Politicians shelve tax to widen internet access until after the election
• No enthusiasm for £6 levy to pay for fast broadband
• Business leaders warn of cost of ignoring rural areas
The government looks ready to ditch controversial plans to tax phone lines to pay for next-generation broadband internet.
Labour MPs are concerned about levying the £6-a-year tax on consumers so close to a general election, while parliamentary convention means the government would require support for the measures before putting them in the pre-election budget. The Conservatives, however, have little appetite for a so-called broadband tax.
Dumping the plan would be one of Stephen Timms's first moves as the new minister in charge of the Digital Britain ideas announced in June. "When you face a general election you tend to have a short finance bill before the election and a longer one afterwards. It [the levy] is unlikely to make it through the short finance bill without Opposition support and that does not look likely … In that case, it would have to wait until after the election," he said.
Asked if that meant the levy was unlikely to happen, he said: "Possibly, yes."
The idea of levying 50p a month on every UK phone line to pay for new super-fast broadband surprised many in the industry when it was proposed in Lord Carter's final Digital Britain report in June.
When Timms replaced Carter, executives hoped that as he was retaining his place in the Treasury, while also taking up a role within the Department for Business, Innovation and Skills, meant he would push hard for the levy. But the fact that the government now seems to have abandoned its plan means that Britain is likely to lag far behind many of its competitors. Other countries such as Australia have proposed using government cash to help build super-fast networks.
Adam Marshall, of the British Chambers of Commerce, said: "Both political parties need to find a consensus about how the next generation of broadband will be delivered, regardless of who is in Downing Street. Businesses need sustained, efficient infrastructure investment in place to deliver growth and jobs."
Clive Davenport, of the Federation of Small Businesses, said: "The government must secure funding to ensure the next generation of broadband speeds is put in place … This is vital if we want the country to be internationally competitive."
Virgin Media and BT have been introducing super-fast networks that allow consumers to download music tracks in seconds and DVD-quality movies in minutes. But there is little economic case to push this expensive infrastructure into rural areas – the broadband tax would have provided several billion pounds for this.
Under the Digital Britain plan, these networks would have been open to any company that wanted to use them. The fact that the levy appears dead in the water means that most rural areas are likely to have to wait many years before they see anything other than a basic service.
The Country Land & Business Association said: "If the promised 50p-a-month levy is not implemented quickly, the digital divide between urban areas and the countryside will become even greater."
The Tories, however, have no desire to support a new tax before an election. They believe BT should open the ducts that house local phone lines so rivals can install their fibre-optic cables. Industry experts do not believe this will be sufficient to push super-fast networks much beyond the half of the country that is already served by Virgin Media and will be served by BT in the next few years.
Richard Wray, communications editor
The Guardian, Tuesday 18 August 2009
guardian.co.uk © Guardian News and Media Limited 2009
• No enthusiasm for £6 levy to pay for fast broadband
• Business leaders warn of cost of ignoring rural areas
The government looks ready to ditch controversial plans to tax phone lines to pay for next-generation broadband internet.
Labour MPs are concerned about levying the £6-a-year tax on consumers so close to a general election, while parliamentary convention means the government would require support for the measures before putting them in the pre-election budget. The Conservatives, however, have little appetite for a so-called broadband tax.
Dumping the plan would be one of Stephen Timms's first moves as the new minister in charge of the Digital Britain ideas announced in June. "When you face a general election you tend to have a short finance bill before the election and a longer one afterwards. It [the levy] is unlikely to make it through the short finance bill without Opposition support and that does not look likely … In that case, it would have to wait until after the election," he said.
Asked if that meant the levy was unlikely to happen, he said: "Possibly, yes."
The idea of levying 50p a month on every UK phone line to pay for new super-fast broadband surprised many in the industry when it was proposed in Lord Carter's final Digital Britain report in June.
When Timms replaced Carter, executives hoped that as he was retaining his place in the Treasury, while also taking up a role within the Department for Business, Innovation and Skills, meant he would push hard for the levy. But the fact that the government now seems to have abandoned its plan means that Britain is likely to lag far behind many of its competitors. Other countries such as Australia have proposed using government cash to help build super-fast networks.
Adam Marshall, of the British Chambers of Commerce, said: "Both political parties need to find a consensus about how the next generation of broadband will be delivered, regardless of who is in Downing Street. Businesses need sustained, efficient infrastructure investment in place to deliver growth and jobs."
Clive Davenport, of the Federation of Small Businesses, said: "The government must secure funding to ensure the next generation of broadband speeds is put in place … This is vital if we want the country to be internationally competitive."
Virgin Media and BT have been introducing super-fast networks that allow consumers to download music tracks in seconds and DVD-quality movies in minutes. But there is little economic case to push this expensive infrastructure into rural areas – the broadband tax would have provided several billion pounds for this.
Under the Digital Britain plan, these networks would have been open to any company that wanted to use them. The fact that the levy appears dead in the water means that most rural areas are likely to have to wait many years before they see anything other than a basic service.
The Country Land & Business Association said: "If the promised 50p-a-month levy is not implemented quickly, the digital divide between urban areas and the countryside will become even greater."
The Tories, however, have no desire to support a new tax before an election. They believe BT should open the ducts that house local phone lines so rivals can install their fibre-optic cables. Industry experts do not believe this will be sufficient to push super-fast networks much beyond the half of the country that is already served by Virgin Media and will be served by BT in the next few years.
Richard Wray, communications editor
The Guardian, Tuesday 18 August 2009
guardian.co.uk © Guardian News and Media Limited 2009
