Ed Vaizey wants help re VOA fibre rates – please comment here

by Trefor Davies on Sunday, 15 August, 2010

Last week the Valuation Office Agency put out revised guidelines for assessing rateable values for fibre connections.

There is no change at the high end so the likes of Virgin and BT will remain unaffected. However at the smaller network end of the scale there has been a massive price hike.

In 2005 if you were running a pair of fibres over 1km you would be stung with a rateable value of £280. In 2010 this has now shot up to £2000. This will not of course affect BT because they have a negotiated total rateable value for their network.

The upshot of this is that at a time when industry has been crying out for a level “rates” playing field the VOA has made it an even more unequal commercial battle in favour of the large incumbent operators.

I realise that running a country is a complex job but this complexity means that we need to have people doing it that understand the issues. You can’t on the one hand say that you are trying to promote Digital Inclusion with “Big Society” projects and flag waving and on the other hand make it harder for the people who you are trying to help to help themselves.

The VOA has no interest in the Big Society. The government does. The government should be providing the VOA with better direction here.

Minister for Communications, Culture and the Creative Industries, Ed Vaizey has made a statement to accompany the VOA announcement:

I welcome the work that VOA has been doing with industry. These new guidelines will offer much greater clarity for businesses that invest in broadband networks and give them the opportunity to feed their views to the VOA.

VOA has made it clear that they welcome evidence from the industry to enable the Agency to maintain a fair and accurate rating for this important market, which is a priority for the coalition Government.

I hope that industry will take the opportunity to study this new guidance and to engage constructively with VOA for the benefit of consumers and businesses throughout the country.”

What Ed Vaizey is saying is this is his stake in the ground. I hereby  invite readers to comment here to build up a body of material that shows this rating system is not going to work. Vtesse Networks and others have already been trying to hammer home the message.  Lets see if we can make it a bigger hammer.

{ 8 comments }

Guy Jarvis August 16, 2010 at 10:37 am

Section 873 is the primary interest for NextGenUs/Fibrestream as our focus is FttH P2P First Mile Access Network Overbuild

http://www.voa.gov.uk/instructions/chapters/rating_manual/vol5/sect873/frame.htm

Altnet FttC, already marginal now looks decidedly sickly though…

We have some concern as regards the loose definition of business connections vs residential and understand from previous BSG/VOA workshops and other discussions, that SME business connections are to be treated as subject to the same RV calculation as Residential connections.

i.e. the approximately £1 per customer per month handicap (that BT is not being subject to)

If it were the case that SME business FttH connections were subject instead to the lit fibre route Km calculation then this would prevent SME from having access to an affordable service available to their residential neighbours.

This would be a perverse outcome!

Although a non-trivial task, NextGenUs calls for the VOA to analyse the NGA components of BT’s infrastructure and break out the details separately from the Cumulo list.

With other NGA barrier-removal analyses underway, e.g. for duct and pole sharing, now is the time for Treasury/VOA to make a proper reassessment of how BT business rates are calculated, using the transition in the First Mile from copper to fibre as an easy differentiator.

In other words, let the Cumulo assessment apply to legacy infrastructure and diminish over time; record and rate separately the new NGA fibre infrastructure deployed by BT on the same equivalent basis as for so-called altnets – i.e. £20RV per connected home.

Only that way do we have a credible level playing field for First Mile FttH Access.

opticalgirl August 16, 2010 at 12:23 pm

I feel a bit more pessimistic about all this. It took the VOA long enough to come up with the list – it was published four months after the rates came into effect – and I don’t see them making any significant changes to the system unless the government asks them to. Whether the government will intervene is unclear, the report on Ed Vaizey saying there won’t be a fibre tax review has been repeated many times on the web, but not confirmed. The task is a big one – it’s not just about better evidence, or changing how BT is charged, maybe it’s about changing the system, which would mean unpicking years and years of precedent, which people are usually unwilling to do. And unfortunately it’s always easier to keep things how they are than make a change. The worst case scenario is that the 2010 list will apply for five years, until the next review is due.

tref August 16, 2010 at 3:15 pm

copy of Vtesse Networks submission to Parliament on rates can be found here http://www.publications.parliament.uk/pa/cm200809/cmselect/cmbis/memo/broadband/ucm2602.htm

cyberdoyle August 16, 2010 at 4:31 pm

I think the digital dinosaurs in Westminster are really struggling with this one. Is it too much to ask of a politician to grasp? I am not suggesting yet another useless quango is formed to engage and inform them, I do think that Ed Vaizey has probably too much work on in his portfolio to spend enough time on the case. To build a truly digitalbritain it is going to need a minister dedicated to that one task. It is far too important a job to not understand fully. Clever talk from BT and biased advice from ofcom will deliver mis information. The only thing Ed needs to understand is if he wants digitalbritain to happen then there has to be a level playing field to help us get on with it. If government has no money to put into the pot then they have to legislate and remove this stupid tax, if it is left on then we can’t build the networks so they won’t be any worse off will they?
What they should do is think to the future, enable the networks to be built by using their legislative powers to help the JEDI, then taxing the profitable ones via the existing VAT and the taxes from the new and more viable businesses created on the back of a decent rural connection. The latest report from sustainable rural communities states that rural business is a far stronger and viable proposition than urban ones and creates masses of GDP. http://ow.ly/2q3QQ or http://ruralcommunities.gov.uk/2010/08/16/the_rural_challenge/

“We have already said that home-based working is twice
as common in rural areas as in urban areas, and is a
sustainable use of property that can help both to grow
the local economy and facilitate the low-carbon agenda.
Existing housing and lack of broadband infrastructure
often mitigates against ‘live-work’ options, holding back
rural start-up enterprise and investment.”

The way to move this agenda forward is to support the grassroots initiatives and larger companies like Vtesse, and the best way to do this is through big society thinking and common sense.
The VOA tax is a tax on seed corn.
Far better to tax the harvest.
Cmon Ed,help us light our fibre. We dig it, you hum it.
chris

tref August 17, 2010 at 8:24 am
cyberdoyle August 18, 2010 at 1:19 pm

I think a lot of the debate at thinkbroadband is from BT plants. And dinosaurs. One of them is a customer of timico, you should maybe have a word in his shell like? ;) Anyone who thinks a connection of less than a meg is sufficient for the demands of the future needs his bumps feeling. Just because he has managed to get a connection in the final third thanks to line bonding and three landline connections does not mean this is the way forward. Just sayin…
chris

lakelandtreker October 4, 2010 at 6:54 pm

All we (the public) want is a level playing field for companies currently operating in or thinking about entring this market, why should one company that already has a massive advantage be further rewarded by lower rates.

tref October 4, 2010 at 7:27 pm

lakelandtreker – I totally agree

Comments on this entry are closed.

Previous post:

Next post: