On Tower v AP Wireless: ECC Renewal Rights and the Assignee Operator

ByRob Bratby Posted on Telecoms Regulation
On Tower v AP Wireless ECC renewal rights Court of Appeal 2026 Bratby Law Telecoms Regulation

Quick answer. In On Tower v AP Wireless [2026] EWCA Civ 43, the Court of Appeal held that an operator to whom only the benefit of a Code licence has been assigned is a “party to a code agreement” within paragraph 33(1) of the Electronic Communications Code, and so may use the Part 5 renewal route. Whether the assignee was an “operator” was never in issue: that is a designation question under section 106 of the Communications Act 2003 and paragraph 2 of the Code.

On 3 February 2026, the Court of Appeal handed down judgment in On Tower UK Ltd v AP Wireless II (UK) Ltd [2026] EWCA Civ 43, on which the First-tier Tribunal and the Upper Tribunal had taken different views. An operator assigned only the benefit of a Code licence is a “party to a code agreement” within paragraph 33(1) of the Electronic Communications Code (the “Code”), and benefit alone is enough to reach Part 5. The result matters to towercos, digital infrastructure funds and any operator holding Code rights through a chain of assignments.

The Electronic Communications Code: Part 4 and Part 5

The Code is set out in Schedule 3A to the Communications Act 2003, inserted by the Digital Economy Act 2017 and amended by the Product Security and Telecommunications Infrastructure Act 2022. It gives operators designated under section 106 statutory rights to install and keep apparatus on land, and those Code Powers underpin the commercial viability of towerco and digital infrastructure businesses.

Under Part 4, paragraphs 19 to 27ZA, the court may impose an agreement where the operator has no subsisting right. The court may make an order under paragraph 20 only if both conditions in paragraph 21 are met: the prejudice caused to the relevant person, who is not always the site provider, must be capable of being adequately compensated by money (paragraph 21(2)), and the public benefit likely to result must outweigh that prejudice (paragraph 21(3)). Paragraph 21(4) directs the court to the public interest in access to a choice of high quality services, and paragraph 21(5) bars an order where the relevant person intends to redevelop and could not reasonably do so if the order were made.

Part 5, paragraphs 28 to 35, governs the termination and modification of agreements that have run out. Paragraph 30 continues code rights past contractual expiry, paragraph 29(5) defines the “code agreement” to which Part 5 applies, and paragraph 29(2) takes out of Part 5 a lease of land in England and Wales whose primary purpose is not to grant code rights and to which Part 2 of the Landlord and Tenant Act 1954 applies.

Two notice routes run from there, and they are not interchangeable. Only a site provider who is a party to a code agreement may give a paragraph 31 notice, to end the agreement on one of the four grounds in paragraph 31(4). Paragraph 32 is not a second notice provision: it sets out what a paragraph 31 notice does, giving the operator three months to counter-notice and a further three months to apply under paragraph 32(1)(b) for an order under paragraph 34. To change the terms of an expired agreement rather than end it, either party may serve a notice under paragraph 33(1) and (2), and if six months pass without agreement, either party may apply for an order under paragraph 34 (paragraph 33(4) and (5)). On Tower’s applications were paragraph 33 applications.

An operator renewing under Part 5 need not make out the paragraph 21 test afresh, though the test is not absent from Part 5: under paragraph 31(4)(d) a site provider may seek to end an agreement on the ground that the operator is not entitled to it because that test is not met. Nor does Part 5 require a site provider to justify departing from the existing terms. Under paragraph 34(9) and (10) the terms are for agreement, failing which the court specifies them under paragraph 34(10), having regard to the terms of the existing agreement (paragraph 34(12)); in determining which of the paragraph 34 orders to make, the court must have regard to all the circumstances and in particular to the matters listed in paragraph 34(13).

The Court of Appeal’s Ruling: Benefit Alone Suffices

Benefit alone makes an assignee operator a “party to a code agreement” for paragraph 33. That was the unanimous conclusion of the Court of Appeal (Newey, Holgate and Foxton LJJ). It matches the First-tier Tribunal’s primary holding that entitlement to the benefit suffices, although the Court found it unnecessary to consider the alternative case on paragraph 12 of the Code ([65]), and it displaces the additional requirement the Upper Tribunal had read in.

The proceedings concerned two sites: Fields Farm in Sandbach, Cheshire, licensed to Orange Personal Communications Services in 1997, and Blackwell Grange Golf Club in Darlington, County Durham, licensed to T-Mobile in 2007 (judgment, [4] to [6]). The benefit of each licence was assigned along a chain ending in On Tower, which served paragraph 33 notices seeking a much reduced rent and referred both sites to the First-tier Tribunal. AP Wireless II (UK) Ltd (“APW”) argued that On Tower had never taken the burden of the licences and so was not a “party to a code agreement”.

The First-tier Tribunal (Judge D Jackson) held that entitlement to the benefit sufficed ([27]). The Upper Tribunal (Fancourt J, [2024] UKUT 429 (LC), 18 December 2024) disagreed: an assignee had also to have assumed primary responsibility for performing the obligations, which it could do by covenanting with the assignor rather than with the site provider ([2], [30]). In a further decision ([2025] UKUT 43 (LC), 6 February 2025) the Judge found that On Tower had given such a covenant and dismissed APW’s appeal. APW appealed on the footing that nothing short of a direct obligation to the landowner would do ([32]).

The Court of Appeal rejected both intermediate positions, and did so on certainty rather than on impossibility. It was common ground that assigning a licence does not of itself pass the burden ([35]), but the words “party to [a code/the] agreement” in the Code do not bear their contract-law meaning ([44] to [45]).

A burden requirement would not shut assignees out of Part 5, because an assignee can give a covenant. Newey LJ’s objection to APW’s test was that it lets the operator pick its moment: an operator “could choose if and when to become a ‘party to a code agreement’ by giving a covenant”, and could do so “only immediately before making an application under paragraph 33 of the Code”, for which Parliament had legislated not at all ([61]). The Upper Tribunal’s test fared no better. A site provider, who may be a private individual rather than a commercial landlord, “may well find it easier to identify the current operator on the ground than to determine who now has ‘primary responsibility for performing the obligations in the licence agreement'”, which can turn on arrangements between operators of which the site provider knows nothing. In terms of certainty, Newey LJ agreed with counsel for APW, “the Judge’s solution is the worst” ([60]).

Newey LJ rested his conclusion on the terms of Part 5 and on the purpose of the Code. He said at paragraph 63 of the judgment:

“Parliament was aiming to ‘make it easier for communications providers to deploy and maintain their infrastructure’ and, more specifically, to enable operators exercising code rights conferred by expired agreements to continue to do so. Treating the operator who is now exercising the code rights in question as a ‘party to [a code/the] agreement’ within the meaning of Part 5 serves those aims.”

Newey LJ, On Tower UK Ltd v AP Wireless II (UK) Ltd [2026] EWCA Civ 43, [63]

He added that although Part 5 might suit site providers less well than Part 4, not least because Part 4 has no equivalent of paragraph 35, “it is not apparent that Parliament thought that site providers should have that advantage” ([63]). The Court dismissed APW’s appeal, but not on the Judge’s reasoning: Newey LJ had “arrived at a different conclusion” ([63]) and dismissed the appeal “albeit for reasons which differ from those of the Judge” ([66]). The Upper Tribunal’s covenant test does not survive.

Impact on Towerco M&A and Infrastructure Due Diligence

An operator holding a valid assignment of the benefit of a Code licence can now reach Part 5 renewal without showing that it took the burden as well. For towercos and PE funds investing in digital infrastructure transactions, that settles one diligence question and leaves a larger one open.

What decides the renewal route is the character of the agreement, not whether it is still on foot. For a subsisting agreement, one in force on 28 December 2017 when the Code commenced, Schedule 2 to the Digital Economy Act 2017 determines the position. Paragraph 6(2) disapplies Part 5 altogether where the subsisting agreement is a lease of land in England and Wales to which Part 2 of the 1954 Act applies and there is no section 38A exclusion. Paragraph 5(1) disapplies paragraph 16 of the Code, the assignment provision. Paragraph 7 applies Part 5 to what survives that filter, with modifications, including the omission of paragraph 34(13)(d).

The first diligence question on a portfolio is therefore one of characterisation: whether each agreement is a licence or a lease, and if a lease, whether Part 2 of the 1954 Act applies and whether it was contracted out. The documents’ labels do not settle it. In [2024] UKUT 263 (LC) (9 September 2024), a separate decision between these same parties covering the Sandbach site among others, the Upper Tribunal held that one agreement took effect as a lease and the other, lacking a term capable of being certain, only as a licence. The Court of Appeal dismissed APW’s appeal on the term-certain point in AP Wireless II (UK) Ltd v On Tower (UK) Ltd [2025] EWCA Civ 971 (25 July 2025), upholding the analysis that the agreement took effect as a contractual licence. Chain of title comes second, and it is that second question that On Tower answers.

The point bears particularly on portfolios of subsisting agreements, many of which changed hands several times, each transfer carrying benefit only. On a sale, site providers also lose a negotiating position they had used to cast doubt on an assignee’s renewal route. The same questions arise in regulatory due diligence and in deal structuring and negotiation on any acquisition of a Code licence portfolio.

Viewpoint

The result is right, and the route to it is narrower than it looks. Counsel for On Tower relied on Lady Rose’s statement in Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [2022] UKSC 18 that the correct approach is “to work out how the regime is intended to work and then consider what meaning should be given to the word ‘occupier’ so as best to achieve that goal”. Newey LJ took the point but qualified it: Lady Rose had been construing a word with no fixed meaning, which draws its content from its context, and “[t]hat context reduces the extent to which Lady Rose’s words can be taken to provide general guidance as to how the Code should be interpreted” ([56]). Her words lent On Tower “some support”; what carried the argument was the general modern emphasis on identifying a statute’s purpose.

The Supreme Court heard that appeal alongside Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd [2021] EWCA Civ 90, where Lady Rose found persuasive the reasoning below as to why an operator with a subsisting agreement protected under the 1954 Act “should not have the option of renewing the rights under Part 4 of the new Code” ([167]). That is the boundary Schedule 2 to the 2017 Act draws, and a portfolio review has to establish it before On Tower becomes relevant at all.

The judgment settles the renewal route and says nothing about renewal terms. On an application under paragraph 33(5), paragraph 34 gives the court a wide choice of orders, and where the parties cannot agree the terms the court specifies them under paragraph 34(10), applying the paragraph 23 and 24 machinery, including the consideration provisions, as it would on a Part 4 imposition. Nothing in Part 5 preserves the rent passing. An infrastructure fund valuing a Code licence portfolio on current rent, without modelling Tribunal-set consideration on renewal, is making an assumption this decision leaves untouched.

The renewal route and the renewal consideration are separate questions. On Tower answers the first; the second remains live, site by site.

Postscript (28 August 2026). The same litigation has moved on since this note was written. In On Tower UK Ltd v AP Wireless II (UK) Ltd [2026] UKUT 245 (LC) (7 July 2026) the Upper Tribunal held that the agreement at the Vulcan Arms site, entered into in 2016 before the Code came into force, was not a Code agreement: the provision of passive infrastructure alone was not the provision of an electronic communications network under the legislation as it then stood, a conclusion with implications for wholesale infrastructure providers extending well beyond that site. In AP Wireless II (UK) Ltd v On Tower UK Ltd [2026] UKUT 286 (LC) (29 July 2026) the Tribunal set aside as wrong in law the First-tier Tribunal’s holding that jurisdiction under Part 5 requires an operator to show that it is exercising Code rights for the statutory purposes, and rejected APW’s reading of paragraph 33(1): the operator need show only that it is a party to an agreement conferring Code rights, ascertained objectively from the agreement’s terms. Both parties were granted permission to challenge the First-tier Tribunal’s findings, and the decision leaves open a further appeal to the Court of Appeal, so the paragraph 33 jurisdiction question may not rest there. The Tribunal has also ruled on the terms of renewal agreements under paragraph 34, the renewal terms question identified in the Viewpoint above, in On Tower UK Ltd v AP Wireless II (UK) Ltd [2025] UKUT 280 (LC) (27 August 2025).

Key Sources

For advice on Electronic Communications Code rights, Code licence portfolio analysis, or digital infrastructure transactions, contact Rob Bratby at Bratby Law.

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