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Labour wants to nationalize broadband. Be careful what you wish for

Digital Politics is a column about the global intersection o..

Digital Politics is a column about the global intersection of technology and the world of politics.

LONDON — Is the British government about to become the worlds next big tech giant?

Thats definitely what the Labour Party has in mind after it announced plans to nationalize most of the countrys broadband industry, invest more than £20.3 billion to create a nationwide high-speed network and tax the likes of Google and Facebook to pay for its upkeep.

As if that were not enough, all Brits would then get free internet access.

The promise has certainly generated publicity for Labour, which is trailing in the polls ahead of a December election. But it has also prompted plenty of head-scratching about feasibility, with backers hailing the plan as a potential engine for growth, and detractors — including most of the tech industry — warning it would lead to “broadband communism.”

The truth lies somewhere in between.

New investment, and lots of it, is needed to bring the U.K. up to speed with its global competitors.

Labours radical plan to invest in the United Kingdoms internet infrastructure makes economic sense in at least one regard: Just like railroads in the 19th century, broadband networks have become a basic requirement for economic growth in the digital age. Its a determining factor in whether a country will be able to compete in an increasingly intense global competition for technological superiority, the digital Great Game.

From the outset, the U.K. political partys plans make economic sense.

Broadband investment across the 35 countries of the Organization for Economic Cooperation and Development led, on average, to a 0.3 percent annual boost to countries gross domestic product over the past 15 years, according to a report for Ofcom, the U.K.s telecommunications regulator. In Britain, the economic benefit was even stronger, with a cumulative increase of around 5.3 percent of GDP over the same period, as improved access to high-speed internet bolstered wealth creation online.

So Labours plan rests on a well-founded idea — that greater broadband usage, on average, leads to greater economic prosperity. And there is clearly room for improvement in the U.K.

Existing broadband penetration (based on the percentage of households that have access to such services) is higher in Britain than the European average. But the country lags behind many of its European Union neighbors, as well as Japan and South Korea.

Countries like Spain and Portugal have a penetration rate of over 70 percent for so-called “fiber-to-the-home” networks, the next generation of broadband networks that involve running internet cables directly to peoples homes, according to figures from IHS, the data provider.

In contrast, Britain has less than 5 percent of homes connected to such ultra-fast networks, which are increasingly important in the build-out of next generation mobile services known as 5G. (The U.K. broadband coverage rate is increasing rapidly, though, as telecom providers compete to keep up with growing demand.)

New investment, and lots of it, is needed to bring the U.K. up to speed with its global competitors. (Both the existing British government and local companies have already pledged billions of pounds.)

But Labours plan risks delivering a death blow to an industry that would otherwise be providing that investment. It also flies in the face of decades of experience in countries from Japan to the United States that have been successful in building out their high-speed digital infrastructure.

In the early 2000s, for instance, policymakers in Tokyo realized that a national broadband network was key to the countrys future economic prospects.

But instead of putting the project into the governments hands, Japanese lawmakers instead offered subsidies, tax incentives, and low-interest loans to existing broadband providers — a bonanza that triggered more than 200 privately-funded projects which, in turn, delivered high-speed broadband to some 30 million households in only a couple of years. Similarly in South Korea — where internet speeds routinely finish at the top of global rankings — officials relied on government incentives to private companies (including allowing the state telecoms monopoly to go public earlier than expected if it hit broadband rollout goals) to create a high-speed network that would make most Brits green with envy.

And the list goes on.

From Portugal to France to the United States, policymakers, often wary of relying on private companies to provide essential nationwide infrastructure, have leveraged the states Read More – Source


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