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Electronic Communications: An update on equipment caps, upgrading, sharing and compensation

  • Legal Development 28 January 2021 28 January 2021
  • UK & Europe

  • Real Estate

In Cornerstone Telecommunications Infrastructure Ltd (CTIL) v London and Quadrant Housing Trust (L&Q) [2020] UKUT 282 (LC), the Upper Tribunal (Lands Chamber) (UT) was asked to consider what terms it should impose in an Electronic Communications Code (Code) agreement to deal with the upgrading and sharing of equipment, the extent of equipment permitted and the compensation payable to the landowner. 

Background 

CTIL installs equipment and makes it available to others to provide electronic communications networks. CTIL wanted to install equipment on the roof of an eight-storey mainly residential building owned by L&Q. Most of the terms in relation to the 10-year arrangement were agreed, but the parties couldn’t agree the level of compensation, the extent of equipment to be installed or how to deal with upgrading and sharing the equipment.

Equipment Cap 

L&Q wanted to limit CTIL’s right to install equipment by referring to a list attached to the agreement (an "equipment cap"), but the UT did not agree. There was no risk that CTIL would install unlimited equipment because the agreement already prohibited overloading and contained safety provisions. In practice, the amount of equipment would be limited by the strength of the supporting structure and the size of the site. An equipment cap would make it harder for CTIL to provide its service.  

Upgrading and sharing 

L&Q wanted to limit CTIL’s right to upgrade or share equipment by reference to paragraph 17 of the Code, which provides that operators can upgrade or share equipment if two conditions are met: 

  • the changes have no adverse impact, or no more than a minimal adverse impact, on the appearance of the equipment; and 
  • the changes impose no additional burden on the other party to the agreement

The UT decided that paragraph 17 of the Code was the minimum right, in terms of upgrading and sharing, which an operator was entitled to under a Code agreement. An operator could seek more extensive rights in the Code agreement.

Ultimately, the UT decided that CTIL should have unlimited rights to upgrade and be allowed to share equipment with up to two operators (with additional sharing permitted only within certain limits). Otherwise, the UT contended, as technology improved, CTIL would have to negotiate to install any new equipment and this would increase costs for the consumer. Also, the fact that CTIL hosts equipment belonging to others was relevant; without the ability to share, there would be little use in giving CTIL any Code rights. 

Compensation 

The UT ordered CTIL to pay L&Q £5,000 p.a., commenting that it had no reason to expect that the market value of a site provider’s agreement to confer Code rights over a roof top site on any different residential building would be much more or less, regardless of its location. 

The consideration constituted a nominal fee for the site itself, a payment towards maintenance of the site and insurance (which fell to L&Q as the building owner), a sum to reflect the additional burdens on L&Q of managing access across the common parts and onto the roof, and a payment to reflect the anticipated costs to L&Q of supervising the upgrading of equipment by the operator and the sharing of the operator's rights over the rooftop (which also hosted numerous solar panels).

Further comment

In the later decision of ON Tower UK Ltd v JH & FW Green Ltd [2020] UKUT 348 (LC), the UT has indicated that a reasonable market value for greenfield sites is £750 p.a. base value, increased to £1,200 in a case where the site is close to homes.

Key Takeaways

  1. Equipment caps are no longer appropriate
  2. Upgrading and sharing rights under paragraph 17 of the Code are a minimum
  3. £5,000 p.a. is a good indication of the market value for a roof top site on a residential building

End

Additional authors:

Toral Shah

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