Cornerstone Telecommunications Infrastructure Ltd v London & Quadrant Housing Trust (2020)
The Upper Tribunal imposed an agreement on a housing trust under the Communications Act 2003 Sch.3A Pt 4 para.20 conferring on a telecommunications operator rights to install and operate equipment on the roof of a building. The tribunal determined the extent to which the operator should be able to upgrade and share the equipment and set out the correct approach to assessing the consideration payable by operators under such agreements.
A telecommunications operator applied under the Communications Act 2003 Sch.3A for the imposition of an agreement on the respondent housing trust relating to installation/operation of telecommunications equipment on the roof of a building.
The operator installed and maintained telecommunications apparatus which it made available to its shareholders, two telecommunications companies, and to others. It wished to install equipment on the top of an eight-storey block containing offices and residential flats in South London. The roof was used for solar panels, and the apparatus would be installed around the panels. An interim order had been made imposing an agreement on the housing trust under the provisions of Sch.3A of the Electronic Communications Code and installation of the apparatus had already begun. Most of the terms were already agreed, including a 10-year term. However, the trust was concerned about the effect of increased weight on the roof and the obligations it would have to check the extent to which the apparatus and the works undertaken might present a fire risk.
Should an equipment cap be imposed limiting the operator's right to install apparatus? The fear that the operator might install unlimited equipment on the roof of the building was fanciful. The agreement included a term prohibiting the operator from overloading any part of the building and requiring it to take all reasonable steps to ensure that it did not make the building, or any plant or machinery on it, unsafe. In practice the amount of apparatus capable of being installed was limited by the strength of the supporting structure and the size of the communications site. An equipment cap would invite dispute and jeopardise the operator's ability to provide a service to network providers for the duration of the agreement: it would not be included in the agreement (paras 57-59).
Upgrading and sharing under para.17 - Under para.17 of the Code operators could upgrade or share equipment if two conditions were met: (1) the changes had no adverse impact, or no more than a minimal adverse impact, on the appearance of the equipment; (2) the changes imposed no additional burden on the other party to the agreement. The absence of a de minimus exception to condition 2 meant that it was to be read literally. The policy explained by Law Commission report 336 was that where upgrading or sharing had physical implications for the site provider, it should be the subject of negotiation and an additional payment of consideration. Paragraph 17 therefore represented the irreducible minimum, in terms of upgrading and sharing rights, which an operator was entitled to under a Code agreement. The onus was on the party wishing to depart from para.17 to justify its request (paras 63-65, 69, 73-78).
Should upgrading by the operator be restricted? The parties had agreed a 10-year term and it was reasonable to expect improvements to technology within that period, including 5G, which would arguably involve "upgrading" within the meaning of the Code. The facilitation of new technology was one of the objectives of the Code. It would be inappropriate to impose terms which might significantly impede upgrading, and the para.17 conditions would be likely to have that effect. It was therefore appropriate to permit upgrading without limit (paras 83, 85).
Should sharing by the operator be restricted? The fact that the operator was an infrastructure provider, hosting apparatus belonging to others, was relevant to the issue of sharing. If the Code rights conferred on the operator could not be shared with network operators (because it would breach the para.17 conditions) there would be little point in conferring those rights at all. However, unrestricted sharing of apparatus on the roof of a large residential building was not compatible with the direction in para.23(5) of the Code to include terms appropriate for ensuring that the least possible loss and damage was caused to the occupiers of the building. More users of the apparatus would mean more traffic through the common parts of the building, and more checks required by the trust on those working on its roof. It was therefore appropriate to curtail the number of persons entitled to make use of the operator's infrastructure to cause the least possible loss and damage which was consistent with achieving the purpose of the agreement. The operator's primary purpose was to host apparatus belonging to its shareholders. Accordingly, the agreement should permit sharing by no more than two operators. Additional sharing would be permitted within the limits of para.17, although it was unclear whether that would be possible in practice (paras 84-88)
Compensation and consideration - The following components were likely to be necessary in most consideration assessments by the tribunal:
- The current or alternative (non-network) use value. The no-network assumption dictated that the value of the site as part of an operator's network was to be disregarded, but not its value to any other prospective tenant in the market;
- The value to the tenant of any additional benefits conferred by the letting;
- The expense to the site provider of the operator using the site for the apparatus. That could form part of additional consideration or an award of compensation payable.
The additional stages of consideration in Vodafone Ltd v Hanover Capital Ltd  8 WLUK 180 were unnecessary where an agreement was imposed by the tribunal, as compensation could be awarded for legal expenses and rent negotiations, and no addition to reflect an inducement was permissible, Hanover considered. The consideration to be paid between willing parties would amount to £5,000. That included (i) a nominal existing or alternative use value of £50; (ii) £1,500 to reflect the value of additional benefits conferred on the operator by the site provider's responsibilities for building maintenance and insurance; (iii) an allowance of £1,000 to reflect the additional burdens of managing access across the common parts and onto the roof, and an allowance to reflect the anticipated costs to the site provider of the operator's right to share the benefits of the agreement with up to two others and upgrade the apparatus without restriction. Compensation would also be awarded for the trust's reasonable legal expenses (paras 94-99, 103-105,150-152).