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Government push to popularise Voice over IP with 50p tax
Wednesday 23 September 2009 14:54:51 by Andrew Ferguson

The Digital Britain report threw out a curve ball with the proposal for the 50p a month levy/tax on all metallic telephone lines. There has been some talk that the levy may not make it into law before the next General Election, but Stephen Timms speaking at a debate by the British Computer Society insists the government is committed to the levy and getting it into law before the next general election.

As with many taxes there are unforeseen consequences; the 50p per month may not be much, but people may vote with their feet and consider alternate methods of voice communication, e.g. mobile phones, or Voice over IP (VoIP). While those using ADSL will still get stung for the levy, some may, by moving second or third lines to utilise VoIP, save money per month, and the expected £175m a year revenue could be lower than expected. It is even possible that the mobile providers may exploit this charge in their marketing in areas where 3G coverage is good, or cable providers could see an increase in those opting for just a broadband service rather than a telephone/broadband bundle.

The levy will also affect those for who the telephone is a communications lifeline and have no desire to embrace the digital revolution. For the digital inclusion aspects of the Digital Britain report, it may make people more resistant to change. Of course, any levy or tax change in the run up to a general election will be exploited by the opposition, but we are at the real risk that the bits everyone agrees on within the Digital Britain proposals could be delayed.

With broadband speeds of 25Mbps and faster to some 50% of households being available from two or more providers by 2012, (which means that many millions paying the levy will see no immediate benefit and those who want to pay to get better broadband in their area having to wait until maybe 2017 to see the benefit) one really must question whether the proposed solution is the best that can be arrived at. The private sector, given the right incentives, e.g. removal of fibre tax, would most likely have reached or exceeded the current government plans.

A radical idea would be for the music/movie industries to embrace a fibre based broadband roll-out and help with investment seeing the new infrastructure as being a way to replace the existing distribution model of physical DVD/CD media and shipping the goods to shops around around the country. The content industry could then control the gateways offering the content and by ensuring that the price was right for options like streaming (the radio of the digital age) or buying to copy onto a portable music player, they might see sales increase, eroding some of the perceived losses due to piracy.


Posted by herdwick over 8 years ago
As line rental tends to be at least a tenner I wouldn't see another 50p as a decisive change. It's about the size of an annual price increase in "normal" inflation times.
Posted by Dixinormous over 8 years ago
I'll stand by my repeated comments that offering appropriate incentives to the private sector along with removal of the prodigious barriers to infrastructure investment in the UK will be a far better idea than these plans, but as per for Labour government knows best!
Posted by andrew (Favicon staff member) over 8 years ago
In monetary terms 50p per month is not much, but for those with two or more lines it starts to add up, and may make small firms reconsider things, in terms of number of fixed lines they have.

How about a National Broadband Lottery
Posted by Dawn_Falcon over 8 years ago
Er, no, without funding there would certainly not be. BT's indication that they'd be seeking funding from this pool for BET deployment is a clear sign of this.

Dixi - Funding is funding is funding, regardless how delivered. It's appropriate to attach strings, *if* the funding is voluntary to uptake, like regional USO's.
Posted by mishminx over 8 years ago
The Tories will rightly oppose such theft. No surprise that Labour should seek to introduce it prior to an election though. Got to get in all they can before this damned democracy stuff kicks their ass out of Government.
Posted by kamelion over 8 years ago
50p per line isn't much at all but why should we pay twice? It is up to the communications companies to fund rollout of technology not us.

Next we'll be getting a Macdonalds tax to make sure rural locations get a drive through.

The other question is how much of this 50p per line per month will go to providing broadband rather than on administration.

Who is going to pay for collection? How is collection going to be implemented?

Posted by kamelion over 8 years ago
Are people with ermergency/incoming calls only going to be charged for something they wont use? The elderly? the disabled? People on low incomes?

Are people going to be able to sue the government if broadband isn't going to be provided to small communities where provision of broadband isn't financially feasible?

FGS TBB take off the stupid 600 character limit on news comments
Posted by shaunhw over 8 years ago
No doubt it will be 50p + VAT on top.

Personally I object to this tax, because it might be the start of a slippery slope.

50p now, then a pound, then two pounds and so on...
Posted by Aqualung over 8 years ago
Its a pathetic attempt by a failed government to try and show they are doing something for those outside the major cities.

We know different and can see all the pitfalls but the appalling thing is i think they do actually believe it will help people,thats how far out of touch with reality they are.
Posted by zyborg47 over 8 years ago
I will get rid of the phone line, simple as that and just use a mobile for calls. I can live without the internet.

It may only be 50p, but it is the principle of it.
Posted by hughgrection over 8 years ago
I'll just have my phone line removed and opt for a voip service over cable. Do those in the sticks have to pay a 50p fresher air tax? You can't have it all.
Posted by Somerset over 8 years ago
Does this include VM which have 'metal' delivery to the home?
Posted by Dawn_Falcon over 8 years ago

Sod it, Gov? Tax per house.
Posted by Michael_Chare over 8 years ago
It makes no sense for people who don't want broadband, or who are unable to use it, to be foreced to subsidise those who do. I would much rather see some type of universal service obligation.
Posted by ElBobbo over 8 years ago
Many are starting to consider internet access to be a utility; one reason to have taxes is that everyone contributes to provide services for the community. I think that a good next generation broadband infrastructure is essential to continued growth, economic and otherwise.
I don't agree with this random 50p tax on land lines, but I do think the government should fund the infrastructure, even if they have to raise taxes to do so.
Posted by Dawn_Falcon over 8 years ago
Of course there's sense to it, Michael.

Increasingly, it's cheaper to provide services online, to have information there, etc. - there's very much a public good argument.

This is tied into a USO. If you impose a USO without providing funding, all you're doing is taking money away from other investment areas into ones less profitable for the company, delaying other developments.
Posted by chrysalis over 8 years ago
right, I want to drop my phone lines, this tax is supposed to be an incentive for me to do so? but even if I used voip I need the phone line to use voip. doh!!!
Posted by Dixinormous over 8 years ago
Just as a reminder this 50p is not related to USOs it is to increase the deployment of next gen services.
Posted by mikeblogs over 8 years ago
There is a small chance that they picked up the 50p idea from this submission -

Naive I know, but the notion was a universal service fund, 50p on all broaband (fixed and mobile) - central gov contribute the spectrum fees, some of the service delivery departments contribute as well, industry pool their corporate giving.

As a standalone item it looks peculiar but it is investment. Perhaps we could have gone back to geographic averaged pricing.

Posted by mikeblogs over 8 years ago
Unfortunately Ofcoms top priority (09/10) is to run another spectrum heist rather than engineering a single world class UK Data Transport fabric - moan.
Posted by herdwick over 8 years ago
"Does this include VM which have 'metal' delivery to the home?" - yes, for VM phone lines only (not cable broadband).
Posted by Dixinormous over 8 years ago
Fingers crossed mike Ofcom won't have any priority for 2011 as they'll be history.

Perhaps a better use of government time would be removal of business rates and Ofcom and others not shafting companies who want to deploy the fibre by forcing them to duct for other things.
Posted by mpellatt over 8 years ago
Dixi - remove business rates and fund pavement maintenance in shopping roads - benefitting retailers (for example) how exactly ??
Now, if you'd said abolishing NNDR, returning determination to LAs and giving businesses some democratic input to its determination, then I'd have agreed.....
Posted by Dixinormous over 8 years ago
I was referring to removal of business rates on fibre optics, this would improve the business case for fibre. Along with this I read here about a small company being forced to deploy additional ducting for electricity cabling, surely this should be done by the National Grid? While the hole is there yes definitely but not by the fibre company. If anything National Grid et al should be deploying additional ducting for fibre optics...
Posted by pyeomans over 8 years ago

Why should my neighbour who uses VOIP on Virgin media not pay it!
Posted by ElBobbo over 8 years ago
I suspect Virgin will not see much - if any - of the proceeds from the 50p tax.
Posted by Somerset over 8 years ago
Dixi - 'If anything National Grid et al should be deploying additional ducting for fibre optics... ' - what do you mean?
Posted by Dixinormous over 8 years ago
Exactly what I said, when utilities are digging they should be laying the additional ducting for other services such as fibre optics, not fibre companies being expected to supply free ducts for them.
Posted by Dawn_Falcon over 8 years ago
If the laws gets changed, having that on a non-discrimiatory basis would be better... (if /anyone/ has to duct...)
Posted by Somerset over 8 years ago
So when 100m of gas pipe is being replaced the gas people should put in some duct for 'fibre'?

Who would own it, who would use it, what would it connect to?
Posted by Somerset over 8 years ago
Another flaw in your argument is that there are designated positions for services in new roads, so gas may be down the middle, telecomms at the side.
Posted by Dixinormous over 8 years ago
Those 'designated positions' are typically moronic stuff and should be gotten shot of. Certainly no evidence of designated positions here going by how long they've spent digging up various bits of our village.
Posted by Somerset over 8 years ago
Where is the story about a fibre company having to provide power duct?

Please answer my question 3 above.
Posted by Somerset over 8 years ago
Why moronic? Stick pipes and cable where you like?
Posted by Dixinormous over 8 years ago
Does it not make more sense to have them in close proximity to one another so that multiple duct owners can perform maintenance simultaneously?

The fibre story is in this very forum.
Posted by Somerset over 8 years ago
Surely more chance of the water company digger hitting a gas pipe etc.
Posted by BITS over 8 years ago
Smacks of politicians trying to solve the current financial problems with promises that are unlike to come to fruition.
Posted by tony_butler over 8 years ago
Since the government is forcing companies and encouraging individuals to "do everything online" then the government should fund providing Internet services to everyone. Since they are "killing off" the Post Office by removing services and reducing the use of "the post" I thought the intention was to reduce the postal subsidy. Surley this would eventually be available for providing Internet services.
Posted by Mr_Fluffy over 8 years ago
I wonder whether similar arguments are playing out on "" or ""? Maybe it's time to have "" and see if some really intelligent people can be persuaded to examine how the communications, transport, drainage, water, effluent recycling, energy, etc. infrastructure can be best made to mesh coherently, accessibly and repairably.
Posted by Blood-Donor over 8 years ago
My dear old mum has an emergency "carers phone" in her home for use in emergency only. This uses a BT landline, so will she or the Council pay the 50p TAX?
She does not own a computer and would not know how to use one anyway. So why should she be forced to pay this highway robbery tax, by this corrupt government and the cheating corrupt MP`s who ripped everyone off with their false and illegal expenses claims?
Posted by Fellwalker over 8 years ago
Having created the principal of an additional stand alone tax, what next? VERY DANGEROUS
- how about 50p on electricity bills to fund green technologies?
- how about 50p on every car tax for funding electric vehicle development?
- how about 50p on water bills to fund new flood defences for London?
Posted by Fellwalker over 8 years ago
If it is to benefit all, then it should be part of general income tax.
Posted by searcher100 over 8 years ago
How is flood defences for London "The benefit for all" Good riddance to Westminister,Canary Wharf,Buck House In fact the fraudulent Establishment and the City of London Move Goverment To the Midlands Then they might find the reality of poor infrastucture and Telecommunications and do something about it.Id pay 50p for that
Posted by leshewitt over 8 years ago
Some years ago (not sure if it was pre- or post-privatisation), there was a proposal for all of the utilities to have a communal database showing where they were planning to dig up and disrupt roads. Then one could dig it up, they all dd their separate things, then the last one filled it in. Excellent! Only they couldn't agree the funding and it all fell apart. So our local roads are all (badly) patched to hell like everyone elses...
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