Virgin Media legal win sets precedent in battle over disproportionate access charges

Virgin Media and Durham County Council have agreed an out of court settlement which will see the telco pay a nominal £1 sum to access land owned by the local authority to lay new ultrafast broadband cables.

The case is the first test of the updated Electronic Communications Code, which was amended in 2017, legislation designed to simplify the process of rolling out future-proof communications infrastructure. Gaining access to existing infrastructure for upgrades is an issue which has plagued the industry for years, with telcos claiming land owners charge disproportionate fees, as well as taking the opportunity to increase rent due to a change in the inventory of the assets.

With the out of court settlement creating more favourable terms for Virgin Media, the hope is precedent will be set throughout the industry, removing an administrative barrier to deployment which has proved expensive.

“This agreement with Durham sets a much needed precedent which will speed up broadband rollout and encourage investment,” said Tom Mockridge, CEO of Virgin Media. “We hope that other local authorities and landowners now follow Durham’s example.

“Most importantly, this is fantastic news for the residents and businesses of Durham as we can now continue the good work we started with Durham Country Council and bring a real broadband boost to local communities across the county.”

“Following the reforms it was important that, as a local authority, we were able to test and understand the implications of the new code,” said Durham County Council’s Head of Planning and Assets, Stuart Timmiss. “Working closely with Virgin Media and our legal team we are happy to be able to move forward in ensuring our businesses and communities can benefit from superfast broadband.”

The case first emerged back in June, with Virgin Media hoping to expand its fibre network to 16,000 properties by the end of 2019 as part of Project Lightening, though with the council charging what the telco described as a ‘hefty’ per-metre levy progress slowed. Other telcos in the UK will likely look at this development with excitement, and hope other administrative hurdles can now be addressed.

EE is another telco which is currently taking the legal route to address one of these hurdles. Tom Bennett and Howard Jones highlighted to us a couple of months ago, EE is challenging a currently unnamed entity in the courts over rent re-negotiations land owners are forcing on telcos when inventories change in existing assets ahead of necessary upgrades. Land owners, or more commonly the agents, are using the opportunity to increase rent knowing the telcos have little choice in the matter.

“The benefits of bringing 4G and high speed broadband to an area are in improved connectivity and the innovation opportunities they can bring to businesses, local authorities and the wider community – not in any landowner opportunistically charging more money in rent,” said an EE spokesperson.

“This settlement is a positive step forward for enforcing operators’ new Code rights.”

Vodafone UK General Counsel and External Affairs Director Helen Lamprell is another who has found issue with the legislative and regulatory landscape of the UK, stating it is the most difficult region she has had to work in.

“The regulatory environment in the UK is not conducive to infrastructure investment,” said Lamprell, during a briefing in June. “The right balance has not been found yet.”

Vodafone’s issues are not only focused on access charges and ransom rent, but also the height of masts. As it stands, the tallest cellular masts in the UK are less than half the height of the same structures in Germany, a critical component when attempting to increase coverage; for every ten metres you go up, the coverage roughly doubles. Vodafone is not suggesting it wants to pepper the landscape with these monstrous structures, but by increasing the height of the masts the less sites you actually need.

While certain aspects of the UK’s legislative environment seem contradictory to government ambitions to increase connectivity quality and coverage, the success of the Virgin Media legal team demonstrates the updated Electronic Communications Code is doing its job. Perhaps the other hurdles can now be addressed.

Wileyfox’s administration shows risk of undercutting

Budget smartphone manufacturer Wileyfox has entered administration demonstrating the risk of trying to undercut established brands; small profits = small chance of doing anything.

Although Wileyfox has not provided an official comment yet, a Reddit post states the business has entered administration. The company entered into the world in 2015, claiming because it didn’t have legacy devices to support as well as a smaller workforce, the team would be able to offer high-end devices at budget prices. Unfortunately this attempt to shake the status quo has seemingly amounted to nothing.

“Wileyfox Europe Limited is in Administration,” the post reads. “Andrew Andronikou and Andrew Hosking are appointed joint administrators and act jointly and severely without personal liability.”

Back in 2015 the first two devices launched by Wileyfox, the Swift and the Storm, fared pretty well, delivering on the promise of performance and price. Following up proved more difficult, as it was forced to ditch the Cyanogen operating system and move onto Android. To try and keep prices low certain models were offered if the user was happy to content with lockscreen ads, though this was never going to be an idea which lasted. Later devices did not meet the high-spec features of the Swift and the Storm.

This is not necessarily the end for Wileyfox, administrators will try to secure the future of the business, but it does show the danger of the smartphone industry. Most consumers will be tough pushed to leave the brand that they currently have unless there is a compelling offer. Of course, undercutting competitors is a tried and tested strategy, but unless there is a substantial mountain of cash in the bank account it is a very risky game.

The lessons learned here are hard ones. If you want to operate in the Western markets, everything on the phone has to be high-spec and priced attractively (unless you are Apple); if you don’t have the scale of the global smartphone players, you will struggle. Wileyfox found out the hard way you the economies of scale work against localised players.