Budget announces 2Mbps USO but who pays?
Wednesday 22 April 2009 16:09:32 by Sebastien Lahtinen

The Chancellor of the Exchequer Alistair Darling today announced the Budget including a commitment by government to a Broadband Universal Service Obligation (USO) of 2 Mbps by 'no later than 2012'. This announcement was not unexpected given it was covered in the Digital Britain Review by Lord Carter.

However, the budget is very lacking in detail about who will pay for it, with a brief mention of government approval for a £100m Digital Region project in Yorkshire. It does suggest that money could be diverted from the 'emerging underspend' from the Digital Switchover Help Scheme and that additional costs might be met through other funding mechanisms. This raises concerns that broadband service providers might be expected to foot some of the bill, which in turn would be passed onto consumers, becoming a 'stealth tax' on broadband services.

Interestingly, the budget document states it will "allow virtually everyone to experience the benefits of broadband" raising questions about the need for a qualification to the concept of the definition of 'universal'. This might be simply an acknowledgement that everyone doesn't want to use broadband, but it leaves open the question of whether the USO will apply to the entire country by 2012, or whether this will merely be the date when the USO starts taking effect in a phased approach with telecommunications operators being given an additional couple of years to finish the rollout.

The Budget also signalled a review of the powers and duties of regulator Ofcom to ensure it can help balance competition and encouraging investment.