Broadband News

Labour proposes nationalising Openreach and free broadband for all - updated 16th November

Free broadband for all and it will be full fibre broadband too, and funded by a tax on the profits of multinational online companies that trade in the United Kingdom. 

This is what the Shadow Chancellor John McDonnell is proposing that Labour will do if elected in the General Election on December 12th.

The expectation is that an extra £15 billion will be committed to the roll-out of FTTP on top of the existing £5 billion from the current Conservative Government and in view of the large investment from the Government the Openreach arm of BT Group will be nationalised with shareholders compensated by Government bonds.

Free broadband for the country. I've been touring around the country for the last couple of years doing these town hall meetings where we're bringing people together to talk about their local economy. And apart from some parts of London and some of our major cities, everywhere I go, they're saying that we've either not got broadband AT THE SPEEDS that we need is holding our economy back, or it's actually impeding on people's social engagement as well. The government's come forward with a 5 billion pound investment, but actually it's nowhere near enough, so we're saying it's going to cost about 20 billion. We'll put the extra 15 billion in. We'll ensure that broadband reaches the whole the country. We'll start with the more difficult to reach areas first and then work through the smaller towns and then into the cities themselves only about 10 to 12% of the country has covered up at the moment. If you look at Japan, Korea, it's 97 99%. But the way that will do it is, if we're putting that scale of public money and taxpayers money in, we want to ensure actually we own it as well. And that means bringing parts of BT into public ownership Openreach in particular, rolling out the broadband programme, making sure that's free to people so that they, well they can participate in the way that they haven't in the past both economically and socially. And it will have environmental effects as well all the figures are telling us we can, we can grow the economy the prediction is about 59 billion pounds in terms of growth, increased productivity, but also a reduction in commuting where people work from home but also people say yes moving out of some of our cities as well to live in rural areas, so it will stimulate rural areas too. All of that is good to the economy but good the environment.

Extract from interview by BBC with John McDonnell

The £20 billion is probably about the right amount to get the UK from its current 10% full fibre coverage figure to full coverage, though if truly doing 100% of premises there will be those that cost many times the average cost and might push the amount needed beyond £20 billion. In terms of timescales Openreach has already been scaling up to hit its 4 million target and then if conditions are right carry on to 15 million premises for 2025, so in terms of pace it seems possible, but is still a significant ramp up in delivery volume of today.

The free element sounds extremely attractive, but there are ongoing costs with broadband networks such as repairing network faults from storm damage and connecting new buildings e.g. 200,000 new homes each year would use around £60 million of the £230 million running costs that Labour say experts have advised them to run the network. Or put another way the estimate of running a free broadband connection is around 50p per month. One hopes the experts have remembered to account for things like broadband hardware, running call centres etc

Though we have to ask will it really be free? Openreach currently does not provide an end to end service, their responsibility ends at one of 1,200 or so handover exchanges.

So the question to ask now is will the FTTP service actually be free for retail broadband providers and then people pay the costs of them getting that data from say Swindon to the wider Internet. On the current FTTP services that retail at around £40/m, the Openreach element accounts for about £20 of this, so people would still be paying something in the region of £15 to £20/m. Or is the nationalisation also going to include elements of BT Wholesale so we really will have a 21st century full fibre GPO and it really is full end to end Gigabit broadband for free.

The pension funds appear to be on board, with them being more interested in a secure stable rate of return. So the possibility of legal challenges from those that Labour has talked to appears to be minimal.

Now for the elephant in the room, how will firms like City Fibre, Liberty Global (Virgin Media/Liberty FIbre), Sky, TalkTalk (FibreNation), Hyperoptic, Gigaclear and the numerous other start-ups that have secured speculative investments be able to compete against a free nationalised operator? Some will say that Virgin Media has its video packages to fall back on, but the subscription package market is undergoing a rapid change and expensive big packages are falling out of favour with the public. 

The legal challenges when they arise if this nationalisation plan comes to fruition are most likely to be from the current competitors to Openreach who have actually built competing networks and will be looking for compensation for not just sunk costs but destruction of their future business model.

A final comment, the £20 billion roll-out cost is in the right ball park for building premises passed network, but there are additional costs for those final few metres crossing the drive/garden/pavement into each individual home and this could add a couple of billion pounds to the total. Normally this cost is rolled into the setup fee and minimum contract term that people pay when buying broadband.

Update 8:15am A few words to add to the original article. The nationalisation will also include the broadband relevant parts of BT Group apparently, which we would take to mean BT Enterprise (often known as BT Wholesale) for the core network linking handover exchanges to the Internet and also parts of BT Consumer i.e. broadband customer parts such as billing which even if service is free a customer relationship will be needed for dealing with faults and engineer visits, plus call centre staff. What would be left of BT to survive is not clear, BT Sport and phone call packages?

What will happen to the long tail of hundreds of retail broadband providers is a big unknown, it may be they will be able to subscribe to free broadband tails at the handover exchanges and be allowed to sell a service, but how many would pay £20/m when free is available. Survival would depend on what billing for things like email, which unless you use a free service where your email is harvested for advertising data might switch from being free with your broadband to costing £10 to £15/m.

Often missed in the political commenting is that this is free broadband for both consumers and businesses. Business use of free broadband raises more questions, since a small 3 people vehicle repair garage will have very different requirements to a video editing business with 10 suites all working on 8k footage. A business with basic needs will happily reside on a consumer style service, but the video editing example may well need 1:1 contention guaranteed e.g. Gigabit or 10 Gbps without fail from their building to the Internet at large, in the existing market place this is the difference between a £25/m business service and ones costing £100's or £1,000's per month. Also to add further complication, static or dynamic IP addresses (IPv4 and/or IPv6) and custom reverse DNS to name a couple more variables.

Two arms will exist, BDI - British Digital Infrastructure tasked with building and maintaining the network and BBS - British Broadband Service who will deliver the free broadband. 

Final thought (for now): The target for completion of the roll-out is 2030, but what we don't know is when will the first areas have access to the free service and will this only be free on the full fibre network, so those waiting on various partial fibre services will be stuck paying for their broadband.

Update 9:35 It is being reported that TalkTalk has put the sale of its full fibre broadband service on hold due to the Labour proposals. This could be seen as over reaction but given the plan is public and would have major ramifications for any investor in broadband roll-outs in the UK taking a pause until the results of the General Election are known would seem the sensible thing to do.

Update 10am: As we would expect with such a big proposal the industry comments have started to arrive.

As a collective industry, driven by competition, we are already working to deliver full-fibre to all parts of the UK; with many rural communities already enjoying these benefits. Labour's announced proposals are ill conceived, completely out of tune with reality, slicing and dicing an advanced vibrant industry that will set the delivery of full-fibre back even further. Any sensible Government should be working with an industry, not looking to be on full collision course with it.

Martin Pitt, Managing Director, Aquiss Limited

Update 11:15am We don't know what speeds the free ultrafast service will offer, but ultrafast by definition is 100 Mbps and faster or 300 Mbps if the Ofcom definition is used, but after years of getting used to watching out for the catch to free broadband deals we are left wondering why unlimited has not been mentioned with respect to the free broadband service? It seems possible that the free service may be a basic 30GB monthly data allowance with per GB billing thereafter. Hopefully more detail will emerge on the policy as the public perception is currently a free unlimited ultrafast connection and probably Gigabit speeds.

Labour’s plan exposes a fundamental misunderstanding of how broadband is delivered in the UK.

Labour has identified some challenges relating to broadband infrastructure, but has wildly underestimated the costs involved. This proposal would also undermine the huge private investment and existing work already in motion to deliver nationwide access to gigabit broadband.

More importantly, this proposal not only jeopardises the 600+ companies that use Openreach infrastructure but also those investing in alternative and competing networks to provide the services and connectivity that businesses and consumers throughout the country rely on. Our members range from small regional ISPs to household names with thousands of employees and it is extremely worrying that Labour has given no consideration to how their plans would affect them.

ISPA Chair Andrew Glover commented

Update 11:30am Jeremy Corbyn speaking in Oldham has said the following on the free ultrafast broadband plan:

A Labour government will make broadband free for everybody. And not just any broadband, but the very fastest, full-fibre broadband, to every home in the country.

Just 8 to 10% of the UK has access to full-fibre broadband. In South Korea, it is 98%, he says. He says this is essential infrastructure. The best way for this to be provided is for the public to take control of it. Labour will create a new entreprise, British Broadband, overseeing a publicly owned network, delivering full-fibre broadband within 10 years. This will show Labour using public investment to transform the economy. This plan will also have national security implications, he says. The current companies have had little incentive to roll-out full-fibre broadband to remote and rural areas. Labour would prioritise those areas. And then it would roll it out in towns. Finally it would complete the roll-out in urban centres.

Corbyn says there will be guaranteed jobs for people currently working in the broadband industry.

Corbyn says Boris Johnson promised to make full-fibre broadband available for everyone during the Tory leadership contest. But people would have to pay for it.

And now we have seen the government’s plans, they involve copper cables that are already out of date, he says.

Extracts from Jeremy Corbyn Manifesto Speech - credit to The Guardian for its transcript

A quick fact check on the copper cables comment, believe he is referring to the switch from 100% full fibre to 100% Gigabit i.e. Conservatives relying on existing Virgin Media network once upgraded to DOCSIS 3.1 in urban areas. Which while correct a large amount of this is due to be overbuilt by competing full fibre networks, certainly there is no plan to deploy more coax or copper twisted pair using public money.

Those working in the UK broadband industry will probably need to have a lawyer take a look at the actual wording for guaranteed jobs for people working in the broadband industry, i.e. is this referring to only BT Group and Openreach employees or does it stretch to the long tail of 500+ Internet service providers, Ofcom staff and ancillary services (believe sites like thinkbroadband and ISPreview would fit into the latter category) that would not be needed once the new BDI and BBS are up and running and no-one sees the point in paying for broadband when you can have the fastest full fibre speeds.

On slightly humorous note we wonder who proof reads the speeches since promising the very fastest full fibre broadband could mean anything from 1 Gbps to the 10 Gbps some are already looking to deploy to speeds of 40 Gbps and higher that are currently usually the domain of full fibre core networks.

Update 5:20pm: More feedback on the policy idea

For the UK to become a world leader in full fibre and 5G, it needs to provide access for all, wherever people live or work and we are pleased to see the commitment Labour has shown to this through its latest pledge.

It is crucial, however, that how broadband is funded, rolled-out and provided is considered, along with the wider impact the plan could have. The UK’s broadband market is currently thriving as a result of infrastructure investors and local communities, alongside the public sector. £3.3bn was committed by investors in alternative network providers (altnets) last year alone, in addition to investments by BT and Virgin Media. This has led to the deployment of Gold Standard world-class networks in cities and towns across the country, including in previously underserved rural areas, growing from a very low base of about 1% of premises to around 10% today. Accelerating the pace is important and all parts of the industry are working to do that.

While we welcome Labour’s focus, we are concerned that some parts of the policy, for example, nationalisation, will dampen the vibrant market for investment in new fibre networks in the short term, thus delaying fibre roll-out. Free broadband is an attractive consumer proposition but will be costly, could undermine innovation and consumer choice, as well as having a detrimental effect on the service provider sector.

INCA CEO Malcolm Corbett

Labour have rightly identified the potential of widespread full fibre and the transformative benefits it will bring to the UK. However, as an industry we believe this proposal will halt the significant investment already flowing into the industry, slow the large scale builds currently underway, risk jobs now and in the future, and leave consumers with no choice. We stand ready to work with whatever Government is elected on best way to deliver fit for purpose broadband to the UK as soon as possible and will provided further comment on Labour’s plans in the coming days.

INCA has also signed a joint statement with TechUK, UK Competitive Telecommunications Association (UKCTA), and ISPA

Update Saturday 16th November: In a busy Thursday night and Friday that saw us doing a number of radio interviews using FaceTime on a VDSL2 connection one comment from a full fibre operator was missed so adding it now.

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.

Evan Wienburg, Truespeed CEO, on Labour’s plans to nationalise Openreach

Comments

Oh my its been a good day for humour on here. I honestly believe I'll be long dead before many of our countries voters realise that nothing the Government do is 'Free'

  • Swac3
  • about 1 month ago

The free is to be paid for from Facebook, Amazon and other firms profits apparently, i.e. pay running costs and service the debt.

  • andrew
  • thinkbroadband staff
  • about 1 month ago

I can't see in that extract, or hear on Sky News or see in the related BBC article where he means anything more than free installation, though the Beeb's reporter with no Labour quotation does mention that the average monthly cost is £30 to the end user.

Even if they do mean the broadband ongoing service would be free to the user, that kills all content except the big boys that offer football, other sports and various TV services.

Netflix and suchlike would carry on unchanged of course.

What about any legacy copper line rental and phone services? Who will pay for the fibre phone services?

  • uniquename
  • about 1 month ago

Please could we have free water and sewage waste removal as well?

  • uniquename
  • about 1 month ago

I've just listened to the BBC interview clip and it does sound as in "ongoing costs" would be our monthly broadband charges. I assume not the added content.

But how would they cover broadband charges without fixing the current providers' prices? Including BT Wholesale.

  • uniquename
  • about 1 month ago

I guess they mean a non profit government wholesale provider. So kinda like Australia's NBN

  • Jake4
  • about 1 month ago

Wholesale provider of what though.

Openreach provides various wholesale products. They do not provide any ADSLx services.

Of the broadband services we receive, BT Wholesale provides ADSLx, GEA-FTTC (VDSL2), and GEA-FTTP. GEA FTTC and FTTP are Openreach's implementation of Ofcom VULA specifications, which basically get as near as possible to the ADSL2+ LLU services.

There are no FTTC/FTTP true LLU services. The easier of those to explain being that LLU requires the provider to have the same sort of equipment in Openreach exchanges as BTW does. MSANs/DSLAMs.

FTTC DSLAMS are in the cabinets.

  • uniquename
  • about 1 month ago

For the LLU providers, or even BT Wholesale, to have DSLAMs there would be impracticable.

  • uniquename
  • about 1 month ago

This is nuts. Why would we make the taxpayer stump up the cash for this when private companies are investing heavily to achieve this goal already? All the employees of those companies would find themselves jobless.

Why are labour obsessed with owning everything? The idea of having the government any nearer to controlling the internet should give everyone grave concerns.

Next we will all be getting "free pets" by taxing big veterinary.

  • rmaspero
  • about 1 month ago

Coming next: bread and circuses...

  • John_Gray
  • about 1 month ago

Who actually NEEDS superfast (as opposed to fast) broadband. This reminds me of the smart meter fiasco (not needed).

  • savamac
  • about 1 month ago

Maspero "Why are labour obsessed with owning everything?"

Because they're Socialists and that's what they do.

  • Swac3
  • about 1 month ago

Remember back 35 years when BT were government run it was an absolute nightmare, 6 weeks for a telephone line install. All businesses run by government are poorly managed so lets not go back to those days even if we are all being promised free broadband.

  • dect
  • about 1 month ago

@savamac - for streaming 4k video.

  • Somerset
  • about 1 month ago

@Somerset - not forgetting 8K which will be next.

@dect - I do remember that time - when a fax to New York from Isleworth took 10 minutes to send and still cost £5!

  • mollcons
  • about 1 month ago

@dect. "6 weeks for a telephone line install" you must have had a direct line to the Gods. It was up to three months on occasion in central London and getting a payphone installed could take many many months!

  • MCM999
  • about 1 month ago

Hi ho, hi ho. It's back to the 1970s we go.

  • AndrueC
  • about 1 month ago

The reason for the long waits for new lines back in the 60's and 70's is because the GPO was running around installing in the region of 250k to 300k new phone lines a year every year for decades. I want FTTP, I am waiting years, even if I stump up for FTTPoD it could easily take a year to get my line, but private firms are supposed to be fantastic!!! By the time BT was privatised the flood of people getting new lines had stopped. The call quality improved too, but that was down to SystemX and fibre/microwave coming on line and nothing whatsoever to the privatisation.

  • jabuzzard
  • about 1 month ago

I recall about 3 months wait for as line install, and then it was a party line.

  • brianhe
  • about 1 month ago

It'll be fun when "British Broadband" starts striking, and the whole country has no internet for days at a time.

  • Chipmunk77
  • about 1 month ago

Why shouldn't politicians fail to under stand the business structure of how broadband is delivered, when for years they have failed to understand the physical infrastructure and terminology.

  • brianhe
  • about 1 month ago

@jabuzzard

I worked for GPO/BT during the period (before and after) when it was privatised and can say that the company was very poorly managed before it was privatised just in the same way hospitals, schools and local authorities are today. If Openreach gets nationalised again things are going to get a lot worse.

  • dect
  • about 1 month ago

Still does not change the fact the waits where down to GPO/BT running around like headless chickens installing new lines hand over fist. It also gives us a reasonable handle on how quickly everyone can be moved to a full fibre solution. If we go for 500k actual connections per year (aka double what the GPO was doing) it will take over a decade to connect every property up (based on the 26 million address in the the OS's Address Point database and allowing for some number to already be connected). Fact remains the improvements in waits and call quality had nothing to do with privatisation.

  • jabuzzard
  • about 1 month ago

@jabuzzard

When you say "GPO/BT running around like headless chickens installing new lines hand over fist" are you talking from experience of being on the job or are you quoting Google?

I can assure you we weren't running round like headless chickens we spent most of the time on rest breaks, if anything we worked harder after privatisation when better management figured out what we should be doing.

  • dect
  • about 1 month ago

How would the Free broadband be introduced? Would it be area by area as the FTTP is rolled out over 10 years, or would the government pay existing ISPs with everyone being entitled to the free service at some start date? At one location I have an FTTC service the router connects at 40Mbps. The connection is stable and is adequate for my needs. I have one house phone that works even in a power cut.

  • Michael_Chare
  • about 1 month ago

Running costs are nowhere near correct at only £230m. If including all the core equipment to actually get to Internet exchanges power cost alone will be close to this (at todays cost) unless power will also be free due to being Govnt owned as well. 7000 employees at average wage + NI & pension = 7000*27k*( 11%+8%) = £225m so not very many people looking after it all. I think 30k people would not be enough but this costs around £964m on it's own. (Maybe they only page minimum wage!). Then Core equipment needs replacing every 5-7 years etc

Maybe the shadow chancellor needs some maths lessons!

  • jumpmum
  • about 1 month ago

It make running cost figures add up needs only 11615 people at minimum wage (£10ph) on a 32 hour week with employer 11% NI and 8% pension ( Although this maybe unfunded to reduce costs) with free power and no business rates with equipment that lasts forever ( the next change of Govnt)

  • jumpmum
  • about 1 month ago

You are not going to get people working for minimum wage in terms of network support.

The little detail we have says existing people will be have same benefits/terms as today, so what BT Consumer pays its support and call centre staff is not going to drop massively and same with the Openreach engineering teams.

  • andrew
  • thinkbroadband staff
  • about 1 month ago

is there an election in the pipeline??

  • threelegs
  • about 1 month ago

Andrew, I know people won't do the job for minimum wage, example was to show how few people even at min wage. At existing BT terms and conditions for OR people the £230m would only pay for ~5500 people. This is nowhere near enough!

  • jumpmum
  • about 1 month ago

Maybe they missed a zero off the costs :-)

  • andrew
  • thinkbroadband staff
  • about 1 month ago

diane abbot did the sums

  • threelegs
  • about 1 month ago

Labour run broadband would be much like Plusnet, slow, prone to going on strike, abysmal customer service and with no means of escape to a sane provider.

  • M100
  • about 1 month ago

I see Labour are printing money again.......what if they don't raise the tax revenues from internet media companies......who is going to foot the bill then?

It seems Corbyn and his minions want to stamp out private enterprise, the market is working well. We currently have amongst the cheapest broadband pricing in Europe, granted FTTP is way behind, but this is being rolled out with private equity with no subsidy from the Gov as yet.....

  • AyeUp
  • 30 days ago

what happens when all the companies they are relying on for tax revenue ie google facebook etc move their entire operation out of the country thereby stopping the money that they are relying on to pay for this pie in the sky idea.

  • threelegs
  • 28 days ago

"this is being rolled out with private equity with no subsidy from the Gov as yet"

So you're saying the BDUK FTTC/P scheme was not partly funded by the Govt? You learn something new everyday on TBB!

  • baby_frogmella
  • 28 days ago

Existing tax revenues from all the existing companies must exceed £4b a year, this will all be lost with a zero cost BB service. ( VAT, Corporation tax, Business rates) This will exceed the tax they will squeeze from Amazon, Apple and Facebook. Without taking into account that lost from the reduced spend on advertising BB on TV, and the Web.

  • jumpmum
  • 28 days ago

I don't understand Labour's running cost figure. According to the ONS there are 19.2 million families in Britain. A reasonable cost for providing 1Gbps broadband might be £30 per month. 19.2 x £30 x 12 = £6.9 billion per annum.

  • pvfpvf
  • 27 days ago

So the government provides "free" internet access by directly controlling the infrastructure, which then enables them to freely monitor all our online activity and restrict access to any websites they deem undesirable. Cynical me...

  • nrb501
  • 26 days ago

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