Tuesday, December 07, 2010


Do I need an ISP

I used to know what an ISP was for. They took your modem signal via the phone network, converted it back into TCP/IP data and passed it onto the internet :-

In the hopefully near future, Next Generation Access (NGA) will give me a TCP/IP connection over fibre optic (or xDSL, WiMAX, LTE, EFM or whatever) from a local network provider. If they provided transit to the internet it would be job done :-

This latter scenario is very similar to Virgin's cable broadband or to LLU ADSL, where vertically integrated providers take data from a local point directly to the internet. The prevailing "wholesale" model and the much talked about (but seldom existing) "open access" network doesn't allow the local network operator to provide internet connectivity but forces them to route traffic via an ISP in order to foster competition. The competition is mainly in price and add-on services as the local connectivity is fixed :-

Notice how in this case we have two entities or networks passing data from the local exchange equipment to the internet. This is purely for regulation and competition reasons. I may be using no services at all from the ISP, other than getting my data out onto the Internet. If the telco were allowed to do this directly I would not need the ISP.

ISPs can of course offer a range of other services beyond connectivity however I generally source these from the internet or "The Cloud" in order to be independent of connectivity provider and location. My 3G Android smartphone operates using cloud based services with the network operator (Vodafone) providing local access and internet connectivity only.

Given the track record of networks like Neuenen, Ashby, S. Yorks Digital Region, Fibrecity etc etc in attracting credible and known retail ISPs I really do wonder if there is any merit in insisting on open access or wholesaling arrangements. Do they not add complexity both in networking and business process terms rather than providing a simple one shop supplier of access to the internet from my home ?

Labels: , , ,

Monday, December 06, 2010


Fibre Tax Fig Leaf

I'm kinda bored with reading people droning on about how the UK's taxation of business assets shouldn't include fibre optic networks (presumably electricity distribution networks are a "legitimate" target for taxation) and how this massive and inequitable tax is holding back the progress of network deployment in the UK.

Some months ago the Valuation Office Agency (VOA) and the Broadband Stakeholders Group (BSG) worked together to clarify the current regime, and to come up with valuations for Fibre to the Home (FTTH) and Fibre to the Cabinet (FTTC) networks. This was done because the networks are new and as such there isn't a database of costs, rents, receipts and expenditure or other measures of valuation that can be applied to these assets. The VOA Guidance Note came up with a figure of £20 per home connected for FTTH networks. This £20 is the rateable value, the actual business rates charged will be slightly less than £10 per year with discounds available for small companies and charity / not-for-profit entities at the discretion of local rating offices.

Those of a campaigning bent also point out the cost to operators of rates on long distance fibre networks. They are particularly exercised about this because they hate BT and BT's fibre network is assessed as a whole and not using the per km table published by the VOA. Other operators can negotiate with the VOA to use alternative methods of valuation and various tribunals and courts have so far ruled that there is no unfair discrimination against other operators such as Vtesse Networks.

I always like to put numbers on things, as it brings the issue into focus and shows if my understanding is correct. If I were to start a network company and run a pair of fibres 25km to the nearest interconnection opportunity in Peterborough the rateable value from the table is £500 per km for 2 fibres in the range 10 to 100km long. So that's an RV of 25 * 500 = £12,500 on which I would pay annual business rates (technically "National non-domestic rates") of 41.4% * £12,500 = £5175 per annum. If I use this to serve 500 customers then it's £10.35 per year per customer. If I set up a broadband charity or not-for-profit community association I may get "relief" on 80% or as much as 100% of this, or if it were my only small business I may get a reduction from "small business relief". The VOA provide worked examples (PDF download).

If my fibre were deemed to be part of a FTTH network and were my only network asset it would appear to fall under the £20/year per home connected scheme :-

(Diagram from VOA document).

So in my case y=25km and I pay £20 * 41.4p = £8.28 per home connected per year.

Clearly it would be in my interest to avoid having the 25 km run be valued separately and additional to the FTTH network, but the numbers here really aren't that scary and investment blocking, are they ?

This page is powered by Blogger. Isn't yours?