50p a month phone levy to expand faster internet links

A NEW broadband tax is to be levied on millions of homes to pay for the roll-out of super-fast internet access across Britain.

Every person with a fixed-line phone in the UK will pay an extra £6 a year from next year to ensure high-speed internet coverage is guaranteed across the country – even if they already pay for broadband connections.

The UK government yesterday announced plans to levy the charge – for at least seven years – to boost internet speeds to between 50 and 100 megabits per second (mbps) to build a "world-class communications infrastructure".

The proposal was part of the Digital Britain report, which also included plans to divert £15 million from the BBC licence fee to safeguard the coverage of Scottish news on STV.

However, proposals to implement a permanent "top-slicing" of 3.5 per cent of the licence fee from 2013 to subsidise commercial news rivals drew a sharp response from the BBC Trust. It warned it would not sit "quietly by" and allow politicians to use the licence fee – which raises £3.6 billion a year for the BBC – to become a "slush fund" to respond to issues of the day.

Scotland is to be one of three UK TV regions where a three-year pilot scheme will begin next April to divert unspent cash, raised via the BBC licence fee for the switchover to digital TV, to keep afloat news providers on ITV.

This follows major concerns that commercial TV stations such as Scottish Television (STV) would no longer be able to provide news bulletins because they had been so badly hit by the advertising downturn during the recession.

In its Digital Britain report, the government set out a "universal service obligation", similar to the right for every UK address to have a phone line, that will guarantee every home in Britain a broadband connection by 2012.

However, this will only be at a speed of 2mbps – well behind international rivals such as the United States and France.

The long-term aim is to use the 50p a month levy on fixed-line phones to raise between £150m and £175m a year to subsidise firms such as BT and Virgin to complete the roll-out of super-fast broadband across the UK by 2017.

About two-thirds of homes would be able to benefit from such download speeds because operators would install it as a matter of course.

But in the remaining third of the country – mostly rural and sparsely population areas such as the Highlands, North-east Scotland and the Western Isles – the commercial case is weak and the government therefore has to use the levy to subsidise coverage. Its aim is for 90 per cent of the UK to enjoy speeds of 50mbps or higher.

Announcing the plans in the Commons, Culture Secretary Ben Bradshaw said: "Just as the bridges, roads and railways were the foundation of Britain's 19th-century industrial strength, our digital communications infrastructure will help power our future success.

"Businesses, other organisations and individuals want access to high-capability, high-speed networks, both fixed and mobile. This is key to Britain's competitiveness."

Jeremy Hunt, the Tory shadow culture secretary, said the report – by communications minister Lord Carter, who leaves the government next month – was a "colossal disappointment".

He described the initiative as "digital dithering from a dated government". He said it was packed with proposals for consultation rather than action, while countries such as the US and Japan were already laying fibre-optic cables offering vastly superior download speeds.

He warned that the 50p levy might have to be imposed for 20 years to raise the £3bn cost of rolling out high-speed broadband.

He also criticised the proposal to use unspent cash from the digital switchover, saying that only 5 per cent of the UK had its signals switched from analogue – this was done in the Scottish Borders last November, with STV's Central and North regions following from next year.

The licence fee – currently £142.50 a year – was increased to raise £603m to help elderly and "vulnerable" viewers with the switchover, but Mr Hunt said viewers would prefer to receive a rebate on the cost of the licence fee.

Pete Wishart, the SNP culture spokesman at Westminster, said it was right to use unspent money from the licence fee to boost broadband communications. He supported the STV pilot scheme but was dismayed that the report failed to endorse proposals for a Scottish digital channel.

In a sign of battles ahead over the future of the BBC licence fee, Sir Michael Lyons, chairman of the BBC Trust, issued a strongly worded statement making clear his total opposition to the proposal.

"On behalf of licence fee payers, the BBC Trust opposes top-slicing," he said. "The licence fee has a clear aim, clear benefits, is clearly understood and has stood the test of time. Top-slicing would damage BBC output, reduce accountability and compromise independence."

The report paved the way for the switchover of all major radio stations to the DAB frequency, with FM and MW being handed over to "ultra-local" broadcasters by 2015. To speed the take-up of DAB, carmakers will be encouraged to fit digital tuners in new vehicles.

New laws will be brought in to tackle illegal file sharing, with new powers for media regulator Ofcom. Persistent offenders will be prevented from continuing to download illegally by legislation allowing internet service providers to block or greatly reduce their broadband speed.

AT A GLANCE

• Universal broadband speed of 2 megabits per second (mbps) for all UK households by 2012.

• A 50p per month levy will be placed on all households with a fixed-line phone line to build a fund to subsidise the move to "super-fast" broadband.

• This surcharge is expected to be imposed from next year until 2017, subject to legislation. It will raise up to £175 million a year.

• The aim of the UK government is for 90 per cent of UK households to have super-fast broadband.

• Up to £15 million is to be taken from the BBC licence fee to help subsidise provision of TV news on channel 3. A pilot scheme is being run in Scotland and, if successful, will be made permanent, with 3.5 per cent being top-sliced from the £3.6 billion raised by the licence fee for news on channel 3.

• A wholescale transformation of radio frequencies has been ordered, with the FM and MW signals being switched off for major radio stations by 2015. This will result in UK-wide coverage for digital radio.

• A closer partnership between Channel 4 and BBC Worldwide, the corporation's commercial arm, is being formed.

• Action on illegal file-sharing and downloading will result in industry watchdog Ofcom getting new powers.