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Report slams government for giving BT superfast broadband monopoly

A report has slammed the government’s superfast broadband plans for essentially handing BT a superfast ‘quasi-monopoly’. 

BT is accused by PAC (Public Accounts Committee) chair Margaret Hodge of exploiting its dominant position by restricting access to information and not providing good value for the £1.2 billion of taxpayer’s money it’s been given. 

The BDUK (Broadband Delivery for the UK) contracts signed have required BT to connect around 90 per cent of properties in a county, region or country to superfast fibre-based broadband. Information on where the 10 per cent of premises, typically in remote rural areas, is scarce. 

An Openreach van poised for action in a sleepy London suburb

This prevents competing ISPs from intervening and helping bridge the UK’s growing digital divide. 

BT and DCMS have been criticised for withholding this information before. But the incumbent telco has said it’s up to local authorities to reveal this information.

Despite this, Committee report claims that BT has not been forthcoming with the details. The report states:

“The Department welcomed BT’s statement at our hearing that it has no objection to publishing this data for finalised contracts. But we are very concerned to hear that local authorities and community based organisations have since continued to encounter resistance from BT to publishing detailed roll-out plans.” 

The report urges DCMS (Department of Culture, Media and Sport) which is responsible for BDUK, to force BT to reveal the whereabouts of the 10 per cent. 

The Public Accounts Committee also criticised a lack of transparency over costs, arguing that local councils have not been able to negotiate with BT, now the de facto winner of all remaining contracts, to get a better deal. 

BT: It’s not a monopoly if we let other ISPs use it 

“The standard contract between BT and local authorities includes a clause that prevents the local authority from disclosing the costs involved to other local authorities who are negotiating contracts. This means that other local authorities’ negotiating positions are weakened by a lack of comparable cost data against which to assess BT’s bid. In addition, the Department does not know how much contingency BT includes in its bids, and estimates vary.”

A BT spokesperson told us that the Public Accounts Committee’s findings are based on out of date information: “We’re disturbed by today’s report – we believe it’s simply wrong and fails to take on board a point-by-point correction we sent to the committee several weeks ago.”

 The spokesperson argued that BT has not been handed a monopoly as its network is open to competing ISPs like Sky, TalkTalk and Zen Internet, all of which have launched FTTC (Fibre to the Cabinet)-based services on the Openreach network. 

Terms of BDUK bids meant that contract winners would have to open up their networks, something which the likes of Fujitsu and Geo Networks wouldn’t do. 

“We have been transparent from the start and willing to invest when others have not, so it’s mystifying that we’re being criticised for accepting onerous terms in exchange for public subsidy – terms which drove others away,” the spokesperson added.
“The taxpayer is undoubtedly getting value for money. BT faces a payback period of around 15 years on its rural broadband investments in spite of the subsidies available and DCMS has imposed a rigorous auditing process that ensures every penny is accounted for.”

BDUK: The goalpost has widened by two years – and five per cent

Elsewhere in the report there’s criticism of plans to move the BDUK finish date back two years, although it should also be noted that as well as moving the goalposts, the government also increased the minimum superfast coverage target from 90 per cent to 95 per cent. 

This means that local authorities would have to provide location information on where the 5 per cent of rural homes and businesses are located, not 10 as the report states. Perhaps this is what BT’s spokesperson meant by out of date facts. 

Efforts are currently being made by culture secretary Maria Miller, who wants to stop local authorities getting any extra BDUK funding until they’ve released information on the 5 per cent

This is in line with the PAC’s recommendations at the end of the report which call for a halt on further government spending until ‘approaches to secure proper competition’ have been developed.

Despite this, we’re still hearing of problems with local councils sending out mixed signals. In Lancashire, BT announced plans to install fibre broadband using BDUK money in an area where local project B4RN had already planned to build. 

DCMS revealed earlier this week that 10,000 rural premises are being connected to superfast broadband every week. It expects that by Sping 2014, this figure will have increased to 25,000 and climbed to 40,000 by the Summer. 


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