ISPA says proposal could drive up costs and slow down investment.
The Internet Services Providers’ Association (ISPA) has warned that Labour's proposal for a digital licence fee could undermine broadband investment and push up costs for consumers.
According to Labour Leader Jeremy Corbyn, a digital licence fee could supplement the existing licence fee, which he described as a "potential area for modernisation".
Mr Corbyn said the fee could be collected from technology giants and broadband providers, as they "extract huge wealth from our shared digital space".
Furthermore, he argued that this approach could "allow a democratised and more plural BBC to compete far more effectively with the private multinational digital giants like Netflix, Amazon, Google and Facebook".
Mr Corbyn also suggested that it may help reduce the cost of the licence fee for households on lower incomes.
"With secure funding and empowered staff and audience, the BBC would be on a firm footing to move forward into the 21st century educating, informing and entertaining, and be a vehicle to drive up standards for the rest of the media," the Labour Leader commented.
However, ISPA has responded with concerns that a digital licence fee risks "undermining" broadband investment and pushing up prices for all consumers.
The organisation said its members are currently investing billions of pounds to help deliver next-generation broadband infrastructure and services that are vital to both the UK economy and society.
As a result, it believes a digital levy could divert resources away from this investment and slow down broadband deployments.
ISPA acknowledged that the digital licence fee is only a draft policy idea that is being discussed.
However, it said this means it is important to consider at this early stage the impact of imposing a levy on broadband providers, as it is these companies that are delivering what Labour itself has described as a "critical national infrastructure priority".
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