MPs: Don’t hand more broadband funding to BT

BT must not receive more funding to extend superfast broadband coverage across the UK until the government has ensured there’s more competition, MPs have said.

MPs: Don't hand more broadband funding to BT

BT is currently the sole bidder in the government’s existing £530 million rural broadband programme, which aims to bring superfast internet coverage to 90% of the UK by the end of next year.

It appears with this £250 million that local bodies can simply decide to extend contracts with BT where they are in place

The cash has been allocated by the Department of Culture, Media and Sport (DCMS) to local authorities around the UK, who must find a suitable partner to build out a superfast broadband network. Every contract so far has been won by BT, which has promised its own additional investment of at least £415 million.

That process was slammed by the parliamentary Public Accounts Committee last year, which said the programme had been “mismanaged”. Citing a critical National Audit Office report, the committee pointed out the project was behind by two years, and claimed BT didn’t offer the best value for money.

Now the government has outlined plans to hand an extra £250 million to councils after 2015, which will help extend superfast coverage to 95% of the population by 2017.

Straight to BT

But the Public Accounts Committee said the government hadn’t done enough to ensure councils wouldn’t simply hand the money over to BT.

“Although the [government] has stated that it is consulting with stakeholders and local bodies on its future approach, including the scope for competition and consideration of value for money, it appears with this £250 million that local bodies can simply decide to extend contracts with BT where they are in place,” a spokeswoman told PC Pro. “This is just not good enough.”

The committee said it wanted to see “proper competition” and that it would summon DCMS to a third hearing if it wasn’t happy with the funding allocation.

BT has said it would probably bid for the new funding, once local authorities had determined what to do with the cash. It also batted off the committee’s claims it didn’t provide value for money.

“Where there are cost overruns, BT incurs them,” the spokesman said. “If there are revenue shortfalls, BT takes the loss. If take-up and revenues overshoot, then the gain is in the government’s favour and there are claw-back mechanisms which mean any surplus gets re-invested into getting coverage even further.”

A spokesman for DCMS said it was up to councils to decide how to spend the new funding, and that the process was in line with EU competition rules.

“Rightly, procurement will be a local decision – we’re are not dictating to local authorities which suppliers they should use,” he said. “Projects will also have to demonstrate that they deliver value for money.”

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