What does the latest budget mean for the telecoms industry?

The government’s strategy to ensure a nationwide full fibre network by 2033 means an allocated budget of £200 million.

What does the latest budget mean for the telecoms industry - Office Phone Shop

The National Productivity Investment Fund (NPIF) is a government initiative to address the UK’s productivity gap, with the aim of deploying full fibre in rural locations. The first wave of this will include the Borderlands, Cornwall, and the Welsh Valleys. Suffolk will be the first local area to be awarded from the £5.9 million of funding from the third wave of the Local Full Fibre Networks challenge fund, enabling full fibre connections to key public buildings.

The latest budget allocated a further £1.6 billion for R&D funding. In addition, the government is increasing the Industrial Strategy Challenge Fund by £1.1 billion, which includes up to £121 million for Made Smarter, “to support the transformation of manufacturing through digitally-enabled technologies, such as the Internet of Things and virtual reality.

“While it is great news to see Philip Hammond promising to invest £200 million to pilot innovative approaches to deploying full fibre internet, it is important that digital businesses don’t jeopardise this opportunity by undermining the network expansion with poor digital experiences…. We always need to accompany network expansion with a laser focus on remedying latency issues that spoil digital experience and hurts our digital economy,” said Steve Miller-Jones, VP of product strategy, Limelight Networks.

From April 2020, the government plans to introduce the digital services tax (DST) – a two per cent tax on the revenues of “certain digital businesses”, a temporary measure, applicable until an appropriate long-term solution is in place. Beneficiaries include those that generate global revenues from in-scope business activities of more than £500 million per annum. It also applies to revenues generated from search engines, social media platforms and online marketplaces and will include a safe harbour provision that will exempt loss-makers and reduces the effective rate of tax on businesses with very low profit margins.

Commenting on the budget, techUK CEO, Julian David said that the DST cuts “across the grain” of the positive narrative created by the chancellor’s other announcements.

“techUK remains opposed to any tax that seeks to narrowly target businesses simply because they are digital. The kind of tax being proposed will be bad for investment and bad for the UK economy.

“This approach risks undermining the UK’s reputation as the best place to start a tech business or to invest. The £500 million threshold the chancellor proposed is low and risks capturing much smaller companies than anticipated. techUK will engage with the chancellor’s consultation but it is vital that policy is developed based on the reality of how businesses work, not on theoretical models of how they operate,” David said.

He added, “We welcome the chancellor’s recognition of the benefits of an international approach but the OECD and the EU Expert Group on tax have said that a national digital services tax is the wrong idea. This is an international tax issue that needs an internationally agreed solution. Work at OECD level is progressing. The UK should show commitment to that process and not encourage others to look to unilateral action.”

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