Service provider slams “fibre tax”

Small service providers have slammed updated tax provisions put in place by the Government, which threaten to hamper the growth of next generation broadband for business and consumers.

According to Fibrespan and other providers, the so-called “fibre tax” charges rates similar to those applied to business premises, and proposed changes will mean higher charges for businesses “lighting” new fibre.

The rates are set by the Valuation Office Agency, an arm of HM Revenue and Customs, but according to Fibrespan, the updated rates are poorly thought out, unfair and will hamper the rollout of fibre networks in Britain.

“Smaller networks end up paying more than larger ones – it costs much more per kilometre for smaller providers,” said Peter Caplan, chairman of Fibrespan. “And the minimum charge applied is £3,000 in London, so even if you’re lighting new fibre to connect a building next door to your office, there is a £3,000 annual fee. That puts people off.”

The £3,000 charge is a new proposal in the as-yet unpublished 2010 edition of the rating list fibre “tone” – seen by PC Pro – which updates the last “tone” that has applied since 2005.

The proposed minimum fee for short distance fibre routes outside London is £2,000.

According to Caplan, not only are the charges high, the way they are administered means they are squeezing the life out of many projects, including those bringing high-speed broadband to business centres and communities.

“Everyone is pulling towards the middle for better broadband but the way they assess this tax on fibre is based on fibre length, and where abouts it would be most expensive to charge,” he said. “The whole thing is about maximising tax revenue.

“It’s more expensive in London, so if any of a network is based there then the whole thing is charged at the London rate, and the network is charged depending on the length of fibre, not the distance covered. Because of ducting issues, a fibre might be twice the length compared to the distance between buildings and they charge the price for the whole distance of the fibre.”

Fibrespan also said there had been no consultation of the way rates are to be charged from this year as laid out in the 2010 List Tone, a claim the VOA denies. It chose not to share its figures when we asked for specifics on the changes.

“The Valuation Office Agency is in contact with representatives of the telecommunications industry and has recently agreed the valuation scheme for fibre optics for the 2005 rating lists,” a spokesperson told PC Pro. “The VOA liaises with industry representatives to ensure that these assessments are accurate, fair and consistent.”