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Volume 450: debated on Wednesday 25 October 2006

To ask the Secretary of State for Communities and Local Government (1) whether it is her policy to exempt local loop unbundling broadband operators from paying non-domestic rates; and if she will make a statement; (92446)

(2) what assessment her Department has made of the impact of non-domestic rates on local loop unbundling upon the wholesale broadband market; and if she will make a statement;

(3) whether local loop unbundling will be exempt from non-domestic rates after 31 March 2008; and if she will make a statement;

(4) what discussions her Department has had with (a) BT and (b) local loop unbundling operators on the payment of non-domestic rates on unbundled local loops; and if she will make a statement.

Liability for non-domestic rates on unbundled local loops is determined by the Central Rating List (England) Regulations 2006 which provide that, until 31 March 2008, unbundled local loops are part of British Telecommunications Ltd. (BT) single central list hereditament.

Local loop operators pay an annual cost-oriented rental charge to BT for each loop they unbundle. Included in the rental charge is an amount BT is entitled to recover as a contribution to their non-domestic rates bill.

The consultation paper issued by the Department in December 2005 proposed this arrangement and also invited comments on the long term options. It was recognised that further detailed analysis of the options was needed before a long term solution could be implemented. The Department intends to issue a further consultation paper including a partial regulatory impact assessment once the detailed analysis work is completed. It is envisaged the outcome of the further consultation will determine whether BT continues to pay non-domestic rates for unbundled local loops or whether the non-domestic rates liability for the loops will shift to local loop unbundling operators.

The Department for Communities and Local Government, The Department for Trade and Industry, the Valuation Office Agency and Ofcom have held formal and informal discussions with BT and local loop unbundling operators on this subject and there will be further discussions as part of the work on determining the long term solution.