Yet the government’s own research directly contradicts this argument – and backs the case for state intervention in the broadband market. Government figures show that market competition in the broadband sector has largely failed.
Research commissioned by the Department for Digital, Culture, Media and Sport (DCMS) last year
argued that current major providers are competing for a slice of just 75 per cent of the UK broadband market – and largely ignoring rural areas that they consider unprofitable.
The report considered various scenarios, all involving some kind of government intervention or subsidy to achieve a successful full-fibre broadband rollout. One of the models touted was that of a national monopoly, which “could be expected to deliver a nationwide fibre network coverage, as the monopolist can cross-subsidise between profitable and unprofitable areas”.
Openreach was even identified as the best (and only) contender for the job, and advised against “competitive tendering”. In a similar way to Australia and Singapore, this model could deliver coverage at a lower cost than a model that relies more heavily on the private sector, analysts argued.