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News Story

Broadband Tax - Opinion

25th September 2009.

Well, the hot news this week was the governments plans to introduce a broadband tax before the next election. Every house with a phone line will pay 50 pence per
month to the government to fund the countrywide development of a broadband network.

The problem with this is that the numbers don't add up. The government estimates the tax will raise between £150m and £175m per
year. The difficulty is that £175m a year won't buy you a super-fast fibre optic infrastructure. According to BT (last year) a nationwide
fibre optic set-up would set you back £28.8 billion. Now we know government doesn't always move quickly, and BT have probably factored in a hefty
profit in that figure, but, if we take those numbers at face value, then at this proposed tax rate it would be 164 years before we could afford a fibre infrastructure.

In fact £175m wouldn't even buy you a national roll-out of BT's Broadband enabling Technology, BET. And BET would give you 2Mbps hardly the future speed increases demanded in the governments Digital Britain Report. So, as we see it this really leaves only 3 options:

1. The government has a huge stash of money set aside for this which just happens to be £175m short. Given the recent banking bail-outs this would
seem unlikely.
2. It's just a nod towards fulfilling the demands of the Digital Britain Report, with the money going to shore up the nation's balance sheet, whilst
allowing the politicians to claim they're doing something.
3. It's the tip of the iceberg, and this tax is going to massively increase over the coming years. Our quick calculations suggest to do a roll-out over
ten years at BT's predicted cost would require a £98 per year tax on phone lines.

Unless Gordon and Alastair shock us all with option 1, then it looks like we shouldn't hold our breath for a nationwide fibre roll-out, unless Virgin extend their coverage to rural areas. The tragedy of this all is that a national fibre infrastructure capable of massive bandwidth is exactly what the UK really does need, and a
project of that magnitude would be just the sort of thing to create desperately needed jobs across the country.

Still, there is a reasonable chance that one of the other political parties will win the next election, and many of them have vowed to scrap this tax,
so perhaps we're worrying over nothing. But we'd still be no closer to our broadband infrastructure.





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