New UK Wireless Network Tax May Hamper Internet Rollout

Mark.JUK writes "The Valuation Office Agency (VOA), which compiles and maintains business rating and council tax valuation lists for England and Wales, is reportedly getting ready to impose business rates (tax) upon UK wireless networks regardless of their status. The move has raised concern because many community driven wireless broadband (Wi-Fi , WiMAX) ISPs, which often exist in locations where the big players have failed to deliver adequate services (remote and rural areas), operate off some already very thin margins."

Comments

Funny thing about those margins

[BadAnalogyGuy]

Those thin margins exist because competition is keeping the final price down. When the government comes along and imposes a tax on all the businesses, the prices rise, but those margins stay pretty steady.

A boat floating in a harbor has some percentage of its total mass below the water. When the tide comes in, the boat rises up. When the tide goes out, the boat sinks back down. But there is no change in the amount of boat mass above and below the water! The only thing that affects whether the boat goes deeper into the water or not is if additional mass is added, removed, or a hole is punched in the bottom. Governments are well known for punching holes into the titanics of industry, though.

Re:Funny thing about those margins

[commodore64_love]

Yes BadAnalogy, but there's a difference between applying a $1,000 flat tax to a small ISP with only $10,000 in total equity, versus applying $1,000 to million-dollar Comcast. The small company can't absorb the cost and will disappear..... just the same as if you applied an additional $1,000 flat tax to an engineer like me, I could swallow it but if you do the same to a McDonalds worker, he will be forced into bankruptcy.

Re:Funny thing about those margins

[tkrotchko]

"to million-dollar Comcast"

Comcast is a $16 BILLION dollar company.

Re:Funny thing about those margins

[Anonymous Coward]

It's called pandering to the constituencies. Imagine how many whiny kids would get ponies, Tonka trucks and as much candy as they could eat if those same kids could vote on their favorite adults to be in charge as the parents every 3-4 years!

Re:Funny thing about those margins

[homer_s]

A boat floating in a harbor has some percentage of its total mass below the water. When the tide comes in, the boat rises up. When the tide goes out, the boat sinks back down. But there is no change in the amount of boat mass above and below the water! The only thing that affects whether the boat goes deeper into the water or not is if additional mass is added, removed, or a hole is punched in the bottom. Governments are well known for punching holes into the titanics of industry, though.

If that logic is correct, there should be no problem imposing a 10,000% tax right? After all, it will be the same for all ISPs, so it will be ok.

Hint - like all taxes, it raises the prices and some consumers will not be able/want to pay.

Margins

[mistralol]

In fact in the UK i worked out that my current isp's margins are so tight i actually cost them around £50 / month for my connection that i pay £30/month for. It also explains why the "up to 24mbit" gets the best speed of 2mbit in eveningings and 1mbit all weekends. It also gets so bad on sunday afternoons the max speed i can sometimes get is around 0.2mbit which is only double isdn speeds. The UK really needs to sort its self out when it comes to telecomes. The goverment putting more tax's on it really isnt helping it any.

A Solution!!

[Linker3000]

Later in the original article, they call this a "Wireless Window Tax*" so the solution's simple - just switch to Linux!

L3K

*Yeah, yeah: http://en.wikipedia.org/wiki/Window_tax

A couple of solutions

[Aceticon]

First let me say that I think that taxing a technology is the kind of thing that's born and implemented because of heavy lobbying by the competition (which uses a different technology) - there are zero public benefits from such a measure: it only creates artificial barriers to entry that protect the established telecoms and result in lower services and higher prices for the consumer.

That said, here's a couple of things that those that provide Internet services over wireless can do:

• Increase the bill by the exact amount of the tax and include a separate line in the invoice for the tax. Contact local newspapers and let them know what's happening - blame your local representative to parliament for not doing enough against this, make people really pissed-off about this: elections are coming, and if you are indeed in a rural constituency, that means that each vote is much more significant in determining who gets elected to parliament, so enough votes swayed can a change which party get's a representative into parliament. The best way to prod the politicians to move is to put their sinecures at risk.
• If you as a provider exist because those that wanted wireless couldn't get together from the "big boys" so they got together and set something up for having Internet access, then incorporate as an Association (instead of a Limited company). Then, instead of charging for Internet access, you charge membership costs which are used to keep the association's "activities" going. This should include an amount to cover for the salary of the people that have to keep the network going. Keep in mind that associations are not for profit, so this solution is only for those wireless ISPs that were not really setup for the profit but are really just a group of people that got together to get Internet access.