Pre-budget report and broadband
Thursday 10 December 2009 10:42:04 by Andrew Ferguson

It is unusual for broadband to figure in budget speeches, but since the announcement of the 50p levy on each fixed telephone line it was inevitable that more of a mention would be made. Alas for those looking for the full detail they still have to await the announcement of the finance bill.

Broadband received several mentions (the various documents are listed on BBC News Online:

Infrastructure UK’s initial work programme will also include:

• supporting BIS in delivering a Universal Service Commitment in broadband by 2012 and providing further support to achieve private sector roll-out of next generation broadband to 90 per cent of the population by 2017.

4.43 The £750 million Strategic Investment Fund was introduced in Budget 2009 to support advanced, innovative industrial projects of strategic importance, including £250 million for low-carbon projects. Box 4.3 sets out the projects benefiting from investment from the Fund so far.

[..]

• a contribution to the total Government investment of £200 million for the roll-out of universal broadband under the Digital Britain programme;

4.46 Digital Britain also announced a duty on fixed telephone lines to be used to help encourage private sector investment in digital infrastructure. A consultation on the practical aspects of the new Landline Duty will be launched shortly and will be followed by a consultation on the procurement approach to investing in Next Generation Access.

Broadband coverage in Pre-Budget report

So that is it, while the tax is mentioned, the exact amount is not, so the presumption is that it remains at 50p per month and the exemptions are yet to be formally announced. The wording is perhaps a little different, suggesting less that the fund which might have raised £1.5 billion by 2017 will be used to solely fund next generation roll-outs, but used as part funding in conjunction with money from the private sector.

With two consultation periods and a general election that has to happen by early June 2010 getting the duty into place is going to be a rushed job, and with the Conservatives saying they will abolish the tax there is a real possibility that the next six months or so of uncertainty may delay private investment in next generation networks.

Of some concern in the media coverage of the telephone tax is that it is being pushed as a tax to fund roll-outs in rural areas, when the reality is that there will be plenty of people in towns and cities that will benefit from assisted roll-out of next generation broadband technologies. We are already seeing a rise in complaints against Openreach with its roll-out of FTTC not necessarily enabling all cabinets on an individual exchange. One final point is the the levy has only ever been suggested as increasing next generation coverage to around 90% of households, which is well short of current broadband coverage levels.