Top Story

Will Labour halt fibre investment with Openreach nationalisation?

Labour has revealed a key policy ahead of the UK general election coming up which will see the party move to nationalise Openreach to offer free broadband to consumers and businesses.

The core policy will see Labour buy broadband using public funds, however Labour will decide the price which could be bad news for BT. Under the plans Labour will deliver free full-fibre broadband to all individuals and businesses by 2030. They 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.

The money to build out networks will come from Labour’s Green Transformation Fund, with maintenance costs being passed to multinationals through closing tax holes.

“It’s time to make the very fastest full-fibre broadband free to everybody, in every home in every corner of our country,” said Jeremy Corbyn, leader of the Labour party. “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.”

Below is some of the market reaction.

Lloyd Felton, chief executive of County Broadband commented, “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.”

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.”

Dave Weinstein, CSO at Claroty comments; “Whether broadband is nationalised or remains private in the UK, the fundamental security issues reside with the underlying infrastructure itself. It has been well documented that infrastructure manufactured by Huawei and ZTE, for example, comes with certain security risks. But nationalising broadband would require significant upgrades to the existing infrastructure, which is predominantly running on copper versus fiber. Upgrades of this scale always present supply chain risks, but introducing new technology could markedly enhance the security of country’s networks. If the plan eventually expands beyond BT, it would be important to set universal security standards across the board. Of course privacy is also a consideration whenever a country nationalises communication infrastructure on this scale.”

Country Land and Business Association (CLA) President Mark Bridgeman 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.”

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.”

“There is no denying that the UK is far from a leader in full-fibre broadband, but the market is really starting to move as Openreach’s rollout plans are complemented by a long list of alternative / competitive network providers – Virgin, Talk Talk, CityFibre, Hyperoptic, and many more,” said Phil Kendall, Analyst at Strategy Analytics.

“A survey of The Independent Networks Cooperative Association (INCA) members showed an aspiration to pass 16 million premises with fibre by 2025. If there is a role for government in this it would be to support pushing broadband coverage out to all communities, so the areas that the private market will struggle to cover profitably, not torching the whole sector.

“If nationalizing Openreach doesn’t kill off some or all of those competing providers or wholesalers then offering free fibre broadband to everyone definitely will. For the average voter, there are good optics on this – free broadband, like free Wi-Fi or free roaming, is a nice populist idea and getting the evil webscale giants to pay for it is perfect. But this is a hugely destructive attempt to fix a sector that isn’t anywhere near as broken as Labour seems to think.”

Ofcom and BT are yet to release a statement.

To deliver this we will adopt a public mission to roll-out the remaining 90-92% of full-fibre across the country, as well as acquiring the necessary access rights to the existing 8-10% of full-fibre assets.

Ofcom isn’t commenting and Openreach is leaving it to BT. We understand that there is an unprecedented exchange of views taking place within the UK telecoms industry, however, and look forward to the outcome of that. We also asked a few industry experts what they thought of Labour’s plans.

The following two tabs change content below.

David Dungay

Editor - Comms Business Magazine