Tories pledge to drop broadband tax

A Conservative government would scrap the proposed 50p ‘broadband tax’, according to the shadow culture secretary.

Jeremy Hunt told the Financial Times that the Conservatives would abandon the charge, proposed by the Government as part of Lord Carter's Digital Britain report, "as soon as possible".

The 50p tax on landline telephones was proposed to help pay for next-generation broadband internet access in the mainly rural areas where it is not commercially viable.

At the time Lord Carter described it as the “fairest” way to ensure that everyone benefited from next-generation fibre-optic services.

However, a Conservative spokesperson told Computeractive that the plan was “putting the cart before the horse”, as public funding via taxation would pre-empt commercial competition.

“If you say we’re going to give public funding, you stop what the market would do,” she said. “You’re killing off market forces.”

“We’ve suggested that BT should be forced to open its fibre-optic ducts in the same way as France Telecom… what you then do is create a market where people are actually competing to provide better broadband services.”

However others have expressed concerns over the plan. A spokesperson for the Country Land and Business Association said: “If the proposed 50p-a-month levy on fixed telephone lines is scrapped, we are still left with the problem of where the much-needed investment would come from.

“The levy would be a small step in the right direction but without it in the meantime, rural businesses would continue to be excluded from the prosperity urban areas take for granted.”

Andrew Ferguson, of the Broadband news website ThinkBroadband, said that “While the 50p per month levy was far from perfect, it did at least offer a way forward … The danger than many foresee is that if we wait until the upgrades are critical it may be too late to intervene with money from central government.

“We can wait for commercial efforts and play catch-up then, but we need to be aware of the risks that this carries in discouraging new media type companies from setting up in the UK, or forcing some abroad to where Internet infrastructure costs are often lower, and higher speeds are available.”

A spokesperson for the Department of Business, Innovation and Skills said that “The Government's proposed 50p levy will deliver the broadband networks of the future that this country needs.

“Next generation access will enable a world-class digital infrastructure and economy which will bolster the UK's competitiveness in an international arena. Our plans are geared to encouraging competition for private companies to capitalise on the £150-£175m support Government will raise each year through the levy.”