The UK's proposed 50p broadband tax will force 100,000 low income households to give up their broadband lines, according to TalkTalk CEO Charles Dunstone.
The tax is expected to start in 2010 and last for seven years, raising about £1 billion. It's designed to help fund the roll-out of superfast broadband access, but Dunstone says the increased availability of high-speed internet will come at a cost.
"This is an unjust and regressive tax on all phone customers which will subsidise mostly richer rural households that can afford high priced super fast broadband services," said Dunstone.
"We estimate that the increase in price will mean that over 100,000 mostly low income homes will be forced to give up their broadband lines. This is wholly inconsistent with the government's plans to tackle digital exclusion by increasing uptake and use of broadband," he added.
TalkTalk's director of strategy and regulation, Andrew Heaney, is due to give evidence to a Business, Innovation & Skills (BIS) Committee later today to outline the company's concerns.
Hearney is expected to express concerns to the BIS Committee that the government has avoided proper public debate on the issue by including the levy in the Finance Bill which traditionally is not consulted on.
TalkTalk believes that investment in the UK's broadband infrastructure should be focused on delivering essential basic internet access, rather than developing premium services that favour the private sector.
"Crucially the scheme is likely to delay next generation broadband roll-out in rural areas rather than hasten it as private investors will wait for public funds to be made available. This will mean that much of the tax will be wasted investing in networks that the private sector would have built themselves anyway," said Dunstone.
"When broadband first started people said the networks would only reach 60 per cent of the population. The private sector, unaided, actually got to 99 percent coverage, far further than in most other countries. We now need to let the private sector drive next generation broadband as far as it can. Public funding at this stage - in what appears to be an effort to ‘keep up with the Joneses in Korea, Singapore and the Netherlands - is simply going to waste customers' money and slow down roll-out."