From The Telegraph:
Farmers face a threat to hundreds of millions of pounds in extra income from their land, as mobile operators mount a campaign to slash the rent they pay for mast sites.
A coalition of all four of Britain’s mobile operators – EE, O2, Three and Vodafone – is urging the Government to intervene to give them the similar rights to energy and water companies to build out their networks.
According to a report commissioned by the operators from Deloitte and seen by The Telegraph it could mean the average annual rent for a rural mobile mast plummeting from £7,500 to less than £240. Many farms host more than one mast.
Urban landlords could also take a big hit if the mobile industry gets its way. They charge an average of £9,200. It would mean total savings for the mobile operators of up to £271m, according to Deloitte.
How on earth is that "income from land"?
The value of a mobile phone mast is purely a function of how many people live within its radius. In that sense, that value belongs neither to the agricultural landowners nor the mobile phone companies, does it?
Monday, 23 March 2015
Rent seekers vs rent seekers
Subscribe to:
Post Comments (Atom)
17 comments:
Meanwhile the ambulance-chasers have cottoned on to the fact that hundreds of farmers have been receiving miserable amounts of rent for years for the electricity poles on their land, whilst the market rate has gone up by at least an order of magnitude.
"The value of a mobile phone mast is purely a function of how many people live within its radius."
So this is, in fact, almost completely bullshit by the mobile phone companies. The government wants to extend coverage in marginal areas and the MPCs are saying that high rents are impeding them doing this. However, I'll bet that the rents in the peripheral areas are nothing like the figures quoted and in the areas with the high rents, they don't need to improve coverage anyway.
B, you didn't answer the question.
"Farmers face a threat to hundreds of millions of pounds in extra income from their land, as mobile operators mount a campaign to slash the rent they pay for mast sites. "
Boo hop. Perhaps farmers should make money from farming.
R, that's the spirit, and thanks for answering the question!
What if some very clever technology people found out that you do not need ground based phone masts, and your signal can go straight up to the satellite and back.
Then the rental value of a site for a phone mast on the ground is precisely zero, what are the farmers going to do then?
Whatever they were doing before. No-one is farming mobile phone masts and there is a certain amount of inconvenience to having a mast stuck in the middle of your field, for which the landowner is presumably due some sort of compensation. Perhaps not as much as £7,500 a year, but remember, there was presumably a certain amount of competition when these masts were erected and so the current rent should reflect the best deal available at the time, unless the MPCs were being very irresponsible with their shareholders' money.
Also, what if the landowner says "Fuck your £240 a year, you can take your mast and put it elsewhere"? It's going to take the MPC a long time to recoup the relocation costs in reduced rent, even supposing they can find another landowner who is prepared to accept the £240 a year.
"B, you didn't answer the question."
I didn't think I needed to. We all know what the answer is and it is not to give the MPCs the right to impose the reduced rent on the landowner and deprive him of the option of cancelling the deal. If water companies and electricity companies have this right, that is because they were once arms of the state and, now that they are privately owned, they should no longer have it.
All value comes from other people.
B, so you still think that the rent ought to go to either the farmer or the MPC?
IB, correct, assuming you meant 'all land value'.
No, all value. Or more specifically, all value in the trade economy. Any good or service only has value if somebody else wants it. If I am a plasterer, that service only has value if other people want their walls plastering. Etc.
Since having a strong mobile signal is valuable to businesses and residents (it is certainly something Rightmove and other property websites advise you to check along with schools etc.), this amenity makes that location slightly more valuable. Therefore the councils would have an incentive to pay to build these masts if LVT was in place since their LVT receipts would increase. The farmer could be compensated with a lower LVT bill to the extent that the mast reduces the productive value of their land. The mobile phone operators would get free access and would presumably compete away the savings and pass it on as lower bills to customers (they already pay for the bandwidth licence). Does that work?
Mark, certainly the farmer ought to get something for the inconvenience, probably more than a miserable £240 a year. I don't really understand why the MPCs offered such high rents in the first place, it's not as if there are so many masts that they need to be on every hill. I'm a bit baffled why everyone has gone all command economy here. DBCR would be delighted. Sure, it would be better for everyone if the state provided the masts and the MPCs paid to use them, there'd be a lot less masts and a lot better coverage, but that's not how it's happened. I can't see any need for state interference in what is, essentially a private contract between the MPC and the landowner. It's not like a road or a railway or a electricity line, no landowner can hold the MPCs to ransom: they can just go the landowner of the next hill, or the local vicar or to someone who owns a tall building.
Yes, Bayard they can go for the next best alternative.
"I'm a bit baffled why everyone has gone all command economy here."
None of us have.
"I don't really understand why the MPCs offered such high rents in the first place,"
I am a bit surprised why tenants do as well.
OTOH, yes of course. LVT sorts everything out.
The MPC's have to pay quasi LVT to the government when they bid for exclusive rights to radio spectrum.
And no, the MPC's would not 'pass on' the rent saving to consumers.
B… and the farmer gets an modest LVT reduction when he puts up with inconvenience of a mobile phone mast which he has to drive his tractor round it when ploughing.
About £20 per year per mast seems appropriate, seeing as the rental value of farm land is £50 to £100 per acre, he loses a quarter of an acre, so what?
"I'm a bit baffled why everyone has gone all command economy here."
Nobody has
"Sure, it would be better for everyone if the state provided the masts and the MPCs paid to use them"
Yes of course, same as roads or the original National Grid which was state-owned.
Is that command economy? No, it is simply the best way of dealing with competing land rights.
The "command economy" remark was because it was being suggested that the farmers should be forced to charge a lower rent to the MPCs because they had done nothing to earn those rents and they should have a "fair" rent imposed on them rather than the rent that was originally agreed between them and the MPCs.
"I am a bit surprised why tenants do as well."
Why are you surprised? It's very easy to work out what the going rate is for rent, there are lots of houses being rented out and people have been renting them out for centuries. Mobile phone masts, however, were something completely knew, so presumably no-one had a clue what the going rate was for renting land for them to stand on.
B, you know perfectly well that there are two quite separate calculations to the cost/value of a mobile phone mast:
a) the cost/inconvenience to the farmer (approx. £20 per year, tops).
b) the value to the MPC (£thousands of pounds per year).
So you are falling into the trap of assuming that this gain should be shared somehow between the two sets of monopolists.
Wrong. They are as bas as each other - hence the post title.
The MPC should pay for the rental value it gets (£thousands)* and the farmland owner should be compensated for the fall in rental value of 'his' land (£20) and AFAIC the government on behalf of all people who use mobile phones (nearly all of us) can collect the difference and spend it on our behalf.
Which is much the same as your suggestion to have a state-owner mast network.
* Clearly, this would be all part and parcel of the radio spectrum auctions: you bid for the right for exclusive use of XYZ frequency and the right to bounce your signals off XYZ phone masts.
The same as private electricity generators (hooray) using the govt owned national grid (hooray).
Mark, you are forgetting two other factors, namely:
c) the value to the farmer and
d) the cost to the MPC.
Now the value to the farmer is equal to the cost to the MPC, but it isn't just the cost to him (quite apart from the fact that, as nearly always we are not operating on a cost plus system here and so there is no connection between cost and value) but also takes into his consideration his reluctance to have a 'phone mast on his land in the first place. By their very nature they are ugly and have to be very visible. There are also the considerations of allowing the MPC 24hr access to the mast, so there is land lost to a track to the mast from the nearest road at the least.
Presumably the MPCs factored the costs of the masts into their initial calculations and that the costs came out less than their value. Perhaps they offered the farmers too much money, in fact I'm pretty certain they did, because of the stories that were going about at the time, but that's just bad judgement on their part.
"and the farmland owner should be compensated for the fall in rental value of 'his' land (£20)"
But what if all of the landowners decide that £20 a year isn't enough for them to have a mobile phone mast on their land? The MPCs would be stuffed, then.
What if someone came up to you and said he wanted to buy your car. You said, "Ok, give me £2,500 and it's yours". He then said "No, I don't think it's worth more then £500, that's all I'm going to give you". You'd then tell him where to go.
Anyway, as far as LVT is concerned, much better than forcing MPCs and landowners to renegotiate their existing rental deals would be simply to treat the quarter acre with the mast on it as if it were a building being rented out and tax it accordingly on the rent received.
Post a Comment