Government leaves BT with monopoly on public broadband funds

Government won't change public broadband funding scheme, after Fujitsu leaves BT as the last man standing

Nicole Kobie
19 Mar 2013

The government has said there will be no change to rural broadband funding despite Fujitsu - the only rival to BT - pulling out of the bidding process.

Broadband Delivery UK (BDUK) is the government's system for doling out £530 million in broadband funding, with the goal of giving 90% of British homes access to superfast connections by 2015. So far, all of the projects have been won by BT over it's only approved rival Fujitsu.

Now, Fujitsu has said it won't be bidding on any future projects, despite only a quarter of the total 43 deals awarded.

"Various conditions surrounding the BDUK process, which we have discussed with the DCMS, effectively rule Fujitsu out of the competition for new areas," the company told The Financial Times. "So while we remain supportive of the process and its objectives, we are not actively pursuing opportunities within it."

Despite BT now being the only bidder, the Department for Culture, Media, and Sport (DCMS) said it would not alter the BDUK procurement process.

"It won’t change it," a DCMS spokesman told PC Pro. "We knew right from the start that in some places there would only ever be one bidder, so the framework was designed to function effectively in situations where there is only one bidder. It was designed to be able to deal with this, so there’s no need to rework it."

If local authorities aren’t happy with the offer suggested by BT, the different parties will have to "sit around the table and come up with an agreement", the DCMS said.

"What the framework does is ensure value for money is delivered. If the council or BDUK saw that value for money wasn't being delivered, we simply wouldn't fund the project," the spokesman said. "That doesn't do anyone any favours, because BT, and everyone, will want the project to go ahead. So we would sit down with BT and look at why we don’t think it’s value for money and come up with the plan to roll out the broadband that all three parties are happy with."

The framework won't be reopened to allow other companies to join the procurement process, the DCMS spokesman confirmed.

Competition concerns

The BDUK process was delayed last year after concerns from the EU about the lack of competition in the bidding, but the DCMS said it doesn't foresee further hurdles from Europe now that Fujitsu has pulled out.

"The government is keen that there is as much competition as possible for these contracts but has always accepted that there are some projects which are not as commercially competitive due to the scale of work and infrastructure required," the DCMS added in a statement.

A spokesman for BT told PC Pro that the company felt the bidding process was working, and that merely getting onto the BDUK framework in the first place was a competitive process.

"If other companies have withdrawn from the process, it is because they are unwilling to invest the large sums that are required without being guaranteed a short-term return," BT said. "That is despite several of them pledging to make such an investment. In contrast, BT has stood by its promises saying it will invest up to a billion pounds via the process, but accepting that the payback period will be more than ten years."

Of the projects doled out so far, BT has contributed about 40% of the total funding, to a total of £336 million.

The DCMS added that the broadband roll out was moving quickly, with a project a week going through the procurement process.

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