The government’s controversial broadband tax has been given the go ahead by chancellor Alistair Darling in his pre-Budget report. The £6-a-year levy will be imposed on all households with a fixed line phone. The money made will be put into a fund to ensure rural areas of the UK do not miss out on super-fast broadband services.
Mr Darling said the government would provide super-fast broadband to 90% of the UK by the end of 2017. Announcing the tax, Mr Darling said: “We are modernising the UK’s digital infrastructure and, in the process, creating thousands more skilled jobs. We have provided funding to help extend the opportunities of the broadband network to more remote communities. We now want to go further, so we can provide the next generation of super-fast broadband to 90 per cent of the population by the end of 2017.”
The broadband tax has attracted criticism from within the industry with some experts saying the fund will fall short of what is needed to provide fast broadband services to all areas of the UK.
The money is earmarked for the 30% of homes that experts think will be by-passed by commercial fast broadband plans.
It is estimated that the broadband tax would raise around £170m a year, which is some way short of BT’s estimate of £5bn needed to provide super-fast fibre services to every UK home.
The Conservatives have vowed to scrap the tax if they win the next general election.
Shadow culture secretary Jeremy Hunt has been given the Conservative remit for broadband.
He has said the Conservatives will favour a market-led approach with public funds only considered once the market has taken broadband as far as it can.
Currently BT is committed to rolling out next-generation broadband to around 40% of the UK with Virgin Media offering speeds of up to 50Mbps (megabits per second) to around half of UK homes.
Commenting on the announcement of a ‘50p broadband tax’ in today’s Pre-Budget Report, Julie Owens at moneysupermarket.com said: “The levy seems a little unfair to those who have a landline but no broadband, however 50p is a small price to pay for what the Government sees as vital infrastructure to the UK.
“This is clearly a big commitment towards bridging the digital divide and on the face of it will go a long way to enable consumers get a fair deal, regardless of their location. Not only will this open up the market, it will give them the option to search between a number of packages to suit their needs.
“Broadband has become a household necessity in recent years and every home deserves to have fast access to what is now an essential service. BT and Virgin Media have already begun the upgrade of their networks but the Government and Ofcom need to ensure that the roll out of a super-fast network reaches those places that need it most.”