The tragedy of the £80,000 broadband connection bill

There's a reason economics is called the dismal science - it makes clear some uncomfortable truths. For example, this complaint about an £80,000 bill to be connected to broadband. If it's not worth paying that cost for the benefits to be gained then it's not worth the cost for the benefit, is it? 

The owners of one of rural Scotland’s most popular hotels for walkers and climbers has attacked the dire speed of broadband it can access after being asked to pay £80,000 to get a good connection.

Lesley McArthur, a partner in the Glen Clova Hotel in Angus, said it is forced to make do with an internet speed of only 0.5mbps and the connection disappears altogether if more than one guest decides to log on.

She argued that the remote hotel, which attracts hill walkers across the UK, makes a significant contribution to the local economy but in September was quoted the “absolutely ridiculous” sum of £80,000 by BT for a fibre-optic line.

Although Nicola Sturgeon has pledged that every premises will have superfast broadband with a speed of 30mbps by 2021, she said that the hotel could have lost “a lot of business” by the time this happens.

Let us make the - possibly unwarranted for who knows about BT's pricing but this is going to be true of at least some isolated places within our islands as it is true of electricity supply, piped water or sewage connections - assumption that £80,000 is the true cost. 

The hotel is stating that it's not worth their paying that bill for the economic benefits it brings. There is no spillover effect here, no value of a connection which they cannot capture. Thus, if it's not worth their paying the bill it's not worth anyone else doing so either.

That is, we've not changed the cost benefit analysis by suggesting that the taxpayer should pick up the bill instead. Or BT shareholders perhaps, through a universal service provision. Running broadband, with current technology, to every place out in the boonies (and looking at the map, this really is the boonies) simply isn't worth it. It makes us all poorer, the value added is less than the cost.

So, let's not do it, whoever is paying for it and however. Why would we want to make ourselves generally poorer?