In July, the government released the ‘Digital Britain’ white paper: their vision for putting the UK at the “leading edge of the global digital economy”. Within this is a plan for every home to have access to ‘superfast’ broadband rates of 40-50 megabits per second by 2017. This aspiration would be achieved by government intervention, and – surprise surprise- funded through more tax. In this case, a 50p-a-month charge on fixed phone lines.
Plenty of government failures start off as honorable aspirations. It would be far better to let the public decide the technology they want (many people are happy without broadband at the moment), and let suppliers respond to demand accordingly. Instead, the government might implement a regressive tax in which the poor pay £12 a year for a service that the better off tend to consume.
The report is unclear on how exactly the revenue raised will achieve universal broadband. Team this with governments’ general inability to plan and implement policy in an area they know little about, and it is unlikely the project will be finished on time, on budget or even at all. Nevertheless, the government wants this legislation to go through in the spring.
Such shambolic ideas often go down rather well in the Houses of Commons, but not this one. The proposal was roundly criticized by the Commons business, innovation and skills select committee this week as “regressive and poorly targeted”. They remarked that “early government intervention runs a significant risk of distorting the market”, and questioned the logic behind the spending commitment given the dire state of public finances. Instead, the committee recommended market-based reforms effective in spreading access to high-quality broadband, such as cutting tax on fibre-optic cables, and increasing competition amongst suppliers. While the committee doesn’t have the power to strike down the government’s proposal, they have recognized that the power of the market will achieve outcomes far cheaper and faster than government intervention.
They must have been reading Eben Wilson’s Digital Dirigisme.