Businesses and consumers will pay for the roll-out of a universal 2Mbps broadband service to the UK.
Communications minister Stephen Carter ackwlowledged that network operators would pass on the extra costs. But he said consumers may benefit from new technologies and greater competition as a result of Digital Britain initiatives.
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Speaking at the publication of the Digital Britain report in London, Carter said the money would go into a "Next GenerationNetwork Fund". Network owners could apply to the fund to build fast broadband networks.
The £150m to £175m a year the tax would generate would be enough to encourage network owners to extend their networks to "the final third" of households that cannot be served profitably, he said.
Two-thirds of households and busineses already have - or soon will have - access to a 2Mbps internet access under normal commercial terms.
But the fund was needed because there was "no business case" to roll out internet access to the remaining third of households.
It would be "unacceptable" to have a digital divide between people who have access to high speed internet and those who can't, added Carter.