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Conservatives plan to reverse 50p broadband tax
Monday 19 October 2009 17:41:30 by Sebastien Lahtinen

The Digital Britain Report introduced a 50 pence per month levy (the so called 'broadband tax') on copper phone lines, which would be used to fund the rollout of next generation broadband to the areas where market forces were not expected to deliver on their own.

In an interview with the Financial Times this morning, Jeremy Hunt, shadow culture secretary said that if the Conservatives win the general election, they would reverse the Digital Britain Bill and are considering changes to how the BBC is structured. This would mean scrapping the proposed 50p per month levy on phone lines which is expected to raise £175m to fund next generation broadband in mostly rural areas.

The Conservatives told us that they are looking at plans for a market led approach:

"We believe that it is important to first create an environment where the market is encouraged to invest and see where this takes us before looking at a broadband tax for areas in which the market won't invest.

While we recognise that there may need to be some public investment in the future to ensure 100 per cent coverage, we believe it is putting the cart before the horse to do this before you have seen how much the market will provide."

Conservative Spokesman

The Shadow minister also suggested in a BBC interview that the Conservatives would also look at any regulatory changes that might be needed to encourage this investment.

Thinkbroadband has always argued that the government should be doing everything possible to incentivise companies to invest in broadband technology, including fibre optic cabling. At present, fibre is subject to non-domestic rates (similar to council tax for businesses), which adds to the cost of connecting up Britain to a super fast network. This statement by the opposition may indicate a positive change, although no doubt it will be of concern to rural residents who are unclear on what they should expect in the next 5-7 years. It is important to note that the above does not affect the Universal Service Commitment of 2Mbps which is expected to be available across the country in 2012.


Posted by TonyHoyle over 7 years ago
It's *already* market led. The market has said it can't make a profit running fibre out into the countryside (or LLU, or any kind of fast broadband at all in fact). That's the problem.

The 50p tax barely scratches the surface, but it's better than nothing.
Posted by mikeblogs over 7 years ago
I have asked him to see whether he intends running the auction heist.
Posted by TGVrecord over 7 years ago
I am concerned about the Conservative restructure for the BBC. Will they curtail the BBC web site just to please the likes of Murdoch? Will we lose BBC 3, 4, HD and iPlayer?

Will market led mean Sky led?
Posted by meldrew over 7 years ago
I do not know how much the BBC web site costs but I would hazard that most of the expenditure is outside the remit of the licence fee. Do we really need BBc 3 4 and iPlayer when the video recorder is universal?
Posted by TGVrecord over 7 years ago
Yes because it gives us licence payers more choice and therefore value for money. BBC 4 do show a number of programs not shown on BBC 1 or 2 such as the orignal version of Wallander. iPlayer is great if you are unable to watch a program because my wife wants to watch something else or it is on at a time I am not at home or even the chance to watch it again!

I do have a video recoder (vhs) but because terrestrial analogue reception is now so poor I only use it once a week and I use the signal from Freesat.
Posted by black5 over 7 years ago
video recorder!! you will have a job to buy one these days
Posted by Somerset over 7 years ago
I think he means PVR...

Posted by TGVrecord over 7 years ago
I currently don't own a PVR due to technical and financial reasons. At the moment there are few devices that will record in HD and those that do are very expensive. When they come down in price I may get one.

However I might opt for a satellite receiver with dual tuner and with USB2 so that programmes can be recorded onto USB memory sticks or portable hard drives.
Posted by kendal01 over 7 years ago
i hope they scrap it. i don't see why i should pay for jeeves's country manor super speed broadband.
Posted by dicko1975 over 7 years ago
@kendal01 That's a bit short sighted. Many of us live in fair sized rural towns/villages which are poorly connected. A choice we make for reasons such as quality of life for our children. Should they be denied access to fast broadband because of that? Not everyone in the countryside spends their weekend blasting pheasants out the sky you know. Maybe you should get out more?
Posted by Dawn_Falcon over 7 years ago
So basically they'll be imposing more duties (s USO) without the funding? Go Tories (far, far away from power)!
Posted by AndrueC over 7 years ago
@kendal01:Not everyone in a not-spot is in a rural area. In fact most appear to be in urban areas.,51.39235087498254,-0.0823974609375,all,2
Posted by citizenx over 7 years ago
This is good news on the 50p tax. They should leave the BBC alone though. Governments of the day should have no involvement in the BBC whatsoever on any level.
Posted by meldrew over 7 years ago
<<Governments of the day should have no involvement in the BBC whatsoever on any level. >>

Privatise it then?!

I'm quite surprised that the internet is now seen as an essential tool for delivering television. To me they are quite separate forms of media with the internet an essential for necessary information such as traffic, weather and financials.
Posted by mishminx over 7 years ago
After the bungled efforts of the current Labour administration this is most welcome news. Though to be fair, it was never in any doubt that the insane tax would be scrapped.
Posted by timmay over 7 years ago

"I'm quite surprised that the internet is now seen as an essential tool for delivering television."

It's worked in both ways hasn't it!? The cable TV networks built to deliver TV now offer super-fast broadband and you can also watch TV on the Internet ergo TV and Internet are akin.
Posted by chrysalis over 7 years ago
first thoughts are when I read this I agree with the first poster, the 50p plan is far from perfect but it is indeed better than the old 'let the market decide' approach which generally leeds to nothing. If they also plan to reverse the planned USO changes then this shouts out to me as preserving the status quo.
Posted by chrysalis over 7 years ago
"This is good news on the 50p tax. They should leave the BBC alone though. Governments of the day should have no involvement in the BBC whatsoever on any level" in that case they would need to privatise it, right now they have a large involvement in that they decide its income level and remit.
Posted by mr_flibbles_twin over 7 years ago
It is unsurprising that the conservatives are planning to scrap this. The conservatives have always lacked vision. It is folly to deny funding to ensure the UK can compete in the future. The conservatives say they are the party of business. How can the small businesses of the UK thrive on the current broadband provision?
Posted by chrysalis over 7 years ago
the iplayer is one of the few things good about the bbc, I would also hazard a guess the running costs are minimal compared to the rest of the bbc, the stuff on it is stuff already produced for live tv.
Posted by chrysalis over 7 years ago
mr_flibbles the tories cater for the 'im alright jack' lot who just want tax cuts and everyone to look after themselves, this is becoming more and more evident again.
Posted by Dixinormous over 7 years ago
Glad to hear this is happening. Hopefully things can happen at a more local level to address issues rather than 100% of the country paying for 30% to get better services.

Chrysalis - we need far more personal responsibility, hardly a bad thing to aim for though not really the issue here, the issue is central government interference in local issues.
Posted by Dawn_Falcon over 7 years ago
Local levels, right. That means less people pay more to address the issues. Does economy of scale mean nothing to you?

Broadband is not a local issue, it's very clearly a central government one - national infrastructure.
Posted by Dixinormous over 7 years ago
Yes less people pay more to address the issues that affect them.

When the 'national infrastructure' is actually infrastructure for 30% of the country it's hardly national. Many other nations, Sweden and The Netherlands being notable, built / are building fibre MANs on a local basis.

Stop stating your opinions as facts. If I and the other 70% of the country who get nothing from this plan but still pay were to see any kind of benefit I might be more tempted to agree.
Posted by Dixinormous over 7 years ago
Incidentally your earlier comment regarding coverage, etc, is inaccurate. Again the 50p is not for the funding of USOs but for next gen access networks to 30% of the country. I can't see anything in the article about additional requirements on BT or anyone else.

Hardly national infrastructure giving private companies money to build networks they get to keep and add to their balance sheets as assets is it?

You obviously missed something about local level action, SYDR and VM's FTTC in Cornwall come to mind immediately.
Posted by Dixinormous over 7 years ago
Ah one more, economies of scale. A local area gets funding and puts a tender out, I'd have thought economies of scale would take care of themselves in the tender process, someone like BT can use their own economies of scale to reduce the cost of their bid.

You also do know that the 50p was likely to be funding a series of localised projects, right?

I would love a national strategy, which sadly this most certainly is not.
Posted by Dawn_Falcon over 7 years ago
Huh? How can a local project use the sort of economys of scale which a national strategy deploy? Come on.

More, local projects will tend to trap people into using a single ISP, at the prices set by that ISP - the example of KCom is one to take a very strong warning from!

Amd no, it's not a *strategy* to drop the only funding project, while still intending to bleed ISP's with a USO. It's madness.
Posted by Dixinormous over 7 years ago
There is no mention that there will be no funding for USO, a mention is made of an environment promoting investment whatever that may entail. The only thing that definitely won't happen is the 50p which would have funded FTTC.

Economies of scale come from those who put their bids in for them. Given BT are passing 10 million homes with FTTC I would imagine they have some scale which they can bring to their bids.

Local projects don't necessarily trap at all. You can comment on a legacy operator like KCom I'll point to the open access like SYDR, i3, Sweden's MANs, Netherlands municipals.
Posted by Dawn_Falcon over 7 years ago
An, another of the lovely uncosted things the Tories will never do because they won't have the money.

And economies of scale only apply when you can use standard kit. Local projects tend to be slightly out of step, and need specalist work on each, negating the economies of scale,

Yes, I could, and I comment on illegal hard sale techniques, long contractual lockins to services at high prices...
Posted by Dixinormous over 7 years ago
Right, local projects don't use the same OLTs, ONTs, MSANs, etc, as larger projects. Clearly they need specialist kit custom built. You have of course built or spoken extensively with someone who's built one of these, one of your mysterious all-knowing ISP friends perhaps?

Try engaging someone like Dirk van der Woude who has done it and can comment authorititvely on costs. As you also should know a major cost of civils, don't get much economy of scale on that.

Comment on what you want from KCom, it's of absolutely no relevance.

Never took your opinions as being politically tainted.
Posted by Dixinormous over 7 years ago
Few words from an industry analyst:

I don't see why a municipal project should inherently be any more expensive than a nationwide rollout, except perhaps economies of scale work to the advantage of bigger projects in hardware procurement. Conversely, I think the actual deployment cost efficiencies on a nationwide deployment might be lower, because of assumptions made which don't translate to reality on the ground in every area. I would assume that a highly localised planning and execution strategy is probably more efficient.
Posted by Dawn_Falcon over 7 years ago
Who? With references.

Because you're talking complete rubbish. Of course a small rollout is going to be massively more expensive. No "localised strategy" can overcom paying massively more for hardware and interconnects.

And given your stance, you're the last one to be able to bleat about politics. (And I don't like the Tories, this dosn't mean I'm pro anyone!)
Posted by Dawn_Falcon over 7 years ago
And I've /seen/ local projects spend a lot of cash creating bidding templates, and failing in a single respect to get standards right and getting back offers ten times the expected price.

KCom is *entirely* relevant. It's what happens when you try and force infrastructure to be built town by town!
Posted by Dixinormous over 7 years ago
References? I asked him.

KCom remains irrelevant for several reasons, it's not what happens at all, it's last century, and I'm sure would disagree.

However you have never entertained the possibility you may be wrong about anything ever on this board so why start now? :)

You really should drop programming and consider becoming a telecomms analyst, given you know more about it than a guy who was one of Bloomberg's 2 top comms stock pickers.
Posted by Dixinormous over 7 years ago
Check also and the speakers there who are dealing with municipal and rural deployments. The major cost issues CityNet had related to things like a basement PoP flooding and needing extensive work and people not being in for their installs, hardly helped by scale. Note also costs from Dirk van der Woude's slides, equipment is less than 20%.

But hey what does he know. You're right, we know this.
Posted by Dawn_Falcon over 7 years ago
20% is huge, and has to be added to the price of connectivity, when negociating from a position of weakness (small area) which can easily massively magnify your costs there.

And thanks for the reference. Given how disasterously wrong he's been before the only time I've come across him before (dealing with games and VoIP), I'd not take his views as gospel.

And no KCom are absolutely and vitally important to see what happens when you get a few years down the road with these isolated projects.
Posted by herdwick over 7 years ago
I'll point to the open access like SYDR, i3

excellent examples of non-functioning networks without retail service providers or customers !

the EU acknowledged the cost burden of open access in the recent state aid rulings
Posted by Dixinormous over 7 years ago
They are both works in progress and i3 do indeed have at least one retail service provider. I would hazard a not very reaching guess SYDR do also.

I would be interested in seeing the cost burdens of open access over closed access though, do you have links?
Posted by gbswales over 7 years ago
Just how long will "the market" need - they have had more than enough time. Of course in my view private companies should not be given licenses to operate profitable public services unless they are obliged to fund all the unprofitable ones from their profits - internet, phones, transport etc etc the taxpayer potentially will have to provide even more cash because the profitable services are not generating income for the public purse
Posted by ElBobbo over 7 years ago
That's a bit of a slippery slope - how do you define a public service? What does one have to do with the other?
Can you give examples of companies who have been given licenses that you feel are being abused, or perhaps just profiteering from them?
Keeping in mind that this is what companies are for - making profit. If it's really a public service, the government should be doing it (I don't agree with privatizing public services).
Posted by Dawn_Falcon over 7 years ago
gbswales - BT has long had to fund an unprofitable public service (phone lines in rural areas), without recompense within two orders of magnitude from the government.
Posted by Dixinormous over 7 years ago
Eeps don't talk about rural areas getting services that are more expensive to provide for the same price, it'll only lead to the comments about how they are subsidising the urban UK getting lower DSL sync speeds but paying the same.

BT aren't really funding them, other customers are funding them. I would hope the price controls take account of the USO on telco.
Posted by zev1t over 7 years ago
Personally I'd be glad to pay a 50p tax if it means friends of mine who live in isolated villages, with no hope of cable, would get a decent speed of broadband. A bit of altruism is no bad thing.
Posted by johnalwyn over 7 years ago
Mr Hunt has just lost a vote at the next election. A market led approach for rural broadband will lead to nothing, just more delay and confusion. At least a 50p levy will generate some funding and if little else it will keep the subject on the governments agenda.
Posted by Ronat over 7 years ago
I really can't see why so many people are getting worked up about 50p per month.Surely this is the whole principle of taxes,in that everybody pays so that the minority can also benefit.Remember people like myself,without children,happily pay into the pot to ensure that we all have a future from the children we are subsidising.We can't just say that because we do no live in a rural area,then we are not helping those who do.I'm afraid that this is just a very small sample of what we could face at the next election.
Posted by silvryn over 7 years ago
It would seem that everyone has missed a very important fact.....the network is owned by a 'Private Business' that has share holders. It is not owned in anyway shape or form by the government. This once public asset was sold into private hands, and therefore the government reliquished ownership/responsibility that is once had. So, the tax in my opinion cannot be justifiably brought into law.
If a private company wants to upgrade a network, then it is soley their responsibility to finance that restructering, not the government or the state.
Posted by Dawn_Falcon over 7 years ago
silvryn - Ignoring "cannot justifyably", because it's done all the time, Where's your campaign to abolish the duties placed on BT by the government?


Because you know, something smells rotten arround here...
Posted by mikeblogs over 7 years ago
Mr Hunt has not responded to my request on his plan.
When I included the 50p within a USO design to the DB team, I had a vague memory of geographic averaged pricing contributing rural network maintenance up keep.
50p is worth it even for us urbanites as 1) improve our chances of Video conferencing with our country cousins and 2)
Posted by mikeblogs over 7 years ago
and 2) the bidding process may help shape things like a) sharing power between FTTC cabinets and RANs - force some planning between Openreach /Mobile Operators, b) sharing spectrum, not just networks, c) cunning use of femto cells and a shared femto cell gateway function and other things that competition on its own will not deliver.
Posted by silvryn over 7 years ago
'It's done all the time' sounds like corruption Dawn?
I run a business, and If I need to restructure my business because maybe the business model is wrong, then it is MY responsibilty to foot the bill. I won't get a government handout that is funded by the tax payer.
It makes no difference what a business does, it is still that businesses' respsonsibility to foot that bill.
Posted by silvryn over 7 years ago
This isn't a campaign as you put it Dawn, it's just a plain simple fact of a free open market economy. That is the world we live in. There's no such thing as a free lunch. And this will sound harsh, but I moved from the country side into a built up area, because I knew it would benefit me. I do benefit from high speed internet. But then I had a choice, and I have profitted from it. Sort of!
Posted by Ronat over 7 years ago
That's fine as long as you have the type of business that you can easily transfer to a different location,but unlike you we don't all live in a bubble,where we only look after no1.If you consider,as a quick example,the tourist industry.Also,not everyone is in business,and pay the same taxes in the country as the town.Surely they are entitled to be considered as well.Remember we are talking about 50p.
Posted by Dawn_Falcon over 7 years ago
silvryn - No,that's your hypocrisy. The government should not put requirements on private UK companies which interfere with their ability to compete without compensating them for it. Period.

You're arguing strongly *against* a free market. BT is hampered by a mass of rules which prevent it from offering better services...
Posted by Colin_London over 7 years ago
D'oh! I think this just shows how out of touch the Tories are on the Broadband market. Just why do they think the current government are touting the 50p tax? Precicely because they have actually tested 'the marketplace' and it JUST ISN'T PREPARED TO FUND RURAL BROADBAND.
Reading behind the lines on this, this is just the Tories looking for an easy vote winner to repeal a 'Labour Tax' that plays badly with the suburban Tory voter.
Posted by swishman over 7 years ago
nother example of the Conservative party saying anything to gain votesA
Posted by Laura1956 over 7 years ago
What I find annoying is the fact I will be taxed to provide a service and then expected to pay for the service I have funded?
Posted by Ronat over 7 years ago
Do you mean that is different from many other taxes where they are only intended to pay for the main service,then augmented by individual payments eg NHS,Road Tax,etc.
Posted by georgegeorge7831 over 7 years ago
What about o2 ,what,s people's opion
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