There’s a battle raging between landlords and network operators that is threatening to stifle the 5G UK rollout.
“Across the country, we are taking telecoms kit off sites, in Newcastle, Portsmouth, Rugby, all over the country. So what’s happening to connectivity? It’s an emperor’s new clothes scenario,” says Mike Watson, head of property litigation at Shulmans law firm.
Go deeper with GlobalData
The reason for this is, somewhat bizarrely, a law that was designed to speed the process up.
The reformed Electronic Communications Code, introduced in 2017, was designed to help the UK become one of the world leaders in 5G.
Instead, it has dramatically altered the dynamic between those responsible for rolling out 5G infrastructure and those hosting it, embroiling them in lengthy court battles that jeopardise any chances of a speedy 5G UK rollout process.
The infrastructure challenge behind the 5G UK rollout
Rather than requiring the large masts associated with traditional telecoms networks, 5G instead makes use of smaller antennas, distributed at a greater density.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataTo meet this demand, operators have already been called on to be faster, more creative and dirtier by moving their infrastructure for 5G into sewers. US companies such as AT&T and Verizon have been “densifying” their networks for years by installing low-power radios at street-level called “small cells”. They are also exploring ways to bring radios and antennas closer to customers.
Some vendors have integrated radios inside street lamps, with the idea that this gives the operator the cabling they need while the city gets a bonus of lighting as an amenity, helping jogging paths and inhibiting crime, partially or fully at the operator’s expense.
That’s not just towers: 5G infrastructure needs to be extremely dense, merging into the very fabric of cities, according to Watson.
“You might be talking about a cabinet that’s stuck on a building somewhere, it needs a power supply, and that drives a series of antennae that might be stuck on the corners of a building.”
This change in need has meant that the traditional approach to antenna access is simply no longer up to scratch.
“Traditionally you’d do an agreement that provided for the equipment to be installed and that would provide rights of access, and in certain cases, those rights of access might be limited to certain hours. That was worked out by negotiation and that worked since the 1980s.”
The reformed Electronic Communications Code, which came in under the Digital Economy Act 2017, was brought in to tackle this problem.
“People muddled through with the old code [pre-December 2017], it was quoted by a judge in one case, and I paraphrase here, as being confusing and difficult to understand,” explains Watson.
“Nobody got involved with it, everybody was sensible, operators would pay sufficient rent to landowners that it would incentivise them to voluntarily have the kit on their property, and so everything worked.”
Why the reformed Electronic Communications Code has created more problems
The motive behind reforming the Electronic Communications Code was to make the law better suited to the needs of the industry, and so ease the 5G UK rollout.
However, Watson, who acts for landlords that host network infrastructure, says the new Electronic Communications Code is slowing down the rollout of 5G across the UK, rather than speeding it up like it was supposed to.
“The fundamental problem that I see is that the network operators are going through a process of alienating the very people whose property they need to put their infrastructure on,” he says.
“[Shulmans] are now being instructed by corporate landlords to remove telecom kits from their lands. Given that the government want a digitally connected UK plc leading the world, there is a major conflict there, because if you want to roll out 5G you’ve got to have somewhere to put it.
“If you’ve annoyed all the landlords to the extent that they don’t want you there, not just because you’re not offering them enough money but actually because you are perceived as an encumbrance, an inconvenience, a nuisance.”
Under the new code, telecom providers have the power to take obstructive landlords to court – but this is, according to Watson, encouraging a litigious approach that is slowing down the 5G UK rollout.
“The telecom operators answer to that would be, well it doesn’t matter, we’ve got the new code, and the new code has given them some new powers. They can go to the tribunal and seek the imposition of agreements on the property owners. But that’s going to take time, at the moment you’re looking at probably a year to run a case through the tribunal.”
Landlords are now earning far less to host 5G equipment
The Electronic Communications Code was, according to Watson, the result of lobbying by network operators, which had already reduced costs as much as possible using current network capabilities.
“The government were probably influenced by thinking if we do this we’ll get much more connectivity, particularly rural. And so they went for it and they introduced a new code in the Digital Economy Act, and this is the real problem: it introduces a thing called a no-scheme valuation in valuing the rent that is to be paid by telecoms operator for a telecoms installation,” he explains.
This no-scheme valuation is the biggest issue for landlords because it has seen the amount they earn from network infrastructure plummet dramatically.
Under the previous laws, a landlord could charge a higher rent – in some cases up to “£30,000 a year” – to telecoms providers, according to Watson. The idea was to incentivise landlords to rent out their roof space to the operators because they could make more than renting it out for other means.
But under the new law, the roof must be offered to let at the same price range as other renting purposes.
“It’s maybe £200 a year or something. Those are real numbers being quoted, £50, £200 a year, sometimes £350 for a ten-year term. And they may be right, but the tribunal has yet to decide.”
These are much lower amounts than what landlords and property owners have come to expect. What’s more, the agreements with network operators mandate changes to the appearance of their buildings and to provide 24-hour access for fixing and maintenance.
Few would go for such a deal, but according to Watson, a landowner can’t say they’re not interested because the telecoms operator can simply threaten to go to a tribunal over the matter.
“The way the act is set up is, the tribunal can effectively draft the terms of that agreement and impose it,” he says.
Telecoms operators can fight the property owners to allow them to put up their kit at lower rents that haven’t been freely negotiated, but Watson says, “It’s a slow process, if you have to do that for every 5G cell that you want to put up in London, you’re not going to have many.”
The code, says Watson, has “crashed the market”.
“Ministers were sold a line and fell for a line that said do you want UK plc to be the best-connected country in the world, to which the answer is obvious, of course, we need to be the world leader.”
The 5G UK rollout: the industry’s response
Mobile UK, which calls itself the voice of the UK’s mobile network operators, said in response to Watson’s claims about 5G rollout in the UK:
“As the mobile industry readies itself for 5G it is crucial for the business case that sites can be rolled out quickly and cost-effectively. The reformed Electronic Communications Code is an essential piece of this puzzle. While there has been some inevitable uncertainty, and even misunderstanding, about how the new process works, progress is being made and agreements are now being concluded on mutually agreed terms.”
Cornerstone, the joint venture between Vodafone and Telefonica, says it is “developing and agreeing on consensual Code-based deals with landowners to allow installation of mobile phone base station equipment that will lead to better connectivity across the country”.
It added: “We are promoting greater engagement with the landlord community and are confident that with positive engagement landowners and operators can agree on terms that are satisfactory to both parties.”
GlobalData principal analyst David Bicknell added a conciliatory perspective on the situation. He said: “Some of the heat may now be going out of the situation. I don’t think anyone is expecting rents of tens of thousands of pounds to come down to a couple of hundred.” He expects telecom providers to make sure that the original charge won’t double, but says it is likely to stay the same or be only “slightly less, rather than being inflated out of all proportion or conversely slashed to rock bottom”.
He added: “The telecoms operators are keen for a reasonable meeting of minds and for ‘consensual based pricing.’”
Referring to the University of London building where the tribunal ruled that operators should be given access, Bicknell says: “Ultimately, once one of these cases goes to court – and I believe there may have been one already which will support the operators’ case – there will be a legal precedent in place.”
GlobalData principal analyst Lynnette Luna adds a global perspective, with a look at the US experience in 5G infrastructure rollout. She says, “With every new mobile technology iteration, we have seen difficulty in placing new mobile infrastructure. Every generation of technology needs more and new types of towers, and communities resist. With 5G on the horizon, the issue is no different and is more acute because of all of the small-cell antennas that are needed to provide high-speed data coverage in certain pockets of communities.
“In the US, at least, local government regulations have made it increasingly difficult for carriers to erect towers and infrastructure. Carriers run into differing regulation from one community to another, which slows down the rollout of new technology. The Federal Communications Commission has recently stepped in and established time limits for local officials to make decisions regarding small cell deployments in cities. It also puts limits on how much city officials can charge operators to deploy 5G small cells. But there are other ways communities can slow down deployments based on spacing, design and so on.
“The main point is that national governments have now learned that they have to assist in streamlining deployment of networks on a local level to help carriers speed up the rollout of new technology.”
