Government's broadband tax likely to cause more problems than it solves

The answer is that we will be taxed to pay for it. Ben Bradshaw the Culture Secretary who introduced the Digital Britain Report, has announced that a broadband tax will be applied to all home phone lines in the UK to ensure maximum next generation broadband coverage".
The report proposes a 50p-a-month tax on all home phone lines, with the 175m per year it raises given to an independent Next Generation Fund" that would provide subsidies for operators to deliver super-fast (fibre optic) broadband to areas where it would not normally be commercially viable.
Virgin Media already have a fibre optic broadband network which covers approximately 50% of UK homes. And BT has committed to invest 1.5bn in a fibre optic broadband network that will cover 40% of the country by 2012. The problem is that BT's footprint would be very similar to Virgin Media's (being focused on urban areas), so it doesn't really help the other 40 or so percent of the population.
But following the government's announcement of the broadband tax, BT is now indicating that they could extend their fibre-optic broadband network to 90% of the population, in keeping with the government's objectives. Analysts estimate that this increase in broadband network coverage would cost an additional 3bn.
Ian Livingston, BT's CEO said: We're keen to get fibre to as many homes as possible and so the levy is a positive step towards increasing availability. The devil will be in the detail, but, if the plans are workable, then it could be feasible that we [would] deliver somewhere in the region of 90 per cent coverage."
There are therefore two potential outcomes from the proposed broadband subsidy. Either it ends up being too small to make a real difference as BT's indication that it may" extend its fibre optic broadband network plans never materializes. Or BT ends up receiving a large government subsidy to create a fibre optic broadband network that gives it a dominant market position.
Indeed the BT's share price is already perking up as the broadband tax may end up glad-handing BT the UK's only national fibre optic broadband network which it can then wholesale to the DSL(copper wire) broadband players such as Sky and TalkTalk.
Bearing in mind the regulatory fuss about Sky's alleged dominant position in the digital TV market, it would be ironic if BT receives government subsidy to be placed in a dominant market position in the new fibre optic, super fast broadband world.
What is certain though, is that plans to deliver a fibre-optic network across the UK are vital if the UK's is not to slip behind in the worldwide digital economy. The Asian economies especially, are way ahead of the UK in fibre-optic broadband provision with the result that businesses and homes already benefit from far faster broadband connections than we do in the UK. The average household broadband speed in the UK is still just 3.6 Mb/sec, versus nearly 90 Mb/sec in Japan, where fibre optic broadband is far more prevalent.
And the Australian government has a manifesto commitment for a far more ambitious broadband future than that outlined in the UK's Digital Britain Report. They have committed to bringing fibre to the home broadband (FTTH) (which allows far faster broadband speeds than the planned UK solution), to 90% of the Australian population, using a A$43bn investment. The remaining 10% of Australian households will be catered for by wireless mobile broadband and satellite broadband.

Simplifydigital.co.uk offers a unique service in the UK to Compare Broadband. We provide a free and impartial consultation for fibre optic broadband to help anyone looking to save money on Broadband packages.