ISPs Warn Labour’s Digital Licence Fee Risks Damaging Broadband

tax

The UK Internet Services Providers’ Association (ISPA) has warned that today’s proposal by the leader of the Labour Party, Jeremy Corbyn, to impose a new ‘Digital Licence Fee’ upon tech giants and ISPs “runs the risk of undermining broadband investment and could lead to increased prices for all consumers.”

Corbyn’s speech doesn’t actually mention broadband, telecoms or related infrastructure and was instead focused on the party’s future approach to journalism, as well as funding the BBC. “The licence fee itself is another potential area for modernisation. Originally, it was charged on radio sets. Then, as the technology developed, it became a radio and TV licence fee and finally just the TV licence fee,” said Corbyn.

Instead Labour’s leader has proposed that, in the “digital age“, we should consider whether a Digital Licence Fee (DLF) could be a “fairer and more effective way to fund the BBC“. Apparently this would be designed to supplement rather than replace the existing TV Licence Fee.

Jeremy Corbyn said:

“A digital licence fee, supplementing the existing licence fee, collected from tech giants and Internet Service Providers, which extract huge wealth from our shared digital space, could allow a democratised and more plural BBC to compete far more effectively with the private multinational digital giants like Netflix, Amazon, Google and Facebook. This could also help reduce the cost of the licence fee for poorer households.

With secure funding and empowered staff and audience, the BBC would be on a firm footing to move forward into the 21st century educating, informing and entertaining, and be a vehicle to drive up standards for the rest of the media.”

At this point we’d caution that politicians have a nasty habit of using the term ISP to interchangeably describe both Internet Content and Internet Access Providers, which means that currently we don’t know for certain whether he was referring to both types of service or only content providers like Facebook, Twitter, Netflix etc.

In any case imposing a new internet tax on broadband providers, most of which only offer access to the online world and don’t produce content for it, would perhaps inevitably also result in those commercial companies passing that extra cost on to consumers via higher prices (as always seems to happen).

Statement by the ISPA:

“Today’s call by the Leader of the Opposition, Jeremy Corbyn, to impose a levy on Internet Service Providers to help fund a ‘digital licence fee’ runs the risk of undermining broadband investment and could lead to increased prices for all consumers.

ISPA members are currently investing billions to help deliver the next generation broadband infrastructure and services that are essential to the UK’s economy and society – a digital levy could divert resources away from this investment and slow down broadband rollout.

We note that this is a draft policy idea for discussion, so it is important to consider at this early stage the impact of imposing a levy on ISPs who are delivering what the Labour Digital team calls a ‘critical national infrastructure priority’.”

The industry is already facing the prospect of having to pay a levy to help fund the forthcoming 10Mbps+ Universal Service Obligation (USO) for broadband, as well as the huge investment currently going into major fibre optic network upgrades. Adding another charge to help fund the BBC was thus never going to be particularly popular.

Equally there will be the usual questions about how such a fee could be extracted? Would it apply to all ISPs (big and small or mobile and fixed line)? Would only the BBC benefit from it or might other broadcasters benefit? Would raising consumer prices to compensate only end up making it harder for those on lower incomes to access an affordable broadband connection? Etc.

On the other hand it’s worth remembering that a portion of the funding for the original Broadband Delivery UK programme was extracted from the TV Licence Fee (i.e. the Digital Switchover budget) and so there’s a certain degree of karma in seeing that come full circle. Except BDUK was a time limited project, whereas the DLF is not. This calls for a snap poll..

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