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By: MarkJ - 13 January, 2011 (8:19 AM)
uk fibre optic broadband taxThe governments Minister for Communications, Culture and the Creative Industries, Ed Vaizey, finally met with UK ISPs earlier this week to discuss the Valuation Office Agency's (VOA) controversial fibre optic broadband tax (Fibre Tax). The meeting was originally supposed to be held on 2nd December 2010 but was delayed due to the bad weather (heavy snow).

This tax is often blamed for stifling the development of new "super-fast" fibre optic broadband services, especially in rural areas, by effectively making it economically unviable for anybody except BT (taxed on its profits and not the new fibre itself) and Virgin Media to do the work.

It's understood that the debate about the non-domestic rating system for Next Generation Access (NGA) networks was "lively" and appears to have resulted in a newly proposed £8 per year levy on residential 100Mbps+ Fibre-to-the-Home ( FTTH ) broadband connections.

UK ISP Rutland Telecom told ISPreview.co.uk:

"In principle we are in agreement with the proposed £8/year levy on residential FTTH connections. However we would welcome some form of differential ratings system which might stimulate investment in the Final Third - perhaps by lowering the rates on backhaul circuits for NGA networks in rural areas.

It is clear that the VOA and BIS and the Broadband Minister are keen to see evidence from real examples before shaping policy in this way. To that end we will be looking at assisting the VOA by providing details from some of the feasibility studies we have undertaken.

BT's reference offer in relation to PIA (access to ducts and poles) is eagerly anticipated. It will be critical that BT's PIA running costs, when combined with non-domestic rates for new build NGA backhaul networks, does not represent a barrier to investment if new fibre is to be installed in rural areas.

Rutland Telecom rasied the possibility of negative rates to stimulate investment in rural fibre. Whilst not dismissed out of hand at the meeting, such a stimulus seems unlikley in the near future."

The meeting itself was not for "decision-making", although news of a newly proposed levy on residential FTTH lines is interesting. However, it remains to be seen how this will fit into the bigger picture and we are currently awaiting further feedback.

Sadly Fibrestream (NextGenUs) and Vtesse Networks ( Vtesse Broadband ) were left off the invite list, which is disappointing because they have a large amount of experience in this field. However the government doesn't appear to like ISPs that challenge its policies. At least those providers will have some consolation in knowing that BT was also excluded.

UPDATE 14th January 2011

We've just been informed that, unlike the original December 2010 invite list, Vtesse Networks ( Vtesse Broadband ) did in fact manage to squeeze their Finance Director into the meeting. However Vtesse appears to have been somewhat less than impressed by the meeting, which saw the VOA giving up no real ground.
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