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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?


Posted by mitchja over 7 years ago
That's a bit rich coming from a company which already offers LLU services.

If he's so concerned about those 100,000 people why doesn't he offer then all his own LLU service in their exchanges?
Posted by TonyHoyle over 7 years ago
I'm surprised he didn't stick a 'think of the children' argument in there too. I find that figure slightly ridiculous - is he seriously saying that 50p will make that much difference to those on 'low incomes' (who seem to find it no problem paying for the computer and broadband in the first place, and the resultant increase in electricity bills).

If he's *so* concerned he could easily drop his prices to compensate.
Posted by g-bhxu over 7 years ago
It's not the extra 50p that people will worry about.

It's going to be "When will I see any benefit?" for the extra 50p a month!
Posted by Dawn_Falcon over 7 years ago
Sure, Mr. Dunstone. This is why I support a £2.50/month "basic" broadband service, 256KBps, avaliable to people on benefits and funded by an industry levy.

Bet you don't like that either.
Posted by AndrueC over 7 years ago
His comments are a bit rich coming from a cherry-picking LLUO. Tell me Mr. Dunstone - when does North Wales get your service? Not that I live there but I'm sick of my parents complaining about still having to pay for broadband :-/

As for the tax being a put off..whaaah? Maybe I'm out of touch but if people are so strapped that an extra 50p a month tips them over the edge they probably shouldn't have it in the first place.
Posted by drteeth over 7 years ago
I don't even trust the government to screw up properly. rather than increasing taxes to end-users AGAIN, they should reduce taxes to investors/telcos to make the provision of faster networks more viable. Then more customers maying more for a 'better' product will generate more taxable revenue; without raising the rate.
Posted by otester over 7 years ago
Well if the government removed the fibre tax and the one for WiMAX/LTE, and also discounted the price of digging up the ground then we might see changes along with completely seperating Openreach from BT and take away the monopoly.
Posted by John_Gray over 7 years ago
Is it permissable to be smug if cable customers aren't caught by this 50p tax?
Posted by mishminx over 7 years ago
There is little to no credible alternative for many people to the objectionable phone tax. So most people would pay up and have a disgruntled moan every so often. People seem far too focused on the amount of the tax. Which was no doubt intentional by design. Even so there is still no sound reasoning behind it.
Posted by gbswales over 7 years ago
The argument is just silly - no tax has ever seemed to deter anyone from doing anything. All of the countries which have decent internet connections have only done it with huge public sector investment - there is not enough short or medium term profit to be made from improving the infrastructure outside of densly populated areas - it has to be public and that means tax from somewhere
Posted by gbswales over 7 years ago
My real concern is that 50p will be nowhere near enough to provide anything close to what is wanted
Posted by tiggerrmummy over 7 years ago
I think its likely they will shoot themselves in the foot over this one and it will just drive people off the web, and off the phone network. My mother has already said she wont pay it and is leaving BT to just have her mobile phone. If mobile networking were more reliable I would follow suit.
Posted by Foggy_UK over 7 years ago
Most people will just see this as "just another price rise" and carry on as if nothing has happoned. Yes, sure thay will winge a little, and maybe more so if the press make a thing of it for a few days, but in the end most will payout and get little if anything in return for the extra cost.
Posted by chrysalis over 7 years ago
no it wont make people cancel (they will moan but not cancel), the isps are too paranoid at the moment over price. Once someone has internet they usually will keep it in some form or other.
Posted by callum9999 over 7 years ago
Dawn_Falcon - Talktalk will currently waive the broadband charge and reduce it to 512kb for 6 months if you are struggling to pay your bill - so you only pay line rental. Granted, its not as good as what you are suggesting, but it's better than the vast majority of other providers.
Posted by Dawn_Falcon over 7 years ago
callum9999 - Interesting, didn't know that, ty.
Posted by yellowhat over 7 years ago
Some of the people I know don't have a landline phone anymore. I think this proposal will push more towards this option.
Posted by luckypeterpiper over 7 years ago
The simple fact is that although I am a lone parent on income support I MUST have a broadband connection as much of my son's homewrok now REQUIRES him to use the internet. Public Libraries do offer this service but ours has only eight machines and getting a timely booking for him to do such work is nigh on impossible. It is NOT easy to pay for it already, despite some people seeming to think that we have 'no problem' psaying for it but as a family we sacrificed in other areas to make it possible.
Posted by luckypeterpiper over 7 years ago
furthermore why is it that we should now pay MORE for a service that should already be in place, the private sector has made heavy profits, for many years on telecoms, surely THEY should be the ones to invest in this, especially as they are the ones who will profit from it most. I agree completely with Mr Dunstone's comments. Being asked to pay twice for the same thing is unfair.
Posted by Dawn_Falcon over 7 years ago
luckypeterpiper - Go look at the countries where it's happened. There's been government investment, one way or another, or service bundling with other features like TV which BT was specifically forbidden to do.

This is why they didn't do it. It's not a surprise. You haven't paid *once* yet for FTTH.
Posted by nmg196 over 7 years ago
50p is the price of a chocolate bar. It will make no difference. I read recently that most people wouldn't give up broadband for anything, and instead would rather give up things like extra TV channels, nights out, takeaways etc, before giving up broadband. This 50p tax is one of the few taxes I think is a good idea and I hope it works to subsidise broadband rollout to rural areas.
Posted by doughnut77 over 7 years ago
"...low-income homes will be forced to give up their broadband lines"

For an extra 50p a month?! What rubbish. For the price of one packet of crisps in a month people are going to turn off their Broadband?!

This is a really silly comment.
Posted by sylvantos over 7 years ago
I presume this tax is for those who do not use virginmedia?
Posted by stealth1039 over 7 years ago
It may not be very much but it's still unfair on the many pensioners who need a phone line but haven't, and never will have, a computer let alone broadband.
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