Telcos hit out against plans to hike their broadband rates

Could someone explain what the rateable value affects with regards to laying new infrastructure? I only know about rates with relation to commercial buildings.

None of the reports about this seem to explain.

Back of the envelope calculation

Rateable Value rising from £158m to £715m means a rise of £557m, multiplier is 49.7%, giving BT a bill of £276m. There are 26.7m households in Britain, so that's just over £10 a year each. Rounding up to £12/year, that's £1 per month per household.

The direct bill to consumers will be a bit less because I haven't taken into account business telephone lines, but ultimately it's all coming out of the same pockets. This isn't a tax hike on BT; it's a tax hike on all of us.

I just want cheap broadband and not expensive football with no desire to cross subside broadcast purchase rights.

Madness

See title.

Does BT still get a discount?

When I was involved in a 3rd party FTTC programme here a few years ago, one of the (many!) complaints from small ISPs against BT (as Openreach) was that the "fibre tax" (business rates on fibre in the ground) was applied VERY differently to BT compared to other telcos, thereby giving BT a huge competitive advantage. Is that still the case, or is some of BT's beef with the current change that they're losing some of their preferential tax treatment?

A big problem at the moment is the ISPs' priorities in what upgrades they deliver and to whom.

Just to avoid jumping on the BT bashing bandwagon lets take a look at Virgin first. They keep on upgrading existing infrastructure while not expanding their network. A friend of mine recently received some spam from Virgin telling her the 100Mbps service on her street has now been upgraded to 200Mbps and making her a special introductory offer (something that should be banned - existing customers should not be expected to subsidise new ones). Meanwhile another friend living two streets away still does not have access to Virgin fibre.

BT keep on upgrading infrastructure for some exchanges while not touching others. I see exchanges where customers are still on 20CN ADSL1 services, while other exchanges that were upgraded to 21CN ADSL2+ years ago and have since been upgraded to FTTC are now being upgraded to FTTP. I remember BT telling me 20CN was going EOL years ago, so why is there still so much of it out there when other customers are getting FTTP?

Yes you can say that those exchanges are more profitable, but it is ridiculous that some people are getting their home internet access (I hate the term broadband) from 3G and 4G services because the fixed line service in their area is so poor.

The way the market seems to work is that BT hold back from offering very high speed upgrades where there is no competition. As soon as somebody else, Virgin for example, offers or even threatens to offer fast fibre services in any given area that area suddenly jumps up BT's roll out plan. Equally Virgin are not interested in rolling out new or upgraded services even in urban areas until BT announce plans to outdo them. As such there is no incentive for BT to roll out fibre (TTC or TTP) as long as long as ADSL is the only game in town. Equally there is no incentive to Virgin to roll out fibre to areas they don't already serve.

The best way the government could deal with this? Exclusivity. All the government needs to do is give a period of exclusivity deal (say 5 years) to whoever rolls out high speed services to an area or even a street. So if and ISP rolls out fibre to my village (unlikely) then anybody else who wants to offer fibre in that area must use that ISP's infrastructure for at least five years. This is a big incentive. It means that non only does the ISP get the revenue from any customers they sign up, but they also get wholesale revenue from other ISP's customers who want fibre. It also brings us back to the original model of the cable rollout.

Most people probably don't even remember it, but back in the day small companies bid for cable franchises on a local basis. The likes of Jones Cable and Yorkshire Cable got the deals round here. As a model it was a good idea because smaller companies were competing with each other for new areas. The problem was that those companies all got swallowed up by Telewest and NTL and those two by Virgin. All of which gave us a second effective monopoly (if you see what I mean) rather than a competitive market. Virgin are actually in a more protected position than BT as there is no obligation for them to throw open their last mile to other ISPs.

A model such as I'm suggesting would encourage new operators to enter the high speed infrastructure market.

Rateable values are not rates.

The rates on a premises are a combination of two things: its rateable value and a multiplier. The multiplier is there simply so that authorities don't have to survey every property in the country every year: instead of surveying a property again to see how much its value has changed in the last twelve months, councils just multiply last year's valuation by 1.2 or whatever. I did a report on the system for my GCSE (many many years ago), and discovered that Southwark Council were at the time using rateable values based on thirty-year-old surveys -- with, of course, a huge bloody great multiplier.

In other words, this kind of huge leap in rateable values is completely normal, and it doesn't usually lead to equally huge leaps in actual rates.

I'm happy to admit I'm hardly an expert on this. Is there some reason why, on this occasion, a fourfold increase in a rateable value could lead to a fourfold increase in the rates? Or are the ratepayers taking advantage of the public's ignorance of the system to threaten them with drastic price hikes?