The PSTI Act 2022: A summary of upcoming changes for site providers

The Product Security and Telecommunications Infrastructure Act 2022 (PSTI) is wide-ranging legislation addressing cyber security, digital infrastructure and, of course, telecommunications.

The PSTI proposed to make changes to the Electronic Communications Code[1], first introduced in December 2017.  Many changes have now been introduced, but the industry has awaited the coming-into-force of provisions affecting valuation and compensation.

A Government consultation has completed, and transitional provisions have been published.  The key date is 7 April 2026– on this date, Sections 61 to 64 of the PSTI come into force.

Current Position

When the Code came into force, transitional provisions addressed how its introduction would affect agreements already in place.

This led to the concept of a ‘subsisting agreement’ – a qualifying agreement which was “in force” on 28 December 2017.  As with all things Code, there has been much debate (and litigation) around this question.

For present purposes, subsisting agreements will generally be either tenancies to which Part II of the Landlord and Tenant Act 1954 Act (“the Act”) applies, or other agreements to which Part 5 of the Code applies.

This distinction directly affects valuation and the route to a new agreement.  Where negotiations fail, tenancies within the Act are valued by reference to Section 34 and disputes start life in the County Court.

Agreements within Part 5 of the Code are valued by reference to paragraph 24, with disputes being determined by the First-Tier Tribunal (“FTT”).

Since 2017, these disputes have generated a growing body of authority on how to value each type of agreement, taking into account the rights being conferred, and the nature of any particular site.

There was good reason for this distinction.  If a site provider granted a qualifying tenancy within the 1954 Act, it was reasonable to expect the Act’s protections and valuation approach to continue.

Although the distinction will remain, the PSTI introduced amendments to the 1954 Act which will take effect in April 2026.

The Provisions

The provisions concern rent, interim rent (S61 and S62) and compensation (S63 and 64).  S61 and S63 affect England and Wales, with S62 and S64 applying to Northern Ireland.  In this article, we focus on England and Wales only

Section 61 - Rent

Section 61 inserts a new Section 34A into the Act. In effect, it incorporates the Code’s valuation assumptions into the 1954 Act (adapted to fit the Act).

Chief among those assumptions is that when determining rent for qualifying tenancies, market value is assessed on the assumption the rights do not relate to the provision of an electronic communications network.  This is the ‘no network assumption’ which, many would argue, has been the chief cause of a significant increase in disputes since the Code’s introduction.

The interim rent provisions of the 1954 Act are also amended to sit alongside the new valuation framework.

Section 63 - Compensation

Where Code agreements are imposed by Order of the appropriate Tribunal, a site provider benefits from access to statutory compensation provisions - see paragraphs 25 and 84 of the Code. Similar provisions will be incorporated into the 1954 Act, through the introduction of S34B and S34C. These provisions apply where ‘the court grants a new tenancy by an order under this Part of the Act’.  Though the parties may choose to enter contractual arrangements, this is the only route to statutory compensation under the new sections.

Timing

The industry has been aware of these changes for several years, but there has been uncertainty around timing, particularly where notices have already been served.  The Regulations seek to address this uncertainty.

• Rental Valuation

The effect of the Regulations on rental valuation is best illustrated through two examples:

A Section 25 Notice or Section 26 Request has been served with a specified termination date falling before 7^th April 2026.

If this is the case, the market rent for any new tenancy will be valued as though the above provisions had not been introduced, and on the established S34 basis.

A Section 25 Notice or Section 26 Request has been served with a specified termination date falling on or after 7^thApril 2026.

If this is the case, the new Sections 61 and 63 apply, and the market rent for the new tenancy must be valued in accordance with the new assumptions in S34A of the 1954 Act (i.e. broadly aligned with the Code).

• Interim Rent Applications

The 1954 Act defines the “appropriate date” as the date from which the interim period commences.  This is the earliestdate of termination which could have been specified in a Section 25 notice or Section 26 request.

From April, the law will split the interim period into two phases – pre-commencement and post-commencement, with each phase valued differently.

The pre-commencement period runs from the ‘appropriate date’ until 6^th April 2026 and is valued as though the new S61 and S63 did not apply, with modifications.

The post-commencement period runs from 7^th April 2026 to the date of termination of the current tenancy, and is to be valued by reference to the amendments introduced by S61 and S63.

In practice, this may result in an interim periods consisting partly of a Code valuation, and partly of a ‘traditional’ 1954 Act valuation.

On the Horizon…

One provision the Regulations do not introduce is S65 of the PSTI, which would refer the vast majority of affected disputes from the County Court into the FTT.

The April date will give time to ‘support alignment’ with this transition, including further changes to existing law.  This is not guaranteed, and the County Court may still have a role.

Whilst all Code cases under one roof has appeal, there are resourcing issues, and the Tribunal already suffers from a backlog; itself a symptom of the number of disputes the Code has helped create.

The introduction of these changes has inspired talk of ‘much needed clarity’ and ‘efficiency’, largely on the part of telecommunications operators who see this as a route to swifter agreements being reached.

However, new law brings new challenges.  Market changes have created discord and an increased likelihood of disputes, and these changes will raise new complexities and questions.

The Government was keen to stress the consultation was ‘technical in nature” and was not concerned with policy decisions which led to the PSTI.  That this had to be spelt out at all is, we suggest, evidence enough that there continues to be dissatisfaction with policy decisions on the part of many site providers. If these changes are intended to unlock the market and improve UK connectivity, it is difficult to understand how they might achieve that objective.  We would suggest they are at least as likely to shift disputes from one forum, and one legal regime, to another.

[1] Schedule 3A Communications Act 2003, as amended

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