Broadband Column

Time to ditch your landline?

A new telephone tax is being used to superfast broadband in the UK. But why weren’t we asked first? By Seamour Rathore (24/06/09)

There was very little new information in the Digital Britain report – it was no secret the government wanted to spin the news that everyone would be able to receive a 2Mb service by 2012 – the so-called universal service obligation.

We even knew beforehand that the report would suggest mobile broadband be used as an interim solution in areas where fixed-line presented cost issues.

However, what no-one had counted on was a 50p a month telephone line tax – which would be levied on all but a few landline owners.

It is a pretty old school way to fund a next-generation project, as several commentators have already pointed out. In other countries, universal high-speed broadband access is being paid for from the conventional public purse and/or thanks to commercial investment.

Lord Carter, Digital Britain’s author, has said that the credit crunch means that commercial operators will not be able to fund it from the investment community to make the necessary infrastructure improvements.

Furthermore with the UK’s public finances stretched to breaking point thanks to the banking meltdown and the subsequent recession – there is no possibility that the public purse could be used to pay for this initiative.

So what was left? A next-generation tax.

Blanket taxation

Unfortunately, the £6-a-year tax will only raise £150-175million a year, which is nowhere near the amount needed for the massive investment in fibre optic and cable fixed lines.

The broadband suppliers suggest that it would cost around £5.1billion to supply cabling to all the UK’s homes. That means it would take more than a decade before the project is be completed unless further funds are raised.

And should the public just shrug and accept this new tax? It may not be big enough for us to take to the streets in protest, but like all taxes of this nature, it fails to take into account ability to pay.

There are many people on limited or fixed incomes who shouldn’t be forced into paying this tax on their phone lines. And many of these people are ones who are not the sort who stand to make the most from universal broadband access.

What about the pensioner with a fixed phone line but no broadband or internet-enabled mobile phone. They just want a phone to keep in touch with family and for emergencies – why should they have to pay?

The tax is even more ironic as communications regulator Ofcom has recently shown that of the 30% of the UK population who don’t have broadband, almost half of those don’t want it anyway.

These refusniks are a discrete bunch who unlike Gordon Brown don’t feel broadband is one of life’s essentials like water and gas. Maybe these people get their news from the papers, their information from the library, and don’t feel the need to download films and music for 24hr personal entertainment.

Participating in the digital revolution should be a choice. But anyone who wants to be part of it shouldn’t be priced out either.

Your landline or your mobile?

This £6 levy will, to my mind, be the straw that breaks the camel’s back for many.

As the public spends more time trying to cut down on their basic household bills, will the landline soon come in the firing line?

I rarely use mine although it costs me a fixed £11 every month and its sole purpose appears to be to support my broadband connection, which I rarely use as I also have mobile broadband and an internet-enabled phone.

When you can get a decent mobile phone deal for £8.75 a month, if push came to shove, which would you forsake to save money: your landline or your mobile?

Much was made in Digital Britain of the historically low price for communications. Maybe so, but we’ve got used to a complete set of supplementary ones too. These days I pay monthly for landline and calls, fixed broadband, mobile broadband dongle, internet access on my phone, mobile phone package, TV licence and cable TV. Maybe the price of telecomms to the consumer has gone down, but 20 years ago the only ones I could have had were a phone line and a TV licence.

Broadband companies are falling over themselves to get you onto their landline rental, but they won’t be so happy if many people decide that a mobile phone is the only phone line they really need as finances get more tightly stretched.

And it will be the mobile suppliers who will benefit if people get rid of their landlines and fixed broadband.

Of course not everybody is willing or can do this – small businesses for example, and those with poor mobile coverage. But it is becoming an increasingly attractive option for the budget-conscious.

One ex-Microsoft boss, Jerry Fishenden said in ComputerWeekly.com that the Digital Britain report puzzled him.

“Will taxing broadband users encourage them to adopt the technology? I suspect many people will opt for their mobile phones. A lot will depend on what content they can get from fixed broadband,” he said.

It will be the ultimate irony for the Digital Britain if these clumsy attempts to make broadband access universal, results in desertion of the fixed-line phone by a significant minority.