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Jeremy Corbyn Pledges £25bn for National UK FTTP Broadband and Mobile

Tuesday, August 30th, 2016 (12:13 pm) - Score 1,332
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The United Kingdom’s economy may be hovering just above recession but that doesn’t seem to be a problem for the Labour Party’s embattled leader, Jeremy Corbyn. He has today outlined a new “Digital Democracy Manifesto” that reveals more about his plans to upgrade national broadband and mobile connectivity.

Earlier this month Corbyn launched the opening salvo in his plan to improve UK Internet connectivity / national infrastructure by pledging to invest and lend £500 billion over a 10 year period, part of which would be used to roll-out “high speed broadband” so that the United Kingdom can “stop languishing behind Bulgaria and Romania” (see our analysis of that claim).

Apparently £350bn of this money would come from the public purse via a new National Investment Bank (NIB) and this in turn would be managed independently of the government, which sounds similar to the much maligned Quantitative Easing (i.e. print new money (increased debt) in order to support new infrastructure projects).

The idea of spending more public money at a time when the country is still trying to get its punishing debt pile under control may raise a few eyebrows (£1.56 trillion of Gov debt in February 2015 and rising), but equally even the current Conservative Government appears to recognise that infrastructure does need more investment (we’ve yet to see their exact plans).

However big questions remain over precisely how much of the £500bn would go towards improving digital infrastructure (broadband, mobile etc.) and what kind of service we could actually expect to get back. Today we got a few answers, although the detail is still somewhat vague. As usual we’ll only focus on the Internet and telecoms connectivity aspects.

Universal Service Network

We [The UK Labour Party] will deliver high speed broadband and mobile connectivity for every household, company and organisation in Britain from the inner city neighbourhoods to the remotest rural community.

Apparently the new USN will be supported by £25bn from the NIB above and a party briefing document states that this is the same amount as they envisage being the “maximum cost” for a “nationwideFibre-to-the-Premise (FTTP/H) broadband network. Such pure fibre optic networks tend to offer ultrafast speeds of anything from 100Mbps+ and up into Gigabit (1000Mbps+) territory.

The party’s briefing also suggested that £13bn would provide around 80% UK coverage of FTTP, although it should be said that this claim is based off an extremely out-of-date 2008 report from Analysis Mason (‘The costs of deploying next-generation fibre-optic infrastructure‘).

The above figure would clearly need some updating given recent developments and is likely to be less than £13bn, but tackling the final 20% is of course the biggest economic challenge. However the party’s document does appear to recognise this.

Quote from Labour’s Briefing Document

“This investment could be funded at minimal cost to the taxpayer and with the most rapid deployment possible, using the National Investment Bank and relying on all-time low government borrowing costs.

The provision of a valuable national asset would produce significant returns over time, both in economic growth and additional tax revenues arising from growth, far outweighing the initial investment.

Building on existing fibre-optic roll-out schemes would reduce the total costs below this headline figure, and building on current practice we would look to schedule installations where the demand was urgent, such as to existing tech clusters.”

Interestingly Corbyn and /or his allies have previously indicated that he would be in favour of separating Openreach from BT and then effectively nationalising Openreach under public control. This is more radical than the perhaps more commercial approach proposed elsewhere of splitting the two and encouraging the private sector to invest in upgrading the newly independent network.

Politicians, the majority of which often fail to understand even the basics of how telecoms, Internet and broadband networks actually work, usually don’t make for good masters (e.g. Digital Region’s flop). In any case Ofcom appears not to be going for a split, although they are still at loggerheads with BT over the key issue of Openreach’s governance (here).

However Corbyn was today asked whether or not he would nationalise Openreach if he got into power and interestingly his position appears to have softened. Corbyn instead expressed that he had an “open mind” over the issue of ownership, but would still insist that BT had a duty to deliver universal access.

Certainly we’d welcome a big influx of investment to help roll-out FTTP/H connectivity to the farthest reaches, as well as urban areas. But at least part of the challenge would be to deliver that without destroying the many alternative networks that are already collectively spending hundreds of millions worth of private investment on tackling the bits that BT has missed.

As ever, such things are easier said than done and many will be wary about anything that could further increase the national debt. Likewise any new pledge from a political party, particularly one concerning broadband connectivity and massive public spending, should always be taken with a pinch of salt and is somewhat of a moot point because the next General Election isn’t until 2020. A lot can happen in 3-4 years – positions, markets, leaders and the economy can all change, both for better or worse.

Do you think Jeremy Corbyn's broadband strategy is a good one?

  • Yes (62%, 82 Votes)
  • No (38%, 51 Votes)

Total Voters: 133


NOTE: Poll votes are checked and cached, thus the latest results may not be visible for a few hours. Check back later.

UPDATE 1:04pm

Added the UK Internet Service Providers’ Association (ISPA) response to today’s announcement below.

A Spokesperson for the ISPA said:

“ISPA is pleased that the Leader of the Opposition recognises the incredible power of the Internet and the important and positive role it can play throughout our economy and society.

There are a number of interesting policy suggestions in the manifesto, including a proposed Digital Bill of Rights to protect civil liberties and the promotion of digital skills, but more information is required over a high speed broadband Universal Service Network. ISPA members are already rolling out superfast broadband nationally and locally across the UK that covers over 95% of the country using a range of technologies.

Industry has led this transformation, and alongside public funding in harder-to-reach areas, speeds have risen significantly from 3.8 Mbps in 2006 to 28 Mbps today. We call on policymakers to focus on reforming regulations and barriers to rollout to make it easier for companies to deliver broadband.”

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he is also the founder of ISPreview since 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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14 Responses
  1. Bob2002

    Corbyn is important, but not necessarily in the sense he will ever become PM. He is putting alternative policies before the public that will spark debate and possibly influence Conservative policy.

    The major political British parties are similar in so many ways that we are often left arguing over mere details – they often refuse to reflect public opinion which is why UKIP managed to exist and flourish.

    As far as national debt goes, we already run a deficit yet manage to ring fence about £11 billion a year for International Development(second largest aid budget in the world after the US!). If we can justify that we can probably justify something similar for national fibre infrastructure that will last for many decades and actually provide a tangible benefit to the UK unlike International Development – interest rates are very low indeed, negative in cases. At the beginning of August the Treasury’s Debt Management Office sold £850m of an index-linked Gilt, that matures in 2036, at a yield of minus 1.72 per cent – a record low interest rate.

    HSBC have suggested May might well start significant infrastructure spending –

    http://www.telegraph.co.uk/business/2016/08/22/hsbc-thinks-theresa-may-will-go-on-a-50bn-spending-splurge/e

  2. Regis

    Usual government hype, vote for me and i will spend on this and that and yet as soon as they are in they will vote in a pay rise for themselves and everything else will be forgotten about. i can guess what “significant” might really mean…… HS3 to newcastle and a extra few lanes onto the M25 car park. Or maybe his own private carriage on all virgin trains.

    • timeless

      he isnt a Conservative… despite what the media says about Corbyn theres allot more to the man than meets the eye imho.. he might not be perfect and wear suits that would likely cost us normal peeps a an arm and a leg.. but in retrospect to most other leaders he talks sense and whether he gets in or not (lets face it he is being smeared by everyone who wants to keep the current status quo) unlike other parties he is actually bringing in some interesting ideas which actually have the potential to improve the economy unlike the current perpetual austerity measures that the Tories seem to love (after all austerity is designed to move wealth from the bottom to the top which already has more than enough already).

    • Austerity is a word that in this context reflects the cutting of public expenditure so as to stop the economy collapsing via an uncontrolled deficit (country level equivalent of going bankrupt due to being suffocated by your own debts = Greece), which is the same as you reducing your credit card bill to stop the payments getting out of control.

      Austerity is not itself an evil, but it’s often associated with other separate and more complex measures that can cause problems. A large part of the problem is that we, as a society, have lived with easy access to cheap (high risk) credit for so long that it can be difficult when those wheels become unstuck by reality. Governments have to make hard decisions to stop a bigger problem.

      However other separate and more complicated measures, like Quantitative Easing, can indeed have the effect of protecting some of the wealthiest from the impact of economic shocks and even directly benefiting others (e.g. bond traders). QE can also push currency values lower, which in turn weakens the pound (this does at least help UK exports) and also punishes savers. Going forward it may cause a surge in interest rates as it could become difficult to sell bonds back to market and this would hamper UK borrowing for future investment.

      Obviously QE sounds terrible, but crucially what it does do is give the economy a chance to breathe and grow, which means you can tackle the debt incurred further down the road / more gradually. Had we tried to tackle the debt immediately then you’d quickly end up in a downward spiral like Greece or Spain, where you cut and cut but growth falls faster than you can tackle the underlying problem = a longer and deeper recession with exceptionally high unemployment (the welfare system would strangle the state).

      No solution is perfect, but at least we still have our savings (those of us that have been able to save), at least there are still jobs, at least employment is high even if the wages are fairly low and at least we don’t have a massive recession and aren’t called Greece. Yes there will always be a pain, but you only understand how much worse it could be by looking seriously at the other examples.

    • Bob2002

      @Mark

      Austerity is not really entirely comparable to managing personal debt, and can backfire very badly. Nobel Prize winning economists like Joseph Stiglitz and Paul Krugman are some of the more notable economists who have spoken out against it.

      Mark Blythe, author of “Austerity – The History of a Dangerous Idea”, gave an interesting talk at Google in 2013 –

      https://www.youtube.com/watch?v=JQuHSQXxsjM

    • wirelesspacman

      Aah, economists – it only take three to end up with at least five wildly different opinions! 🙂

      Given that QE involves “printing” money, I’m not sure I would count it as increasing debt. Mind you, I am but a lowly engineer!

    • Yes of course it can backfire (as per the example of Greece that I gave), which is why you have to balance it against other mechanisms to boost growth and job creation. The challenge is in how you balance all these elements, but there must be balance as one extreme or the other does not solve the problem. Simply saying austerity is bad or extra public spending is bad is too linear.

    • Ignition

      Mark, were you perhaps going for the point of view that productive investment in things like infrastructure, roads, housing, etc, is usually a good thing, however spending money on current spending, things like welfare, isn’t so great for our prospects?

      The big criticism of the last government is that their cuts were the easy ones, capital expenditure, investment, they didn’t grasp the nettle of the politically less expedient stuff until later on.

      Obviously our entitlement programmes are probably unsustainable in the longer term, however any pain needs sharing equally.

    • Bob2002

      @Mark

      I would describe myself as wary of austerity rather than anti-austerity, and was really putting the case against it with regard to the comparison to credit card debts – which is the sort of thing told/sold to the public.

    • timeless

      the problem with austerity is that it doesnt work.. which is even more apparent under the Conservatives given their whole idea of making this work is by moving what little wealth is at the bottom to the top.

      in fact over the first five years of the coalition government the top 1% had made more money than the bottom 20% put together, in fact from the figures ld seen the money the top 1% had gained would have cleared the deficit!!

      regardless, l believe the Cons have conveniently missed a point.. in any good economy money passes hands, lve never advocated out of control borrowing and spending but in retrospect to the lie that Labours borrowing was out of control is an over used excuse, after all this government has borrowed more in the past 7 years than any Labour government in the past 100yrs combined!! and for all this hubub about clearing the deficit the only thing the current government has done is increase their own wealth while stripping what little the country has left via privatisation.

      and a prime example of asset stripping is the NHS selloffs going from pennies, Royal Mail being sold for significantly less than its worth (those who bought shares laughed all the way to the bank when they resold them) and lets not forget RBS.. before Osborne was sacked there was allot of talk of him selling off the shares we bought out when we bailed them out.. for a staggering 12Billion loss!!!

      but l digress, but l will leave off with these points.. the Conservative government fought with tax payers money for bankers to keep their bonuses and to date not one banker complicit in the financial crash has been imprisoned.

  3. brianv

    The Nazis implemented their own severe economic austerity policy; under the directions of Nazi Finance Minister and President of the Reichsbank, Dr Hjalmar Schacht.

    That Austerity Policy became known as Schachtian Austerity. It caused immense misery and the intentional enslavement of the German people. And achieved nothing good whatsoever.

    All manner of instruments of austerity were used by the Nazis. Including “Labour Recycling”. Sacking employees and re-employing them (if they were lucky) on ever low wages and worsening conditions. Inflicting savage cuts to basic living standards for middle- and lower-class Germans.

    Hjalmar Schacht also injected huge amounts of hyper-inflationary new Reichsmarks into the economy. We call that Quantitative Easing today, and the ill-informed still applaud it.

    At the end of the Third Reich, the Reichsmark was so devalued by hyperinflation that a wheelbarrow was needed to carry the banknotes needed to pay for basic groceries.

    After the War, Schacht was tried at Nuremberg for war crimes. He had spoken often of the “surplus population” eating away at German prosperity, and the need for a “final solution” to get rid of them.

    Unsurprisingly, Schacht was acquitted at his war trial. Today we recognise him as an agent of US-UK banking circles. He was a personal friend, no less, of the Bank of England Governor, Sir [Lord] Montagu Norman. As a banker, Schacht was never going to hang.

    And that was Dr Schacht, a failed banker and failed economist, who clinged to the folly belief that severe austerity was the solution to Germany’s economic woes.

    Plus ça change, plus c’est la même chose…

    https://en.wikipedia.org/wiki/Hjalmar_Schacht
    http://www.wlym.com/archive/campaigner/7503.pdf

    • timeless

      the most worrying part about the above is the fact that the uk government has already introduced parts of the above..

      except they call it workfare, where you work full time for benefits for up to 6months pretty much gaining nothing at the end apart from the company using more benefit claimants when one set goes another comes in.. in fact there has been a few peeps let go from their jobs and rehired via workfare. not to mention a christmas ago in order to save money ASDA used those on workfare to cover actual staff to cut down on holiday pay.

    • New_Londoner

      @Brianv
      The Nazis were guilty of far worse acts than “austerity”! And the comparison between what iwas implemented in pre-war Germany and current economic policies betrays a deep lack of understanding of both eras.

      Meanwhile, back on topic…

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