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UPDATE UK Digital Britain - Tax on Phone Lines to Fund Next Gen Broadband

Posted: 16th Jun, 2009 By: MarkJ
The government’s final Digital Britain report (here) has announced plans to impose a tax on all fixed copper lines in the country. The revenue from this will go to a new independent Next Generation Fund, which will help provide a part subsidy for the deployment of next generation broadband to the ‘final third’ of British homes and small businesses.

The Report States: "The Government believes that the case is made for the desirability of such next generation networks being available to the large majority of the UK population. It is also persuaded that the economics of network deployment, whether fixed or next-generation mobile, mean that true superfast broadband will be concentrated in the first two thirds of the market in the next decade, leaving the ‘final third’ served only with current generation broadband. This would be undesirable."

The report notes that UK consumers currently enjoy some of the lowest retail telecommunications prices, depending on their usage patterns, in Europe. It notes that wholesale prices for today's copper-network has fallen by £8 per line per year in real terms since 2005. Over the same period the retail price for combined voice and broadband has fallen by around £90 per annum.

The new Next Generation Fund will therefore be based on a supplement of £0.50p per month on all fixed copper lines, which will be available on a tender basis to any operator and act as a part-subsidy for the deployment of next generation broadband to the ‘final third’ of homes. Precise details of how this fund will be used remain somewhat vague but we have many more pages yet to read.

UPDATE - 17th June 2009:

We've just had it confirmed by two UK ISPs, including Tiscali, that the tax will not just impact Openreach/BT copper telephone lines; it will also affect ISDN and fixed cable (Virgin Media) lines too.

UPDATE - 18th June 2009:

Just to add, the report set a target of 2017 for 90% of UK homes and businesses to be within reach of next generation broadband lines by 2017.
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