Landline tax 'threat to broadband'

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Charles Dunstone, the broadband provider's chief executive, said the "unjust and regressive" plans to add 50p per month to all landline phone bills will backfire on the Government and delay next-generation broadband roll-out in rural areas.

His criticism comes as TalkTalk prepares to outline the company's concerns to the Department for Business, Innovation and Skills (BIS).

Mr Dunstone said: "This is an unjust and regressive tax on all phone customers which will subsidise mostly richer rural households that can afford high-priced super-fast broadband services.

"As well as being unfair, we estimate that the increase in price will mean that more than 100,000 mostly low-income homes will be forced to give up their broadband lines. This is wholly inconsistent with the Government's plans to tackle digital exclusion by increasing uptake and use of broadband."

He added: "Crucially, the scheme is likely to delay next-generation broadband roll-out in rural areas rather than hasten it as private investors will wait for public funds to be made available. This will mean that much of the tax will be wasted investing in networks that the private sector would have built itself anyway."

He went on: "I understand that this levy was devised at the last minute after the Treasury refused to make funds available, presumably because it thought it was a bad use of public money."

Mr Dunstone called for the private sector to be allowed to "drive next-generation broadband as far as it can".

"Public funding at this stage - in what appears to be an effort to 'keep up with the Joneses' in Korea, Singapore and the Netherlands - is simply going to waste customers' money and slow down roll-out," he said. "To tax all phone customers is not even robbing Peter to pay Paul, it's just robbing Peter."

The £6-a-year levy on fixed phone lines - generating up to £175 million a year - will subsidise the cost of installing next-generation broadband networks in areas where they would not otherwise be economically viable.