UK's rural broadband plan criticised

Two of the UK’s mobile operators have added to the chorus criticising the way that broadband is being rolled out in the country’s rural areas. Vodafone and EE both issued statements calling for the government to re-evaluate the initiative and make it more inclusive of 4G wireless.

The Public Accounts Committee (PAC), a House of Commons watchdog for public expenditure released a report Thursday, which stated that all 26 local contracts for rural broadband have gone to BT, and that the incumbent operator is also likely to win all 18 remaining contracts. This is only because BT was the only bidder for the contracts after rival Fujitsu withdrew from the process.

However, the report said that the Department for Culture, Media and Sport accepted contract terms that were overly generous to BT and do not promote value for money, such as confidentiality clauses over bid costs and roll-out plans.

The report added that the department also failed to negotiate the full access it needed to BT’s cost information to validate that bids from BT for local projects were reasonably priced; a key control over value for money on a programme where there is no competitive tension in individual procurements.

The government’s Department for Culture, Media and Sport’s design of the rural broadband programme has therefore failed to deliver the intended competition for contracts, the report went on to say, and instead BT has strengthened its already strong position in the market. Other providers are therefore constrained in their ability to build systems which ensure universal coverage, it added.

Vodafone and EE were quick to comment on the matter, implying that they are among those providers constrained in their ability to serve rural Britain.

“The current BDUK process simply will not deliver value for money nor the rural connectivity that Britain needs,” Vodafone UK said in a statement. “The Government should urgently revise the process to encompass wireless 4G in order to make digital Britain a reality.”

Fotis Karonis, CTO at EE, added in a statement of his own: “As a nation, we need to get over our fixation with fixed broadband as the best solution to rural connectivity challenges. The sooner we recognise that superfast 4G can, very efficiently, deliver internet access to places where there is none today, the sooner more people in rural Britain will enjoy the benefits of being online.”

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Matthew Howett, principal analyst for telecoms regulation at Ovum, said that most of the report’s sensationalist claims are unjustified or overlook some of the realities.

“A chief criticism is around BT being a near-monopoly. What the PAC seems to miss is the concept of competition for the market,” he said. “Firstly it was never the intention to necessarily have lots of different firms rolling out broadband infrastructure in rural areas; rather, they should compete on price for the right to do so. By all accounts and purposes this is what has happened. Secondly what rarely gets mentioned is that any publicly funded network must be opened up at the wholesale level in much the same way as the rest of BT’s network is, for other firms to come along and sell services to consumers at the retail level – another source of competition.”

Howett added that the BDUK process has been far from plain sailing and some criticisms that the report highlighted are real, such as the way the UK was broken into many small regions. The initial objective of ‘the best superfast broadband in Europe’ was also arguably too ambitious, and mobile technology seems to have been disregarded for the especially hard to reach places.

“Nevertheless, finding an example of a national broadband strategy that hasn’t gone without a hitch either in terms of delays or excessive cost is almost impossible,” he said.

BT said in a statement of its own that it is “disturbed” by the report, which it believes is “simply wrong” and that it has been “transparent from the start and willing to invest when others have not”.

“It is therefore mystifying that we are being criticised for accepting onerous terms in exchange for public subsidy – terms which drove others away,” the firm said. “The taxpayer is undoubtedly getting value for money.”

“The Department for Culture has imposed a rigorous auditing process that ensures every penny is accounted for. Rolling out fibre is an expensive and complex business but we remain committed to the programme. The network we build will be open to all our rivals, who will be able to sell services to consumers, paying us the same prices we charge our own Retail division.”