Who should bear the cost of 5G? Why the Government has it all wrong
Successive governments have rightly prioritised universal online access and high-speed connectivity. They have provided generous state subsidies to try to ensure rural networks are adequate and eliminate wifi 'not spots'. The economic and societal arguments for doing so are irrefutable, especially post-COVID. The only question is: who pays? The industry or the taxpayer?
Until now, the answer has been 'both', but legislation currently going through Parliament will make small and large site providers – many of whom are small farmers, sports clubs, churches and community groups – foot a significant part of the bill, while telecoms giants continue to post record profits.
This legislation permits these companies to dramatically reduce the rent they pay to the landowners who host their masts and erodes their property rights. Not only is this unfair but it’s a huge disincentive to anyone thinking of hosting a mast and a further threat to our stuttering roll-out. A number of MPs and peers from across the political spectrum agree.
The Product Security and Telecoms Infrastructure Bill will set up a new arbitration regime that the government claims will resolve disputes between network operators and site owners quickly and cheaply. The reason this needs to happen is that many of the 13,000 landowners already affected by changes made to the Electronic Communications Code in 2017 – typically farmers, local councils, hospitals, sports clubs and churches – are fighting rent reductions of up to and sometimes over 90%.
Four years ago, Welsh farmer Ed Bailey agreed to have a mast on his land, granting a telecoms company round-the-clock access in return for £5,500 a year in rent. Despite the disruption the mast caused to his sheep fields, he felt this payment was worth it, allowing him to invest at a tough time for UK farmers. But, just six months later, he was told he would only receive £3.50 a year.
Far from addressing the root causes of these issues, the new Bill compounds them
In the Prime Minister’s own constituency, Hillingdon NHS Trust’s rental assets fell from £1.9 million to £211,000 due to the 2017 changes. Unbelievably, Boris Johnson’s local hospital trust has incurred costs of £300,000 following legal action by Vodafone – a company with revenues of more than £6.5 billion from its UK operations alone last year – to claw back rent. Money going direct from our NHS into the pockets of mobile operators.
In such cases, landowners have no recourse other than lengthy court battles they can rarely afford. Meanwhile, operators like Vodafone are protected by law as sitting tenants, and given license to strongarm landowners into accepting outrageous terms. Disputes have vastly increased since 2017, when the code first changed. In the previous three decades, just five came before the courts; since 2017 there have been 336.
Far from addressing the root causes of these issues, the new Bill compounds them. According to a report by economics consultancy CEBR, it will cut rents collected by landowners by a further £50 million. Astonishingly, it will also slow down the rollout of high-speed internet coverage due to the promise of further, protracted legal battles.
The government seems determined to push this bill through, but peers will not allow it to go unamended. There are some glaringly obvious changes that would make this Bill fairer:
- Exempting contracts protected by the Landlord and Tenant Act 1954, which is the cornerstone of British property rights.
- Providing a mandatory dispute resolution process that stops telecoms operators abusing the courts to threaten landowners.
- Removing provisions that would allow operators to claw back rent that has already been paid through the courts.
- Making a statutory commitment to analyse the effects of its previous reforms before making new ones.
Mobile phone operators have lobbied successfully for government money to build networks in remote areas where they claim they can't make a profit, and have received more than £500 million for rural broadband to date. Shaving rents will only save mobile phone giants and infrastructure companies less than 10% of their capital expenditure. But it will hit small landowners incredibly hard, and in some cases threaten their very existence.
Take Billericay Rugby Club, which was being kept afloat by an annual rent of £8,500 that has now been slashed to just £750. This money provides sports clubs for local schoolchildren and adults. That these activities should be threatened in the name of a miniscule boost to the balance sheets of a few corporations is unthinkable.
The mobile industry argues that masts should be treated like electricity pylons or gas pipelines. The difference is that energy companies are highly regulated by many industry codes and standards, including price caps and other consumer protections. If Vodafone and EE want to pay peppercorn rents for the land on which they build their networks, they should be ready to comply with equally robust regulation.
This is not a debate about whether we need high-speed broadband. We do. It is an argument about the rights of property owners to charge fair market rents for land that has a commercial value, and the injustice of telecoms giants tearing up existing contracts without being challenged in court. Telecoms companies describe the fees they pay to landowners as 'ransom rents'. In reality, it is the government and local communities who are being held to ransom by the mobile phone lobby.
If the Bill is to be a success, it needs to ensure that costs of connectivity are divided fairly between consumers, providers and the stakeholders who are indispensable to building a national broadband infrastructure. In its current form, it fails to strike this balance – and those paying the price are the ones who can least afford it.
Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.