UK budget: 50p broadband tax gets green light

24/03/2010

Chancellor Alistair Darling has announced this year’s budget with plans for a major broadband roll out, funded by its much anticipated 50p-a-month broadband tax. He announced super-fast broadband for the majority of homes by 2017, funded by a £6 annual tax on landline phones. The Conservatives have vowed to scrap the tax if they win the next election.

In his budget speech, the chancellor said: "The UK has the potential to be a digital world leader. It needs high-speed broadband for rural areas as well as urban, it must not be limited to the well-off," the chancellor said in his budget speech. A super-fast broadband service will create "hundreds of thousands" of new jobs while putting services online will lower the cost of public spending, the chancellor said. He also promised more tax breaks for the UK's computer games industry.

24/03/2010

The broadband tax, one of the measures in the government's Digital Economy Bill,

will apply to people with fixed lines. They will pay 50p a month to help fund super-fast broadband, although it is not clear if those who use cable services will be included.

It has been branded unfair by an all-party group of MPs who say that most people who pay it won't reap the benefits.

It is aimed at the so-called final third of the country that is unlikely to be included in commercial plans to roll out expensive fibre optic services.

The Conservatives believe that government intervention to ensure super-fast broadband reaches the whole country is not yet necessary. It favours leaving the roll out of such services to the industry, although it would consider government assistance in 2012, when funds are freed up by the digital switchover.

Commenting on the introduction of the tax, Sebastian Lahtinen, co-founder of thinkbroadband.com, said; "The Prime Minister made references in a speech on Monday to 100% next generation broadband coverage, so we are disappointed that the budget has simply repeated the government's previous target of 90% coverage by 2017".

Michael Phillips of Broadbandchoices.co.uk added: “That the government has formally stated its intention of bringing superfast broadband to 90% of households by 2017 on the eve of the next general election – and the mechanic of sticking to the controversial 50p/month tax itself – speaks volumes of a lack of real commitment to improving the UK’s broadband infrastructure.

“The good news is that whilst the government has dithered, providers such as Virgin Media and BT have pressed ahead with investment in – and the roll out of – their own superfast services.

“Recent research we carried out indicated that half of consumers felt that line rental costs already offered poor value for money and this is just another body blow to customers that have seen the majority of telecoms suppliers significantly raise line rental charges in the last 12 months.”

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