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Could reluctance to create new telecoms agreements impact the rollout of 5G?

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Could reluctance to create new telecoms agreements impact the rollout of 5G?

Could reluctance to create new telecoms agreements impact the rollout of 5G?

Landowners and operators are currently (as a general rule) not prepared to enter into new agreements relating to electronic communications sites, due to uncertainty over the implications of the new Electronic Communications Code. In particular there is a great deal of speculation as to the impact of the new valuation mechanism on determining the rent that an operator should pay to occupy a site. The market has come to a standstill with nobody willing to set a precedent as to what a market rent is under the new Code.

Part of the problem is that there is no guide in the property market generally as to what an appropriate rent would be. Under the new Code the rent is to be based on the value of the land to the landlord. The new Code requires us to imagine that use of the land for electronic communications adds no extra value for the operators, and then to assess what an appropriate rent would be. The problem is that in the real world nobody would rent a small piece of land for no specific purpose, hence there is no guide.

Operators and landlords are at opposite ends of the rental scale, with operators expecting to pay very little and landlords expecting to receive the same level of income that they received prior to the new Code coming into force. Clearly they need to come together somewhere in the middle, and there is a feeling in the industry that this may be beginning to happen.  

With networks looking to roll out 5G in late 2019 and into 2020, they will surely need to engage with landowners to put up the equipment required. Unless new agreements can be completed it is hard to see how 5G can be implemented. Perhaps 5G will provide the impetus that the industry needs to finally find a balance between the different rental values that landowners and operators are seeking under the new Code.

For more information on this, please contact Graham Jones, or you can give us a call on 0345 070 6000.