BT under fire over broadband costs

posted on October 3, 2012

Broadband Delivery UK (BDUK) is a Government funded initiative that aims to provide super fast broadband to 90% of customers on the UK mainland with no area receiving less than a speed of 2 Mb. An integral part of the Government’s ‘Department of Culture, Media and Sport’ (DCMS), BDUK is wholly responsible for managing funding for broadband and should, ideally, be helping to roll out affordable broadband services in rural, remote and island communities.

BDUK has made an open commitment to satellite broadband services like Tooway which tick all the boxes for an immediate, non-geographically discriminating, fast broadband connection.

As a result of a leaked letter, global telecommunications giant BT has been accused by tech website ‘The Register’ of hiking up the cost of broadband services. It’s been reported that BT has inflated costs in such a way that local authorities and other service users who require speed, reach and reliability of broadband are compelled to shell out more and more for the service. BT has effectively been accused of taking advantage of the BDUK commitments and strategy to inflate its blanket costings.

BT says no

Whilst denying the allegations that it is pushing up broadband costs for service users, BT can hardly deny that they are, up until now, the only beneficiary of the £530 million fresh from the public purse for the purposes of providing broadband under the BDUK scheme.

There have been insinuations from other bodies that BT has doctored the figures submitted to BDUK in an effort to get local authorities to pay top whack for broadband services, allowing the telecom giants to use less of its own money to invest in getting broadband out to remote locations.

As if underlining these accusations, BT has recently created many new jobs in the part of its business that deals with rural broadband. But the numbers of additional jobs are not being adjusted correctly taking into account the savings made where jobs already exist. This came to light when BDUK compared BT bills for Next Generation Access (NGA) in Northern Ireland, North Yorkshire and Rutland with current BT proposals, and found that BT has ostensibly increased costs by way of bringing on new job descriptions.

£604 for super fast broadband

It has been revealed that BT intends to set a standard price for super fast fixed line broadband at a total cost of £604 per house. This figure includes an £84 connection fee but excludes VAT. It has been further alleged that this amount entirely represents BT’s direct costs in keeping its promise to supply 90% of the UK with super fast broadband. (Super fast broadband generally means any download speed higher than 30 Mb.)

Clear financial planning

BT responded by saying its figures and reporting are transparent, and that the company produces detailed financial information for every project it tenders for. It also asserts that the reason BT is being so successful in gaining contracts is because of the financial investment the company has made into the schemes. BT underlined that every contract tendered complies fully with provision laid out in the BDUK agenda.

A recent BT statement advised that the winning of tenders is directly due to BT’s commitment to improve broadband services in all areas of the UK and the fact that it has already invested £2½ billion commercially. The spokesperson went on to say it is ‘ludicrous’ to suggest BT is attempting to financially pull the wool over the eyes of public sector associates.

At the time of writing it is unknown whether BDUK will investigate these allegations against BT any further.

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