VAT Reduction To Spur Broadband Growth?

jmcc

http://www.siliconrepublic.com/news/news.nv?storyid=single6087

Apparently a VAT reduction will spur broadband growth according to IBEC's Tommy McCabe. I've got a better idea: How about making broadband available to those who want it. The takeup levels would probably be better. Most SMEs are probably registered for VAT and would be able to reclaim the VAT on broadband as a business expense.

The Silirep story also had this interesting quote:
"McCabe also called for a full review of the County and Group Broadband Scheme to ensure a more streamlined approach to broadband rollout in rural areas."

I don't trust IBEC and I don't consider IBEC to be anything more than Eircom's mouthpiece. But this is quite a staggering thing to claim because it means that the GBS is working and becoming serious competition to Eircom's wetstring notwork in rural areas.

Regards...jmcc

jwt

jmcc wrote:

"McCabe also called for a full review of the County and Group Broadband Scheme to ensure a more streamlined approach to broadband rollout in rural areas."

I don't trust IBEC and I don't consider IBEC to be anything more than Eircom's mouthpiece. But this is quite a staggering thing to claim because it means that the GBS is working and becoming serious competition to Eircom's wetstring notwork in rural areas.

Regards...jmcc

He obviously read my comment here

McCabe concluded: “The awareness by small business of the huge benefit that broadband can have on their businesses needs to be heightened. With increased demand comes increased investment.”

Strangely this was something asked of Damien, Viking and I when we met Minister Dempsey last.

"Why don't more small businesses take up BB where BB is available"

Took a few attempts to make everyone understand that in rural areas the number of businesses who CAN take up BB is very small and this swings the national average down quite a bit. Furthermore many businesses in so called Bb enabled areas are not close to exchanges, i.e. small industrial estates and so can't get BB.

In fact I have yet to meet a small buisiness or SME that had a need for electronic communications and didn't see the advantages BB has brought.

Blaster99

I think there's something to be said for streamlining GBS rollouts. I mentioned this in another thread where apparently eircom had enabled the exchanges around the same time as the GBS went live in a couple of towns. Sounds like a potential waste of money to me. Eircom, unlike all other ISP's, publish their rollout plans so it shouldn't be rocket science to get this right. Unless of course eircom enabled the exchanges outside of their published plans because the competitive threat of the GBS.

Sponge Bob

No connection really.

Eircom have enabled certain rural towns with a 70% or 80% failure rate on their lines. Therefore those towns need ADSL as WELL AS a GBS .

Giving eircom BB exclusivity where they effectively do not provide copper is morally repugnant.

Anyway eircom have taken GBS money themselves to enable exchanges such as in Oughterard Co. Galway and ( IIRC ) Carragaline in Cork

Blaster99

I would be extraordinarily surprised if there's a single town in Ireland that had eircom ADSL first and was subsequently approved for GBS. You just wouldn't get the numbers required for the GBS application.

jwt

Clonard is on a BB enabled exchange in Kinnegad

No one more than 0.5 - 0.75 miles from Kinnegad can get BB

And I found out that Broadford which is closer to clonard than kinnegad is also enabled but the lines run from clonard to kinnegad

Even within Kinnegad the GBS is still required for a large portion of the population. But that was a GBS first then eircom enabled the exchange. So it doesn't disprove your point.

John

Sponge Bob

Blaster99 wrote:

I would be extraordinarily surprised if there's a single town in Ireland that had eircom ADSL first and was subsequently approved for GBS. You just wouldn't get the numbers required for the GBS application.

The town was not approved for GBS after DSL , the 'hinterland' , or parts of the hinterland were , a GBS has no lower limit of participants in practise , either persons or geographical area size. All you do is offer it to all in 'an area' at a realisable price and serve those who are willing to be served and make sure it breaks even !

Eircom exchanges are sited so that the max line length is 8km but the max dsl line length is 4.5km leaving an unserviced 3.5km wide Doughnut around EVERY town with an enabled exchange in Ireland ...more or less .

Sponge Bob

jmcc wrote:

http://www.siliconrepublic.com/news/news.nv?storyid=single6087

Apparently a VAT reduction will spur broadband growth according to IBEC's Tommy McCabe.

The VAT reduction proposal is simply Eircoms way of increasing line rental without increasing line rental , they have been banging on about this for years. It is nothing to do with BB at all. Dave Mc Redmond has been looking to get his annual bonus for this scam , here is how it operates.

Currently Eircom charges about €24 a month line rental including 21% VAT. An essential service such as electricity charges 13.5% VAT

Eircom do not propose to reduce any charges to the consumer. So heres how it operates at present .

€24 including 21% VAT = €19.80 To Eircom and €4.20 to the Government .

As there are c. 1.1m residential lines The exchequer gets €4.62m a month in VAT for them.

BUT

€24 including 13.5% VAT = €21.15 to Eircom and €2.85 to the Government

This reduces the Governments VAT take by €1.5M a month (€18m a year) but leaves Eircom better off to the tune of :

1.6 Million x €1.35 a month as business customers will pay the extra line rental too (but not VAT) . Thats €2.16 Million a month extra for Eircom . €26 Million a year for doing nothing and the tax payer gets €18m less.

Then theres the Social Welfare line rental to be paid by the same taxpayer despite the reduced VAT income to offset that subsidy , that would be 200,000 x €1.35 a month extra or €3.2 m a year leaving the taxpayer €21 million worse off and Eircom €26m better off and the consumer no better or no worse off for the same crummy customer service .

It also complies with Retail = or Retail - guidelines set for Consumer Line Rental after Eircom gave us the highest line rental on the planet while Comreg looked on ....trembling ...a few years back .

Mc Redmond gets much of his his fat bonus for recurring revenues , he increases Eircom recurring annual revenue by €26m at a stroke and gets his bonus.

The consumer gets precisely **** all, as usual

Blaster99

Sponge Bob wrote:

The town was not approved for GBS after DSL , the 'hinterland' , or parts of the hinterland were , a GBS has no lower limit of participants in practise , either persons or geographical area size. All you do is offer it to all in 'an area' at a realisable price and serve those who are willing to be served and make sure it breaks even !

Eircom exchanges are sited so that the max line length is 8km but the max dsl line length is 4.5km leaving an unserviced 3.5km wide Doughnut around EVERY town with an enabled exchange in Ireland ...more or less .

Very good, but eircom sticks exchanges in population centres. You're not practically going to get the numbers required for a GBS if an area of 4km's from a population centre has access to cheaper and better broadband (I would have thought). If a GBS can be justified by just serving very low density rural housing, then by all means, but I'm sceptical. If you look at commercial WISP's, they all go to the same places as Eircom (or vice versa) and offer perhaps a little wider coverage but generally compete for the same customers. That kinda shows you the economics of the situation. These GBS's need to make money of sorts too, even if they are subsidised. Perhaps I'm mistaken, but isn't a GBS a once-off capital grant to get a service off the ground, but the service itself needs to be self-sufficient, i.e commercially viable?

But I suppose instead of speculating, how are GBS's fairing that have eircom competition? If they're doing alright, then I'm wrong.

cgarvey

jmcc wrote:

Apparently a VAT reduction will spur broadband growth according to IBEC's Tommy McCabe

How about coming out with a decent entry-level product (untimed 512Kb+ for < €10/mo incl. VAT) and make it available to anyone who wants it? Not just eircom by the way, all the ISPs, mainly eircom though!

I always thought VAT on comms should be 13.5% anyway, but I don't think that's going to spur any growth, if it's changed.

Capt'n Midnight

jmcc wrote:

http://www.siliconrepublic.com/news/news.nv?storyid=single6087

Apparently a VAT reduction will spur broadband growth according to IBEC's Tommy McCabe.

IBEC members can claim back the VAT so irrelevant to them at work. And they are always on about high charges to their members regardless of fairness to the rest of the economy or citizens. So just hot air.

Line Rental is the biggie. If Eircom were forced to offer copper at EU wholesale rates and T&C's to other Telc's..
It Eircom had a USO that was what people need and was enforced...