'Broadband tax’ to fund ‘Digital Britain’

Every home with a fixed telephone line will pay 50p a month – equating to £6 a year – to fund ‘Digital Britain,’ whether they want super-fast broadband or not.

The landline tax, which will come in next year, will help pay for next-generation broadband for the third of homes and small firms unable to get it from the market.

To be charged by phone and broadband providers, the levy will be paid into a Next Generation Fund at Ofcom, and is estimated to collect between £150m and £170m a year.

The Conservative party attacked the proposal, announced recently by the government, saying it would take 20 years for the levy to meet the £3bn price tag of the rollout.

But signalling the government was not prepared to rush the move, the Department for Culture said it was a “longer project” which “amounts to installing a new network.”

The former description relates to the state’s reinforced pledge that everyone should be able to access broadband of at least 2Mbps by 2012, in time for more ‘e-government.’

First floated in January, the proposal has drawn widespread support but critics say it lacks ambition, as 2Mbps lags the average speeds today in North Korea, Japan and Sweden.

These tech evangelists are more pleased with the pledge, albeit without a timetable, to tap them into broadband network that can handle more than just the BBC iPlayer.

Promising as much, the government said the next-generation network would run “more revolutionary applications” like tele-presence, “allowing for much more flexible work patterns.”

It should also provide ‘e-healthcare’ in the home, and bring ‘cloud computing’ to small firms, allowing them to ‘cut costs’ and gain from ‘quicker innovation of products and services.’

“Next-generation broadband will enable innovation and economic benefits we cannot today predict,” added the Department for Culture, Media and Sport in the final report on Digital Britain.

Trying however to scale the benefit, the department said that first generation broadband provided a boost to GDP of some 0.5%-1.0% a year, according to official figures.

Its report also cites a Massachusetts Institute of Technology study that found employment in communities with broadband grew 1% more than those without between 1998 and 2002.

A DCMS spokeswoman would not say whether such growth would apply to the UK from now until 2012, nor would she estimate the number of new jobs that the UK’s digital injection might create.

Estimates by the London School of Economics show that, based on £5bn being spent on UK broadband, the government could create an extra 280,000 jobs.

About 70,000 of these would be in non-digital sectors, the LSE said, indicating that more than 200,000 jobs would be for staff to build, install and maintain the networks.

The first network, designed to provide broadband for all, will be partly funded by the £200m so-called “digital switchover surplus” from the BBC licence fee.

Users of the network, or its super-fast successor, who share files illegally, would face notification, identification and filtering of content, under new legislation.

Lord Carter said repeat offenders could face a combination of these measures, as well as having the speed of their broadband connection reduced.

Upon parliament’s approval, Ofcom would force broadband providers to act on copyright infringement by blocking websites, protocols, ports and maximum bandwidth.

Reflecting generally on the UK intellectual property system in the digital age, the government hinted reform was incoming, as it said “what is clear” is “that changes are needed.”

Lord Carter explained: “Those changes may not necessarily be legislative changes but both within the UK, across Europe and globally there are key improvements that need to be made.

“Rights clearance and the visibility of rights is a major issue….We want creators and creative businesses to be paid but we also want to maximise access works. Too often the existing systems seem to be breaking down.

“This impacts on businesses, who cannot get access to works. It impacts on consumers and wider society as it reduces the pool of content that they can legitimately draw from. It also impacts creativity as untapped opportunities mean less recognition and less reward.”

Jeremy Hunt, the Tory shadow culture secretary, slammed much of the report, saying it was a “colossal disappointment” as it promised 12 consultations, but “does not contain a single action.”

Facing the new Culture Secretary Ben Bradshaw, who delivered Digital Britain, Mr Hunt told the House of Commons that the report smacked of “digital dithering from a dated government.”

Business was more forgiving and, implying its support for the 50p tax, said the government was “right” not to throw more money at digitalising Britain “given the state of the public finances.”

Yet tempering its praise, the CBI cautioned: “The government should put in place the right conditions so that the private sector can lead the way,” in making the investment in next-generation broadband.

The National Endowment for Science, Technology and the Arts said the UK was well-placed to “reap the benefits from this transformation,” though a “relentless focus on innovation” would be necessary.

Pointing to its own estimate, the group warned: “If the UK does not get up to speed in its transition to digital markets, the UK economy stands to lose an annual £6bn in value added by 2013.”

 

22nd June 2009

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