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Words by:
Associate Director
November 15, 2019

Labour’s plans to nationalise parts of BT and offer a free national full fibre broadband service represent the most radical policy announcement of the election. Should Jeremy Corbyn secure a majority, he has now pledged to bring all major utilities back into public ownership – gas, electricity, water, rail, mail and now telecoms. Such a move would fundamentally change the telecoms sector overnight with grave consequences for private network builders and retailers.

There will be much commentary on the commercial implications for the sector in the coming days. However, it is also worth considering the political process that will be required to make this radical vision a reality.

Getting the numbers

Firstly, it is important to remember that this whole agenda can only be delivered under a Labour government with a stable, workable majority. Neither the Liberal Democrats or the SNP will back it under a confidence and supply agreement. There’s a long way to go in this campaign and the polls still indicate that Jeremy Corbyn has a lot of work to do to have any hope of securing a majority in December.

This announcement itself will be a major theme in the election going forward as free, high-speed broadband for all is likely to go down well with many voters. The key question is whether it ultimately feels too good to be true and leads voters to question the credibility of a policy that will have a long list of detractors.

Learning from the past

But what if Labour do forge a way to power? How will the Party turn such a radical nationalising agenda into reality? Previous rounds of both nationalisation and privatisation took a great deal of time and political capital to realise. Margaret Thatcher’s converse plans to re-privatise much of the same parts of the economy took three parliamentary terms to deliver. Ticking off Labour’s long list of target nationalisations in just one five-year parliament will be a mammoth of a task.

There are several significant elements that will require primary legislation for broadband nationalisation. Firstly, the actual practicality of nationalising the relevant parts of BT to build and maintain the physical network will require immense planning and negotiation. Secondly, establishing a framework for a national broadband service provider, along with how and who will run it will not be simple. There is also the matter of establishing a body, or possibly a parliamentary process, to scrutinise the new provider and ensure reliability for users. Finally, Labour will need to construct complex new taxation targeting the big tech giants to pay for the maintenance of the network.

The political capital, technical complexity and potential legal wrangling resulting from just one of these three areas would daunt any government regardless of its majority. Yet collectively, even if a majority Labour government could overcome these three challenges and nationalise the broadband industry, it will only deliver one of the party’s five targeted nationalisations. Nevertheless, it’s important to note that nationalising broadband is perhaps the most ambitious and complex pledge for Labour to deliver on.

A juggling act

Let’s not forget that on top of all this, a Labour government will simultaneously be renegotiating yet another Brexit deal with the EU, scrapping universal credit, setting up a new National Education Service and making significant investments and reforms in housing, social care and other areas. The reality of government is that some agendas will have to be prioritised over others simply due to – if no other reason – the practical limitations on time and resource in the civil service.

Especially on the topic of Brexit, there is a question mark over whether Labour’s broadband proposal would comply with EU state aid rules, though they will cite recent rulings on Ireland’s public subsidy for broadband in their defence. It could nevertheless be a potential stumbling block in agreeing a new, closer economic relationship currently envisaged as the Party’s preferred approach.

Finally, were this to ultimately go through, the government would find itself taking on responsibility for a plethora of tricky issues that were previously the problem of private players in the sector. The debate over online safety and the level of responsibility that intermediaries such as ISPs have for harmful or illegal content distributed over their networks would suddenly become an in-house issue for government. Questions over net neutrality – whether ISPs can or should prioritise bandwidth for certain sites over others – as well as the control and use of people’s data, would also be questions government would have to solve as the sole service provider.

These are headaches that no government wants to grapple with and while this announcement is a potential game changer, it’s one which is still far from being realised. Even if it ever is, it could come with a host of difficult unintended consequences attached.

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