The government’s Broadband Delivery UK (BDUK) project has received stinging criticism from the National Audit Office (NAO) for delays, a failure to generate competition and a lack of transparency on the prices BT is charging local authorities.
The report savaged the fact that the Department for Culture, Media and Sport (DCMS) target of providing superfast services to 90 percent of the nation by 2015 is likely to fall short, saying the rollout will be 22 months later than planned.
As a result it said only nine of the 44 projects will be complete by 2015, and it slammed the fact that competition for contracts has been non existent, despite nine firms showing interest in bidding at the start, allowing BT to hoover up the contracts.
“Competition has been limited. The design of the competitive framework had the advantages of ensuring affordability and transferring risk but, together with State aid conditions and other commercial factors, led to potential suppliers withdrawing from the bidding process,” the report said. “BT was left as the only active participant in the framework and is likely to win all 44 local projects.”
Not only this, but the NAO was concerned that BT was being cagey with its pricing, leaving it unclear whether tax payers are getting value for money from the project.
“The DCMS has secured only limited transparency over the costs in BT’s bids. It does not have strong assurance that costs, take-up assumptions and the extent of contingency contained in BT’s bids are reasonable,” it said.
Amyas Morse, head of the National Audit Office, said: “The rural broadband project is moving forward late and without the benefit of strong competition to protect public value. For this we will have to rely on the Department’s active use of the controls it has negotiated and strong supervision by Ofcom.”
The chair of the Public Accounts Committee (PAC), Margaret Hodge MP, said the report's findings were damning and she attacked the DCMS for failing to run the system properly.
“The DCMS has not had a good enough grip on its rural broadband programme. In an attempt to reduce public costs and risk, the department has ended up stifling competition,” she said.
"BT has won all 26 contracts so far. 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.”
She urged Ofcom and DCMS to take control of the situation to ensure it delivers
better value for money.
“Ofcom needs to up its game and ensure BT does not make super profits out of its dominance of the wholesale broadband market. DCMS must take more control of the programme to ensure people in rural areas get the superfast broadband they were promised, at a reasonable cost to the taxpayer," Hodge said.
BT took issue with some of the criticism leveled at its role in the process, claiming it has strived to deliver its rollouts as cost-efficiently as possible.
“BT’s fibre programme has been one of the most efficient in the world with the company going further and faster than industry experts thought possible,” the company said. “BT has applied these cost efficiencies to its BDUK work and so the company is delivering excellent value for money.”
It also said that, although there is now no other competition, this only underlines the strength of the firm’s offerings and history in the telecoms market.
“There was strong competition when prices were set at the start of the process and that has ensured counties have benefited from the best possible terms. Deploying fibre broadband is an expensive long-term business and so it no surprise that others dropped out as the going got tough,” it said.
Ofcom said it remained committed to ensuring regulation and competition in the market: "This week we outlined new proposals to promote competition by making it quicker and cheaper to switch fibre customers from one provider to another,” a spokesperson told V3.
The DCMS, said it recognised some areas of the programme needed improving and is already working to address this.
“We agree that effective enforcement of the contracts is important and are working with local authorities to ensure this,” a spokesperson for the department said. “As the NAO report makes clear, the project’s funding model greatly reduced the cost and financial risk to the taxpayer.”
The report comes as the government sets out new goals for its broadband targets, aiming to ensure 99 percent of the population can access superfast services, either by fixed or mobile services, by 2018.
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