UK rural broadband rollout criticised by auditors

 

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The government's rollout of "superfast" broadband to rural areas is about two years behind its original schedule, an official audit has found.

The report said only nine of 44 rural areas would reach targets for high-speed internet by 2015, and four areas could also miss a revised 2017 target.

The National Audit Office also raised concerns that BT would be the only firm likely to win contracts.

It said the company would benefit from £1.2bn of public funds as a result.

"The rural broadband project is moving forward late and without the benefit of strong competition to protect public value," said auditor general Amyas Morse.

"For this we will have to rely on [the Department for Culture Media and Sport's] active use of the controls it has negotiated and strong supervision by [the regulator] Ofcom."

He added the scheme was also expected to cost the taxpayer more than first thought.

Revised targets

In 2011, then Culture Secretary Jeremy Hunt announced that 90% of premises in every local authority area of the UK should have access to internet speeds above 24 megabits per second by May 2015 and a minimum of 2Mbps for others.

Superfast broadband availability

Ofcom map of Superfast broadband availability

To do this he pledged £530m of cash for rural broadband projects which would become available to councils if they also provided funds.

He said this would give the country the "best superfast broadband network in Europe".

However, the scheme was hit by delays, in part because it took longer than expected to get approval from the EU.

The NAO said once officials revised their projections, they found it was going to take 22 months longer than first envisaged for 40 of the areas to reach the goal.

Last week the Treasury revised its target, saying it now wanted 95% of UK properties to have access to superfast broadband by the end of 2017, effectively shifting the goal until after the next general election.

The NAO warned four areas - Highlands and Islands, Cumbria, Norfolk and Suffolk - might still miss this new deadline because the local authorities had failed to request sufficient funds.

A spokesperson for Cumbria County Council told the BBC that since the report was compiled it had signed a contract with BT to deliver superfast broadband to 93% of Cumbrian homes by 2015.

The DCMS said that a pledge to invest an extra £250m meant it would meet the goal.

However, the NAO said that past experience suggested the "government is not strong at taking remedial action to guard against further slippage".

'Opaque data'

The revelations prompted claims that DCMS did not have a "good enough grip" on its programme and that BT had been "cagey" about its costs.

"Opaque data and limited benchmarks for comparison means the department has no idea if BT is being reasonable or adding in big mark ups," said Labour MP Margaret Hodge, who is the chair of Parliament's Public Accounts Committee.

However, a spokesman for the DCMS said its efforts to deliver value-for-money were "strong and robust".

"We agree that effective enforcement of the contracts is important and are working with local authorities to ensure this," he said.

Person on laptop Faster speeds let users stream higher quality video and download documents more quickly

"As the NAO report makes clear, the project's funding model greatly reduced the cost and financial risk to the taxpayer."

BT also defended its record.

"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," it said.

"Deploying fibre broadband is an expensive long-term business and so it was no surprise that others dropped out as the going got tough."

Dropouts

Sixteen organisations had originally shown interest in competing for the rural broadband projects.

The NAO noted that "competition was envisaged to be a key value-for-money safeguard".

However, it said suppliers had complained the bidding process was "difficult and complicated" and that the process favoured large companies with secure revenue streams.

By early 2013 only BT and Fujitsu were left in the running, and in March Fujitsu dropped out after it said various factors had made winning the work unattractive.

The audit highlighted that officials only scored BT's financial model eight out of 20 - the minimum pass rate.

It said it remained unclear how much of the firm's bids covered "contingency costs" - a safety-cushion to protect it against unexpected charges.

David Corner, from the National Audit Office, said the delay was due to a high number of negotiations around the country

It also raised concern that BT said 40% of its costs would be on staffing - a figure the NAO said was hard to verify.

The report revealed that there had already been one instance when BT had been caught overcharging for management costs by £3m.

It also pointed out that BT's figures were based on the assumption that only 20% of properties would sign up to superfast broadband within seven years of it being enabled.

The study said this was lower than the figure suggested by both industry experts and international comparisons.

A clawback rule is supposed to ensure that if uptake is higher the firm should share the extra profits with the public.

However, the NAO said government workers would have to scrutinise hundreds of thousands of invoices to make sure this happened, and that some councils have already said they might not have enough resources to do this.

 

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  • rate this
    -2

    Comment number 194.

    Both fast broadband rollout and HS2 are vitally important and have excellent business cases. It's not a choice between one and the other, both need to be completed as quickly as possible

  • rate this
    +4

    Comment number 193.

    BT will drag their feet... as they always do

    BT will overcharge... as they always do

    BT will obstruct all competition... as they always do

    BT will fail... as they always do

  • rate this
    0

    Comment number 192.

    In central Bedfordshire in the small village of Clophill, Virgin installed fibre in all the surrounding towns and villages, but due to planning restrictions this village was miss and now who knows if we will get anything better than 3-5Mb. The government needs to sort out the planning offices and make sure this does not happen again. Also make telecoms do equal work in rural areas as town/city.

  • rate this
    +4

    Comment number 191.

    In some countries, the company doing the work has to pay huge financial penalties for going over time and estimates for a job. In this country there is a culture of squeezing as much profit as possible out of a job especially if it is taxpayer funded. Time the government had a serious look at how these jobs are contracted.

  • rate this
    0

    Comment number 190.

    This isn't a surprise. I live in a village in Nottinghamshire, and the fastest ADSL i can get is with BT at 2.5Mbs. THe parish council recently got told that superfast broadband is coming to the village.... in 2015!

    There are alternatives such as wireless but its £200 to have set up and verging on £35 a month as they know they have no competition at the moment. Disgraceful the whole situation

  • rate this
    +3

    Comment number 189.

    This government like all governments don't know how to connect ALL of us to superfast broadband. The UK is kidding itself if it thinks it is a major world class player whilst the majority of company's and individuals faff around with 400k uploads and 1.5meg download speeds.
    The Baronet's son should get a grip and sort this out - but don't hold your breath.

  • rate this
    0

    Comment number 188.

    117. chrisdunstone

    Hmm. No prejudiced sweeping generalisations here, I'm sure.

  • rate this
    +1

    Comment number 187.

    Why is the government rolling it out anyway?

    I thought the market could better provide for our needs.

    Ah yes, the market cherry picks the most profitable areas for the least outlay, so why is the tory government seeking to increase market provision in other sectors, but are happy to finance through the public purse, broadband availability of all things?

  • rate this
    +1

    Comment number 186.

    We live in Cropwell Bishop near Nottingham and were getting 0.5Mb. We now get an amazing 1.3Mb. Apparently we have had fibre fitted up to the outskirts of the village for the last 18 months but not in the village. Can BT explain this please? We have many businesses in our village and lots of people working from home but obviously we don't matter to BT as we aren't seen as profitable.

  • rate this
    -2

    Comment number 185.

    Hi I'm a rich villager,I like riding and have three expensive cars,andI have very fast broadband!! I feel sorry for you inner city dwellers who have chicken for Sunday lunch,cos its speshul, init blud! Long live tax credits!!

  • rate this
    +5

    Comment number 184.

    Who is surprised that there is another costly delay fro this government.
    Its time to ask not what you can do for your country, but what does your country do for you? The answer is unfortunately not a lot, but it takes a long time and lots of your money not to achieve it.
    We have embedded incompetence at the heart of our national leadership and political system. Its time for real change.

  • rate this
    -6

    Comment number 183.

    "128.
    Jonathan Lee
    56 Minutes ago "

    Why do businesses need such fast connections? Maybe the odd video conference (never really taken off), and the odd corporate video message. Aside from that, not having employees looking at youtube ought to be a good thing. I get 2 meg at home by the way. Can't understand 'struggling' with 5 meg.

  • rate this
    +2

    Comment number 182.

    M4 "Silicon Corridor" - in my office we currently run four ADSL+ lines which are bundled. Total download speed on a good day is 1.5M (when it rains it drops to below 1M) between ten of us. No high speed roll-out scheduled in this area for the next three years even though fibre exists so we're forced to have a fibre leased line installed at a cost of £44k plus £1.3k/month for 100Mb. Jokers.

  • rate this
    +3

    Comment number 181.

    Err Boodnock, how about those of us who were born here, whose kids go to local schools and who are trying to run the family business with one hand tied behind our backs because incompetant BT can't get their act together

  • rate this
    +5

    Comment number 180.

    If the government ever needed to back track on anything it is HS2. Super-fast broadband and tech infrastructure are the future. Yet again it just shows how out of touch politicians are.....I despair, I really do.....

  • rate this
    +1

    Comment number 179.

    what do these rural savages want with the internet anyway?

    It's an absolute disgrace that tax payer money is being wasted on giving these people access the net so they can upload their sheep bothering and cow tipping antics for all to see.

  • rate this
    -1

    Comment number 178.

    If openreach didn't keep falling foul of local planning refusing permission for cabinets, that would speed things up.

    About time the cabinets require NO planning consent.

    This also applies to towns, not just remote rural areas.

  • rate this
    +3

    Comment number 177.

    Although our village is a notspot with only 3 lines able to get ADSL broadband we were excluded from the Suffolk BDUK contract because BT said they would upgrade us. They are now saying they will only do it if we stump up £40,000. It appears that a £1billon of subsidy is still insufficient for BT to carry out their promises.

  • rate this
    +3

    Comment number 176.

    More poor performance by government...the waste of taxpayers money due to incompetent government continues.

  • rate this
    0

    Comment number 175.

    162.Little_Old_Me
    At least when private sector fails, it's localised to those who invested in the venture. Hence the risk factor essential to a free market. However, when government fails, it socialises the losses onto all of us. Can you name government programs that came in on time and under budget?

 

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