Virgin Media COO Accuses Government Of Subsidising BT

Andrew Barron, the chief operating officer of Virgin Media, will complain to the the House of Lords today, that the government is effectively subsidising BT.

In particular, Barron is cross that BT seems to be getting all the money the government put into Broadband Delivery UK (BDUK) The claim was made in a letter to the Guardian ahead of Barron’s appearance at the Lords communications committee later today.

Government Subsidy

BDUK, set up by the government’s is providing £530 million to improve the UK’s broadband network and deliver at least 2mbps to remote areas of the country. So far, BT and Fujitsu are the only two bidders left for 35 local authorities, with the latter bidding for just two. The two contracts which have already been awarded, Rutland and Lancashire, have both been won by BT.

“The noble ambition of locally procured rural broadband networks is protracted and likely to favour the incumbent, freezing out new entrants,” said Barron. “The outcome of current government policy is likely to be the subsidy of already dominant infrastructure in areas where we are not, to the sum of hundreds of millions of pounds of public money.”

“If we agree competition is the best way to encourage further sustainable investment, and that embedding dominance in markets is bad for consumers, we must also accept that providing the vast majority of available public funding to an incumbent is not in the UK’s best interests,” he added.

In his letter, Barron also criticises the absence of a national broadband strategy, arguing that the UK needs an equivalent of the 1984 Cable and Broadcasting Act, which allowed for the creation of Virgin Media’s predecessors, Telewest and NTL.

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