Britain is in the slow lane when it comes to the internet. Fewer than one in 12 premises in Britain have access to full-fibre connections capable of delivering speeds greater than 1 gigabit per second. By comparison in Spain more than 70% can connect via such networks. In South Korea the figure is close to 100%. So Jeremy Corbyn’s promise to give every home and business in the UK free full-fibre broadband by 2030 is canny retail politics. Free stuff is popular. Labour’s offer contrasts with Boris Johnson’s decision to quietly shelve his plan to deliver an equivalent paid-for service by 2025. Labour says it will nationalise the infrastructure division of BT, Openreach, and do deals with Virgin Media among others to ensure the high-speed internet rollout plan is not bungled. It is clear the Labour party is betting that Britain is ready for a radically new approach to capitalism.
Mr Corbyn gauges that his economic ideas are ones whose time has come. Almost no one in Britain is entirely happy with the broadband service they receive. Slow connections are a source of frustration, offering sluggish Netflix streams and slurred Skype calls. The private sector is reluctant to bridge the “digital divide” without state support. In September the government offered firms £5bn to wire up rural areas but questions remain about whether and how the funds will see the light of day. With more people using data-intensive streaming services and smart devices, the appetite for data will grow. It already is. Last year the average household used 240 gigabytes of data a month, up 26% on the previous year. Access to information and connectivity is central to a fair society.
We must wean ourselves off the idea that corporations ought to work only to maximise their stock prices. That approach has been failing Britain in terms of infrastructure like broadband – which requires a broader, more social view. Some argue that Britain lost a chance to have emulated Japan and Korea’s success in 1990 when Margaret Thatcher killed off the UK’s fibre-optic rollout by BT because it was a monopoly provider. She thought competition was necessary to spur investment. History suggests otherwise. Today the same thinking prevails, with ministers claiming private funds should deliver “full-fibre speeds” to 90% of UK premises, with the other 10% requiring public cash.
Labour’s plan, rooted in a government analysis last year, instead contends the state would provide at least two-thirds of the high-speed connections. It would be funded by debt and by taxing internet giants that depend on download speeds – which is not a bad idea. Other experts suggest Labour ought to offer a free “basic superfast access” service and let “British Broadband” build the high-speed network which others could piggyback on to offer more commercial services. All of this depends on Labour winning a parliamentary majority. Even then there may be insuperable obstacles.
The party insists that in any nationalisation, parliament will decide the appropriate price to pay shareholders. If investors thought they were shortchanged, that issue might end up in court. The central question is not whether Das Kapital could replace private capital, but whether and to what extent it should. It is about what might work better for the public as both consumer and taxpayer. Could a state-owned industry supply quality services as efficiently as the private sector? BT Openreach is a natural monopoly – with high initial fixed costs and low marginal costs – in private hands. Public infrastructure generates social returns and as public purpose is not a commercial concept, it feels right to consider other ways of doing things.