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Public Accounts Committee criticises BT over rural broadband roll-out

Margaret Hodge MP, who chairs the Committee, agreed the process had not promoted competition

The parliamentary Public Accounts Committee has slammed the government-funded rural broadband programme, which is allowing BT to receive over £1 billion in state funding to help roll-out fibre broadband, reports the Financial Times.

The funds had been awarded to a "monopoly supplier" [BT], said the Committee. The Committee also questioned BT's "transparency" following criticism of the process taken in evidence from other rival companies who wanted funds.

The parliamentary criticism follows that in a report published by the National Audit Office, which said plans for delivering superfast broadband to more than 90 per cent of the UK were being delivered almost two years behind schedule - and without competition.

Under a framework deal to release over £1bn of public funds, BT is the only bidder after Fujitsu pulled out and a host of other companies refused to take part, after they claimed BT had too many advantages in bidding. For one, BT was already laying fibre in many of the areas covered by the council- and government-funded contracts.

Margaret Hodge MP, who chairs the Committee, agreed the process had not promoted competition. She also criticised BT for not revealing which areas would not be covered by rural broadband, to help competition, and challenged how much private funding would be provided by BT to deliver the fibre networks.

Sean Williams, head of strategy at BT, said the decisions to reveal where the rural broadband rollouts would reach was under the jurisdiction of local authorities. After every contract has been awarded so far, it has been stated by BT in its annoucements that the council and the company will decide together.

Williams also rejected the NAO report's findings on the split of funds from BT and the government.

Hodge questioned whether the process should now be put on hold, even though some of the roll-outs have just started.

A BT spokesperson told the FT: "We are shocked and mystified by some of the ill-informed comments played back by members of the Committee today. Deploying fibre broadband is a complex, long-term investment but that was ignored today as MPs prioritised soundbites over analysis."

At the beginning of this month Hodge said of the rural broadband programme: "The Department for Culture, Media and Sport has not had a good enough grip on its rural broadband programme. Only 9 of 44 locally managed programmes are expected to meet the 90 percent super-fast broadband coverage target by the May 2015 deadline.

"The programme won't now be delivered until March 2017, nearly 2 years late. The Department wanted the private sector to foot 36 percent of the bill for the £1.2 billion rural broadband programme, but it is now expected to contribute just 23 percent, leaving the public sector purse to cover the rest."

She added: "In an attempt to reduce public costs and risk, the Department has ended up stifling competition. BT has won all 26 contracts let so far from the Department's framework contract. It is not much of a competition when you end up with only one supplier actively bidding in a framework, despite nine organisations being interested at the start."

Hodge went on: "BT has been very cagey about its costs. Available comparisons raise potential concerns. For example, BT's bids for the cost of street cabinets are on average 12 percent higher than the actual costs of similar work carried out in Northern Ireland.

"Average project management costs are also more than double the Northern Ireland scheme. Opaque data and limited benchmarks for comparison mean the Department has no idea if BT is being reasonable or adding in big mark ups. Private sector organisations need to be 100 percent transparent about their figures when spending public money. It is not acceptable to hide behind arguments about commercial sensitivity."


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