New report proposes dropping the 50p broadband tax
Thursday 14 January 2010 12:31:38 by John Hunt

A new report titled Changing the Channel, authored by Mark Oliver, former head of strategy at the BBC, is proposing to drop the 50p broadband tax. The extensive report looks at the structure of public service broadcasting in the UK, particularly with relation to reforming the BBC to better serve viewers and their access to public service broadcasting content, as well as touching on the Digital Britain broadband recommendations.

The report contains two recommendations for broadband. The first addresses the universal service commitment (USC) which aims to deliver at least 2 Mbps broadband nationwide. The current plan for funding for this is from the Digital Switchover surplus, a pot of money that was put aside to aid in the migration from analogue to digital television services. Instead, Oliver suggests this money should be put toward content and services rather than content delivery, and general taxation funds should be used to achieve the 2 Mbps commitment.

The second broadband recommendation is to scrap the 50p a month tax on telephone lines which is aimed at raising money to fund next-generation broadband services to areas where the market feels it cannot succeed. Instead the recommendation is, in the medium term, to roll out high-speed broadband services to community hubs at public libraries, community centres and post offices at a potential saving of around £3.2bn. A longer term solution would be to encourage providers such as BT and Virgin to share infrastructure in urban areas such that funding that would have gone into duplication can instead be directed to getting rural areas online.

Whilst the longer-term part of this is an interesting idea, it would be unlikely to ever go ahead. BT have invested significantly in the project to roll out fibre to the cabinet and home which is already under way. Dropping the roll out of next-generation broadband in the medium term to rural areas would just help increase inequality in services available around the country. It seems to miss the main benefits of deploying next-generation services, many of which are based around video content and the ability to provide new useful services. The report claims that next-generation broadband could isolate elderly people, but equally, it may help them interact with friends and family more easily using video calling type services. It would also introduce the ability to get medical consultations from their GP without having to take the trip to the surgery, something that can be challenging and detrimental if you are unwell.