for a term certain

5. Paragraph 33 notices and contractual break rights

• The Tribunal has provided clarification to operators on seeking the renewal of minimum term agreements under the Code
• In circumstances where an existing agreement remains within its contractual term, a notice served under Paragraph 33 of the Code cannot do the 'double-duty' of also taking effect as a contractual break notice
• Despite there being no conditional break requirements in either of the two existing agreements in question (other than a break notice must be in writing), the Tribunal held that notices under Paragraph 33 of the Code were invalid where the operators had not also exercised the relevant contractual break rights

6. Land Registration, Code agreements and Code rights

• The Tribunal was asked to consider whether, in circumstances where an assignment has not been registered at HM Land Registry, the assignment is void and therefore, the existing agreement is surrendered by operation of law
• The Tribunal did not agree with APW's submissions that the assignment was void. The correct position is that it may "become" void if not registered within a 2 month period. However, it is "the transfer of the legal estate" that becomes void. Not the assignment. The correct legal position is that a bare trust is then created.
• Further, the Tribunal clarified that EE and H3G had protection under both the Old and new Code in respect of their apparatus installed at the site as Code rights are not subject to registration under paragraph 2(7) of the Old Code and paragraph 14 of the Code
• As such, the only issue here was the transfer of the legal estate. The existing Code agreement had not, as suggested by APW, been surrendered by operation of law and no periodic tenancy could be inferred.
• The decision provides reassurance that registration formalities do not automatically deprive operators of the benefit of existing Code agreements and Code rights

The Tribunal's decision helpfully - and not for the first time - demonstrates that the aim of the new Code is to facilitate the expansion of electronic communications networks in the public interest, grant operators broad rights and greater flexibility to renew agreements. There is a clear lesson here: preliminary issues should focus on matters of genuine legal complexity, rather than attempts to relitigate issues already considered by the Tribunals which inevitably delay or frustrate the renewal of agreements under the Code.

DAC Beachcroft acted for the operators EE Limited and Hutchison 3G UK Limited and instructed Oliver Radley-Gardner KC of Falcon Chambers for the preliminary issue hearing.