Small ISPs fuming over changes to fibre tax

The cost of fibre is set to rise despite the government's desire to increase fibre rollouts

Small internet service providers (ISPs) hoping for wholesale changes to the way fibre deployments are taxed have reacted angrily to new rateable values issued by the Valuation Office Agency (VAO).

ISPs were hoping that costs would be reduced or removed altogether, but the Revised Valuation Guidance for Telecommunications Networks will make it more expensive to deploy fibre, undermining the government's pledge to make the UK a leading broadband nation by 2015.

The previous charge of £200 for one fibre connection deployed over a distance of 2km has been increased to £850 for 1km, while the cost of 10 fibre connections over 1km has risen from £529 to £4,400.

Connections to premises, however, will now cost just £20 per household per year, based around rateable values that will actually work out at about half of the values listed.

"Charging £20 in rateable value [around £10 in real-terms] per connection is a good move, but these connections need to go to middle-mile networks and will prove a lot more expensive as firms like Geo, Colt and Vtesse will be hardest hit," said Matthew Hare, a member of the Internet Service Providers' Association.

"The VAO seems to be basing its increases on the idea that only large corporations will be paying for fibre connections, when in reality business of all sizes are moving to the cloud and require fibre connections."

Vtesse chief executive Aidan Paul, who last week invited Ed Vaizey to the switching on of a new rural fibre network, said that he was "very disappointed" to hear of the move, and that it is clearly not in the UK's broadband interests.

"There was no indication given that this was happening," he said. "The government needs to get its message sorted on broadband. Do they want broadband investment or not? They won't make any money from these changes as people like us won't invest and it will just stop final third rollouts."