LONDON, Feb 23 (Reuters) - The British government’s proposal for a tax on fixed telephone lines to pay for increased broadband speeds in areas with poor access is unfair and unwise, a parliamentary committee said on Tuesday.
The Business Innovation and Skills committee agreed with the government’s “Digital Britain” white paper which focused on universal broadband access by 2012.
But it said plans to impose a levy of 50 pence a month on all copper phone lines, which could raise up to 175 million pounds ($271 million) to introduce faster broadband to areas where it would not be commercially viable for private investment, would be a regressive and poorly targeted tax.
It also said ministers at this stage should concentrate on improving market conditions to facilitate next generation access, or high-speed broadband, rather than use state financial intervention.
At the same time, the government should deploy a full-time minister to look at encouraging investment.
“In times of great stringency in public expenditure, digital inclusion, not next generation access, should be the priority for expenditure,” committee chairman Peter Luff said in the report.
“The market can be helped to deliver greater levels of high speed access without significant increases in public expenditure.”
The committee argued that a 50 pence monthly levy on fixed telephone lines placed “a disproportionate cost on a majority who will not, or are unable to, reap the benefits of that charge”.
Some government funding may be necessary at some stage, but wider intervention was “unwise”.
Also early government intervention ran the risk of distorting the market, it added. Instead, the government should look at changing the business rating system, which currently favours BT (BT.L).
“We believe that the government should consider a reduction, or even a temporary removal, of business rates on fibre optic cable,” Luff added.
The government should also remove barriers which prevent access by Internet service providers to the BT duct network, municipal ducting, and canal and railway networks to encourage investment, the report said.
The committee also questioned what the government’s proposals for a universal service commitment of 2Mbps would mean, suggesting it should be the minimum, under normal circumstances, to all users at all times. (Writing by Avril Ormsby; Editing by Louise Heavens)