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Government and ISPs meet to discuss fibre taxes
Thursday 13 January 2011 12:53:24 by John Hunt

Updated - 12:53

A meeting took place earlier this week between ISPs, Ed Vaizey (government Minister for Communications, Culture and Creative industries) and the VOA (Valuation Office Agency) to discuss fibre rates that were adjusted at the end of August. The meeting was supposed to occur at the end of last year but was delayed due to the poor weather in December. The Conservative party said before the elections that they would review business rates to encourage investment in next-generation networks but the VOA adjusted rates before any such review happened. Whilst some of the ISP industry was present, a notable omission was Vtesse Networks who have been one of the key players in deploying fibre-based broadband to rural areas, and also in fighting against fibre rates which it deems are unfair.

Rutland Telecom, another operator deploying fibre broadband solutions in the final-third, were at the meeting and they spoke with ISP Review after the meeting to advise what was discussed.

"In principle we are in agreement with the proposed £8/year levy on residential FTTH connections. However we would welcome some form of differential ratings system which might stimulate investment in the Final Third - perhaps by lowering the rates on backhaul circuits for NGA networks in rural areas.

It is clear that the VOA and BIS and the Broadband Minister are keen to see evidence from real examples before shaping policy in this way. To that end we will be looking at assisting the VOA by providing details from some of the feasibility studies we have undertaken.

BT's reference offer in relation to PIA (access to ducts and poles) is eagerly anticipated. It will be critical that BT's PIA running costs, when combined with non-domestic rates for new build NGA backhaul networks, does not represent a barrier to investment if new fibre is to be installed in rural areas.

Rutland Telecom rasied the possibility of negative rates to stimulate investment in rural fibre. Whilst not dismissed out of hand at the meeting, such a stimulus seems unlikley in the near future."

Statement from Rutland Telecom

It's worth pointing out that these are still just discussions and nothing definitive has been decided. We hope these discussions will continue and this can help lead to a more joined-up, fair, solution on fibre rating which helps boost investment and hence deployments in next-generation fibre broadband in the UK.

Comments

Posted by opticalgirl over 6 years ago
I thought the rates charged on FTTH connections was already set at ~£8 /yr. (£20 rateable value per home passed with the rates multiplier applied.)

So nothing changes.
Posted by cyberdoyle over 6 years ago
It is vital this matter gets sorted ASAP, there is no way private investment from new entrants can compete with the more favourable base the incumbent has. The best way to get a digital britain is competition, and we need a level playing field. The windows tax is unfair and is throttling innovation.
I can't see how there will be many real examples coming from the BDUK studies when other companies won't be able to tender as low as BT who already have the infrastructure and choose not to use it. Just like Cornwall.
Posted by Guest_Again over 6 years ago
FTTH is at the box just at my windows - My cable goes direct to the exchange - ergo, I don't FTTH... yet. Not fair. lol.
One day... ;)
I'm @ 31meg Bonded with Be* ATM. They rule.
Posted by krazykizza over 6 years ago
like opticalgirl i thought there was a levy also. butnether the less, i don't mind paying for technology as i value it
Posted by Legolash2o over 6 years ago
I'm sure the customer can afford the extra 60p a month.... Although i thought it was already around £8 too?!?!?!?
Posted by john (Favicon staff member) over 6 years ago
Ok, have updated article as was confusion over £8 vs £20 /month on fibre rates. Should be accurate now!
Posted by Legolash2o over 6 years ago
John, looks just the same, what's changed? :)
Posted by john (Favicon staff member) over 6 years ago
A more accurate title and removed the bit about saying £8 levy is new..
Posted by andrew (Favicon staff member) over 6 years ago
Based on some Defra data

Around 80% of England and Wales population live in Urban areas, so final third is NOT just a rural issue.

8.8% are small town and fringes.
Village 6.7%
~3.0% are dispersed
Posted by GMAN99 over 6 years ago
"other companies won't be able to tender as low as BT who already have the infrastructure and choose not to use it. Just like Cornwall." - So you are saying there is money to be made everywhere for BT but they just... choose not to?
Posted by NorwichGadfly over 6 years ago
Why should there be a fibre tax at all ? Customers already pay VAT on their monthly broadband rental.
Posted by New_Londoner over 6 years ago
@CD
Worth reminding you (again) and others that both the UK courts and EU have repeatedly found that the current arrangements do not in fact provide a more "more favourable base" for "the incumbent". What do you know that the various judges etc do not?
Posted by camieabz over 6 years ago
£8 per year sounds like a tiny amount, but mark my words, it will be the starter for ten. The thin end of the wedge (Sir Humphrey).

Once it exists it will rise, and who will stop it?

What's wrong with VAT in this instance? Why not make VAT on Fibre 25% (the political suicide perhaps?)? Said tax system is already in place for 20, 5 and 0 percent. The staff are already in place. Surely it's the cheapest option for the government, the ISPs (another accountancy discipline required) and the taxpayer as a whole.
Posted by camieabz over 6 years ago
To create a new tax will mean the tex revenue will be eaten by the new tax infrastructure, staff and associated departments/quangos.

It's a bad idea to tax fibre. Better to encourage ISPs to set a minimum price which reflects the quality of the service one expects with a fibre product (splutter!)

'Up to' 100 Meg anyone? What can the proposed fibre tax go 'up to' in years to come?
Posted by camieabz over 6 years ago
Coupled with the heavy usage issues that a fatter pipe will create, I believe the quality of the service will not improve very much at peak times.

Now is the time to introduce a minimum price for a set quantity of GB (e.g. 20GB), and charge a reasonable amount over and above that, and let the heavy users pay for the infrastructure they require to be heavy users. Why should light users pay extra tax for a service they don't need?
Posted by dustofnations over 6 years ago
@camieabz: I'd agree there is a good argument for avoiding the taxation of infrastructure that they're desperate for the population to have access to. And I agree on the tax front, remember VAT was only "temporary" when it arrived

@Cyberdoyle: Interesting. Do you have any references to back up your assertions?
Posted by herdwick over 6 years ago
"Why should there be a fibre tax at all" - why not ? It's part of our property tax system that taxes business assets. Electricity distribution is taxed.

If anyone's business model is broken by £8 pa of tax it wasn't very robust to start with (or more likely it didn't even exist).
Posted by opticalgirl over 6 years ago
@New_Londoner:
When Vtesse took it's case to the EU, the courts found no advantage to BT because BT's market share in business connections was only 12%. The logic was that if the system conferred an unfair advantage on BT, then it would be expected to have a higher market share.

The courts didn't consider the market for local access or wholesale broadband - markets where BT has a monopoly across large parts of the UK... So the "courts said it was fair" argument just isn't the whole story.
Posted by Legolash2o over 6 years ago
Just get rid of the Fibre Tax, end the argument once and for all....
Posted by SheepFarmer over 6 years ago
@Legolash2o

Yes, because those paying Fibre Tax are the poorest of the poor aren't they?

Tax food instead, makes much more sense.
Posted by audioslim over 6 years ago
So...

Taxed on my wages. Tick
Taxed VAT on my phone line. Tick
Taxed VAT for a broadband line via ISP. Tick
Taxed for my Fibre line. Tick.

Perhaps they want to tax the use of a router,or even better. Add VAT to TCP packets. That'll do the job for eh!.

What a joke.

Perhaps I should there should be additional tax on my gas bill to make up the shortfall for all the people who arent on mains gas.

But then again perhaps us city dwellers should get some tax back from the people in the country who have fresher air!

Slim




Posted by camieabz over 6 years ago
VAT on your online purchases too. ;)
Posted by Legolash2o over 6 years ago
@SheepFarmer, read the two comments after you last post, they are another reason why it should be scrapped.

Some ISPs dont make that much profit because they provide the service so cheaply...
Posted by Legolash2o over 6 years ago
Cant they tax copper instead of fiber to promote the upgrade? :P They would properly make more..
Posted by Somerset over 6 years ago
See:

http://www.openreach.co.uk/orpg/home/products/ductandpolesharing/ductandpolesharing/ductandpolesharing.do
Posted by SheepFarmer over 6 years ago
@Legolash2o Yeah, yeah, we all pay too much tax, etc. etc. but we all complain when the bins don't get collected properly, the NHS is underfunded or there's a lack of teachers in schools.

People speak as though the day after fibre tax is removed we'll all have FTTH. ISPs will just make a tiny bit more profit, that's all.
Posted by New_Londoner over 6 years ago
@opticalgirl
Actually if you read the judgement from the Court of Appeal, the judges systematically dismantled every point in the case put forward by Vtesse. Worth reading, dispels many of the myths put forward by posters based on PR from some of the comapnies with an interst in reducing their annual rate bills.
Posted by Legolash2o over 6 years ago
SheepFarmer but this aint council tax, its just Fibre Tax which goes pretty much towards nothing...
Posted by otester over 6 years ago
A way to deal with this would be to list it after sub-total in the order cart when ordering broadband online to raise awareness of the issue.
Posted by herdwick over 6 years ago
"but this aint council tax, its just Fibre Tax"

there is no such thing as "fibre tax", that's just a slogan. Fibre optic networks are business assets which attract business rates, or non-domestic rates if you prefer. Same as offices etc.
Posted by NorwichGadfly over 6 years ago
@herdwick - by your logic business rates would be payable on water pipes, sewers, roads, railway lines. If the government wants to encourage the telcos to invest in fibre, then why tax them on the asset even before it starts bringing in revenue ?
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