UK Gov Consult on 5 Year Tax Break for New “Full Fibre” Broadband Networks

The Government of the United Kingdom has this week started a new consultation on their proposal to introduce 100% business rates relief for new “full-fibre” (FTTH/P) broadband networks (estimated to be worth £60m), which will run from 1st April 2017 to 31st March 2022.

The Chancellor of the Exchequer, Philip Hammond MP, first unveiled the proposed tax break as part of last year’s Autumn Statement (here), although its introduction was stalled by the surprise 2017 General Election (hence being backdated to 1st April 2017) and thus it now forms part of the recently introduced Telecommunications Infrastructure Bill 2017-19.

The measure is naturally designed to complement the new £400m Digital Infrastructure Investment Fund (DIIF), which was also reannounced last month and aims to help support many of the same ultrafast “full fibre” networks as those proposed by the above bill (here). Not to mention the £200m that was set aside in the 2017 Budget for “local projects to leverage private sector investment in full-fibre broadband networks” (here).

Naturally the Government wants to introduce the change ASAP and thus the bill is very short, focusing almost entirely upon the proposed tax break. Similarly this week’s new consultation will only seek views on how the draft regulations should implement this relief and NOT the policy of the relief (e.g. who should be eligible for the relief, when it should apply or for how long).

Matt Hancock MP, Minister of State for Digital, said:

“Full Fibre is the gold standard for fixed broadband connectivity. It will ensure our digital infrastructure supports the UK’s world-class digital economy.

We have created a £1.1 billion package of measures to support market delivery of digital networks underpinned by full fibre, including £200 million to support local bodies in the roll out of full fibre networks in their area. Also, in July 2017 we launched a £400 million investment fund, providing finance for network providers to match in their fibre investments.

We have made progress in extending superfast broadband coverage. Public funding of £1.7 billion has resulted in over 93% of the UK covered to date, and we are on target to reach 95% by the end of the year.

Following on from this investment, we want to create an attractive environment for private sector providers to increase their roll out of fibre connectivity. We have therefore introduced in this Parliament specific legislation to allow business rates relief on new fibre deployment from 1 April 2017. This measure will support all providers who deploy new fibre increasing competition and helping the roll out of 5G. We are keen to ensure the measures are as effective as possible, and so we are launching this consultation on the detail of the regulations. We look forward to receiving your views.”

The consultation notes that this “relief will only be available on new fibre,” which is much as we expected. However it’s interesting to note that the Government had initially invited some Fixed Wireless Broadband ISPs to related meetings, although this is perhaps because some of them may also need to feed their new sites with fibre (not unlike the expectation for 5G mobile operators).

Sadly the use of existing unused fibres (known as Dark Fibre) won’t be eligible, unless of course the fibre itself is a completely new deployment built after 1st April 2017. “The regulations limit the relief to fibre which is part of the hereditament and was not laid, flown, affixed or attached before 1 April 2017. This will ensure that previously dark fibre which is lit after 1 April 2017 will also be excluded if it was laid, flown, affixed or attached before 1 April 2017,” said the Government.

The consultation (PDF) will run until 11:45pm on 21st November 2017 and this document currently only applies to operators’ in England, although the bill itself does include Wales too. Unfortunately none of this will help operators with the huge business rates tax hike that is hitting their existing networks (the hike itself will cost some operators significantly more than the predicted benefits of this relief).

UPDATE 31st August 2017

We’ve had a comment from Gigaclear.

Matthew Hare, Chief Executive of Gigaclear, told ISPreview.co.uk:

“We fully support new proposals for 100% business rates relief on the installation of new fibre broadband. It shows the government is taking seriously the challenge of future proofing the UK’s digital economy.

Such a scheme provides the incentive needed to extend full fibre rollout across the country, particularly for those providers that are already investing in bringing broadband to areas such as rural communities that are saddled with poor infrastructure and second-rate connections.

Guaranteeing business rates relief for five years will also give the government time to review the wider process of rating fibre and create a fairer mechanism of valuing different provider’s assets.”