LEGAL Putting a price on a rooftop

Boost for network operators as tribunal rules in favour of EE and Hutchison 3G


It is generally accepted in the telecoms market that activity has been “paused” until operators and site providers had some idea of how the Electronic Communi- cations Code would be applied. Te “first case” has been eagerly awaited. Tat first case is now here; it

gives useful indications but has not been as definitive as we had hoped (or feared). Te site in question was a rooftop site, which make up a small proportion of the telecom sites in the UK. Given the restric- tions on alternative use, restricted access and development opportu- nities the sums to be awarded were always likely to be modest. Te Tribunal fully understood

the state of the market place, even making an assumption that the outline agreement, where a consideration of £21,000 a year had been agreed in principal, was not completed because the valu- ation provisions of the Code were thought to be more favourable to the Claimants. Tis case is unlikely to be

definitive in terms of creating a precedent, especially as the Re- spondents made the cardinal error of refusing the Tribunal’s direction in commenting on a draft agree- ment prepared by the Claimants. Tis failure was seen as deliberate by the Tribunal and was a source of annoyance to them. It resulted in the Tribunal setting the terms of the agreement as proposed by the Claimants, with no reply. Te interesting points consid-

ered by the Tribunal which will be relevant to upcoming cases included:-

Operators and site providers have wondered how the Electronic Communications Code would be applied. Picture: EE

at the time it made the rights order. Te Tribunal also rejected a suggestion that the power to grant compensation was wholly discretionary, and followed three general conditions from the law of compulsory purchase, namely that there must be a causal con- nection between the acquisition and the loss, the loss must not be too remote and those who claim compensation must sustain only a reasonable loss. Several heads of loss were

rejected as too speculative or too early. It is clear that applications for compensation can be made by site providers as the need arises. We do not have the first com-

l Te Tribunal rejected a sugges- tion that leases could not be cre- ated by the Court under the Code. l Te “no scheme” rule was ana- lysed, and it was confirmed that any value attributable solely to use for telecoms purposes is to be left out of account. Tis rule has been re-named as the “no-network” assumption. Te presence in the market of operators who might want to use the site to provide a network must be ignored and the price which such operators would offer for the site must also not be taken into account. Rental values achieved for other uses could be taken into account, however. l Otherwise the valuation crite- ria is that of market value, which is what a willing buyer would pay a willing seller for an agreement, on the terms to be imposed by the Court, and an arms-length transaction where both par- ties act prudently and with full knowledge. l Te fact that no-one is actually willing to rent the site does not


mean that rental will be nominal. Te value of the land to the will- ing buyer will depend in every case to its characteristics and potential uses, and not on the number of potential bidders. l Any reliance on transactions under the old code is likely to be rejected. l Any risks and obligations which the relationship creates for the Site Provider (the expenses of running the building, service charge etc) must be taken into ac- count. Te Tribunal felt that this should be reflected in consider- ation rather than compensation. Te Tribunal considered that an

appropriate market value con- sideration would be £1,000 per annum, but fixed compensation at £2,551.77 per annum, which the Claimants had offered in their pleadings and were willing to stick to.

When it came to compensa-

tion, the Tribunal rejected a suggestion that Claimants can only apply for compensation

plete indication of exactly how a Tribunal is going to deal with consideration or compensation claims, but we do have some early indicators as to how they will approach certain questions. Most importantly, the relatively low amount of rent applied as consideration in this case does not mean that similar amounts will be applied to other sites. Ac- cordingly, the wait for complete insight into how Tribunals will fix consideration continues. l

Liam Entwistle is a Partner at Wright, Johnston & Mackenzie LLP.

Wright, Johnston & Mackenzie LLP is a full-service, independent Scottish law firm, with a history stretching back 165 years, operating from offices in Glasgow, Edinburgh, Inverness, Dunblane and Dunfermline. Further information on WJM can be found at

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