Free superfast broadband for all, Labour Party pledges ahead of UK election

London(CNN Business) The UK's main opposition party has promised to provide "fast and free" full-fiber broadband across the country by nationalizing parts of BT Group (BTGOF).

Labour leader Jeremy Corbyn is expected to say in a speech Friday that if his party wins the December 12 general election, the public service will bring "communities together, with equal access, in an inclusive and connected society."

The plan to nationalize parts of Britain's largest broadband and mobile provider follows previous Labour pledges to take ownership of other utilities including the railways and postal service.

It would see a Labour government take control of BT's telecoms infrastructure arm, Openreach, and form a new public entity known as British Broadband. It is unclear how Labour would pay for the nationalization.

The plan to nationalize parts of Britain's largest broadband and mobile provider follows previous Labour pledges to take ownership of other utilities including the railways and postal service.

The party said it would cost £15.3 billion ($19.7 billion) to roll out free superfast broadband for up to 18 million premises, by 2030.

The annual maintenance cost will be around £230 million ($296 million), according to Labour, and will be funded by taxing multinationals, like "Amazon, Facebook and Google."

"It's time to make the very fastest full-fibre broadband free to everybody, in every home in every corner of our country. Making it free and available to all will open up opportunities for everybody, at the cutting edge of social and economic change," the Labour Party said in a statement.

According to a December 2018 report from UK communications regulator Ofcom, large parts of the country are still poorly served by communications services.

Only 6% of homes and businesses have access to full-fiber connections, according to Ofcom. Full-fiber connections offer lightning quick download speeds of up to 1 gigabit per second.

Speaking to BBC Radio on Friday, UK Prime Minister Boris Johnson criticized Labour's proposal, warning that Corbyn's "crackpot scheme" would involve "many many tens of billions of taxpayers money."

Shares in BT dropped 2.4% in London after Labour unveiled its plan. The stock is down roughly 20% this year amid fallout from an accounting scandal in the company's Italian unit.

"Whatever the result of the election, we'd encourage the next government to work with all parts of the industry [on full-fiber]," BT said in a statement. "It's a national mission that's bigger than any one company."

Virgin Media, another broadband provider, said that while it was expanding its network using private money, government has a role to play in the industry.

Policymakers, it said in a statement, "can help to accelerate broadband deployment in a way that minimizes the level of public subsidy needed and provides the UK and consumers with incredible connectivity within a competitive market."

UK telecom company TalkTalk paused a deal to sell its superfast broadband business, FibreNation, following the Labour announcement, CEO Tristia Harrison told reports. Its shares dipped 3%.

Julian David, Chief Executive of trade association techUK said the proposals "would be a disaster for the telecoms sector and the customers that it serves."

"Renationalisation would immediately halt the investment being driven not just by BT but the growing number of new and innovative companies that compete with BT," he added.