Digital Britain phone levy not enough, says BT

• Tags:
• Broadband,
• Digital Britain,
• Stephen Carter

David Meyer ZDNet.co.uk

Published: 02 Jul 2009 15:05 BST

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The government's proposed 50p monthly levy on fixed copper lines will not be enough to finance fibre broadband access for the entire UK, BT has said.

Liv Garfield, BT's director of strategy, said on Thursday that the charge — which will feed into a fund for ensuring high-speed access for those parts of the UK deemed economically unviable by operators — was a "reasonable" figure to charge consumers. However, she said there was a "question mark" over whether it would prove sufficient to pay for fibre access across the whole of the UK.

The fund was proposed by the government in Lord Carter's Digital Britain report, which was published last month. When Carter announced the 50p levy, he said investment by operators would take care of around two-thirds of the UK's next-generation broadband coverage, while the fund was intended to "subsidise market build-out to the remaining third".

The levy will put around £150m-£175m into the fund annually, the government estimates. That fund will be used to pay operators to roll out high-speed connectivity to the areas in question, following a procurement process.

"If [the charge] is for the final third, we would be very surprised if that could cover it," Garfield said at a round-table event in London. "All our modelling shows differently. We can see a way to get to 80 to 85 percent [coverage] with that number, but it would be impossible to get to 100 percent."

Carphone Warehouse has also criticised the levy. At an Ecta event in Brussels a week ago, the telecoms firm's strategy chief, Andrew Heaney, called the charge a "regressive phone tax" that was "not the way to do it".

"State aid has to be open and transparent and not a backroom deal," Heaney said.

At the same Ecta event, Ofcom chief executive Ed Richards said he expected the tendering process proposed by the government to be open and transparent.

The Digital Britain recommendations are to be scrutinised by a Commons select committee, which will examine issues including the viability of the government's fibre access plans.

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