The government's Broadband Delivery UK (BDUK) programme is placing an undue burden on the taxpayer and is too lenient on BT, the House of Commons' Public Affairs Committee (PAC) said today.
Following a damning report by the National Audit Office in July, which described the scheme as a “train crash waiting to happen", the PAC has issued its own report saying, the £1.2 billion scheme has been "mismanaged".
“We now have a situation where local authorities are contributing over £230 million more to the programme than forecast in the [government]’s business case, while BT is committing over £200 less, ” said MP Margaret Hodge who chairs the committee, in a statement.
“The consumer is failing to get the benefits of healthy competition and BT will end up owning assets created from £1.2 billion of public money.”
A major criticism leveled at the government has been a lack of fair competition in the tendering process, with BT winning all of the 26 contracts to provide infrastructure to as many countries so far and expected to win the remaining 18. This has been echoed in both the National Audit Office and PAC in its report published today.
BT has been assigned to roll out broadband coverage to least 90% of rural areas, and is exploiting this position by banning local authorities from publishing details of the areas it will and will not cover, the costs of implementation and the speeds it will provide, said the report.
As a result local authorities are in a weak position to negotiate, other suppliers have been hesitant to step forward, and people have been unable to ascertain if they are getting value for money from BT.
BT has hit back against the claims, saying it is “disturbed” by the PAC’s report, which “fails to take on board a point-by-point correction we sent to the committee several weeks ago. We have been transparent for the start and willing to invest when others have not.”
“It is therefore mystifying that we are being criticized for accepting onerous terms in exchange for public subsidy – terms which drove others away.”
The government promised £480 million in subsidy to telcos as incentive for bidding on contracts in less profitable rural areas. BT initially saw competition from Fujistu but the company withdrew, arguing that conditions in the BDUK process heavily favoured BT.