Fibre optics and business rates

Every five years the Valuation Office Agency (VOA) is required by law to re-value every business premises in the country, to ensure individual rateable values reflect changes in the property market.

Dealing with the converged telephony requirements of our clients, I didn’t expect to be discussing rateable values in a blog. However, the VOA is coming in for a lot of criticism, after imposing significant increases in business rates charged on fibre-optic cables for a number of the UK’s biggest network owners and internet services providers (ISP’s).

Now bear with me. The VOA has just published the proposed new rates, which will come into force in April 2017, with some of the biggest increases in rateable values likely to affect the likes of BT, facing a rise of around £500m in England and Wales.

The VOA is treating fibre as part of a business premise and is imposing a rateable value on them. The problem is obvious, with BT already saying it is “highly likely” such an increase will lead to price rises for both consumer and business customers. Nice.

BT is said to believe the new rateable values are excessive and it will probably appeal the rises. The rises are odd given the government consider broadband to be a vital service to both consumers and businesses, undertaking significant investment over recent years.

Now with these new rateable values taking into account fibre-optic cables and by extension the provision of broadband, the VOA will effectively increase the cost of improved broadband right across the country. It will impact all providers and all technologies as they strive for the greater speed of fibre-optic required for the data intensive world we now inhabit.

We handle broadband connections for lots of our clients and speed is a major factor in any decision and now I suspect they will be paying more for a technology that makes them more competitive – which makes no sense at a time when the Government is trying to strengthen the economy in the run-up to our exit from the EU.

It feels as if this move by the VOA has been made without the Government’s knowledge; it undermines the government’s digital strategy and is likely to discourage investment. There have been calls for the Government to review rates on fibre optic cables, with many pointing out the disparity between the higher rates paid by small network operators compared to those paid by the larger network operators, like BT – it harms the business case for smaller operators to build local networks.

The whole issue also makes you question whether the Government is committed to ensuring the UK can be a leader in 5G. The arrival of 5G in 2020, will be a real game-changer, with some early predictions indicating speeds of 1Gbps will be possible, but some are quoting much faster speeds.

Much more about 5G in a blog coming soon, but suffice to say, if the rateable values imposed on fibre-optics continue to rise, will anyone be able to afford 5G when it comes?

Terry Faria, Telecommunications Manager, Quiss Technology

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