BT’s monopoly on rural broadband a ‘government failure’, says Margaret Hodge

'Despite our warnings… alternative suppliers may be crowded out'

BT has been given an effective monopoly by the Government to run a taxpayer-funded rural broadband programme, according to  the Public Accounts Committee (PAC).

The communications giant has won all 44 contracts awarded under the £1.2bn scheme to extend services to areas that are not considered commercially viable.

In a second highly critical report on the progress of the plans, MPs said the Department for Culture, Media and Sport (DCMS) had “failed to deliver meaningful competition”, which has put BT in a strong position and made it more difficult to insist on value for money.

BT’s position as a monopoly supplier should have raised a “red flag” but the department failed to act on previous warnings that higher standards of transparency around costs must be imposed to ensure that contracts were competitively priced and the company was “not taking advantage”, the PAC said.

Margaret Hodge, who chairs the PAC, said: “The Government has failed to deliver meaningful competition in the procurement of its £1.2bn rural broadband programme, leaving BT effectively in a monopoly position. The scheme is designed to help get broadband to areas, mainly rural, where commercial broadband infrastructure providers currently have no plans to invest.

“Since our hearing in July last year, when 26 of the 44 contracts to deliver this were with BT, all remaining contracts have now also gone to BT.

“Despite our warnings last September, the Department for Culture, Media and Sport has allowed poor cost transparency and the lack of detailed broadband rollout plans to create conditions whereby alternative suppliers may be crowded out.”

Communications minister Ed Vaizey said: “Britain has the best super-fast broadband of all five leading European economies.

“The Government’s nationwide broadband rollout is ahead of schedule; multiple robust safeguards are already in place to ensure value for money, and thousands of homes and businesses up and down the country are already getting the benefits.

“We continue to promote competition and have insisted on enhanced transparency from both local authorities and suppliers.”

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