Gillian Wood: Ofcom decision may mean new opportunities for housebuilders

Gillian Wood is a senior associate in the real estate team of Shoosmiths in Scotland.

The new electronic communications code (the Code) came into effect at the end of 2017 and forms Schedule 3A to the Communications Act 2003. Ofcom’s own summary of the Code’s effect is that Operators to whom Ofcom applies the Code may: “Construct and maintain electronic communications networks and infrastructure on public highways (streets) without needing to obtain a specific street works licence to do so; Benefit from certain immunities from the Town and Country Planning legislation; and In the event that agreement cannot be reached with the owner or occupier of private land, to apply to the Court to impose an agreement which confers the Code right being sought by the operator or provides for the Code right to bind the landowner or occupier.”

When the Law Commission and DCMS consulted on the proposed terms of the Code, it’s suspected the focus was on the application of the Code to the “usual” parties seeking to benefit from its rights – mobile network operators, WiFi and network infrastructure providers. Responses largely centred around how those parties’ rights should be balanced against the interests of landowners/occupiers.

Collectively, existing operators hoped the new Code would help facilitate faster and more efficient rollout of new technologies as they grappled with high cost rollouts and rising rents while government pushed to achieve greater widespread high speed connectivity UK-wide.

Consequently, following a consultation, the Ofcom decision that the Code shall apply to Persimmon Homes Limited (as a housebuilder, not one of the “usual” parties) is significant. Persimmon intends to use its rights to deploy fibre to the premises (FTTP) to offer ultrafast broadband and telephony to its housing developments across the UK. It aims to offer retail services in competition with existing operators. In making its decision on Persimmon, it appears Ofcom took account of wide-ranging considerations, including the desirability of: promoting competition in relevant markets; encouraging investment and innovation in relevant markets; and encouraging the availability and use of high-speed data transfer services throughout the UK.

In Persimmon’s view, the application of the Code was necessary because of (a) long waits their residential plot purchasers have encountered in getting connected to broadband services and (b) slow speeds once those purchasers are connected. It is an innovative (though presumably expensive!) solution to their problem.

It seems there isn’t the capacity within the existing network providers to roll out FTTP to new premises in the locations and at the speed that residential developments are being completed. Given considerable public demand for high-speed connectivity, Ofcom concluded that Persimmon’s request would be in the interest of consumers as regards choice, price and quality of service.

Consequently, a housebuilder now has the same power as the likes of Vodafone or BT to ask to install electronic communications apparatus on an occupier’s land and, failing agreement, apply to the Court to impose an agreement that confers the rights to do so under the Code. The rights must be sought for the purposes of its network.

However, a housebuilder benefiting from such powers is arguably an unexpected outcome of the new Code.

It’s unclear how Persimmon propose to construct their network into which their various housing developments would connect. The application for Code powers was presumably a relatively early stage in their plan.

Arguably, other housebuilders may now follow suit, though there would need to be a justifiable case for establishing a new network rather than relying on networks already in place. Indeed, some housebuilders may not have the UK-wide spread to back up a similar business case. Notably, it’s within Ofcom’s power to grant Code powers in respect of a specified area within the UK.

It remains to be seen how Persimmon will open up their infrastructure to other operators to tie in with the requirement of the Code to facilitate sharing of infrastructure. Persimmon say they intend to create a national “fibre spine” which would provide a wholesale service to other communications providers. They may also serve business and public sector premises in the vicinity of their housing developments.

Time will tell what Persimmon decide to do but Ofcom’s direction has possibly signalled new opportunities for housebuilders in the UK.

Gillian Wood is a senior associate in the real estate team of Shoosmiths in Scotland