The problem with Labour’s free broadband pledge
The UK goes to the polls on 12th December, and so far this election has been characterised by two things – Brexit, and spending promises.
In particular, one pledge has a lot of people talking. Labour’s decision to offer free superfast broadband to all homes and businesses seems to have really cut through the cacophony of noise, and everyone’s talking about.
Free internet as a public policy isn’t new. Australia has tried it and apparently even the state of Kerala in India is pushing it now. Even corporates have been pushing this approach – a few years ago, Facebook offered a similar promise when it tried to provide a set of free internet services (including, of course, access to its own platform) to users in developing countries.
It’s no surprise that Labour is pledging to nationalise yet another utility. After all, Mr Corbyn has already intimated that if elected, he will renationalise rail, water, energy and the Royal Mail. But what is significant is the reaction to the policy. A recent poll found that 83% of respondents favoured renationalising the water industry, and 77% and 76% backed nationalising energy and railways.
Writing in the FT, Robert Shrimsley points out that “nationalisation has ceased to be a dirty word in British politics”, and that’s partly because the Conservatives are struggling to articulate the benefits of capitalism and partly because successive governments have struggled to regulate monopolies and provide consumers with better experiences at lower prices.
The net result is that the seemingly unbreakable linkage between free market competition and the customer experience has been severed. Where people used to equate nationalised industries with terrible service – be it train travel, water or energy – the narrative has shifted and public ownership of utilities has been reframed as something that will transform standards and benefit consumers.
I won’t wade too deep into politics here. But my feeling is that governments have the greatest impact when they are investing in big, long term projects – technology, infrastructure, and science that is too capital intensive and with too long a time horizon for the private sector to fund. I’m talking about transport infrastructure, basic science, and other projects that are so big that they require a government to step in and do something in order to overcome the lack of short term commercial viability.
While it once was at one point a government project, the Internet (and associated infrastructure) is no longer applicable. It’s mature, and now it’s more of a question of operational competence rather than investment. A government-owned internet provider won’t be developing the newest networking tech – Huawei, Erricsson, Cisco and the like will remain at the cutting edge of technological development.
Service providers are really operators, and we’ve seen time and time again that the private sector is much better at operating efficiently (providing a better service at a lower cost) than a government-run entity. If the provision of free internet is a social policy aim, then a system of need-based subsidies or vouchers like food stamps is probably a much better way of achieving the goal.
Governments do have a large role to play in society, and in technology specifically. The golden age of digital technology that we currently live in is only here because of the huge investments that have been made over the past 100 years: the unanticipated outcomes of the nuclear arms race, the cold war, and the space race, as well as the deliberate sponsorship of basic science research. We need our governments to recommit to sponsoring that part of the science and technology value chain. But once a technology has matured, the government should leave it to the private sector to operate it under balanced oversight. The last century saw governments on both sides of the Atlantic get the balance right to the benefit of all of us. Let’s hope this century won’t be different.