MPs Want To Withhold Rural Broadband Cash Until BT Is More Transparent

The Public Accounts Committee (PAC) says BT should not able to bid for more government funding for the provision of rural broadband until it explains how it is spending the £1.2 billion it has received so far from local councils and the Broadband Delivery UK (BDUK) initiative.

According to the BBC, government audits have revealed that BT is making a killing on the scheme, because it is saving as much as 35 percent on the price it quoted for the projects within the initiative.

BT has admitted this is true due to economies of scale, which allow it to save on the project management costs it originally predicted. The former state monopoly has explained that the BDUK bidding process for each council required it to estimate the cost of rollout based on the assumption it would not receive any other contracts. Of course, BT won every single one after Fujitsu withdrew from the procurement framework last year.

BDUK criticism

The PAC now wants to see where these economies of scale are taking an effect before BT can bid for an additional £250 million allocated by the government to local councils to extend superfast broadband to areas where BDUK cannot reach.

The committee adds that it is “not good enough” that councils have the power to extend contracts already in place as part of BDUK to include the additional funding.

BT says it doesn’t expect to make a profit on BDUK fibre deployment for another 15 years and stresses that any savings would be reinvested into making rural broadband more available, however it will not tell the BBC which proportion of the money it has spent has gone on fibre and what has gone on project management.

BT transparency

The government has been criticised for handing all of the money available in BDUK to BT, which is the sole participant in the procurement framework, with the National Audit Office (NAO) saying the project isn’t providing value for money and is running 22 months behind schedule. Meanwhile, MPs are accusing the company of blackmail, while others suggest BT has been overcharging for its services.

However BT has denied such claims. Last year, the outgoing Openreach CEO Liv Garfield said that it was “massively frustrating” to have to defend BT’s involvement with BDUK as, in her opinion, the project was going quite well.

More than 300,000 homes and businesses can now receive superfast broadband as a direct result of BDUK, with around 10,000 new properties added each week. The government is aiming to connect 95 percent of the UK population by 2017.

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