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Will UK broadband suffer as political games continue
Tuesday 11 June 2013 09:23:07 by Andrew Ferguson

The National Audit Office is set to deliver a report on the BDUK in July and following the tradition in UK politics we appear to know what is in the report before it has been published if the details Financial Times are correct.

The FT is using terms like 'train crash' and 'deeply critical' for the way the DCMS (Department of Culture Media and Sport) has handled the bidding process run by the BDUK. As we understand the purpose of this audit it is to look at how the bidding process was constructed, the rules associated with it and how the process was handled, and is less of an investigation into the common belief that BT is overcharging councils for the work under the BDUK contracts it has won.

A short history lesson is worthwhile, as the train of thought that BT is charging too much has been a story that has gone on since at least July 2010 a year before the money was allocated to the various regions of the UK as part of the BDUK process.

For the general public and businesses to some extent having BT win all the BDUK projects to date does at least ensure that at the retail level the superfast services they see in adverts will become available to them too. On the other hand though by handing the money to BT it could be seen as helping to strengthen the position of Openreach as the national telecoms infrastructure provider, the silence from Fujitsu is very telling almost as if they never really expected to win any of the contracts.

The BT roll-out is very much an accountant led affair that is largely FTTC based, simply because it is more affordable when you are trying to get superfast to 40,000 projects over a wide area of a county. Fibre to the Home is something we would love to more of in the roll-outs but given the level of complaints about how much public money is already going towards FTTC, it seems impossible to en-vision a widespread FTTH roll-out on the scale of the BDUK process in the UK for some years.

At the end of the day the improvements to UK broadband are now part of the political battlescape and have been since the original Digital Britain report was published under the Labour Government.

The reason so many of those involved in the alt-net scene are so annoyed with the BDUK process is probably the millions spent on unseen consultants and reports that appear to have no real impact for the average person who just wants to know when their broadband connection will go faster.

In a world of soundbites, we feel we should add one which is that the BDUK process is all about accelerating superfast roll-outs, so that rather than waiting till 2019 for 90% coverage of superfast services we should hit that target sometime in 2015.


Posted by AndrueC over 3 years ago
"..less of an investigation into BT overcharging."

If BT are overcharging then other companies should be able to underbid them. Or at least let's say that if BT isn't the cheapest then other bidders should be able to.

Perhaps BT could have quoted cheaper but if they still out bid the competition then c'est la vie. That's why it was a bidding contest.

Get over it already and just start building.
Posted by AndrueC over 3 years ago
And yes, the real problem here are the hidden costs (in money *and* time) that BDUK has incurred. As I keep pointing out: Compare the Cornish roll-out with BDUK.

The EU is hardly known for being lean, mean and efficient yet working with BT and councils they have orchestrated an excellent programme. BDUK is a farce and it has little or nothing to do with BT's pricing.
Posted by mervl over 3 years ago
We can all scoff a lot at British bureaucracy, but we should think how it keeps a fair few of us in jobs, indirectly. And where else would they come from? And if BT and other owners of infrastructure don't keep their shareholders and the wealth funds happy, then where's the investment funds coming from? Not, for the most part, from HM Treasury.
Posted by Dixinormous over 3 years ago
What are your sources for these hidden costs that BT have incurred through BDUK please AndrueC?

Given BT's built in advantages, cemented by BDUK rules, the idea that other companies could underbid is laughable.

I guess all those in the industry who saw BDUK, shook their heads and asked why they don't save themselves time and hand the money to BT straight away are clueless.

If you want to top up BT's pension fund go ahead, don't expect me to be happy about doing so.
Posted by Plankton1066 over 3 years ago
It is difficult to understand how £10m can be spent on consultants and have failed to figure out that BT could be the only player. Prices should have been agreed with BT on open book principles allowing full transparency and a healthy margin for BT. It will never be know if VFM was had or not.
Posted by Somerset over 3 years ago
Consultants as in:
Posted by WWWombat over 3 years ago
Tricky, isn't it?

The BDUK project will connect 23% (6m premises) to SFBB, and prob another 5% to fibre below SFBB thresholds (1.3m).

If you believe those people deserve access to the same retail prices, via open wholesale access (I do), the consequence is that these bids had to be won by a small group of large players. Big enough to attract the big retail ISPs.

I'm not surprised Fujitsu didn't win. But I'm surprised that Virgin went behind them as a retailer, instead of bidding themselves as a network operator. Strange for the 2nd biggest access-network operator to choose to do that...
Posted by herdwick over 3 years ago
Consultants were used because councils tend not to have broadband expertise sat around doing nothing.

I would rather see some knowledge bought in than the car crash that might result from the guy who manages the street cleaners doing it.
Posted by themanstan over 3 years ago
Not really they've stopped expansion at the wholesale limit. This allows them to tailor their infrastructure capacity accordingly, if they wholesaled they would have to expend a lot of capital adding capacity to their network...
Posted by AndrueC over 3 years ago
@Dix: I'm talking about the BDUK costs, not BT. The clue would be in the phrase "that BDUK has incurred."

If I was talking about BT incurring costs I would probably have written "that BT has incurred."

A lot of time and money has been wasted by councils and possibly the government in pushing bits of paper around and seeking approvals.
Posted by herdwick over 3 years ago
I agree with AndrueC's point - if BT's charges are so overpriced it would surely be straightforward to undercut them. Vtesse can trench in new long distance fibre runs for commercial customers but choose not to play in the retail game, leaving an open goal for BT.

If BT have such massive price advantages that nobody can compete, then it can hardly be overpriced.

So which is it ?
Posted by JNeuhoff over 3 years ago
@AndrueC: "BDUK is a farce and it has little or nothing to do with BT's pricing. " I fully agree with that. Also, public, e.g. taxpayer's money is given to BT, and yet BT will receive full ownership and control of the new infrastructure assets, the public and private non-BT funders will never get their money back.
Posted by chrysalis over 3 years ago
how do we know BT werent undercut? Just because they won the bids it doesnt mean they had the lowest bid.
Posted by chrysalis over 3 years ago
JNeuhoff yes, I am ok with subsidies on the condition the subisidy funder gets ownership relative to their funding, whilst it seems BT get full ownership of the infrastructure in BDUK areas.
Posted by WWWombat over 3 years ago
It's fun reading the same comment from you on every article. Got something else to say?

Its a bit late to revisit the funding model that BDUK chose for the rural rollout. Public ownership was considered and rejected. Presumably they chose the hands-off model for a reason.

They're going through the same decision process for the UBF at the moment:
(link to DCMS within article)
Posted by WWWombat over 3 years ago
@JNeuhoff & @chrysalis
There's more info about why the county projects have ended up going with a gap-funded investment model, and the consideration of JV models.

Google "broadband delivery pilot lessons learned" and check the "commercial approaches" section.
Posted by vicdupreez over 3 years ago
So... I say this every time (WWWombat) and I will keep saying it. BT SUCKS. The UK will continue to have crappy substandard broadband until someone (not sure who since the government is just as bad as BT) takes the lead and builds an alternative, all fibre network to EVERY home. Until that time, we weill keep having this crap happen. BT being privatised was fine, but the powers that be should have kept hold of the cable infrastructure. A LOT of issues would have been avoided.
Posted by vicdupreez over 3 years ago
I have actually told BT's CEO in Northern Ireland and the head of engineering that BT sucks directly. They just shrugged, and I did not expect anything else...
Posted by Somerset over 3 years ago
@vicdupreez - how would an all fibre network be funded?
Posted by mervl over 3 years ago
e.g. Gap funding = Cornwall
Public infrastructure = Digital Region
Some people never learn.
Posted by WWWombat over 3 years ago
@vicdupreez. You can continue to believe BT sucks. Lots of people do, and it can't all be unfounded. BT staff are used to people being annoyed to their face - founded or unfounded - and can do no more than shrug shoulders.

If the only thing stopping FTTP to every home was BT's intransigence, then someone would have taken the lead and built an alternative by now.

I wonder what could be stopping them...
Posted by WWWombat over 3 years ago
The government sold off the copper infrastructure, and tried to set up competition in the form of cable companies, and tried to set up competing infrastructure in the ground... and actively prohibited BT from competing against either.

After a lot of dealing with debt and bankruptcy, that has got us a single company with infrastructure to less than 50% of the country, and no desire to go any deeper.

What makes you think that a third company will come in and want to do more coveregae, deeper, than Virgin has managed, but using fibre?
Posted by themanstan over 3 years ago
There has been a 3rd company.... Fujitsu... and they said give us all the BDUK money and we'll connect up the next 30%... then they came back and said, "Well, actually with this amount of money we can't do the 30%...". Everyone looked at the figures and agreed that they could not FTTH the BDUK 30%. Best estimates for the whole of the UK via FTTH is anywhere between £15-20BN. France is looking at Euro20BN for the remainder of the country to be FTTH 50:50 gov:private money. Don't see UKgov doing that.
Posted by WWWombat over 3 years ago
I can see UKgov doing the next step (£300m), but only where EU policy allows them to step in with state aid.

EU policy currently really 30-100Mbps, not gigabit.

For current BDUK, that policy really meant FTTC. And I can forsee that the BDUK projects become a higher percentage, perhaps 95% (like Cornwall has). Especially after adding vectoring.

For the final 5%, where distance makes FTTC impossible, we'll need FTTP or FTTdp. Perhaps the next BDUK installment of £300m, once trebled, makes that possible.
Posted by michaels_perry over 3 years ago
I feel the basic principles of delivery to all have been skewed badly. If they installed a FTTC network as they did with copper and then allowed either copper or fibre for the final stretch to house or business then we could have had a very fast and affordable network. What we are getting now is a hotch potch that does not deliver to rural areas.
Posted by rjohnloader over 3 years ago
As I remember it BDUK money was aimed at rural communities who wouldn't get fast broadband without it. In Richmondshire and Hambleton Districts in N Yorks we are too rural for an early rollout and will have to wait until 2014 or maybe never whilst BT goes for the easier targets and says how good they've been to hit numbers. This is not what BDUK was about was it?
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