Broadband tax to help fund superfast networks

Carter : 50p levy to fund UK-wide fibre rollout

Lord Carter has announced plans for a "broadband tax" to raise up to £175m to help fund the rollout of next-generation, superfast network connectivity across the UK.

As part of his unveiling of the final version of the Digital Britain report, Carter also confirmed plans for a universal service commitment (USC) to make broadband available to anyone in the UK who wants access, but gave a minimum 2Mbit/s stipulation, rather than the "up to" 2Mbit/s promised in the interim report in January.

And mobile network operators will be given their 3G licences in perpetuity, instead of fixed-term contracts, to encourage further long-term investment in high-speed services.

"We unequivocally take the view that the digital economy will be central in the industrial capability of the UK," said Carter.

"We assert the view that we need to start looking at our communications infrastructure in the same way as we have looked at our transportation infrastructure."

Carter said that he expects the market to be able to provide "somewhere between 60 and 65 per cent of the next generation connectivity" needed to deliver superfast broadband at speeds of up to 100 Mbit/s.

But for the rest of the UK, Carter said that all the analysis he had seen gave, "no evidence of an economic case for building out new fixed networks on the payback levels that current models would give you, without some form of intervention."

Consequently Carter said the fairest means of ensuring that everybody benefited from fibre-based next-generation access was a 50p per month levy on all fixed copper lines, which he said had been costed and would generate between £150m and £175m per year. This money Carter said, "would be used for subsidising market build out of fibre networks to the remaining population."

As expected, Carter stuck to the 2Mbit/s USC, but made it a minimum. "The 2Mbit/s USC will be a floor rather than a ceiling – a kind of technological minimum wage" he said.

Carter explained that the government would pay for the USC by a mixture of government investment, commercial tenders, extending 3G licences currently held by the mobile operators to encourage private investment, and use of an expected underspend on digital TV switchover.

The strategic investment fund and the digital switchover underspend would generate £200m said Carter, adding that delivery of the USC would be achieved through a mix of fixed and mobile networks.

The USC will be delivered by the creation of a Network Design and Procurement Group, "set up at arm's length from central government in order ensure fast delivery," with a chief executive to be recruited by the end of October.

For mobile broadband networks Carter said the report was proposing,a programme of spectrum liberalisation, auction packaging and licence liberalisation.

In five years' time Carter said he expected to see: "Full universal access to today's broadband, full extension of fibre networks to 90 per cent of the population, and 3G coverage to the same level currently experienced by standard GSM technology, which is for all intents and purposes universal, and the post-auction and beginning of fourth generation mobile technology rollout."

The implementation plan for how these network mission statements are to be delivered is being held back, and will be unveiled before Parliament rises for the summer recess on 21 July.