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UK Government Sacks Man Who Questioned BT Superfast Broadband Costs

Tuesday, Oct 2nd, 2012 (1:44 pm) - Score 1,948

The government’s Department for Culture, Media and Sport (DCMS) has allegedly sacked the author of an internal discussion paper that questioned some of the costs of BT’s financial model for delivering superfast broadband (FTTC) services into the “final third” of mostly rural parts of the UK.

The report itself, which we covered last month, pointed to several areas of concern, such as one where BT is said to have “continuously increased its apparent cost by adding new job types and not cutting costs where jobs are already accounted for“. It later added that the operator was “using the opportunity of a framework structure to create a wholesale price – not a cost as understood in calculating state aid“.

Suffice to say that the suggestion, which is that BT might have allegedly attempted to inflate some of its costs to the detriment of tax-payers, drew an understandably strong denial from BT. A spokesperson for the operator told ISPreview.co.uk last month that, “these funds are in addition to our commercial investment of £2.5 billion and so it is ludicrous to suggest that we are trying to pass on the full cost of deployment to our public sector partners“.

BT are subject to a contractual obligation, which is designed to ensure that all their costs are consistent with the commercial deployment and across all Broadband Delivery UK (BDUK) contracts. On top of that their actual costs are audited during the life of the contract and the operator remains subject to international cost benchmarking. Naturally BT, as a commercial company, needs to be able to return a profit but at the same time it’s also incentivised to reduce costs in order to make their £2.5bn investment go further.

According to Ian Grant’s Br0kenTeleph0n3 blog, report author Mike Kiely was let go shortly after his document had been sent to local authorities and subsequently leaked online. The government has a no-comment policy on matters that affect individual members of staff and thus we’re unable to gain a response as to the exact cause of his departure.

Still, whether correct or not, Kiely’s report clearly did raise some concerns and those have today been picked up by the Daily Telegraph, which claims that Margaret Hodge MP (Labour), chair of the Public Accounts Committee (PAC), was “shocked” by the disclosures and planned to examine them further. Hodge has also forwarded her concerns on to the National Audit Office (NAO).

Mrs Hodge said (NAO Letter):

This looks like another example of a lack of transparency by a private company providing a public service potentially allowing the taxpayer to be ripped off. Taxpayers are paying £1 billion for the roll-out of high speed broadband across the UK, an essential service that people cannot do without, and it appears from this document that BT may have exploited its monopoly position.”

The Local Government Association (LGA) and Digital Policy Alliance (DPA) have since joined with Hodge in calling for a proper investigation of the concerns. Certainly where there is any doubt then it’s always wise to take a closer look (hopefully without adding any further delays). It is however notoriously difficult to compare costs between different networks as every telecom developer adopts a different strategy, hardware, software and engineering approaches.

It’s also worth remembering that it does cost more for big operators like BT to deploy new services into rural areas where people traditionally live much further away from their local telephone exchanges and sometimes even street cabinets.

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 X (Twitter), Mastodon, Facebook and .
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