Following the broadband money

DCMS mismanaged £1.2bn BDUK project – PAC

with 25 comments

PAC chairman Hodge - dismissed BT "corrections"

PAC chairman Hodge – dismissed BT “corrections”

Anyone who watched the Public Accounts Committee hearing on the value for money likely to be achieved by the government’s next generation rural broadband programme would have had no doubt that the department of culture, media and sport (DCMS), its agency Broadband Delivery UK (BDUK), and BT were in for a roasting.

In its report published today,  PAC chairman Margaret Hodge MP said, “The programme to extend superfast broadband to rural areas has been mismanaged by the DCMS. The sole provider BT has been placed in a quasi-monopolistic position which it is exploiting by restricting access to cost and roll-out information. The consumer is failing to get the benefits of healthy competition and BT will end up owning assets created from £1.2bn of public money.”

None of this is new to regular readers of this blog, who have been following the BDUK money with a growing sense of dismay. What is new is that the political establishment can no longer ignore the fact that BT has run rings around them.

Despite the evidence collected by the National Audit Office and the PAC, it continues to protest its innocence. “We are disturbed by today’s report, which we believe is simply wrong and fails to take on board a point-by-point correction we sent to the committee several weeks ago,” it told the BBC.

The broadcaster said BT denied that it had failed to deliver value for money for the taxpayer and said that, even with the public subsidies, it would take it 15 years to pay back its investment in rural broadband.

That’s three years longer than Bill Murphy, MD of BT’s Next Generation project, has said publicly, more than once.

“Rolling out fibre is an expensive and complex business,” BT told the broadcaster, ignoring the fact that farmers and housewives are doing a fair job of it, self-funded and self-taught, in rural Lancashire, with the B4RN project, despite BT’s efforts to undermine them.

Responding to the report, Malcolm Corbett, the CEO of the Independent Networks Co-operative Association, (Inca)who gave evidence to the PAC,said “The PAC expressed real concern about the lack of competition in the programme, BT’s lack of transparency over costs, its deployment plans, the overall level of state aid, the reduction in BT’s financial contribution and delays to the programme.”

On behalf of Inca members he called for

  • transparency over BT’s costs and deployment plans
  • competition where alternative providers and communities are willing to invest in fibre and high speed wireless networks, BT should not be allowed to roll over them with state subsidy
  • full, unfettered access for alternative providers to all of BT’s publicly-funded infrastructure to promote genuine competition and choice, and
  • new investment models to promote investment, innovation and better value for money for the next £250m the government is committing to rural broadband.

Written by Br0kenTeleph0n3

2013/09/26 at 05:54

25 Responses

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  1. Yes, you have to admire the marketing powers of the monopoly, they certainly have run rings round most politicians and journalists. Thank goodness you have a record of it all for our history books, and future generations will see the truth. If only they put as much effort/money into their infrastructure as they do into marketing and bonuses for the bosses.

    It’s too late to keep us ahead in the digital revolution, we will become a ‘third world country’ very soon, but maybe someone will be elected who will see through this farce and actually start the rollout of a proper internet network instead of this sad excuse running though the old phone lines and only serving those near cabinets or large exchanges.


    2013/09/26 at 06:25

  2. A fair job of it?! BT has passed more than 10M homes whilst the farmers and housewives have not even reached 1000! Please!

    You should quit being a “jurno” and go write some fantasy stories, you clearly have an eye for the creative and a blind spot for reality!


    2013/09/26 at 06:57

    • For reality see here:

      For rural areas FTTC is the wrong technology for those on long poor quality lines.

      And please stop using “passed” when the current installed capacity will require further street works to install hard infrastructure to actually provide a service to all 10M. Please instead tell us how many have access without further upgrades being required.

      In summary it seem the cost to taxpayer is high and quality is low.

      David Cooper

      2013/09/26 at 09:28

      • David,
        I agree FTTC for long line lengths is not the best solution but your work doesn’t factor in G.FAST nor does it cover vectoring which will lift the speeds of many. Also shortly Openreach will launch a wires only service allowing users to use their own modem. (I personally think this will cause more problems with varying compatibility on chipsets and many service providers prefer the OR modem). OR have thousands of FTTP users also, again a lot more than any rural project.

        For a large majority FTTC enables super fast services.

        Can you tell me how much it would cost to create a commercial fibre solution in Ewhurst? I’ve put down hundreds of thousands of route kilometres of fibre and it would billions to create fibre networks to 100%. Seems good value to me but then again you haven’t provided costs for your solution.

        No BT hasn’t shared costs, how many commercial business would share their cost model? None.



        2013/09/26 at 19:54

    • Passing your home doesn’t guarantee you will get SFBB, as in many areas the DSLAM cabinets being installed cant provide all subscribers attached to the PCP with a connection.

      Mel Bryan

      2013/09/26 at 11:53

    • We don’t ‘pass’ anyone Neil. We connect them. To real gigabit fibre, not a clapped out old phone line delivering dial up in many places with a potential for 2megabit if they’re lucky. Nor do we pass streets of houses, we connect remote farms and rural businesses. We are doing the hard stuff that the telco can’t do. If you could work out how many of those ‘homes you passed’ could actually get your headline speeds and how many can’t even get a connection then maybe YOUR comments could be a bit more realistic. As it is it seems like you may have to cast the bean out of thine own eye mate?


      2013/09/26 at 17:23

    • Neil,

      Thank you for reading our report. But, I am sorry to say that we have heard the old jam tomorrow stuff so many times and have come to believe that its use is in selling future proofness to local authorities rather than being a practical proposition. Of course we do not factor in the future as it hasn’t happened yet. In Ewhurst BT are still struggling to upgrade one particular FTTC cabinet for the third time to meet increasing demand with deadlines now missed on so many occasions I have lost count. Why wasn’t the capacity, at least in the ducts, tie cables and cabinet space allowed for in the day one installation?

      To look at the promised future; Gfast with vectoring, I believe from what I have read may offer speed improvements over around the first 250 metres, therefore does not solve the problem for the outliers on long poor quality lines; we believe that vectoring (with VDSL2) is not compatible with the equipment installed in the cabinets in Ewhurst, so big costs to change it?; and I do not see how a different modem will improve clapped out mixed metal, directly buried telephone line (although a non-Openreach modem may at least not be locked down and allow the end user to see the connection performance statistics).

      FTTP on demand will depend on connection back to the nearest aggregation point (not the FTTC cabinet as the BT marketing suggests) and in the case of the Ewhurst outliers that is a significant distance and of course that means Excess Construction Charges, even if FTTP was available, which it isn’t.

      As for DIY FTTP and even other provider FTTP solutions they seem to work elsewhere. Perhaps by the time BT have introduced all this expensive magic the metallic lines will have fatigued to such a point that even BT will admit that FTTC is just simply the wrong technology for users on long poor quality lines. Matters are made worse in Ewhurst and other places where BT have deliberately hijacked what would have been superior FTTC deployments from alternative providers by using business practices involving Non-Disclosure Agreements, with RDAs and local authorities (note to Somerset).

      David Cooper

      2013/09/26 at 21:42

  3. When you start the personal attacks you know you’ve lost the argument. The PAC and NAO have verified everything that has been reported here, in particular Mike Kiely’s report that BT has as good as lied about its costs, and how its defence of its monopoly has depended on business practices that are morally and ethically bankrupt.


    2013/09/26 at 07:13

    • What are these ‘business practices’? Didn’t another report reject Mike’s costs?


      2013/09/26 at 08:16

      • Perhaps you’d like to put up that report here so we can all see what you’re talking about instead of trying to cast doubt on his findings which were largely accepted by the NAO and the PAC.


        2013/09/26 at 08:30

      • ‘The Department therefore considers that this model greatly underestimates the actual costs of deployment.’

        And the ‘business practices’ are?

        So ‘Margaret Hodge, the committee chair, added: “The taxpayer has been ripped off with £1.2bn going to the shareholders of BT.”‘ Not to the suppliers and contractors as well? That sums up the ability of some of our politicians…


        2013/09/26 at 10:11

      • DCMS would say that, wouldn’t it? Beside, it never provided evidence for its view, which is presumably why NAO and PAC ignored it.
        On business practices, to name just some:
        “BT used its commercial roll-out model to price its bids under the framework and provided the Department with a summary reference cost book based on output costs per user connected that did not meet the Department’s intended level of detail.”
        “BT was not prepared to agree to inspection rights so the Department has to rely on self-certification from BT and cannot check that this clause has been applied.”
        “the Department identified BT as overcharging for project management costs by £3 million in one area, and made BT remove the identified costs from that bid.”
        Re the ripped-off £1.2bn: the money goes first to BT; what it does with it after that is up to the directors. Even if they give some to suppliers and contractors, how much sticks to BT? A dividend yield of 2.77 suggests not a lot gets back to shareholders.


        2013/09/26 at 22:03

      • this is the same NAO that got the reasons for the delay completely wrong – as referenced by Ovum and other agencies?!


        2013/09/26 at 19:57

      • The DG told me he spent a long time waiting for DCMS to give him information. Perhaps DCMS was waiting for BT to give it the information the DG wanted. Wouldn’t surprise me in the light of BT’s willingness to disclose information.


        2013/09/26 at 21:30

  4. Whilst I agree that the politicians were out of their depth, I cannot see why the money could not have been made available in the form of a loan so that we, the end users, could have our money back. I am not a BT shareholder, but any investor can see that the value of their assets has risen significantly recently thanks to the great British Public.

    Neil Bradley

    2013/09/26 at 10:31

    • Would BT have accepted the loan?

      Or would they have said “No thanks, we don’t need it. The line rental just keeps on rolling in without it, so we’re OK, thanks very much”?


      2013/09/26 at 14:45

  5. Is it just a coincidence that BT has and will get £1.2Billion and the cost of launching BT Sport was £1B?

    Mel Bryan

    2013/09/26 at 11:48

    • hmm you might want to check that number about what BT sport is costing!


      2013/09/26 at 19:55

  6. It’s probably time for a new “word – bite”

    Homes passed – It’s a FARCE – We can prove it.

    To reinforce David Cooper’s comments, heres a summary of our farce !

    BT failed to provide a compliant bid for vendor assessment by Ewhurst & Surrey Hills Broadband; then once we had been awarded our £180,000 RDPE Grant, using our compliant bidder’s tender, and after an additional 3 months delay under a NDA with SEEDA, BT deceived all public servants within SEEDA, DEFRA, BDUK & Ofcom, Surrey County Council and our MP (Anne Milton) that they were providing a like-for-like solution. Instead of providing a completely new fibre spine capable of expansion immediately to the outliers** and three cabinets with a capacity of 500 services each, we have to date, after an 18 month delay, 3 ECI 128 cabinets and some with insufficient cables. One of those cabinets has been at full capacity since 18 of July with promises of additional capacity available on 28 August,  25 September and now 23 October.

    ** We currently have 69 properties unable to get any VDSL service at all according to BT’s Wholesale availability checker and we estimate a total of 226 properties out of about 942 unable to achieve the lower BDUK bottom limit of 24 Mbps.

    Unless BT can be forced to pay punitive damages, thus allowing us to employ a competent organisation to replicate the excellent B4RN deign for a symmetric 1 Gbps point-to-point full fibre to the premises, all the outliers are now left with no prospect of rescue as BT have rendered the area commercially non-viable.

    Merrow Drover

    2013/09/26 at 22:27

    • The Ewhurst situation is an example of BT’s privilege within the civil service. As somebody who runs an ISP in the area though, I have been on the receiving end of the original campaign for the RDPE grant whereby my ISP’s service was lied about, belittled and defamed in pretty much every way possible to ensure the maximum amount of people were behind the campaign and kept away from signing up with us.

      This meant we withdrew our commercial, unfunded plan to expand coverage to the majority of Ewhurst.

      It isn’t hard to see that the way the original campaign treated an existing ISP was no different than the way BT treated the original Vtesse Fibre campaign ultimately.

      After this all fell through of course we received a load of requests for service from the very people who had previously run my company into the ground and spread a mass of lies about it over a lengthy period.

      This included the lie that the Duke of Kent school had dumped our ISP as it was rubbish/no good etc..

      This is the same Duke of Kent school that uses our ISP for broadband and telephone and has done for some years now. They even put a public statement on their website to refute the lies and state how pleased they were with the service.

      In summary quite a lot of people in the area had our service for years before your campaign, especially in the outlying areas, and they still have it now.

      The rest will have to see where the latest local campaign and the public funded BT monopoly takes them i guess?

      Bill Lewis

      2013/09/27 at 19:31

  7. Hmm, I think VDSL vectoring might provide a bit of a speed boost up to 1km, but it’s not going to do much for rural communities on long loop lengths. Yes there are crosstalk problems on some lines, but many of the problems are things like big sections of aluminium cable and bad joints. With rural lines, it’s the sheer length of the thing (or the laws of physics debate).

    Also, vectoring is useless for VDSL on LLU operators/exchange only lines (if the ANFP ever allows it that is), as you can’t synchronise the different operators DSLAMs. Here’s hoping that this isn’t used as an argument to only allow a single operator the ability to run VDSL on exchange only lines.



    2013/09/27 at 08:53

  8. interesting comment thread, the article though was predictable from when it was clear all the framework competitors to BT were to be squished out. Only to be confirmed when the EU then ratified this Monopoly recently and simultaneously made sure any other non BT dependent provision was unsuitable for funding.

    Its the same crap that happened with ADSL 10 years ago and i personally do not expect it to turn out any less ugly.. 🙂

    West Sussex has already downgraded its target to 90% to get “super fast” .. although that isn’t 90% with 24Mbps+ as they have refused to answer the questions, how are they going to confirm the actual speed received and what penalty clauses / mechanisms exist for non compliance?

    what a way to run a business…

    Bill Lewis

    2013/09/27 at 18:57

  9. […] BT is not taking its beating from the the Public Accounts Committee, the National Audit Office, nor even culture secretary Maria Miller, lying down. On BT’s […]

  10. […] PAC earlier identified these traits in the BT contracts, all of which are subject to non-disclosure clauses and restrictions on speed […]

  11. […] PAC, chaired by Margaret Hodge, was previously frustrated by the answers it received (here and here), and vowed to keep asking questions until it was satisfied. BT’s director of […]

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