MPs have heavily criticised the government for failing to promote competition in the procurement of its £1.2 billion rural broadband programme, which has led to an “effectively BT monopoly”.
In a hearing in July last year, the Public Accounts Committee revealed that 26 out of 44 rural broadband contracts had been won by BT. Now, the PAC reported, all remaining contracts have also gone to BT.
Margaret Hodge MP, chair of the PAC, said: “Despite our warnings last September, the Department for Culture, Media and Sport (DCMS) has allowed poor cost transparency and the lack of detailed broadband rollout plans to create conditions whereby alternative suppliers may be crowded out.”
The PAC released an initial report criticising BT’s near-monopoly in July 2013, and published a report in September 2013 on the rural broadband programme. The committee recalled the supplier and DCMS to provide further evidence in January following the government’s “disappointing” response to the September report.
Hodge said that despite BT’s claims that it is making further concessions, local authorities in rural communities are still contractually prevented from sharing information to see if they are getting the best value for money.
“Communities can still not access the detailed data they need to understand whether they will be covered by BT’s scheme in their area. Other broadband providers might be squeezed out of the rural market by BT’s actions,” she said.
For example, while DCMS thought that Cumbria County Council was able to publish data it wanted to on the broadband rollout, campaigners in Cumbria have told the PAC that BT was still not allowing the council to provide this information.
She added: “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’s exploiting its monopoly position to the detriment of the taxpayer, local authorities and those seeking to access high speed broadband in rural areas.”
BT, however, denies that it has a monopoly on the rural broadband programme, saying that the PAC’s criticism was “inaccurate and unjustified”.
“BT was the only company willing to accept the challenging terms on offer and make a significant investment in rural areas. This was at a time 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 ISPs are offering fibre across BT’s open network,” the supplier said in a statement.
“BT is delivering value for money and the National Audit Office acknowledged there are ‘robust’ processes in place to ensure that. DCMS and BDUK have full sight of BT’s costs so there is a very high level of transparency. Our solution was also cheaper and better than the bids submitted by our competitors – before they walked away - and those terms still apply. It is also the case we do not get paid until we have submitted detailed invoices showing the costs we have incurred.”
It added: “As for maps, most councils have published coverage maps with our 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 PAC today made a number of recommendations to DCMS.
It said that the department should “work urgently” with all local authorities to publish detailed mapping of their implementation plans, enabling searches down to full, seven-digit postcode level.
“The information should include speed of service, as soon as that is available,” it said.
The PAC recognised that DCMS had agreed to review the non-disclosure agreements that prevented local authorities from discussing and comparing BT’s costs directly between themselves, but it said that cost transparency could be improved. It suggested that the department should collect, analyse and publish costs data on deployment costs in the current procurement programme, to inform its consideration of bids from suppliers under the next round of funding.
Finally, the PAC reiterated its criticism that the rural broadband programme had been uncompetitive, and said that DCMS should work with local authorities to rectify this. It suggested considering options such as alternative solutions, joint working and fair capital contributions from suppliers.