back to article Fat fibre taxes strangling us – UK broadband providers

Broadband providers have hit out against a forthcoming hike in business rates which will dramatically increase the tax paid on fibre optic networks. The increase in tax is decided by the Valuation Office Agency, which sets rates for all businesses accessing land. The body is in the process of updating the rateable values of …

  1. Disgruntled of TW
    FAIL

    Ask the VOA how they calculate BT's rates ...

    And it will become clear that BT is treated "differently" because BT doesn't know how many Km of lit fibre it has, or won't admit how much it has ... this is differential taxation, creating an unfair market.

    1. Anonymous Coward
      Anonymous Coward

      Re: Ask the VOA how they calculate BT's rates ...

      BT don't have any reason to take a proper survey of what they've got whilst the status quo favours them. VOA really need a kicking over this - if you must have differential taxation it should be favouring small competitors, rather than the large monopoly suppliers. At least that way it stimulates competition. Maybe levy double rates for companies which fail to provide a detailed assessment of their deployed assets (i.e. BT and Virgin)?

      As far as incentivising investment, how about VOA setting the business rates on copper connections 10x higher (adjust as necessary) than the equivalent fibre would be. Might get the big fibre rollout question to change from "How long can we sweat the existing assets?" to "How much can we save by replacing this crap immediately?".

  2. Anonymous Coward
    Anonymous Coward

    Government clueless on rates as usual

    I can't say I'm surprised that broadband is being hit by the VOA (themselves only enacting government policy), because there's plenty of other crapness in the work of UK property taxes. Domestic council tax is a complete mess, based on made up valuations now thirty five years out of date. Business rates have been a carbuncle on growth for the last decade or so. In the autumn spending review, government announced plans to fritter a third of a billion on heat networks and bring in over £2bn of private capital, but VOA are trying to levy business rates that are (like for like) five times or more the value charged on an equivalent gas network.

    So shitting on broadband companies just as government claim to be supporting more broadband roll out is par for the course, and in that respect they should perhaps conclude that they aren't being discriminated against. This is business as usual.

    1. Number6

      Re: Government clueless on rates as usual

      The way to fix council tax is to replace it with something based on the last sale price of the property, inflated annually by some fixed amount, to be re-assessed each time the property is sold. That way, granny who paid a pittance many years ago but lives in a £2million house in London isn't forced out, but anyone buying it from her (or her estate) knows in advance how much tax it's going to cost them annually over the coming years and can budget for it. Then apply it to all property, business or residential.

  3. Sureo

    Isn't this the kind of cost that just gets passed on to the customers?

    1. Anonymous Coward
      Anonymous Coward

      only if they have enough customers to pass it onto as BT doesn't get charged the same rates and so can undercut.

      1. Anonymous Coward
        Anonymous Coward

        Difficult to compare BT and VM

        VM's network is ONLY used by VM.

        BT's network (from the exchange to the punter) is by law open to being used by all sorts of other carrier. eg Sky, TT etc etc.

        So a bit of BT fibre may well be used by half a dozen different other ISP's. Then you have all the people moving from one to another one. For a level playing field when it come to us punters you can't load it all onto BT. Very difficult to apportion what how much should be off loaded to other ISP's.

        The same goes for those with kit in a BT Exchange and those without.

        IMHO, it is rather difficult to use the same valuation model on BT's cables than on VM's.

        The crappy VM network up my street has not been upgraded since NTL put it into the ground god knows how many years ago whereas the BT network is a lot newer.

        Yes I have an axe to grind against VM. My house did not exist when NTL laid the cable so they (VM) won't connect me to it despite it running less than 10ft from my property. I'll even dig the trench for them but nope. BT OTOH, did connect it up.

        1. Roland6 Silver badge

          Re: Difficult to compare BT and VM

          VM's network is ONLY used by VM.

          BT's network (from the exchange to the punter) is by law open to being used by all sorts of other carrier. eg Sky, TT etc etc.

          I think your logic is faulty. Take the local high st. in a neighbouring town. The business rates on a shop unit adjacent to the market sq. that was a hairdressers with 4 chairs is circa £80,000 pa. So are you suggesting that if I use that unit (as the previous business did) and operate it as a hairdresser's with four chairs then I should be charged the full rate (ie. what you are implying for VM); whereas if I were to allow third-party hairdressers to use the chairs, I should be charged a reduced rate as it would be difficult to apportion what should be offloaded (ie. what you are implying for BT).

          Sorry, in my book the duct is the premises and hence subject to VOA considerations. How many cables I put down it and how much I charge others to run their own cables or use my cables is a business decision of no concern to the VOA. As for BT's open access obligation, yes that should qualify them for a partial rebate, but the valuation method remains the same.

          Taking the high st. metaphor a step further, there are reasons why business rates on high st. premises is higher than on out-of-town or business parks; I suggest that given the ease of access to BT's infrastructure etc., it is probably more akin to the high st. than out-of-town and hence should incur a higher rate of business rates...

          1. dcluley

            Re: Difficult to compare BT and VM

            "more akin to the high st. than out-of-town ..."

            I don't have much time for BT but I would want to quibble with your statement slightly. BT probably has more rural stuff miles from anywhere with ridiculously low data rates that could do with upgrading than other providers like VM. If only they could be persuaded to do the upgrade......

        2. Anonymous Coward
          Anonymous Coward

          Re: Difficult to compare BT and VM

          > VM's network is ONLY used by VM.

          > BT's network (from the exchange to the punter) is by law open to being used by all sorts of other carrier. eg Sky, TT etc etc.

          Wrong. VM's is wholesaled out to plenty of other companies, including Sky.

          1. John Brown (no body) Silver badge

            Re: Difficult to compare BT and VM

            That's true to some extent, but I think the conversation on "sharing" fibre is leaning towards the end user retail customers rather than wholesale backhaul, which is where VM sells access. Also the VM sharing is a pure business decision, not a legally mandated process.

  4. Anonymous Coward
    Stop

    It would be interesting to compare to BT

    ...but remember Virgin is no "small" company either, what being a multi-billion pound, multi-national AKA Liberty Global, so they are not exactly a poor hard done by victim. Also given Virgins fibre tends to be in urban areas, it stands to reason they would be hit more if you averaged out cost per KM, as stated in the article, rural areas attract a lower rate.

    But like for like comparisons are exactly what are required.

  5. Rol Silver badge

    Are we to expect Network Rail to stump up a realistic rate for the huge swathes of land that is unusable for anything other than trundling carriages up and down, while the unobtrusive cables that do not debar alternative land use gets whacked with a, pass it on to your long suffering customers indirect regressive tax.

    So it's only a matter of time, before my internet access goes the same way as my intercity access, unaffordable and meant primarily for the sole use of the fortunate.

    For God's sake, just vote us out of the EU and complete this shit storm of Capitalism gone mad quickly and humanely, 'cos at the moment I feel as though I'm part way through, being hung drawn and quartered.

    1. ZSn

      Interesting crowbaring in of the EU into a purely British failure. Is the weather Brussels's fault as well?

      1. DavCrav Silver badge

        "Interesting crowbaring in of the EU into a purely British failure. Is the weather Brussels's fault as well?"

        I think you might need to re-read what the OP said. He didn't say it was the EU's fault, he said just get out of the EU and complete the collection of shit, i.e., leaving would be a part of this collection.

    2. Roland6 Silver badge

      I think you missed the point of the article: its not whether National Rail should pay a realistic rate, but whether the Severn Valley line say, should pay a rate that is substantially higher than that being paid by Network Rail per km; just because it is easier to measure the total length of the Severn Valley trackbed than Network Rail's.

    3. Anonymous Coward
      WTF?

      WTF has this to do with the EU?

      It's because of stupid, ill thought out, irrelevant arguments like this that makes me wonder why the hell the decision is being left to the brain dead general public.

      Next you'll be blaming the HSE for the banning of playing conkers in school.

      So going by your logic.

      This is the sort of stupid rules that we need the EU to control our government over, so we don't get more of these stupid taxes overburdening our multi-billion pound multinationals. Vote In

      <rolls eyes>

  6. Anonymous Coward
    Anonymous Coward

    This is not a new problem, but certainly one holding back the UK's Digital Economy. Indeed Electronics Industry veteran & new technology luminary & evangelist Jeff McKeown was on the money here (2009):- http://www.zdnet.com/article/darling-must-cut-tax-on-fibre/

  7. Barry Rueger Silver badge

    Call Me Skeptical

    Whenever a major corporation starts whining about "unfair" taxes, fees, or regulations, my first instinct is to look at their balance sheet

    99 times out of a hundred it's companies with billion dollar profits that claim "We can't afford to pay our way!"

    Usually while they're outsourcing staff to India, and manufacturing to China.

    1. SImon Hobson Silver badge

      Re: Call Me Skeptical

      But in this case, it's not so much "we can't pay" - it's "why should we have to may much more than BT ?"

      It is a real problem. At work, a few years ago we got a call to get internet connectivity to a client "a bit in the sticks". They had just been given (very short) notice that their existing service was being shut down - because of rates. I didn't have all the details, but in essence the rates people wanted to charge rates on the radio towers based on what they could theoretically make in profits if fully utilised - ignoring the fact that there were several towers with only a few customers at the end of the chain !

      Given the sudden imposition of disproportionately high rates, the operator simply decided it wasn't viable to keep the service running and so shut it down.

  8. energystar
    Paris Hilton

    Not enough for a Greek Island?

    Or.. is this real?

  9. Wolfclaw

    No sympathy, now these companies know how their customers feel being screwed for a service they cannot meet and always have excuses for SLA failures, poor customers services and price increase and yes VM, you are at the top of the list ! !

  10. Anonymous Coward
    Anonymous Coward

    Way to go VOA, way to go - sigh

    Having owned a small ISP a couple of years ago that owned and operated a small fibre network I can tell you with great certainty that fibre tax kills dead any chance smaller ISPs or network operators have. It not only ensures that it simply isn't economical to build out your own network and hence you basically have to rely wholesale on the incumbent protectionist large operators, they actually do (when given the chance), laugh in your face as they know they play on a very very skewed playing field.

    It was utterly bloody ridiculous in the first place and to now see this, it's just downright crazy.

  11. Alan Brown Silver badge

    Taxing in-ground services

    One has to wonder if rates are also payable for sewers, power and water lines.

    1. Commswonk Silver badge

      Re: Taxing in-ground services

      Why limit it to underground services? (BTW you omitted gas pipes!)

      Post boxes, telephone boxes, tram lines, overhead cables for same, bus stops and so ad infinitum. TfL's bill would be humungous; perhaps it actually is. Might make for an interesting FoI enquiry.

      It might be corporate Britain that gets the tax bill but it's the poor bloody end users who pay it.

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