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UPDATE National Audit Office to Criticise the Broadband Delivery UK Scheme

Tuesday, June 11th, 2013 (8:53 am) - Score 996

The National Audit Office (NAO), which works on behalf of Parliament to scrutinise public spending, is expected to criticise the value for money aspects of the government’s £530m Broadband Delivery UK (BDUK) project when it publishes an allegedly scathing report into the scheme next month (July 2013).

The framework ultimately exists to help 90% of people in the United Kingdom gain access to a superfast broadband (25Mbps+) connection by the end of 2015 (i.e. public funding would be used in the last 33% of areas that the private sector has neglected) but it has also been beset by various administrative and funding delays, not to mention competition concerns.

As with most such projects the NAO has, for the past few months at least (here), been tasked with examining the case for the scheme, the design of the procurement framework, the appointment of framework partners and the role played by DCSM in local authority procurements.

But few expect the NAO to give BDUK a completely clean bill of health, not least because BT has been left as the only viable bidder in the scheme after Fujitsu UK confirmed in March 2013 that it had given up on the process due to economic and competitive concerns (here). On top of that the release of a leaked internal discussion paper last year suggested that BT may have been overcharging for its work, which the operator strongly denied (here).

Since then the government’s Major Projects Authority (MPA), which was established to help improve the “delivery success rate” of major publicly funded projects through collaboration between various government departments, has put the effort to roll-out superfast broadband on Amber/Red Alert and warned that the “successful delivery of the project is in doubt” (here).

According to yesterday’s FT (Paywall), a source close to the NAO process said that the forthcoming report would describe BDUK as a “train crash waiting to happen” and one that is apparently “accelerating“. It’s also claimed that the report will criticise BDUK’s structure because it “lacks transparency and it lacks competition, so they can’t judge whether there is value for money or not” and that’s before we’ve even touched on the troubled but largely separate £150m Urban Broadband Fund (UBF) situation (here).

A DCMS Spokesperson said:

The government is absolutely confident that our programme will deliver projects that are real value for money and result in a transformation of broadband in the UK by 2015. From the very start, we have built multiple controls into our contracts to ensure value for money, including independent assessment and clawback clauses.”

Margaret Hodge, Labour’s chair of the Public Accounts Committee (PAC), is widely expected to use the report as fuel to scrutinise the government’s broadband strategy. Needless to say that the situation could put BT, which is also set to be quizzed by MP’s over its broadband programme in mid-July, and the Secretary of State for the Department of Culture, Media and Sport (DCMS), Maria Miller, in a difficult position (though she could always blame some of it on Jeremy Hunt).

Suffice to say that BDUK has faced a rocky road but it’s also important to remember that funding for the scheme has been approved by Europe’s competition authority and it recently began to see some real progress with a number of local projects finally starting their physical deployment work. It’s possible that the 90% target could slip into 2016 but it will almost certainly still be met.

Meanwhile there’s unlikely to be a change of strategy until after 2015 when the focus will be on the most rural areas again (i.e. the last 10%).

UPDATE 12:09pm

BT has given sent us their statement.

A BT Spokesperson told ISPreview.co.uk:

BT cannot comment on the report ahead of it being finalised and published. What we can say is BT is delivering value for money via the BDUK process and there are various auditing measures to ensure that is the case. We are contractually committed to ensuring the costs we incur in broadband partnerships are consistent with our own commercial costs and we are also reinvesting savings to go further when we can.”

It’s understood that a draft version of the NAO report is currently doing the rounds in order to be checked for accuracy and BT are believed to have warned that several things in it are factually incorrect, although we don’t yet know which aspects this is referring to.

BT has so far set aside roughly £1bn to match-fund with related BDUK projects, which amounts to a total of around £3.5bn for superfast broadband deployments when you factor in their commercial £2.5bn deployment of FTTC/P to 66% of the UK.

Leave a Comment
16 Responses
  1. Avatar Bob says:

    Throwing money at something will just increase costs and reduce the commercial rollout. WE also have no competition pretty much a 100% of the contracts have gone to BT

  2. Avatar Slow Somerset says:

    No surprise here then.

  3. Avatar Stephen says:

    It’s a shame that BT don’t seem to have any desire to provide a fast service to 100% of the country, they seem contented to stick with the quick & easy 90%. But then no one else is prepared to push for the remaining 10% so I guess we will just have to wait a few years & see if anything changes.
    Why BT won’t put fibre on the telegraph poles for the rural users I don’t know, it’s got to be cheaper & quicker than going underground.

    1. Avatar TheFacts says:

      Where there is an underground route they surely use it, and where there are poles they use them.

    2. Avatar Ignitionnet says:

      They will Stephen, but where does the fibre go? It’s extremely difficult for those who are deciding how this money is being spent to justify spending tens of thousands of pounds getting superfast fibre to a single property when that same cash could cover hundreds of properties in a poorly connected village.

      Stringing fibre along 5 kilometres of poles to serve a single property or tiny hamlet of a handful of houses isn’t a good use of the limited resources.

    3. Avatar Anoyed Tax Payer says:

      @Stephen BT are already using fibre on the poles and the soon to be fibre on demand will mean that people in rural areas will be able to club together (or even apply for funding) to get fibre to their community.

    4. Avatar MikeW says:

      on 100% coverage:
      Think of this BDUK project as the first step; most of the councils seem to be treating it that way, and are focussed on the EU 2020 goals of universal 30Mbps and 50% takeup of 100Mbps+. Universal 30Mbps is that 100% coverage.

      The recent Warwickshire plan specifically mentions that their spending of the BDUK funding now is intended to support infrastructure that helps that 2020 aim, and to not spend on dead-end solutions.

      On poles:
      Current laws require the fibre to be underground if the existing infrastructure is underground – so no new poles in those areas, and that might affect rural stuff too.

      However, there is a desire to open up planning rules for 5 years, so that more cabinets can be planted, and more poles used (there’s a recent article on here about the result of the public consultation on that). I’d expect that to open up the stringing of fibre to remote areas, probably in the 2016-2018 timescale.

  4. Avatar Stephen says:

    Even that would be fine, if I could club together with the neighbours and save up for fibre, at least that would be 1 option. I really hope this becomes an option.

    I appreciate that is is not as cost effective to hook up rural users as it is to the people in towns & cities but I think that BT would get a much higher take up. People with no options available will bite the hand off of the first supplier that offers them a good service, whereas in towns & cities there is much more competition from other suppliers, Virgin cable, 3G, 4G, leased lines etc etc.

    1. Avatar FibreFred says:

      Would they get much higher take up though compared to towns?

      Its very straightforward really and its the same for a lot of things not just fibre:-

      How much does it cost to deploy
      How many customers will you get
      How long will it take to pay off the deployment costs based on the customers you get

      If the “how long” is many many years its not attractive to do it

    2. “People with no options available will bite the hand off of the first supplier that offers them a good service”

      Unfortunately that does not happen in practice. People are quick to moan but slow to take up service.

  5. Avatar hmm says:

    All this fast broadband is a waste of time in the uk everything is being blocked or Censored ok if you want a fast shopping channel that what the internet is turning in to

    1. Avatar dragoneast says:

      Good point. Content: after streaming and gaming, what is there to need this superfast broadband? It’s nice for pleasure, but I’m not yet convinced it’s the magic bullet to bring the economy out of the doldrums. And the argument that the British are best at the digital economy, as in everything else, does seem a teeny weeny bit wishful thinking, perhaps? Quite a few of the foreigners I come across don’t seem to find their poor internet to be as much of an impediment as the Brits claim.

      Strangely my connection would be classified as superfast, but I now use it less than in the days of 1Meg ADSL. The novelty has worn off.

  6. Avatar Bob says:

    The best way would have been to implement a true demand lead rollout. A target level of take up could be set for the cabinets say 15%. So a local campaign could be started for an area served by a cabinet. People would have to register a firm interest by putting down a £50 deposit. This could be refunded at any time prior to the Cabinet being included in the build. When the 15% target is reached the cabinet moves into the build program. The £50 would be deducted from there first bill once it goes live

    1. Avatar dragoneast says:

      I thought in the commercial roll-out areas take up was around 15% or less anyway? So why would the people who don’t choose to take it up up pay their £50 deposit? And people in rural or remoter suburban areas who pay the same taxes, aren’t they entitled to the “same” level of service? I suspect the roll-out wouldn’t have happened at all.

      Certainly in my (relatively affluent) street with the commercial roll-out take up is struggling to get above 10% after 2 years, for a jump from 4Mbps to 30+Mbps. And we’re not alone in the area.

      Most people don’t see themselves having money to throw around, especially not on things that they see as a basic “right” in what they consider a heavily taxed welfare state. Look at the furores on the NHS and road pricing.

    2. Avatar MikeW says:

      Why would a true demand-led rollout help? You’ve described a way to run one, but not why it helps.

      While a demand-led programme might help you order it in terms of the places with largest prospective take-up, you lose everything else related to a controlled, planned project. You don’t know, until very close in time, exactly where you will need cabinets. Therefore you won’t know which exchanges. You don’t know when you will need them either, and you won’t know how many. You won’t know when to order cabinets or head-ends from suppliers. You won’t be able to deploy the fibre routes in any controlled manner. You won’t know where to locate the staff, where or when to train them, and you won’t know how to keep them busy.

      On the whole, a demand-led project does nothing whatsoever to help keep the project costs under control.

      If you’re going to have to do almost the whole country anyway, you might as well do it in the order that keeps costs down the most. Where you are most in control of the project?

      Then, because you installed the cabinet anyway, before trying to get anyone interested, you gain the biggest advert of all – word of mouth from a neighbour who has already signed up.

      Won’t take-up be faster after the cabinet has arrived, rather than trying to drum up interest for something that may never turn up?

    3. Avatar dragoneast says:

      The problem, as always, is that the planning of the roll-out is shrouded in “commercial confidentiality”. And, as always, when we don’t know we assume the worst, and it makes a fertile breeding ground for every conspiracy theory. Secrecy always carries an unpleasant odour, and half the time it isn’t justified. My County Councils BDUK plan even seems to blank out on grounds of commercial confidentiality stuff which is available freely on commercial websites. Old habits die hard.

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