Name: What Labour's broadband giveaway means for the telecoms sector | FT
Uploaded: 2020-03-07T16:00:18.000Z
Duration: 3 min 33 s
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The UK Labour party has ambushed the telecoms sector.

and offer free broadband for all by 2030.

The move has played well in an election weighed down

by Brexit, but it has caused panic in the telecoms industry.

What are the implications of this radical move,

and do companies have a future if a government-owned telecoms

company gives away the industry's main product -

Boris Johnson has promised to connect every home

to a full-fibre line by 2025, driven by a £5bn subsidy

Jeremy Corbyn has gone much further, with a plan

effectively an infrastructure asset, in house.

A Labour government will make broadband free for everybody.

It sounds radical, but many telecoms companies

It could be argued that Labour is stealing a march

on the pension funds and private equity companies that would no

doubt pounce on Openreach if a split happened.

The UK's position in the international full-fibre league

A paltry 8 per cent of homes and businesses

In Japan and Singapore, it's almost universal.

And in Spain and Portugal, the ratio is over 70 per cent.

in the space of two years and will speed up

Virgin Media is also set to upgrade its network

But millions suffer patchy or poor services.

And the question is whether to stimulate the market with more

subsidy, or would a government-owned network

One issue is what it'll cost the taxpayer.

John McDonnell has set a price of £20bn to roll out fibre,

on top of the billions needed to buy Openreach out of BT.

This plan has been derided by the industry.

The National Infrastructure Commission says it'll cost

And BT has argued that the cost could be much higher than that,

The cost of running the network has also been highlighted.

Labour says it'll generate cash from taxing multinationals

and has allocated around £234m a year to run Openreach,

despite Openreach's current cost base being 10 times higher than

The real controversy in the Labour plan is, however,

The UK is one of the most vibrant telecoms markets

in the world, and giving away the product for free will wipe

out many companies and pose huge questions for the future

with billions already spent on fibre networks to compete with

Work and funding on new fibre lines across the sector

screeched to a halt after Labour's announcement.

like an appealing concept, perhaps even a vote winner,

Back in 2009, Australia's Labour government drew up a plan

to fibre up the country on the back of a beer mat on a plane.

The NBN was born, as politicians dreamed of a Down

But the plan ran aground as costs ballooned,

and full fibre became part fibre to save money.

NBN is now almost complete, with more than A$50bn of government

But speeds are still yet to pass those of the slowcoach UK.

The arguments about the benefits of radical government

intervention are broadly similar to those made in Australia

But sometimes you've got to be careful what you wish for.