Rural dwellers want the same broadband speeds as those living in cities
The way rural broadband has been rolled out in the UK has been criticised in a damning report from the Commons Public Accounts committee (PAC).
The committee of MPs accused the government of failing to ensure proper competition by awarding all 26 rural broadband contracts to BT.
It concluded that the Department for Culture, Media and Sport gave away public money without proper checks.
Both the government and BT defended the rural broadband rollout.
"We put in place a fair commercial process and encouraged different suppliers to bid," the DCMS said in a statement.
"We are disappointed that the PAC fails to recognise that thousands of rural premises who have never had a decent broadband supply are now getting one, something that is vital for farmers, rural businesses and all those who live outside major cities."
Rural blackspots
BT has rolled out superfast broadband in Cornwall, using existing telephone wires
Making sure that those living in the countryside get broadband speeds comparable to those living in towns and cities has long been something the government has grappled with.
Commercial firms such as Virgin Media and BT see little profit in rolling out services to areas with few people living in them.
So, as an incentive, the government provided a subsidy pot of £230m, with an extra £250m available after 2015, and awarded contracts on a county-by-county basis. Each county also contributed funds to bring superfast broadband to their areas.
But only Fujitsu and BT entered the bidding competition, with Fujitsu later withdrawing.
BT has so far been chosen in 26 counties and is expected to win the 18 remaining contracts.
'Overly generous'Broadband speeds around Europe
- Denmark plans to have 100Mbps to all by 2020
- Estonia wants 100Mbps for everyone by 2015
- France plans almost universal coverage at 100Mbps by 2020
- Germany expects to have around 70% coverage at 50Mbps by 2014
- Greece wants 100% of citizens to have access to 30Mbps by 2020
- Ireland plans 100Mbps for all by 2020
- Italy wants to see half of its citizens have access to 100Mbps by 2020
- The UK's target is 90% coverage by 2017 but at the lower speed of 24Mbps
"The Department for Culture, Media and Sport's design of the rural broadband programme has failed to deliver the intended competition for contracts, with the result that BT has strengthened its already strong position in the market," summarised the report.
It said that its contract terms were "overly generous" to BT and did not "promote value for money".
It has also accused the department of failing to check that BT's bids were reasonably priced and said there had been "wildly inaccurate" estimates of costs.
"Local authorities are contributing over £230m more to the programme than the department assumed in its 2011 business case and BT over £200m less, yet BT will ultimately benefit from £1.2bn of public funding," the report says.
'Quasi-monopoly'BT was also criticised in the report for failing to provide local authorities with full information about where exactly it would roll out superfast broadband services, which in turn hampered rivals from drawing up alternatives.
It was also criticised for including a clause in its contract that prevented the local authority it was dealing with from disclosing the costs involved to other authorities negotiating contracts.
Such a lack of transparency meant that the company "exploited its quasi-monopoly position" to limit access to both the wholesale and retail market "to the detriment of the consumer", concludes the report.
BT's response was robust.
"We are disturbed by today's report, which we believe is simply wrong and fails to take on board a point-by-point correction we sent to the committee several weeks ago," it said.
"We have been transparent from the start and willing to invest when others have not.
"It is therefore mystifying that we are being criticised for accepting onerous terms in exchange for public subsidy - terms which drove others away."
It denied that it had failed to deliver value for money for the taxpayer and said that, even with the public subsidies, it would take it 15 years to pay back its investment in rural broadband.
"Rolling out fibre is an expensive and complex business," it said.
The report recommended that the government should, as a matter of urgency, publish BT's detailed rollout plans so that other suppliers could offer services to the final 10% of the population that would not be covered under current plans.
Huge delaysIt also said that the DCMS should not spend any more money until "it has developed approaches to secure proper competition and value for money".
The process has suffered from huge delays and is now due to be completed in 2017, nearly two years later than originally planned.
But, according to Ovum analyst Matthew Howett, the delays were more down to the EU's failure to green-light the scheme rather than to the UK government.
Overall, he thinks BT has done a pretty good job.
"The challenges of deploying to the most rural and remote areas of the UK shouldn't be underestimated and you have to wonder whether there are many providers other than BT who would've been able to overcome some of the engineering challenges," he said."
He added that it was "almost impossible" to point to a public funded broadband delivery model from elsewhere that had done a better job.
"If we could roll out rural broadband using reports, inquiries and investigations, the UK would probably have the fastest broadband in the world," he said.
Source: BBC News - Business http://www.bbc.co.uk/news/technology-24227096#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
