The Closing of the Net  "original and valuable"  Times Higher Education

A double taxation, plus the likelihood of  restricted Internet access under proposed copyright measures,  will  begin to make UK broadband services  less attractive. And is it just a subsidy to  BT and NTL/Virgin? 


A tax on broadband will be included in the  Finance Bill, to be announced in the Chancellor's pre-Budget report tomorrow. The tax of 50p per month per phone line is designed to make a contribution towards the installation of fibre lines to UK homes.

For residential broadband subscribers with one fixed phone line, it will be an additional $6 per month on top of their usual payment. But for those who

run a business business from home, and who have two phone lines, it represents an extra £12 per month.Homes with a cable connection and a separate phone line will also pay to lots of the new tax.


For businesses with switchboards, and multiple incoming lines,  the monthly outgoings will be considerably higher. According to the Digital Britain Report, the tax will apply to all business analogue telephony lines, and ISDN-2 lines. Thus we can expect to see a consequential rise charges for other services, as those businesses pass on the new tax. 


The Daily Telegraph has raised this issue based on a leaked document, stating that a government spokesman ‘refused to comment'. However, it doesn't need a leaked document to work this out, just a knowledge of telecommunications. What the Telegraph report does clarify, however, is that the per line tax will in fact be a double tax, because it will attract value added tax.


The stated reason for the broadband tax is to fund access  to broadband for people in "hard-to-reach" locations - an undefined concept which could mean anything from geniune remote locations such as the Highlands and Islands (which have traditionally received subsidies for installation of upgraded telecoms equipment) to places which are not remote, just poorly served by their current exhange. An example is a  village down the road from me  here in Berkshire, just 35 miles from London, which,  I was surprised to read recently, does not have broadband.


People could be paying the broadband tax on the pretext of some form of ‘charity' to remote regions, only to find that they are just subsidising BT or NTL/Virgin  who have been miserly  about investing in upgrading telephone exchanges.


However, the Digital Economy Bill says nothing about a universal service obligation, or broadband network coverage. Hence the question, what is the tax going to pay for?


The other  issue which the Telegraph article does not raise, is the triple whammy on the UK broadband users. At the same time as being double-taxed on their communications facilities, people in the UK are also going to be subject to restrictions on their  Internet services, to support the copyright industries.  Such restrictions are detailed in the the Digital Economy Bill. They  include 3-strikes copyright enforcement measures, which will have  to be implemented using deep packet inspection and traffic management systems. The measures cover all kinds of alleged infringements and are not limited to peer-to-peer filesharing, and  the Digital Economy Bill leaves the options open for other measures as yet unspecified.


 This article is licensed under a Creative Commons Attribution Non-commercial-Share Alike 2.5 UK:England and Wales License. It may be used for non-commercial purposes only, and the author's name should be attributed. The correct attribution for this article is: Monica Horten (2009) Triple whammy broadband tax  in UK Finance Bill 8 December 2009.







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