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Darling confirms telephone line tax

Townies to pay for rural broadband

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Yesterday's budget confirmed Labour's intention to tax every phone line in the UK to the tune of 50 pence a month, providing funds for connecting the disconnected by 2017.

The tax was widely expected, and was part of the Digital Britain proposals, but yesterday's speech confirmed that it will come in once Labour gets past the minor detail of winning the next election. The plan is to connect 90 per cent of the country by 2017, but rural operators will need to find money for fibre if they're going to avoid being underminded by BT's ubiquitious copper.

For a long time Wireless Internet Service Providers (WISPs) were seen as the ideal way to connect rural communities - keeping infrastructure costs low and only relying on cables for aggregated backhaul. The problem is that once the company has got around the line-of-sight issues and licensed some frequency it's also proved there's a market. So BT comes along and upgrades the local telephone exchange so it can steal away most of the customers with cheaper ADSL.

The WISP goes out of business, customers too far from the exchange still don't have any broadband and BT makes money for its shareholders - which is, after all, what it should be doing.

All this was laid out for us last year by Malcolm Corbett of the Community Broadband Network, who explained that for rural broadband to work companies have to lay fibre optic to the home. That way BT can't come along and undercut the prices - it could lay more fibre, but that would be a huge investment which would only result in a comparable service, so BT is unlikely to bother.

Of course, laying fibre is much more expensive than setting up a WISP, which is where all those 50 pence pieces come in - unless the Conservatives win the next election in which case they'll be raiding the BBC's licence fee for the money.

Corbett, now of the Independent Networks Co-operative Association, reckons the money will help networks avoid the trap of providing a sub-standard service which can be easily superseded by BT - essential if every bothy and cow shed is going to be connected to "superfast broadband" as envisioned by Digital Britain. ®

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