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BT given rural broadband monopoly, say MPs

By GDemianyk  |  Posted: April 01, 2014

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Taxpayers risk being short-changed by the Government’s £1.2 billion rural broadband programme because BT is “exploiting its monopoly position”, a powerful committee of MPs has claimed.

The communications giant has won all 44 contracts awarded under the scheme to extend fast internet connections to areas that are not considered commercially viable.

Among those is the Connecting Devon and Somerset scheme, given public subsidy to expand broadband coverage in the two counties.

BT has also bagged the Cornwall and Isles of Scilly Superfast Broadband contract – which is funded by EU subsidies, rather than the UK government.

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MPs on the Public Accounts Committee (PAC) said the Department for Culture, Media and Sport (DCMS) had “failed to deliver meaningful competition”, which has put BT in a strong position.

The committee claims non-disclosure agreements mean there is a lack of information being published about rural broadband coverage and speed, making it difficult for potential alternative suppliers seeking to plug the gaps in provision and to ensure value-for-money. They add BT’s monopoly supplier position should have raised a “red flag”.

BT labelled the claims “inaccurate and unjustified”.

The £132 million Cornwall and the Isles of Scilly project is aiming to have 95% coverage by the end of the year. Some 90% of homes and businesses are expected to have the faster connection by 2016 under the £94 million Devon and Somerset programme.

The technology is seen as vital to making rural areas economically buoyant.

The PAC, publishing its second critical report into broadband expansion, said the Whitehall department has failed to act on previous calls for transparency around costs and detailed roll-out plans.

Margaret Hodge MP, who chairs the committee, 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.”

She said post-code level data was not being published, arguing local authorities are restricted by contract, meaning other broadband providers “might be squeezed out of the rural market by BT’s actions”.

Mrs Hodge said: “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.”

In a statement, BT said the Broadband Delivery UK, responsible for the project nationally, is “successful” and said it was “frustrating” that the committee “continues to try and pick holes”.

It added: “We respect the role of the committee but we feel their criticism of BT is inaccurate and unjustified.”

BT said it was the only company willing to accept the “challenging terms on offer” when “others walked away when they realised easy pickings weren’t to be had”.

“Claims that BT is a ‘monopoly’ are simply inaccurate given more than 100 internet service providers are offering fibre broadband across BT’s open network,” it said.

It said DCMS and BDUK have “full sight of BT’s costs” and most councils have published coverage maps with its support.

“More detailed data will be released by them in due course once surveys have been completed and we know for sure that we are going to an area,” the statement added.

Communications Minister Ed Vaizey said rural broadband roll-out is ahead of schedule and ensuring value-for-money.

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

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