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Thursday, 22 October 2009

Wireless networks to be taxed

Rumours abound about the fast-tracking and retrospective introduction of property tax for wireless networks in the UK. This can only have disastrous consequences for Digital Britain, and community networks and rural areas in particular.

As regular readers of this blog are aware, property tax on fibre has been a major bugbear, not just for those of us who constantly battle for grassroots' views to be heard and understood, but also within the industry. It has been one of the major contributory factors in the lack of investment in FTTH in this country. Where other countries have scrapped or substantially reduced the tax to aid the deployment of fibre infrastructure, this government has seen fit to continue to treat fibre optics as properties and tax accordingly, thereby hindering the roll-out of fibre for years.

Now, in a seemingly as yet unreported move, it appears the Valuations Office Agency has decided, in its infinite wisdom, to also apply the property tax (rates) to wireless networks, including metronets and in-building networks. Not only could it be introduced before the end of this year, it could also be applied retrospectively to existing wireless networks. As I understand it, it will be £100 per access point per year. And it can be applied back to the inception of a project.

Let us consider the consequences of this decision.

Firstly, whilst much noise has been made about using wireless to cover the shortfall in fibre deployment to ensure ubiquitous broadband is available to all, it would now appear that the soft and fluffy noises about community broadband initiatives delivering on that need, particularly in rural areas, were precisely that - white noise, clouding the reality. The economics of community, rural wireless deployment are always going to be tight, particularly without any central intervention promised yet to those who can actually deliver what consumers need. Adding £100 per year per access point will stretch that business case, potentially to inviability, and discourage many from taking up the challenge to innovate and connect the disconnecteds.

A community network can over-deliver to those within its 'manor', becoming sustainable whilst still offering more than any commercial operator ever can because of knowledge of that community and what it requires. Customisation of the services, bespoke services relevant and unique to that community or region, community ownership, personalised and valuable customer understanding, and so on, often leads to far higher engagement and hence more positive outcomes than a commercial operator can manage. This has been clearly and unequivocably demonstrated in spades, both here and abroad.

Not only that, but the allocation of free spectrum in the 2.4Ghz range has seen some of the most astounding innovation in technology to the masses in the last decade. It is the work of community wireless pioneers across the world that has seen:

* the Everest Base Camp and surrounding areas connected by Dave Hughes and Tsering Gyaltsen Sherpa, which has brought much-needed income into the area, as well as bringing vital education and safety aspects with it.
* Rural and remote communities operating wireless networks in Bolivia, Cambodia, and all corners of the world, including using motorbikes instead of IP transit
* Community networks such as Wray, Wennington, Withernsea, South Witham etc leading the way since 2004 in the UK in reaching the notspots.

I could list thousands more such projects that have all directly impacted communities that had they a) been left to governments or industry or b) been taxed would never have happened. These projects, started by those at grassroots and who care for their communities, have led to fast-track development of wi-fi until it is now included in every laptop and most mobile devices.

Secondly, once again, this seems to be a play into the major operators' hands - in this instance, the mobile operators. One can only wonder who exactly has been lobbying hardest over summer since the Digital Britain report. Much of the mast infrastructure for these operators to supposedly deliver mobile broadband is in place, and is taxed according to the existing property rating system. There will be little requirement for them to take on extra cost, leaving them in a prime position to deliver broadband via wireless in direct competition to the community networks and smaller operators and new entrants without existing infrastructure.

WE HAVE BEEN HERE BEFORE and it does NOT work. This is exactly what happened with BT and fibre optics. BT are dealt with in an entirely different manner to new entrants and therefore many, including Vtesse etc, have had to fight (and continue to do so) in the Courts of Law to have the playing field levelled so that we have open and fair competition in the fibre marketplace. This proposal will repeat the mistakes yet again, and further stymie investment.

However, with mobile broadband, the issue that has consistently been raised, and seems to go unheard in Westminster and within the ivory towers of the operators is that mobile broadband is not fit for the purpose that broadband was intended to be used for, not now nor in the future.

It's fab as a cloud, giving ubiquitous access to those on the move, but as the core means of connecting to broadband? Absolutely not. Our aim has to be 1Gbps for everyone as soon as possible and mobile broadband is a very, very long way from that. Rural areas will NOT be happy, thank you very much, with being told that all we can have is what is available over an already patchy and at times non-functional mobile network. It is time some of those in Westminster came out to try and use mobile phones in the sticks. THEY DO NOT WORK. No matter the operators tell you they have 99% coverage. BT tell you precisely the same thing about ADSL. It is not true and you need to listen to the consumers, or get burnt.

Furthermore, and in contrary to everything we in this country know needs to be done to regenerate the economy, this taxation will hit not just commercial operators such as The Cloud and Open Zone, in shopping centres and other commercial spaces eg large business premises, but also educational networks which have been put in specifically to allow kids to access school networks from home. Our schools are already in difficult budgetary times, and retrospectively charging them (or those supplying, operating and maintaining their networks) can only be seen as a stealth tax on our hard-hit and struggling schools. Apparently, hospitals are currently exempt but don't count on that to last long.

Those offering free or low cost wi-fi, which has been acknowledged worldwide as bringing major cost-savings to business travellers as well as opportunities to citizens and communities, will be placed under very major threat. If your Starbucks has 3 or 4 access points, you will now need to make at least £1 a day to cover that cost. In reality, this means generating a revenue of at least £6-10 from sales in your premises to make the set-up worthwhile. Or you start charging, thereby driving customers away from your premises at a time when every business needs them more than ever. Or you cut your losses and it therefore impacts on your bottom line, and hence profitability as a business.

Talk about killing the golden goose.

If this proposal goes ahead, this country will once again have failed its people. Worse, it will have done so to protect private, commercial interests in favour of the citizens. Far worse, it will have taken money in taxes that will actually cause yet further problems to our struggling business, education and rural sectors, when that money could far more easily come from encouraging the build of the essential infrastructure required for the next 20+ years and hence encouraging economic growth and social well-being.

The fact that Stephen Timms MP is in charge of HMRC, of which the Valuations Office Agency is an executive agency, and also in charge of delivering Digital Britain must now surely be looked at carefully. There is a clear conflict of interest between what the Treasury coffers are seeking and what this country needs in the way of true, workable, future-proofed broadband. Taxing the hell out of wireless and fibre is not the way for a Digital Britain and Mr Timms must surely be aware of that. Can he sleep at night? I hope not, because with these constant idiocies going on to the detriment of this nation, I know I can't.

You heard it here first.

22 comments:

helenander said...

If they do this to community networks like ours, that even provides free wifi in some places we will certainly shut our doors.

helenander said...

A few points I received from a network manager that installs for the military:
1. Cost of collection would most likely exceed revenues. Revenues would be tiny in any event.
2. Business rates are already applied to antennas on masts and fibre in the ground.
3. Retrospective taxation is considered to be one of the greatest fiscal sins of any Gov't. MP's are up in arms about restatement of reclassification of 'legitimate' expenses.
4. Places like Scotland and Wales have no choice other than wireless access points or P2P links.
5. The article itself is devoid of any facts.

Obviously point 5 - we cannot confirm this is fact as yet, which the article does state.

Cybersavvy UK said...

On an ordinary day, I would be on the phone right now to BIS, VOA and Timms' office. Someone with more time and who gets paid, eg as a journalist, can run with this now.

The only "facts" I have are that it is mooted to be £100 per access point per annum. That the plan is to apply the rates retrospectively. That the intention is to rush this through as fast as possible. I have been told "by the end of the month" but not by anyone in officialdom. That the Norwich wireless network was one of those approached by VOA, and that Kirklees Council's education network has also attracted VOA attention.

As I said, I have not had time to seek facts, but others undoubtedly will now, which will lead to hard facts being published for all to see.

I'm just laying the path to those facts.

Cyberdoyle said...

I am a member of a rural research network run by the University, and also part of a commercial rural network. We provide a connection to 23 rural properties - a 2 meg symmetrical feed shared with fibre and wireless. It is the most we can supply and afford. we pay £25 each a month for this service and run the network as a CIC. (community interest, not for profit company).
If we make any money we help get more people online.None of us get paid. If there is to be a window tax imposed on our suppliers and us, then we will not be able to help people and an area over 10sq kilometres will once again be a notspot. No broadband, no mobile and another scab on the digitalbritain landscape. Here we are working our butts off to help ourselves and a greedy treasury instead of helping pours salt into the wound.
Disgraceful lack of wisdom, empathy and knowledge by an ignorant government looking no further than its own empty coffers.
Get the money back you lent the banks and look after the people you are supposed to be representing...
rant over, back to work.
chris

Jaqui Smith said...

The nice man at the VAO who can answer questions about this is
Alan Francis 0208 315 2876.

I must remember to put my home hub on my new expenses claim !!!

Hi fromHove said...

Alan (real name Bradford) says it's not true. He is a nice man for talking to me, even though I said I was a journalist. As a result, I am waiting for the VOA's formal statement before taking this further.

Cyberdoyle said...

this comment taken from the fibrestream blog at http://tinyurl.com/ykfmchy

Digital Britain – DoA Via VOA?

It looks like Digital Britain is now facing an even greater struggle and if implemented the VOA business rates on wireless networks may well cause UK PLC to slide backwards and for us to see a situation whereby thousands of particularly rural broadband customers are cut off as their local grassroots suppliers are forced out of existence by the Wireless Window Tax.

So much for Digital Inclusion – Martha Lane-Fox please note!

Following up on http://5tth.blogspot.com/2009/10/wireless-networks-to-be-taxed.html

I decided to have a chat this morning with the relevant people at VOA and DCLG to get some sense of what is going on and it is clear that VOA are very much actively pursuing the issue of applying non-domestic business rates to wireless networks and that this may well be retroactive to 1st April 2005.

At this stage VOA is struggling to get any engagement with community groups and businesses who operate wireless broadband networks hence they have advised that they would welcome contact, so please take them up on this offer and get your message across asap:

From Alan Bradford at VOA this morning:

“The VO’s operational instructions can be found on the Publications tab on the VOA website (www.voa.gov.uk). Section 860 deals with the valuation of wireless installations (mast sites).

My colleague, Michael Hetherington (based in Durham, michael.j.hetherington@voa.gsi.gov.uk) will be writing to WiFi, WiMax operators shortly to invite them to open dialogue with the VOA. It would be useful if you could provide contact details of anyone who you think should be invited to the meeting.”

Nick Cooper in non-domestic rates section of DCLG is also helpful in explaining the situation.

Some quotations from affected parties follow:

Helen Anderson, SWBB – “If they do this to community networks like ours, that even provides free wifi in some places we will certainly shut our doors.”

Chris Conder, WENNET – “I am a member of a rural research network run by the University, and also part of a commercial rural network. We provide a connection to 23 rural properties – a 2 meg symmetrical feed shared with fibre and wireless. It is the most we can supply and afford. we pay £25 each a month for this service and run the network as a CIC. (community interest, not for profit company).
If we make any money we help get more people online.None of us get paid. If there is to be a window tax imposed on our suppliers and us, then we will not be able to help people and an area over 10sq kilometres will once again be a notspot. No broadband, no mobile and another scab on the digitalbritain landscape. Here we are working our butts off to help ourselves and a greedy treasury instead of helping pours salt into the wound.
Disgraceful lack of wisdom, empathy and knowledge by an ignorant government looking no further than its own empty coffers.
Get the money back you lent the banks and look after the people you are supposed to be representing…”

Gavin Young, C & W – “I think shares in The Cloud have just crashed! Not good for hot-spot operators or those seeking to reduce the digital divide in Broadband Britain by using wireless technology in rural/remote areas.”

Peter Cochrane, Silicon.com – “Talk about government being fat, dumb and happy! Another case of left hand not watching the right hand.”

Aidan Paul – Vtesse Networks – “*****”

Justin Davis said...

I agree, but I'm not so sure about what you said at the beginning. Where are you getting your information? I'm not disagreeing, but I'm just wondering how you came to that conclusion.

Justin Davis
Author does not represent the position of LSI, which screens content as an internet filter to K-12 institutions.

GuyJ said...

@Justin - the information is coming from the VOA itself, who in turn are fulfilling their responsibilities to rate "property".

Whether and to what extent such rates are applied is dependent to some degree on local government and to a greater extent on central government, as to what if any exceptions or reductions might apply

nick_clannet said...

According to the VOA guidelines for NGA see: http://www.voa.gov.uk/instructions/chapters/rating_manual/vol5/sect871/frame.htm there is a rateable value of £7.50/household for NGA 2005-2010 and is now up for review and requesting views.

Our view, if applied to wireless, is it would stifle our development as a notspot provider for some of the most inhospitable parts of the UK ie The Yorkshire Dales, Moors and Wolds.


Nick

Hi fromHove said...

Having asked the VOA what it is up to, a VOA spokesman said:

"It is not correct to suggest a new tax is being introduced for wi-fi installations. All business property is liable for rates, which are based on rental value. Wi-fi installations are not treated any differently to any other business property.

There are currently over 31,000 mast assessments in the rating lists and valuation officers are working proactively with WiFi operators to ensure they have accurate information on all wi-fi sites.

There has been no change in rating policy for wireless installations and any suggestions otherwise are wrong. "

Cyberdoyle said...

so in other words, the community wifi networks have been 'under the radar' and now someone at VOA has spotted another cash cow to milk? Except all it will do is kill the cow.

helenander said...

http://www.theregister.co.uk/2009/10/27/wireless_tax/

Cyberdoyle said...

Thanks for the link Helen, it shows even the register can be hoodwinked. I would have thought they could have seen through this and come down on the right side of the tracks, but they have fallen for the bullshit. The taxman doesn't miss a trick to bleed the people trying to help others. Well all I can say is that it is their loss, and maybe they would like to provide some broadband to notspots and then we can get a life.
chris

Hi fromHove said...

The Reg quotes the VOA's boilerplate, which is true as far as it goes. What it doesn't say you can read here. http://www.computerweekly.com/Articles/2009/10/28/238330/wi-fi-and-wimax-tax-could-be-backdated-five-years.htm

Nick P said...

How does a business like Kijoma (www.kijoma.co.uk) in Sussex/Hampshire fit into this? They are offering super-high speed BB across very large rural area...not a community, but a commercially based outfit. I am at a loss to know why the technology they use isn't being pushed as the low-cost, least disruptive, soonest-implemented solution to providing fast BB to the entire nation.

Cybersavvy UK said...

Up to 13Mbps is not superfast. The sooner we all realise that, the better. 1Gbps wireless is now highly affordable; it's just that no-one is really jumping on this yet and putting in working projects. Although all that 1Gbps wireless will do is shift the bottleneck until we can resolve access to affordable backhaul.

Kijoma are part of the jigsaw of interim solutions, just as are many others using wireless effectively eg in NANDS, Wray etc.

Wireless is perfect as a cloud for mobility etc overlaid on a fibre network. It can also be used to get remote communities connected where you can prove it is the right technology in order to increase awareness and demand for better services and apps.

Using wireless instead of fibre though has nothing to do with money as any community network can lay sustainable FTTH in rural densities of around 10 properties per route mile - as has been proven elsewhere. We need to get pilots in to prove this to the morons in Westminster and elsewhere who keep accepting evidence from the telcos who have very clear financial discentives for getting on with the job.

Meanwhile, anyone with any questions about VOA tax and community wireless networks must address them to Steve Spillane who is co-ordinating the feedback to VOA.

Hi fromHove said...

Good question, Nick.

The problem is that DB minister Stephen Timms serves two masters, Digital Britain and Treasury, which have opposite goals. DB wants to bring next gen access to all as cheaply as possible, but Treasury needs money. Radio transmitters and masts are taxable, so they will be taxed.

BTW, what other country taxes the productive capacity of the nation, before it has even earned a penny?

kijoma said...

hi,

I cannot agree that "kijoma is just an interim solution" , what twaddle from somebody who has the needle stuck in the fibre groove.

Fixed wireless has been the staple diet of many developed and developing nations for years..

I am not talking some shoddy wifi mesh system either. Sadly these are what the government seem to be basing wireless capability on. the recent consultation document says wireless is "typically under 2 Mbps" .. A complete stitch up job, none of the fast providers, including Kijoma were consulted over this at all.

I don't see where the word Savvy and making statements like "FTTH is sustainable in rural areas" can possibly co-exist? .

The comment about 13 Mbps not being super fast is correct, i mean we have only been providing a top speed of 13 Mbps to each customer who pays for it since 2005.. We now offer 40 Mbps services.. and unlike FTTC this is 40 MBps, not 12-40 depending on the length/quality of the phone line from your house to the cabinet.

FTTH is about as economic to implement to the last 10-20% of the UK population as running a 6 lane motorway to their door.. it is not needed, not economic and the countryside doesn't need to be turned into a building site to accomplish it either!..

As for this tax, well that is typical of a government who are driven by the big telecoms companies who cry like children "its not fair!" and throw their toys out if there is a hint of competition looming over the horizon..

Cyberdoyle said...

In the old days when the church owned the land and taxed the peasants it knew the best way to get the most money...
... unlike the government with the stupid VOA windows tax (started in the reign of Elizabeth 1st) it didn't tax the seed corn. It taxed the harvest. Just think about it.
If they removed the tax on lighting the fibre, more would be lit, making the country more productive and generating more income, = more taxes. More exports. More Ehealthcare and education, Egov on a shoestring, saving billions. Why doesn't somebody get hold of these politicians and explain it to them? They are killing a golden goose...

Cyberdoyle said...

kjoma, there is a place for both fibre and wireless in the Endgame. Our community network uses both. I know which I prefer. Fibre runs just work. Wireless is tons cheaper, but needs more management. We have a mix of speeds, 34meg symmetrical, 2 meg symmetrical and a gig symmetrical...

Cybersavvy UK said...

FTTH is economic in rural areas, just not from the poverty-struck telcos with pension deficits. There are FTTH projects all over the world in rural areas which have proven sustainable.

If you add in the social capital generated, then the argument about a motorway, and lack of need is spurious.

And as for not being consulted by Govt, then join the very big club of people and companies who never are on this issue. See today's post re the rural campaign which has been launched today March 4th 2010, and let's have some of these voices heard finally.