Tax on broadband closer than you think

by Darren Davidson, revolutionmagazine.com 23-Sep-09, 15:00

LONDON - The government's controversial plan to impose a 50p a month broadband tax will happen before the next election, minister for Digital Britain Stephen Timms has revealed.

The 50p a month tax will apply to everyone with a fixed line telephone as part of an effort to raise up to £175m a year to fund high speed networks.

Timms said the tax will be presented to parliament as part of the Finance Bill, but Tory MP John Whittingdale said the tax would be opposed by the Conservatives.

He said: "I'm confident the Conservative party will oppose it. I object to it on the basis that it is another tax and is aimed at people who are using old technology."

Speaking earlier in the day, Timms said: "We want to make high speed networks nationally available. The next-generation fund will help that and we will legislate for it this side of a general election," he said.

Some are already questioning the value of the tax. Ian Fogg, an analyst with Forrester research, claims the sums don't stack up.

"There are around 34 million fixed lines in the UK and at £6 a year this is going to raise in the low hundreds of millions each year. This is some way off BT's budget of £1.5bn to put fibre in 40% of homes by 2012," he said.

Fogg was referreing to BT's aim to upgrade 40 per cent of UK homes to Fibre to the Cabinet technology (FTTC) by 2012.

However, BT is targeting easy-to-reach urban and suburban areas at the exclusion of rural areas.

Rival Virgin Media is also upgrading its network so it can offer speeds of up to 50Mbps. Its network is available to 50 per cent of homes in the UK, mainly in urban and suburban areas.