Fiber-Optic Right of Way Appraisals - Valentine Appraisal

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  • April 12, 2021

fiber-optic right-of-way appraisalsFiber-optics are lines of thin glass that can send digital information by transmitting light signals. Thousands optic fibers are arranged in bundles and optical cables, protected by an outer covering, called a jacket. Optical fibers can be single-mode fibers that transmit infrared laser light. Or they contain multi-mode fibers that transmit infrared light from light-emitting diodes (LEDs). Optical fibers often have the diameter of a single human hair.

Fiber optics were first discovered in 1970. Their discovery has revolutionized the Fiber-optic communication industry. Today, more than 80% of the world’s long-distance traffic is secured over optical fiber cables. The increase in computer use means demand remains strong.

 Fiber-Optic Right of Way Appraisals

Fiber-optical cable can be buried underground. Or cable can be hung from poles above ground like electrical wires. When they are buried, the rule of thumb is that they be placed three to four feet deep. Fiber-optic cables typically encumber an area non-exclusively between three to ten feet wide. Protective cables are designed for approximately a 40-year lifetime. Glass fiber inside the cable is good for millennia. That is, as long as the coatings and plastics used in the cable remain intact.

The biggest failure is damage from backhoes and/or digging up cables. What is the downside to placing cables underground? According to experts, the installation cost to place fiber optic conduits underground is twice as much as the cost to hang a fiber-optic cable from poles. However, more conduits can be placed underground for a little additional cost per conduit. This means that several times more fiber can be installed simultaneously underground than on poles.


Fiber-Optic Right of Way Appraisal Methods

How are fiber-optic appraisals conducted? Because the Fiber optic cable industry has failed to make comparable sales and rental data available for fiber-optic lines. This means there can be a problem. Appraisers are left to use three alternative approaches of value. They are: The Market Approach, Across the Fence, and Survey Methods of appraisal.

fiber-optic appraisal
fiber optic valuations can be tricky

The Survey Method for Fiber-Optic Appraisals

The Survey Method is the first method. It is good to use if you can get ahold of the right information. Because in this approach, information from the right of way owners who have allowed leases or easements for fiber-optic lines on their corridors is obtained. Then the information gets analyzed. So, without the proper documentation, it is not an easy method to use.  Further information from users who have fiber optic lines throughout various corridors can help as well. Discussions may include those in the private and public sectors.

The Across the Fence Method for Fiber-Optic Appraisals

The across the Fence method is the second method. Because the value of the corridor is similar to the value of adjacent properties. It was developed in the early days of the industry’s growth. Back then,  a window of opportunity existed to beat out the competition and secure laying thousands of miles of fiber optics cables. These agreements were closed in a very short period of time.

A good example of this is when negotiators for Southern Pacific Transportation Company needed to know the value of real estate fiber-optic lines. These were lines that encumbered their corridors, so a rough Across the Fence (ATF) value was arrived at. Eventually, an across the Board value for fiber optic lines was agreed upon. It equaled $10,000 an acre for rural areas and $25,000 an acre for urban areas. These numbers were used for nearly two decades (1980s-1990s). Another acceptable unit of comparison for the Across the Board approach is the price per mile.

florida real estate appraiser


The Market Approach for Fiber-Optic Appraisals

The final approach that is used is the Market Approach.  This third approach is recognized as the most reliable method for appraising real property for fiber optic lines. And, this approach requires obtaining comparable leases and easements of other fiber-optic lines. Leases are then adjusted for necessary market items.

These may include the following. Terms and conditions of an agreement, changing market conditions, and location differences. Plus, differences of physical characteristics between the comparable and subject property.

Final Thoughts on Fiber-Optic Right of Way Appraisals

The telecommunications industry continues to grow at a rapid pace. However, due to a blockage of free-flowing information because of confidential agreements, the appraisal of fiber-optic lines continues to vary. For this reason, there needs to be a level of uniformity in the units and elements of comparison in appraising real property for fiber optic lines.

But until then, the marketplace will continue to accept a host of methodologies and approaches of value. So, for this reason, fiber-optic right of way appraisals can be tricky!

Looking for an experienced fiber-optics appraiser? Please contact Gary Valentine, Lic# RZ4132. Ph 407-721-5373


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