UK phone line tax to fund rural broadband

Digital Britain report commits to 2Mbit/s universal connection spped

A tax will be imposed on fixed telephone lines in the UK to help fund the rollout of broadband to rural areas. This will cost every household with a landline phone 50 pence per month, equivalent to £6 a year.

Ben Bradshaw, secretary of state for culture, media and sport, told parliament that the government still had a target for every home in the UK to have broadband by 2012, as he announced Lord Carter's Digital Britain report. "We have concluded the fairest way is to use some of that saving ... in an independent national fund to ensure full coverage," he said.

But shadow culture secretary Jeremy Hunt immediately hit back, questioning the benefits of this tax, and why responsibility for funding the rollout to some areas would effectively be taken off the shoulders of telecoms providers.

The fund would only raise £150 million per year, he added. "At this rate, it will take 20 years to complete the £3 billion rollout", he said, calling the report a "colossal disappointment".

BT and Virgin Media this morning indicated they are unlikely to be able to afford to provide broadband infrastructure to homes in the countryside, and were not expecting to receive much government help, according to a report in The Times.

BT told the newspaper it could not afford to connect remote rural homes to the service without financial support. "We believe that the future is fibre, but it is only economically sensible for us to connect up the big cities and new-build houses; we're not expecting Digital Britain to help us to run fibre into rural areas."

A source at Virgin Media added that the company expected the report "to offer us not much more than some tax breaks".

Mobile operators Vodafone and O2 have so far declined to release any of their radio spectrum to the cause, it was reported.

Andy Donaldson, principal technician at IT services firm Capgemini, said that the government needed to go further than simply promising the basic infrastructure for high speed broadband.

"The commitment to a 2Mbit/s universal connection speed is a short-term fix and ultimately toothless without the reassurance that contention levels will be reduced so that users actually receive what is advertised," he said. "Those paying for 8Mbit/s but only receiving 900kbit/s at peak times for streamed media will be the first to point out the problems that lie ahead."

"The network behind the broadband access network, all the way to the content source, comes into play as well [as the bandwidth to homes], and this is the crux of the issue which needs to be addressed," added Paul Gainham at supplier Juniper Networks.

And not everyone is interested in broadband anyway, according to Chris Williams, media partner at Deloitte.

"By making high-speed broadband access widely available to consumers, there is no guarantee that it will be taken up," he told the Daily Telegraph. "Demand and willingness to pay for services varies significantly, with some segments viewing broadband as an essential utility, and other groups choosing to opt-out even if services were free."

Online entrepreneur Martha-Lane Fox has been appointed as Digital Champion, to help encourage the uptake of broadband.

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