Why are we pissing away £120M?

This limp-wristed government are about to throw away £120M, out of the rural broadband pot raised out of BBC licence fees, over the next 10 years for no reason other than that they refuse to grasp a nettle which has become a massive industry issue over the years.


We’re back to fibre tax, again. This problem will not go away until this administration faces up to it. And if they are unwilling to, then certain Ministers (and Ofcom) should leave their offices, never to return. 

If the £530M for rural broadband was used to build a network, then applying the contractor’s test would mean that, over 10 years, 25% of that money would go in fibre tax. That would give a rateable value of £26.5M, using a deconstructed capital rate of 5%, and a tax charge of £12M a year, or £120M over 10 years, which is a not abnormal time span for an infrastructure project, such as a network build.

The winning bids for the BDUK models (not pilots, as the whole point is to put in a sustainable, for at least 25 years, future-proofed solution) should have all fibre tax WAIVED. 
For the lifetime of the projects, preferably, but definitely for all of this administration and the next.

The additional £120M will extend the £530M substantially, and give each of the pilots a chance to recover costs more quickly. This is particularly important because the business case for FTTH in UK is only likely to become feasible in the next 4-5 years due, mainly, to consumer apathy, a poorly considered regulatory environment, and seriously unethical tactics by certain telcos. 

Waiving the fibre tax will also remove one of the obstacles in the path to give a level playing field for all bidders, and help to ensure that BT is not the only possible player in the procurement process. As happened in Cornwall, and which requires urgent attention, if not judicial review.


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