Not quite "bye bye to business rates for broadband" ... yet

A five year holiday for new investment in full fibre back haul from April 1st 2017, as announced in the autumn statement, is a major step in the right direction. It is not, however, the full overhaul that is needed. That will hopefully come as the small print of implementation is negotiated over the next few months.

Yesterday I rejoiced. Today I would like to add the necessary notes of caution:

  • First there is the risk that digging that might have taken place over the next few months will be put back to after next April. I am not sure how big a risk this is – but it needs to be addressed if the UK is not to slip further behind overseas competitors during the Brexit negotiations.
  • Second there is the position of local fibre connectivity. The announcement refers to the fibre spine. This is indeed where some of the most egregious distortions in incentives (or rather disincentives) to invest have occurred but local  fibre also needs encouragement.
  • Third there is the position of wireless networks. All modern networks are a mix of fibre and wireless. The issue is how close to end device does the fibre get. Even with fibre to the home, there will commonly be a mix of wireless and powerline between the router(s) and the smart phones, TVs and toys, if not yet fridges, that are increasingly used to access the Internet. Meanwhile 4G and 5G  will need armies of masts to service the flocks of IoT devices that will ebb and flow through city centres, around sports arenas and tourist hot spots and along motorways and rail lines.

The business rates holiday needs to be accompanied by a review of the Valuation office “tone list” to bring it into line with the way unit costs and prices have tumbled over the past decade or so. That  requires the competitors to BT to be less shy about giving current information to the Valuation Office. I have no illusions as to how difficult this will be. Back in 2010 I blogged in support of the last attempt to get them to do so. Almost none responded. They have since had to live with the consequences.

Time has, however, moved on. My understanding is that some of the players have been using evidence of current actuals in support of the current crops of appeals and court cases. The consequence has been “an outbreak of sanity”. Treasury now has the evidence that this is an area where apparent “give-aways” will lead to more tax revenue … not less. More-over, it will only lose if it fights to maintain unrealistic valuations which do not fit with the fundamental basis of the rating system.

Better to give way gracefully – beginning with a good headline!