Financial News

  • 2 April 2014, 5:46

BT Rural Broadband Rollout Under Fire

BT has come under fire from MPs because of its "virtual monopoly" in the rollout of the broadband access for rural areas programme.

The powerful Public Accounts Committee (PAC) said the decision to award all 44 contracts to the company in the 1.2bn scheme had "failed to deliver meaningful competition".

The project was designed to provide those in the countryside with fast data speeds in areas not considered commercially viable.

The PAC said the contract awards by the Department for Culture, Media and Sport (DCMS) gave BT a stronger position while reducing an insistence on value for money.

It said the DCMS should have seen the monopoly position as a "red flag", especially after earlier alarm bells were sounded.

PAC chair Margaret Hodge said: "Since our hearing in July last year, when 26 of the 44 contracts to deliver this were with BT, all remaining contracts have now also gone to BT.

"Despite our warnings last September, the DCMS has allowed poor cost transparency and the lack of detailed broadband rollout plans to create conditions whereby alternative suppliers may be crowded out."

The PAC said publicly-released details remain vague about BT's rollout plan which made it even harder for alternative suppliers to fill gaps or offer higher download speeds.

Mrs Hodge added: "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.

"But we see the lack of transparency on costs and BT's insistence on non-disclosure agreements as symptomatic of (it) exploiting its monopoly position to the detriment of the taxpayer, local authorities and those seeking to access high speed broadband in rural areas."

However, BT rejects the criticism that has been levelled at it and claims of its monopolistic actions.

A spokesman told Sky News: "We respect the role of the committee but we feel their criticism of BT is inaccurate and unjustified.

"BT was the only company willing to accept the challenging terms on offer and make a significant investment in rural areas.

"This was at a time when others 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 ISPs are offering fibre across BT's open network.

"BT is delivering value for money and the National Audit Office acknowledged there are 'robust' processes in place to ensure that."

Meanwhile, the Independent Networks Co-operative Association (Inca) - set up to aid a more holistic broadband system - is pushing for greater inclusiveness.

Inca said: "There has been zero competition for the 1.2bn of public funding despite evidence that independent providers can often deliver better services, more cost-effectively than BT.

"Government and local authorities must now take steps to ensure that there is genuine competition for the additional 250m (plus local match) of superfast extension funding.

"This means genuine transparency over current contracts - where and when BT plan to deliver - and a willingness by Whitehall and local authorities to encourage alternative providers."