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Fujitsu pulls out of further broadband bidding

How competitive is the UK’s procurement process?

Fujitsu has quit bidding for funding for two further regional broadband roll-outs in the UK, which is likely to raise concern that BT may end up being the only company to win government funding, creating an anti-competitive market.

The UK government has said that it hopes to have the best broadband network in Europe by 2015, and has committed a minimum of £730 million up until 2015 to support the rollout. The money is being distributed to local authorities that bid for funding via a framework created by governing body Broadband Delivery UK (BDUK).

BT and Fujitsu are the last remaining companies to be picked to compete under the framework, with seven other suppliers having pulled out.

According to the Financial Times, Fujitsu now plans to withdraw from bidding for Cumbria's roll-out, while North Yorkshire is expected to choose BT as its preferred supplier.

It was revealed last month that Cumbria County Council rejected both Fujitsu and BT's initial offers for broadband rollout in the region, citing a complicated process and wanting to get the optimal solution for businesses and communities.

This leaves BT as the only party that has so far won any regional tender since the BDUK process began.

Further to this, in areas that have decided against using the national framework, such as Wales and Highland & Islands, BT is the only company left bidding for the work.

Duncan Tait, chief executive of Fujitsu, said: "We withdrew from Cumbria because we cannot currently see a clear path towards a mass market that is required to attract leading retail service providers. We continue to monitor the market place and see where we can get this to make sense.

"We will look at each on its own merits and see if there is a way to make it work and get to the scale we need for our anchor tenants."

Matthew Howett, practice leader at analyst firm Ovum, told Computerworld UK that he expected this outcome when the government announced its plans.

"I think this has been anticipated more or less from the beginning that BT in many areas was probably going to be the only player left in the bidding process. So I don't think that we can say it's surprising," said Howett.

"From my point of view I think it's mostly due the sub-optimal BDUK procurement process. I think it makes it very difficult for smaller operators to bid for the funding, when they know that they are going to be rolling out a network on a fairly small scale [due to funding only being made available at a regional level].

"Players like BT, who are obviously a lot bigger, have the know-how, have the engineers to hand etc., can carry out a more cost effective rollout. I think that the way the BDUK process runs will always favour somebody that benefits from those additional savings."

He added: "We have always known that bringing broadband to these parts of the country was going to be a challenge. If you look at the £730 million that is available, it's paltry compared to the figures that we were talking about only three or four years ago, where the estimated cost of rollout was in the billions."


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