Broadband tax not enough to cover fibre rollout

BT has confirmed that the proposed tax on all of the Britain's telephone lines will not be enough to fund a complete national rollout of fibre, as the carrier began pilots of fibre to the cabinet (FTTC) in London and Wales.

Last month's Digital Britain report by Lord Carter proposed a new tax to help fund a rollout of broadband and next generation networks in the UK. Dubbed the 'broadband tax', it recommended that every household in the UK with a fixed telephone line (roughly 34 million lines) should be charged 50p ($0.82) a month, or £6 ($9.80) per year, to help ensure that every UK home will get broadband by 2012.

However, this tax would at best raise only between £150 to £200 million annually. Lord Carter' thinking was that this money would be used to fund the rollout of fibre to the problematic "last third" of the country (ie those in areas where broadband is currently unavailable or extremely slow). The other two-thirds of the UK which is more densely populated, better connected, and therefore more economically viable, should be covered by investments from commercial operators.

"If you're going from 55 to 85 percent, then I can see that that could be delivered," said Olivia "Liv" Garfield, director of strategy and portfolio for BT. "I can see a way to get to 80 to 85 percent with that kind of money, but we will struggle to get to 100 per cent - in fact it would be impossible to get to 100 per cent," she is quoted as saying on the technology website v3.co.uk.

A BT spokesman confirmed this to Techworld. "She was speaking at a BT roundtable event in London, and was responding to a question as to whether BT believed that money was sufficient to provide 100 percent coverage," said the BT spokesman.

"We recognise that there is no commercial case at present to extend fibre based services much beyond 50 percent of the population," the spokesman said. "So the Government's 50p levy is a practical suggestion for funding superfast broadband to other parts of the country."

"Is the 50p enough to deliver fibre to the last third of the UK? We will have to see," said the spokesman. "We're already investing more than anyone else in rolling out fibre and it will be the case that we will learn lessons on the way. Our initial plans are to cover 40 percent but if there's decent take-up we may cover more."

Last year, BT announced it would spend £1.5bn pounds rolling out fibre to the node (or cabinet) to 10 million (or 40 percent) of UK homes by 2012. It now expects to have rolled out fibre to the node to 1.5 million homes by the summer of 2010.

"To deliver fibre to the whole of the UK would cost around £10 billion ($16.3 billion) for fibre to the cabinet to every home, but mid teens of billions for FTTP (fibre to the premise/home)," the spokesman said. "A lot of costs relate to the final 10 percent of homes so if the Government's aim is to achieve 90 percent FTTC then the costs will of course be lower. As Liv said we think the fund would allow for 80 to 85 percent of the country to have fibre broadband."