As the general election draws nearer, the UK’s Labour Party has outlined plans to “deliver fast and free full fibre-broadband for all”, via the nationalisation of parts of BT (BT.A). It has its sights on elements of the business including Openreach, which operates the wholesale network that connects UK homes and businesses.
Labour estimates that such a move could save the average person £30.30 a month. Moreover, only 8-10 per cent of UK premises are connected to full-fibre broadband, compared with 97 per cent in Japan, and 98 per cent in South Korea. It also cites findings from the Centre for Economics and Business Research, noting that a full-fibre broadband network could enhance productivity by £59bn by 2025, bring 0.5m people back into work and support rural economies.
But free internet comes at a cost. Labour reckons that there will be a one-off capital outlay of £15.3bn to roll-out the network, on top of the government’s existing £5bn pledge. This will be paid for by the party’s mooted Green Transformation Fund. Labour says that full-fibre would be relatively cheap to run once rolled out, requiring an injection of around £230m a year. This would be covered by tax on multinationals such as Facebook (US:FB).
These figures haven’t gone unchallenged. BT’s chief executive, Philip Jansen, told BBC Radio 4 that Labour’s plans could cost closer to £100bn. Still, while BT’s shares dropped by around 4 per cent the morning after Labour’s pledge (which was delivered late on 14 November), they closed the day down by just 1 per cent. A sign, perhaps, that the market doesn’t expect free broadband to come to fruition.
A BT spokesperson said: “It should be a top political priority to super-charge the roll-out of full fibre broadband and 5G right across the UK so we can build the digital economy of the future. Whatever the result of the election, we’d encourage the next government to work with all parts of the industry to achieve that. It’s a national mission that’s bigger than any one company.”
