Stealth tax to fund UK broadband plans

Opinion – The UK Government is to impose a tax on all fixed business and residential phone lines in Britain to achieve its aim of providing broadband access to every home by 2012.

In its new Digital Britain report, the Government says it believes “the fairest and most efficient means of ensuring that the overwhelming majority of the country has access to next generation broadband is to share some of that saving and create an independent Next Generation Fund, based on a supplement of 50 pence per month on all fixed copper lines.

“It seems unlikely, particularly in a period when capital markets are severely constrained, that private investment or publicly available financing will provide the investment necessary to roll out Next Generation Access such that coverage can reach ADSL or mobile coverage levels,” adds the report.

While 50 pence (81 cents) a month sounds like a small price to pay to ensure every citizen has web access, it should be noted that this applies to every copper pair, meaning a company with 100 lines will have to pay an extra $972 a year.
The cash in the fund will then be available as a subsidy to any operator to deliver next generation broadband to the ‘final third’ (the ones currently without broadband access) of homes and small businesses, bringing the cost of the deployment to the same level that operators face in the commercially economic parts of the market.

So everyone who currently uses a phone – and is probably paying handsomely to use ADSL over it – will be asked to help out multinational telcos such as BT who would otherwise have to find their own investment to build an improved network for which they can then charge.

This means that the UK public will be paying twice to get minimal broadband access at a rather sad 2Mbps – and not before 2012. Last year BT revenues were a mere £5,437 million ($8,884,978,097.19), so it is clear that the company cannot possibly find the estimated £200 million ($300.27 million) needed to provide slow broadband for all and then charge for it.

It is always good to see ordinary users being forced to put their hands in their pockets to help out beleaguered multinational corporations and the UK Government should be applauded for its foresight.