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Is Digital Britain to be taxed back to the copper age?
Friday 30 October 2009 09:43:20 by Andrew Ferguson

Computer Weekly has spent some time looking into the business rates that affect fibre networks, and has also uncovered plans that could see Wi-Fi hotspots and WiMAX networks having to pay tax backdated to 2005. BT Retail with some 600,000 home routers capable of acting as a hot-spot could face a bill of £29m a year.

Business rates on fibre networks are well known about in the industry, but the affect that these have had on the roll-out of unbundled networks and next generation access are considerable. The tax is charged at 48.5p in the pound, with the value being based on what the HM Revenue and Customs' Valuation Office Agency (VOA) estimates as the operating profit that the network owner could make if the fibre was rented to a third party and the length of the fibre is also taken into account. This means that even if you were in a situation where you had someone willing to put fibre in the ground for free, they would have to pay the tax, based on what the potential profit might be. These estimates could vary greatly and stand as a massive barrier to firms wanting to offer a fibre based service to businesses and homes. The UK and Ireland are the only two countries in the EU to have this tax.

Much more worrying is that the VOA is suggesting a next generation access tax on homes connected to new fibre networks (remember the fibre is already subject to business rates) at around £7.50 a year. What is defined as next generation access is unclear. If Openreach FTTC (fibre-to-the-cabinet) is subject to the tax, then the millions of existing Virgin Media fibre/coax hybrid solutions should also be subject to it. Though Computer Weekly does suggest it will only relate to FTTH (fibre-to-the-home) installs, but we all know how taxes can expand.

The proposals for Wi-Fi hotspots and WiMAX networks will see them rated at £100 a year, and seems to cover any network to which public access is offered. Add this £100 a year cost to the dangers of offering people free Wi-Fi access and the number of hotels/guest houses offering free Wi-Fi is going to drop. The backdating to 2005 would be the killer, while a firm like BT would be able to survive this, how many community based networks have £500 sitting spare in the bank.

Apparently Telecommunications have been subject to non-domestic rates for many years, and these new rates are nothing new, but it seems odd that they should start to surface at a time when the need to raise taxes to reduce the UK deficit is high on the agenda.

Of course the VOA is doing what it is meant to do and is raising taxes based on the rules given to it by government, the question is whether the Digital Economy Bill due to be announced in the Queens speech will have some joined up thinking in it. Now is the time to contact your MP to find out what their position is on these matters and express any concerns you have, you can find out who this is at WriteToThem.com.

Comments

Posted by paulbeattie87 over 4 years ago
What a way to kill free Wi-Fi!
Posted by AndrueC over 4 years ago
What a way to kill networking.

Stupid sods. I'd argue for a revolution but that would just put violent stupid sods in power.
Posted by herdwick over 4 years ago
Virgin Media's HFC network is already subject to these business rates. The VOA decided to apply the £7.50 per home *passed* that they pay to new NGA networks like Ebbsfleet FTTH. If there is evidence that the economic value is substantially higher or lower then it would change the rate.

http://www.voa.gov.uk/instructions/chapters/rating_manual/vol5/sect871/frame.htm
Posted by andrew (Favicon staff member) over 4 years ago
The £7.50 was comment that if the BT FTTC were to pay the £7.50 NGA, then so should VM as similar architecture.

The passed is important, as it means the incentive is to build as small a network as possible.
Posted by EnglishRob over 4 years ago
I don't get it, the government want us to have a 'next generation' network but then tax the hell out of fibre, and now by the looks of things WiMax and Wifi. They can't have it both ways, as much as they'd like to.
Posted by Dave2150 over 4 years ago
Sounds like good old Britain to me. We have amongst the worst access speeds across the EU (21st I believe, as per a recent article on this website) and still we decide to tax FTTH, discouraging further rollouts.
Posted by Bryan-Tansley over 4 years ago
Time to consider moving, not to a new ISP but to another COUNTRY!
Posted by themanstan over 4 years ago
From the VOA "Therefore, all BT’s Local Loops in England and in Wales, including the unbundled loops operated by other telecoms operators, are included in BT’s 2005 Central Rating list assessments in England and in Wales. Unbundled local loops should not be included in any operator’s network hereditament, other than in BT’s." So BT pays tax for other people's loops... nice... No wonder BT complains so much and do they get to pass on this cost?
Posted by Dawn_Falcon over 4 years ago
Dave2150 - And you know why the speed's so "bad"? Because BT runs ADSL connections which other country's operators would take one look at and say "no". Slow ADSL > no broadband.

themanstan - Nope, they have to pay. Sheesh, people think my comments on BT funding LLU were idle?
Posted by Dawn_Falcon over 4 years ago
Also, VM have described their network as "fibre", and should clearly be subject to the tax. If you advertise as something...

(boom, headshot loooool)
Posted by andrew (Favicon staff member) over 4 years ago
Plenty of other countries still running ADSL, including those with FTTH available.
Posted by Dawn_Falcon over 4 years ago
Yes, but most of them have strict line limits, Andrew, whereas BT have heavily pushed extending those limits.
Posted by otester over 4 years ago
just like what they've done with transport.

Tax fuel, to stop everyone going to public transport, they change policy to inflate ticket prices.

Now they know WiMax/LTE is a threat to land-lines, they'll tax it back to the stone age.

BT/VM keep their empires.

Really need a new country to live in (not in EU)!
Posted by Dawn_Falcon over 4 years ago
Cya! (heh)
Posted by andrew (Favicon staff member) over 4 years ago
Be interested in reading about these countries with strict line limits on ADSL?

Posted by herdwick over 4 years ago
Andrew - VM are already charged business rates on their HFC network. That's where the VOA

Wimax and LTE will never challenge wired access as the bandwidth simply isn't their.
Posted by herdwick over 4 years ago
.. that's where the VOA got the £7.50 from.
Posted by Dixinormous over 4 years ago
I understood that BT still own the copper that forms unbundled loops, it's hardly up to other operators to pay the tax bills on BT's plant when renting it, should be considered within the pricing. Most unbundled loops are still SMPF anyway and if BT are providing voice via their equipment it's kinda appropriate that they pay the bills?

As above cable networks have always paid business rates at a set charge per home passed.

Also be interested in these countries with strict line limits on DSL - citations please Mr Falcon, I thank you.
Posted by Dawn_Falcon over 4 years ago
Why should I cite a common situation? Sigh. What BT have done is the unusual situation.

And yea, why should BT not pay, given they can't refuse to provide it or recover the cost, making it a direct BT funding of LLU!
Posted by Dixinormous over 4 years ago
If it's common citation should be pretty easy and would be appreciated. It may be common but I've not come across it recently, as far as I know others have relaxed legacy pre-qualification also.
Posted by mickerickerous over 4 years ago
If you don't like it then collective action would seem to be the way forward. A cohesive and integrated public policy on the internet and its usage is required that does not penalise free services and future developments of all kinds. Start lobbying rather than chatting.
Posted by Toots3D over 4 years ago
"Sounds like good old Britain to me. We have amongst the worst access speeds across the EU (21st I believe, as per a recent article on this website) and still we decide to tax FTTH, discouraging further rollouts"

In reponse to this, I noticed only today at www.speedtest.net that the UK is rated as being 41st in the World for speeds.
This are typical government restrictions on The Quality of Life, that it deems is so important to the structure of the country. When will a government listen to it's people, only when that government is made up of 'Real, Working People' that's when.
Posted by otester over 4 years ago
@Toots3D

Then a revolution is required, but I don't think the majority of the population would go along, they'd rather suffer under the current system than actually have to do something.
Posted by Mince1978 over 4 years ago
Another perfect example of the uk being a s*&thole and our illustrious leaders happily shafting us in the worst possible way!!!! Thanks Brownie you Tosser!!!
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