The National Audit Office has slammed the UK’s rural broadband programme for being over budget and two years too late.
The report, The rural broadband programme, predicts that BT will only manage to complete nine out of the 44 Broadband Delivery for the UK (BDUK) contracts before May 2015. The last contracts will be finished some 22 months after that, in March 2017.
The lack of competition, the Department for Culture, Media and Sport (DCMS) moving the goalposts and the fact that BT now stands clear to snap up the remaining BDUK contracts has also been criticised by the NAO.
“The rural broadband project is moving forward late and without the benefit of strong competition to protect public value. For this we will have to rely on the Department’s active use of the controls it has negotiated and strong supervision by Ofcom.”
A BT spokesperson argued that BT deserves the money as competition at the start of the process did create value for money and that only BT bothered to go the distance:
“There was strong competition when prices were set at the start of the process and that has ensured counties have benefited from the best possible terms. Deploying fibre broadband is an expensive long-term business and so it no surprise that others dropped out as the going got tough. BT on the other hand has stayed the course and invested significant sums in rural Britain even though the payback period in such areas is longer than in the first two thirds of the UK which has been funded by BT alone.”
But the NAO argues that BT is the only company that could have gone the distance. The gap funding model, the requirement for contractors to open up their networks to competitors and ‘unattractive commercial conditions’ were all cited by the NAO as reasons why everyone bar BT dropped out.
The NAO claims that BT has contributed just 23 per cent of the overall funding of £1.5 billion and there’s a £207 million shortfall. By the end of BDUK, the NAO expects that BT will have benefitted from £1.2 billion of public investment.
The figures however don’t take into account the fact that a third of BDUK contracts have not been awarded. In a one-horse race it’s a given that BT will get them. BT will match-fund any contracts it receives, meaning this 23 per cent figure will grow. Match funding from BT won’t likely eclipse £1.2 billion.
The bottom line is that the majority of the British public will (eventually) benefit from upgraded broadband connections which can be upgraded on a per-connection basis capable of providing speeds of up to 10Gbps.
Consider as well that BT has invested £2.5 billion of it’s own money on connecting two-thirds of the UK to superfast broadband.
BT will be indirectly benefitting from £1.2 billion of public money but the obligations to open the network up to the competition means that customers will be able to order in services from other ISPs. Already there are 80 companies selling fibre-based services on the Openreach network.
The cost and delays on BDUK can be weighed against other big projects like HS2. The high speed rail project, which will only benefit those living in cities and is expected to cost over £30 billion. Not a single metre of track has been laid yet.
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