Fibre tax appeal thrown out by European Court

Independent ISP Vtesse Networks has lost its fight in the European Court of Justice to redress "unfair" fibre tax laws after its appeal was dismissed.

This means the ISP has now exhausted all options to change the fibre rating system through the courts.

Vtesse Networks took its case to the European Court of Justice after suffering a defeat in a long-running court case in the UK.

Its argument throughout has been that the fibre tax system unfairly favours BT. Vtesse and other smaller ISPs contend that the business charges payable on an optical fibre see them pay the equivalent of 20 times more for their fibre network than BT, as a result of the economies of scale BT enjoys thanks to the size of its infrastructure.

Speaking to Computing about the result, Aidan Paul, CEO of Vtesse Networks, said: "The grounds on which the appeal has been dismissed seem rather peculiar to me.

"The European Court said that the case could not be looked at as we were appealing as a single entity on an issue that affects many other businesses."

When asked whether the ISP would be taking any further steps Paul said that they were "collecting their thoughts" for the moment.

Although the fibre rates seem unfair on the face of it when the government is trying to encourage investment in extending the reach of superfast broadband, arguably the problem may just be too difficult to correct.

"The resolution would require government intervention and regulation meaning there isn't going to be a quick fix here," said Rob Bamforth, principal analyst for Quocirca.

"The legislation worked at one time but it is so old that the only way it will ever change is in slight increments," he added.

"What I think will come out of all the discussions around fibre rates is that we will see the cheaper rates extended to Virgin Media so as to create a strong second to BT and balance the market."

Bamforth suggested that having BT as a dominant provider and Virgin Media as a strong second would encourage innovation and investment among the smaller companies and allow the "ecosystem to flourish".

"As BT is the dominant player with no strong second everyone has to play by its rules. But if there are two at the top, its power will be slightly diluted giving everyone else a chance."

BT had no comment on the decision of the European Court to dismiss the appeal.