Corbyn wants to nationalise internet

Jeremy Corbyn’s Labour Party is behind in the polls for the UK election so it’s unsurprising that he’s chucking out more giveaways to voters. The policy to nationalise BT Group Plc’s fixed-telecoms networks business and provide free fiber broadband to every British household is a humdinger nonetheless.
Of course, the chances of this becoming reality are slim given that Corbyn’s best hope of becoming prime minister is a coalition with more moderate political parties. Yet the idea has stimulated even more debate than Labour’s previous plans to re-nationalise the railways and the energy utilities, so it’s at least worth thinking about. Taking it at face value, the policy would be a huge mistake that would achieve the opposite of its stated aim of accelerating Britain’s sluggish rollout of fiber broadband.
First, there’s the cost. A Labour government would add 15 billion pounds to an existing 5 billion pound broadband spending pot, according to Shadow Chancellor John McDonnell. Even assuming that would cover the required capital expenditure it would cost at least the same again to nationalise Openreach, BT’s networks division.
McDonnell says the state would pay for the acquisition by giving BT’s shareholders government bonds as compensation. Yet why would investors, especially those outside the UK protected by treaties against asset expropriation, exchange an 8.1% annual dividend yield from their BT stock for the less than 1% returns from UK gilts?
The network spending itself would be funded by an increased tax on likes of Facebook, Alphabet and Amazon.com. But G-20 will probably adopt new international tax standards next year to try to curb Big Tech’s avoidance tactics. So a Labour government might not even be able to whomp up these levies without breaching new guidelines.
Then there’s the speed of rolling out the networks. While the UK is well behind the pace on high-speed broadband rollout, a tortured nationalisation process isn’t the answer.
The same is true for private competitors such as John Malone’s Virgin Media, Vodafone Group Plc and Comcast Corp.’s Sky. Increased competition has at least accelerated the pace of the rollout: The proportion of homes with fiber access has doubled in two years.
Should Labour ever get the chance to offer free broadband to everyone through a state-owned provider, tens of thousands of private sector jobs would be jeopardised.
And full-fiber broadband might not even really be necessary. The adoption of next-generation 5G mobile networks promises the ability to transmit far more data at far greater speeds. That would make fiber to every home redundant in parts of the country.
There are more thoughtful ways to get fiber installed sooner: Making it easier to get permits to build network; permanently reducing business tax rates for new fiber; and making it obligatory for customers to accept fiber upgrades. If McDonnell is willing to hand over 15 billion pounds to BT shareholders to snap up Openreach, why not use the funds to subsidise the rollout directly?
—Bloomberg

Alex Webb is a Bloomberg Opinion columnist covering Europe’s technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco