In one of the boldest moves in the upcoming UK election so far, the Labour Party is promising free, full-fibre broadband for all –something it plans to achieve by renationalising parts of BT and taxing tech giants like Google and Facebook.
Labour is promising free full-fibre broadband to at least 15-18 million homes and businesses within five years, and to all by 2030. It will do this by renationalising BT’s broadband business. That includes BT’s Openreach, plus parts of BT Technology, BT Enterprise, and BT Consumer.
Rolling out the network will cost around $15 billion, Labour said (plus the cost of nationalisation).The £230 million a year cost of maintaining the network will be met through a tax on multinationals including tech giants like Google and Facebook.
Labour points out that only 8-10% of homes and businesses in the UK are connected to full-fibre broadband, compared to 97% in Japan and 98% in South Korea. It quotes research by the Centre for Economics and Business Research which said a full-fibre broadband network could boost productivity by £59 billion by 2025, bring half a million people back into the workforce, and boost rural economies by allowing more people to move into rural areas and still work.
The Conservatives have so far offered £5 billion for full fibre, so Labour’s plan is very bold.
Problems and opportunities
There are plenty of good reasons why nationalising a chunk of BT will be problematic. It’s unclear what the impact would be on competition in the broadband space. There’s the potential impact on companies already offering alternatives to fibre broadband, like Fixed Wireless Access and satellite, and on companies that have already stepped in to provide fibre broadband where BT has been too slow-moving.
Julian David, CEO of tech industry group techUK, said the plan would be a “disaster” for the telecoms sector because it would lead to an immediate halt on investment by companies that compete with BT.
“The majority of the estimated £30bn cost for Full Fibre is being borne by the private sector. Renationalisation would put this cost back onto the taxpayer, no doubt after years of legal wrangling, wasting precious time when we can least afford it. These proposals would be a huge setback for the UK’s digital economy, which is a huge driver for growth,” he said.
BT itself has said that the full cost of the proposals could be as high as £100 billion.
As well as the cost, there is a big question mark over whether a state-run organisation can be anywhere near as efficient and effective at delivering this service. How successfully will such an organisation respond to changes in technology? Similar projects elsewhere have struggled, although it’s also fair to say that government attempts to inject competition into the telecoms market through the old cable companies didn’t work either.
And do you really want the government to be your ISP? Would we be ushering in an even tighter surveillance state than we have today? Would this make it easier for any future government to control our access to the internet, or even cut it off?
Of course, free at the point of use doesn’t mean we don’t pay for it: we’ll likely end up paying through general taxation, just like we do for the NHS. That could mean tricky trade-offs down the line. Which should the government pay for — more teachers and doctors, or faster broadband for you to watch Netflix?
However, there is a more positive story here, too.
Giving everyone free access to the fastest broadband would acknowledge that access to the internet is now a fundamental public good — a basic requirement of living in a modern information society.
It puts fast internet access alongside roads and streetlights — as something that we ought to provide to everyone, whether they live in the middle of a city or a village in the countryside.
It would acknowledge that giving more people access to the fastest broadband is good not just for them, but to our society as a whole. It says that being a full part of our society means being able to interact online.
Making fast broadband free is also important, because it removes another barrier to internet access for people on lower incomes. Free means that those, like the elderly, who may not have wanted to experiment with the internet will now feel more comfortable doing so.
Free will also encourage the mass take-up that will make the rollout worthwhile — there’s little point in forcing a rapid roll-out of a technology that doesn’t get used.
It’s also worth noting that broadband is hardly a perfectly functioning economic market anyway: plenty of government money has already been poured into getting broadband delivered in areas where private companies don’t see a return.
But it’s easy to see how the fastest broadband everywhere could have a real and immediate payback for the country. Labour points to 300 million fewer commuting trips, three billion fewer kilometres travelled by car, and a reduction of 360,000 tonnes in carbon dioxide emissions.
Digital transformation, for free
There’s also the wider digital transformation opportunity. In the healthcare sector, for example, you might able to have a video appointment with your doctor (quicker for them, quicker for you), or be able to stay in your home longer because doctors can monitor your health remotely.
Replicated across the public sector, innovations enabled by quicker, ubiquitous and free broadband could save billions and make life better for many people. For those innovations to work, everyone — particularly those who consume many public services, such as the elderly and those on low incomes — needs to be online.
The details of Labour’s plan may well prove unworkable. There’s also the small hurdle of winning an election in which Labour is currently trailing in the polls. But the idea that everyone should have free access to the fastest broadband as soon as possible is one that deserves to be considered, whoever wins.