The highly controversial 50p per month broadband tax has been scrapped.
The broadband tax would have been applied to all landline telephones and cost 50p per month (£6 per year) and was expected to help raise around £170m a year to help pay for next generation fibre broadband to rural areas but Labour have scrapped it at the last minute before parliament is dissolved next week ahead of the General Election that is due to take place on May 6th.
It is not financially viable for the likes of BT and Virgin Media to install fibre broadband to some rural areas where they would not make a return on their investment and is the reason that the government wanted to provide funding. There is currently plans that 90% of the UK should have access to superfast broadband (50Mb or above) by 2017.
The Conservatives are apposed to the broadband tax and if they get into power would instead look to use part of the BBC licence fee to help with the funding required for the roll out of broadband to rural areas.
One big sticking point was the fact that the broadband tax would be used to help fund the next generation broadband roll out to rural areas which would account for less than a third of the country yet people all over the country would be forced to pay the tax yet see no benefit themselves from it.
Some households who may have more than one telephone line would be charged on each telephone line they hade, even if it was left unused.
Although the broadband tax has been scrapped for now, if Labour do win the General Election on May 6th then it is likely that they will re-introduce it and get it passed.
The broadband tax of 50p per month for those with phone lines that has been proposed by Labour could see some households paying three times this price.
The Broadband Tax works out at £6 per year but a leaked document has suggested that those with more than one telephone line could be charged for each line they have as apposed to it being just a household charge, so those with 2 or 3 lines would end up paying twice or three times as much!
It is estimated that around 1.7 million households in the UK have more than one telephone line, with some having one line for telephone, on for broadband and one for a fax machine, these people could end up paying £21.15 per year as apposed to the £6 according to The Times (who the report was leaked to).
What’s more is that the government are looking to add VAT onto the broadband tax (yes, tax on tax) meaning that it works out at even more than originally expected.
The broadband tax is designed to help raise funds to deliver next generation fibre broadband to hard to reach rural areas, although the Conservatives have vowed to scrap the broadband tax if they get into power in the next General Election and the tax has not gone through.
The TalkTalk chief executive, Charles Dunstone has estimated that around 100,000 lower income homes in the UK will have to give up their Internet connections due to the 50p per month/£6 per year broadband tax.
The broadband tax was proposed in the Digital Britain report earlier this year and due to last for 7 years with the aim of raising £1 billion to help with the investment of high speed fibre networks across the UK.
He also complained that private investors will also wait for the public handouts of money to invest in the fibre broadband networks in more rural areas as apposed to funding the development themselves.
Stephen Timms, the treasury minister is going to include this tax in this years finance bill meaning there is a good chance that it will be made legal before the next general election. The conservatives are hugely against the plans for the broadband tax, and with the Torries the favourite to come into power at the next general election it may be too late for them to get the plans scrapped.
The 50p per month broadband tax that is to be used to help fund next generation fibre optic broadband in the UK has been criticised by The Conservatives who say that it will fail to deliver high speed broadband to every home.
Jeremy Hunt, the shadow Culture Secretary and Nick Herber, the shadow Environment Secretary wrote a column in the Daily Telegraph:
“The incentive for operators to invest is destroyed as everyone focuses not on consumers but how to get more state handout.
The tax has been earmarked to encourage investment in modern fibre optic networks – but telecom operators will have no incentive to make any investment of their own if there is the chance to tap into subsidy.”
They belive that the technology providers will just want handouts from the giovernment to help fund the new technology instead of investing in it themselves.
The Shadow Culture secretary Jeremy Hunt has said that if the Torries get in then they would scrap plans for the 50p per month “broadband tax” that is set to be charged to all land line telephones.
The £6 per year tax is to help fund next-generation fibre broadband in the UK but many believe that the £175 million it would raise per year is no way near enough.
If Labour do manage to rush through with their plans for the broadband tax that were detailed in the Digital Britain Report before the next general election (that the Conservative Party are favourite to win) then it would make it more difficult for the Tories to have this proposal stopped.
The £6 “broadband tax” is set to be put through and made law before the next general election which will infuriate many who think that it would not get passed under a Conservative government (the favourites to win the next general election).
Stephen Timms who is the Treasury minister said that the £6 per year tax on phone lines should be made law in the next few months as it could be put forward in the Digital Economy Bill that is due to be put before the House in November or it could be part of the Finance Bill that would be presented after the budget.
The 50p per month charge on all telephone lines is expected to raise around £175 million per year and is to be used to help pay for next generation super fast fibre broadband even thought there are serious doubts that the money raised will come anywhere close to help fund it.
The broadband tax that has been proposed in the Digital Britain report by Lord Carter, to be introduced to every fixed phone line in the UK may not get introduced.
The 50p per month/£6 per year levy is set to be put onto every fixed telephone line in the UK to help fund the roll out of next generation broadband (fibre broadband) services in the UK, the fees were set to raise around £150m a year.
The reason there is doubt as to if the levy will actually come to fruition is because the current communications minister who replaced Lord Carter, Stephen Timms, has said:
“If the question is, is the levy definitely going to be legislated for this side of the election, I can’t say for sure”
With the general election being next year and because the Conservatives who are against the levy are the favourites to replace Labour in government we could find that if the legislation for this has not gone through before the general election then it could well be dropped altogether.
BT think that the “broadband tax” to help fund next generation fibre broadband that is to be charged to all fixed telephone lines should be extended to also include mobile phone users.
The “Broadband Tax” as set out in the Digital Britain report means that a levy of 50p per month, £6 per year, is to be charged to every fixed telephone line that is expected to raise around £1.5 bn.
BT say that as it won’t only be fixed line broadband operators who will be able to bid for a share of the money and that the mobile operators will also be able to bid for some too.
Emma Gilthorpe, BT’s director of industry policy and regulation has said that “the government should consider the opportunity to widen the base for the tax and possibly reduce the amount that each individual household pays.” with regards to mobile operators looking to claim some of the money raised from the broadband tax.
The money raised is to fund the deployment of fibre broadband into areas of the country where it wouldn’t be feasible for broadband providers to fund the installation themselves.
BT is planning on installing it to 40% of the UK population at a speed of 40Mb, Virgin Media however already offer their fibre optic broadband service to 50% of the population and have a headline speed of 50Mb broadband.
The 50p per month levy to be placed on all fixed copper phones won’t be enough to give total coverage of the UK with fibre broadband according to BT.
The “broadband tax” is to be charged for all premises that have a fixed copper line and was announced in the recently published Digital Britain Report.
The director of strategy at BT, Liv Garfield, said that she thinks even with the levy that there will still be a proportion of the UK where the fibre broadband won’t reach to. She thinks that it will help them to achieve around 80%-85% coverage and that 100% coverage is impossible.
The 50p per month (£6 per year) levy will raise between £150m-£175m per year that will be put in to the pot to fund the roll out of the fibre optic network into the hard to reach and remote areas of the UK.
BT have already started the roll out of their new fibre optic network and expect that by March 2010 there to be 1.5 million premises who will be able to connect via the fibre network.
A new national tax is to be levied onto all fixed telephone lines in the country to help pay for the the universal roll out of next generation broadband across the UK it was announced in the Digital Britain Report yesterday.
A charge of £6 per year, or 50p per month, is to be charged to every fixed line telephone and will raise funds of up to £175 million per year that will then be used to subsidise the cost of extending next generation fibre broadband Internet access to the areas of the country where it is not currently planned to be rolled out to as it is not financially viable for the broadband providers to pay for this themselves. There is currently around 30% of the country that will benefit from this investment that live in rural areas that would be missed out from receiving fibre broadband initially.
This is going to be a yearly charge and it is expected that by 2017 all areas will have next generation fibre broadband installed and available to them.
The report also confirmed the government want a minimum 2Mb broadband across the country for everyone by 2012 which is what we have been under the impression would have been announced. This is to be funded in a number of different ways which includes using the £200 million surplus left over from the Digital Switch Over Help Scheme.
The full 245 page Digital Britain final report can be read at www.culture.gov.uk