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Ed Vaizey to meet with network operators to discuss fibre tax
Wednesday 17 November 2010 11:50:52 by John Hunt

The governments communications minister Ed Vaizey is to hold a meeting with UK network operators to discuss the issue of fibre rates, a subject that has raised much debate, and various court cases over the last few years.

Fibre rates are raised by the Valuation Office Agency (VOA) which charge network operators when they 'light' (or start to use) fibre optic cables. The standard charge is based on each kilometre of fibre that is used with a minimum valuation of £2,000 a year. Many operators have spoken out about the excessive charges and the inequality that BT are rated differently based on the overall rentable value that is available from their network, averaged over 5 years. Before coming in to power, the Conservative party said they would re-evaluate how the rating system works to try and encourage investment in next-generation networks, but this hasn't happened, and the VOA instead released revised rules which could turn out to be more expensive.

One key proponent to the review of the rating system is Vtesse Networks who have spent a lot of time in court arguing the disparity between BT's rateable value and that of Vtesse and similar operators. The company lost its court appeal, but has taken this to Europe to try and get the decision overturned. Interestingly, Vtesse and BT don't appear to have been invited to the meeting to be held on the 2nd of December. Those who have received invites include Digital Region, Easynet, i3 Group, Gamma Telecom, Geo, NYNet, Rutland Telecommunications, Sohonet, TalkTalk, Virgin Media, the Broadband Stakeholders Group, and Ofcom.


Posted by AndrueC over 6 years ago
Option 1:Charge BT more.
Option 2:Charge everyone else less.

Now - where did I put my crystal ball?
Posted by opticalgirl over 6 years ago
when fibre tax went to the EU courts the case was lost on the basis that it didn't give BT an unfair advantage - because BT's market share in high-capacity business connections was very low. i guess this was the right comparison at the time because it was the market that Vtesse operated in.

NGA wasn't even in the picture at that point - this was back before BT announced its FTTC/P investments. i do wonder if the courts would have come to the same decision if they were to look today at the markets for retail and wholesale broadband.

Posted by john (Favicon staff member) over 6 years ago
Charging BT more doesn't sound like a good option as it means everyone might see prices go up
Posted by cyberdoyle over 6 years ago
Remove fibre tax for new start ups. why tax the seed corn when you can tax the harvest? We have had this debate many times. Until government sort it out we won't get investment in rural areas. Therefore a third of the country is cut off from a fit for purpose connection to the internet.
Posted by herdwick over 6 years ago
It gets boring listening to business rates being used a fig leaf to hide unworkable business plans.

The valuation can be based in expenditure and receipts (to name but one) as well as the standardised method and the business rates are levied at about 50% of that valuation. Small businesses have exemptions, as do charities etc etc.

Do we have to re-engineer the whole of society to satisfy startups or can they just shut up and get on with it ?
Posted by Somerset over 6 years ago
Do TalkTalk install any network?

cd - how long should a startup be exempt for?
Posted by mhc over 6 years ago
Since when have Business rates been fair?

Every telephone box is liable for business rates - and there are cases where the rates far exceed the annual revenue.

Every street cabinet is liable for Business rates - and every installation for FTTC will incur additional rates.
Posted by AndrueC over 6 years ago
@cd:Internet access is a service. It doesn't have to be 'fit for the purpose'.

The provider just has to ensure that the customer is aware of the limitations and do a 'reasonable' job to provide it whilst charging a 'reasonable' fee.
Posted by adslmax over 6 years ago
sack him now, Ed Vaizey, Communications minister
Posted by Dixinormous over 6 years ago
If the fibre is going to homes or businesses directly charge it at a rate per home passed same as cable companies. Core network fibre is usually many strands so can be left as is.
Posted by cyberdoyle over 6 years ago
think virgin is £7.50 php. not the £20 for other companies.
Somerset, its figured in the business plans that private new lay fibre networks should break into profit at 6yrs on average. If they were exempt for 5 years it would stimulate investment in them. sowing the corn.
AndrueC, so is drinking water and electric. People would soon moan if that service slowed to a stop at peak times would they not?
Posted by Somerset over 6 years ago
Slowing at peak times is a core network issue isn't it cd?
Posted by cyberdoyle over 6 years ago
If you say so Somerset. ;)
Posted by Somerset over 6 years ago
Do you disagree?
Posted by New_Londoner over 6 years ago
Bizarre to see that this is being raised again despite the UK courts and EU investigation ruling that the various tax treatments do not discriminate, give an unfair advantage - if they did then it would be state aid, which the EU would then rule on.

Before commenting on the substance of this, suggest people read the most recent court judgements, which pretty comprehensively reject there is anything in this.
Posted by Legolash2o over 6 years ago
I wouldn't be suprised if the EU courts where paid to says it's fair, the EU are full of corrupt idiots after all, wouldn't be surprised at all....
Posted by mp4man over 6 years ago
There are two issues: one is the R&E issue where BT fibre is bundled in with the rest of their hereditament. The other is that small networks attract a higher valuation per fibre km. For discussion see the RSE Digital Scotland report available at
Comments welcome.
Posted by KarlAustin over 6 years ago
@Herdwick - Small businesses do not get an exemption, because you're only allowed a max of two rateable "properties", and they've got to be below a certain RV - pretty much anything other than the shortest fibre run will take you over that, if your offices haven't already.
Posted by New_Londoner over 6 years ago
Possibly rather far-fetched (and libelious!) to suggest that corruption of the EU caused the inquiry they launched to reject any state aid issues?

Are you also suggesting that the same applies to the various UK courts that rejected the related complaints as well?
Posted by NorwichGadfly over 6 years ago
On the one hand, the government wants the telcos to invest in broadband infrastructure; on the other hand, it then imposes a tax for doing so. Better to scrap the tax, as the businesses that benefit as a result of the improved infrastructure will themselves grow and hence pay tax.
Posted by Somerset over 6 years ago
Government wants investment everywhere but still wants taxes!

Any costed examples of removing fibre tax?
Posted by Legolash2o over 6 years ago
If they remove the tax, they will have money to invest in their networks, even BT!

Point is removing the tax will stop the argument altogether and i would be curious as to what excuses they will come up with if its removed lol.
Posted by Legolash2o over 6 years ago
No other country in the world taxes fibre, so why do we?
Posted by Somerset over 6 years ago
Current scheme explained here -
Posted by c_j_ over 6 years ago
So, did the meeting happen on Dec 2nd (Google News doesn't find any reports featuring Vaizey), or did the wrong kind of telecoms infrastructure combined with the wrong kind of snow mean that the meeting couldn't even be held as a teleconference?
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