The Ulster Farmers Union (UFU) has suggested telcos are unfairly implementing entitled powers through the Electronic Communications Code (ECC) to drive down land rental costs.
Friction between landowners and telecommunications companies is nothing new, but this is one of the first condemning public statements made by an association. The comments from the UFU are a sharp swing from the previous rhetoric, where the telcos complained of ‘ransom rents’ and the balance of power being too much in favour of landowners.
“While we expect current agreements to be honoured, what is happening stems directly from the Code,” said Victor Chestnutt, Deputy President of the UFU. “This is rooted in significantly reducing rent and compensation payments.”
Introduced as part of the Digital Economy Act of 2017, certain parts of the ECC were intended to address the dynamic between landowners and telcos. Telcos have traditionally leased land off various different parties, including famers, to house communications infrastructure to improve mobile coverage across the country.
The original complaints, from the telcos, date back years. The suggestion is that as there were few alternatives once a mast had been constructed and mobile equipment has been placed on the passive structure, landowners were using this position of power to drive up rental agreements and compensation. The telcos have always felt they were paying too much, and landlords were taking advantage of upgrade to renegotiate leases to further compound the misery.
The ECC was intended to offer greater protections to the telcos, creating a mechanism to dictate what is deemed fair and reasonable leasing terms and compensation, as well as grant greater access to land. However, the UFU is suggesting the telcos are using the fine print to drive down costs to an unfair and unreasonable level.
“Current agreements will be honoured but taking advise after may be a prudent course of action,” said Chestnutt.
What should be noted is that this is an on-going and long-term conflict between the two parties. A lot rests on the shoulders of the telcos and due to the vast expense of deploying mobile networks, they are perfectly within their right to attempt to reduce costs. This would be to the benefit of society and the economy on the whole, as it would accelerate the continued rollout of 4G and introduction of 5G, but the question which needs to be addressed is whether the ECC over-compensates for years of an unbalanced relationship.
The ECC was supposed to balance the equation, but whether this is the case remains to be seen.
Although it has been more than two years since the ECC was written into law, these issues are only emerging now. As Chestnutt highlights above, the telcos are legally obliged to honour existing agreements, though as these expire, farmers could be left in precarious positions, with the telcos using the ECC to drastically reduce compensation.
That said, this strategy could backfire and inhibit the digital dream which is enthralling the country today.
Michael Watson, a partner at law firm Shulmans, has told Telecoms.com that the drastic reduction in compensation could lead to a landowner revolt. If the financials do not match up to the hassle of housing telecoms equipment, landowners will seek ways and means to make sure the environment is unsuitable.
Farmers could relocate a pig pen to demonstrate there is a commercial use for the land, undermining the telcos case using the ECC, while building owners in urban environments could elect to house solar panels on the roof as an alternative.
As Watson highlights, this is a relationship between two parties, both of which need to benefit. People are very protective over their property, therefore if it is felt the telcos are abusing this dynamic, means to make the property unsuitable for telecoms equipment will be sought.
A good relationship is one where both parties benefit, however, there is a risk landowners could feel snubbed by this new dynamic.
But what could be the negative consequences?
|Number of mobile masts in UK (Ofcom estimates)|
While there certainly is consolidation in tower assets thanks to joint-ventures between the telcos, it is perhaps concerning the number of mobile masts is decreasing year-on-year across the UK. At a time where coverage demands are increasing and higher frequency spectrum is being implemented, most would want this trend to be reversed.
However, if the risk of landowners snubbing telco leasing agreements becomes a material reality, this will be difficult.
What is worth considering is that the ECC grants the telcos considerable legal powers. If a dispute arises, the telco now has the power to take the landowner to court in an attempt to force through the lower compensation, but this presents its own risk.
The Lands Chamber of the Upper Tribunal is the only court room in the UK which is currently in a position to hear such disputes. This creates a niche in the legal system which will likely lead to more consistency in rulings, however there is also a risk of a legal bottleneck.
Legal complaints take time to resolve, and should enough disputes emerge, it won’t be long before a queue emerges at The Lands Chamber. Just at a time where the UK needs clarity and simplicity to rapidly rollout next-generation infrastructure, a very real bureaucratic risk is present.
Although this paints a worrying picture, what is worth noting is that both the telcos and the landowners will want to hype this situation in favour of their own objectives. The telcos made the ransom rent landscape seem almost apocalyptic at time, driving the lobby machine into overdrive, though the same could be said for the associations representing the landowners. Suggesting billion-pound corporations are abusing struggling farmers is certainly one way to attract headlines to the cause, but it always worth remembering this is a lobbyist mission.
Ultimately, more uncertainty and the risk of delays is the last thing anyone in the UK connectivity landscape wants.
BT/EE, Vodafone, Three and O2 were all approached for comment, with no response at the time of writing.