John McDonnell today explained that the broadband nationalisation plans are perfectly affordable – upkeep costs would just be £230m a year. This was based on a report from the National Infrastructure Commission. It compared going for full fibre (the bars in blue, below) with incremental upgrades of the copper system (orange, below) and gave a £6.9bn cost of operating full fibre over 30 years, so £6.9bn divided by 30 makes £230 million. Simples! Or is it?
The sharp-eyed Sam Taylor spotted in the footnotes that £6.9bn is really a discounted cash flow figure. So dividing £6.9bn by 30 to arrive at an annual operating cost estimate of £230m “is therefore a catastrophic spreadsheet error. Or more accurately, the error is the failure to even use a spreadsheet”. When the sums are done properly, the annual operating costs of running a British Broadband Corporation would be an almighty £690m. So, as Taylor puts it, “McDonnell and his advisors are out by a factor of 3, because they don’t know how to use a spreadsheet.
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