Last updated: February 24, 2010 - 9:30am
It doesn't sound like a compelling business case: spend billions on rolling out a product for which there is no obvious demand. But that is what the British government wants telecoms companies to do.
It would like fibre-optic cables to lace the country, bringing everyone super-fast broadband of 50 to 100 megabits per second, compared with today's average 4Mbps. To subsidize the upgrade in rural areas, it plans a 50p per month tax on all telephone lines. The problem, as a skeptical parliamentary committee pointed out on Tuesday, is that hardly anyone needs broadband that fast. Even new applications such as Internet TV work fine on existing copper wires. In future that will almost certainly change but, questioning the project's urgency, the bipartisan committee opposed the tax and said the market should be left to its own devices for now. Ditto the Conservative opposition. Companies, meanwhile, are divided.
At the heart of the problem is that there are two "digital divides". The first is between the UK and its neighbors: it comes 20th in the broadband speed league of developed countries, behind Portugal and Italy, which could one day hurt competitiveness. The second is within the UK: 11 per cent of users, many in rural areas, have been left behind with speeds of less than 2Mbps.
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