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Broadband Stakeholder Group Welcomes New Guidance for Taxing UK Fibre Lines

Posted: 16th Jan, 2012 By: MarkJ
uk fibre optic broadband taxbroadband stakeholder group ukThe Broadband Stakeholder Group (BSG), a UK government think-tank for broadband issues, has welcomed the recent Valuation Office Agency (VOA) publication of new guidance for how the controversial tax on fibre optic broadband lines (Fibre Tax) is applied in rural parts of England and Wales.

The BSG has spent the past year consulting on an evidence based assessment with the VOA and smaller ISPs (altnets) (here) that would hopefully help to address the perceived imbalance. This can allegedly make it too expensive for smaller operators to build Next Generation Access (NGA) networks in rural areas. We detailed some of these new proposals and what they could mean on 5th January 2011 (here).

Antony Walker, CEO of the BSG, said:

"This guidance addresses one of the uncertainties facing investors considering the deployment of residential superfast broadband networks in the final third. It provides industry with greater clarity about the rates liability for these networks, and the provisional rates are generally significantly lower than those that will apply to networks in more urban areas within the first two thirds.

While further work is required to ensure the guidance is understood by all stakeholders and that industry has an opportunity to provide feedback, this is a big step forward."

The related VOA Rating Manual explains the changes in detail (provided you can wrap your head around it). The provisional rateable values are in most cases significantly below those that apply to urban areas (i.e. roughly 66% "two thirds" of the country), yet the VOA and BSG have decided that they should only apply to "networks that are built using public subsidy" (i.e. areas deemed white for State Aid purposes).

This could have been a serious problem as the Broadband Delivery UK (BDUK) office and EU funded (public subsidy) schemes generally, due to some strict criteria and scale requirements, do not include smaller operators. However, the BSG has clarified to us that "any privately financed rural schemes will be assessed having regard to the final third scale".

Furthermore the new guidance only applies to mainly residential networks. Any networks built primarily for business services, such as those in business parks, are not covered. Research is continuing on the primarily business-focused NGA networks and the guidance will apparently be extended in due course.

The BSG and several affected operators intend to discuss the new guidance with the VOA in February 2012, which could result in further revisions. In the meantime it is intended that the new valuations will apply for the duration of the 2010 rating list, which runs through to 2015; it will be revised thereafter based on any new evidence that becomes available.
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