Product Security and Telecommunications Infrastructure Bill (Second sitting)

Debate between Chris Elmore and Shailesh Vara

Committee stage & Committee Debates: 2nd sitting
Tuesday 15th March 2022 Public Bill Committees

[Chris Elmore]

Q To flip it on its head, how many people, companies, organisations or groups have tried to withdraw from contracts dating back more than a decade before 2017? This is purely for the record; it is not a trick question. It is all good and well saying that it is 1,000 since 2017, but how many have tried to walk away or are still arguing that the use of their land, building or whatever should not continue?

Simon Holden: We, CityFibre, are in cities. Probably 10% to 15% of our build is in multi-dwelling units. We are typically in underserved areas around the UK, and I would say that we have a disproportionate share of things like social housing that sit under our built portfolio. No. 1, we think that it is really important to be able to access those properties. I would say that big social housing landlords are embracing that, but it is patchy and we would value having the ability to accelerate negotiations as we are having them and have a really clear process where we can make sure that we get everyone to the table, with a fair resolution at the end of it.

Once you get access to the building, I think it is up to the building landlord and the tenants, obviously, as to how you are going to do the in-building wiring. As I said before, we found that once you have got hold of the landlord and you have agreed it, that does not tend to be a particular problem. What we are concerned about is that if you extend this back to historic wayleaves, all you are doing is effectively entrenching the people who have already got those, which most of the time is Openreach. We would think that that is not helpful for competition. That would be our observation, but in terms of accessing those properties, it is super key to us for our business model to be successful and, of course, for society to benefit from getting the best digital infrastructure to as many households as possible.

Catherine Colloms: As Simon says, most multi-dwelling units tend to be in towns and cities, so looking at the constituencies represented around this table, I can tell you, Chris, that you only have 3%. Hornchurch, in the Minister’s constituency, has 13%, and I think Hastings has 24%. They are very concentrated, classically, in urban areas, as Simon says, and often in potential areas of deprivation or areas which are less socially inclusive.

In terms of the access point, you are right. The idea of automatic upgrade would give us the right to do that. You still have to have a relationship with the landlord. That is still always the intent, but it comes down to the obligation. At the moment, there is no obligation for the landlord to do anything. New build legislation obligates them to put in a full-fibre connection, and there is a slightly different conversation you can then have that allows you to proceed with the wayleaves.

Mark Bartlett: To answer your question, first of all the current legislation is not working. At least over a half of all sites are stuck, so the landlord says that they are not renewing or getting new ones. Of those that are under renewal, there are absolute rights in the current legislation for landlords, if they wish to do so, to redevelop at the end of the lease and we have to leave. My estate would be measured in tens a year where it is their right and we move on.

In the current legislation there are also absolute rights for the operators to maintain that equipment if there is no redevelopment need. That is, obviously, very positive, because when we lose a site or a rooftop, whatever the infrastructure might be, that is serving hundreds of people in the community. Therefore, quite naturally, both the investment that we have made and the utility to the public need to be maintained, unless, as I said, the landowner has a genuine need to make that redevelopment, and that is enshrined in legislation, both today and in that passed pre-2017.

[Shailesh Vara (North West Cambridgeshire) (Con)]

Q Mr Bartlett, you said that, as far as the agreements are concerned, some 85% are consensual. I would welcome it if you could expand on that, because there is a disproportionate element in terms of bargaining strength. Of the 85%, I am minded to say that there are some small landowners who probably are not happy but feel that they do not want to incur legal costs, that they are up against a David and Goliath scenario, and that they have no option, so they sign up reluctantly but are seen in your statistics as being consensual. Is it not right, then, to put on the record that that 85% is not everybody saying, “Sure, no problem. I have something here; I will just sign it—there you are”? I suspect that a lot of people have concerns about signing, but the cost of legal advice and so on is prohibitive. The way you have portrayed it makes it black and white and very simplistic when, in reality, it is anything but.

Mark Bartlett: I think that would be human. I have never met anybody who wants to take a reduction in the amount of money that they are paid by anyone—that is not something that people work on. However, the policy was put in place to reduce the costs to the industry to allow investment in 5G, which is happening right now for the good of the country.

On the valuation point, it is a fact and a process that if we do not behave properly and that ends up in a tribunal, we would be penalised by the tribunal for the amount of money we have paid, and the judgment would fundamentally go against us, so there is a protection for the landlord there. Secondly, normally—in almost 100% of cases, in fact—we always offer more than the valuation criteria say we should. That results, normally, in a payment of several thousands of pounds, not several tens or several hundreds of pounds.

It is my experience that the majority of people understand that the law has changed and that, like when things change in how you pay your bills, things have fundamentally moved on. So long as we, as an industry, are fair and do not attempt to be over-enthusiastic, as Juliette put it, 85% of people do sign up and say, “Okay, I get it. I am still happy with those several thousands of pounds, and I am willing to make an agreement of that sort.” That is not everyone; 15% of people do not feel that, and we have a further conversation with them, and we come to an agreement with the vast majority of them as well.

I would also point out that this is often characterised as an individual change of an agreement—x to y. We often pay incentive payments to achieve an agreement as well. I would like to put that on the record. It is not just about a reduction in rents. I would also point out that, on average, it is a 63% reduction in rent, not the high 90%-type reduction, that has perhaps been characterised, by the industry.