Telephone tax to fund broadband
Anyone with a landline telephone will have to pay the levy as part of Government plans to ensure every part of the country can access the fastest Internet connections possible.
The plan was unveiled as part of the wide-ranging Digital Britain report which also included a crackdown on online piracy, the future of the TV licence and the provision of regional news.
The cost of telecommunications has fallen sharply in recent years and Culture Secretary Ben Bradshaw hopes to use the savings "in the form of a small levy on all fixed lines to establish an independent national fund which will be used to ensure maximum next-generation broadband coverage".
The move follows concerns that commercial media firms would concentrate on installing next-generation broadband in major towns and cities while ignoring rural areas, where it would prove more costly.
Businesses across Devon and Cornwall – including many which relocated for lifestyle reasons – have complained of the poor quality of Internet connections compared to other parts of the country.
Ministers also announced that some of the £200 million in public funds left over from the digital switchover help scheme would also be used to fund the flagship guarantee that everyone would be able to access broadband speeds of 2Mbps by 2015.
Gordon Brown said a fast Internet connection was considered by many to be as vital as electricity, gas and water.
Writing in the Times, the Prime Minister said he was "determined that Britain's digital infrastructure will be world class".
He added: "The digital revolution is changing all our lives beyond recognition, and today we shall set out how Britain must change with it.
"Whether it is to work online, study, learn new skills, pay bills or simply stay in touch with friends and family, a fast Internet connection is now seen by most of the public as an essential service, as indispensable as electricity, gas and water."
A massive expansion of high-speed Internet access in rural areas would help more to work from home, allow access to "e-healthcare" in the home and encourage businesses to relocate, which could "substantially cut costs and allow much more rapid product and service innovation".
The report proposed the 50p-a-month levy on all fixed telephone lines to help bring next-generation broadband to the whole country. This money would go to an independent Next Generation Fund that would provide subsidies for operators to deliver super-fast Internet to areas where it would not normally be commercially viable.
Last night, the move was welcomed by the Commission for Rural Communities which had campaigned for rural areas to have better Internet connections.
A CRC spokesman said "We recognise how important broadband is for people living and working in rural communities and are keen to ensure that rural areas are not excluded from the economic, social and cultural opportunities provided by broadband connectivity.
"We are pleased the report makes direct reference to demand for broadband continuing to increase in rural areas at a faster rate than in urban areas, and that rural economic development is dependent on broadband availability."
However, Tory culture spokesman Jeremy Hunt branded the report "digital dithering from a dated Government" and claimed that, with 12 new consultations, it amounted to "government of the management consultants, for the management consultants, by the management consultants".
Rather than introduce a "broadband tax", the Government should seek to stimulate investment through the regulatory structure.
"The cable revolution happened without a cable tax. The satellite revolution happened without a satellite tax. Everyone recognises some public investment might be necessary to reach the more remote parts of the country. But simply slapping on an extra tax is an old-economy solution to a new economy problem."
BT welcomed the report, but said it was important that money from the Next Generation Fund went only to companies prepared to open their networks to their rivals.
BT chief executive Ian Livingston said: "This is an ambitious report which describes a strong vision for the years ahead. BT agrees with the Government that next-generation broadband will be important to the country's economic future and we will continue to play a leading role in strengthening the UK's leadership in communications.
"It is important that the Government finds ways to encourage investment in super-fast broadband, particularly in the parts of the country where the economics currently do not work.
"Today's report recognises this and Lord Carter should be praised for offering a creative solution."
Ed Mayo, chief executive of Consumer Focus, said: "The Government has accepted that broadband is now an essential service and that unless next-generation broadband reaches the whole population, a digital divide will be created for consumers. However, cost-conscious customers will be asking why they are being asked to foot the bill by the Government."
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