Sectors: Technology

Atax on broadband usage that was proposed by the previous Labour government has been scrapped in the new coalition government’s emergency Budget.

This tax was to charge 50p a month on every household that used broadband in the UK. However, the coalition government considered that the levy would discourage people from taking up broadband, with chancellor George Osborne stating, ‘I am happy to be able to abolish this new duty before it is even introduced.

‘Instead, we will support private broadband investment, including to rural areas, in part with funding from the digital switchover under-spend within the TV licence fee.’

The outgoing Labour government’s plan was to create a ‘rural broadband fund’ that would be used to spread the technology to rural areas of the UK. But the new coalition has instead decided to leave broadband roll-out to private investment, using money from the under-spend from the fund responsible for the switchover to digital TV, with culture minister Ed Vaizey tasked with ensuring that all homes have a minimum speed of 2Mbps (megabits per second) by 2012.

On AIM, Avanti Communications, the provider of satellite broadband to homes and businesses, is likely to benefit from the coalition government’s emphasis on rural areas being connected through private investment. The company gave a measured response to the scrapping of the tax, saying that it was ‘not likely to be that affected by whether a broadband tax was implemented or whether market forces were left to make it happen’.