Labour Details Broadband Plan

Yesterday Labour released their 2010 Manifesto in anticipation of the forthcoming election. With the election on the horizon the main political parties all seem hesitant to use the 't' word. Considering the unpopular nature of Labour's proposed 'Broadband Tax' I was interested in seeing if this was mentioned at all.

The Tax is to return should Labour win the election with 50p per month being charged to all homes with landline connections. This is needed, Labour says, in order to cover the cost of providing broadband for all. The Manifesto (PDF link) states that:

Britain must be a world leader in the development of broadband. We are investing in the most ambitious plan of any industrialised country to ensure a digital Britain for all, extending access to every home and business. We will reach the long-term vision of superfast broadband for all through a public-private partnership in three stages:

* first, giving virtually every household in the country a broadband service of at least two megabits per second [2Mbps] by 2012;

* second, making possible superfast broadband for the vast majority of Britain in partnership with private operators, with Government investing over £1 billion in the next seven years;

* and lastly reaching the final ten per cent using satellites and mobile broadband.

The proposed tax would generate £175m per year to improve the coverage and infrastructure of the current broadband system. The 10% of people who live in areas which cannot be reached by normal broadband will be able to connect using mobile broadband. The problem with this theory is that, whilst mobile broadband coverage has improved a great deal, the areas which are not covered are likely to be the remote rural areas which are also not covered by normal broadband.

PM Pledges to Provide Fast Broadband for all by 2020

Gordon Brown is expected to make an announcement on Wednesday in which he will promise to provide high speed broadband for every house in the country by 2020. The PM is expected to equate broadband with "the electricity of the digital age" and suggest that speeds of over 50mb are to be provided for all.

The idea of 'broadband for all' is not a new one, the Government's Digital Britain Report was published in June 2009 and recommended providing high speeds for all. As I wrote back in July "They believe that broadband is essential for everyone from school children to big business in order to strengthen the economy and reduce poverty. Children from homes without an internet connection tend to get, on average, lower grades. Businesses need fast connections in order to compete with the global market."



If Labour win the next election they plan to create a 'broadband tax' in order to raise money to improve the country's broadband infrastructure. The tax, which has be opposed by the Tories, will take the form of a 50p per month levy on landlines. The PM expects this tax to raise between £175m and £200m per year. Given the easy availability of contract SIMs this could be yet another nail in the coffin of fixed line services.

The Government also plans to move public services online giving each person in the UK a personal webpage from which they will apply for Passports, submit tax claims and claim housing benefit etc. This plan would save the government millions of pounds although it would also result in lost jobs and potential lack of data security.

"Faster broadband speeds will bring new, cheaper, more personalised and more effective public services to people. It will bring games and entertainment options with new levels of sophistication. So one vision for Digital Britain would create two nations: one digitally privileged, one digitally deprived. And this will mean a massive penalty in economic development to those who are denied access because of a failure of government to rise to the challenge where markets fail. The alternative is our vision: ensuring, not simply hoping for, universal coverage."
Gordon Brown

It is not yet clear how Mr Brown intends to provide 'broadband for all'. Previous plans have included expanding mobile broadband coverage to include deprived rural areas, given the speeds expected to be promised mobile broadband alone would not be enough.

TalkTalk Criticize Broadband Tax Plans

The Government 's plans to introduce a broadband tax in order to cover the cost of providing 'broadband for all' has been criticized by telecoms company TalkTalk. The planned tax, announced as part of the Digital Britain report, would cost users around £0.50 per month and is likely to be leveled at those receiving fixed line broadband.

TalkTalk's chief executive Charles Dunstone (who seems to enjoy being provocative) has said that the £6 per year tax could force low-income households to give up their internet connections:

"This is an unjust and regressive tax on all phone customers which will subsidise mostly richer rural households that can afford high priced super fast broadband services. As well as being unfair we estimate that the increase in price will mean that over 100,000 mostly low income homes will be forced to give up their broadband lines. This is wholly inconsistent with the government's plans to tackle digital exclusion."

Whilst it is admirable to defend those who are on low incomes who stand to gain from having a broadband connection, the figures just don't add up. An extra 50p per month is unlikely to dissuade people from getting connected. Cheaper alternative such as pay as you go mobile broadband are available and the benefits of an internet connection are hard to ignore.



Only 10% of people polled by Ofcom this summer intended to cut back on broadband costs. With the money people are able to save by shopping online a broadband connection could pay for itself.

BT have previously suggested that the tax be paid by those who own a mobile phone in order to spread the cost. The Conservatives have opposed broadband taxation so the outcome of the general election might decide the fate of the tax.

Broadband Tax To Be Law By Next Election

The minister for Digital Britain Stephen Timms has said that the new broadband tax will be law by the time the election comes around. Speaking at a debate in London Mr Timms said that the tax is still a priority and will be 'presented to parliament as part of the Finance Bill'.

The proposed tax which aims to raise cash to improve the nations broadband infrastructure will cost those with fixed phone lines 50 pence per month. The idea for the broadband tax was proposed in the Digital Britain report in order to finance the government's plan to provide 'broadband for all' by 2012.

Those without a fixed line will not have to pay the tax another reason why mobile broadband is best when it comes to saving money if not for download speeds. Pay as you go mobile broadband users will be able to avoid the tax which may help to provide them with a fibre optic connection (eventually).

The tax has proved to be controversial with the Conservatives saying that they would oppose it. Some have said that broadband providers should foot the bill as they stand to profit from increased broadband coverage whilst others have questioned the ability of a 50p tax to pay for a fibre optic network.

Steve Weller of uSwitch.com says that the proposed tax is 'a classic case of robbing Peter to pay Paul.'

"We are talking about a digitally dependent economy and society, and as such, the Government should be looking to share the burden across businesses and consumers alike."

Mobile broadband Tax Plan May Be Scrapped

As previously mentioned the Government has been planning a broadband tax in order to raise money to help provide 'broadband for all' by 2012. The idea of a planned tax was first put forward in the Digital Britain report as money is needed to improve the broadband infrastructure including the provision of better quality mobile broadband services to rural areas.

The planned tax would be paid by all those with a broadband connection and would be around 50p per month. Some have criticized the plan as they do not feel that the public should be funding infrastructure improvements when it will be the broadband providers who will stand to profit in the long run. Others have said that the tax is unlikely to raise enough money to make a real difference.



Speaking to The Times the Communications Minister Stephen Timms 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. Things that are contentious will have to be left until after the election”

The Conservatives have said that they are against the broadband tax so the outcome of the election could decide the future of the tax. The debate will no doubt continue in the meantime.

BT Suggests that Mobile Phone Users Should Help to Spread the Cost of the Broadband Tax

In the Digital Britain report published last month Lord Carter who is the Communications Minister proposed a 50p per month tax on all fixed phone lines. The aim of the 'Broadband Tax' is to help cover the costs of providing high-speed broadband to the nations computers.

What is needed in order to improve our broadband infrastructure is nothing short of a complete overhaul. The current copper phone lines were not designed to transport large amounts of data at high speed, they were designed to handle voice calls. The problem is that there is some debate about who should be paying for the new system.



BT has suggested that in order to reduce the tax per customer more people should be taxed. Their solution is to place a tax on mobile phones as well. Some of the £1.5bn which is expected to be raised by the tax may be available to mobile operators as well as fixed line companies as they are both able to join the bidding process for a share of the funds.

BT's director of industry policy and regulation (snappy title!) Emma Gilthorpe has said "the government should consider the opportunity to widen the base for the tax and possibly reduce the amount that each individual household pays". The problem with this theory is that most households own a combination of a fixed line and several mobile phones so in the end the same people may be paying the same amount as they would with the standard fixed line tax.

Those without a fixed phone line, mobile broadband customers for instance, might end up paying towards the improvement of the infrastructure if BT's proposals are considered.