A government consultation on a proposed £1 billion broadband fund, raised via a 50p per month tax on all telephone landlines, has been opened by Business Secretary Lord Mandelson.

The controversial plan is intended to ensure that 90% of the UK’s population are able to access superfast broadband speeds of up to 50Mb within seven years. Enterprises in the country’s most rural locations are among those to be specifically targeted.

In the consultation document, the government outlines that substantially increased connection speeds and reliability could encourage adoption of cloud computing and high-quality video conferencing, technologies that can bring cost savings to the enterprise.

“Already the market is delivering superfast internet speeds of 50Mb to half the country but we cannot be certain that it will reach the communities that are not currently served, which is why we are putting in an extra £1 billion to support the market," said Mandelson. "By upgrading our networks we will put the UK at the fore of rapidly developing technologies which will bring jobs, boost business potential and grow our digital economy.”

The 50p landline tax needs to be signed into law before this year’s general election, to be held in June at the latest, if the scheme is to go ahead.  The Conservatives have already pledged to abort the project if elected.

Figures published by telecoms watchdog Ofcom last month showed that 16% of UK businesses with five or more employees that are connected to the internet rely on dial-up or ISDN services, highlighting the poor broadband coverage still prevalent in some areas of the country.