Broadband tax will cost businesses up to £1,500 each, says Hunt

Hunt says Digital Britain plans will prevent investment

The Tories have accused the government of planning to turn the 50p per line "telephone tax" into a communications levy that could cost businesses up to £1,500 each.

The claim came from shadow culture secretary Jeremy Hunt in a speech attacking Digital Britain proposals in which he said the charge, originally to be imposed on copper lines, would be levied on every data line, including fibre-optic links, with VAT added.

He said: "Families with different occupiers providing their phone, fax and broadband lines will pay three times what the government would have us believe. This is unacceptable. The 'telephone tax' is ill-conceived, deeply unfair and simply won't do what the government hopes it will."

He claimed the Digital Economy Bill, which may become law just ahead of the general election this spring, would add to the burdensome regulation of IT and fail to deal with some basic problems that currently prevent investment in next-generation broadband. He argues that the UK is currently lagging behind the US, France, Japan and Korea.

The government's proposals would also fail to open up access to BT ducts, dark fibre and other parts of the infrastructure, thereby denying the use of telegraph poles for overhead delivery of fibre. It would also leave anomalies in the business rates, favouring the incumbant, and generate a sense that investment by the private sector would be penalised at a later date by unexpected regulation.

Hunt attacked the government's use of regulatory levers to promote investment in online content as "fundamentally flawed" and attributed this to the development of online-only services by public sector broadcasters. He said: " This development has been the the biggest possible deterrent to private-sector investment in innovation in the online space."

He added: "The massive leverage offered by access to TV audiences risked crowding out any private-sector investment in the internet."

A Tory government would make Ofcom "a light-touch regulatory [body]" and regard deregulation as "critical" to the development of a broadband infrastructure that was essential to the UK's economic future by opening up the market to new players.

Hunt said it was "an embarrassment" that Britain is 21st out of 30 OECD countries for broadband speed, and said: "We are behind the likes of Greece and Portugal and streets behind Japan or Korea, where the 2012 target is not universal 2Mbt access [as intended by the UK] but 1Gbt access for a million homes, this will be achieved by competition.

He also warned that a Tory government would undo any agreements around regional news consortia that hadn't already been made law, and instead create space for a digital network by linking private-sector city broadcasters.