The key points | Report in full | Graphic: digital Britain

Mum’s mobile is playing 3-D TV to keep the kids entertained in the back seat, because the car has broken down on the way to grandma’s country cottage. Dad’s flat screen tablet is offering to download clips that show him how to get his car moving, so they can avoid a lengthy wait for the AA.

Grandma, meanwhile, who has a little more free time than she’d expected, settles down on the sofa in her rural retreat and, using her remote control, flicks through her database of all of last year’s television programmes and ten million songs, to find something to pass the time.

Welcome to the Britain of the next decade. In the Digital Britain Green Paper, a long-awaited report on the media and telecoms industries, Lord Carter of Barnes, the Communications Minister, declared that every home should be able to receive broadband internet by 2012. Yesterday, Gordon Brown said: “Our digital networks will be the backbone of our economy in the decades ahead. It is as essential to our prosperity in the 21st century as roads, bridges, trains and electricity were in the 20th.”

The communications industry generates £51.2 billion annually, with the digital economy accounting for 8 per cent of GDP. Lord Carter hopes it could grow to “12, 13 or 14 per cent in four or five years’ time” — creating thousands of jobs as Britain claws its way out of recession.

At its heart is the proposal to give every home in Britain the right to a broadband service running at 2 megabits, the speed that most people get today. That is generally considered the minimum necessary to deliver television to computers.

Today six out of ten people have broadband in Britain; the same proportion as in the US, France and Japan, and ahead of Germany, Spain and Italy. However, download speeds in Britain often lag behind other leading economies, where fast services of 8 megabits and more are common.

The remaining 40 per cent of Britons, about 10 million homes, do not have broadband. Of those, 1.75 million households in mainly rural areas are unable to get an internet connection at that speed even if they want it.

Ministers fear that without government intervention, people without broadband will lose out, because so many goods such as flights and books are priced more cheaply online.

Lord Carter, who was previously the Prime Minister’s head of strategy, is behind this vision for digital Britain. He said yesterday that 2 megabits was “a start point”, and added: “We’re not going to set a ceiling. I’d like it to be 25, 50, 100 — but you’ve got to start somewhere, because the market has got to have something to work to.”

He refused to spell out the costs of providing such a service, but industry experts say that it would amount to tens of millions of pounds levied on BT, Virgin Media and other internet providers; charges that will indirectly fall on consumers. Some taxpayer funds may also be required.

Digital Britain also spelled out a series of measures aimed at unlocking fourth generation mobile internet services, about as fast as the quickest existing fixed-line connections. The Carter plan envisages that people will be able to switch seamlessly between fast-fixed and mobile connections, but their development has been held up by a legal dispute between Ofcom, the communications regulator, and the key providers, T-Mobile and O2.