https://www.ispreview.co.uk/index.php/2019/11/2020-labour-party-pegs-20bn-to-deploy-free-full-fibre-for-all.html

ISP Review

Mark Jackson

The UK Labour Party has set out their broadband pledge for the General Election on 12th December 2019, which includes a commitment to invest £20.3bn into rolling out “full fibre” (FTTP) by 2030, nationalising Openreach (BT) into public ownership and if that wasn’t quite radical enough then access to this will be.. FREE.

One of the big curiosities of this election is whether or not Boris Johnson’s (PM) opponents might try to best his already seemingly optimistic targets for complete coverage of “gigabit-capable broadband” by the end of 2025 (here), which at present involves spending £5bn to help those in the final 20% of hardest to reach premises.

Admittedly such competition between parties is to be welcomed, although on the other hand we don’t particularly want to see it being boiled down to rival parties making increasingly flaky promises. One catch here is that the current Government has yet to set out the detail of their plan (i.e. leaving plenty of wriggle room for flexibility on delivery during the GE debate) and rival political parties will no doubt be similarly vague, unless elected.

NOTE: Readers should always take any political pledges, from any party, with a pinch of salt until there’s more solid detail (something manifestos always lack).

The first opposition party to reveal their broadband policy this week has been Labour and, as above, they’ve clearly taken the more radical approach.

Jeremy Corbyn, Leader of the Labour Party, said:

“A new public service delivering the fastest broadband free to everyone is at the heart of Labour’s plans to transform the future of our economy and society.

The internet has become such a central part of our lives. It opens up opportunities for work, creativity, entertainment and friendship. What was once a luxury is now an essential utility.

That’s why full-fibre broadband must be a public service, bringing communities together, with equal access, in an inclusive and connected society.

It’s time to make the very fastest full-fibre broadband free to everybody, in every home in every corner of our country. Making it free and available to all will open up opportunities for everybody, at the cutting edge of social and economic change.

By creating British Broadband as a public service, we will lead the world in using public investment to transform our country, reduce people’s monthly bills, boost our economy and improve people’s quality of life.”

We’ll tackle the arguably easier points first. On funding there will no doubt be a wider debate about the question of how much is needed (some say £30-£35bn, others say £20bn etc.) and where the money will come from. At the end of the day Labour are promising to commit £15bn more to the effort than the £5bn that the current Government has already promised, which will be seen by many as a positive.

Indeed in a normal climate £20bn, assuming some match-funding from the private sector and local authorities (i.e. councils that could afford to do so and there aren’t many with money left to spare now), might actually be enough – more or less – to finish the job. Apparently all of this will be paid for through Labour’s Green Transformation Fund and the cost of maintaining the network will come from taxing multinational corporations such as Amazon, Facebook and Google.

Labour also appear to be opting for the same outside-in approach as the current government. “The roll out will begin with communities that have the worst broadband access, including rural and remote communities and some inner city areas, followed by towns and smaller centres, and then by areas that are currently well-served by superfast or ultrafast broadband,” said the party. Overbuilding existing ultrafast networks in urban areas with public money will require more flexibility in EU state aid rules, which may well depend upon the outcome of Brexit.

Meanwhile the idea of nationalising Openreach (BT) under public ownership is a much more complicated issue (i.e. its impact upon pensions, the question of who takes on BT’s massive debt pile (the public?), shareholders, competition etc.) and one that is likely to result in plenty of legal challenges (this could hamper the fibre rollout until settled). Not to mention a lengthy debate over whether that by itself would result in a better market.

Labour’s Nationalisation Plan

This will be formed by bringing broadband-relevant parts of BT into public ownership: Openreach (which runs much of the existing digital network), parts of BT Technology (which oversees the backhaul network), BT Enterprise (which retails broadband to business) and BT Consumer (which retails broadband to individuals). EE, Plusnet, BT Global Services, BT TV and non-broadband-relevant parts of BT will not be brought into public ownership.

All current workers in broadband infrastructure and broadband retail services will be guaranteed jobs in the new public entity and be guaranteed the same or better terms and conditions.

On an ordinary day nationalisation alone might require a much longer examination but it would clearly be necessary in order to deliver on Labour’s next, and easily most controversial, pledge. “We will integrate the broadband-relevant parts of BT into a new public entity, British Broadband, with a mission to connect the country. Labour will aim to deliver free full-fibre broadband to at least 15-18 million premises within five years,” said the party.

The new entity, British Broadband, will have two arms: British Digital Infrastructure (BDI), which will roll-out the public network, and the UK ISP British Broadband Service (BBS), which will deliver free broadband.

Free Full Fibre for All

Clearly promising a nation that their broadband access will in future become free is going to be popular with some sections of society, although it might have made at least a little more sense had they only promised a free “basic broadband” (2Mbps) connection for all, but instead they made the pledge for full fibre.

At this stage there isn’t a lot of detail but the logical conclusion of this would be the near total destruction of the current competitive market, including all ISPs on Openreach’s network and alternative networks – both large and small alike. Since after all, what operator could reasonably ever be expected to compete against a completely free full fibre rival. Not to mention the huge on-going costs of upkeep, support, capacity supplies and maintenance.

By that same stroke Labour may risk causing investor fright as sources of private investment take flight to the hills, which in turn could have a significant knock-on impact upon the on-going rollout (if the source of funding for all that were to suddenly dry up then it may take a lot longer than 2030 to complete) and the fact that this might actually push the total cost of delivery upwards (i.e. placing it entirely upon taxpayers shoulders).

Admittedly this election is about much more than broadband (Brexit is the dominant topic) and as such issues of internet connectivity will inevitably be significant less important to voters this time around than in previous such events. On the other hand a pledge like this is sure to make plenty of headlines and will open the door to lots of discussion.

Finally, Labour has also pledged a new Charter of Digital Rights, which they say will be “the strongest protection of data and online rights ever enacted.” As ever there isn’t much detail and so very little to judge, but this charter sets out to do the following.

Labour’s Charter of Digital Rights

* Powers for individuals and collectives to challenge algorithmic injustice (where online algorithms cause disproportionate harms to particular groups);

* Powers for individuals and collectives to prevent the use of digital infrastructure for surveillance;

* Rights for individuals to protect access to and ownership of their data.

What do you think of Labours’ broadband policy?

  • I don’t like it (67%, 348 Votes)
  • I like it (24%, 125 Votes)
  • I’m undecided (9%, 49 Votes)

Total Voters: 522

UPDATE 9:14am

The CWU has given it’s support to Labour’s policy.

Dave Ward, General Secretary of the Communication Workers Union, said:

“After years of neglect the UK lags way behind on full-fibre coverage with just 8% of premises connected, compared to more than 98% in countries like Japan and South Korea.

While the Tories have failed to invest, Labour would build a network for the future and ensure every part of the country shares in the benefits of the digital revolution.

The announcement demonstrates the scale of ambition of a Labour government to connect the whole of the UK with full-fibre broadband in just a decade.

It’s underpinned by a robust plan for investment, good jobs and for rolling out the network to millions of homes across the country at pace.

It will revolutionise the industry with one of the most significant infrastructure programmes we have ever seen and shows what is possible with a proactive industrial strategy.

Labour’s plan to build the broadband network for the future will create thousands of good jobs across the UK.

Rolling out full fibre will require thousands of engineers and will only be delivered with a co-ordinated plan to ensure we have the skills, technology, resources and investment in place.

Labour is setting this out today and it is good news for the industry, public and workers.”

We’ve also had the first comments in from an ISP and unsurprisingly, given that they might not exist under this approach, they’re none too happy.

Evan Wienburg, Truespeed CEO, said:

“This country’s robust and competitive telecoms industry is already working hard to deliver full fibre for all, using a mix of public and private money. Rather than upset the apple cart, we urge whoever is in government to be careful about how they use public money to effect this change and to support the myriad of infrastructure providers that are working tirelessly up and down the country to deliver this game-changing infrastructure to every post code.”

Julian David, techUK’s CEO, said:

“These proposals would be a disaster for the telecoms sector and the customers that it serves. Renationalisation would immediately halt the investment being driven not just by BT but the growing number of new and innovative companies that compete with BT. Full Fibre and 5G are the underpinning technologies of our future digital economy and society.

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.

The telecoms sector has delivered increased coverage, capacity and quality whilst household spend on telecoms services has remained flat. Put simply, it is delivering for consumers and UK PLC. Labour’s plans are fundamentally misguided and need to be dramatically altered if they are to deliver the infrastructure we all need.”

UPDATE 9:36am

We’re expecting a lot of comments from ISPs on this one and here comes BT (response is via BT Group = both BT and Openreach etc.).

A BT Group 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.”

UPDATE 10:09am

Some more reaction from ISPs.

Martin Pitt, MD of UK ISP Aquiss, said:

“As a collective industry, driven by competition, we are already working to deliver full-fibre to all parts of the UK; with many rural communities already enjoying these benefits. Labour’s announced proposals are ill conceived, completely out of tune with reality, slicing and dicing an advanced vibrant industry that will set the delivery of full-fibre back even further. Any sensible Government should be working with an industry, not looking to be on full collision course with it.”

Adrian Kennard, MD of Andrews & Arnold (AAISP), said:

“It makes very little sense, to be honest. I can’t believe they consulted with anyone in the industry over this proposal.

It is almost certainly not actually practical. It would be hugely damaging to the ISP industry as a whole, though does open up interesting options for selling indirect “internet” access (we already sell quite a lot of indirect unfiltered IPv4 and IPv6 L2TP internet accessed via other ISPs, surprisingly!).

Splitting BT up to nationalise some of it would also be a huge challenge – OFCOM have been working on that for a while! There are almost certainly many ways that far less money could be spent in a more effective way to improve internet access (including scrapping “fibre tax”).”

UPDATE 11:26am

Yet more reactions from the industry, although unlike some others Virgin Media has opted to avoid confrontation with the policy.

A Virgin Media Spokesperson said:

“Virgin Media has the fastest scaled network in the UK and has pledged to bring next-generation Gigabit broadband to half of the UK, by the end of 2021. As this commitment shows, private investment is essential to delivering improved broadband infrastructure.

With billions of pounds worth of private money invested in the UK, Virgin Media continues to expand its network, providing competition and choice to consumers. Government policy has a role to play and can help to accelerate broadband deployment in a way that minimises the level of public subsidy needed and provides the UK and consumers with incredible connectivity within a competitive market.”

Andrew Glover, UK ISPA Chair, commented:

“Labour’s plan exposes a fundamental misunderstanding of how broadband is delivered in the UK.

Labour has identified some challenges relating to broadband infrastructure, but has wildly underestimated the costs involved. This proposal would also undermine the huge private investment and existing work already in motion to deliver nationwide access to gigabit broadband.

More importantly, this proposal not only jeopardises the 600+ companies that use Openreach infrastructure but also those investing in alternative and competing networks to provide the services and connectivity that businesses and consumers throughout the country rely on. Our members range from small regional ISPs to household names with thousands of employees and it is extremely worrying that Labour has given no consideration to how their plans would affect them.”

UPDATE: 12:02pm

Lloyd Felton, CEO of County Broadband, said:

“Today’s announcement highlights the importance of full fibre access for all. However, it also shows an alarming lack of understanding about the complex nature of full fibre rollouts and the fact that, unlike by comparison the rail industry that operates rail franchises, the industry has already invested billions of pounds in building its own infrastructure over which the service is delivered, in direct competition to BT.

This proposal would almost certainly lead to delays, or at worst, derailment of existing full fibre investment and new network rollouts. It is a broad-brush, and makes no mention of how customers would be served and supported and provides no recognition for what has been achieved by the many Alternative Network providers who are currently active in providing a competitive full fibre solution.

The competitive nature of the current market in the UK has meant consumers already benefit from one of the lowest cost broadband services in Europe. Broadband is an essential utility and whilst we share the ambition to bring future-ready full fibre connectivity to every home and business, we believe a mix of public and private investment is the only realistic strategy to deliver the service efficiently, without the need to bring significant cost to the public purse.”

UPDATE 12:15pm

Mark Bridgeman, Country Land and Business Association (CLA) President, said:

“The rural economy is 16% less productive than the national average – in part because of poor broadband in huge swathes of the country. Closing that productivity gap could be worth up to £43bn for UK PLC.

So we welcome the political focus on broadband from all parties which shows we are finally seeing some ambition to become a world class fully connected digital nation, tackling the digital divide between rural and urban areas – with all the economic and social benefits that brings.

Of course everyone likes things for free. But it is not clear how nationalisation will speed up the delivery of full broadband for everyone in the country. Under these plans, investment will collapse straight after the election and it will not begin again until the Government is able to complete the nationalisation process. This could take many years and actually slow down progress, not speed it up.”

UPDATE 6:11pm

Malcolm Corbett, INCA CEO, said:

“For the UK to become a world leader in full fibre and 5G, it needs to provide access for all, wherever people live or work and we are pleased to see the commitment Labour has shown to this through its latest pledge.

It is crucial, however, that how broadband is funded, rolled-out and provided is considered, along with the wider impact the plan could have. The UK’s broadband market is currently thriving as a result of infrastructure investors and local communities, alongside the public sector.

£3.3bn was committed by investors in alternative network providers (altnets) last year alone, in addition to investments by BT and Virgin Media. This has led to the deployment of Gold Standard world-class networks in cities and towns across the country, including in previously underserved rural areas, growing from a very low base of about 1% of premises to around 10% today. Accelerating the pace is important and all parts of the industry are working to do that.

While we welcome Labour’s focus, we are concerned that some parts of the policy, for example, nationalisation, will dampen the vibrant market for investment in new fibre networks in the short term, thus delaying fibre roll-out. Free broadband is an attractive consumer proposition but will be costly, could undermine innovation and consumer choice, as well as having a detrimental effect on the service provider sector.”