Cumbria broadband rejection exposes BDUK chaos
There are now serious doubts over the government’s programme to get “the best broadband network in Europe by 2015” following Cumbria County Council’s decision to reject bids from BT and Fujitsu for a £40m next generation broadband network.
In a statement this afternoon, the council said it would enter fresh talks with the two firms to get the network Cumbria has been looking for all along. A decision is expected in September.
“Neither of the final tenders had completely fulfilled the original, and full, requirements of the procurement process,” it said. Despite extensive talks between Cumbria and the suppliers, the bids met neither the technical specification nor the funding terms Cumbria had called for.
To be fair, BT has been upgrading its copper network in Cumbria at its own cost. But its capabilities fall far short of what the council expects from a next generation network.
Fujitsu has still to build a public access network in the UK, and was widely expected to get the nod in Cumbria. This is said to be to keep BT on its toes and to preserve the semblance of competition for most of the £830m the government has earmarked for next generation broadband.
How we got here
The government set up Broadband Delivery UK shortly after took power to set up the procurement and disbursement process. Following Vince Cable’s faux pas over the BSkyB bid, responsibility for BDUK shifted to Jeremy Hunt’s culture media and sport department (DCMS), whose first priority has been the London Olympics.
Public procurement specialists, believed to be as many as 20, from the audit firm KPMG were drafted in via a Treasury framework procurement deal to help BDUK. According to insiders, none of the KPMG secondees had ever procured a large communications network. However, the rate for their junior staff is reputed to be more than £1000 a day. DCMS has refused to answer Br0kenTeleph0n3’s Freedom of Information Act request to provide details of the consultants’ qualifications and day rates.
The disparity in pay and the lack of technical expertise is believed to have led to friction between the permanent and drafted technical experts and the KPMG staff. Several DCMS reorganisations have seen staff with telecoms experience moved or or out.
BDUK set up a procurement framework that was guaranteed to exclude all but the biggest supply companies. Nine were invited; two, BT and Fujitsu, are still in the running. The rest say among other things, the Ofcom-approved terms and condition that govern access to BT’s poles and ducts made for a ‘incontestable’ environment.
Neither BT nor Fujitsu has signed up formally to the BDUK framework because the European Commission’s DG Competition, which rules over state aid disbursements, has so far refused to approve it. It is believed DG Competition is doing so because BDUK’s proposed procurements would lead to taxpayers’ money going into networks that would fall short of Europe’s Digital Agenda targets. These are for a universal 30Mbps service with 50% of citizens using a 100Mbps broadband service by 2020.
This has delayed local procurements, which are to be led by county councils. Cumbria felt it could no longer wait, and set off on its own, as it is entitled to do.
The present delay is not the first. Cumbria was meant to have picked a winner in January. But it may be the last.
It is less clear what will happen with councils that stay with the BDUK procurements, and the money. There are some clues. DG Competition quickly gave the nod to Birmingham’s plan for a state-aided, £10m, wholesale-only, open access, fibre to the home network that will supply everything from dark fibre down to anyone who wants to resell it.
It is understood that both the UK and European authorities are less anxious about broadband network procurements in cities, where there is usually a choice of network operators, than they are about what happens in rural areas, where BT has a regulated monopoly. However, the speed with which DG Competition approved Birmingham points to a preference for the features included in its proposal.
In addition, the European Commission’s vice president and Digital Agenda champion Neelie Kroes is on record saying national regulators have to make incumbents open their networks and to sell dark fibre.
That gives BT a massive problem. Having to sell dark fibre would destroy the business case for a fibre roll-out, BT’s director of strategy Sean Williams told the House of Lords communications committee. Installing fibre is five times more expensive than copper, he said.
Williams did not provide evidence to back this assertion, but if it is the case, it is hard to understand why Ofcom has not investigated why BT is selling its copper broadband for the same price as its fibre broadband. Or perhaps it knows. After all, Williams worked for Ofcom and was, he told their lordships, responsible for Ofcom’s broadband strategy.
So it seems the UK has a stand-off. BT is religious in its determination not to sell dark fibre; BDUK can’t disburse taxpayers’ money, so a lot of voters can’t get next generation (or even first generation) broadband.
It is hard to see how this will resolve itself. In the meantime, potential investors go elsewhere, talent follows them, and the UK grows a little less competitive every day. The only winners are BT’s shareholders, but for how much longer?
The blame for this must fall on BDUK, DCMS and ultimately, the culture secretary. If Hunt could escape the sack over Sky, he is definitely sackable for this cock-up.