The current system of business rates is not fit for purpose and needs to be fundamentally reformed, say MPs.
The call could open the way for a reassessment of the so-called fibre tax that makes BT’s competitors pay 20 times more to operate fibre networks. It could also kill efforts by civil servants to tax Wi-Fi hot-spots, which areincreasingly important to backhaul data on mobile broadband networks.
A spokesman for the business, innovation and skills committee said that while its study focused purely on the effect of the tax on the retail sector, it was possible a full review would examine the effect and desirability of the fibre tax.
Normal network operators must pay the tax whether or not they make a profit and in advance of sales. However BT pays the tax in arrears and on profits, while Virgin Media pays based on the number of homes passed by its network.
The committee called for a “wholesale review” to examine whether non-domestic property taxes aka business rates should be based on sales rather than the rateable value of a property and how frequently revaluations should take place, among other things.
The call for the review was prompted by the growing success of e-commerce and consequent slackening in demand for high street premises as a sales channel.
Chairman Adrian Bailey said business rates are one of the highest forms of local property tax in the European Union, adding, “Business rates are the single biggest threat to the survival of retail businesses on the high street. Since the system was created (in the 1600s) the retail environment has changed beyond all recognition. A system of business taxation based on physical property is simply no longer appropriate in an increasingly online retail world.
“This is a time for wholesale review and fundamental reform, not for tinkering around the edges. Business rates are not fit for purpose and minor administrative changes will not alter that.
“The government’s retail strategies are full of warm words that fail to address the most debilitating levy on existing businesses and the most crucial deterrent to new businesses appearing on the high street – business rates. Fewer strategies are required; simple, decisive action is needed.”
The government must respond by 4 May.
In a rare bit of good news for the altnet community, Gigaclear announced it has won funding from the Rural Community Broadband Fund (RCBF) to design, build, implement, and operate a fibre to the premises (FTTP) broadband network to serve around 500 homes in Northmoor, Oxfordshire.
Just weeks ago Gigaclear scrapped a planned rollout in Dun Valley, Wiltshire after it discovered BT planned to use taxpayers’ money to provide a fibre to the cabinet (FTTC) service to the area.
Gigaclear won the contract in an open procurement by West Oxfordshire District Council (WODC) after the parish secured an RCBF grant from the Department for the EnvironmentFood and Rural Affairs (DEFRA). The value was not disclosed.
In a survey of residents’ needs, 14% of respondents said they could get no broadband service at all. A quarter of responses were either from business premises or from residential premises used by people to work from home and/or run their own businesses. Better broadband was high on their priority list.
Graham Shelton, chairman of the parish council and leader of the broadband group, said talks with Oxfordshire County Council revealed the parish would be likely to fall outside the area covered by Oxfordshire’s £4m Broadband Delivery UK (BDUK) subsidy. “That freed us to pursue other options. We were aware of Gigaclear’s work elsewhere, so were delighted they won on merit.
“The network will ensure that everyone can obtain equally superfast broadband and that it will be available to all properties in the parish – including a number of caravans.”
Gigaclear is expected to finish the network in September.
The figures on which this report was based were corrected after we published the report by the authors, Peter Buneman and Michael Fourman, both professors in the School of Informatics at Edinburgh University, as noted in the comments below. But the corrections themselves do not add up. We have asked the authors for an explanation, and to avoid further confusion, have scrapped our original report.
Mr Fourman has sent an exhaustive reply complete with tables. We will publish it in full, but we are reformatting the tables to make them easier to read. Please be patient.
In the meantime he says:
There are many approximations to be chosen and caveats to be stated. We can produce many different sets of estimates, but that fact should not obscure the underlying issues:
Unless there is substantial investment in hundreds new fibre-fed cabinets (or equivalents), (or in FTTH where there are exchange only or too-long lines :
1. In rural areas at least 40% of households will not get superfast (>24Mbps) unless we shorten some copper beyond existing exchanges. If we focus on remote rural areas, that number rises to 45% and in very remote rural areas to over 60%.
These are optimistic estimates based on theoretical performance of good copper. Using empirically-based estimates for copper speeds gives higher stillslow figures: 49% for rural overall; 52% for remote rural; and 71% for very remote rural.
2. Even in urban areas it is unlikely that 95% will get superfast (>24Mbps) speeds. If we use empirically-based estimates for copper speeds then one in eight households in urban areas of Scotland are unlikely to be able to achieve the EU target of 30Mbps.
Now please fill in the poll below so that we can get some reliable numbers.
BrokenTelephone doesn’t normally publicise paid-for events, but we’re making an exception in this case. We have long argued that the UK has ignored alternatives to the gap-funded model beloved by BT to finance investment in broadband networks. At last someone has heard us and is taking he message seriously.
Adrian Wooster, late of BDUK and now with Broadway Partners, is putting together an event for 12 March to look at the non-engineering aspects of getting next generation broadband into the Final 10% – funding, investment, business models, social inclusion, and the dreaded state aid. It is aimed at the public sector, financiers and communities.
The timing is perfect because DCMS has just announced how the £250m of the £300m promised years ago will be divvied up: England £184.34m; Wales £12.1m; Scotland £20.99m and Northern Ireland £7.24m.
The official reply to BrokenTelephone’s questions about the terms and conditions tied to the allocation was, “Procurement will be a local decision – we’re not dictating who the supplier should be. Where contracts are already in place with BT, local bodies can decide to extend them (within contractual limits); or to undertake a new procurement either using the national framework or not.”
Reading between the lines, there is a desire for local authorities not to simply give it all to BT but to conduct genuine fresh procurements in an attempt to get better value for taxpayers. INCA has shown that LAs can likely get better value for their taxpayers’ money if they go with altnets rather than BT. INCA executive director Malcolm Corbett is on record saying that procurements that pick BT find they contribute up to 90% of funds to what is meant to be a match-funded process; altnet solutions could come in at 30%, thanks to the willingness of private investors.
BT is already trying to “white ant” altnet coverage areas, making it difficult for altnets to provide coverage without overbuilding BT’s subsidised coverage areas. It is also spending £50m to fill in city not-spots and hook up multi-tenanted buildings to stop Hyperoptic and CityFibre from having a free run. BT claims that serving 150-home villages like Lancashire’s Dolphinholme is commercially viable. That might be true, but only because BT is running a fibre to a nearby radio mast; Arqiva or a mobile network operator is picking up most of the capital cost, and the village (or rather homes along the road) is covered en passant at marginal cost.
The other big win for LAs is that many would-be altnets offer fibre to the home; BT’s fibre stops at the street cabinet. So even if the altnet fails, the fibre is in the ground; LAs could get BT or another big operator to take it over at a fraction of the cost than if they picked BT at the start.
Wooster says the event will present funding options that don’t depend on gap-funded grants. “The UK is largely alone in gap-funding. There are very good, tested models that we should be learning from. These have a bigger economic impact and are better value for the stakeholders including, not least, the public sector,” he says.
Wooster says delegates will learn to how create more options and choices for broadband delivery; how to maximise their SEP allocation; how to love state aid; how to get new funding streams without spending a penny; how to de-risk their projects; how others abroad have done/are doing it; and how to make your area a contender for ‘Best Broadband in Britain’.
The event will be at the Riverside Studios in Hammersmith, so reasonably central. Fees are £99 each for civil servants, and £50 each for communities. Book via https://broadwayworkshop1.eventbrite.co.uk.
The price for communities has dropped to £25, and Wooster says, “We will listen to cries of poverty.”
It’s becoming increasingly clear that BT is prioritising rural areas where it faces competition for its initial taxpayer-funded roll-out of next generation broadband.
The latest example comes from West Sussex, where BT has already upgraded the coastal belt in its commercial roll-out, and is now moving inland.
The official West Sussex County Council interactive map (which is not up to date in terms of its colour-coding; it still says the coast is “under evaluation”) does not reflect any choice of suppliers of high speed broadband.
However, BrokenTelephone has made a more up to date map which shows roughly how BT’s taxpayer-funded coverage maps onto the coverage provided by wireless internet service provider Kijoma (outlined in black).
Interestingly, the WSCC says that two of the exchange areas shown as pink are “partly in the commercial roll-out”.
“These are Billingshurst and Bosham. The rest are outside of the commercial roll-out and therefore in the area eligible for funding by the project.”
When the BDUK procurement framework was first mentioned, wireless was excluded as not being capable of meeting EU targets of 30Mbps for all, and 50% of the population on 100Mbps service. The European Commission later relaxed its stance on wireless, but BDUK and local councils appear to ignore the change in contracting for next generation broadband networks.
We have asked WSCC for clarification as to precisely which areas in Billinghurst and Bosham (bottom left of map, just south of Kijoma coverage) are in the commercial roll-out, and what the time-frame is for the roll-out to the non-commercial parts are. We’ll update this story if we get a reply.
This is not the first sign that BT is being allowed to use public money to overbuild privately-run networks. The most egregious so far is BT’s roll-out of a fibre through the
Lancashire village of Dolphinholme, where residents have spent time, money and effort digging towards the B4RN network to ensure that their village doesn’t miss out.
While BT’s Dolphinholme roll-out looks good in terms of “homes passed”, the actual availability of a fibre connection to those homes not on the road appears slight. The more likely reason for the fibre link is that the road through Dolphinholme leads to a radio mast, and the fibre is there to backhaul mobile radio traffic, not to carry residential broadband traffic. But its presence is a threat to B4RN, which, try as it might, is unlikely to persuade mobile network operators to use its fibre, at least in the short term.
Tunstall, another Lancashire village in the B4RN coverage area in BT’s sights, is on the road to Kirkby Lonsdale and there is already fibre in that road. BT is also targetting Whittington, which is the hamlet after Arkholme and Docker on the way up to Kirkby on the opposite side of the Lune valley to Tunstall.
Two weeks ago Gigaclear scrapped plans to roll out a 1Gbps-capable FTTP network in the Dun Valley, Wiltshire, after the Wiltshire County Council said it would apply BDUK money to BT’s “up to 80Mbps” FTTC roll-out in the area. This followed months of discussions between residents, Gigaclear and the council as to their roll-out plans for the valley.
The department of culture, media and sport (DCMS), home to communications ministry and Broadband Delivery UK, has given Belfast city council £13.7m from its Superconnected Cities fund. This fund is designed to provide small and medium enterprises with a “step-change” in the speed of the broadband they use to connect to the internet.
SMEs can apply for a voucher to the value of £3,000 towards the cost of installing faster internet connections.
The city council added another £3m to bring the total to £16.7m.
Why then does the city say “Over £9 million is going towards the voucher scheme…”? Why not all the money? What will the remaining £7m go on?
Could this provide a clue? “By 2015, the council aims to have improved wireless and wi-fi access across the city, via metro wireless in the city centre and wi-fi hotspots in more public buildings.”
Taxpayers have so far chipped in nearly £24m of the £56m spent so far to get next generation broadband into Northern Ireland, only for Ofcom to report NI still lags the rest of the country in take-up.
Belfast City Council replied: “The remaining portion of the investment package will provide a metro wireless concession to allow in-fill of the 3G/4G service and an outdoor Wi-Fi for Belfast, as well as the provision of free to the public Wi-Fi in public buildings across the city. The tender process for the Metro Wireless already has been advertised: http://www.belfastcity.gov.uk/business/investinginbelfast/superconnected-belfast/superconnected-metrowireless.aspx. BCC is still in negotiations with other public bodies which will allow us to design the free Wi-Fi in public buildings scheme; details of this will be published in the coming months, depending on the progress we make in our negotiations.”
Meanwhile, the Northern Ireland Executive said on 7 February it would sponsor a further £23.5m investment with BT to fill in some broadband not spots and cover 45,000 more homes at an average cost of £522/home.
The Department of Enterprise, Trade and Investment is contributing £9.9m; the European Regional Development Fund’s (ERDF) £5m; BDUK £4.4million, and BT £4.2m to the project, which puts state aid intensity at 82%.
This brings the total spent on next generation broadband in Ireland with BT to £93.6m. The 2011 census found 703,300 households in Northern Ireland, which makes the average cost per home passed so far £133.
In July 2011 we were told the NI roll-out was “complete”. Further down in the story BT said “at least 89%” of phone lines would be connected to a fibre-enabled cabinet. The present investment will take that to 95%.
Devon residents were refused a vote on which next generation broadband plan they prefer – their own or BT’s – at a public meeting hosted by the leader of the county council.
Local newspaper the Kingsbridge and Salcombe Gazette reports that residents who attended a public meeting on 22 January heard details of a fibre to the home (FTTP) project by would-be community network operator South Hams Broadband and a fibre to the cabinet (FTTC) alternative by BT and the county council-run Connecting Devon & Somerset.
The paper reported that Bill Murphy, MD for BT’s Next Generation Access roll-out, told the meeting they “had an important choice to make”.
County council leader John Hart, who hosted the meeting, refused to allow a vote on the two proposals.
Chris White, who spoke for the South Hams Broadband project, which plans to run fibre to all the premises in three coastal parishes west of Dartmouth, was reported saying it was now “unclear” how residents would be able to make this choice.
“Perhaps a vote could have been taken then and there to give Councillor Hart a flavour of what the audience had made of the two options presented. Unfortunately, he was having none of it, and refused to have a vote of any sort.”
White went on to say, “Although the mood of the meeting was in fact unmistakeable, it became clear that (Hart) and his select committee would make the decision on ‘commercial’ grounds, based on a written report from the CD&S broadband team that would remain confidential as it would contain ‘commercially sensitive information’.”
Shortly before Christmas BrokenTelephone reported that Lancashire’s B4RN and Devon’s Thurlestone (aka South Hams) community-based next generation broadband projects had passed the BDUK hurdles to qualify for money from the £20m Rural Broadband Development Fund. The next step is have their county council exclude their planned coverage areas from BT’s taxpayer-subsidised fibre to the cabinet roll-outs.
As reported here earlier, BT has an effective veto over such exclusions.
A 2012 analysis of the South Hams project by rural broadband consultant Adrian Wooster (whose subsequent contract with BDUK has just finished) revealed the area has 4,610 homes. Seventy per cent are main residences and 260 are social housing properties; a quarter are second homes or holiday lets. South Hams now plans to cover about a quarter of the original area.
Wooster reported the average predicted speed in the project area was just 3.1Mbps, (at the time half the national average), with ADSL2+, VDSL and Docsis services all unavailable.
There were 13 BT telephone exchanges. None was “unregulated”, and only in Kingsbridge did BT have competition in the form of TalkTalk.
“The existence of additional operators in a telephone exchange can be a useful indicator of the markets general interest in the area, and the existence of backbone connectivity; some operators offer wholesale access to their core networks as well as retail services,” Wooster wrote.
“That only Kingsbridge has additional operators is perhaps an indicator that the whole of the South Hams area is not considered attractive to broadband operators and that backhaul connectivity may be scarce and expensive.
“Should the community decide to progress a FTTP project in the Thurlestone area, the budget is likely to be in the realm of £3-5m.”
White said the South Hams plan is to make a 100Mbps symmetric service available to all premises in the parishes of Thurleston, South Milton and South Huish. He expects to issue a tender in March, select a supplier in June, and start work in July, provided the county agrees to “descope” the three parishes.