In the end, there will be a price to free broadband

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November 18, 2019 by Paul Goldsmith

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Labour’s commitment to providing free broadband by 2030 may seem attractive on the surface. After all, who is going to turn down free broadband? But under the surface there are many concerns about the policy. Including whether it is actually a policy.

For years, John McDonnell as Shadow Chancellor has toured media organisations calmly allaying fears about Labour’s nationalisation programme by insisting that it was limited to the privatised utilities and that the initial cost of them would be recouped by profits over the years.

This could be argued to make sense. The water and rail companies are effectively private monopolies, so nationalising them stops money leaking away to shareholders. There is also duplication of costs such as HR and finance departments for different companies competing to offer gas and electricity (as well as the different rail and water franchises). So those could  be reduced if it was all run by the state. Even if charges fell, the organisation could still make profits.

Then, this week, Labour announced they would declare broadband a utility (needed by everyone) and then nationalise BT Openreach and provide free broadband to all homes in the UK by 2030. This is another thing altogether. If, at a cost approaching £100bn, you are going to nationalise an organisation, then not charge for it, you can’t possibly then argue that nationalisation will be funded by profits from the service you have provided in the future.

Labour claim this can be funded by taxing the sales of Google, Facebook and Amazon, once again picking a bogeyman orange to squeeze the pips of. Trouble is, those companies are so financially and legally footloose that they can move the receipt of money to any jurisdiction. Solving that problem is another level of legal nad regulatory complexity altogether, likely to only even start to be possible if Britain leaves the EU……

What’s more, it is important to think about what nationalising broadband means. Nationalised water means we still get water to our homes, and water is water, if you know what I mean. Gas is gas and electricity is electricity. I have never switched providers for gas and electricity because I wasn’t happy with the quality or speed of gas and electricity in my home. it was only price.

Broadband is different. If I am unhappy with my Virgin broadband speed and connection, I could change to BT, or Sky, or Plusnet. I have choice. If I am unhappy with my Labour Government provided broadband speed and connection…tough. No choice. The current broadband providers also compete on speed of service. They claim that if you want a new broadband line or to switch they can do it quicker than the others. One nationalised broadband provider and….well…in 1979 if you wanted a telephone line and a telephone you went to the post office and filled in a form and month later a black dial telephone might be installed.

Now, I live in London. I realise that if I lived in Cornwall a guarantee that I would have decent broadband speed, or even broadband at all would be very attractive. But why does it have to be free? If there is a nationalised broadband provider, why can’t charges from people like me be used to subsidise broadband provision for those who cannot access what I agree should be seen as a utility to which everyone has a right, like water and gas and electricity? It is the free bit that is so dangerous. The free bit makes me think this isn’t a policy, but an undeliverable bribe for votes. The kind of which only a party thinking it won’t get into government would make.

Talking of dangerous. Here’s another thought. If the Government controls the broadband service, it can shut it down if it wanted to. If the Government controls the broadband service, it can control what it is being used for. If the Government controls the broadband service, it can possibly see and read what people are seeing and reading and writing. You might want to think about that.

 

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