UK government rolls back on next-generation broadband pledge

UK government rolls back on next-generation broadband pledge

Summary: Tax rules which tax smaller fibre companies more and the larger companies less is one of the reasons why the UK national broadband will not be completed by 2015.

SHARE:

The UK minister for culture, communications and creative industries for the recently installed coalition government, Ed Vaizey announced that business rates applied to fibre network providers will not be reviewed.

One of the key battlegrounds to the recent election which saw the then incumbent Labour government topple after 13 years in power, was the goal of having the fastest broadband in the European Union.

But now, in short, the new government will provide very little taxpayer's money to make this happen, if any at all. The private industry will have to build the networks themselves with consumer provided money. Though at least this is a fall-back plan and would not be as secure had it not had government backing, the review which taxes fibre network operators is making the task even more difficult.

Vaizey's stance now that he is in government has completely U-turned since last year. The business rates regime was "an active disincentive to competitive, next-generation [broadband] access roll-out" in his words last year, which also refer to tax public wireless and WiMAX network .

So instead of the government helping out the fibre broadband roll-out across the UK, they are now essentially standing in the way causing yet another obstacle for the next-generation broadband industry to jump over.

According to the Guardian:

The issue centres on the way that the Valuation Office Agency, a branch of HMRC, taxes networks. Under the current system, most operators are charged according to the length of their networks, incurring significant costs every time they "light" a stretch of fibre.

BT and Virgin Media, though, who have the largest fibre-optic networks in the UK, are taxed in a different manner, based on their revenues and expenses. Smaller rivals have long complained that this gives the biggest operators an unfair advantage, resulting in a less competitive market that harms customers.

Trefor Davis, CTO of Timico said in his blog:

"There is no change at the high end so the likes of Virgin and BT will remain unaffected. However at the smaller network end of the scale there has been a massive price hike.

In 2005 if you were running a pair of fibres over 1km you would be stung with a rateable value of £280. In 2010 this has now shot up to £2000. This will not of course affect BT because they have a negotiated total rateable value for their network."

So in short, smaller fibre companies will be needed to fill the gaps in the UK nationwide fibre broadband plan because they will have local knowledge and elements of industry specialisation. Not only this, they'll be able to add an even balance to the competition and enable fairness to the consumer.

But in reality, the larger powers of the fibre industry are maintaining the monopoly because the government is not allowing the smaller players to contribute.

Just before the UK Election in March, I asked whether an open-source government or faster national broadband speeds were more important, regardless of whether you were American or British. Two of the highest results were relating to wanting faster broadband, though the Britons who answered said "they could wait". But as the UK is considered mostly 'rural' and 'remote', one could argue that the ones who want faster broadband couldn't answer because their speeds are so slow, the page wouldn't load up.

The 50p per month tax on landline phone bills isn't looking so bad now, is it?

Topics: Telcos, Broadband, Government, Government US, Networking

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

5 comments
Log in or register to join the discussion
  • That's the right thing to do

    Learn to live within your means rather than shifting own bills onto other people's shoulder. Funny now while Europeans are waken up to it libtards here in US are still going ga-ga over these crazy government spending. All the more reason to vote their butt out in the coming elections.
    LBiege
    • RE: UK government rolls back on next-generation broadband pledge

      @LBiege <br>Oh boy, I can't wait for 8 more years of double digit inflation, invading Middle Eastern countries, thousands of American servicemen dead, sweetheart deals and tax loopholes for monopolies who outsource to China, government bailouts for Wall Street fat cats.<br><br>Yup, can't wait for chickenhawk repubs to come back and f'ck this country up some more.<br><br>Maybe airhead Palin can give Halliburton a new bonus? Whadyya think?<br><br>lol... :D
      ahh so
  • RE: UK government rolls back on next-generation broadband pledge

    i already feel sick just thinking about the new conservative government, what a bunch of lying pricks.
    Naryan
    • RE: UK government rolls back on next-generation broadband pledge

      @Naryan If I'm honest, I was apprehensive at first. As a northerner, Labour/liberal values run in my veins. But the new Lib/Con government hasn't been all as bad as I thought. Some great things - abolition of ASBO's (subjective convictions and conviction without jury) is good, but elected police officials are not. What's clear is that manifesto pledges are like a contract. The politicians make their contract pledges, and these are 'signed' by the electorate when they get into government. Legally, they should stick to them. But as so often is the case, they don't. In theory, something can sound nice where as in practice, not so much.
      zwhittaker
      • RE: UK government rolls back on next-generation broadband pledge

        @zwhittaker

        Unfortunately the pledges of politicians are not legally binding.

        I think they should be.

        Our opposition party is running ads that pretend that they are making a legal contract. This has more to do with the opposition leader admitting that he sometimes doesn't speak the truth in the heat of a debate, and the need to now say he means what he is saying this time than any real attempt at being under contract.

        If you can make a case for the pledges being legally binding I would be most grateful.

        There is a danger though that as circumstances change some policies do have to be adjusted - and the GFC was the best example of a need to rewrite the policies to get through.

        Also under our system what do you do when a major policy gets blocked in the parliament and you cannot fulfil the promise due to the opposition making it impossible - have you then broken the contract? In our case you get blamed by the opposition for they're blocking and get claims of a backflip, surely their should be other legal impediments to politicians lying rather than just simply policy being set in stone?

        We also are having major broadband disputes with the opposition thinking that somehow wireless is going to outperform fibre soon. We also have them arguing that the status quo +$6 billion is going to be better than a fibre to the home network purely because it is cheaper and involves competition.

        I would like to apply your legal contract argument to the politicians - and also see their lies about the other parties resulting in legal action against them, and for that matter any lie that affects the public resulting in a damages claim by the public.
        richardw66