UK wayleave reform to create a £1bn windfall for telecoms operators

As discussed previously, perhaps one of the most important pieces of legislation for the telecoms sector proposed in the recent Queen’s speech is reform of the Electronic Communications Code, which deals with the telecoms industry’s access to land in the UK.

My colleague Warren Gordon has just posted his overview of the UK Government’s May 2016 response to its earlier consultation on reform of the code, and his post is well worth reading.

Given other debates currently running in both the UK  and EU about infrastructure investment incentives, the proposed reform of wayleave valuation stood out for me in the proposals. Quoting Warren:

“A critical aspect is the reform of wayleave valuation, which will lower the cost of infrastructure rollout and incentivise investment. The Government proposes the introduction of a valuation system based on compulsory purchase principles (“no scheme” rule), which will mean that the value of land is assessed on the basis of its value to the site provider, rather than the communications provider, a system analogous to that used for domestic utilities. This will reduce the cost to communications providers.

The Government calculates a 20 year net present value benefit to communications providers of £1.02bn with a balancing cost of £709m from lower rents and potentially up to £307m through an indirect impact on business rates.

So while site providers should continue to receive fair payment for the use of their land (in addition to simple compensation for any damage or loss of value to the land), the fair value should not, as a matter of principle, include a share of the economic value created by very high public demand for the communications provider’s services.”

The next stage of the process will be detailed proposals in the draft Digital Economy Bill.