The Valuation Office Agency (VOA) may have missed the steady shift underway from a superfast roll-out to ultrafast rollouts in its review of the rateable values for internet business and particularly the increasing amount of fibre being rolled out.
The VOA has carried out a review of the rateable rates across the business world and it is possible for businesses to review their respective changes online, the effect for the BT Group is that the valuation has increased massively from £165m to £743m, the actual amount that will be paid is not known, but given the four-fold increase a substantial rise in what is paid can be expected. Now some might applaud taking money from BT in an environment where some say it has been making excessive profits and not investing enough in a pure fibre network, but if the group had invested more in FTTH/FTTP the valuation would probably be even higher.
So on one hand we have lobbying for an independent Openreach PLC free to invest in a more fibre rich UK with low wholesale pricing and on the other the VOA attempting to maximise tax revenues when the public purse is under great strain. Traditionally one of the big reasons cash strapped local authorities and the Government have invested in the various BDUK initiatives has been that driving interaction with Government services online saves money in addition to stimulating the digital economy.
"ISPA is extremely disappointed that the Valuation Office Agency has decided to significantly increase rateable values hitting companies that delivering superfast broadband hard. The Government rightly wants the UK to continually improve its digital infrastructure and our members are investing heavily in their networks. Significantly raising rates in this way is only going to put up barriers to investment and make bills more expensive to consumers and businesses.
Brexit means the UK needs to show it is open for business, for Government to meet this challenge it needs to create a better environment for investment based on certainty and stability.Statement from ISPA Chair James Blessing
"At a time when both the Government and Ofcom are seeking a strategic shift to more investment in fibre optic broadband infrastructure, the VOA and DCLG must establish a business rating policy that encourages this aim.
Form today's announcement it is very clear the current system is broken. This issue does not effect just BT and Virgin, but all builders of communications infrastructure.
Current VOA policy taxes the fibre connections of smaller operators at a considerably greater rate than BT and Virgin. This is a massive institutionalised distortion of competition, out of step with other Government policy and a barrier to investment in the UK's broadband infrastructure. Major reform to the business rating of broadband infrastructure is essential, and it must come quickly."Mark Collins, co-founder and Director of Strategy & Public Affairs of CityFibre and Chair of INCA's Policy & Regulatory Group
With Virgin Media in the middle of its Project Lightning roll-out and while its roll-out is progressing it has in the past made it clear that the UK environment needs to remain attractive for the roll-out to meet its previously announced targets and thus any major increases in the tax burden as BT is hinting too will either result in scaled back roll-outs or increases in cost to the businesses and homes consuming the various services. As things stand currently BT pays around 40% of its rateable value in actual tax, so if the rate multiplier remains this would be an increase of £231m, or put another way £8 per premise in the UK and while Ofcom regulates many Openreach and other BT Group prices it seems reasonable to expect an around 50p per month increase if it does filter down.
The most important point may not be the size of any potential to every broadband user, but the signals it sends to BT and any other operator looking to implement a FTTH/FTTP network of any significant size, i.e. sticking with copper is favoured by the UK tax regime.