“Broadband communism” and the demand for free connectivity

What if the internet was free or heavily subsidised for all to use? As the cost-of-living crisis threatens some customers’ connectivity, could nationalised internet providers help those most in need, or be another drain on the public purse?

As the UK Government summoned bosses from the major telcos to Downing Street this week to discuss the cost-of-living crisis, affordability of connectivity is once again in the spotlight.

With telecoms bills continuing to rise, a recent survey by CommunityFibre found that 20% of British broadband customers say they cannot afford to be online, and 33% would prefer to cut back on fuel rather than connectivity to save money, as COVID-19 has increasingly recast internet service as a utility, not a luxury, particularly for low-income customers.

Certainly there’s a great deal of public support in the UK for renationalising utilities – if broadband is now considered a utility like gas and electricity, then why should it remain solely in private hands?

In fact, delegates at last year’s Labour Party conference reiterated a motion committing the party to a policy of “broadband communism”, nationalising BT’s Openreach broadband division and delivering free full-fibre broadband to the country by 2030.

This motion, first proposed during former Labour leader Jeremy Corbyn’s tenure, calls for “a new economic model that meets the needs of our communities and not just those of exploitative shareholders and external investors” and delivers “an irreversible shift in wealth and power to working people.”

Labour’s shadow chancellor at the time, John McDonnell, argued that “there are certain elements within our economy that are best in public hands and are best provided not for profit.”

The proposal calls for the formation of two new entities responsible for the national network: British Digital Infrastructure, responsible for maintenance of infrastructure, and the British Broadband Service, a nationalised ISP. In addition, the government would invest over £20 billion to bring national fibre coverage to 100%, paid for by taxes on internet giants like Amazon, Google and Meta.

This proposal resulted in a huge backlash from the industry – enough to temporarily halt TalkTalk’s sale of FibreNation to CityFibre – leading Labour’s new, more moderate leader, Keir Starmer, to scale back these ambitions. The Communication Workers Union (CWU) subsequently proposed a retaliatory motion to recommit the party to the policy.

Nevertheless, Ofcom’s report on Future Telecoms Infrastructure concludes that the “most effective way to deliver nationwide full fibre connectivity at pace is to promote competition and commercial investment where possible, and to intervene where necessary.”

A national fibre network was actually proposed back in the late 1970s, until Margaret Thatcher’s government privatised British Telecom in 1984 and blocked the full fibre rollout in 1990 to give new upstart service providers a chance to challenge the incumbent, and setting back connectivity in the UK to this very day.

Now, multiple companies are laying fibre to the same places in the most profitable locations, leading to inefficient duplication of the network, as rural and less densely populated areas struggle with little incentive for large operators to expand into these less economically viable areas.

According to the UK’s National Databank, a “food bank for data,” over seven million people across the country are unable to access mobile data or broadband at home. Vodafone has reported a rising demand for cheap connectivity from its partnership providing free SIM cards – with 20GB of data a month for six months and unlimited calls & texts – to those receiving support from Trussell Trust food banks. Already supporting 250,000 users, it aims to connect one million people “in digital exclusion.”

Similarly, Virgin Media O2 partnered with bakery chain Greggs to provide free SIM cards with 15GB of mobile data to struggling families through the latter’s Hardship Fund. The project is being trialled in Scotland, the North East, Midlands, and South East, with other regions potentially to follow.

Across the pond, AT&T and Verizon are among 20 American CSPs to commit to providing high-speed internet services to qualifying low-income households for under $30 per month, with federal Internet subsidies under the Affordable Connectivity Program (ACP) covering the remaining costs. The White House estimates that 48 million households could benefit, receiving free internet, in effect, yet experts warn that funds for this programme could run dry by 2025.

This connectivity inequality also extends to mobile devices, as a significant chunk of the cheapest handsets don’t support 5G. By going all in on mmWave, Verizon has been unable to source handsets at the cheaper end of the spectrum for its customers.

Despite this, notoriously anti-socialist America is home to a number of smaller public networks, providing high-speed, community-driven connectivity to a lucky cohort of users.

Down under, the National Broadband Network (NBN) is an Australian government initiative to provide a publicly-owned open-access broadband network on a wholesale basis to other retail service providers. However, the project hasn’t been a great success, with successive governments facing criticism for not being transparent about speeds and how they deal with customer complaints.

Meanwhile, New Zealand introduced a regional franchising model in 2011 to support FTTP deployment, with significant government support; in its first year, the number of homes and businesses connected to fibre grew by 250%, the fastest rate of any OECD country.

Denmark has gone one step further, with privately-owned OpenNet established as a national wholesale aggregator, providing access to multiple fibre networks through its dedicated wholesale platform. OpenNet works in partnership with the country’s major service providers and infrastructure owners to open up and grow the Danish fibre market.

As the old canard goes, privatisation encourages competition and innovation whilst nationalisation stifles competition and drives up prices, yet the UK has proven quite the opposite – privatisation has created an uneven fibre patchwork, based purely on the best potential return on investment. However, this would likely not stop critics of nationalisation from trotting out this old trope.

Proposals for a government-owned broadband network in the UK would undermine a great deal of the work already undertaken by providers to deliver gigabit broadband, bringing current large-scale infrastructure builds to a standstill, reducing consumer choice and putting jobs at risk. Nationalisation could improve rollout speeds and coverage, but can a future government justify the cost when so many other public services are begging for funding too?