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UK Government Consults on How the 50p Broadband Tax is Spent

Posted: 07th Jan, 2010 By: MarkJ
fibre optic broadbandThe UK governments Department for Business Innovation and Skills (BIS) has launched a new consultation on how proceeds from the Next Generation Fund (NGF), which proposes to put a 50p +vat per month tax on all fixed phone lines to help fund the rollout of next generation broadband services to 90% of the country by 2017, should be spent.

It's interesting to note that BIS refers to the NGF as providing "£1billion of Government investment", which seems significantly lower than the £1.2bn to £1.5bn we saw predicted earlier. The NGF is expected to rake in approximately £175m per year, assuming it’s not scrapped by a different government following the next general election in May.

Business Secretary, Lord Peter Mandelson, said:

"This investment is about bringing the future of broadband to areas of the country that would otherwise miss out. We cannot underestimate the opportunities this will bring for homes and businesses which is why we are taking action to make sure everyone benefits.

Already the market is delivering superfast internet speeds of 50Mbps to half the country but we cannot be certain that it will reach the communities that are not currently served, which is why we are putting in an extra £1billion to support the market.

By upgrading our networks we will put the UK at the fore of rapidly developing technologies which will bring jobs, boost business potential and grow our digital economy."

One of the objectives is also stated as being "To maximise links with the Government’s Universal Service Commitment," which aims to make a minimum broadband speed of 2Mbps available to everybody in the UK by 2010. We note that some £200m has already been set aside for dealing with that.

BIS suggests that private investment alone would only reach up to 70% of the population by 2017, though that figure could be higher if the ridiculous tax on fibre optic broadband was reduced or removed altogether. Concerns also continue to exist about the government’s intention to keep the tax going even if its 2017 target is met.

It's hoped that the 12 week long consultation will at least help to address fears about the difficulty in gaining fair distribution. Many would be quite angry if, for example, BT received the bulk of cash, thus leaving many excellent alternatives from i3 Group and similar rivals out in the cold. On the other hand, BT is well placed to do the job.
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