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.

Also posted on 5tth.blogspot.com