I’ve one final piece to get off my chest about the VOA’s “clarification” on business rates applied to fibre networks, and its about the upside-down nature of the rules and how the new framework exacerbates an already difficult situation.
The old rules taxed fibre owners for homes passed regardless of whether anyone bought a service. The new rules almost triple the tax but apply it only to homes connected.
So the old rules penalised investment but the tax could be mitigated against a successful drive to build take-up. The new rules still penalise take-up but now mitigate in favour of land-grabs to keep other providers out rather than in driving take-up – and the ones which are most heavily penalised are likely to be companies specialising in green field developments where they are unlikely to achieve much less than 100% of the homes as the default telecoms infrastructure. (remember BT has special treatment, so this only applies to alternative providers).
The new VOA rules would seem to imply an almost tripling of the tax bill for green field network builders.
The new Government made it clear it wanted to encourage, enforce if necessary, infrastructure sharing but these new rules encourage a more monopolistic mindset – build to stop others building, and make just enough revenue to cover the costs – oh, and make the architecture so esoteric it could never support infrastructure competition anyway.
The VOA has shown no signs that they are even beginning to understand anything the Government has said since coming to power. Had they chosen to develop rules which moulded the rates system around Government policy they might have recommended a system which:
- Reduced or eliminated business rates on new fibre investments in Ofcom Market 1 areas where there is currently no investment rather than the opposite
- Favoured community led “Big Society” smaller-scale networks over national carriers rather than the opposite
- Penalised idle assets and favoured shared and used assets rather then the opposite
I try to avoid clear attacks like this my blog but the VOA appears to have worked against the key policies of BIS, DCMS, DCLG and DEFRA, while creating a framework so arbitrary and complex that the Treasury can’t possibly have any confidence in any figures estimating the revenue it will generate.
The National Audit Office was scrapped for a less fulsome opposition – can we hope the VOA has a similar fate awating?
Rant over.
I’d really like to thank Pauline Rigby for joining me on our journey to understand the VOA rules. We both felt uncomfortable writing politically charged articles like this one of mine but it was clear this was a major issue for the industry we both care about.
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