The government and BT have come under intense criticism from MPs for the Broadband Delivery UK (BDUK) project, with a lack of rollout transparency and competition cited as major concerns.
In feisty exchanges, the chair of the Public Accounts Committee (PAC) Margaret Hodge rounded on Sean Williams, group director of strategy and policy portfolio at BT, claiming the firm has drastically reduced the funding it initially promised.
Hodge said the firm had promised spending of £1bn for rural broadband rollouts in June 2012, but this figure is now just £368m, although Williams claimed this was wrong and the number is over £700m, when operational costs are factored.
He also said all the money being spent belonged to the firm’s shareholders that “would not be spent otherwise”.
However, Hodge was unimpressed by this, saying it was “shocking” and “outrageous” that BT was being given £1.2m of taxpayers’ money for the rollouts, despite not being transparent on rollout locations and pricing models.
The lack of transparency on pricing was also discussed by Malcolm Corbett, chief executive of the Independent Networks Co-operative Association (INCA) and Nicholas James, chief executive of UK Broadband, who cited numerous concerns with BT.
They said BT’s failure to provide specific information on the final ten percent of rural locations where networks need to be installed made it hard for rivals to plan their bids with adequate pricing knowledge.
Corbett went as far as to deliver the standout line of the sessions, likening BT to a ‘vampire death squid’ for the way it acts towards smaller, local providers.
"There are many future-proof networks that are trying to provide broadband [in rural areas], such as the community organisation B4RN. All of those face being overbuilt with BT turning up with public funding," Corbett said.
"For those providers, BT does not look like the big, friendly, cuddly giant British Telecoms that we all know, it looks more akin to a predatory organisation going after them – it is much more like they are facing a vampire death squid waiting to gobble them up and destroy them," he added.
TalkTalk’s chief executive, Dido Harding, was also present and said that while BT’s “natural monopoly” in the market was expected, more scrutiny is needed from regulators.
“However the BDUK rules were designed they [BT] would have ended up winning the vast majority of bids, but without really firm scrutiny, taxpayers' money will be badly spent not just in the short term but in the long term,” she said.
BT hit back, saying: "We are shocked and mystified by some of the ill-informed comments played back by members of the committee yesterday. Deploying fibre broadband is a complex long-term investment but that was ignored yesterday as MPs prioritised sound bites over analysis."
The PAC also heavily criticised the Department for Culture Media and Sport for failing to achieve value for money and a competitive framework. However, Jonathan Stephens, permanent secretary at the DCMS, disagreed with this, claiming it had delivered value for money and a competitive framework.
The meeting was held a few weeks after a damning report from the National Audit Office (NAO), which said the government had failed to guarantee value for money from its project by not generating efficient competition in the process.
Hodge, who has chaired numerous PAC sessions ranging from tax-dodging to MP expenses, said the hearing was like “Alice in Wonderland” and one of the strangest sessions she’d ever chaired.
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