The UK Labour Party plans to nationalize British Telecom

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The UK Labour Party plans to nationalize British Telecom

Category : entrepreneur

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Just weeks before the December 12 UK General election, the Labour Party announced plans to provide free, nationwide full-fiber broadband access by 2030, according to the Financial Times.

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Should it come to power, a Labour government would allocate £20 billion ($26 billion) to kick-start the nationalization process, which would see the government purchase divisions within Brittish Telecom (BT), including Openreach and portions of BT Technology, BT Enterprise, and BT Consumer.

Labour plans to tax big tech companies like Google and Facebook to pay for network upkeep — an estimated £230 million ($297 million) per year. Though far from a certainty, the plan poses a major operational disruption for the likes of Sky, TalkTalk, and Vodafone, which rely on BT’s Openreach network. 

The UK’s two major parties both plan to expand broadband access in response to dissatisfaction with the UK’s slow, expensive network — but their plans vary drastically: 

  • The Conservative Party plans to accelerate the status quo with increased funding for public-private buildout of fiber broadband coverage. The leader of the Conservative Party, Prime Minister (PM) Boris Johnson, plans to accelerate the due date for nationwide full-fiber broadband coverage to 2025, eight years earlier than former PM Theresa May had planned. However, Johnson only earmarked £5 billion ($6 billion) in government subsidies for the project despite its aggressive timeline: Reaching the 2025 goal would require a fivefold increase in the pace of BT’s Overreach network buildout, according to Wired.
  • The Labour Party aims to improve access to and quality of full-fiber coverage by removing private companies from the picture. Party leaders suggested that their plan could nationalize the entire broadband industry, including smaller, alternative broadband networks such as Virgin Media’s cable network, which might otherwise be doomed in competing with a free public service. In any case, the public service aims to eliminate what Labour sees as negative externalities of for-profit broadband service, including “rip-off ‘out-of-contract’ pricing” and restrictive access for “those unfairly disadvantaged.” 

No matter which party gains power and attempts to see its plan through, the UK looks primed to award a higher number of contracts for the full-fiber buildout. The UK has a significant endeavor ahead, as less than 10% of the UK can connect to full-fiber broadband, compared with 97% in Japan and around 75% in Spain, according to the Financial Times.

This gap presents a major opportunity for telecom hardware manufacturers, no matter which party gains power. Even the seemingly defunct 2033 broadband plan — which was less ambitious than either of the contemporary proposals — estimated nationwide full-fiber rollout required a minimum of £3 billion ($4 billion) to support commercial investment, according to TechCrunch.

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About Author

Sammy Singh

Global VC, Founder, and entrepreneur extraordinaire as featured in Inc. Magazine, Bloomberg, and Forbes. Sammy Singh is a graduate of UCLA and Wharton School of Business as well as a former student of Loyola University of Chicago. Sammy is best known as a renowned financial technology global entrepreneur and has founded over 26 different firms across industry and all over the world. He is a venture capitalist,a TV/ Film actor, tax specialist, and marketing solutions strategist. Connect with Sammy Singh on social media below!

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