2005 RATING LIST
VALUATION EXAMPLES FOR LIT FIBRES
The worked examples below illustrate that it is the physical extension of the network that leads to an increase in the RV, not simply the addition of new customers onto existing network or an increase in services offered over existing rated infrastructure. When a fibre network operator multiplexes a new customer onto an existing lit fibre (Example No. 3) it will not result in an increase in RV.
It can be seen from examples 5 & 6 that a 20 Route Km extension to a small network has a significant effect on the valuation but the same 20 Route Km extension to a large network can be considered to be deminimis. It is normal and accepted valuation practice to round down valuations.
Network buildings and other rateable plant & machinery are not included in these examples for clarity but would need to be added to the fibre RV to arrive at the total network RV.
Example No.1: 2 Points of Presence, 1x Customer
100m. Own Build (OB) 12 fibre Cable
2x Fibres lit by Network Operator.
POP = Point of Presence.
OB connected to Leased Fibre.
50 km Trunk Network 2x leased fibres
2x fibres lit by Network Operator
100m. Own Build 12 fibre Cable
2x Fibres lit by Network Operator.
Valuation Example No.1:
(Table 1: Total fibre km < 3,000)
Trunk Network 50 Route Km (2F lit) @ £500 £25,000
Own Build 0.2 Route Km (2F lit) @ £500 £100
Total RV £25,100
VOA Rounding Policy (RAT IA 100705). SAY: £25,000
(RV > £10,000 and < £50,000 RV round down to next £250)
Example No.2: 3 Points of Presence, 2x Customers – Physical Extension
100m. OB (12F) 2F lit
100m OB (12F) 2F lit
60 RKm LF. 2F lit
100m OB (12F) 2F lit
50 RKm LF 2F lit
40 RKm LF. 2F lit
100m OB (12F) 2F lit
100m. OB (12F) 2F lit
.
2005 List Valuation Example No.2: Physical Extension to Network in Example No. 1:
(Table 1: Total fibre km < 3,000)
Trunk Network 150 Route Km (2F lit) @ £500 £75,000
Own Build 0.5 Route Km (2F lit) @ £500 £250
Total RV £75,250
VOA Rounding Policy (RAT IA 100705). SAY: £75,000
(RV > £50,000 and < £100,000 RV round down to next £500)
Example No.3: 3 Points of Presence, 3x Customers – No Physical Extension
100m. OB (12F) 2F lit
. 100m OB (12F) 2F lit
60 RKm LF. 2F lit
100m OB (12F) 2F lit
50 RKm LF 2F lit
40 RKm LF. 2F lit
100m OB (12F) 2F lit
100m. OB (12F) 2F lit
2005 List Valuation Example No.3: No Physical Extension to Network Example No. 2:
(Table 1: Total fibre km < 3,000)
The addition of customer C onto existing lit fibres by multiplexing.
Trunk Network 150 Route Km (2F lit) @ £500 £75,000
Own Build 0.5 Route Km (2F lit) @ £500 £250
Total RV £75,250
VOA Rounding Policy (RAT IA 100705). SAY: £75,000
(RV > £50,000 and < £100,000 RV round down to next £500)
· The valuation does not change from example No.2 as there is no physical extension of the network.
· However, the receipts of the network operator will change significantly for customer C.
Example No.4: 3 Points of Presence, 3x Customers – Additional Trunk Fibres Lit
100m. OB (12F) 4F lit
. 100m OB (12F) 2F lit
60 RKm LF. 2F lit
100m OB (12F) 2F lit
50 RKm LF 4F lit
40 RKm LF. 2F lit
100m OB (12F) 2F lit
100m. OB (12F) 4F lit
.
2005 List Valuation Example No.4: Physical Extension to Network Example No.3:
(Table 1: Total fibre km < 3,000)
The addition of customer D on 2 new lit fibres.
Trunk Network 50 Route Km (4F lit) @ £668 £33,400
Trunk Network 100 Route Km (2F lit) @ £500 £50,000
Own Build 0.2 Route Km (4F lit) @ £668 £134
Own Build 0.3 Route Km (2F lit) @ £500 £150
Total RV £83,684
VOA Rounding Policy (RAT IA 100705). SAY: £83,500
(RV > £50,000 and < £100,000 RV round down to next £500)
The valuation increases from example No.3 as there is a physical extension of the network by lighting 2 new fibres on an existing route.
Note: There will be a graded increase in RV on any route as more fibres are connected to customers and lit, up to the cap at 48 lit fibres. The more fibres that are lit the less the increment in RV per route kilometre, until it becomes insignificant over 48 lit fibres.
When the network increases to over 3,000 fibre kilometres a 10% decrease in the fibre rent is applied.
Example No.5: 20 Route Kilometre Physical Extension to a Small network:
(Table 1: Total fibre km < 3,000)
Trunk (2 Lit Fibres) 200 Route Km @ £500 £100,000
(Rounded down to nearest £250) SAY: £100,000 (No rounding required)
Extension of 20 Route Km (2 lit fibres) @ £500 £10,000
Total including extension: £110,000 (No rounding required)
· In this case the under 3,000 fibre Km rate of £500/RKm is used and there is no rounding required under the VO rounding policy (RAT IA 100705).
· Total Route km after extension is 220 Km, which is a 10% increase in length.
· The 20 RKm extension adds £10,000 RV to the overall valuation
Example No.6: 20 Route Kilometre Physical Extension to a Large Network:
If we assume the network in example No.5 continues to grow to over 3,000 fibre km:
(Table 2: Total fibre km > 3,000)
Trunk (12 Lit Fibres) 5,000 Route Km @ £936 £4,680,000
Trunk (Over 48 Lit Fibres) 498 Route Km @ £1,728 £860,544
£5,540,544
(Rounded down to nearest £10,000) SAY: £5,540,000
Then a further small extension:
Extension of 20 Route Km (2 lit fibres) @ £450 £9,000
Total including extension: £5,549,544
(Rounded down to nearest £10,000) SAY: £5,540,000
· In this case the over 3,000 fibre Km rate (10% lower than under 3,000 fibre Km rate) is used.
· Rounding down to the next £10,000 RV is required under the VO rounding policy (RAT IA 100705). The result is that the RV remains at the pre extension level. If a larger or a further extension were to take place there would be an increase in the RV.
· Total Route km after extension is 5,520 RKm, which is less than a 0.4% increase in total length and considered deminimis in total RV terms.
· The 20 RKm extension adds £9,000 RV to the overall total but the VO rounding policy rounds this down to the next £10,000 which results in no alteration to the rating list.
Example No.7: Addition of 50 Route Kilometre London MAN to Large Network:
If we assume the network in example No.6 connects a London MAN with 10 lit fibres:
(Table 2: Total fibre km > 3,000)
Trunk (12 Lit Fibres) 5,000 Route Km @ £936 £4,680,000
Trunk (Over 48 Lit Fibres) 498 Route Km @ £1,728 £860,544
1st Extension of 20 Route Km (2 lit fibres) @ £450 £9,000
(Table 3: London MAN addition)
2nd Extension 50 Route km L.MAN (10 lit fibres) @ £1,160 £58,000
Total including extension 1 & 2 (London MAN): £5,607,544
(Rounded down to nearest £10,000) SAY: £5,600,000