UPDATE 5-UK's Labour plans to nationalise BT's network in free broadband plan


Reuters | London | Updated: 15-11-2019 16:52 IST | Created: 15-11-2019 16:35 IST
UPDATE 5-UK's Labour plans to nationalise BT's network in free broadband plan
Representative image Image Credit: Facebook (Labour Party)
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Britain's opposition Labour Party plans to nationalize BT's broadband network to provide free internet for all, a radical election pledge to roll back 35 years of private ownership that caught both the company and its shareholders by surprise.

Labour said its proposed overhaul of Britain's telecoms infrastructure would be paid for by raising taxes on tech firms such as Alphabet's Google, Amazon, and Facebook and using its Green Transformation fund. The addition of BT to Labour's nationalization plan sent the group's shares down as much as 3.7%, wiping nearly half a billion pounds off its market value.

But analysts said that the share price reaction was relatively muted as investors do not expect Labour to win the Dec. 12 election. BT also retained the right to show UEFA Champions League soccer games, helping to support shares. Labour said it would nationalize Openreach - the fixed-line network arm of the country's biggest broadband and mobile phone provider - as well as parts of BT Technology, BT Enterprise, and BT Consumer to create a "British Broadband" public service.

"It's time to make the very fastest full-fiber broadband free to everybody, in every home in every corner of the country," Labour leader Jeremy Corbyn will say in a speech, according to an extract released by the party. He will call the current network patchy and cast the plan as one that would "reduce people's monthly bills, boost our economy and improve people's quality of life".

BT, which traces its history back to an 1846 telegraph company, was once one of Britain's national champions and the flagship of Margaret Thatcher's privatization policy when it was floated by her Conservative government in 1984. Labour's announcement brought into sharp relief the stakes of the election: Prime Minister Boris Johnson who promises to deliver Brexit in January or Labour which says it wants to be the most radical socialist government in British history.

The cost of nationalizing parts of BT would be set by parliament and paid for by swapping bonds for shares, Labour said. Johnson's Conservatives, who currently lead in opinion polls, said the broadband plan was a fantasy that would cost taxpayers tens of billions of pounds. Johnson has promised to roll out full-fiber broadband to all homes by 2025.

"What we won't be doing is some crackpot scheme that would involve many, many tens of billions of taxpayers' money nationalising a British business," Johnson said. 'VERY, VERY AMBITIOUS IDEAS'

In what would amount to the biggest shake-up in British telecoms since Thatcher's privatisations of the 1980s, Labour said few would lose out while millions of voters would get access to a connected and socially inclusive future. The national Openreach network is also used by BT's rivals, including Sky, TalkTalk, and Vodafone, to provide broadband to their customers. Its only competitor with widespread coverage is Virgin Media, owned by Liberty Global.

TalkTalk said on Friday a deal to sell its FibreNation business had stalled after Labour's announcement. Labour's second most powerful man, John McDonnell, suggested that the owners of the networks that compete with Openreach, such as Virgin Media's cable network and new fiber providers, could come to an arrangement or be nationalized too.

"We'll agree with them. It will either be an agreement of access arrangements, or working alongside us, or if necessary they can come within the ambit of British Broadband itself," McDonnell said. Labour, led by 70-year-old socialist Corbyn, has been open about its plans to nationalize the rail, utility and water companies as well as to increase taxes on the wealthy, but has never suggested nationalizing BT's assets before. BT was taken a surprise.

"These are very, very ambitious ideas and the Conservative Party have their ambitious idea for full-fiber for everyone by 2025 and how we do it is not straight forward," Chief Executive Philip Jansen told the BBC. BT CRITICISED

Currently, fewer than 10% of British premises have access to full-fiber broadband - also called fiber to the premises - where fiber optic cable instead of copper is used to connect homes to the network. BT has been criticized by customers, rivals and the regulator for poor service and a lack of ambition in upgrading its network to fiber, where Britain lags far behind European rivals like Spain.

Labour said it would roll out the free broadband to all individuals and businesses by 2030, providing it to at least 15 million to 18 million premises within five years. It said the plan would save the average person 30.30 pounds a month. There would be a one-off capital cost of 15.3 billion pounds to deliver the full-fiber network, on top of the 5 billion already promised by Johnson, the party said.

The Conservatives said the real cost would be over 83 billion pounds over a decade, that shareholders would sue the government and that it was unclear what the impact would be on BT's pension liabilities. "It needs funding, it is very big numbers, so we are talking 30 to 40 billion pounds," CEO Jansen told the BBC. "If you are giving it away over an eight-year time frame it is another 30 or 40 billion pounds. You are not short of 100 billion pounds."

Jansen said last month that Johnson's time scale for delivering full-fiber broadband to all homes would be extremely difficult to achieve. ($1 = 0.7815 pounds)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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