UK rural broadband rollout criticised by auditors

 

The BBC's Rory Cellan-Jones visits the Cotswolds, which is still waiting

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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
    -6

    Comment number 214.

    all u rural nimbys. pay up or shut up.stop expecting demanding people living packed like sardines in cities to subsidise your 'way of life' . if u want to lower the costs build more houses in your area and raise the population to a threshold where it become economic for services to exist.

  • rate this
    +4

    Comment number 213.

    Would you believe it - Scotland and Wales get the least coverage! What a surprise.

    It's becoming clearer to me why so many Scots want independence. Westminster is only concerned with London, and a few cities around it.

    Scots want to see their taxes benefitting them, not being siphoned off by the City elites. Honestly, everything outside of London should declare independence from those parasites.

  • rate this
    +1

    Comment number 212.

    Boring undelvoped UK indeed. Can't even have proper internet access... what century is this country in!!??

  • rate this
    +1

    Comment number 211.

    Our home on Anglesey would only get 0.5mbs "broadband" from BT. Microwave wireless broadband companies have no interest in providing service to our part of the island despite the grant programs.

    I doubt BT will ever provide high speed coverage to the rural parts of Anglesey. Even the towns have poor connections.

  • rate this
    -4

    Comment number 210.

    198.matchico
    We don't need government to build roads. They, as government programs inevitably do, end up costing more and running over time.

    I don't know such people, no. But, if someone chooses to live an area without fast BB, why should I have to also pay for them to have it?

  • rate this
    +1

    Comment number 209.

    Yet another project that should not be left to private companies, they invariably rip us off but have the right mates in the cabinet/civil service so it all gets whitewashed over.
    We need to admit that a single central state solution is the best way to achieve a lot of infrastructure projects due to a) economies of scale and b) nobody skimming ridiculous profits off the budgets.

  • rate this
    0

    Comment number 208.

    @160.lyonnesse

    We don't need the state to subside us to get a proper broadband structure. All it needs is for Hugely Stupid2 to be paid for only by those directly connected to it, and the reduction in taxes then passed on to local communities to invest in their own solution. The cost to our village of HS2 will be £150K. For that we could get 300mb -1gb to every house and business here

  • rate this
    +2

    Comment number 207.

    33. willythewombat

    2 HOURS AGO
    " having an additional phone line connected can more than double current broadband speeds."

    I'm pretty sure having a second line will not increase broadband speed. Tell me if I am incorrect.

  • rate this
    +1

    Comment number 206.

    I live next to M1 - hardly rural but have a speed of about 0.5mb. Means I can't download music or TV etc. Have been to meetings with County Council and BT, who want a payback of less than 10 years. Fair enough, but they don't want to reduce our line rental. Why do I keep getting the smell of a gravy train passing?

  • rate this
    +12

    Comment number 205.

    For those who don't understand why we need fast broadband, let me explain. You cannot move your business to the Cloud, which is where business is now being pushed, with very slow upload and download speeds. You may have 5Meg download but if the upload is only 800k, that's as fast as it is. Most companies internal networks connect with their internal servers at a 1Gigabit speed, not 800k!

  • rate this
    +1

    Comment number 204.

    Why is the criticism not that it's been done at all or the taxpayer funds being wasted on extending BT's monopoly?

  • rate this
    0

    Comment number 203.

    Little village about 5 miles from Warminster. Best we ever get is about 800k. Tried satellite broadband (£25/mth) but the killer is the latency which makes it no better than the landline. Also have no mains gas, sewage or terrestrial TV signal (why do I pay the licence). I think I'm supposed to benefit from this initiative, so disappointed.

  • rate this
    +2

    Comment number 202.

    Pricing structure should be based on actual download speeds gathered / reported on a monthly basis (easy to do), not on a theoretical "up to" speed.
    It's basically a utility anyway, so why not price it like one.

    It simply cant be fair to charge the same for up to 20mb with one getting 2Mb and another 5Mb (note much less than 20Mb).

  • rate this
    +2

    Comment number 201.

    " Surely you don't think your service charges would ever repay the costs of getting fibre out to you? The money to do that comes from the profitable areas, namely cities, and a slice of cash appropriated from taxpers. Rural users are subsidised - they would get nothing otherwise"

    Hahaha..so we shouldn't have roads//water/electricity/gas....anything?

    Errr...we pay tax just like you!

    Grow up

  • rate this
    +15

    Comment number 200.

    Ditch HS2 and spend the Billions it will cost on high speeed broadband for every home in the UK.

    There'll be no need to get on expensive white elephant when you can video conference.

  • rate this
    +5

    Comment number 199.

    If we spent less on a train that will be obsolete by the time it's built, and more on 21st century communications - we wouldn't need the train, and everyone would benefit.

    I'm in Wigan, three minutes' walk from the exchange, and my broadband is slower than dial-up was five years ago. Most times it's so slow that downloading a big e-mail causes it to crash.

    I've got "superslow"!

  • rate this
    0

    Comment number 198.

    152. Sally says no to the Nanny State
    They will come later anyway, will have to dig roads and replace existing outdated equipment by new ones. Is that economically sensible?
    Or is it just a lack of coordination between LA, builders and FO providers because they are just too lazy to get sensible and organized? Do you know many people forking £400K in a new home who wouldn't want fast BB?

  • rate this
    +1

    Comment number 197.

    in my area, the property management company only allows virginmedia to provide fibre here, the one next to me only allows sky, no competition.

  • rate this
    +4

    Comment number 196.

    We've been battling BT and its rural broadband fiasco for years now:

    http://www.marykirk.com/journal/2013/7/5/an-open-letter-to-the-ceo-of-bt-scotland

    We're now demanding parity. We want a 300mb fibre connection. Its not my fault that they cant manage their network rollout. They are the monopoly provider here in rural Scotland.

    ---* Bill

  • rate this
    -2

    Comment number 195.

    ultimatley, BT are a private company and have no obligation to provide service anywhere, superfast or not.

    The government is putting up cash to allow BT to roll this out to areas where theyll make no profit. I myself live in a village which is benefiting from government cash, but need to wait for it. but waiting is better than never getting it so people should be thankful even if delayed

 

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