Adding 50 pence to all phone bills to fund next generation internet connections in rural areas will result in 100,000 low income homes having to sacrifice their broadband lines, the Government has been warned.
First proposed in the Digital Britain Report that was published in June, the tax will raise £40 from every home over seven years beginning in 2010, totalling some £1 billion.
However, Charles Dunstone, chief executive officer of TalkTalk, commented: "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 over 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."
TalkTalk said that it was backing the government target of delivering broadband speeds of 2Mbps across the entire UK, but that public funds must be delivered to essential services.
The tax may actually delay the roll out of broadband in rural areas as private investors wait for infrastructure to be paid for from the public purse, it said.
"We now need to let the private sector 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," said Mr Dunstone.
"To tax all phone customers is not even robbing Peter to pay Paul, it's just robbing Peter."
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