Rating Manual section 6 part 3: valuation of all property classes

Section 870: telecommunications cable networks (previously - cable TV systems)

This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.

1. Scope

This guidance covers Local Rating List Broadband Cable TV/Telephony Networks. Currently there is a single provider with a number of separately assessed hereditaments.

Former Narrowband Cable networks have gradually been superseded by changes in technology and are now obsolete. However some relay rooftop equipment sites may remain in place. If it is ascertained that these sites are used for other telecommunication purposes they should be dealt with following the guidance in Rating Manual Section 6 - Part 3 : Section 860

2. List description and special category code

Type Description Code Description SCAT Suffix
Telecommunication Cable Network MTX Telecommunication Cable Network 275 U

3. Responsible Teams

National Specialists’ Unit, Telecommunications Team (TT) is responsible for this class of hereditament.

4. Co-Ordination

TT will co-ordinate as required with the Business Units, in particular 1.Seeking advice on building values 2.Ensuring splits and mergers of network buildings are completed by the business unit.

Advice should be sought from TT by the Business Units on any matter relating to Broadband Cable TV/Telephony Networks via the NSU inbox

5.1 Cross Boundary Hereditaments

Regulation 6 of the Non-Domestic Rating (Miscellaneous Provisions) Regulations (SI1989/1060) will apply to all Local rating List Broadband Cable TV/Telephony Networks that physically extend beyond a single billing authority boundary.

6. Survey Requirements

6.1 Unit of Assessment

The unit of assessment should include all contiguous cable routes occupied by the operator as one network as well as all connected operational network buildings such as those used for transmission, switching, relay, points of presence and data centres.

It is not necessary to consider contiguity in respect of designated local list telecoms hereditament as all network is valued as a single hereditament.

6.2 Request for Information (VO6006)

A special adapted version of VO6006 has been designed specifically for Broadband Cable TV/Telephony Networks.

The form requests details of all network and network buildings changes, including those built or leased from third parties in respect of the operator’s occupation. This form is issued on an annual basis. This is necessary in order to keep the rating list maintained and factually accurate.

6.3 Cable

It is practically impossible to physically inspect network cable. Details should be obtained from the form of return or directly from the operator.

6.4 Network Buildings

Generally network buildings are converted industrial or office properties. These should be surveyed and valued in accordance with the normal provisions for that class of property.

Improvements such as raised floors and air conditioning should be noted.

6.5 Rateable Plant & Machinery

Full details of rateable plant & machinery should be noted. These will typically include.

i Diesel Generators (Note kVA)

ii. UPS Systems (Note kVA)

iii. Batteries (Note voltage and number)

iv. Primary Transformers (Note range of voltage transformation)

v. Primary Distribution Boards and Switches

vi. CCTV

Ideally an electrical schematic plan should be obtained to confirm the rateable plant & machinery.

Air Conditioning systems should be noted.

Fire protection systems should also be noted.

6.6 Radio Sites

A number of the larger networks include radio sites. These should be surveyed in accordance with Rating Manual, Section 6 Part 3, Section 860 Radio and TV Transmitting/Receiving Stations and Masts (Including Microwave Masts)

6.7 Enquiries on Class

For enquiries on this class contact the Telecoms Team, via the NSU inbox

7. Survey Capture

Plans and surveys should be stored in appropriate property folder within the Electronic Document Records Management (EDRM) system.

8. Valuation Approach

These hereditaments are valued individually taking into account the receipts and expenditure of the undertaking as well as the physical extent and nature of the network.

9. Valuation Support

Rating Support application for identified network buildings and land which are within the hereditament.

Cost guide for the Plant and Machinery.

Practice note: 2017: Telecommunications cable networks (Previously - Cable TV systems): National scheme - Group 4

1. Market appraisal

There is competition between the Central List designated providers and the current single local list provider, each competing for market share. In recent years the broadband cable principle operator has extended the services offered to customers and in part upgraded their cable network.

2. Changes from the last practice note

No changes.

3. Ratepayer Discussions

Discussions have taken place with the broadband cable operator for mainland Britain.

4. Valuation Scheme

Broadband cable TV/telephony hereditaments are valued individually taking into account the receipts and expenditure of the undertaking as well as the physical extent and nature of the network.

Practice note 2010: Telecommunications cable networks (Previously - Cable TV systems) National scheme - Group 4

1. Co-ordination Arrangements

This Class is split between the National Specialist, Michael Hetherington – CEO Rating Directorate {based in Durham VO} and Groups. All are responsible for ensuring that effective co-ordination takes place, in particular:

a. Narrowband and Upgraded Narrowband Cable TV Networks

These are the responsibility of the Groups and should be co-ordinated with the National Specialist (Part A) via Group Technical Advisor.

A Primary Description Code of MTX and a standard description of “Cable TV Network” should be used.

b. Broadband Cable TV/Telephony Networks

These are the responsibility of both the National Specialist, Michael Hetherington, and Groups, in particular: -

a) Groups are responsible for the separately assessed buildings element and should advise the National Specialist on the values adopted;

b) The National Specialist is responsible for the “wires” element and annually reviewing the network assessments.

A Primary Description Code of MTX and a standard description of “Telecommunication Cable Network” should be used.

The R2010 Special Category Code is 275 and as the responsibility for this class is split the appropriate suffix to be adopted is N for Broadband networks and G for Narrowband and Upgraded Narrowband networks and the building elements of b).

In the event of any complex issues arising the case should be referred to the National Specialist Michael Hetherington.

For further information see Rating Manual - Section 6 - Part 1: Practice Note 1: 2000.

Part A: Narrowband And Upgraded Narrowband Cable Networks

2. General

A scheme of valuation was not specifically agreed for either the 2000 and 2005 Rating Lists. GVA Grimley, represent the Cable Communications Association in respect of Narrowband and Upgraded Narrowband Cable TV Networks and whilst there has been a general acceptance of the 2000 scheme, there has been no substantive discussions on the 2005 rating lists.

I am proposing to continue with the methodology of previous lists for the 2010 Reval.

3. Background Information

Narrowband and Upgraded Narrowband networks provide a basic package of terrestrial TV and radio channels and can still be found in areas of poor TV reception and as installations in large blocks of flats.

Generally however, these services continue to decline as satellite services including Free Sat is now widely available, with some of the larger networks e.g. Milton Keynes and Bracknell have been converted to Broadband cable networks.

4. Valuation Considerations

The loss in the numbers of subscribers to broadband, satellite and digital services will put severe pressures on the profitability of these older networks which are expected to have declined further since 2003.

5. Information Required

There are no published statistics for the individual Narrowband and Upgraded Narrowband networks.

Details of the 3 years turnover (2006 to 2008( (less VAT) for Narrowband and Upgraded Narrowband networks should be requested directly from the individual cable operators where necessary.

6. Unit of Assessment

Narrowband and Upgraded Narrowband networks should be easy to define, as they are generally more limited in extent and are not interconnected, unlike the Broadband networks. Any operational buildings that are contiguous to the network are reflected in the value. The value does not include the “host” building which may be in separate occupation. Advice should be sought from CEO if there is any doubt on the unit of assessment.

7. Valuation Guidance

Due to the declining profitability of both Narrowband and Upgraded Narrowband services we advised that, subject to changes in the number of subscribers up to 31 March 2005, the 2005 Rateable Value should remain at the same level that was adopted for the 2000 Rating List.

There has been no negotiations with GVA Grimley on the 2010 Rating List so in the absence of agreement the following approach should be taken:

Narrowband and Upgraded Narrowband Networks; (i.e. the older type systems where the operator provides a basic TV/Radio service only)

To be valued on the basis of 5.0% of the 2008 turnover (less VAT), or where turnover not available adopt the 2005 RV.

Any reduction from the above percentage or RV should be supported by a full Receipts and Expenditure valuation looking at a minimum of 3 years past accounts up to the AVD.

8. Reviews

Reviews of the assessment are only necessary if there is more than a 5% change in the number of subscribers. The RV, as determined from the compiled 2010 list entry, should be analysed to a RV per subscriber, then adjusted by a multiplier based on the number of subscribers at the new material day. For further guidance on this advice should be made to CEO using the ‘Mast Advice’ inbox headed Narrowband Review.


9. General

A scheme of valuation was not agreed for the 2005 Rating List with GVA Grimley who represented the Cable Communications Association in respect of Broadband Cable TV Networks, see Rating Manual - Section 6 part 3: Section 870, 2000 Practice Note. The schemes for 2000 and 2005 valued the “wires” element only, with the buildings being separately assessed. A similar scheme has been adopted for Reval 2010 with the buildings to remain separately assessed.

10. Background Information

The broadband cable TV industry has undergone a major change during the 2005 list. NTL and Telewest merged ion 6 March 2006 but were subsequently purchased on 8 February 2007 and re-branded as Virgin Media.

Additionally the cable TV industry has undergone a change in financing and service offering as broadband connections have increased by more than 3 times, whilst TV and telephony has remained constant.

A comparison of the relative positions at the two AVD’s, based on the published ITC statistics, is set out below, where the information is available (* - Provisional figures).

1 April 2003 1 April 2008
Number of operating franchises: *132 *132
All Homes passed: 12,440,043 12,578,100
All Homes connected: 4,457,222 4,779,600
Average Penetration: 36% 38%
Homes Connected TV and/or phone: n/k 3,514,900
Cable Service Penetration: 33.0% 28%
Average Annual Revenue Per Unit: *£493.34 £503
Average Penetration (TV service): 22% 27%
Basic Package Price (£): £24.29** £11.00
Franchises offering Telephony: 129 *129
Total Telephone Lines Installed: 4,574,000 4,528,000
Residential Telephone Lines: 3,932,000 4,133,000
Business Telephone Lines: 642,000 395,000
Telephony Penetration: 36.8% 36%
Broadband Connections: 960,021 3,502,000

Previously reported Average Annual Revenue Per Unit.

The annual build rate reached its peak rate of 2.34 million homes passed in 1998. However, there has been limited growth since 2000.

As from 1st April 2003, a Cable TV service (TV and/or telephony) was available to over 12.5 million UK homes with over 4.75 million subscribers and a service penetration rate reaching 38%.

Over the last five years there has been some fluctuations in subscriber numbers, with the peak in 2005, when there were more that 5 million. However, by the first quarter of 2008 (AVD) this had reduced to a little under 4.8 million. These fluctuations were partly due to a dispute with BskyB over the charges for the receipt of channels and services they provided each other.

In total, at the AVD 1 April 2008, Virgin Media Cable TV accounts for *% of the Pay TV market and 27.6% of the multi channel market. However, Broadband Internet connections have shown strong growth with cable modems accounting for *% of the market.

11. Valuation Considerations

There has been increased competition for TV revenues from new entrants in to the satellite provision. As well as new free service providers such as freesat, BT has now entered the market with BT Vision. However the merger of NTL and Telewest to form Virgin Media has enabled them to effectively compete with these challenges.

However, the growth in Broadband Internet services has been extremely strong and it is expected to continue to grow.

Information on cable telephony is not currently available but will be included in due course.

12. Information Required

The ITC became part of the communications regulator, Ofcom, from 29 December 2003 and have ceased to publish individual franchise area statistics. Since then the information required has been published by OFCOM in quarterly publications inc Market Information Data.

The definition of homes passed remains as it was initially defined in 2000 as:

“Homes passed and marketed records the number of homes, which have been informed that a cable service is now available to them. It is not strictly a measure of cable construction, since there are additional homes which have been physically passed but to which the service has not yet been marketed.”

However, it should be noted that in preparing accurate assessments for the individual franchised areas’ an addition will need to be made to reflect business connections.

No updated cost information for Broadband networks has been provided and local VO’s should request details of the buildings associated with the cable networks.

13. Unit of Assessment

The broadband franchise area licences from the ITC became non-exclusive in 2001 in the case of the Telewest franchises and it is understood NTL followed shortly after. Despite the formation of Virgin Media, the franchise areas continued to be run as individual subsidiary companies.

The unit of assessment should include all contiguous franchises that are run as one network. However, contiguity does not include networks connected by leased capacity or by backbone fibre optic networks, which are run and occupied as a separate network.

It has been agreed to continue to separately assess the head end and hub centre buildings from the cable network.

Written confirmation should be sought from the cable operators as to which franchises are contiguous and run as one unit in order to prevent any misinterpretation or double counting.

14. Cross Boundary Hereditaments

Networks can be extensive and it is not unusual that they can be present in more than one billing authority. Where this occurs the provisions of Regulation 6 of the Non-Domestic Rating (Miscellaneous Provisions) Regulations (SI 1989/1060) should be used to determine which Billing Authority area the assessment should reside in and it should be noted that the assessment would then remain in that Billing Authority list until the next revaluation.

Any new networks coming into being after 1st April 2010 will be entered into the appropriate list, at the appropriate Material Date for a new entry, in accordance with the above regulations.

15. Valuation Guidance

Discussions with GVA Grimley, who represent the Cable Communications Association has failed to produce an agreed scheme of valuation for Reval 2005.

Broadband Networks (i.e. Cable TV/Telephony franchise networks)

a. ‘Wires’ element is to be valued on the basis of:

i) £7.50 per “home” passed; plus

ii) an addition for business connections

for the “wires” element as at the 1st April each year, to reflect cable TV, telephony and broadband services.

a. All buildings, including hub centres and head ends, occupied with the cable network are to be valued on local rental tone levels for similar premises and assessed separately from the “wires” element. Additional plant and machinery in the buildings and higher quality finishes should be reflected where appropriate. GVO’s are to advise the National Specialist on the values of the buildings associated with the wires element.

The Homes Passed and business connection figures should be requested directly from the operators as at the 1 April each year.

The valuation methods set out above include all wires, cables, fibres, ducts, connections and street cabinets in the franchise area, excluding any trunk network cables forming part of a separate trunk network. The £7.50/HP rate above does not include the “buildings” which are to be separately assessed but reflects the average service penetration rate (TV and/or Telephony) at the AVD.


The revised rate includes an allowance to reflect the increase in competition due to the physical increase in the number of satellite dishes and competing telephone networks.

16. Reviews

Reviews of the assessment are only necessary if there is more than a 5% change in the number of homes passed plus business connections. The RV should be reviewed on 1st April each year by multiplying the revised homes passed figure at the initial RV/HP rate. In the event of two or more franchises merging and becoming one network, the homes passed figure should be taken at the date of the merger.

It is important to action any revision as soon as possible after the 1st April statistics are available from the operator, usually in the following June, as the backdating of the reviewed RV can be barred by a following material change in circumstances, assumed to take place on the following 1st April.

17. Transition

The current lack of roll out in the cable TV networks means that a review at the 31 March 2005 will be unnecessary in most franchises, unless there is clear evidence of increased build activity for a franchise area.

18. Enquiries

Enquiries about this Practice Note to Michael Hetherington, CEO Rating Directorate {based in Durham VO} on PN 3221032 or email using the “Mast Advice” inbox headed CATV.