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
    0

    Comment number 434.

    Looking at the availability map Northern Ireland seems to have better coverage than anywhere else in the UK, including London and all the other major cities. What a great place to set up a digital business if only they could reach customers in the rest of the country.

  • rate this
    0

    Comment number 433.

    412 Gerard, The company i use have over half a million residential customer, and a quarter of a million business customers. So can't be doing too bad. Join the 21st century

  • rate this
    0

    Comment number 432.

    We're 4.7 Km from our very rural exchange. We don't yet have 21CN, only 20CN, the BT plan up to 2017 for the whole area does not even mention our exchange nor several others around the countryside. We struggle to see 2 Mbps down reliably and get less than 400 kbps up! Not good enough for BT Sports, etc. Graphics rich pages take an age.
    We need a fair balance between rural and urban investment.

  • rate this
    0

    Comment number 431.

    I live in a Town and broadband isn't all that fast..soon as they rid the cooper wires and replace fibre optics.. the better..

  • rate this
    +2

    Comment number 430.

    No suprise really just another missed target amongst the many.
    Still as long as the home counties are well looked after what else matters.

  • rate this
    -8

    Comment number 429.

    I don't personally see why rural broadband users should be heavily subsidised by those in more sensible areas. All manner of wealthy people have moved out far into the country and given that they are now trying to deny their responsibility towards those in towns I can see no reason at all why those less wealthy people should pay for a HIDDEN subsidy for the wealthy.

  • rate this
    -3

    Comment number 428.

    427.ukstudent
    I agree on what you said to not spend on. But, getting rid of welfare is the only answer. Plus, those nordic states you refer to, that have been stagnating for ages and are now rioting, will also fail.

    424.uk
    Your precise, and valid, question is asked and answered here: http://libertariananswers.com/how-would-a-libertarian-society-treat-indigent-patients-in-need-of-medical-care/

  • rate this
    +5

    Comment number 427.

    423.
    Because we spend way too much on things like defense, the war on drugs and yes - giving free money to people who don't need or deserve it. I'll agree with that to an extent.

    Getting rid of the welfare state is not the answer - we need to close tax loopholes, raise taxes to Nordic levels and stop spending on things we don't need.

    We don't need H2S or Trident, nor police hunting down stoners.

  • rate this
    +3

    Comment number 426.

    Kenya is a developing country that is almost the same size as Europe.

    They have broadband in rural areas

    The UK isnt the size of Europe.
    The UK is a developed country.

    Why can't we...just get it right?

  • rate this
    0

    Comment number 425.

    410
    You obviously know nothing as LLU has been around for many years and BT pay the same as any other company for an Openreach circuit.

  • rate this
    +3

    Comment number 424.

    418.
    You're too idealistic. You think we can have a perfect system with no flaws and i'm telling you - we can't.

    Much as I hate our government, I can't complain looking at how other people in the world live.

    Less poor in a 'free' society? That's a bold statement. The Nordic states are more socialist than us yet richer.

    Regardless, you admit there will be some poor. How do they afford treatment?

  • rate this
    -2

    Comment number 423.

    ukstudent
    Why do you think that our government is worse than broke, it's deficit spending?

    395.ukstudent
    "We've actually tried that hands off approach before... the result was mass poverty and rule by warlords."
    =
    When have we? Got evidence?

  • rate this
    +2

    Comment number 422.

    Won't matter where you live or what speed you have. The fact is most of the bandwidth will be soaked up by more garbage such as TV just like it is now. The more capacity is acheived and the faster it gets the same lions share will continue to be raeped by the media and big business. The internet was created to exchange information not endless crass on demand soap operas and PPV sport and movies..

  • rate this
    0

    Comment number 421.

    416
    Why didn't Virgin bid, the reason being they are happy to snap up the densely populated area's but don't care about sparsely populated area's.
    This is the reason no one else bothered bidding.

  • rate this
    0

    Comment number 420.

    Never mind rural customers. I'm about 5 miles from the city centre, but since I'm on an exchange only line (no cabinet, wired straight to the exchange) and about 4-5 miles from the exchange I'm lucky to get 2Mbs, and paying a premium for that.

    BT/Openreach will apparently have a think about what they can do for customers like me when the rest of the roll out is complete.

  • rate this
    +5

    Comment number 419.

    If the Government claims it is a good investment to spend £40B and rising to build a new train line that will benefit a comparatively small number of people why can they not find the much smaller amount to provide high speed braodband to much of the population? I am sure the business case is much stronger as will be the environmental benefits. So why does somebody not speak up and make the case?

  • Comment number 418.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +1

    Comment number 417.

    Yet another example of central government uselessness.

    With absolutely zero chance of anyone being res

  • rate this
    +1

    Comment number 416.

    If you can get it, Virgin cable is quicker and more reliable and seems less sensitive to contention ratio. I get the superfast 100 meg broadband while my neighbours (3 miles from Brighton City Centre) pay for full speed on BT lines and often only get 0.5 meg. Virgin are always expanding their own cable network too. Yup, seems I'm a Virgin Media fanboi now, sorry about that. Busby died long ago...

  • Comment number 415.

    This comment was removed because the moderators found it broke the house rules. Explain.

 

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