A seemingly unrelated and innocuous taxation may explain a part of the (lack of) broadband development in the UK, especially outside the bigger cities.
Lit fibers are subject to a property tax (unlike copper wires used for telephony or DSL).
The VOA (Valuation Office) sets the rateable value.
You can expect to pay for backhaul or corporate networks
£0.28 per metre per fibre per annum for 2 fibers,
£0.17 per metre per fibre per annum for 4 fibers,
The rate scheme drops quickly with the number of fibers in a route to £0.05 per metre per fibre per annum for 40 fibers.
£7.50 per home passed per annum for fibre access networks (to be finalized).
" As NGA will be mainly the replacement of existing copper infrastructure, the VO considers that the level of value for residential NGA connections will be similar to the £7.50 per home passed adopted for cable TV access networks, the nearest comparable network currently offering broadband services".
The rating scheme penalizes small operators and companies that start their business: their average cost is much, much higher than large existing corporations with a lot of fibers and long lengths. The ones with a lot of fiber can add fiber with low marginal costs of taxation, new entrants have a hard time.
What about smaller villages?
Lets assume a minimum of 2 fibers in a redundant ring to a village with 1000 homes where 50 % of the people are dying for broadband access, approx 30 km away from the nearest backhaul aggregation point.
The tax rate is £0.28 per metre per fibre per annum for backhaul of 2 fiber, 60.000 meters (redundant ring) and 2 fibers lead to a tax bill of £ 33.600 per year, or £ 67.2 per connected user (50 % penetration). Auch.
No wonder you are on your own if you live somewhere a bit off the centre of a city. The business case get harder adn harder just because of taxation designed in 2000. The backhaul networks are probably minimized in number of fibers and capacity, shared as much as possible to reduce the costs, leading to high overbookingsratios and lacklustre response times of websites. Could that again be a reason why broadband adoption outside the cities is relatively low?
It is hard to get a causal relationship proven, but one starts to wonder....
Leave a comment