Following the broadband money

Archive for January 2012

Surprise at VOA’s tax proposals for next generation broadband

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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

How BT strangled Ewhurst’s FTTP project in red tape

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BT invoked EU red tape to scupper a communmity-inspired partial fibre to the premises (FTTP) project in Ewhurst, Surrey, condemning villagers to a long wait for high speed broadband.

This emerged today, with the publication of a letter from the Surrey County Council explaining why it withdrew a £180,000 grant for the project .

The council’s letter says, “EU State Aid regulations do not allow public funding to be spent in areas that are included in BT Openreach’s partial fibre upgrade areas.”

Ewhurst has been and still is plagued by long distances to the local exchange, poor condition of the ducts, lots of poor quality (aluminium) cables and an unsympathetic incumbent. So it called for tenders, secured a quotation from Vtesse Networks and a “non-compliant” reply from BT, lobbied for the money, was awarded a granti n December 2010 from Seeda , the local development agency, and was about to sign the order when the grant was withdrawn, scuppering the project.

All this came out in February, almost exactly a year ago. Council and funding agency staff refused at the time to explain their decision, claiming, off the record, that they were under a non-disclosure agreement between them and BT.

At the time, there was no public indication that BT intended to upgrade the Cranleigh exchange that serves the two villages.  As recently as March 2010 BT wrote to Ewhurst saying that Cranleigh was not not on the “current or next phases” of the NGA (next geneation acces) FTTC schedule. This meant EU state aid rules should not have come into play. Then BT spoke to the county council.

The council now says, “Following BT Openreach’s inclusion of the Cranleigh exchange… in their national fibre upgrade programme, the £180,000 of funding being referred to was withheld…” BT added Cranleigh in April, at least three months after the grant was witheld.

So what’s happened to the money? According to the council letter, “The funding stream … is no longer in place and the £180,000 cannot be accessed.”

To be fair, it might have wound up in Defra’s £20m Rural Community Broadband Fund (RCBF) as part of its Rural Development Programme for England, which targets communities in remote areas. The council suggested that Ewhurst residents might like to approach the RCBF. After all, Ewhurst is 10 miles from Gatwick Airport.

There are problems with the RCBF. It provides only up to 50% of the project cost, after the expense (and all the risk) has been incurred, with no indication of what is an allowable expense.

Also, any approved plans must tie into the county’s broadband plan if the county council receives money from BDUK. This gives the incumbent operator, most likely BT, an insight into who is looking for funding, what their plans are, and potentially repeating the Ewhurst story.

But BT is laying fibre in the village. Walter Willcox, who helped lead the Ewhurst project for the residents, says, “As far as I can deduce BT are spending a small fortune laying what I expect to be a bespoke and restricted fibre network for their FTTC, all the way from Cranleigh but then only install their small 100 (line) service FTTCs instead of Vtesse’s 500 line cabinets.

“Whilst I expect the small cabinets will be adequate for say a couple of years BT will then be forced to spend very substantial amounts on expansion – unless they are about to do FTTP for the whole country.”

Hold your breath if you feel lucky.

Written by Br0kenTeleph0n3

2012/01/04 at 08:00