EU Requests Minor Changes for Broadband Delivery UK State Aid Clearance

The European Commission’s (EC) competition boss, Joaquín Almunia, has confirmed that the Broadband Delivery UK (BDUK) office, which is responsible for managing the country’s national superfast broadband strategy, will shortly be given permission to distribute State Aid funding to related projects around the country.

Europe is currently believed to be holding-up the release of £530m in central government funding for roughly half of the 47 existing Local Broadband Plans (LBP), which are each designed to help 90% of UK people gain access to a superfast broadband (25Mbps+) service by March 2015 (the last 10% will receive service download speeds of at least 2Mbps).

Several issues are understood to have triggered the EU’s competition concerns with the UK process, such as how contract bids are only open to BT and Fujitsu; the latter hasn’t won anything yet and was most recently re-classified as “high risk” for government contracts (here). On top of that the commission also wanted to see improvements at the infrastructure level (e.g. more access to dark fibre, better unbundling etc.).

The state aid rules are designed to stop member states, such as the UK, from dishing out significant public subsidies to individual firms if there’s a risk that doing so could distort market competition. So it’s easy to see the concern, especially with Fujitsu often choosing to pull out of bidding on local BDUK projects (usually long before the contract itself has been awarded).

According to the FT (paywall), Joaquín Almunia, whom is said to have only requested “relatively minor changes” to the BDUK’s design, has now given preliminary approval for the release of public funding.

A Spokesperson for the Department for Culture, Media and Sport said:

“It is our understanding that the commission is on track to issue its final decision in late October or early November 2012, which will allow [affected BDUK] projects to get under way.”

Unfortunately we don’t yet know what these changes actually are and they will need to be approved by the other commissioners before the clearance becomes official. The final approval had originally been expected by the end of last month (September 2012).

The situation has already had a significant impact on the country’s national broadband strategy, which had originally expected to get its local procurement processes completed by the end of 2012. Sadly that was recently put back to July 2013 (6 month delay).