Following the broadband money

Surprise at VOA’s tax proposals for next generation broadband

with 7 comments

Br0kenTeleph0n3’s attention has been drawn to the new Valuation Office Agency proposals on how to tax next generation networks.

“It isn’t exactly what we thought it would be,” said the industry source, who has been closely involved in the discussions between the industry-led Broadband Stakeholders Group (BSG) and the VOA that have led to these proposals.

Indeed some may be astonished with VOA’s founding assumption: “NGA will be mainly the replacement of existing copper infrastructure”. As BT has been saying since forever, that is true only up to a point, that point being the street cabinet. Copper local loops will be with us for a long time yet.

The proposals are nothing if not complicated. As reported earlier, one of the proposals is that non-BT operators that service rural areas (the 33% of homes that BT says it won’t supply with NGA without state aid) will have their networks taxed on a receipts and expenditure basis, ie, like BT, namely on profits.

This is good news, as everyone knows that profit is an opinion while cash is reality. But the VOA says it all depends on it getting enough information from the market to be able to make a realistic assessment of the notional rental value of the link.

VOA apparently considers urban and rural residences to offer different rateable values. In town it’s either either £18 or £20 , depending on whether BT has unbundled the local loop. In the sticks it’s £2 , £6.50, £10 or £13 per end user, depending on “the factual data for each network”.

The VOA also says it will assess connections to large businesses and high bandwidth SMEs on their own merits, but there is no indication of the threshold for “high bandwidth”.

Please read the document. There is sure to be lots more important detail, but frankly, my eyes have glazed over.

Besides, as almost all the alternative operators have dropped out of the BDUK rural pilots, the entire issue now seems moot.


Written by Br0kenTeleph0n3

2012/01/05 at 08:00

7 Responses

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  1. My eyes glazed over too, but not before I saw our county (Lancs) is in one of the highest bands. Goodness knows why, as we’re big on rural areas. Why can’t people write reports that normal people can read and understand? Why do they have to pad them out with so much bull? I am waiting on the ‘experts’ to provide a translation now. I guess its all a pile of hot air, a bit like all the PIA stuff. Of no use to us.


    2012/01/05 at 08:19

    • Would be interesting to see their workings. There’s a lot more urban in Lancashire than Lincolnshire but what effect that has on the bits inbetween is less clear.

      Save a few quid off your RV anyway.


      2012/01/05 at 12:52

  2. It’s very hard to tell which bits of the VOA stuff you linked is to be considered new? Most of it looks like a rehash of last years conclusions with nothing new to add but the page was apparently updated on 4th January 2012. Wish the VOA would do a news release to clarify such things.

  3. Good article Ian – all I would say is that the alternative operators have less dropped out than been excluded by a sham framework agreement designed to suppress innovation.

    There is a very strange agenda operating as regards BDUK which is over-cosy at the very least with BT.

    Guy Jarvis

    2012/01/05 at 16:19

  4. Been chatting with the BSG about this and a press release should surface next week, assuming it’s all signed off. Just waiting to hear some confirmation of whether or not the new rates will be restricted to BDUK/public subsidy bidders.

    • One wonders if it would be possible to audit the execution of the VOA’s proposals in the time and cost that would make it practicable and the results defensible in court, if it ever came to that. One suspects that a dispute would soon degenerate into the equivalent of two bald men arguing over a comb – nice for the lawyers, a costly waste of time for everyone else.

      Ian Grant

      2012/01/09 at 10:58

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