The Economist - USA (2022-03-12)

48 Britain TheEconomistMarch12th 2022

Thank goodness for government

Britain, payrolled employment

Selected industries, % change Jan 2020-Jan 2022

Source:ONS

2

-10 -5 1050

London Rest of Britain

Hospitality

Artsand entertainment

Transport and storage

Wholesale and retail

Finance and insurance

Construction

Professional services

Health and social work

Administration and support services

Public administration and defence

travellers and tourists dumped their prop­

erties on the market. Rents have rebound­

ed  as  the  excess  is  mopped  up.  Zoopla,  a

listings  service,  says  that  the  number  of

rental properties per estate agent has fall­

en from a peak of 30 in July 2020 to just 11—

lower than before the pandemic. 

Businesses have been less sure­footed.

Mat Oakley of Savills, an estate agent, says

that  many  firms  are  delaying  decisions

about  location  as  they  wait  for  working

habits  to  settle  into  a  pattern.  But  those

that do move strongly favour Grade a offic­

es—the most appealing kind. In a tight la­

bour  market  firms  must  coax,  rather  than

bully, their employees into work. Mr Oak­

ley also believes that workers will be given

more  space,  which  will  put  a  brake  on  of­

fice  downsizing  in  response  to  home­

working. They had gradually lost it over the

years: in 2018 more than a third of offices in

London and south­east England had densi­

ties  higher  than  one  worker  per  eight

square  metres,  according  to  the  British

Council for Offices. 

Coaxing  employees  back  probably  also

means  office  jobs  will  remain  concentrat­

ed  in  central  London,  near  public­trans­

port  hubs,  rather  than  dispersing  to  the

suburbs.  Simon  Brown  of  cbre,  another

estate  agency,  recalls  that  some  people

were predicting a decentralisation of offic­

es as a result of the pandemic. “That is not

how things have panned out,” he says. 

Mr Johnson’s Conservative government

has  little  time  for  London,  a  Labour­

dominated city that it seems to have writ­

ten  off  electorally.  Its  “levelling  up”  poli­

cies  are  all  about  boosting  the  Midlands

and  North,  and  largely  overlook  the  deep

poverty  that  remains  in  the  capital.  It  has

provided  only  short­term  funding  for

Transport for London, which is struggling

with a collapse in revenue from Tube fares,

and  only  after  dire  warnings  that  without

support,entirelinesmighthavetoclose.

Thatneglectcouldyetharmthecity.But

one post­Brexit policy shift will favour

London.InJanuary 2021 Britainwentfrom

animmigrationsystemthatfavoursEuro­

peanstoa systemthatfavourstheglobal

middleclass.Peoplemaybeallowedtoset­

tleifa Britishemployerispreparedtopay

them£25,600($33,600),orthegoingrate

fortheirjobinthecountryasa whole.Be­

causeLondonsalariesarehigher,manyare

likelytostartthere.Thecityusedtobeby

farthemostimportantgatewaytoBritain.

Itoughttoreclaimthatstatus.n

Satelliteinternet

Failure to launch

I

nmarch 2020 OneWeb,a satellite­inter­

net  company,  filed  for  bankruptcy  after

its  biggest  funder,  SoftBank,  a  Japanese

tech  investor,  declined  to  pump  an  extra

$2bn into the firm. OneWeb emerged from

bankruptcy  in  November  2020  clutching

$1bn  of  fresh  capital,  including  $500m

from Britain’s government for a 33% stake,

reduced to 19% in later investment rounds.

It planned to start selling internet access in

Britain in late 2021 and elsewhere in 2022. 

But  OneWeb’s  timelines  have  often

slipped.  In  2018  Greg  Wyler,  its  founder,

was saying he planned to sell internet con­

nectivity  in  some  places  in  northern  lati­

tudes by the end of 2019. By the end of 2021

that  still  had  not  happened.  A  planned

2022  “global  roll­out”  already  looked  un­

likely when, on March 2nd, Russia’s space

agency  set  new  preconditions  for  One­

Web’s planned launch from Baikonur, Rus­

sia’s main spaceport. OneWeb had to guar­

antee that its satellites would not be used

for military purposes. And the British gov­

ernment had to relinquish its stake.

Kwasi Kwarteng, Britain’s business sec­

retary, rejected the demand to sell up out of

hand.  On  March  3rd  OneWeb suspended

launches  from  Baikonur.  Its  36  satellites

and the Russian rocket they are strapped to

were wheeled back into a shed. 

Until then, the task of putting OneWeb’s

satellites  in  orbit  was  going  well.  It  had

launched 428, of a planned 648, through a

contract  with  Arianespace,  a  French  firm

that  managed  its  Russian  launches.  But

losing  Russian  launch  capacity  will  set  it

back.  Other  sitesare  booked  up.  One  firm

that could offer some capacity, Elon Musk’s

SpaceX,  has  raced  ahead  building  a  com­

petitor  to  OneWeb,  launching  more  than

2,000  satellites.  Its  Starlink  constellation

offers services around the world. 

More big­tech money will soon be in or­

bit. Kuiper, a subsidiary of Amazon started

in 2019 by Jeff Bezos, then the firm’s boss,

says  it  will  launch  its  first  satellites  this

year.  Mr  Musk’s  constellation  benefits

from  SpaceX’s  launch  capability.  Kuiper

will be able to piggyback on the ground sta­

tions Amazon Web Services has built to re­

lay  signals  between  satellites,  users  and

the  rest  of  the  internet.  OneWeb  must

stand on its own.

The  loss  of  launch  capacity  comes  on

top  of  other  problems.  A  global  semicon­

ductor shortage means trouble in sourcing

components  it  needs  for  ground  stations.

Its  business  model  is  to  sell  connectivity

wholesale to other internet service provid­

ers,  including  bt in  Britain  and  at&tin

America.  But  that  means  it  must  rely  on

those companies to install the equipment

users need in order to connect to the satel­

lite network. Starlink, by contrast, sells di­

rectly to consumers as well as wholesale. 

OneWeb’s  unusual  range  of  share­

holders also risks muddling its incentives.

When  Britain  left  the  European  Union,  it

lost  any  say  over  Europe’s  Galileo  naviga­

tion system. OneWeb is one of the firms vy­

ing  to  provide  it  with  a  replacement.  And

so British taxpayers find themselves with a

stake  in  a  satellite­internet  company  that

is  competing  with  firms  backed  by  two  of

the  world’s  richest  tech  barons,  one  of

which controls the launch capability upon

which OneWeb may soon depend. 

The  British  government’s  growing  tol­

erance  for  risky  investments  is  part  of  a

shift  in  philosophy  towards  prioritising

ownership  and  control  of  strategic  tech­

nology  infrastructure.  This  has  its  merits.

But  bailing  out  a  capital­intensive  busi­

ness with deep­pocketed competitorsand

a shaky business model always lookedlike

too much risk for too little reward.n

Eighteen months after the government

bailed it out, OneWeb is in trouble

Going nowhere fast