Will 50p levy mean 100,000 households give up broadband?
Monday 02 November 2009 11:54:34 by Andrew Ferguson

Charles Dunstone from TalkTalk is attempting to make a stand for his customers in several areas, the main ones being opposing the the 50p per month proposed levy on telephone lines, and the disconnection of users over copyright infringement without the case going to a court.

The headline figure that has caught much of the press is the estimate from TalkTalk that 100,000 low-income homes will be forced to give up their broadband lines due to the 50p per month levy proposed by the current Government.

"As well as being unfair, we estimate that the increase in price will mean that more than 100,000 mostly low-income homes will be forced to give up their broadband lines. This is wholly inconsistent with the Government's plans to tackle digital exclusion by increasing uptake and use of broadband.

Crucially, the scheme is likely to delay next-generation broadband roll-out in rural areas rather than hasten it as private investors will wait for public funds to be made available. This will mean that much of the tax will be wasted investing in networks that the private sector would have built itself anyway"

Charles Dunstone, Chief Executive, TalkTalk

We believe that for many of these people this would prove to be a false economy. For example it is possible to save up to 14% a month on your electricity bill by paying online--that saving for almost all households would be more than the 50p levy. Other savings such as discounts for online purchase of car/home insurance will certainly mean most individuals will be better off by shopping online.

If people are finding that the cost of a telephone line and broadband is too expensive, then pay-as-you-go mobile broadband services are an option although this may not be suitable for all. Another alternative would be to buy a basic Virgin Media cable broadband service without a telephone line, which is £20 a month, although this is still more expensive than phone line and broadband from TalkTalk and a few other providers.

Taxes in general are unpopular, but the 50p levy should at least result in something being done to address next generation broadband for those areas where the market is not expected to deliver. Its target is to get the UK to around 90% Next Generation coverage by 2017. Charles Dunstone feels that the private sector should be allowed to first "drive next-generation broadband as far as it can". The question really is how long do we wait for this to happen? Virgin Media has completed its DOCSIS 3.0 roll-out with small patches being added and BT Group does not seem to be willing to spend any more than the existing £1.5 billion. Does Charles Dunstone sees network investment coming from another party? His own firm's broadband coverage using unbundling reaches around 80% of the UK, but for speeds beyond ADSL2+, they are tied into Openreach and their fibre plans, unless Mr Dunstone is considering their own fibre network?

Broadband at speeds of 25 meg and faster is not something we must have today, but some might suggest we look back at 2000 when the same argument could have been applied to dial-up versus first generation broadband. Nine years later, most of us accept the critical nature of basic broadband services. Who knows what we will need in 2017? Better to be prepared rather than being left behind as the rest of Europe embraces the changes that faster broadband can bring. Consider this--how many miles of driving have been saved, or flights not taken as broadband can allow remote working/video conferencing to replace many of these trips?