Broadband Tax To Be Scrapped But How Will The Fast Broadband Rollout Be Funded?

In his emergency budget last week, George Osborne confirmed he will scrap the proposed broadband tax, but how will broadband investment be funded?

The broadband tax of 50p was proposed by the Labour government to fund next generation broadband.

This proposed tax was much criticised by the Conservatives so it’s perhaps not surprising that George Osborne, the Chancellor, has confirmed he feels it isn’t necessary and has scrapped it.

The expectation is that private investment will in the main be used to fund the fast broadband rollout. That said the Government have said that money left over from the digital switchover is to be used to ensure all homes have internet access.

But will this really provide enough to connect remote rural villages to fast broadband?

The Government maintains it is committed to providing fast broadband and has appointed a new broadband minister, Ed Vaizey, to oversee and ensure all homes have a minimum speed of 2MBps by 2012.

How achievable is this though with so much reliance on private funding I wonder. BT recently said it would spend an extra £1bn on high speed broadband ensuring that 2/3rds or British homes have access to it within 5 years.

Virgin Media already has its cable network which reaches half of UK homes.

The Government is planning to contribute to three pilot schemes that will assess how best to extend superfast broadband networks to rural areas. All well and good but whatever is determined it is going to cost money that has to come from somewhere.

Are the likes of BT and Virgin Media really going to be able to justify investment beyond where they are and reach the more rural comunities? It seems extremely unlikely.

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