Q&A: Why fibre broadband taxes favour big ISPs

 

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By Nicole Kobie

Posted on 16 Aug 2010 at 16:51

Chances are that any new operators will only be lighting up one or two fibres, because that’s all they need or all they can afford.

That's the nub of it: how do you get the rating system to be equitable, so it doesn’t stop small operators from coming in and setting up new networks? The way it’s set up at the moment, it favours the big guys.

Q. Do big players such as Virgin also get this bulk benefit?

A. It’s Virgin as well, but they don’t have the same deal, as BT is actually quite a bit larger than Virgin and they have more legacy networks.

Q. You've mentioned this all to the Government?

A. The Government just accepts what the valuation office says. Ed Vaizey, the communications minister, has just said “thank you very much, looks good”. But he says he’s willing to listen if someone tells him the system isn’t right.

The whole rating system is complicated – it goes back 400 years, and wasn’t designed to rate bits of glass in the ground

It’s been bubbling under for some time, the unfairness of the rating system. The problem is that it’s such a complicated world, networking and the internet, and the whole rating system is complicated – it goes back 400 years, and wasn’t designed to rate bits of glass in the ground.

The people in the ratings office and valuations agency don’t really understand the whole technology, the Government doesn’t understand it, so all in all, it’s not a very helpful situation.

Q. How is this affecting fibre rollout?

A. It will slow things down, because it will make it harder for people to put networks into places that are economically not worth it for BT.

Once the Government starts dangling cash [to motivate ISPs into rural areas with less of a financial return], BT will be in a strong position to win that cash because they have the benefit of having the rates set the way they are. New network operators won’t be able to win the business, because it will be more expensive for them.