Britain proposes landline tax to boost broadband access
Last Updated: Tuesday, June 16, 2009 | 4:40 PM ET
CBC News
The British government has proposed levying an $11 annual tax on telephone landlines in order to extend fast broadband access to the whole country.
The proposal is included in a report, authored by British Communications Minister Lord Stephen Carter of Barnes, that outlines Britain's digital future.
According to the report released Tuesday, the British government hopes to have everyone in the country reach a connection speed of at least two megabits per second by 2012 — including those in rural areas. Around 11 per cent of British homes currently do not have access to broadband at that speed.
Rural consumers make up a significant chunk of this group, largely due to inadequate infrastructure. The average broadband speed in the country clocks in at 3.6 megabits per second, according to a recent study commissioned by Ofcom, the British telecommunications regulator.
Tuesday's report also proposes tougher anti-piracy measures, changes to funding practices relating to the BBC and increased funding for regional news on commercial channels.
'How will the public react? We will find out'
But Carter conceded the new tax — which would come in the form of a 93-cent monthly charge — would be a major talking point.
"How will the public react? We will find out," he said. "Our view as a government is that it's a good exercise of judgment."
The government will draw up legislation to enact the proposed changes, said Lord Carter.
British telecom companies BT and Virgin have said they would be willing to extend fast broadband connections to two-thirds of the country. But they have stopped short of pledging a comprehensive overhaul, saying it would not be cost effective.
"True super-fast 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," said Tuesday's report. "This would be undesirable."
The government's proposed tax, which is estimated to generate between $280 million and $325 million, would help cover some of that shortfall. The report also says contributions from private and public entities, as well as funds taken from the BBC's licence fee can help bridge the gap.
But it's unclear how far those extra funds can go, as some analysts have said the cost of installing fibre optic wires in isolated areas may run into the billions.
Canada's subsidy
Canada does not have a comprehensive digital plan, although in February's budget, the Conservative government committed $225 million over three years to implement broadband coverage countrywide.
As in Britain's case, the Canadian government has said it has to subsidize the private sector to deliver broadband because many communities have too few people or are too far from cities for companies to make a profit on the service. Most Canadians with broadband have connection speeds between five and seven megabits. Many internet users in rural areas, however, are limited to much slower dial-up speeds of 56 kilobits per second.
Analysts have cast doubts about whether $225 million is enough to keep Canada connected. Many have criticized the government for not having a long-term digital strategy.
In a February interview with CBC, John Reid, president and CEO of the Canadian Advanced Technology Alliance, said committing extra funds is less important than having a plan to back it up.
In 2002, Canada ranked second to South Korea in broadband penetration, but now ranks 9th out of 30 countries, according to the latest OECD figures.
