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BT Criticised for Approach to Devon and Somerset Broadband Contract

Monday, February 16th, 2015 (2:05 pm) - Score 1,264

A new report suggests that the recently announced £45.5m extension to the Connecting Devon and Somerset project, which will make superfast broadband (24Mbps+) speeds available to even more local premises, very nearly didn’t go ahead after BT initially refused to bid. The move gave the council little option but to sign an exclusive deal with BT, instead of pursuing a more open tender.

The original £94m CDS scheme was also a BT contract and currently aims to make “superfast broadband” speeds available to over 90% of local homes and businesses by the end of 2016, although back then BT was the only approved supplier remaining in the Broadband Delivery UK programme and thus the council’s choice was perhaps inevitable.

The Government’s BDUK scheme attempted to make the Phase 2 Superfast Extension Programme (SEP), which pushes the national coverage aim from 90% to 95% by 2017, a little bit more flexible. But so far nearly all of the local authorities involved have chosen BT again, with only a few exceptions like the one in West Oxfordshire (here).

A big part of the problem is with finding another suitable large provider, other than BT, that could deliver upon the contract and do so within the limited timescale / funding specified (i.e. without also putting too much risk of failure onto a vote conscious council). Not an easy task and this is where BT’s approach often wins the most brownie points.

However Andrew Leadbetter, a cabinet member for Devon County Council, has noted that the new £45.5m Phase 2 extension was nudged into making an exclusive deal with BT after the operator said they wouldn’t bid on the open market contract (only two other unnamed firms registered an interest for it).

Andrew Leadbetter said (Western Morning News):

With my hand on heart I can say we were going out to competitive tender but there was hardly a great stampede so there was a risk there wouldn’t be anybody. Circumstances have gone against us – we wanted to run an open procurement process but we have got a critical timescale to get the contract awarded before state aid ends in June.

We could have been left sitting there with millions of pounds and unable to spend it – we would have been criticised for that. With that amount of money to offload, (Culture Minister) Ed Vaizey told us he was happy for us to go back to the BDUK framework.”

Apparently only the Dartmoor and Exmoor national parks will now be opened up for bids to install the service, although this represents just 3% of the local population and the work is expected to cost around £6 million. Meanwhile BT has apparently refused to comment on the above claims and passed the buck back to councils.

The situation highlights the problem with having a single primary / dominant infrastructure supplier, but it also reflects the UK’s current regulatory model and the way that infrastructure outside of urban areas is still broadly dominated by BT. Rivals have admittedly also struggled to build an alternative (except for Virgin Media.. in urban areas), albeit largely because investing in areas that BT currently covers is exceptionally challenging.

Ultimately we can’t blame BT for being a commercial company and using all of the tricks in its book to win new business, fair enough. But clearly today’s market and regulation, particularly at the infrastructure level, is still far from perfect.

Leave a Comment
12 Responses
  1. Avatar Steve Jones says:

    “A new report suggests that the recently announced £45.5m extension to the Connecting Devon and Somerset project, which will make superfast broadband (24Mbps+) speeds available to even more local premises, very nearly didn’t go ahead after BT initially refused to bid.”

    Is there a link to this report I’ve missed? Was there a tender issued that BT refused to bid on as this article states? Or was it that BT said they wouldn’t tender for a proposed tender. It’s all rather confusing as there’s not much definitive then there’s apparently a report (or does report mean that some people have reported that?).

    Some real information on how Somerset/Devon had originally proposed to tender for this would, surely, be essential information. That is completely lacking.

    1. Avatar themanstan says:

      Typo? Maybe it should says “A news report suggests” linking to western morning news.

    2. Mark Jackson Mark Jackson says:

      The report on Western Morning News is already clearly linked above in big bold letters. Sadly no further details since BT apparently would not comment.

    3. Avatar Steve Jones says:

      It does sound more like something a regional newspaper might have produced based on what some discontented local politicians told them.

      But it still needs more analysis. Quite what was it about the structure of the original proposed tender that BT, reportedly, wouldn’t respond too. Or is it that BT would only offer an extension to the existing BDUK framework contract?

      I guess the truth is that there really weren’t any other options than the BDUK framework as the timescales simply wouldn’t allow for some very complicated process involving tenders different areas using several potential altnets that don’t actually exist.

      So, when you boil it down, it’s a cry of frustration…

  2. Avatar Steve Jones says:

    OK, so it’s a newspaper article. Essentially what it seems to say it that there were only two other potential bidders, and they weren’t credible (if they were credibly, then surely the tender would have been issued). So if the tender had been issued, then only one of the bidder would have been eligible. All in all, fairly pointless. It would have been a sham bid anyway. Maybe it would be better spending the effort on optimising the roll-out rather than wasting time on a pointless exercise.

    1. Avatar Steve Jones says:

      That’s the OMR and will be required whether there is a tender or not. It’s just to establish where state aid can legally be provided. There will have been one for phase 1 but, no doubt, it would require revising, if only because time has passed and things may have changed in the meantime.

      It looks increasingly like BT just said they’d not bid for any new ITT on the basis, probably because it was a waste of money (technically the tender is the bid; what the councils woulds have issued is an Invitation to Tender – an ITT – but it’s almost the norm that ITTs are called tenders, which is rather unfortunate).

  3. Avatar NGA for all says:

    These contract extensions are odd. With the NAO identifying 38% inflation in BT submitted capital costs in Phase 1 modelling – (see para 3.7 and 3.8 in NAO 17767.pdf), is the worry the state aid approval will disappear thus the counties are rushing to contract more centrally provided funds even through there has been no time to revise the roll out using the excess modelled costs?

    With 38% inflation in the cost models where is BT’s contribution of 23%?

    1. Avatar MikeW says:

      NAO reports that a new financial model has been agreed for phase 2, and that the LA’s can reference the results of the SEP pilot (Suffolk), where the model was first renegotiated.

      The end-date for state-aid approval is undoubtedly a key issue, with BT previously saying they can handle 2 ITT’s per week.

  4. Avatar PeterM says:

    The thing is that any commercial company, especially a PLC, will always act in its own best interests because it is directly answerable to its shareholders.
    The first round of BDUK was simply FTTC but now with the more hard to reach areas expecting an upgrade other technology such as fixed wireless should also be used, unfortunately it looks as though this is now unlikely to happen.
    Lets hope BT can use EE to help us get superfast speeds from fixed broadband in rural areas.

  5. Avatar Chris Conder says:

    Same in every county. The easy bits have been cherrypicked, BT can’t do the hard bits, so its satellite for the rurals.

    1. Avatar New_Londoner says:

      Any actual evidence for this Chris, or is it just your opinion?

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