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No more subsidy for BT broadband

February 28, 2014

BT should not be given any more taxpayer money to roll out rural broadband until it is clarifies how it is spending the £1.2 billion (€1.4bn) already awarded to it, says the Public Accounts Committee.

Government audits of how much the telecoms firm charged councils for project management have revealed possible savings of up to 35 per cent. BT has so far won all the UK’s rural broadband contracts.

BT said any savings would go on extending coverage. “Yes, it’s true that BT has been able to save the taxpayer some project management costs,” the telecoms firm told the BBC. Under the original competitive process we were required to bid for each contract individually, with the assumption that we wouldn’t win any others. That hasn’t proven to be the case however and so we are more than happy to pass on the savings we can achieve through economies of scale.”

In response to the news, MPs on the Commons’ Public Accounts Committee (PAC) told the BBC that BT should not yet be allowed to bid for the next round of broadband funding – a pot of £250 million which the government has this week distributed to councils to get fast broadband to their most hard-to-reach communities.

“It appears with this £250 million that local bodies can simply decide to extend contracts with BT where they are in place. This is just not good enough,” a PAC spokeswoman told the BBC. “We want to see clearly what the economies-of-scale savings for the first tranche of £1.2 billion will be before contracts are extended or competed.”

But the Department for Culture, Media and Sport told the BBC it would not be intervening in the process. “Procurement will be a local decision – we’re not dictating who the supplier should be,” it said.

Categories: Articles, Broadband, Policy, Regulation