Is Labour's free broadband pledge too good to be true?

Fibre broadband

broadbandchoices takes a long, hard look at the real cost of free, full fibre broadband, as we count down to next month's general election.

Labour’s manifesto pledge to deliver free, full-fibre broadband to all Britons has birthed an endless stream of thinkpieces.

Along the way, it’s been dubbed everything from a “crackpot scheme” to “a return to the vision of its great election victories” and a “radically new approach to capitalism”.

But between the hyperbolic headlines, how feasible is the plan? Is broadband really going to be ‘free’ under Labour? And if so, when?

Here, we take a look at the finer details of Labour’s proposal to sort the facts from the falsehoods.

Will 'free broadband for all' arrive in Labour’s first term of office?

house of commons

It’s very unlikely. Labour has pledged to ensure every Briton has free full fibre broadband within a decade.

Initially it’ll roll out free broadband in areas that are currently least well served by broadband providers. That means rural locations and the most remote parts of the UK will be prioritised.

But the critical thing to note is that rollout to those rural locations will only go ahead after a Labour government has agreed a price with BT’s shareholders.

That could take some time. Not least because among its shareholders are powerful financial institutions who won't roll over easily.

The wait for free full fibre for city-dwellers will likely be much longer. If you’re in London, Manchester or any major conurbation, you probably shouldn’t expect it until much closer to 2030.

Is free broadband for all really fairer and more equitable?

Much like child benefit, free broadband will be a universal benefit. Peers and paupers and dustmen and data-analysts will be equally entitled to a free-of-charge, full-fibre service.

But while free broadband is a brilliantly utopian notion on paper, the truth is that if Labour wants a fairer apparatus for UK broadband provision it should enforce a means test.

After all, if you’re decently remunerated in your job, and especially if you’re a member of the moneyed ‘few’, you probably should be paying for broadband.

That’s not to say that there’s no case for ‘some’ free broadband provision on the part of the state.

But it’d be much better targeted at those most in need, for whom the average broadband bill of £30 per month is no small outlay.

Not least benefit-claimants and pensioners, for whom the internet is a vital lifeline to the outside world.

It'd make a lot to sense to offer free broadband to employment-seekers too, for whom the internet is a vital resource for job-hunting and who are otherwise forced to rely on free Wifi in public libraries.

Will it put a stop to punitive out-of-contract costs?

Contract

Ofcom studies show that 40% of Britons are paying more for their broadband than they have to. The cause? Providers’ practice of raising monthly charges when customers’ contract term ends.

Shadow Chancellor John McDonnell claims the free-broadband plan will change all that and “challenge rip-off ‘out-of-contract’ pricing” by “eliminating bills altogether”.

While that’s surely the case, the days of sky-high out-of-contract prices are numbered anyway. Even in the fast and loose world of the free market.

In the wake of the telecoms regulator Ofcom’s challenge to providers to make pricing fairer for out-of-contract customers, from March 2020 BT, Sky and TalkTalk will allow existing customers to get the same cut-price deals as new customers when they take out a new contract.

Meanwhile, Sky has stated that the price newly contracted customers will pay when their deal expires will not exceed their in-contract price by more than £5 per month. And BT is capping its out-of-contract prices by an as-yet-unspecified amount too.

Just as importantly, at the ‘value’ end of the market, TalkTalk and Plusnet have pledged to insulate out-of-contract customers from above-inflation price rises.

What’s it going to cost us?

Labour has costed the cost of its entire project, including taking BT Openreach back into public ownership and free broadband to all Britons, at £20 billion. By way of comparison, HS2 is currently costed at £88 billion.

As detailed in Labour’s manifesto pledge, the maintenance of the government-owned full-fibre network will be funded by new taxes on large corporations and tech giants who benefit from a faster internet, such as Google, Amazon and Facebook.

Granted, it’s only fair that foreign companies that benefit from the UK’s infrastructure pay their share.

But there remains a degree of disquiet that Labour’s projected spend radically under-costs its broadband grand plan.

August business journal Bloomberg puts the cost of nationalisation alone at £15 billion. BT posits that full fibre network will cost at least £25 billion-£30 billion. While some claim that the total cost will come in at £100 billion.

Recent UK governments' dismal track record of keeping infrastructure projects on-budget doesn’t instil confidence that Labour’s broadband plan will be any different.

And if it does exceed projected costs, it won’t be providers picking up the tab any more. It’ll be taxpayers.