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The government is inviting public input on its legislative proposals to introduce a five-year business rate holiday on new fibre broadband network infrastructure.
The plan to offer rate relief to fibre network builders was first suggested by chancellor Philip Hammond in his 2016 Autumn Statement, alongside a funding package for broadband and 5G totalling over £1bn. The relevant legislation was introduced to Parliament in July 2017 in the Telecommunications Infrastructure Bill.
“Full fibre is the gold standard for fixed broadband connectivity. It will ensure our digital infrastructure supports the UK’s world-class digital economy,” said digital minister Matt Hancock.
“We want to create an attractive environment for private sector providers to increase their roll-out of fibre connectivity. This measure will support all providers who deploy new fibre, increasing competition and helping the roll-out of 5G.
“We are keen to ensure the measures are as effective as possible, so we are launching this consultation on the detail of the regulations,” he said.
The government believes the UK has made “significant” progress in the last seven years in improving the communications infrastructure, with over 90% of properties in the country now able to access a broadband service that it defines as superfast – over 24Mbps.
However, to ensure there is sufficient capacity and bandwidth to support the massive growth in data traffic over broadband connections, it has recently come to the conclusion full fibre-to-the-premises (FTTP) is needed, as opposed to slower but cheaper fibre-to-the-cabinet (FTTC) services.
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- BT, Sky and Virgin Media have proposed a voluntary industry code of practice for broadband compensation, but it falls short of what Ofcom would like to implement.
Offering tax relief to businesses building FTTP networks is designed to support this pivot away from FTTC by making it more cost-effective to deploy fibre all the way into the premises, supporting services capable of delivering speeds of up to and over 1Gbps.
Among the proposals up for discussion are conditions that will ensure existing fibre networks and dark fibre are not included to effectively incentivise the building of new infrastructure; how the rateable value of new fibre is actually worked out; and to calculate the rates bill after the relief.
Matthew Hare, chief executive of FTTP network builder Gigaclear, which stands to benefit from the legislation, said the government was finally taking the challenge of future-proofing the UK’s digital economy seriously.
“Such a scheme provides the incentive needed to extend full fibre rollout across the country, particularly for those providers that are already investing in bringing broadband to areas such as rural communities that are saddled with poor infrastructure and second-rate connections.
“Guaranteeing business rates relief for five years will also give the government time to review the wider process of rating fibre and create a fairer mechanism of valuing different provider’s assets,” he said.
The consultation on the proposed legislation, which applies to England only, is open for 12 weeks from 29 August 2017. If successfully introduced, the tax relief will be backdated to 1 April 2017, meaning it will expire on 31 March 2022.