As the UK telecoms industry, and wider tech community, reels from the news that the UK Labour party has pledged to create a nationalised broadband network if they win the election, the implications are still hitting home.

The hit on BT (share price diving by 4%) has already been felt – long before voters go to the polls. TalkTalk’s deal with FibreNation is tottering subject to the election results. Scott Bicheno at telecoms.com gave a pretty fair early summation of how the industry felt. No-one could find much good to say. Dark talk over the weekend was about high-tech workers leaving these shores for pastures new in countries desperate for their skills.

In the interests of balance, I have to point out that duplicated network assets can be wasteful. We need network diversity; but we also need to build out network in an efficient way without unnecessarily duplicated equipment. Private firms don’t always achieve that aim. However, mobile network-sharing agreements between service providers that have ironically just been announced, undermine that argument. Commercial operators can co-operate – especially if the regulator mandates such co-operation.

It goes without saying, that the industry thinks British Broadband is a technically-illiterate idea that is more suited to North Korea than the UK in 2020. But there are points that have been missed or skimmed over.

  • The policy is focused on fixed, full fibre broadband and totally ignores 5G.
  • Shareholders will lose out. Amongst them are many institutional investors who see telecoms as a steady stock. So there goes everyone’s pension.
  • It’s simply a lie to say that all employees could be transferred to a single network operator on improved terms and conditions. Not unless you want to have 3 people making each cup of tea. Not in the age of network automation. Such a move will accelerate job losses, not protect against them. And if jobs are retained, we’re really saying the company will be an inefficient, state-owned monopoly that will cost so much to support that it will hamstring industry. Because oh-yes the UK tech industry will be the ones paying the bills. This would be the start of a new UK brain drain, because other countries would target our skilled workforce to move.
  • Government control of broadband is chilling. Governments have long sought to stop ordinary people exchanging ideas and information on social media; defying ‘super injunctions’ obtained by the powerful and rich; using means to stop governments from monitoring them (such as encryption); or organising to protest. As Brendan O’Neill outlined, the idea of any government controlling access to the Internet is terrifying. Free speech and free access to information is worth more than the £20 a month I pay my service provider.
  • Not having full fibre broadband is not the disaster touted by many. We are rolling this out at a speed that is roughly aligned to demand. Having a brand new network that costs billions but has excess capacity because few are using it, is not a good economic outcome either. If demand is there for a faster network, the UK industry is pretty good at aligning to that opportunity. Many businesses may now desire faster speeds, but cheaper capacity has been a bigger driver in the UK for most businesses.

But what effect is all of this going to have on the tech sector?

If Labour wins the election the effect will be crippling. Stock slowdowns; M&A deals falling through; investors closing their purses; employees jumping ship to rival economies keen to acquire their skills. The failure will not be confined to the telecoms sector, but will extend to the wider tech community and beyond that to the entire digital economy. We will have network communism – with one standard of (albeit free) service for all. We will have slowdown of investment to civil service timescales, and political interference in technology decisions.

All of this is going to stimulate questions from our enterprise customers, and delay their potential investments at that vital end-of-year timescale.

What should a B2B service provider say? Firstly, yes it will affect B2B as the promise is to extend free fibre broadband to both households and businesses. But this will take years to implement even if Corbyn wins the election. It cannot be implemented until, and if, we leave the EU, which is not any time soon under a Labour Administration. It is also highly unlikely that anything the government could do would speed fibre rollout, other than by providing hard cash to fund it.

My advice to B2B service providers is to hold steady; because once the hysteria (and the election) has died down, the reality is likely to be far less alarming. Even under the worst case scenario, we will have a basic free network service, but that doesn’t mean we won’t have a market for better-than-basic broadband, or additional services, or alternative service providers that are not government owned. We can only focus on the way things will be for the next 12-24 months. So while this could, in future, run a coach and horses through the industry, there is still much to play for and no certainty that this is anything other than an outlandish manifesto idea that will be quietly shelved after the election. (Virtue signalling meant to appeal to under 25 voters and their proclivity for a connected lifestyle.)

However, on another level, what all of this tells us is that we are building a digital economy that is run by politicians who still have dial-up thinking. They parrot half truths, out of date and regurgitated lobbying simply because they have no digital vision. 

Postscript

I wish to make it clear: I am not against network sharing. Nor do I agree with unnecessarily duplicated network rollout. I do believe in strategic diversity to prevent network outages and aid recovery. I also think competition should and can take place at a service level and not simply at a network level. But I don’t think the network should be government owned and operated, nor should it be free.

Posted by Teresa Cottam

Teresa is the Chief Analyst at Omnisperience and has over 25 years' experience in the telecoms and technology markets. She is an expert on SME and enterprise telecoms, and has considerable vertical market expertise. Her research focus lies in helping B2B telecoms firms become more commercially successful by better understanding and meeting their customers' needs. She is a judge of the GSMA Global Mobile Awards (GloMo's) for customer experience and enterprise innovation, and for the UK Cloud awards. You can follow her on Twitter @teresacottam

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