MPs: ‘BT gifted rural broadband monopoly’
April 1, 2014
By Colin Mann
The UK Parliament’s Public Accounts Committee has accused the government of failing to deliver meaningful competition in the procurement of its £1.2 billion (€1.4bn) rural broadband programme designed to help get broadband to areas, mainly rural, where commercial broadband infrastructure providers currently have no plans to invest, accusing it of leaving BT effectively in a monopoly position.
The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, said that since the Committee’s hearing in July 2013, when 26 of the 44 contracts to deliver the programme were with BT, all remaining contracts had now also gone to the telco. “Despite our warnings last September, the Department for Culture, Media and Sport has allowed poor cost transparency and the lack of detailed broadband roll-out plans to create conditions whereby alternative suppliers may be crowded out,” she added.
She said that whilst BT claims it is making further concessions, this is not impacting on rural communities. “Local authorities are still contractually prevented from sharing information to see if they are securing best terms for the public money they spend. Communities can still not access the detailed data they need to understand whether they will be covered by BT’s scheme in their area. Other broadband providers might be squeezed out of the rural market by BT’s actions,” she warned.
According to Hodge, BT’s monopoly position should have been a red flag for the DCMS. “But we see the lack of transparency on costs and BT’s insistence on non-disclosure agreements as symptomatic of BT’s exploiting its monopoly position to the detriment of the taxpayer, local authorities and those seeking to access high speed broadband in rural areas,” she stated.
The Committee recommends that the DCMS should work urgently with all local authorities to publish detailed mapping of their implementation plans, enabling searches down to full (7-digit) postcode level. The information should include speed of service, as soon as that is available.
It also recommends that the DCMS should collect, analyse and publish costs data on deployment costs in the current programme, to inform its consideration of bids from suppliers under the next round of funding.
Before the next round of funding is released, the Committee recommends that the DCMS should work with local authorities to identify opportunities to promote competition and value for money; including considering alternative solutions, joint working and fair capital contributions from suppliers.
Communications Minister Ed Vaizey contended that the rural broadband roll out was ahead of schedule. “Multiple robust safeguards are already in place to ensure value for money, and thousands of homes and businesses up and down the country are already getting the benefits,” he said. “We continue to promote competition and have insisted on enhanced transparency from both local authorities and suppliers.”
In response, BT said the Broadband Delivery UK, responsible for the project nationally, is “successful” and said it was “frustrating” that the committee “continues to try and pick holes” adding that it respected the role of the committee but felt its criticism of BT was “inaccurate and unjustified”.
BT said it was the only company willing to accept the “challenging” terms on offer, suggesting that other players had walked away when they realised “easy pickings” weren’t to be had.
“Claims that BT is a ‘monopoly’ are simply inaccurate given more than 100 Internet service providers are offering fibre broadband across BT’s open network,” it said.