Dunstone: 50p levy will cause 120,000 disconnections

TalkTalk CEO, Charles Dunstone, is to tell the Government its proposed 50p levy on copper phone lines to fund ‘next generation’ broadband will backfire.

Far from providing a fund which will bring fibre to communities who are likely to miss out on commercial roll outs, Dunstone claims the extra 50p per month will cause more than 100,000 price sensitive households to ditch broadband connections.

TalkTalk’s director of strategy and regulation, Andrew Heaney, is to give evidence today to a Department of Business Innovation and Skills (BIS) Committee to outline the ISPs concerns.

It believes the tax is wrong because it has not been the subject of any major public consultation and it will make phone lines and broadband comparatively more expensive for the less well off.

TalkTalk claims this will lead to at least 100,000 low income homes giving up broadband. Its research shows a 50p rise would normally see a decline of 0.6% of customers which equates, it claims, to around 120,000 nationwide.

Lack of consultation

Dunstone believes the levy was a knee-jerk reaction by the Government to the Treasury refusing to release sufficient funds for next generation projects. Hence, the resulting tax, he claims is not only unfair it will be counteractive. It will cause widespread disconnections and will actually slow down the roll out of fibre to rural areas.

“This is an unjust and regressive tax on all phone customers which will subsidise mostly richer rural households that can afford high priced super fast broadband services,” Dunstone blasts.

“As well as being unfair we estimate that the increase in price will mean that over 100,000 mostly low income homes will be forced to give up their broadband lines. This is wholly inconsistent with the Government’s plans to tackle digital exclusion by increasing uptake and use of broadband.

“Crucially the scheme is likely to delay next generation broadband roll-out in rural areas rather than hasten it as private investors will wait for public funds to be made available.  This will mean that much of the tax will be wasted investing in networks that the private sector would have built themselves anyway.”

Dunstone concludes the Government should instead be focussing on creating a climate where industry is encouraged to invest in fibre.

The 50p levy has been contentious since it was first proposed in June’s Digital Britain report by Lord Carter. The Conservatives have said they would scrap if they win the next election and the Government had appeared to cool slightly on the idea. However, Dunstone claims that the Government attaching the copper phone line tax to the upcoming Finance Bill is a means of shoe-horning it in to legislation before the next election through a bill which traditionally is not consulted upon.

Tags: 50p levy, 50p tax, Andrew Heaney, BIS, Charles Dunstone, Conservatives, Department of Business Innovation and Skills, Digital Britain, Finance Bill, Lord Carter, TalkTalk