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    17 June 2009

    Experts question UK broadband tax


    Technology, 17th June,2009

    One of the biggest surprises in the Digital Britain report was the news that everyone with a fixed line telephone would pay a broadband tax.

    At 50p a month the amount is unlikely to break the bank but experts are already questioning what it will buy.

    Some believe it will mean the majority of homes can benefit from fast networks within a decade.

    Others question whether Gordon Brown's vision of "access for all" is achievable.

    Antony Walker, chief executive of the Broadband Stakeholder Group, thinks that the money needs to be targeted at rural areas.

    He believes that, spent wisely, the money should ensure that the 30% of the country estimated to be bypassed by commercial fast broadband plans can enjoy speeds of up to 50Mbps (megabits per second) by 2017.

    Graphic of a house

    BT already plans to upgrade 40% of UK homes to so-called Fibre to the Cabinet technology (FTTC) by 2012, although it will be targeting the easy-to-reach urban and suburban areas.

    Virgin Media is also upgrading its network so it can deliver speeds of up to 50Mbps. Its network is available to 50% of homes in the UK, again mainly in urban and suburban areas.

    Broadband maths

    For Ian Fogg, analyst with Forrester research, the sums don't stack up.

    "There are around 34 million fixed lines in the UK and at £6 a year this is going to raise in the low hundreds of millions each year. This is some way off BT's budget of £1.5bn to put fibre in 40% of homes by 2012," he said.

    "There is going to be a two-tiered internet for a long time, whether the government likes it or not," he said.

    Andrew Ferguson, editor of broadband website ThinkBroadband, estimated that the government will raise around £170m a year from the broadband tax.

    "It will depend on how many people give up their fixed line because of the 50p a month tax but over the years will raise around the same amount of money as BT is investing," he said.


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    But because the money is earmarked for the final third of the country, with many homes lying miles away from existing networks, it is going to cost a lot more to supply them with fast net services.

    BT has estimated that to provide FTTC to every UK home would cost around £5bn.

    Mr Walker said it was important to remember that the tax was a top-up fund.

    "It may not sound like a lot of money but it is a subsidy to support commercial investments," he said.

    If BT or other operators are prepared to share half the cost of rollout the plan to fibre-enable 90% of the country by 2017 might work thinks Mr Ferguson.

    The process of collecting and putting the money out to tender will take two to three years to set in motion, he predicted, suggesting that it may have been easier just to give the money to BT.

    "BT would have had to give access to other providers. It might have been easier but would have been more politically charged," he said.

    World leader

    The government has also set aside around £200m to roll out slower broadband (of speeds of no less than 2Mbps) to so-called notspots, estimated to account for around 2.5m homes.

    Some think that figure this is not going to be enough and worry that that the money raised from the broadband tax could be used to fulfil this more pressing goal.

    Prime minister Gordon Brown has said that broadband is as essential as water, electricity and gas and pledged that the recommendations of the Digital Britain report will offer access to all families.

    He said the report will make the UK the broadband world leader.

    But not everyone is convinced.

    "It doesn't guarantee global leadership but the UK is in a better position today than it was before the report," said Mr Walker.

    Few of the recommendations are likely to hit the statute book before the next general election and could be abandoned by any new government.
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    © 2009 Asnycnow15 English

    New financial rules: Major changes for big, small

    WASHINGTON (AP) -- From simple home loans to Wall Street's most exotic schemes, the government would impose and enforce sweeping new "rules of the road" for the nation's battered financial system under an overhaul proposed Wednesday by President Barack Obama.

    Aimed at preventing a repeat of the worst economic crisis in seven decades, the changes would begin to reverse a determined campaign pressed in the 1980s by President Ronald Reagan to cut back on federal regulations.

    Obama's plan, spelled out in an 88-page white paper, would do little to streamline the alphabet soup of agencies that oversee the financial sector. But it calls for fundamental shifts in authority that would eliminate one regulatory agency, create another and both enhance and undercut the authority of the powerful Federal Reserve.

    The new agency, a consumer protection office, would specifically take over oversight of mortgages, requiring that lenders give customers the option of "plain vanilla" plans with straightforward and affordable terms. Lenders who repackage loans and sell them to investors as securities would be required to retain 5 percent of the credit risk - a figure some analysts believe is too low.

    It also would make the Fed the regulator of some of the largest and most interconnected institutions in the financial world - an attempt to supervise companies that are so big that if they fail they could do harm to the economy. A separate council, chaired by the Treasury secretary, would watch over the financial system to flag risky new products or trends.

    In all, the Obama's broad proposal cheered consumer advocates and dismayed the banking industry with its proposed creation of a regulator to protect consumers in all their banking transactions, from mortgages to credit cards. Large insurers protested the administration's decision not to impose a standard, federal regulation on the insurance industry, leaving it to the separate states as at present. Mutual funds succeeded in staying under the jurisdiction of the Securities and Exchange Commission instead of the new consumer protection agency.

    Obama cast his proposals as an attempt to find a middle ground between the benefits and excesses of capitalism.

    "We are called upon to put in place those reforms that allow our best qualities to flourish - while keeping those worst traits in check," Obama said.

    The president's plan lands in the lap of a Congress already preoccupied by historic health care legislation, consideration of a new Supreme Court justice and other major issues. Still, Obama has set an ambitious schedule, pushing lawmakers to adopt a new regulatory regime by year's end.

    "We'll have it done this year," pledged Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee.

    "Absolutely," agreed Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.

    But fissures quickly developed.

    Dodd, who had been at Obama's side in the East Room of the White House for the announcement, raised questions about one of the plan's key features - giving the Federal Reserve authority over huge, intertwined financial institutions.

    "There's not a lot of confidence in the Fed at this point," Dodd said.

    Obama's proposal would require the Fed, which now can independently use emergency powers to bail out failing banks, to first obtain Treasury Department approval before extending credit to institutions in "unusual and exigent circumstances," a change designed to mollify critics who say the Fed should be more accountable in exercising its powers as a lender of last resort.

    But the proposal also would do away with a restriction imposed on the Fed in 1999 when Congress lifted Depression-era restrictions that allowed banks to get into securities and insurance businesses. The Fed, as the regulator for the larger financial holding companies, had been prohibited from examining or imposing restrictions on those firms' subsidiaries. Obama's proposal specifically lifts that restriction, giving the Fed the ability to duplicate and even overrule other regulators.

    At the same time, the new consumer agency would take away some of the Fed's authority.

    Fed defenders argue that none of the major institutional collapses - AIG, Bear Stearns, Lehman Bros., Merrill Lynch or Countrywide - were supervised by the Federal Reserve. Critics argue the Fed failed to crack down on dubious mortgage practices that were at the heart of the crisis.

    Administration officials concede their plan responds to the current crisis- in national security terms, it prepares them to fight the last war. But they also insist that a central tenet of their plan is a requirement that from now on financial institutions will have to keep more money in reserve - the best hedge against another meltdown.

    "I'm not sure that anybody can forecast crises with precision," Lawrence Summers, director of Obama's National Economic Council, told The Associated Press. "That's why it's going to be critical to raise capital levels for all institutions."

    That may appear to be a no-brainer: If banks and other large institutions have more money, they won't be vulnerable if their risky bets go bad.

    However, banking regulators have been arguing for years over implementation of an international standard for bank capital. Treasury Secretary Timothy Geithner said Wednesday hoped to move on enhanced capital standards "in parallel with the rest of the world."

    Obama would also place hedge funds and derivatives, the complex financial instruments traded privately in a multitrillion-dollar market and blamed for hastening the financial crisis, under government supervision. The proposal would give the SEC oversight of hedge funds and other private pools of capital, including venture capital funds

    "It really represents a comprehensive and pragmatic approach to reforming our regulatory system," SEC Chairman Mary Schapiro said in a telephone interview. "It really does a lot to address things we're most concerned about."

    The regulatory overhaul ended up eliminating only one agency, the Office of Thrift Supervision, generally considered a weak link among current banking regulators. The OTS oversaw the American International Group, whose business insuring exotic securities blew up last fall, prompting a $182 billion federal bailout.

    The failure to merge all four current banking agencies into one super regulator could open the door for big banks to continue to exploit weak links in the current system. Sen. Chuck Schumer of New York, a leading Democratic voice on Wall Street issues, praised the administration's plan but said he would consider further consolidation.

    "We're removing one major agency-shopping opportunity, but there's a real potential for others," said Patricia McCoy, a law professor at the University of Connecticut who has studied bank failures.

    Copyright © 2009 Asnycnow15 News/English


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    Due to a police investigation at the Woodhaven Boulevard Station, there is no service on the Jamaica-bound J trains from the Cypress Hills Station to the Jamaica Center-Parsons/Archer Station.
    As an alternative, customers are advised to take Q56 bus from the Cypress Hills Station making nearby station stops to Jamaica Center. Additional bus service has been provided.
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