The Telecoms Code is now known as the Electronic Communications Code. Its aim is to ensure that no-one is unreasonably denied access to telecoms and network services (eg broadband), and thus it gives powers of compulsory purchase to telecoms operators.

An operator can give a landowner notice requiring agreement to use the land. If, after 28 days, the landowner does not enter into an agreement, the operator can apply for a court order. Often, a landowner will agree to the operator’s request without requiring the operator to enter into a formal agreement. Needless to say, this is a bad move. A formal agreement gives the landowner tighter control and, in particular, ensures that the landowner can exclude security of tenure given to the operator (as a business T under LTA 1954).

The point to appreciate is that the operator will be a business T, as well as having Code rights. So, when terminating the operator’s lease, the landowner must check whether or not the 1954 Act rights of occupation has been excluded; if they have not, the L must serve notice under the Act to terminate the tenancy.

Note a potential Catch-22 situation if L wants to terminate the tenancy on ‘redevelopment’ grounds. The Code says L can only give notice to the operator at a time when it is ‘entitled to require the removal’ of the operator’s equipment. Read literally, this means that the landowner cannot give notice until the operator’s lease has already expired. But, with a 1954 Act tenancy, the tenancy continues until proceedings for a new lease are disposed of. However, to obtain an order for termination of the tenancy, the landowner must be able to show it is actually able to carry out its proposed development. But, the developer cannot do that because it cannot show that it can get vacant possession of the site until it has served a Code notice to get rid of the operator – and it cannot serve Code notice until 1954 Act proceedings are disposed of! Note that no court has ever upheld this argument, and most operators will rely upon it in correspondence but shy away from using it in proceedings, but it is a common ploy to be raised as an argument as to why a Code notice is invalid.

The wise landowner will avoid giving any rights to operators that might attract the protection of the 1954 Act. That means either having an arrangement that falls outside the Act (eg a licence), or a lease that is expressly contracted out. It seems that operators will generally accept this. Note that, while it is possible to contract out of the 1954 Act, it is not possible to contract out of the Code.

Strictly speaking, the landowner is not entitled to any compensation. The Code prevents the landowner from extracting a contractual penalty from operators who exercise their Code rights. Despite this, it is common for Code leases to say that the operator will agree not to exercise Code rights and will pay a penalty if it does so. While such provisions are almost certainly unenforceable, they are worth including as they have never been tested in court and few operators will want to run the risk of creating a precedent. Indeed, that approach is typical of most dealings with the Code; it is a complex legal area, but operators avoid court proceedings for fear of unhelpful precedents, and thus it is nearly always possible to negotiate a commercial compromise. Source: Lovells.