Contributors
In the recent Tribunal telecoms case of On Tower UK Limited v British Telecommunications plc, the Tribunal had to deal with two important issues under the Telecoms Code:
- Under what circumstances can a building designed for housing electronic communications apparatus (ECA) itself form ECA for the purposes of the Code?
- If a site provider is exercising a break right in a Code protected lease, must the site provider serve both a break notice and a Code termination notice under para 31 of the Code, or just the latter?
Background facts
BT owned the Kenton Road telegraph exchange, built in the 1930s to house the country's then burgeoning telephone network. Fast forward to 2023, and the exchange was becoming obsolete, housing some telecoms equipment but otherwise largely empty, albeit with some offices, kitchen and storage area. On Tower had a lease of the roof of the exchange, which lease had a break right in it exercisable upon written notice being served.
BT wished to dispose of the exchange and so served a break notice on On Tower seeking to terminate On Tower's lease of the rooftop. Although BT argued it was not necessary to do so, BT also served an 18 month notice under the Code under para 31.
On Tower then applied to the tribunal to determine whether it had Code rights that might prevent its removal from the roof of the exchange, and whether the break notice was valid.
Did On Tower have Code rights?
BT's basic case was that an operator (here, On Tower) could not gain code rights against another operator (BT). This is because the Code only allows code rights to be obtained against land not ECA.
But surely the telephone exchange is land, being a physical brick building? That ignores the definition of ECA in paragraph 5 of the Code which says that ECA includes a "building only if the sole purpose of that building is to enclose other electronic communication apparatus". So BT argued that the sole purpose of the exchange was to enclose ECA, so it could not be "land" under the Code, and so On Tower could have no Code rights against it.
The Tribunal, however, disagreed. What the "sole purpose" of a building is must be judged objectively; what is the building's actual function? Its function (the Tribunal decided) was the "accommodation of telecommunications apparatus and the provision of office storage and welfare facilities." It didn’t matter that its main purpose was to house ECA, its sole purpose was not to enclose ECA.
So the exchange was indeed land, despite BT's arguments, and On Tower could therefore claim Code rights over its roof.
Was the para 31 notice valid?
Given that the Tribunal found that On Tower had Code rights, those rights had to be terminated by a valid para 31 notice. On Tower's argument was that no valid para 31 notice under the code could be served unless and until a valid break notice had been served, and for technical reasons the break notice BT had served was invalid.
Again, however, the Tribunal disagreed. Para 31 allows a site provider to serve a para 31 notice to seek to terminate a code agreement. That para 31 notice must specify an expiry date after the date on which the lease could have been brought to an end by the site provider, if the Code didn’t apply.
The Tribunal found that this provision did not mean that the code lease had actually to be brought to an end by the service of a valid break notice before a para 31 notice could be served. Rather, it simply meant that a para 31 notice could be served, provided it expired after the date when the agreement could have been terminated on its terms by a break notice. No actual break notice needed to be served in addition to the para 31 notice.
Accordingly, the issue as to whether BT's break notice was valid or not was irrelevant, as a valid break notice was not required. This meant that the para 31 notice was valid, and there would have to be a further hearing to determine whether On Tower's Code rights should be terminated under para 31.
Comment
It is relatively well known that code operators cannot claim Code rights against other operators. This is to avoid infrastructure providers such as On Tower being forced to accept low levels of rent (assessed on the "no network" basis) from other operators wishing to install ECA; that would be wholly contrary to the infrastructure providers' business model, namely to be able to extract a commercial "rent" for its infrastructure.
This protection for infrastructure providers is extended to buildings designed for the provision of any electronic communications network, but this case shows there are limits on how far this actually applies to buildings housing ECA.
Going forward, site providers may find it harder to argue that a building with ECA in it counts as ECA and is thus exempt from Code rights, if it can be said that the building has a function in addition to housing ECA, eg as offices or welfare facilities.
