ourEconomy: Opinion

COVID-19 has exposed the UK's digital divide. It's time to invest in a full-fibre future

The pandemic has underscored the need to make Internet access a 21st century human right.

Mathew Lawrence
19 October 2020
Image: ar130405 from Pixabay

Digital connection has never been more vital. Much of the UK has been living under severe local restrictions for months, and many more areas are joining them. Fast, reliable broadband is now no longer a nice-to-have but a fundamental necessity. Indeed, the pandemic has underscored that communication rights in the 21st century should be built on a universal right to Internet access.

That is why the findings of last week’s National Audit Office report, ‘Improving Broadband’, are so worrying – and why we urgently need an alternative to delivering the UK’s digital infrastructure. The report, which examines the decade-old 'Superfast Broadband Programme' introduced by the Coalition in 2010, highlights real improvements in broadband connectivity and coverage. However, far from meeting the government’s target of having “the best” superfast broadband network in Europe, the UK is lagging behind: it ranks only eighth, with 1.6 million homes and businesses lacking access to superfast speeds. Moreover, there are sharp digital divides in terms of both connection and speed by income and region: more than half of all of the UK’s 650 constituencies have below 5% full-fibre coverage, while just ten constituencies have coverage of greater than 60% and just 47% of those living on a low income use broadband internet at home.

Critically, the report found the UK network is no longer future proof, with efforts to build the next generation of digital infrastructure failing badly: it ranks 27th out of 28 European countries in terms of connection to gigabit-capable broadband (speeds of up to 1,000 megabytes) and only 14% of households have a full-fibre connection. This puts the country 35th out of 37 countries assessed by the OECD for the proportion of fibre connections in its total fixed broadband infrastructure. The future is being built, just not here.

Strikingly, the report stressed that multiple owners of broadband infrastructure competing to deliver to the network “did not translate into more competition or better outcomes for consumers”. This is particularly troubling because encouraging private investment via market-led competition – supported by billions of pounds of public subsidies – is the government’s preferred route to delivering the UK’s full-fibre network.

Yet a wholly market-led, for-profit model is ill-suited to building and maintaining vital infrastructure like the full-fibre network. This infrastructure is characterised by high fixed costs and economies of scale that make deployment unprofitable in rural or poorer areas and leads to underprovision. Indeed, deployment of full-fibre exhibits classic market failures: cherry-picking and digital redlining, the failure to deliver universal service without expensive public subsidy, and damaging short-termism. The sector also suffers from poor coordination of investment, with costly and excessive duplication of infrastructure deployment in profitable areas, and severe under-provision in others. As a result, the UK government’s own commissioned analysis found that delivering a nationwide full-fibre network via "enhanced competition" would be significantly slower and more expensive than by a monopoly provider; a CapEx cost of £32.2 billion against £20.3 billion.

The future is being built, just not here.

We shouldn’t be surprised. The priority of private infrastructure companies is the maximisation of shareholder wealth, not the most effective delivery of the UK’s infrastructural needs. For example, since it was privatised in 1984, BT has paid out more than £54 billion in dividends in today’s prices. As Andrew Towers argues, “this could have paid for a full-fibre broadband network for the UK twice over.” And many operate like infrastructure rentiers: the level of investment in the telecoms industry over the past twenty years has been relatively flat in nominal terms, with the sector ‘sweating’ existing assets rather than "significantly expanding the capital stock," even as the sector has provided a steady stream of dividends to its investors.

What’s more, left to profit-maximising telecoms firms, digital infrastructures are likely to be designed to meet the needs of "surveillance capitalism", focused on generating behavioural data that can be translated into insight, intervention, and profit – a business model that will not deliver a digital landscape that is sustainable, privacy enhancing, rights-preserving, innovative and democratic. As our reliance on digital infrastructure deepens, the need for an alternative is ever-more urgent.

Another digital world is possible. But delivering it will require moving beyond the “regulatory state” and market-oriented approaches that have dominated the development of digital infrastructure in recent decades – and which, while generating a rich stream of dividends for private investors, have led to the slow rollout of full-fibre, increased corporate concentration and control, poor treatment of telecoms workers, and a deep digital divide. The alternative is clear: we should move toward treating digital connectivity as a right and organising digital infrastructure – including the rollout and maintenance of fibre optic connections – as a vital 21st century public good, underpinned by democratic ownership and governance.

Another digital world is possible.

To that end, as part of any future recovery plan, a new public infrastructure company should be created and tasked with rolling out a 100% full-fibre network, based on taking Openreach (and the parts of BT Group relevant to rolling out the core network) into public ownership. A mission to connect the nation should be central to a post-COVID recovery that is prosperous and just, with a ‘retrofitting revolution’ building a 21st century digital infrastructure.

A portion of funding for investment could come from charging ISP providers for access to the network, just as Openreach currently does. Rather than paying dividends, the company should reinvest profits back into rolling out the network. The cost of public borrowing for investment is notably lower than for private companies, and is at near-record lows. To finance the remaining Capex requirements to deliver a nationwide network, the public infrastructure company should take advantage of low interest rates, borrowing to invest. In doing so, a public monopoly would be able to plan and deliver a universal 21st century digital network faster and more affordably than an approach relying on market-led competition.

Though in December’s election these ideas were derided as ‘broadband communism’, in reality, they are common sense and should appeal to all political traditions. After all, Gladstone nationalised the telegraph industry and Asquith took the telephone sector into public ownership to ensure the emerging networks achieved nationwide coverage. Full-fibre is the 21st century equivalent.

The effects of COVID-19 – where a digital divide over access to and quality of broadband has exacerbated social and economic inequalities – has underscored the need to make Internet access a 21st century human right, not something delivered primarily through the market. It is now foundational to our ability to lead a fulfilling life in the digital age: to connect, communicate, play and work.

Once the UK’s full-fibre network is complete, public ownership of the infrastructure can enable connection to be organised based on universal, decommodified connection, with the operating and connecting costs covered through general taxation as part of an ambitious universal basic services agenda. ‍

If COVID-19 is shaking our foundational assumptions, it is time to rethink the building and maintenance of the fundamental digital infrastructures upon which we all rely.

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