ourEconomy: Opinion

‘Broadband communism’? Outside the UK, public broadband is a raving success

Around the world governments are taking the lead developing digital infrastructure. Nowhere is this more evident than that well known communist enclave: the United States of America.

Thomas M. Hanna
16 November 2019, 10.48am
Image: Hëamon, CC BY-NC-SA 2.0

This week, the Labour Party announced a bold new policy proposal that has shaken up the election race – publicly owned broadband internet, free to all. In the words of Jeremy Corbyn, the party’s leader, it is “a taster of the kind of fresh, transformational policies that will change your life.”

Under the plan, the government would purchase Openreach, the digital network operator that is a subsidiary of BT Group, and form a new publicly owned British Broadband company to extend high-speed internet access to every household, business, and institution in the country. As Mat Lawrence, Director of Common Wealth, revealed in the Guardian, given than just around 7% of premises in the UK currently have such access (compared to nearly 100% in countries like Japan and South Korea), expanding broadband access would have considerable economic, social, and environmental benefits. Moreover, making the service free would reduce household and commercial bills, putting more money back in the pockets of families and entrepreneurs.

As expected, corporate lobby groups and their political lackeys were less than thrilled at the announcement. For instance, Boris Johnson, in his usual histrionic manner, derided it as a “crazed communist scheme.” The BBC was happy to regurgitate the attack line of BT’s Managing Director, Neil McRae, who derided the proposals as “broadband communism”.

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However, in reality, governments around the world are taking the lead on developing the digital infrastructure necessary to develop thriving 21st century economies (just as they did with the electricity networks, roads, bridges, railroads, airports, and other vital economic infrastructure of the 20th century). They are doing so because in many cases the private sector, and specifically a shrinking group of giant for-profit telecommunications corporations, are unable and unwilling to equitably provide the necessary investment and service – leaving whole towns, regions, and socio-economic groups shut out of the modern economy and society.

Nowhere is this more evident than in the United States, where in recent years more than 800 communities have established locally owned broadband networks (of which around 500 are publicly owned). This includes around 150 communities that have super-fast networks of at least 1Gbps and 20 that have 10Gbps networks. Publicly owned broadband networks are increasingly attractive because, like in the UK, wide swaths of the country – especially rural and low-income areas – remain unserved or underserved by the big corporate telecom companies. These corporations have little incentive to invest in improving networks in such areas, choosing instead to make profits for their shareholders by increasing rates for consumers in areas where they enjoy a monopoly or duopoly.

This uneven distribution of digital infrastructure has contributed to a lack of economic opportunity in certain areas that has led to a downward spiral of out-migration to larger cities, lower tax revenue, and service cuts.

Counter to this, publicly owned broadband networks in the US have been widely credited with attracting business investment, creating and retaining jobs, lowering costs for consumers, improving access for marginalized groups, improving quality of life, and supporting advances in health and education.

Success stories include larger cities like Chattanooga, Tennessee (which was the first location in the US to offer 1Gbps service) where the publicly owned network added around $1 billion to the local economy in just 4 years; smaller towns such as Thomasville, Georgia, where the publicly owned network is credited with saving small businesses and maintaining a vibrant downtown area; and rural areas like south central Minnesota where RS Fiber (a cooperative supported by a joint powers agreement between 10 small cities and 17 townships) has extended broadband access to 6,200 homes, farms, and businesses across a wide geographic area.

Publicly owned broadband is not only increasingly popular in the United States, it also has demonstrated economic and social benefits. Even accepting that the Labour proposal goes further than most by making broadband free (rather than just cheaper), the fact that Boris Johnson would unequivocally denounce such a strategy illustrates how much free-market ideological fanaticism has made the UK a relative outlier among advanced economies over the past several decades.

The UK, for instance, accounted for around 40 percent of the total value of assets privatised across the OECD between 1980 and 1996. One such company privatised was British Telecom (now BT Group), which at the time was a world leader in developing and installing digital technology such as fibre. In 1990, Margaret Thatcher decided that the company (which by that point had been partially privatised) should scrap its deployment of fibre optic cables and networks in order to allow private competitors (including from the US) to compete in the market.

BT’s factories in Ipswich and Birmingham were sold off to foreign corporations, and the assets and expertise transferred out of the country. Perhaps unsurprisingly, fibre deployment stalled and the UK was quickly overtaken by other countries, which in turn reaped the economic benefits of having more widespread digital infrastructure in place when the internet era began.

As Dr. Peter Cochrane, the former Chief Technology Officer at BT, recalls “our colleagues in Korea and Japan, who were working with [us] quite closely at the time, stood back and looked at what happened to us in amazement.”

What happened is that Britain fell victim to a dogma that the private sector, and specifically private corporations, can and will deliver any and all goods and services better than the public sector. While much of the rest of the world has since begun to re-evaluate this theory (or never bought into it so wholeheartedly in the first place), Britain remains trapped.

The Labour Party’s proposal to establish a publicly owned broadband network, free for all users, is an important opportunity to break out of this ideological prison and begin to establish common sense approaches and institutions that have the demonstrated potential to lead to a more equitable, prosperous, and sustainable economy.

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