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50p broadband tax criticised by MPs as ‘ill-directed’
23 Feb 2010 | 09.23 Europe/London
The Government’s plan to introduce a 50p levy on all telephone land lines has run in to heavy criticism from an all-party group of MPs.
The Business Innovation and Skills Committee has labelled the tax as “ill-directed” because it takes money from everyone to deliver a gain that not all will see. As the committee concluded:
“We believe that a 50p levy placed on fixed telecommunication lines is an ill-directed charge. It will place a disproportionate cost on a majority who will not, or are unable to, reap the benefits of that charge.”
Broadband for all, then fibre
The committee also expressed concern that the Universal Service Obligation (USO) of 2Mbps by 2012 is not defined clearly enough. Given that connection speeds can vary by the distance from the nearest exchange and the number of people logging on in the local area at any one time, the committee called on the Government to refine its USO with the definition of 2Mb being on offer “under normal circumstances, to all users at all times”.
Furthermore, the cross-party committee also claims that efforts to push super-fast, ‘next generation’ access are set to “distort the market”.
In essence the committee fears that the Government could end up taxing everyone with a phone line to provide fibre to a minority of households, the so-called ‘final third’ for whom there is not a compelling business case to provide fibre for. Instead of providing fibre connections to far flung regions, the committee is saying the Government should concentrate on providing a well-defined 2Mb connection for all. This, the committee maintains, would provide a platform from which the business case for fibre could be made.
In fact, the committee concluded it should be the market, rather than Government taxation schemes which dictates the pace and geographic spread of fibre.
A spokesperson for the Department of Business Innovation and Skills confirmed it is studying the committee’s report as part of its work to establish how best to spend public money in boosting broadband access.
The Business Innovation and Skills Committee has labelled the tax as “ill-directed” because it takes money from everyone to deliver a gain that not all will see. As the committee concluded:
“We believe that a 50p levy placed on fixed telecommunication lines is an ill-directed charge. It will place a disproportionate cost on a majority who will not, or are unable to, reap the benefits of that charge.”
Broadband for all, then fibre
The committee also expressed concern that the Universal Service Obligation (USO) of 2Mbps by 2012 is not defined clearly enough. Given that connection speeds can vary by the distance from the nearest exchange and the number of people logging on in the local area at any one time, the committee called on the Government to refine its USO with the definition of 2Mb being on offer “under normal circumstances, to all users at all times”.
Furthermore, the cross-party committee also claims that efforts to push super-fast, ‘next generation’ access are set to “distort the market”.
In essence the committee fears that the Government could end up taxing everyone with a phone line to provide fibre to a minority of households, the so-called ‘final third’ for whom there is not a compelling business case to provide fibre for. Instead of providing fibre connections to far flung regions, the committee is saying the Government should concentrate on providing a well-defined 2Mb connection for all. This, the committee maintains, would provide a platform from which the business case for fibre could be made.
In fact, the committee concluded it should be the market, rather than Government taxation schemes which dictates the pace and geographic spread of fibre.
A spokesperson for the Department of Business Innovation and Skills confirmed it is studying the committee’s report as part of its work to establish how best to spend public money in boosting broadband access.