The rural broadband programme - Public Accounts Committee Contents


All 26 contracts let so far by local authorities for rural broadband have gone to BT, and BT is also likely to win all 18 remaining contracts. The Department for Culture, Media and Sport's (the Department's) design of the rural broadband programme (the Programme) has therefore failed to deliver the intended competition for contracts, with the result that BT has strengthened its already strong position in the market. The Department 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 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. Local authorities are contributing over £230 million more to the Programme than the Department assumed in its 2011 business case, and BT over £200 million less, yet BT will ultimately benefit from £1.2 billion of public funding. BT is preventing local authorities from providing proper information on the areas it will and will not cover with superfast broadband. Other providers are therefore constrained in their ability to build systems which ensure universal coverage. The Department forecasts that it will complete the Programme in March 2017, 22 months later than originally planned. BT appear to be taking further action to exploit their quasi-monopoly position and to limit access to both the wholesale and retail market to the detriment of the consumer.

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Prepared 26 September 2013