Supreme Court decision in Vtesse vs BT to have huge bearing on competition in the fibre optic market

A BT victory is likely to put off new entrants to the market

Case will now be heard in the Supreme Court

Vtesse Networks has had its case against BT overruled by the Court of Appeal. The ISP now plans to take the dispute to the Supreme Court.

The case centres on business charges payable on an optical fibre network, with Vtesse claiming that, owing to an anomaly, it is liable to pay 20 times more for its fibre network than BT.

This issue makes BT’s competitors less likely to build their own next-generation access networks because the costs are so disproportionately high.

Vtesse has said it will take the case to the Supreme Court, and the result of that action could have important implications for the government’s optical fibre NGA rollout plans, according to Tony Ballard, partner at law firm Harbottle & Lewis, which is representing Vtesse.

He said: “We believe it’s fundamentally discriminatory for one company to be taxed at this massively higher rate. Unless a fairer means of taxing such companies emerges, there’s going to be a diminution of enthusiasm among potential entrants to the market.”

Quocirca analyst Rob Bamforth agreed, saying that Digital Britain was not something that an incumbent [BT] alone could deliver. “It will require a patchwork quilt of smaller players and differing technologies to ensure the whole country, and not just the lower-hanging profitable parts, has adequate service and coverage,” said Bamforth.

“A country surely wouldn’t want to tax self-builders more than a huge building firm, would it? That sort of attitude stifles innovation,” he added.