Six pound broadband tax planned for UK telephone users

Government plans £6 a year levy on fixed telephone lines to boost broadband funds

by Michael Smith (Veshengro)

The British government plans a £6 (US$ 8.50) annual tax on everyone with a telephone line in order that rural and remote areas of the country can access next generation broadband.

The levy on copper lines is expected to raise about £150- £175m per year, which will be put into the Independent Next Generation Fund.

This will be administered by Ofcom, the telecommunications regulator, and the money will fund part of a subsidy to ensure operators roll out super-fast broadband – with speeds of up to 100 Mbits/sec – to the third of UK homes where it is considered commercially not viable to roll out these services.

The majority of places do not, as yet, seem to get anything in the order of this speed, including where I live not far from London for, as soon as you are more than a mile or so away from your telephone exchange with the current copper wire system nothing more than about 1Mbits/second works. The talk about 8Mb/sec or more only is feasible if one lives in the center of towns near the exchange and if one has optical lines.

The broadband tax plan has been unveiled in Lord Carter’s “Digital Britain” report, and he said placing a 50p per month levy on all copper lines was the “fairest” way of ensuring everyone benefited from fibre-based next generation services.

These services, which can deliver multimedia content such as TV and movies, are seen as vital to boost the UK’s economy. They are also expected to provide essential access to Government services.

However, the Internet Services Providers' Association (ISPA) was critical about the levy.

“ISPA welcomes the government efforts to encourage investment in infrastructure to create a competitive market for high-speed broadband for consumers. ISPA notes that the proposal to place a 50p per month levy was enabled by the 'historic fall in telecoms prices'. In effect customers and the ISP industry are being penalised for successfully bringing prices down.”

The report also, as expected, outlined the promised a Universal Service Commitment (USC) to ensure every home in the UK can access a 2 Mbits/sec service by 2012. Unlike the proposals in the interim report published at the end of January, the proposed 2Mbits/sec is not a headline speed or ‘up to’.

Lord Carter said: "The 2Mbit/s USC will be a floor rather than a ceiling – a kind of technological minimum wage."

This will be financed mainly through public funds including an estimated £200m surplus from the Digital Switchover Help Scheme.

Other contributions will come from private partners and money from other public sector organisations. Consumers themselves may also have to pay out by resolving any wiring issues in their homes.

However there were widespread criticisms of the proposals.

Michael Phillips, product director of price comparison site, BroadbandChoices said: "A 2Mbits/sec commitment is a pretty underwhelming aspiration given the rest of Europe already experiences over 6Mbits/sec as an average."

Some parts of Europe, such as in some places in Sweden the broadband speed now exceeds the 25Mbits/sec rate at a costs that is even lower than what I, for instance, pay for the 1Mbits/sec service that I am getting at present. However, don't anyone think that there is a download speed of 1Mbit/sec in that. The maximum that can ever be achieved here is somewhere around 110-118Kbits/sec on downloading a file. Not much, is it?

One can but hope that all of this is not just another stealth tax from the British government with which to fleece the people.

© 2009