broadband: £12 billion cheaper in public hands
Broadband is crucial 21st century public infrastructure
The Labour Party has announced it will nationalise Openreach and parts of BT to provide free full fibre broadband to every home and business in the UK.
Broadband is crucial 21st century public infrastructure, just like roads, railways, water and energy networks. Just as we developed water networks in the 19th century and the NHS in the 20th century, quick access to the internet is something we all need today.
Right now only 8% per cent of UK premises have full-fibre connections. Only 47% of low income households use broadband internet at home. That means teenagers struggling to do their homework. It means older people feeling isolated and alone. It means rural start ups struggling to get off the ground.
The old fashioned ideology of privatisation is slowing us down
Boris Johnson says he wants to improve internet speeds, but he wants to rely on multinational companies like Virgin to deliver this. They will cherry pick what they can offer to maximise profits for shareholders and demand huge government subsidies to cover rural areas. (Just like rail and bus companies cherry pick the profitable routes in busy areas - and have to be paid vast sums to provide extra services to rural areas.)
Since privatisation in 1984, BT has paid out some £54bn in dividends (in today's values). That's enough to pay capital costs for a nationwide fibre network *twice over*.
The government’s own research shows that the cost of rolling out full fibre broadband is £20bn with one infrastructure provider. If we leave it to the market and involve several providers, it's £32 billion. So it's £12 billion cheaper to deliver broadband to everyone with the public sector. This means making a plan, delivering it directly and benefitting from economies of scale. And it will deliver £59 billion in productivity gains across the economy.
The government’s own Future Telecoms Infrastructure Review found that without government intervention, commercial markets would reach only 75% coverage and take 20 years to get there! This is compared to countries like South Korea and Japan which already have 98% or more full fibre coverage.
Research has shown that bringing broadband into public ownership would save £500 million a year - enough to pay for full fibre broadband for 6 million households.
We were world leading - before Margaret Thatcher
We haven’t always been so behind. Back in the 1980's, the UK led the world in terms of broadband development, along with US and Japan. But in 1984 Thatcher privatised BT and in 1990, she decided that private competitors needed to be allowed to compete in the market. BT’s factories were sold off to foreign corporations, and the assets and expertise transferred out of the country.
“Unfortunately, the Thatcher government decided that it wanted the American cable companies providing the same service to increase competition. So the decision was made to close down the local loop roll out and in 1991 that roll out was stopped.
The two factories that BT had built to build fibre related components were sold to Fujitsu and HP, the assets were stripped and the expertise was shipped out to South East Asia.
Our colleagues in Korea and Japan, who were working with quite closely at the time, stood back and looked at what happened to us in amazement. What was pivotal was that they carried on with their respective fibre rollouts. And, well, the rest is history as they say.
The US also decided to embrace the market and the big telecom companies have failed to deliver for vast swathes of rural and poor areas. But today they’re showing us what’s possible. 500 local, publicly owned broadband networks have now been created in the US, which are saving small businesses, creating jobs, cutting costs and boosting the local economy.
British Broadband can be an excellent publicly owned organisation, following in the footsteps of the BBC and the NHS, and delivering the essential infrastructure we need for the 21st century.