BT 'given rural broadband monopoly'

BT has been given an effective monopoly by the Government to run a taxpayer-funded rural broadband programme, according to a powerful committee.

The communications giant has won all 44 contracts awarded under the £1.2 billion scheme to extended services to areas that are not considered commercially viable.

In a second highly critical report on the progress of the plans, MPs said the Department for Culture, Media and Sport (DCMS) had ” failed to deliver meaningful competition”, which has put BT in a strong position and made it more difficult to insist on value for money.

BT’s position as a monopoly supplier should have raised a “red flag” but the department failed to act on previous warnings that higher standards of transparency around costs must be imposed to ensure that contracts were competitively priced and the company was ” not taking advantage”, the Public Accounts Committee (PAC) said.

Margaret Hodge, who chairs the PAC, said: “The Government has failed to deliver meaningful competition in the procurement of its £1.2 billion rural broadband programme, leaving BT effectively in a monopoly position. The scheme is designed to help get broadband to areas, mainly rural, where commercial broadband infrastructure providers currently have no plans to invest.

“Since our hearing in July last year, when 26 of the 44 contracts to deliver this were with BT, all remaining contracts have now also gone to BT. Despite our warnings last September, the Department for Culture, Media and Sport has allowed poor cost transparency and the lack of detailed broadband rollout plans to create conditions whereby alternative suppliers may be crowded out.”

The PAC found there is still a dearth of information being published about planned rural broadband coverage and speed which makes it difficult for potential alternative suppliers seeking to plug the gaps in provision.

New DCMS guidance should mean that coverage plans for superfast broadband roll-out are published at postcode level but the committee said it was ” still not good enough that, despite £1.2 billion of public money being spent, it is taking so long to get this information out there”.

Mrs Hodge said: ” Whilst BT claims it is making further concessions, this is not impacting on rural communities. Local authorities are still contractually prevented from sharing information to see if they are securing best terms for the public money they spend. Communities can still not access the detailed data they need to understand whether they will be covered by BT’s scheme in their area. Other broadband providers might be squeezed out of the rural market by BT’s actions.

“BT’s monopoly position should have been a red flag for the department. But we see the lack of transparency on costs and BT’s insistence on non-disclosure agreements as symptomatic of BT exploiting its monopoly position to the detriment of the taxpayer, local authorities and those seeking to access high speed broadband in rural areas.”

She added: ” The department should collect, analyse and publish data on deployment costs in the current programme, to inform its consideration of bids from suppliers under the next round of funding. And before that next round of funding is released, the department should work with local authorities to ensure there is real competition and value for money.”

Communications minister Ed Vaizey said: “Britain has the best superfast broadband of all five leading European economies.

“The Government’s nationwide broadband rollout is ahead of schedule; multiple robust safeguards are already in place to ensure value for money, and thousands of homes and businesses up and down the country are already getting the benefits.

“We continue to promote competition and have insisted on enhanced transparency from both local authorities and suppliers.”

BT 'given rural broadband monopoly'