Victorian Statutory Revaluation

Valuer-General Victoria and Municipal Group of Valuers

Guidelines on Valuation Methodology for

Telecommunications

Introduction

These guidelinesare to be used when valuing telecommunications for rating and taxation purposes.

The guidelines need to be used in conjunction with the General Provisions for Specialist Guidelines, which refer to the general requirements, legislation and procedures relating to all statutory valuations.

Definition

The following definition of a Telecommunications network is contained in Section 7 of the Telecommunications Act 1997

"telecommunications network" means a system, or series of systems, that carries, or is capable of carrying, communications by means of guided and/or unguided electromagnetic energy.

An acceptable classification for Telecommunication Towers and Aerialsis contained in the Australian Valuation Property Classification Codes (AVPCC).

Land on which a tower and associated infrastructure used for the transmission or telecommunication signals are constructed or aerials affixed to buildings (without a footprint) and which form part of a larger property..

A definition for a Telecommunications Facility is Victorian Planning Scheme Provisions[1] as follows

Land used to accommodate any part of the infrastructure of a Telecommunications network. It includes any telecommunications line, equipment, apparatus, telecommunications tower, mast, antenna, tunnel, duct, hole,pit, pole, or other structure or thing used, or for use in or in connection with a Telecommunicationsnetwork.

For the purpose of planning, telecommunications are classified as either High Impact or Low Impact Facilities.

  1. High Impact Facilities – Towers/pole that require a Planning Permit

Towers –Man-made structures that are always taller than they are wide, usually by a significant margin, generally built to take advantage of their height and can stand alone or as part of a larger structure. In the context of telecommunications a tower requires a planning permit to be erected and is usually either a HUB or a BTU.

Mobile phone towers are generally 25 to 30 metres high.

A HUB is a larger tower in excess of 50metres.

A BTU is a smaller tower in the range of 25 to 30metres.

  1. Low Impact Facilities – Maximum Height 6.5metres that do not require Planning Approval.

Low-impact facilities are generally small radio communications antennae and dishes erected on existing towers or buildings that are designed to be unobtrusive. Other types of low-impact facility include underground cables, public telephones, telecommunications pits in footpaths and co-located facilities. The maximum height of a low-impact facility is 6.5 metres, but only when sited in a rural or industrial zone.

There are two general categories for the valuation of telecommunication facilities:

  1. Micro – Small Aerials

Aerials can be located on the side of a pole or attached to or on top of buildings. The following are examples of Micro sites

  1. Macro – also known as CMTS Cellular Mobile Telecommunications Site. Macro sites are towers and rooftop antennas.

This category also includes HUBs – large towers in excess of 50 metres with multiple microwave dishes. The following are examples of Macro sites:

Other definitions and industry terms

Towers – three types of CommunicationTowers

  • Guyed Tower –a single column steel structure supported by several guyed wires. These towers require a relatively large land area to accommodate the guy wires. Guyed towers tend to be taller than lattice or monopole towers.
  • LatticeTower –a multiple column structure that is reinforced by crossbeams. A lattice tower is frequently less than 75metres tall.
  • Monopole – a single-pole tower which is usually shorter than the guyed or the lattice towers. Monopoles occupy less space then the other towers and are frequently well suited for large metropolitan areas.

Telecommunication Systems

A telecommunication system consists of three basic elements:

  • a transmitter that takes information and converts it to a signal
  • a transmission medium that carries the signal, and
  • a receiver that receives the signal and converts it back into usable information.

For example, in a radio broadcast the broadcast tower is the transmitter, free space is the transmission medium and the radio is the receiver. Often telecommunication systems are two-way with a single device acting as both a transmitter and receiver or transceiver. For example, a mobile phone is a transceiver.

Telecommunication over a phone line is called point to point communication because it is between one transmitter and one receiver. Telecommunication through radio broadcasts is called broadcast communication because it is between one powerful transmitter and numerous receivers.

DAS – Distributed Antenna Systems

DAS uses a hub and spoke architecture to connect base station equipment to a fibre-fed network. The network consists of small Radio Access Nodes (RANs) or microcells, each with a multi-band antenna, which can be distributed via existing infrastructure.

These types of antenna are usually located within buildings.

Microwave transmission

Microwave Transmission refers to the technique of transmitting information over a microwave link. Since microwaves are highly susceptible to attenuation by the atmosphere (especially during wet weather), the use of microwave transmission is limited to a few contexts –

  • it is only suitable over line of sight transmission links
  • provides good bandwidth
  • affected by rain, vapor, dust, snow, cloud, mist and fog, heavy moisture
  • not suitable for links where an obstacle is in between the transmitter and receiver.

Analogue or Digital

Signals can be either analogue or digital. In an analogue signal, the signal is varied continuously with respect to the information. In a digital signal, the information is encoded as a set of discrete values (for example ones and zeros). During transmission the information contained in analogue signals will be degraded by noise. Conversely, unless the noise exceeds a certain threshold, the information contained in digital signals will remain intact. This noise resistance represents a key advantage of digital signals over analogue signals.

Networks

A collection of transmitters, receivers or transceivers that communicate with each other is known as a network. Digital networks may consist of one or more routers that route information to the correct user. An analogue network may consist of one or more switches that establish a connection between two or more users. For both types of network, repeaters may be necessary to amplify or recreate the signal when it is being transmitted over long distances. This is to combat attenuation that can render the signal indistinguishable from noise.

Channel

A channel is a division in a transmission medium so that it can be used to send multiple streams of information. For example, a radio station may broadcast at 96.1 MHz while another radio station may broadcast at 94.5 MHz. In this case, the medium has been divided by frequency and each channel has received a separate frequency to broadcast on. Alternatively, one could allocate each channel a recurring segment of time over which to broadcast — this is known as time-division multiplexing and is sometimes used in digital communication.

Modulation

The shaping of a signal to convey information is known as modulation. Modulation can be used to represent a digital message as an analogue waveform. This is known as keying and several keying techniques exist (these include phase-shift keying, frequency-shift keying and amplitude-shift keying). Bluetooth, for example, uses phase-shift keying to exchange information between devices.

Guidelines on Valuation Methodology for Telecommunications

August 2011Page 1 of 19

Victorian Statutory Revaluation

Additional Victorian legislation and cases applicable to telecommunications

The following Acts are relevant to this topic:

Local Government Act 1989(Sections 154 and 156)

Telecommunications Act 1997 (Commonwealth)

Electricity Industry Act 2000 (Section 94)

Planning and Environment Act 1987

Court cases:

The following court case is applicable to the telecommunications industry.

United Energy Limited v Monash CC (Land Valuation) [2005] VCAT 2721

Section 22 Valuation of Land Act 1960 – referral of objection to site value, capital improved value and net annual value – consideration of planning controls

Other relevant material:

Telecommunication Code of Practice 1997

Telecommunication (Low Impact Facility) Determination 1997

Australian Communications and Media Authority (ACMA)

The Australian Communications and Media Authority (ACMA) is the government body responsible for the regulation of broadcasting, the Internet, radio communications and telecommunications.

ACMA also administers the technical standards compliance regime for electromagnetic compatibility (EMC), radio communications, electromagnetic radiation (EMR) and telecommunications. It also supports a full range of radio communications services through radio communications licensing.

The ACMA website is

Relevant codes under this website are:

  • Deployment of Mobile Phone Network Infrastructure
  • Placement of Mobile Phone Towers
  • The Mobile Phone Network Infrastructure Code and Local Government.

A register of radio communication licences can be found at

Department of Broadband, Communications and the Digital Economy (DBCDE)

The DBCDE website is It contains information about:

Communications and Technology– Resources and news about telephone, Internet, broadband and ICT services for consumers and business. Also covers funding, policy, legislation, statistics, reviews, online security and contacts for industry bodies.

Media and Broadcasting– Policy and legislation regulating radio and television broadcasting and Internet services, including research, guidelines and reviews.

Post – Policies and regulations for the postal industry and information about the history and administration of Australia Post.

Identification of properties

Australian Valuation Property Classification Codes (AVPCC)

To appropriately categorise telecommunication in a municipality,refer to the Australian Valuation Property Classification Codes (AVPCC) available at

The following codes apply to telecommunications:

Telecommunication Towers and Aerials (AVPCC 694)

  • Unspecified – 694.1
  • Telecommunication Tower – 694.2
  • Telecommunication Aerial – 694.3

Rental questionnaire and property information – specific requirements applicable to telecommunications

In addition to the general requirements for rental information, the following is a guide to the specific information required for telecommunications.
Property Data
  1. Address/Unit number

  1. Tower/pole height
/ metres (approximately)
  1. Total number of carriers

  1. Plans/maps

  1. Pole ID Number

Land lease details
Lease details / Carrier # / Carrier # / Carrier # / Carrier #
Commencement date
Lease term
Rent review method
Date of last rent review
Ground rent per annum / $ / $ / $ / $
Rent type / Net
Gross / Net
Gross / Net
Gross / Net
Gross
Outgoings amount per annum paid by tenant / $ / $ / $ / $
Outgoings amount per annum paid by owner / $ / $ / $ / $
Occupancy Lease Particulars
Lease details / Carrier # / Carrier # / Carrier # / Carrier #
Commencement date
Lease term
Rent review method
Date of last rent review
Rent per annum / $ / $ / $ / $
Rent type / Net
Gross / Net
Gross / Net
Gross / Net
Gross
Outgoings amount per annum paid by tenant / $ / $ / $ / $
Outgoings amount per annum paid by owner / $ / $ / $ / $
Estimated cost of construction / Year of construction
Other details considered relevant
Please include all other details (in addition to the above) that you believe may affect the statutory values of the property(s).

Guidelines on Valuation Methodology for Telecommunications

August 2011Page 1 of 19

Victorian Statutory Revaluation

Property inspection – specific requirements applicable to telecommunications

  1. Inspect telecommunication facility and the number of carriers in the case of a tower/pole.
  1. The Internet is a valuable resource including sites such as the Radio Frequency National Site Archive - This site will enable searches on telecommunications facilities by district and postcode.

Guidelines on Valuation Methodology for Telecommunications

August 2011Page 1 of 19

Victorian Statutory Revaluation

Methodology

Site value and capital improved value

SV methodology

The primary approach used is capitalisation of ground rent. A Ground Rent is a rent per annum for the use of the land to construct a tower. The primary evidence to use is lettings and sales of comparable properties analysed to indicate appropriate market rentals and capitalisation rates.

CIV methodology

The primary approach to Capital Improved Value is a summation approach. The added of the improvements including plant and equipment is added to the Site Value to derive the CIV.

A capitalisation of income approach may be adopted where a telecommunications facility is in a multi tenanted building, or in addition to the ground leases there are multiple licences that attached to the pole.

If a telecommunications facility occupies a portion of a parcel it is considered to be a separate occupancy and should be valued accordingly. If the telecommunications facility is occupied by more than one carrier or is on a rooftop, then the site value and capital improved value attributed to the tower may have to be apportioned in accordance with Section 2 (3) of the Valuation of Land Act. Refer to Occupancy in the General Provision.

Sales Analysis

When analysing sales the valuer should derive the value of the different components of the propertyby ascertaining the added value of any improvements including plant and equipment. Refer specialist guideline paper on plant and equipment.

The sale should be fully analysed on the basis of market rentals. In most cases, however, limited lease details are disclosed and an analysed passing yield may be the best indicator.The check method by summation can be derived by ascertaining the CIV by direct comparison the deducting the added value of the tower to arrive at a site value.

Valuation considerations

  • the CIV should have regard to plant and equipment; Refer tospecialist guideline paper on plant and equipment.
  • in determining theadded valuefor plant and equipment (i.e. pole and shed etc.) a depreciated replacement cost can be utilised. Refer also to sales analysis break up of components if available.
  • in the event that passing ground rents are provided and there are no other current market rents to suggest otherwise, the passing rents can be a guide.
  • the EAV must be a minimum of 5 per cent of the CIV.

The methodology shown in the following examples can apply to residential, rural, commercial or industrial land.

The information in the following examples is not indicative of any market information, the income, rents and rates are for example purposes only.

Example A – One Carrier on a Monopole

Site Value

Ground Rent / $7,500 pa
Net Rent / $7,500 pa
Cap Rate / 15%
Total SV / $50,000

Capital Improved Value

Carrier A - / $10,000 pa
Total Gross Rent / $10,000 pa
Less Outgoings / $1,000 pa
Net Rent / $9,000 pa
Council Rates / $500 pa
EAV / $9,500pa
CIV by Summation
Site Value / $ 50,000
Pole / $ 80,000
Shed / $ 20,000
CIV* / $150,000
Assessment / SV / CIV / NAV
Carrier A / $ 50,000 / $ 150,000 / $ 9,500

Example B – Three Carriers on a Monopole

Site Value

Ground Rent - Net
Carrier A / $9,000
Carrier B / $10,000
Carrier C / $10,800
Total Net Rent / $29,800 pa
Cap Rate / 15%
Total SV / $198,666
Adopt SV / $200,000
Carrier A – Gross Rent / $10,000
Less Outgoings / $1,000
Net Rent / $9,000
Council Rates / $500
EAV / $9,500
Carrier B – Gross Rent / $11,000
Less Outgoings / $1,000
Net Rent / $10,000
Council Rates / $500
EAV / $10,500
Carrier C – Gross Rent / $12,000
Less Outgoings / $1,200
Net Rent / $10,800
Council Rates / $700
EAV / $11,500
EAV Whole / $31,500
CIV by Summation
Site Value / $ 200,000
Pole / $ 90,000
Shed (allow 3 sheds) / $ 55,000
CIV / $345,000

Apportionment on EAV

Assessment / SV / CIV / NAV
Carrier A / $ 60,000 / $ 104,000 / $9,500
Carrier B / $ 67,000 / $ 115,000 / $10,500
Carrier C / $ 73,000 / $ 126,000 / $11,500

Example C – Rooftop Antenna on existing building with a shop on the ground floor, office on the second floor and antenna on rooftop.

Site Value

Based on zoning and usual land considerations / $250,000

Capital Improved Value

Shop –Gross Rent / $30,000
Less Outgoings / $2,500
Net Rent / $27,500
Council Rates / $1,500
EAV / $29,000
Office – Gross Rent / $20,000
Less Outgoings / $1,500
Net Rent / $18,500
Council Rates / $1,000
EAV / $19,500
Telco –Gross Rent / $15,000
Less Outgoings / $1,000
Net Rent / $14,000
Council Rates / $500
EAV / $14,500
EAV Whole / $63,000
CIV
Total Gross Rent / $65,000
Less Total Outgoings / $5,000
Total Net Rent / $60,000
Cap Rate / 6%
CIV Rounded / $1,000,000
Apportionment on EAV
CIV - Shop / $ 460,000
CIV - Office / $ 310,000
CIV - Telco / $ 230,000
SV - Shop / $ 115,000
SV - Office / $ 77,000
SV - Telco / $ 58,000
Assessment / SV / CIV / NAV
Shop / $ 115,000 / $ 460,000 / $29,000
Office / $ 77,000 / $ 310,000 / $19,500
Telco / $ 58,000 / $ 230,000 / $14,500

Guidelines on Valuation Methodology for Telecommunications

August 2011Page 1 of 19

Victorian Statutory Revaluation

Industry information

Telecommunications Industry Ombudsman – The Telecommunications Industry Ombudsman is a free and independent alternative dispute resolution scheme for small business and residential consumers in Australia with unresolved complaints about their telephone or internet services. Website:

Communications Alliance – The aim of the Communications Alliance is to promote the growth of the Australian communications industry and to protect consumer interests through industry self-governance. Website:

A Code of Practice for Telecommunications Facilities in Victoria – July 2004 – Below is an extract from the Code of Practice, issued by the Victorian Department of Planning and Community Development (DPCD), setting out the circumstances and requirements under which land may be developed for a telecommunications facility. The full version of the code of practice is available on the DPCD website –

Telecommunication facilities that may be developed without the need for a planning permit:

  • a microcell - an antenna and associated box which supplements the mobile network in heavy usage areas.
  • an above ground housing - an above ground equipment shelter housing telecommunication infrastructure including:

a pillar

a cabinet

a pedestal

an elevated joint

minor street furnishings

marker posts

a remote integrated multiplexer.

  • a temporary facility - a telecommunications facility that does not exist on the land for more than a total of four months in any 12 month period.
  • an underground cable or duct – is placed into the ground by trenching or direct burial. Once in the ground, the ground is reinstated and the cable cannot be seen.
  • a boring cable –is a process where new cable is run through ducts which already exist, or is bored predominately underground from one end point to another.
  • a radio communications dish – is a circular dish antenna used to send and receive radio frequency communications.
  • a tower –includes any similar structure supporting antennas.
  • a telecommunication facility located inside a building, structure or tunnel – which is included in or integrated in such a way as to have the appearance of being part of the building, structure or tunnel.
  • a telecommunication facility located on a roof – using rooftops of appropriate height avoids the need for a tower or similar structure to be built. A facility on the roof of a building is generally less intrusive than a new tower and is therefore encouraged as a design solution to minimise visual impact.
  • a telecommunications facility attached to infrastructure within a road zone – carriers are encouraged to use existing infrastructure along major highways, arterial roads and freeways to support telecommunications facilities providing coverage along these roads to avoid the need for additional structures.
  • an optical fibre ground wire on high voltage transmission towers – an electricity ground wire with an optical fibre core located in the ground wire position of high voltage electricity towers.

Carriers are encouraged to co-locate facilities wherever practical. This provision encourages colocation where an existing structure has the capacity to cope with the additional requirements and combined equipment of more than one carrier or the combined equipment of carrier(s) and the operation of radio communications network such as two way radio operators and community radio stations.