Designed as a blueprint for an economy based on a digital communications infrastructure, the report commits the government to providing universal access to a 2Mbps internet connection by 2012. It also commits the country to speeding up network speeds to at least 40Mbps by 2017.
It suggests ways to increase public and private online security, as well as protection for content distributed online.
The government plans to set up a £200m fund to fulfil the universal service commitment by 2012, and expects network owners to match amounts.
It is also levying a £6 per year tax on all copper telephone and cable TV lines. This will create a fund worth £150m to £175m a year. Network owners will be able to apply for funds to roll out "super fast" networks in areas that would be unprofitable. This would last until 2017.
Commenting on the detail of the report, Antony Walker, chief executive of the Broadband Stakeholders Group, a supplier-dominated multi-interest group said the government's financing plan could be just enough to get network operators to invest in areas that would otherwise be commercially unviable.
"These proposals are smart because they recognise the wider national financial constraints and take the pressure off public finances," Walker said. "They are proportionate because they address only areas where commercial interest is unlikely. As a result the scale of the intervention is smaller than in other markets."
Carolyn Kimber, chairman of the Communication Management Association, whose members spend £15bn a year on communications, said, "A near-term target of only 2Mbps is disappointing, until you realise that it's a target to be reached within 30 months, and makes the UK the only country to commit to such a concept. However, the CMA would have preferred to see an unequivocal commitment to carrier-neutral, open access networks as part of a revised universal access obligation."
BT chief executive Ian Livingston said the report showed that the government understood the need to encourage investment in areas that were commercially unviable. "Funding should be available only to companies that are prepared to open their networks to others to ensure that UK retains the most competitive telecoms sector in the world," he said.
Director general of the British Video Association, Lavinia Carey said she welcomed the recommendations for internet service providers (ISPs) to do more to prevent illegal downloads. But she wanted them to be forced to act quicker.
Nicholas Lansman, secretary general of the Internet Service Providers Association (ISPA), said ISPA was pleased that the government had ruled out legislating to force internet companies to disconnect persistent illegal file sharers. "ISPA believes this would be a disproportionate sanction against users," he said. He welcomed government plans to use existing legal channels to tackle online thieves, but letting judges, not rights holders, determine lawfulness.