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BT and Virgin Media UK in Legal Challenge to Birmingham Broadband Funding

Monday, October 22nd, 2012 (8:01 am) - Score 1,848
fibre optic ftth broadband cable laying

National UK telecoms operators BT and Virgin Media have “disappointedBirmingham City Council (BCC) after they launched a shock legal challenge against the city’s £10m publicly funded (State Aid) plan to expand the reach of “ultrafast” (100Mbps+) broadband ISP and public wifi services by 2015.

Birmingham’s Smart City project forms part of the UK governments £114.1m Urban Broadband Fund (“super-connected cities“), which is designed to help ten of the largest cities expand the reach of faster broadband solutions into digital disadvantaged “areas where BT and Virgin Media will not go” (a further £50m has also been set aside to help 10 smaller cities).

The Smart City scheme is unique because in June 2012 it became one of the first UK cities to win State Aid approval from the European Commission (here), which praised it for proposing to develop a network that would be “genuinely open to all operators and will therefore promote competition“. This included offering open access to Dark Fibre, which BT has persistently refused to do. But BT and Virgin Media now fear that the new network will overlap theirs.

Virgin Medias Spokesperson said:

We believe it involves a significant overbuild with our network. It’s a poor implementation of what is otherwise a sensible policy. It sets a bad precedent and sends a really bad signal to our investors … We believe the [EC] has made a decision based on inaccurate and misleading information which could waste public money.

James McKay, Birmingham City Council, added:

Birmingham is extremely disappointed in Virgin Media’s decision to appeal this landmark ruling. The city has worked in a very positive and collaborative way with them over the last few years to help inform and develop our business case and we are surprised that they have now chosen to appeal at such a late stage.”

Ironically many similar schemes have stalled over EU concerns about a lack of competition. BT has so far won all of the major Broadband Delivery UK (BDUK) contracts, while smaller ISPs have effectively been excluded from the process and Fujitsu, the only other approved candidate, appears to have all but given up after they were re-classified as a “high risk” for government contracts (here).

Thankfully the EC’s competition boss, Joaquín Almunia, revealed earlier this month that he would shortly be able to grant state aid approval for related projects (i.e. by early November 2012), albeit alongside some “relatively minor [and as yet unspecified] changes” to BDUK’s design (here). It remains to be seen whether this latest challenge will have any impact upon that approval.

Meanwhile BT and Virgin Media are no doubt keen to ensure that they don’t lose out to alternative publicly funded networks and, unlike smaller ISPs, they have the financial and legal clout to protect their interests. The irony will surely not go unnoticed among all those whom fear that BT already has an unfair advantage. Meanwhile Virgin Media doesn’t yet offer a truly open access solution to rival ISPs.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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6 Responses
  1. Avatar Bob

    BT seems to have no problem with State aid when it is BT geeting the cash but gets all upset when it sees competition.

    THis article highlights just how effective competition is at improving things. We badly need realcompetion in the BRoadband Market at the wholesale level.

  2. Avatar Kyle

    A fine example of the greed and utter lack of intent to work in favour of Joe Public for extending the infrastructure in this country. These companies tell us time and time again that they are happy to be providing their services whenever they are awarded council money but when it comes to an infrastructure without a cheque in their names, they get nasty and throw the toys out of the pram.

    These companies need telling who is boss. Just because BT is a national telco (Virgin is NOT), does not give them inherent rights to public funding. Maybe if the matter of public funding went in the favour of others (and ensuring the terms didn’t become untenable to third parties), this issue would have been a lot more frequent.

    I was very much a BT supporter in days gone by, but those days are over. Yes, this is a PLC and I guess therein lies the problem. It really does come down to greedy shareholders and with such an important topic and such reliance on public funding, the PLC shouldn’t be the ones dictating the future of the technological infrastructure of this country.

  3. Avatar New_Londoner

    I think the difference here is both companies seem to be claiming to be covering at least part of the area already. If that is the case, why waste limited public money doing something already being paid for by the private sector?

    It really would be greedy if either took our money for doing something they either have done or are planning to do already, surely it would be better to use this money elsewhere or for a different purpose? Why put taxpayers’ money into something where it is not really needed when there are plenty of locations, urban and rural, that would benefit far more?

    • Avatar nicknick

      I think the answer is in Mark’s original article “This included offering open access to Dark Fibre, which BT has persistently refused to do” – and so has Virgin. Therefore on that logic there is no overlap at all, as they would be trying to offer services not provided by anyone else.

  4. Avatar Deduction

    ^^^ Using that logic why is BT FTTC rolled out in Virgin areas? Did BT legally challenge thereself first? Especially in areas where they had local authority (still tax payer public cash) money to roll out into a Virgin area.

    Bob has it right and short to the point. Both of them a bunch of cry babies, didnt want to expand the network in that area further and now crying like spoilt little beehatches someone else is likely getting the dough to do it.

    Screw both of em i say.

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