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UPDATE UK MPs Slam Unfair 50p Broadband Tax and Universal 2Mbps Coverage Plan

Posted: 23rd Feb, 2010 By: MarkJ
UK NGA fibre optic cableThe Business Innovation and Skills Committee (BISC), which is appointed by the House of Commons to examine the administration, expenditure and policy of the Department for Business, Innovation and Skills (BIS), has branded government proposals for a 50p +vat per month broadband tax on all fixed phone lines in the country as "unfair".

The Next Generation Fund (NGF) essentially proposes to put a 50p tax on all fixed phone lines to help fund the rollout of next generation (fibre optic) broadband services to 90% of the country by 2017. However BISC considers the levy to be a regressive tax that will "place a disproportionate cost on a majority who will not, or are unable to, reap the benefits of that charge".


BISC argues that early Government intervention in Next Generation Access (NGA) could distort the market and will not allow time for technological solutions to extend their natural reach across the country. Instead it recommends the removal of barriers that prevent access by ISPs to BT ducts (underground tubes carrying cables, such fibre optic lines) and a temporary removal of the Fibre Tax [ED: YAY! Common sense at last].

Committee Chairman, Peter Luff, said:

"Government intervention at this stage should concentrate on changing policies to encourage investment in the NGA market. Perhaps the best example of this is the business rating system which currently discriminates in favour of BT and against its competitors.

We believe that the Government should consider a reduction, or even a temporary removal, of business rates on fibre optic cable. This would be a more effective use of limited public sector funds than direct financial intervention."

The report also criticised plans to deliver a minimum ISP speed of 2Mbps to everybody in the country, known as a Universal Service Commitment (USC), because the "Government has not defined what 2Mbps will mean in practice." It believes that the definition should be the delivery of a minimum 2Mbps - "under normal circumstances" - to all users at all times.

In other words BISC's report finally recognises what others have consistently appeared to skate around, which is that merely promising a figure of 2Mbps does not take into account fluctuations of speed (ISPs could advertise 2Mbps but the customer may receive far less, which would make the pledge almost pointless).

However we feel that the report still does not go far enough and avoids tackling an apparent lack of specifics in the USC's pledge. For example, there still needs to be a commitment to good upload speeds too. The need for low latency and affordable connections is also somewhat overlooked. There's little point in offering 2Mbps if you still have to pay extortionately high prices to get it.

In any case we're pleased to finally see some common sense on the 50p Broadband Tax, which if our current front page survey is anything to go by, appears to be the least popular solution of the lot. We have long favoured the opening up of BT's ducts and a cut to the fibre optic tax as more preferable incentives to the trauma of adding a new tax.

UPDATE 24th February 2010

Vtesse Networks, a supplier of high speed networking services in the United Kingdom, has welcomed the BIS Committee's report encouraging a rethink of government policy on broadband internet access. The committee also supported government action on policy, rather than direct government investment to support broadband penetration.

Vtesse CEO, Aidan Paul, said:

"The Committee's stance on state investment in broadband must be applauded. The report clearly supports the role of private companies in building a truly Digital Britain. Vtesse has supported rural communities with trials to improve broadband in underserved areas and we will continue to engage with government on the best way to provide universal broadband access."
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