Darling must cut tax on fibre

Jeff McKeown ZDNet.co.uk

Published: 12 May 2009 15:27 BST

If chancellor Alistair Darling were really serious about boosting the digital economy, he would rethink the tax on fibre-optic links, says Jeff McKeown.

In last month's Budget, chancellor Alistair Darling seemed proud of his allocation of extra funding to extend the broadband network and to 'deliver the vision' of the Digital Britain report.

Even if we set aside the hugely underwhelming nature of the 2Mbps proposition, he has clearly put little thought into the ground-level reality experienced by businesses trying to compete in the communications market.

Over the past decade, the government has been charging a business rate tax on any company trying to light up dark fibre networks and boost the digital economy. This tax creates a significant barrier to smaller-scale service providers entering the market.

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Adding a payment holiday of three years, for example, to fibre deployments at or just above the minimum threshold, would then create the opportunity for smaller operators to get started and encourage a realistic deployment of the community networks that currently feature in Lord Carter's dreams.