UK Wireless Broadband Networks Face Threat from VOA Business Rates

The UK governments Valuation Office Agency (VOA) has once again caused operators of fixed wireless broadband ISPs to fear for their future after it began a review of the rating system for related networks, which could result in the telecoms infrastructure of some providers being hit by additional charges (business rates).

The situation first came to light during early March 2013 after fixed wireless ISP VFast, which covers a large swathe of Kent in the South East England, warned ISPreview.co.uk that the VOA appeared to be considering a revision (or clarification if you prefer) that could “potentially have a devastating” effect on wireless providers around the United Kingdom by forcing them to pay more to operate their service.

A VOA Spokesperson told ISPreview.co.uk:

“The VOA values relevant rateable wireless infrastructure for non-domestic rates, irrespective of whether they are an ISP or NGA provider, a site provider or a provider of other wireless services. If a ratepayer thinks that the rateable value is not a fair reflection of the rental value (as 1 April 2008) then they should contact the VOA.”

One of the issues stems from how the VOA appears to define Next Generation Access (NGA) providers differently from the central government (i.e. NGA providers are subject to the VOA’s business rate charges). The Broadband Delivery UK (BDUK) office and EU say that NGA Wireless Networks must be able to offer real speeds of 30Mbps+ and include a “commitment to replace non-wired connections with fibre at a later stage” (here).

However the VOA does not define NGA networks with regards to the speed of broadband delivery or its fibre commitment and instead values the “passive infrastructure that supports the active equipment that relays the services” (here), which must be able to offer an “improved broadband connection” to what was available in 2008. In other words an “NGA network is generally accepted by the VOA as any network which allows for the provision of broadband delivery“. Very broad.

But until recently the application of such rates to smaller local and rural wireless providers has been somewhat of a grey area. Many providers tend to offer both slower sub-superfast speeds and focus primarily on residential solutions (a few also offer business products), though service performance has improved since 2008. The VOA’s move to clarify this could help but it might equally result in some wireless providers being forced to pay thousands of pounds extra per year to deliver services that were already expensive to support, especially in rural areas.

As a result the Independent Networks Cooperative Association (INCA) has spent the past couple of months trying to get as many wireless ISPs together as possible so that they can present a united front, although the VOA has already confirmed that it will use any additional information to help “refine” as opposed to stop its existing approach.

INCA Statement – 28th May 2013

The Valuation Office Agency is developing a rating regime for wireless networks which could land broadband networks with an extra bill for thousands of pounds a year. Where wireless networks are operating in marginal areas, these additional costs could seriously damage their viability. The VOA currently consulting on the best way to organise the charges and INCA’s Wireless Special Interest Group is co-ordinating a response from members.

It is up to operators to inform the VOA’s thinking, so they understand the impact this will have on a sector of the communications industry which provides vital services.

INCA is organising a Wireless SIG meeting on 14th June, 10:00 to 16:00 in Lancaster, open to all wireless ISPs who may be affected. The meeting will be chaired by Daniel Heery, director of the Alston Cybermoor project and an INCA board member.

On top of all that the VOA intends to backdate any “rates liabilities” that wireless ISPs may incur to 1st April 2010, which could be devastating for some providers and might result in the closure of some services.

In fairness the VOA would perhaps argue that they’re only attempting to apply the rules and rates that already exist. Never the less none of the wireless ISPs that ISPreview.co.uk spoke with could say for sure what the outcome would be but most felt frustrated by the VOA’s approach and feared that their concerns would ultimately be ignored.

As one provider told us, “I think some small hamlet villages will become unviable mainly due to the rates on the local repeaters, some on houses, some on churches + the end users charges. This will certainly have an effect on the government’s targets in the most rural areas.”