Product Security and Telecommunications Infrastructure Bill

Earl of Devon Excerpts

2nd reading
Monday 6th June 2022 Lords Chamber

[The Earl of Devon (CB)]

My Lords, I, too, welcome the Bill and I look forward to adding a Cross-Bench voice during its passage through this House. While my principal focus will be on Part 2, I offer a few thoughts on Part 1 and product security. As an IP and technology litigator both in California and here, I have represented a number of consumer electronics firms in both jurisdictions, and I am aware of the remarkable technological opportunities presented by smart technology and the internet of things, as well as the risks inherent in such ground-breaking technology being admitted into our homes, our most private and domestic spaces. Who has not been thrown by Alexa or Siri offering an answer to an innocuous question directed to a family member? They are always listening.

I note the Government’s aim to ensure that smart technology becomes available in a way that is safe for consumers, but I am also mindful of the law of unintended consequences, as referenced by the noble Lord, Lord Fox, and the danger of government intervention to control and/or manage such technological advances. Such intervention must not become a drag on innovation; we do not want the UK to become the safest place to interact with modern technology simply because there is no cutting-edge technology with which to interact. Can the Minister explain what co-ordination there has been with other jurisdictions on this legislation? Will the UK be an outlier in introducing these product security requirements, or is this consistent with requirements due to be introduced elsewhere? Is it sensible to go it alone? The obvious risk is that cutting-edge consumer products simply will not be introduced to the UK market, causing us to fall behind in a key technological sector. I note that the legislation is specific as to what technology is to be included and what is to be exempted. How do the Government intend to ensure that these provisions are kept up to date in such a fast-moving industry? How will the legislation capture nascent technologies and new means of connectivity?

I note that the legislation and its enforcement powers extend to relevant persons, as defined in Clause 7, such as manufacturers, importers and distributors. How does the legislation impact the second-hand and grey market in consumer electronics? Does it impact products acquired by consumers overseas and brought to the UK and sold here? Also, how do the Government intend to deal with existing products on the market that may not satisfy these legislative requirements? Will they be allowed to become obsolete through the passage of time? One of the major concerns of consumers is how quickly consumable technology products become obsolete. Will this legislation increase that speed of obsolescence, with the requisite cost, both financial and environmental?

Turning to Part 2 of the Bill, on telecoms infrastructure, I note a number of further interests. In my capacity as a technology lawyer, I represent a number of infrastructure providers, mostly in the south-west of England. As the Earl of Devon, I am a champion of rural connectivity and the vital need to end the discrimination experienced by the dispersed population of Devon. I am surprised by quite how many friends and neighbours living in the middle of our local village, only five miles from Exeter, are unable to receive any mobile signal whatsoever in their homes. However, I am also a farmer and a land manager and, in that capacity, I inherited a telecoms mast tenancy of an area of woodland granted by my father some years ago under the 1954 Act. This tenancy has for some time been due for renewal, but it has been stuck in protracted and thus far incomplete negotiations due to the crippling uncertainty caused by the 2017 amendments to the Electronic Communications Code which is only compounded by this pending Bill. As a local resident frustrated by a lack of signal, I am keen as mustard to encourage more masts and better coverage. As a lawyer representing telecoms companies, I see the benefit in strengthening their hand in renewing leases and saving them money. However, as a site provider, if I were ever asked to grant further leases, I would likely decline, as I simply would have no confidence that the rights granted would be honoured or that the rent negotiated would ever be paid.

Therefore, I see the complicated issues raised by the telecoms infrastructure provisions of this Bill first-hand and from pretty much all sides. The one thing of which we can be certain is that the current legislative structure and the 2017 amendments in particular are simply not fit for purpose. As we have heard, some site providers record telecoms operators seeking to decrease rents by up to 90%. There has clearly been a breakdown in trust between operators, providers and their respective professional advisers. Unfortunately, I am not sure that Part 2 of this Bill will do anything to fix that, and it may even make it worse.

As I think we have all stated, our principal concern must be to ensure that the rollout of mobile connectivity across the country is completed as quickly and efficiently as possible to ensure that hard-to-reach communities do not fall further and further behind. The 2017 amendments sought to achieve this by, in part, seeking to decrease the rent payable for telecoms infrastructure and so to decrease the cost to consumers. The actual impact of the 2017 amendments has been the exact opposite: as telecoms companies have sought to renegotiate leases entered into on the open market, at dramatically decreased rents, the take-up of new masts has slowed. The market for telecoms infrastructure has largely ground to halt as property owners—be they farmers, sports clubs, community centres, charities or churches—think very hard before renewing and/or granting new leases in such an uncertain market. The provisions of Part 2 will only exacerbate this problem, causing property owners to withhold their consent and to terminate already-granted leases where possible. The Government’s laudable aim of increasing connectivity will be frustrated if this legislation, in its current form, is passed—to the detriment of us all: communities, telecoms companies and proprietors alike. This is a return to the law of unintended consequences.

A broad array of stakeholders has questioned the wisdom of this legislation, from the NFU and CLA, to the CAAV, the BPF and the Law Society. Of particular concern are the changes in Clause 61 to the way land is valued under telecoms leases, so that they are no longer at market value but now merely bare land value. By these provisions, the Government will be intervening in long-standing existing leases, freely negotiated between willing participants, to dramatically decrease rental values, often years after the fact. That is no way to encourage the rollout of digital infrastructure, and it takes a sledgehammer to existing property rights.

The Law Society noted that the 2017 reforms

“have tilted the balance of rights too heavily in favour of operators to assist them in securing site facilities”.

The result has been many site providers

“reacting with obstruction, unwillingness to cooperate and litigation.”

Despite this, it appears that the Government have failed to assess the impact of the 2017 reforms at all. What analysis has been conducted prior to seeking to extend those controversial reforms to historic leases, as proposed?

I note that the Government consulted in 2021 on changes to the ECC but did not consult on the issue of valuation and compensation to providers. The Government recognised

“that the 2017 Code reforms had an impact on … providers’ willingness to agree or renew Code rights.”

They also noted that changes to the valuation provisions

“have made entering these agreements significantly less attractive for site providers.”

Despite this, the Government’s policy position has not changed. Why?

The Government identified other reasons for lease negotiations failing including, as I said, lack of trust and poor communications between advisers. They are therefore focused on achieving faster and more collaborative negotiations but this entirely misses the point. If the financial underpinnings of those negotiations remain as one-sided as they are, no amount of ADR will help. The Government state that they wish with these provisions to make it easier for digital networks to be installed and encourage stronger and more collaborative relationships between telecoms operators and site providers, but the fact that they seek to backdate claims to rental discounts and permit the ability of operators to add infrastructure to existing sites fundamentally undermines the collaborative relationships that were well established before 2017.

These retrospective amendments ensure that any prospective site provider, properly advised, will be reluctant to grant such telecoms leases, frustrating the Government’s well-intended ambitions. This cannot be in anyone’s interests.