Another Perspective on the Algorithm
Charles Warren
Clearly there is a thicket of legal issues surrounding this topic. As to how and whether they will be cleared has to do with a different algorithm - whether it's worth it.
Now, in a Coasian sense, legalities and legal questions, with their associated costs and delays are transaction costs. Markets work best with low transaction costs. If the costs are high enough, and the market low enough then transaction costs may completely stifle a market. It remains to be seen as to whether this will be the case with telcos and right of way co-location.
From the buyer's point of view, clearly free or nominal cost is good. If that is unavailable, however, then the pencil must be sharpened as to what can be paid. In principle, the value of an asset is residual to the value of its associated enterprise. So, how much can "we" make by, say, running a subsea fiberoptic cable from point A to B? What will it cost to do so? If benefits exceed costs, then it makes economic sense. Conversely, the holdout price can be any amount less than the difference between those two numbers. If there is more than one alternative right of way, however, the holdout price cannot exceed the cost of the alternative route.
Now, if the profitability of the endeavor is low, or the cost of capital high, then only a nominal price can be paid. If the profitablity is high or cost of capital low, then Across-the-fence (ATF) plus a premium can be paid happily. Looking at the seller alone cannot address this valuation question.
From the seller's point of view, more is better, and ATF is as high as most can think. More particularly, however, selling subsidiary property rights is not generally regarded as a profit center, and therefore there is little disciplined effort applied to the activity. If such a right can be sold, wonderful. If not, well, nobody will be penalized for letting the deal get away.
Some believe that railroads were principally real estate companies in their early history, and an examination of many "public" land maps in the western US, with their checkerboard of private, railroad, inholdings, supports this view. But Southern Pacific split off its real estate arm as Catellus Development years ago. Perhaps it is time for railroads and other right of way corridor owners to split off more companies whose mission would be to maximize development of infra-structure for the "new economy".