Tomorrow (Friday 12 February) brings to a close the first public consultation on the introduction of the new 50p levy for all telephone lines in the UK.
Introduced in the Pre-Budget Report in November, this "Landline Duty" will be enforced from 1 October 2010. Tomorrow's deadline is for commentary on the administration of the new tax. A second consultation, drawn up by the Department for Business, Innovation and Skills (BIS), closes on 1 April and will decide how it's spent.
It's a good time, then, for TechRadar to look into exactly what this new charge is designed to achieve in terms of improving access to the broadband network, and who gets what kind of service now.
Graham Wayne retired from his position as Chief Information Officer at software publisher Mastertronic Group about five years ago to develop a career writing. Since he moved to the small village of Hatherleigh in Devon, he's finished three books and runs a small IT consultancy to supplement his income.
"Ironically, I've got the worst broadband service out of any of my clients," he laughs. "On average, I get about 800Kbps download. It gets a bit better than that at times, but it can be very flaky and drop to less than 100Kbps too."
Wayne believes that his patchy internet service disadvantages him in two ways. First off, he says, is the issue of why should he pay the same amount for an unreliable, slow broadband service as someone just a few miles away that routinely connects at over 7mbps.
More important, though, is the impact it has on his business."Essentially, I have to organise my business around my service, rather than the service complementing my business," he explains. "It costs me money in the sense that every job I do can take me an extra two hours to download updates and so on for them."
Rural areas need broadband
There's plenty of justification for using public funds to improve access to broadband in rural areas.
"All the Post Offices are closing and they're encouraging you to do things like tax your car and apply for a TV licence online," says Rob Beadle, a part time teacher and IT consultant from Trevothan on the Lizard Peninsula in Cornwall.
"There's the money you can save, too: BT will give you a discount if you go for paperless billing, and a lot of my customers have got children and grandchildren all over the world and use Skype and online video to stay in touch. For the majority of people now broadband is starting to be a way of life. You can save more than you spend on broadband just by shopping online for things like utilities and holidays."
Beadle and Wayne both say that all of their customers that want broadband can now get it. Rather it's slow speeds and continuity of service which are the issue. BT reckons that around 15% of households can only connect at less than 2Mbps, and around 160,000 homes have no access at all via the Openreach network.
Broadband tax won't help them
What you may not realise is that the 50p a month Landline Duty is not being raised in order to help people like Wayne, Beadle and their clients.
In last year's Digital Britain White Paper, most of which is currently undergoing parliamentary scrutiny as the Digital Economy Bill, there were two separate proposals which have become more or less conflated in the public mind.
The first is the issue of connection speed. Digital Britain introduced a pledge for a Universal Service Commitment (USC), which will guarantee availability of 2Mbps broadband to 99% of the population by 2012. This is has been costed at £200m, and is being paid for by surpluses from the Digital Switchover fund.
The USC will likely be achieved by by using the existing copper network in the most isolated areas, and technologies like Openreach's new Broadband Enabling Technology (BET).
"Initial trials [of BET] in Inverness and Dingwall, Scotland have been very successful," a BT spokespereson told TechRadar. "With lines of between 7km and 12km running stable 1Mbps services. Where a second copper line is available, lines can be bonded together to provide a 2Mbps service."
Your comments (9) Click to add a new comment
anteaus
February 12th 2010
9. Speeds of 24MBps are not necessary for typical online activities. (and no, not even P2P downloading by pirates requires, or necessarily benefits from, such high download speeds!)
Those who promote ultrafast connections are mainly doing so with a vested interest in providing online 'content' -that is, turning the Internet into yet another subscription TV service.
I for one don't think the public should be forced to give financial support to such business operations. If media operators want to spoon-feed us with pap, they should pay for their own distribution channels.
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yard17
February 12th 2010
8. What about WiMax and other 4G services?
Surely it would be more worth while investing in these technologies that cover wide areas without the need for expensive cable to every house. Are we going to pay this tax for a few years, just to find that the mobile companies etc have set up a network that allows broadband speeds across the nation,with no need for wires?
Perhaps a fibre network is best for cities and other dense populations, but I'm sure there are other, more cost effective solutions for the rural areas.
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mouldfc
February 12th 2010
7. The main issue with next generation broadband is that it doesn't make any financial sense to an infrastructure provider, such as BT, in rural areas - where the cost per subscriber for the necessary upgrade works will be high.
They could spend thousands of pounds per house performing the upgrades, and then receive (roughly) £7 per month from an ISP for providing the circuit. At a conservative £2000 per residence, the payback would be more than 20 years!
Unless there are publicly funded incentives it's just not going to happen....
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gambol2k9
February 11th 2010
6. The ISPs can't pay for it, that's the problem.
The vast majority of ISPs utilise BT's Colossus network (and the 21CN currently being rolled out). The limitation is with this network not the ISPs systems.
The likes of Virgin are slowly building up their own networks but it's an incredibly expensive undertaking and there is no incentive for them to spend millions on enabling the rural areas, as the populations are less dense and it equals a negative ROI.
The only solution to enabling next generation speed broadband that is accessible to all, is for BT to upgrade it's network and open it up to the other ISPs.
However the overall cost of the upgrades are beyond what BT can afford, therefore part of it has to be paid for by the tax payer.
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tech89
February 11th 2010
5. Like heck is this 50p tax going to be spent on broadband.
It's going to be wasted on civil servant departments, government debt and propping up health & education budgets, pension deficits and what is an excuse of an economy.
Broadband infrastructure should be the sole responsibility of ISP providers as that is what they are supposed to use a good share of their profits for, for reinvestment in to the network.
Perhaps Ofcom should be given greater power to enforce ISPs to contribute a certain percentage of their profits to reinvestment.
And by reinvestment I mean making Broadband available to all first, then concentrate on the luxury of large speed improvements.
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mobius
February 11th 2010
4. "I think to myself - there's my mother in her old age, never going to have broadband and she can't really afford another 50p on her telephone bill, why should she pay for everyone else?"
Exactly the same thing I've always said (my example I use is my nan). If it's to pay for anything internet related then shouldn't it be a duty on ISP accounts? People who have no intention on getting connected to the internet are having to pay yet those who use the internet through 3G etc don't. Even that would get an indirect benefit from better through traffic overall.
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nisuspi
February 11th 2010
3. @hunnymonster The 10Mbps connections are needed for conferencing and sharing data streams between surgeries and the central hospital services. Having a web chat with a patient is entirely doable over normal ADSL.
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hunnymonster
February 11th 2010
2. Am I missing something here - 24Mbps broadband (with a 1.3Mbps backchannel) is really so much better for high-resolution images than "premium" 8Mbs (832kbps backchannel) that's already there now... no doubt if they used a decent ISP they'd get enough out of the 8M/832k to use it now.
As for the hospital needing 10M to share with the patient, the diagnosis/X-rays/whatever are all going to come down multiples faster than the backchannel with the pictures of the patient sticking their tongue out and saying "ah".
Obviously I've missed something - or ADSL works differently near Bristol.
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konsume
February 11th 2010
1. What if people in the rural areas start downloading illegal music & movies and they all get banned via the 3 strikes rule?
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