Random Variable

Someone recently stated that the government ought to renationalise telecommunications in order to widen access for the poor.

It should be clear that a privatised communication infrastructure has more readily commoditised access than would have been case on a telecommunications system that continued to be state run.

The history of the Internet tells us that it was Post Office engineers who had started to develop packet switching data networks before the Americans, but higher management failed to invest R&D money to make the system go live.

Unfortunately, telecommunications is the perfect example of how markets have encouraged innovation and prices to fall and fall. I remember when telephone calls was well over 10p a minute for local, and web storage was charged at 50p per byte (this message would have cost £7,000 so far). Early nationalisation as Britain and most of Europe carried out was a good idea as the highly fragmented and monopolised markets of the US show testament to that. But now, the current method of full privatisation with strong oversight by OfCom is the best way forward.

Access to the Internet is not a problem for the poor. Access to a computer, full stop, is. A recent paper (Banerjee and Duflo 2006) tells us that in Ivory Coast, for example, 45% of people earning less than $2 a day have television sets. I’m pretty sure we could generate similar stats on the UK regarding Sky TV. The problem is not that of price, but of public perception. I’m sure the net is seen by most as the place to do online shopping and watch crap on YouTube – not as a place to aid an active deliberative citizenry. I believe the MacArthur Foundation’s recent white paper on digital literacy (Jenkins, et al. 2006) is a good first step on how the curriculum could be modified to maximise the opportunities that the Internet can provide.

In addition, we can use voucher schemes to incentivize internet access for the poor. Either that or the state provides their own ISP that competes on the market with private companies whilst subsidising access. This could have lower download limits (which are only required for illegal P2P activity anyway), so that if people wanted better access, they can go to a more expensive ISP. This is pretty much the same as the free ISPs Sky Broadband Base, Talk Talk, and Orange Broadband already provide. The former option seems the best to me.

Back to nationalisation vs. Privatisation; let’s look at our top countries. Scandinavia is already delivering high speed fibre optics to the home, whilst the US must be credited for the development of the Internet Protocol. Both countries benefitted from enormous R&D expenditure – Scandinavia from the social democrat model, and the US from Cold War military expenditure in academic research without pursuing Intellectual Property rights (Castells 2001). Nationalisation is not the issue here.

Further information

Banerjee, Abhijit V, and Esther Duflo. “The Economic Lives of the Poor.” MIT Economics. October, 2006. http://econ-www.mit.edu/faculty/download_pdf.php?id=1426 (accessed 12 21, 2006).

Castells, Manuel. The Internet Galaxy: Reflections on the Internet, Business and Society. Oxford: Oxford University Pres, 2001.

Jenkins, Henry, Katie Clinton, Ravi Purushotma, Alice J Robinson, and Margaret Weigel. “Confronting the Challenges of Participatory Culture: Media Education for the 21st Century.” Digital Learning @ MacArthur Foundation. 2006. http://www.digitallearning.macfound.org/atf/cf/%7B7E45C7E0-A3E0
-4B89-AC9C-E807E1B0AE4E%7D/JENKINS_WHITE_PAPER.PDF (accessed December 21, 2006).