By Vivienne Russell | 1 April 2014
The Public Accounts Committee has again slammed the government’s procurement of suppliers for its £1.2bn rural broadband programme, saying it failed to establish meaningful competition in the market.
In a strongly worded critique, the committee said government actions had handed BT an effective monopoly. Today’s report follows one published in September last year in which the PAC criticised the Department for Culture, Media and Sport handling of the rollout and the lack of competition in the market.
The scheme provides broadband access to rural areas where providers have little incentive to invest. Local authorities were given grants to implement services from a framework of providers. However, of the 44 contracts available, BT has won them all. The MPs said the DCMS had also tolerated poor cost transparency and a lack of detail on rollout plans, which may have ‘crowded out’ alternative suppliers.
PAC chair Margaret Hodge said: ‘BT’s monopoly position should have been a red flag for the department. But we see the lack of transparency on costs of 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.’
She called on DCMS to work with local authorities to publish detailed mapping of their implementation plans, right down to postcode level.
‘The department should collect, analyse and publish data on deployment costs in the current programme, to inform its consideration of bids from suppliers under the next round of funding,’ said Hodge.
‘And before that next round of funding is released, the department should work with local authorities to ensure there is real competition and value for money.’
She warned that if the committee was not satisfied that DCMS was making progress, it would hold a further hearing ‘to find out why it is not improving its approach to protecting public funds’.
But BT said the PAC’s criticisms were ‘inaccurate and unjustified’.
A spokesman said: ‘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.’
He added that the company was delivering value for money and high levels 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.’
Communications minister Ed Vaizey said the rural broadband rollout was ahead of schedule.
‘Multiple robust safeguards are already in place to ensure value for money, and thousands of homes and businesses up and down the country are already getting the benefits,’ he said.
‘We continue to promote competition and have insisted on enhanced transparency from both local authorities and suppliers.’
