Broadband 'levy' for super-fast net

A cow Image copyright PA
Image caption The cash would help bring fast net speeds to the most remote and rural areas

Broadband bills could rise as the UK government decides how to bring high-speed internet access to remote areas.

The government is currently looking into how it can raise an estimated £500m to take super-fast broadband to the "final 5%".

The favoured option for generating the money is to impose a levy on firms involved in rolling out broadband.

Such a levy would add around £1 a month to domestic broadband bills, said industry watchers.

Funding challenge

Current government plans aim to get so-called super-fast broadband to 95% of the UK population by 2017/18. Super-fast means line speeds of about 24 megabits of data per second.

Extending this to 100% of UK homes could cost up to £500m because it would mean reaching the most remote parts of the country. Several satellite and wireless technologies are currently being tested to see if these can bring fast enough net access to these areas.

The main funding options are to raise cash through general taxation or via a levy on industry.

The BBC understands that the Department for Culture, Media and Sport has not yet made a decision about how the money will be raised. However, the FT reported, the government currently favours imposing a levy on broadband, phone and mobile providers to meet the bill.

Such a levy could "undermine" the investment that net providers were making to accelerate broadband speeds in the UK, said internet service providers' association ISPA.

It said the coalition government had called a proposed 50p telephone levy suggested by the previous Labour administration an "archaic" way of boosting spending on broadband.

Image copyright PA
Image caption The coalition scrapped plans for a levy on phone lines to help pay for broadband

While ISPA acknowledged that delivering super-fast to the final 5% was a "challenge" it said the trials of satellite and wireless technologies were "encouraging".

It added: "Government would be better off focusing efforts on encouraging investment and competition."

Andrew Ferguson from broadband news site ThinkBroadband said any levy on industry would undoubtedly be passed on to customers - bumping up monthly bills.

"If a £500m levy was to be raised over two years, it would add around £1 per month to every broadband bill if we assume providers passed on the levy in full - and we see no reason why they would not," he said.

Mr Ferguson said it would be better to find the cash via general taxation because it would have more chance of generating a good return because the money would be used more widely.

"The departments that stand to gain are people like Defra with farmers happy to deal with online forms when they have a good connection, the NHS which can do more remote consultations and HMRC that can move even more to an online only presence," he said.

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