Blunder Down Under Shows U.K. How Not to Nationalize Broadband

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(Bloomberg) --

As opposition leader Jeremy Corbyn tries to lure voters with a plan to return much of Britain’s broadband network to state control, events on the other side of the world provide a cautionary tale.

Australia offers the most ambitious example of a government-led internet rollout in a developed economy and the project has become a byword for mismanagement and delays.

Strategy reversals and cost overruns have left the country languishing at 61st in a global ranking of internet speeds, behind Belize, Paraguay and some former Soviet bloc nations.

The Australian government merged private fixed-line assets into state broadband monopoly NBN Co. on a promise to connect 93% of homes with high-speed optic fiber lines. When that proved too expensive, it opted for a mix of technologies. The legacy is a frustrated public who often find their mobile phones now offer faster connections than landlines.

There’s a reason why only one other country has come close to doing what the U.K.’s Labour Party is planning, said Matthew Howett, founder and principal analyst at policy research firm Assembly. “It’s hard, expensive and fraught with difficulty,” he said in an email.

A British government-commissioned report last year found that Australia’s plans are set to take three years longer than planned and require an extra A$73 billion ($45 billion).

Singapore took a state-led approach and managed to roll out 100% full-fiber coverage in seven years, although that was made easier by its much smaller and denser population. New Zealand, which sits in 23rd place for broadband speeds, used private regional franchises backed up by state subsidies.

Australia now wants to sell NBN back to the private sector. Even that may prove problematic.

“There’s growing evidence that 5G mobile connections will bypass the NBN network and that’s now threatening the privatization plan,” said Ian Martin, a senior telecom analyst at New Street Research.

©2019 Bloomberg L.P.

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