BDUK moves towards crisis
Two usually reliable sources have said that the decision mentioned below is unlikely to relate to BDUK’s application for blanket approval for exemption from scrutiny under EU state aid rules.
One suggestion is that it relates to the UK’s postal service. This seems possible, given the information revealed in the linked document.
BDUK and DG Competition, which rules on the application, have not replied to requests for details.
Given that some high profile political careers depend on delivering “superfast” broadband to all in the next three years, it is likely that there is some pressure to bend the rules.
Getting blanket approval means up to 45 procurement contracts, most of which are expected to go to BT, will not receive independent scrutiny. It is also needed because few, if any, proposals so far, are believed to meet EU rules on state aid.
Approval is crucial to freeing up BDUK’s £530m if the UK is get get close to culture secretary Jeremy Hunt’s goal of the “best broadband in Europe by 2015”.
Approval would also scupper plans by some small independent network operators (altnets) to sue local councils if they give money to BT (or another listed supplier) and BT then targets areas the altnets have said they will serve. Their argument is that councils’ action would breach state aid rules. These prohibit using taxpayers’ money in areas where there is a competitive market.
Some altnets offer wireless broadband access, but there is no official record of their coverage. Local authorities are meant to consult on where basic coverage ends and so-called Next Generation Access starts. Some have been reluctant to do so. As a result, councils could face objections as soon as they issue contracts. This would delay network builds.
In addition, it would be extremely difficult to audit precisely where the money was spent, given that many “white” spots are surrounded by so-called black areas, i.e. where there is a competitive market.
BDUK is wrestling with these issues, but whatever goodwill it had in the industry has ebbed away. It has also failed to get more than BT and Fujitsu Telecom (which wants all BDUK’s money in return for a £2bn investment) to bid for work.