Broadband News

Calls for Universal Service Obligation and tax breaks for BT

The Register has been talking with Michael Fabricant, the Shadow Minister for Trade & Industry. Mr Fabricant believes one way forward for broadband in the UK is cross subsidises and tax breaks to help get broadband into rural areas.

The Shadow Ministers main comment is "In very remote areas, satellite and wireless networks are available, but these alternative platforms have their disadvantages and are more costly than cable. It may be necessary to cross-subsidise services and impose a universal supply obligation (USO) on BT. Alternatively, tax breaks might be offered as an additional incentive,".

The issue of cross subsidising BT exchanges is something that the EFRA would like to see happen. Oftel say BT is allowed to do this, but BT claims otherwise, believing that this may break EU competition rules. This results in the situation whereby every exchange has to stand in its own little island of profitability, which for a company is good as it means the risks are vastly reduced. The idea of tax breaks is something that may be useful, and could be used to help broadband roll-out, but unlike Mr Fabricant we would not rule out the use of wireless technology in rural areas. Why? Because xDSL may not give the coverage needed on widely spread rural exchanges and the relative low capital cost of wireless makes it more attractive in sparsely populated areas.

The current e-minister Stephen Timms ruled out a USO on broadband earlier this year, which has ensured that BT, NTL and Telewest can continue to just enable those areas that will show a profit. The introduction of a USO may not help many people anyway, BT is steadily moving towards 90% coverage, which may be reality in 2005. Mobile phone companies only need to meet 95% coverage, which for BT would still leave around 1.5 million phone lines without broadband access.

The broadband ball is heavily in BTs court still, others prod and poke at it, but BT is the one bimbling ahead at least. What is needed from BT in the next few months is greater transparency on the demand led activation scheme, clear timetables of when exchange review dates are, and the most essential thing is to publish triggers on ALL exchanges so that even people on BT designated unviable exchanges can see the size of the task ahead. If this means BTs competitors can then cherry pick areas to enable for wireless broadband, that should not worry BT as it would be one less exchange they have to enable.


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