There is no doubt that the UK’s digital infrastructure needs an upgrade. In South Korea, 99% of premises have full-fibre broadband internet. In Japan, it’s 97%. In Portugal, 89%; in Spain, 71%. The number here is 7%. This paucity of coverage – especially in rural areas – is why Boris Johnson made connecting every home in the country to full-fibre a central promise in his Tory leadership campaign.
Now Labour has upped the ante, pledging to provide free full-fibre internet access – in other words, ultra-fast and reliable broadband using fibreoptic cables – to every home and business by 2030. The intervention is striking, even though all parties are committed to radically upgrading the UK’s digital infrastructure. The big question is how it will be done – by whom and who will benefit. What Labour has promised therefore, is more than just better broadband for everyone; it is democratic ownership of a vital utility, with basic services run for the public good and not for profit.
The prize of success is great: nationwide full-fibre is estimated to provide a potential boost to productivity worth an estimated £59bn. But digital infrastructure does far more than just allow us to access the internet on our phones or computers, or support thriving businesses. It is the backbone upon which a growing number of essential services depend – including public wifi, “smart” energy grids and electric vehicle charging. But this is just the start: the democratic planning and coordination required to transition to a green economy depends on 21st-century digital infrastructure; it must be sustainable, decentralised, innovative and democratic, preserving our rights and enhancing our privacy.
The challenge is how we can collectively achieve these goals.
It may sound technical and abstract, but the digital divide is all too human: children not able to do their homework because they can’t get online, adults unable to connect to vital services such as banking, older people feeling disconnected and isolated. Currently, the UK’s core digital infrastructure and the development of the networks of the future – full-fibre and 5G – are in the hands of a set of private providers owned by for-profit investors. It is these actors who are currently responsible for delivering – or failing to deliver – the government’s key goals relating to digital connectivity and infrastructure.
Free full-fibre broadband would transform internet access into a human right
Yet these private firms are poorly equipped to build a world-class, universal digital infrastructure. The construction of fibreoptic networks is characterised by high fixed costs and economies of scales that make their deployment unprofitable in rural or poorer areas. The sector now exhibits the classic symptoms of market failure: cherry-picking, under-provision and damaging short-termism. Indeed, the government’s own Future Telecoms Infrastructure Review concluded that without government intervention, commercial markets would – at best – reach only 75% of the UK, and take more than 20 years to do so.
Delivering universal full-fibre will require decisive action. Labour’s remedy is the creation of a new public entity, British Broadband, with a mission to connect the country. Nationalising Openreach – the digital network operator that is legally a separate company, but wholly owned by BT Group – is its plan to accelerate the roll-out of full-fibre and reduce its cost. The party has estimated the cost of capital investment to deliver full-fibre broadband at £15.3bn – on top of the £5bn that has already been earmarked by the government for broadband expansion.
These costings are based on analysis from the Future Telecom Infrastructure Review. The investment in building the network would be funded from Labour’s green transformation fund – a fund proposed by the party to invest £250bn over 10 years to drive a transition to a sustainable economy. The annual cost of network maintenance, estimated by the National Infrastructure Commission to be about £230m a year, will be paid for by a tax on tech multinationals.
While the numbers are bound to provoke debate, it is worth noting the government’s commissioned research has suggested a monopoly infrastructure provider would deliver 100% full-fibre coverage and support nationally uniform prices – with a deployment cost of £20.3bn, which is much lower than achieving the same outcome through competition between private firms, estimated to be £32.3bn.
At the same time, Openreach has prioritised paying large dividends to shareholders over investing in the country’s digital infrastructure – consistently offering 15% return on equity to investors. It’s a striking example of how shareholder capitalism enriches the 1% at the expense of services for the rest of the population: 22% of total dividend income in the UK flows to the top 1%. Given this, Openreach’s monopoly position and its poor record on delivery, it is surprising that Labour has taken this long to extend its public ownership agenda to digital infrastructure.
The biggest benefits of free full-fibre broadband would be for Britain’s most vulnerable people: as it stands, only 47% of those living on a low income use broadband internet at home and one in five people in the UK are not digitally literate. Given mobile and broadband now make up a significant proportion of household expenditure it is likely to prove a popular but controversial pledge. There will also no doubt be significant and important debate on potential trade-offs, the effect on the government’s balance sheet, and what services should be funded through taxation.
Fundamentally though, free full-fibre would transform internet access into a human right, recognising it is foundational to our ability to lead the good life in the digital age. With this announcement, the UK’s digital infrastructure is likely to take centre stage in the election. It echoes the ambitions of the NHS and the universal basic services agenda: removing the fundamental building blocks of modern life from the market, and making them free, high quality and available to all.
• Mathew Lawrence is director of the thinktank Common Wealth