Minister Backtracks On Fibre Tax Review

Ed Vaizey, the government’s Digital Minister, has said there will be no review of the business rates on fibre networks, which some say are the “biggest single barrier” to investment in next-generation networks.

Speaking at the launch of a new fibre-to-the-cabinet (FTTC) broadband service put into the Hertfordshire village of Birch Green by a small broadband operator called Vtesse Networks, Vaizey told the assembled crowd that his recent meeting with the Valuation Office Agency – which sets business rates for the so-called “fibre tax” – had been “constructive”.

“The key is that the system is transparent,” said Vaizey. “My job is to work with the VOA to bring my issues to the table. We don’t need to go through the rigmarole of a review.”

Business rates make ‘unfair’ fibre tax

The so-called “fibre tax” is in fact the application of business rates to operators’ network assets, and small operators have long complained that the valuations on their assets are calculated in a different – and unfair – way compared to larger operators such as BT.

The VOA currently forces small operators to pay considerably more than their larger counterparts – making superfast fibre optic broadband networks unfeasible for many smaller ISPs.

Vaizey’s comments indicate that the Conservative party is planning to go back on its pre-election promise to review business rates on fibre networks, as laid out in the party’s manifesto on communications.

In the manifesto, published in February, the Tories stated that “the current system is heavily weighted in favour of the incumbent (BT) and acts as a detriment to smaller operators building fibre networks”. It promised to “re-examine the case for changing the rating system for fibre networks with a view to removing all current disadvantages suffered by new operators”.

However, Vaizey’s refusal to review business rates on fibre networks could hold back the introduction of new high-speed networks, and prolong the monopoly of BT and Virgin Media.

Birch Green not-spot

Vaizey’s comments on fibre business rates were just an aside to the main event at Birch Green, at which the minister cut the ribbon on a new Vtesse fibre cabinet that will provide fast broadband to homes and businesses in the village.

Situated too far away from the local BT exchange to receive high-speed broadband services, Birch Green had previously been classified as a “not-spot”, experiencing download speeds of less than 2Mbps, with no access to alternative services.

In stark contrast, the village’s residents and local businesses will now be able to connect directly to Vtesse’s high-speed fibre network, enjoying download speeds of up to 40Mbps.

“Until now it’s been ‘Hobson’s choice’ for the people of Birch Green; slow broadband or no broadband,” said Aidan Paul, chief executive of Vtesse Networks. “Our new super-fast service will change the way this community uses the Internet, at last making it possible to do the things so many of us take for granted, like watching iPlayer, uploading photos to Facebook, emailing invoices to clients, or simply ordering groceries.”

At the event, Vaizey was also questioned about net neutrality and the Digital Economy Act, but was forced to admit he had never heard of ACTA – the proposed treaty for establishing international standards on intellectual property rights enforcement.