British Broadband Tax

In his pre-Budget report, the British Chancellor of the Exchequer has confirmed that there will be a 6 GBP tax on all households with fixed-line phones in order to setup a fund that will be used to ensure that even the uneconomical parts of the UK will get fast fibre connections.

Note for readers – the incumbent UK Government is Labour, who come from a socialist or left-wing background.  The Opposition is the Conservatives (aka Tories), who come from capitalist or right-wing background.  For a good few years, it was hard to tell which policies came from which party but now the economy is down, they’re reverting to type.

While the aims of the Chancellor may be laudable, I think he’s completely wrong to setup a broadband fund.  All it will do is line the telecommunication companies’ pockets and it’s not as if they’re short of a penny.  In each of 2007 and 2008, one of the major British telecoms companies, BT made 2.5bn GBP (before tax) on 20bn GBP.  Ok, things are bit tighter in 2009 so far but they’re still making millions.

If the past 30 years of technological advancement has taught us anything, the pressure on technology to make things smaller, faster or cheaper has come from competitive pressures, not by throwing subsidies or government money at companies.  These companies ought to be trying to figure out how to make the uneconomic parts of the country into economic parts, by delivering more efficiently or delivering differently.

Around 30% of households are believed to be in this uneconomic category but that’s only for fibre connections – the figures (and Government) totally ignore the possibilities of wireless technologies.  Rather than let the best technology win out – and it’s for the market to choose what “best” means – the fund will be used to connect up with fibre whether it’s appropriate or not.

And even if the property is miles from anywhere why not simply charge the customer the true price of bringing fibre to their home.  That’s what happens for electricity – if you choose to build your house two miles from the nearest electricity line, the utility company will bill you the cost to install the cable to your house.  For a non-essential service to be given this kind of subsidy seems bizarre.

And I’m sure an extra side effect will be increasing numbers of people dropping their landlines in favour of mobiles and VoIP.  I’m definitely thinking harder about it – if I didn’t have ADSL broadband I would have done it years ago.