Monday, 23 April 2018

Legal insight: Regulatory reforms to facilitate FTTP

By Chris Kelly, Total Telecom
Friday 16 March 18

Rebecca Clarke, legal director in the Commercial and Intellectual Property Team at Hill Dickinson, looks at the regulatory reforms that are necessary to streamline the rollout of Fibre to the Property (FTTP) services

EU and UK policies have led to large-scale investment in telecoms infrastructure in recent years. Although the UK is on its way to meet the first 2020 target (full 30 mbps coverage) largely through FTTC deployments, there is still some way to go in respect of the second (access to 100Mbps or higher connections for 50% of premises). The European Parliamentary Research Service Briefing dated February 2018 states that the EU Commission estimates that there is a 500billion Euro investment gap over the coming decade. The Fibre to the Home Council’s research estimates that 137 billion Euros is needed by 2025. However, this level of investment is at risk due to regulatory uncertainty. With the UK on the verge of further public and private investment to upgrade the “last mile”, we discuss some of the regulatory reforms introduced to facilitate roll out. The Electronic Communications Code 2017 (&ldquo…

EU and UK policies have led to large-scale investment in telecoms infrastructure in recent years. Although the UK is on its way to meet the first 2020 target (full 30 mbps coverage) largely through FTTC deployments, there is still some way to go in respect of the second (access to 100Mbps or higher connections for 50% of premises).

The European Parliamentary Research Service Briefing dated February 2018 states that the EU Commission estimates that there is a 500billion Euro investment gap over the coming decade. The Fibre to the Home Council’s research estimates that 137 billion Euros is needed by 2025. However, this level of investment is at risk due to regulatory uncertainty.

With the UK on the verge of further public and private investment to upgrade the “last mile”, we discuss some of the regulatory reforms introduced to facilitate roll out.

The Electronic Communications Code 2017 (“the Code”)

The aim of the new Code is to make it easier for operators to roll out infrastructure on public and private land. It is generally viewed as being more “operator friendly” providing more flexibility around upgrading and sharing apparatus.

Although the Code is mainly based on its predecessor there are some important changes, including:

·         Reform of the “public benefit” test which arguably lowers the bar for operators seeking to impose rights. However, how this test will be applied to FTTP, in the short to medium term, remains to be seen;

·         Payments for way-leaves are to be on a “no-scheme basis” reducing the cost;

·         Operators can share or upgrade equipment without consent provided that:

o   it causes minimal adverse visual impact; and

o   does not impose any additional burden on the landowner. 

Restrictions on upgrading and sharing (including payment conditions) will be void. However, what is meant by “upgrading” and how the “no additional burden” requirement will be tested is at this point unclear.

·         Provisions (other than guarantees) preventing operators from assigning rights are void;

·         There are no statutory “lift and shift” provisions (however it is likely that landowners will require similar contractual provisions);

·         The confusion regarding the Landlord and Tenant Act 1954 has been removed; and

·         Landowners must provide at least 18 months’ notice stating a statutory ground for repossession (such as redevelopment, breach of payment or other obligations, or that the test for obtaining Code rights is no-longer met). An operator can serve a counter notice within 3 months to remain on the land and has a further 3 months to apply for a court order for a continuation right to remain. Landowners will then need to follow another process under the Code to secure removal.

The Code will apply to way-leaves post 28 December 2017 and there are complex transitional provisions for those which are pre 28 December 2017.

Ofcom has published a Code of Practice (“CoP”), standard way-leave terms and template notices for use under the Code. The CoP suggests best practice and encourages the parties to treat each other “professionally and with respect”. However, the CoP is non-binding and as such it will be for the courts to decide what weight to attach to compliance.

The impact

It is too soon to tell. The Code will inevitably give rise to a period of uncertainty. Areas for potential dispute include the effect of upgrade rights and the “redevelopment grounds” defence in respect of imposed rights and termination. In addition, although the aim of the Code was to reduce the cost of way-leaves, the lack of “financial incentives” for landowners may (at least in the short term) result in more operators being forced to compel access. This could result in increased delays to roll out plans and costs.

Communications (Access to Infrastructure) Act 2016 (“ATI Regulations”)

The ATI Regulations also set out measures intended to reduce the cost of deploying high-speed networks (with speeds of at least 30Mbit/s). These include sharing the infrastructure of telecoms network providers as well as the infrastructure from operators in other sectors (including, for example, gas, electricity, water etc). Operators have the right to:

·         access information about infrastructure;

·         request and carry out surveys;

·         access infrastructure;

·         access in-building infrastructure;

·         obtain information concerning civil works; and

·         co-ordinate civil works that are being carried out using public funds.

The impact

Operators have made use of the ATI Regulations to facilitate roll out. However, the extent to which the regulations have been used is at this stage unclear as these negotiations are generally confidential.

Part R, Building Regulations:

Any newly constructed buildings and those undergoing major renovation must now be ‘broadband ready’. Part R requires that:

·         buildings must be equipped with physical infrastructure capable of hosting high speed networks in excess of 30Mbit/s;

·         developers of multi-occupancy buildings are required to provide an access point and ducting to each individual dwelling up to the network termination point; and

·         access points and associated in-building infrastructure must be accessible to all operators (under fair and non-discriminatory terms).

The costs of installing infrastructure and ducting are incrementally lower during construction than retrofitting. As such these regulations will reduce the costs for operators for connecting new buildings.

Conclusions

Whilst these regulatory reforms will help to stimulate investment in FTTP rollout, barriers still remain including:

·         cumbersome planning processes, particularly permit schemes, which can impede national roll-outs;

·         reluctance to accept alternative construction techniques, such as micro-trenching, which would reduce civils costs;

·         the rateable value of telecoms assets (although there is now a welcome 100% relief for FTTP infrastructure); and

 

·      pricing for Physical Infrastructure Access.

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