In the ever-evolving landscape of local government finance, a London council we work with is grappling with an almost 60% drop in revenue from a single income stream. We caught up with our Head of Telecoms, Chris Hicks to explore the culprit - the quiet yet powerful shift in legislation - the Electronic Communications Code [1] (ECC), which came into force in 2017.
While £450K may seem like a small portion of the Council’s overall budget, in today’s climate of stretched resources and mounting pressure to maintain financial stability while protecting frontline services, a 60% cut to any income stream is far from insignificant.
The income now under threat comes from leasing rooftop sites to telecoms operators for their telephone and communications infrastructure. When the original agreements were negotiated, before the introduction of the ECC, the Council was very happy with the prospect of receiving £450K a year for the use of an unused asset (their rooftops). It involved no disruption to their day-to-day operations and proved to be a welcome income stream and a smart use of an asset that was earning no revenue. Moreover, there was a tangible benefit for everyone who lives and works in the area – enhanced connectivity.
But the Act was a game changer.
To accelerate the UK’s digital infrastructure and boost productivity through better connectivity (by enhancing the operational capability of everything from e-commerce and smart cities to transport and remote working), the Government shifted the balance of power firmly in favour of telecoms operators. The new Code strengthened their position when negotiating leases for rooftop sites. At the same time, the legislation weakened the position of asset-owning councils and private landlords.
Some might argue that the only real winners in this government-imposed regime are the operators’ shareholders, as they benefit from favourable lease terms at the expense of local authorities and, ultimately, the communities they serve.
Nearly 30 years after the original agreements were signed, the council in question now faces a dramatic 60% drop in revenue from telecoms leases at a time when budgets have never been under greater strain. According to London Councils, the collective voice of the capital’s local government (32 boroughs and the City of London Corporation), local authorities are facing a funding shortfall of at least £500m in 2025-26, despite the Government’s recent pledge to boost funding.
Councils face another challenge: how best to manage the telecoms leases. The Act grants operators the legal right to install, maintain, and retain their equipment on council-owned land and buildings. They can also upgrade, share, and assign their leases without needing to consult with or heed the impact it could have on the asset owner. It also made it very difficult for asset owners to enforce the removal of telecoms equipment.
This is a legacy issue where the revenue potential of a public asset is out of the hands of its owner, hence the almost 60% drop in revenue when leases come up for renewal.
To safeguard these investments, councils need three things:
- A deep understanding of the Code, as well as the 1954 Landlord & Tenant Act, to safeguard their interests and ensure negotiations with operators are conducted from a position of knowledge and strength.
- A team which, in addition to having a good knowledge of the law, has the time and the confidence to stand toe-to-toe with operators’ representatives when negotiating new site agreements, lease renewals, and ‘lift-and-shift’ contractual obligations (these ensure that the removal or relocation of equipment does not result in substantial and disproportionate costs to the asset owner).
- The skills needed to manage the sites. A qualified Site Manager’s duties include dealing with requests for access, recording who visited, details of the company, purpose of visit, time on site, a quick audit of what was done, and ensuring that the asset was not damaged or compromised in any way. They must also ensure the owners’ statutory obligations and duties of care to the visitors are complied with and all health and safety requirements are met.
The council we are advising has approximately 30 rooftop sites with an average annual rent of £15,000 per site. They are currently facing a £255,000 revenue loss because of the end of a rental lease (drawn up before the 2017 Act was passed). Delegating the negotiations to a proven team of telecom consultants, who have been negotiating with the mobile operators for over 30 years, has placed them in the strongest position they could hope to possibly be in.
They could appoint an in-house team of telecoms experts to undertake all the above tasks (and more), but the cost of assembling and running a qualified team would probably exceed any savings they negotiate.
However, the issue is not just about rooftops. Given the fact that London councils own 20% of land in the capital, these too either already have or could have telephone masts on available land or rooftop structures.
The issue is not only about protecting revenue; it’s also about delivering essential public services. London is home to 20 of the UK’s most densely populated areas, and consumers’ and businesses’ demand for reliable connectivity is almost insatiable. Whether it’s streaming music, navigating with sat navs, working in smart buildings, or joining countless video calls, we’ve come to expect instant, uninterrupted access to digital services. Just like turning on a tap or flicking a light switch, we now rely on our connectivity infrastructure to work seamlessly, day and night.
Connectivity is no longer a luxury, which is why telecoms operators have been granted negotiating powers that give them a significant advantage over councils and other asset owners when negotiating leases.
Councils face a unique challenge. They need to safeguard revenue streams from tough commercial negotiators, embrace upgraded communications infrastructure on their properties and land, improve the lives and commercial prospects of the people and businesses which live and work in their borough, reduce operational costs, and maximise the revenue-generating potential of every asset they own. This explains why many councils opt to outsource this service.
[1] The Electronic Communications Code ('the Code') is a set of rights that are designed to facilitate the installation and maintenance of electronic communications networks. The Code is set out in Schedule 3A of the Communications Act 2003. It confers rights on providers of such networks and on providers of systems of infrastructure to install and maintain apparatus on, under, and over land and results in considerably simplified planning procedures.