Phone tax could pay for 'Digital Britain'

The Government was preparing to face a backlash from Britain's main broadcasters today for failing to reach a conclusion on whether the BBC will have to give up part of the licence fee.

Speaking at the launch of his long-awaited Digital Britain report, Communications Minister Lord Carter admitted that he had failed to reach a clear decision on whether the BBC's rivals can be saved by public money.

He said: "If we were absolutely clear that contestability of the licence fee is the only answer we wouldn't put it up for consultation.

"We are not 100 per cent sure, having looked at it now we have not yet seen a proposal that provides a funding level that is needed.

"We believe that a consultation should take place. We will absolutely take licence fee payers' views and absolutely take the BBC Trust's view. We will also consult Ofcom which has a responsibility to Parliament on this."

Lord Carter added: "If people can come to us with another idea we'll say great, let's look at it."

There will be a consultation on sharing out a "small portion" of the licence fee after 2013, Culture Secretary Ben Bradshaw said - too late to guarantee the future of commercial broadcasters ITV and Channel 4.

Lord Carter also revealed that government plans to roll out broadband across the country could be paid for through a new tax.

The White Paper suggest that all homes with fixed copper telephone and internet lines could pay a 50p per month tax to fund the Government's commitment to providing "high speed next generation broadband to the vast majority of the UK population".

Lord Carter said: "A 50p per line levy will produce £150 to £160 million a year to provide fibre optic networks for the rest of the country."

With regards to ITV, which says it can no longer afford to produce regional news after 2012, Lord Carter pledged only to "discuss with the BBC Trust whether a proportion of the projected underspend in the Digital Switchover Help Scheme could fund a range of pilots to test options for contestable funding for news before 2012".

The White Paper proposes a series of new bodies called Independently Funded News Consortia to help produce news for England, Scotland and Wales and local and regional news.

Channel 4 was told that its financial crisis could be resolved through a merger with BBC Worldwide.

The White Paper also announces the appointment of internet entrepreneur Martha Lane Fox as the Government's new champion for Digital Inclusion.

The businesswoman will head a taskforce to ensure that digital media is available in socially and economically disadvantaged communities.