EU competition concerns could delay UK broadband

EU concerns about a lack of broadband competition could delay government funding aimed at upgrading infrastructure.

The government has offered £530m funding to upgrade broadband infrastructure so that 90% of homes have superfast connections of at least 24Mbits/sec, with everyone else guaranteed 2Mbits/sec, by 2015.

The process has already been frustratingly slow, with a much criticised Broadband Delivery UK-led procurement process dragging on.

Now, despite millions being spent on legal and consultancy fees, the process could still be derailed for six months by officials in Brussels, who have yet to clear the state aid subsidies.

There may not be the engineering resources to deliver in the timescale left

Although the permission was always a necessity to meet anti-protectionism regulations, officials in Brussels are understood to be uneasy about the level of competition in the UK process, where companies are invited to bid for contract in some 35 UK regions.

BT and Fujitsu are the only companies left in the running for contracts financed by £530 million of public money.

Brussels doubts

“There are issues – and a whole range of people have been in negotiations with BDUK, but [outside BT] all except for Fujitsu came to the conclusion that it wasn’t really going to work for them as things stood,” said Malcolm Corbett, chief executive of the Independent Networks Co-operative Association.

“It’s come down to a framework where there are only two players on the framework and it has yet to be signed off for state aid approval by Brussels,” said Corbett. “It doesn’t look like there’s going to be a significant degree of competition. In some areas, BT will be the only company involved.”

Competition watchdogs in Brussels are also understood to be concerned that BT has not been forced to rent out its fibres in a more open fashion, with the EU preferring “dark fibre” – where rival firms share infrastructure.

“If it was not BT then things in Europe would go smoother – mainly due to the reluctance from BT to unbundle the fibres and offer dark fibre,” said Andrew Ferguson, network expert at Thinkbroadband.com.

“BT is reticent because, in the UK’s cities, there is a lot of fibre infrastructure competition (just not to consumers), in Europe it seems the situation is different.”

While neither issue is expected to see the plans rejected, it could see procurement put on hold for up to six months, according to a report in The Guardian.

A spokesperson for BDUK said: “We are working with the Commission to finalise agreement on state aid. We are confident the vast majority of councils will meet our timetable and complete procurement by the end of the year.”

Engineering work

But even if the EU does approve the plans, the potential hold-up could cause a bottleneck – with publicly funded projects all due to go live at once, there may not be enough engineers to spread between the projects.

“There is a bigger risk that even if all the projects are approved, the final part of the timeline – that is implementation – will be the same few months of 2014 in all the 35 areas, and there may not be the engineering resources to deliver in the timescale left,” said Ferguson.

“BT Openreach is in a better place, as the teams working on commercial roll-out can simply switch onto the local authority work, but how fast can Fujitsu scale its work for the areas it wins?”

We’re waiting to hear back from Fujitsu on its plans, while BT says it is working with officials in the UK and Europe to highlight the UK’s competitiveness.