Anorak | BT’s really screwing up this broadband, isn’t it?

BT’s really screwing up this broadband, isn’t it?

by | 14th, August 2013

THE Guardian is ranting and railing about how appallingly BT is rolling out fast broadband around the countryside. There’s a useful economic point to be made about this:

Given that everyone agrees that getting Britain online is a public good, what do those giants at the Department for Culture do? Why, award juicy subsidies to private companies to bribe them to do the work.

The point being that a “public good” is the justification for a subsidy from taxpayers. It’s one of the few reasons that even right wing bastards like me will accept. It’s a standard conclusion in economics: public goods are very difficult to make money out of, that’s the nature, definition, of a public good. Therefore we get less of them than we would like and the solution is for there to be a subsidy so we get as much of the public good as we desire.

This is why the government pays for vaccinations and primary schools: they’re public goods. So, the idea that there should not be a subsidy for a public good is just barking.

But it does get better. Much of the rest of the piece is about how awful it is that BT is being used. Slow and expensive apparently. No, not their service, but their putting the wires into the ground. We’re offered a shining vision of what could be done though:

Given this level of public subsidy and the lack of any real competition, it would have been far simpler and possibly even cheaper to have done this through a public entity. But 21st-century market-fundamentalist Britain must always run a race, if only to give a gold medal and a massive handout to the one competitor that actually ran. Yet, as Cochrane points out, only one part of the British Isles actually has superfast broadband running at 1 gigabyte a second: Jersey, which ran the entire thing through its publicly owned telecom company.

That it’s easier to wire up 98,000 people on 120 km2 of land than 65 million on 245,000 km2 of land might strike everyone as a no brainer. But that’s the example they give us. And this is interesting:

BT is rolling out its superfast fibre network across the country and the Government has pledged to subsidise part of the programme, but some critics are unhappy about the way it sells wholesale access to the technology.

Yep, Jersey is using BT and paying it a subsidy to do it.


Posted: 14th, August 2013 | In: Money, Technology Comment (1) | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink