About this Book

The rural broadband programme is designed to help get superfast broadband to areas, predominately rural, where commercial broadband infrastructure providers currently have no plans to invest. The Department provides grant funding to 44 bodies (local authorities or groups of authorities) to subsidise them to procure superfast broadband for their areas, and a framework contract for local bodies to use. But the procurement approach failed to deliver meaningful competition. The Department appointed only two bidders - BT and Fujitsu - to the framework contract. By June 2013 all of the 26 contracts agreed by local bodies had gone to BT and, following Fujitsu's March 2013 announcement that it would not be bidding for any more local contracts, BT is likely to win the remaining 18. The Department's assumptions in its 2011 business case about the respective capital contributions of the public and private sectors were wildly inaccurate. BT is committing £207 million less in capital funding than anticipated, while local authorities are contributing £236 million more. BT will eventually benefit from owning assets created from £1.2 billion of public funding. The lack of transparency over BT's costs is a serious risk to value for money, particularly as BT is now the single supplier. The Department has allocated a further £250 million to increase coverage of superfast broadband in 2015-19, but does not yet have a clear plan for reaching 100% coverage. Ofcom's review of the broadband market presents an ideal opportunity to reconsider whether the regulatory regime is doing enough to promote competition.