£6 tax on telephones to pay for fast broadband access

A charge of 50p per month is to be levied on all landline telephone bills to subsidise the Government's plan to bring broadband internet access, and faster download speeds, to every home in the country by 2012.

The move is part of proposals for a "digital revolution" to overhaul Britain's internet infrastructure, as well as the media and telecommunications sector. The much-anticipated Digital Britain report was presented to MPs yesterday by the Culture secretary Ben Bradshaw, who said it would help the UK to secure a competitive, low-carbon economy within five to 10 years and "accelerate Britain's recovery from the biggest economic shock the world has seen since the war".

The Prime Minster, Gordon Brown, said the proposals would give Britain the "tools to succeed and lead the way in the future", because digital technology was as important now as "roads, bridges and trains were in the 20th century". However, the Conservatives said the report promised no new action, while the Liberal Democrats branded it a "complete damp squib".

The 238-page document was drawn up by the outgoing Communications minister Lord Carter, and the levy on fixed-line telephones was his biggest surprise. The £6-a-year surcharge on every landline will raise about £175m to pay for infrastructure to bring broadband to the estimated 40 per cent of homes that do not have it now. "We have to have a policy of maximum digital inclusion. We cannot have 40 per cent of the population not being able to use these services," Lord Carter said.

The fund will be handled by the media regulator Ofcom and supplemented with about £200m taken from the BBC's digital switchover budget.

Antony Walker, chief executive of the Broadband Stakeholder Group, a consortium of telecoms experts which advises the Government, said: "The cost to consumers is relatively small: less than the price of one cinema ticket per year. But the scheme would generate sufficient funds to tip the balance of investment in many areas that would otherwise face an indefinite wait for next-generation broadband."

A spokesman for BT agreed: "It seems a reasonable and practical solution. There is only so far commercial companies can go with investment in new infrastructure." BT is already spending £1.5bn to upgrade its broadband network, which should reach 10 million homes by 2012.

In his interim report in January, Lord Carter recommended providing broadband for all homes at a speed of at least two megabytes per second (MBps), fast enough to watch a programme on the BBC's iPlayer system. Phil Stokes, an entertainment and media consultant at PricewaterhouseCoopers, said: "Universal broadband by 2012 is an ambitious target. It is a positive step, and the basic principle of MBps broadband for everyone is a good one."

Critics say that target would condemn the UK to the dark ages of broadband, but Lord Carter stressed that MBps was "not the height of our ambitions", adding: "Think of it as the minimum wage in terms of broadband speeds."

In a separate move, Lord Carter has proposed using some of the money ring-fenced in the BBC licence fee for the switchover from analogue to digital broadcasting to support regional news on commercial channels.

But Sir Michael Lyons, the chairman of the BBC Trust, said it would fight any changes to the licence fee, which should not be a "slush fund to be dipped into at will". He added: "There has not yet been a full and open debate about the suggested costs of these services."

A spokesman for one rival broadcaster said: "The BBC is just worried that the move sets a precedent."

Internet pirates 'should be named and shamed'

Lord Carter announced tough measures to stamp out illegal downloading yesterday, saying internet pirates would be named and shamed and could face criminal prosecution.

The film, music and computer games industries estimate they lose millions of pounds a year from illegal downloading and file-sharing.

The Digital Britain report said that infringing on another's intellectual property or file-sharing without payment was "in plain English, wrong" and piracy of intellectual property for profit was "theft and will be pursued as such through criminal law".

The Government believes that most consumers would prefer not to break the law when it comes to downloading movies and music, and so it has pledged to provide a framework to encourage cheap and convenient legal markets for downloading content.

Should offenders persist, however, the Government will provide recourse for rights-holders and internet service providers under civil law. It has handed media watchdog Ofcom the mandate to notify offenders that they are breaking the law and then publicly identify through the courts those who refuse to stop. Their identities will be passed on to the rights-holders of the property, who could sue them.

Broadband providers including Virgin, BT, TalkTalk and BSkyB, will also be handed powers to hamper the pirates. These companies will be able to reduce an offender's bandwidth or block particular browsers.

The Government said the internet service providers will have to cut the practice of illegal file-sharing by 70 per cent within a year. The proposals are now out for consultation before they can be passed into law.

Lord Carter had initially mooted the idea of a "rights agency", to help overcome the problem of illegal downloading in the interim Digital Britain report in January. Yesterday, he said: "The view from the industry was that such a move would be like using a sledgehammer to crack a nut." He instead proposed a code of practice, similar to the codes governed by the Advertising Standards Authority.

Linda Weatherhead, the digital rights expert at Consumer Focus, said: "Issues of illegal downloading are still essentially left for the industry to police, albeit under Ofcom's supervision. It is welcome that consumers will not be cut off from the internet without a court trial. However, the devil will be in the detail."

Digital 'champion': Martha Lane Fox

Appointed as the country's "Digital Inclusion Champion", Martha Lane Fox shot to fame after co-founding Lastminute.com in 1998. In 2004, aged 31 with a company worth more than £660m, her plans for a career break were thwarted when a car crash left her in hospital for more than a year. She has since established a karaoke bar chain, Lucky Voice, and the interior design company Mydeco.com. She is a non-executive director of Marks & Spencer.

Six years and counting: time to get a new radio

National radio stations will broadcast on digital frequencies only by 2015, replacing existing FM and MW coverage as part of the Government's plans.

The switchover from analogue to digital television is already planned for 2012; radio will move to solely Digital Audio Broadcasting (DAB) three years later, though ministers believe more than 50 per cent of radio programming will be digital by the end of 2013.

The FM frequencies no longer used by major broadcasters will be opened up to small local stations to boost community radio provision.

The Government wants DAB to cover 90 per cent of the country before the full switchover. In the first quarter of this year, only one fifth of listeners were able to receive digital radio programmes. Ministers also want radio manufacturers and retailers to start selling DAB radios for less than £20, calling it "the key price point that makes the swap-out economic".

Lord Carter said that by 2015, much of the FM infrastructure would have needed rebuilding anyway. "It is 30 years old in places and beginning to degrade. A £200m nationwide rebuild is impractical for such a small sector which is anyway migrating to digital," he said. The car industry has been in talks with the Government to ensure most new vehicles are fitted with digital receivers by 2015.

The industry regulator Ofcom will oversee the move to digital and the Government will examine whether there is a case for helping specific groups, as there was with the digital television switchover. Radio licences currently run for up to four years, but Ofcom will have the power to grant licences for a further seven years.

Digital future: At a glance

* Universal Mbps broadband service by 2012.

* Fixed broadband for the 10 per cent of homes that are without, paid for by £200m underspend from BBC switchover.

* 50p levy on existing fixed phoneline customers to fund next-generation broadband.

* More Government services to be made accessible online.

* Lastminute.com co-founder Martha Lane Fox appointed as "digital inclusion champion".

* Illegal file-sharing "tantamount to theft"; repeat offenders to have broadband connection reduced.

* Ofcom to be charged with reducing piracy via "notification of unlawful activity".

Broadcasting

* Digital-only national radio stations to start from 2015, with BBC asked to extend national DAB coverage and manufacturers asked to make DAB sets cheaper than £20.

* Push for Channel 4 and BBC Worldwide to set up a joint venture.

* BBC's licence fee to be used to fund other broadcasting activities.

* Licence-fee funded regional news pilots to happen in Scotland, Wales and one English region before 2013.

Newspapers

* No legislative changes to existing newspaper merger regime.

* Ofcom to get bigger role in assessing merger proposals.