Space tax threatens government broadband plan

Whitehall, we have a problem: a new satellite would boost government plans to extend broadband access across the UK., but a space tax threatens to keep it on the launch pad

Government plans for a satellite to provide broadband internet to thousands of British homes have been challenged by a powerful group of telecoms companies.

Government plans for a satellite to provide broadband internet to thousands of British homes have been challenged by a powerful group of telecoms companies.

Intellect, whose members include BT, Cable & Wireless and Marconi, warned that a new levy on satellite broadcasters could make the broadband plans uneconomic.

Ofcom, the new multimedia regulator, wants to team up with the private sector to launch a satellite in the next few years. The Government owns the rights to a satellite orbit but must secure a partner in the next few months or be forced to hand over the rights to the international body that governs the use of space.

The industry concern surrounds a new satellite levy, known as Recognised Spectrum Access (RSA), which also comes under Ofcom.

In a letter to the Government, Intellect, a lobby group, says that the rights to the orbit "constitute a significant national asset that should be jointly developed by [the] Government and industry to deliver cost-effective broadband access". However, it warns: "Intellect is very concerned that the exploitation of the ... asset could be hampered by the threat of RSA. It would be unfortunate if the UK relinquished its valuable rights for this orbital slot because of uncertainties in its own licensing regime."

In a separate letter, BT also warns that the satellite plans could be jeopardised by RSA. The country's largest broadband provider would be interested in using the satellite, if it is launched, to augment its service. But RSA "must be a significant concern to any potential operator when formulating a business case", it says.

Satellite is crucial to delivering on the Government's promise that 90 per cent of Britons will have access to broadband by 2006. Currently, 72 per cent have access, but this is skewed towards urban areas. In particular, satellite can offer broadband in rural communities where it may be uneconomic for fixed-line telecoms companies.

Ofcom will decide later this year whether to hold a "beauty contest" to select the private-sector partner or auction the rights to use the orbit to the highest bidder.