By Paul Sandle
Nov 15 (Reuters) - Britain's opposition Labour Party says if
it wins the Dec. 12 election it will nationalise BT's
broadband network and provide free internet for all within a
decade, a radical election pledge to roll back decades of
private ownership.
WHAT LED TO THIS?
The UK's biggest broadband and mobile phone provider was the
flagship of Conservative Prime Minister Margaret Thatcher's
policy of selling state-owned assets, a political revolution
that she said would improve efficiency and "spread the nation's
wealth among as many people as possible".
The 1984 privatisation was three times oversubscribed and
made millions of Britons shareholders for the first time.
But it failed to trigger much competition as the company
kept its grip on the British telecoms market until the
widespread adoption of mobile in the nineties and home broadband
in the following decade.
Regulator Ofcom made BT "unbundle" parts of its network, and
the company created a fixed-line network arm called Openreach in
2006 to offer access to competitors. That led to pay-TV company
Sky and new entrants like TalkTalk becoming
major broadband providers.
WHY DOES THE BROADBAND NETWORK NEED OVERHAULING?
Customers, rivals and the regulator had criticised BT for
poor service and a lack of ambition in upgrading its network to
fibre, where fibre optic cable instead of copper is used to
connect homes to the network. It has also spent billions of
pounds on sports rights.
A full-fibre network could offer speeds of 1 Gigabit a
second.
Some 95% of premises have access to speeds above 30mbps
through BT's hybrid copper-fibre roll-out but some homes and
businesses - known collectively as premises - in rural areas and
in some pockets in major cities, have internet speeds of less
than 10 Mbps on BT's ageing copper connections.
Fewer than 10% of British premises have access to full-fibre
broadband, according to Ofcom, far behind countries like Spain,
Europe's fibre leader, which plans to have 100% 300 Mbps fibre
broadband by 2021.
WHAT ARE THE ALTERNATIVES TO LABOUR'S PLAN?
Conservative Prime Minister Boris Johnson has promised
full-fibre broadband to all homes by 2025.
BT CEO Philip Jansen aims to recast the company as the
national champion the country needs to upgrade communications
for consumers and businesses.
He said BT is ready to accelerate a fibre broadband roll-out
that reaches a home or a business every 26 seconds, as long as
the government and the regulator create conditions that allow it
to make a fair return.
But he said last month Johnson's pledge would be "extremely
difficult" to achieve.
BT's full-fibre network will reach 4 million premises by
2021, and it has plans to reach 15 million by the mid-2020s if
it stacks up commercially.
BT's cable competitor Virgin Media, owned by Liberty Media
, is building out its ultrafast network. Investors
including Australia's Macquarie Group are backing new
network companies.
WHAT ARE THE FLAWS OF LABOUR'S PLAN?
Labour is lagging the Conservatives in opinion polls and
investors do not expect Labour to win the election, but the
proposal creates unwelcome uncertainty for BT, its shareholders
and rivals, which use the Openreach network.
Deutsche Telekom, which has a stake of just over
12%, declined to comment.
Analysts questioned whether the estimated budget of 20
billion pounds ($25.6 billion) was realistic.
Costs in densely populated towns and cities have fallen to
300-400 pounds per premise.
However, capital expenditure per premise passed can
skyrocket to close to 2,500 pounds in more rural areas, Neil
Campling, analyst at Mirabaud said.
Tackling the final 10% of predominantly rural premises may
require "additional funding" of up to 5 billion pounds to
support commercial investment, he said.
($1 = 0.7815 pounds)
(Reporting by Paul Sandle in Barcelona
Additional reporting by Douglas Busvine in Barcelona, Edward
Taylor in Frankfurt and Benoit van Overstraeten in Paris
Editing by Josephine Mason and Frances Kerry)
