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National Audit Office reports on rural broadband projects
Friday 05 July 2013 00:17:56 by Andrew Ferguson

The National Audit Office has been looking at the BDUK programme, which had the original aim of providing a minimum 2 Mbps for everyone and pushing superfast broadband to a coverage level of 90% by the vague date of 2015 (many assume May 2015). As of a couple of weeks ago, the goal posts were moved with extra funding added to push superfast coverage to 95% by 2017.

  • The Department forecasts that the programme will complete its rollout 22 months later than planned.
  • Only nine out of 44 local projects are expected to reach their original target of providing 90 per cent superfast coverage by May 2015.
  • In June 2013, the government revised its target, and now aims to secure delivery of the rural broadband programme by December 2016, as well as 95 per cent superfast coverage by 2017.
Extracts from Report by the Comptroller and Auditor General

If the programme is to miss its original deadline of May 2015 by 22 months, which has varied depending on what time of day various politicians have been talking about it, then this suggests a completion date of March 2017. So how the report can suggest that the 95% superfast target will be met by 2017 is very confusing. The modelling used to estimate delivery dates is on page 43 of the report and this shows 90% being hit in May 2016 and the 95% target in December 2016, so we believe the NAO would have been more accurate to say the scheme is running around 12 months behind schedule.

Modelling as anyone who has tried this on any large project is a constantly changing game, but the National Audit Office highlights that they are expecting BT to provide only around 23% of the original funding of £1.5 billion, or around £345m. A quick five minute check back through our news on BDUK funding announcements, showed that in England we quickly found £233m of funding from BT, and that is excluding the funding for Wales and Scotland, and with a third of the projects yet to sign even if excluding Scotland and Wales the £345m looks likely to be met and exceeded. Add what will probably be around £140m split between Wales and Scotland and the comments from the National Audit Office are looking very suspect.

BT themselves are estimating they will probably provide around 38% of the £1.5b, which will closely match the £530m original BDUK funding pot. Of course this is still substantially lower than the £1.2b (if that figure is correct) from the public purse. If the people running the BDUK programme had pushed this apparent mismatch harder, then the situation could potentially have arisen where even BT were not interested in bidding, and certainly it would not have encouraged Fujitsu to have remained in the process.

"The rural broadband project is moving forward late and without the benefit of strong competition to protect public value. For this we will have to rely on the Department’s active use of the controls it has negotiated and strong supervision by Ofcom."

Amyas Morse, head of the National Audit Office

We would have assumed that those in charge of the BDUK project would have relished access to invoices and paying out when key milestones are reached, alas it seems that there is some annoyance at the hundreds of thousands of invoices the project will generate and that follow-up analysis of take-up rates will be needed to allow claw back clauses to kick in, meaning where take-up reaches commercial levels, less of the public funding will be used.

"There was strong competition when prices were set at the start of the process and that has ensured counties have benefited from the best possible terms. Deploying fibre broadband is an expensive long-term business and so it no surprise that others dropped out as the going got tough. BT on the other hand has stayed the course and invested significant sums in rural Britain even though the payback period in such areas is longer than in the first two thirds of the UK which has been funded by BT alone."

BT spokesperson responding to report

At the end of the day, for the average broadband consumer and SME in the UK, the real question is when will I get it and how much will it cost. This report makes for some great tabloid headlines, and criticism of politicians, civil servants and BT is very fashionable.

Of course BT is not some kind benevolent uncle, it is a commercial operator with shareholders to keep happy, a path that was started back in the 1980's. That said there is a lot more it could be doing to make information on the commercial roll-out easier to obtain, the situation with the BDUK programme is more complex as we have seen with the variation in the amount of roll-out information from them.

Lets look at this another way, while Australia is currently aiming to have 93% full fibre (FTTH/FTTP) coverage by 2021, something like 95% of the UK should at some point in 2017 have access to a connection of 30 Mbps or faster and have spent a lot less money to reach this point. For those who will be sure to comment that 30 Mbps is not fast enough, remember almost half the UK has access to a Virgin Media 120 Mbps service, which will see more upgrades in the next few years.

Is the BDUK spending value for money? This all depends on whether the time saved on a commercial roll-out which we have no doubt would eventually have happened is worth the £1.2b of public money the NAO says will be spent on it.

Update 8:30am: A copy of the NAO report is now available online for those keen to draw their own conclusions from the data.


Posted by herdwick over 4 years ago
Public sector project late ? at least it isn't over budget (yet) but otherwise what did we honestly expect. At some point we were being offered a USC of 2M by 2012 weren't we ?
Posted by AndrueC over 4 years ago
And as always everyone is complaining about the cost. So they want to upgrade the entire countries telephone system but they don't want to pay for it. Not now, not in the future either.

I don't hold with wasting money myself but sometimes you have to accept that if you want a job done you have to pay for it.
Posted by NorwichGadfly over 4 years ago
Wouldn't it be more cost-effective to serve the most remote areas by wireless or satellite rather than install expensive cables?
Posted by andrew (Favicon staff member) over 4 years ago
@NorwichGadfly Satellite will not do superfast at present, and is such that a transponder covering South West England only has around 450 Mbps of capacity.

Fixed Wireless may well be cheaper, and some county projects are looking to use it to meet the 2 Mbps minimum.
Posted by herdwick over 4 years ago
"worth the £1.2m of public money" - typo for £1.2 bn ?
Posted by NorwichGadfly over 4 years ago
There are people who cannot get broadband at all, obliged to struggle with dial-up, who would be delighted with 2 Mbps. Surely they should be prioritised?
Posted by mervl over 4 years ago
AndrueC: and where does the money come from, and if you don't try to ensure value for money don't you inevitably end up wasting it?

There needs to be some perspective. Mankind does not live by broadband alone (well, not yet).
Posted by herdwick over 4 years ago
"mobile operators were not interested in engaging"
Posted by themanstan over 4 years ago
Interesting point in the document is that BT bears the burden of risk for overspends, albeit with the lack of transparency on contigency included.

The NAO also blows away the BitCommons costing model... page 35
Posted by ValueforMoney over 4 years ago
@themanstan I think it suggests BDUK did not like the NI bit while not publishing their analysis.

So where is the £1bn capex, Sean Williams promised at the house of lords?

And Lic Garfield £100k cabinets and millions on every exchange?

No problem with BT receiving £1.2bn but it must be accountable. Clearly not so at present. These two statements are false, why should we put up with this?

Since when would a future Minister for Trade and Investment count opex as investment?
Posted by ValueforMoney over 4 years ago
@themanstan note if you read the gathering evidence on that site, it is mostly from BT presentations, which reflects the hardwork of BT workers. It is a shame those in charge at BT currently do not follow the same values.
Posted by herdwick over 4 years ago
" The Bit Commons currently assumes
70 per cent for this (discount) factor which
seems optimistic. The Bit Commons
estimate is less than half the cost that
the Department found when analysing
Northern Ireland invoice data. "
Posted by fastman over 4 years ago
NorwichGadfly may be worth cheking on superfast norfolk where you community is on that deployment
Posted by andrew (Favicon staff member) over 4 years ago
Is the problem also that not until a cabinet has gone live you do not know all its costs?

And even then it may take some time for take-up to increase to reasonable levels.
Posted by ValueforMoney over 4 years ago
@herdwick so where can there analysis be seen and checked?
Posted by herdwick over 4 years ago
You can FOI request their analysis, surely ?

" The Atkins ‘should cost’ model for
Northamptonshire is 3 per cent
higher than BT’s actual bid for
the area."
Posted by ryant704 over 4 years ago
Norfolk is actually ahead of planned work, you can see the phases at

Sorry If i'm not allowed to post links here, maybe they were forced to do work early as they were planned to start working this September to March 2014 but phase 1 is expected to be completed by September this year now.
Posted by NorwichGadfly over 4 years ago
fastman - there are parts of Norfolk that cannot get terrestrial broadband at all. As they are covered by wireless providers, perhaps it would be cheaper to help defray the cost of equipment to receive this service than install fibre?
Posted by gerarda over 4 years ago
Once again a report that has come out that assumes everyone already has access to broadband.

No mention of progress on getting a service to the 750,000 not spots
Posted by themanstan over 4 years ago

Transparency will be a challenge in what has become a one horse race and all the other competitors (Fujitsu) should have to present the same cost data for their solution. This would fairly allow parties that went down to the wire to shows costs. If BT as now the sole player presents costs in public then competitors get a look in to operational matters.

As I mentioned before there needs to be a form of accounting that allows public trust that there is good value without compromising commercially sensitive information.
Posted by WWWombat over 4 years ago
"so we believe the NAO would have been more accurate to say the scheme is running around 12 months behind schedule."

The NAO report does actually say this, but funnily enough, leaves it out of the "key findings" and buries it in a later conclusion paragraph:

"The Department is currently forecasting that it will complete the programme
22 months later than originally planned, reaching 90 per cent of premises 12 months
later than originally planned."
Posted by andrew (Favicon staff member) over 4 years ago

Yes the more measured answers are in the report itself, once wonders whether the report summaries were written more with a view to getting widespread press coverage than accuracy
Posted by WWWombat over 4 years ago
You'd expect an audit function to present the facts in a non-biased way, whereas some of these seem highly politicised.

Somewhere between the public accounts committee and the NAO, something about "impartial" has gone missing. It seems like a report designed to allow politicians to derive spin from in the future.
Posted by WWWombat over 4 years ago
I also agree that the figures they present about BT's portion of the spend is way out - they say BT portion is between 15% and 38%, while I make it 15%-50%. For example, Kent & Northants are both at 50%, while a few more are in the 40's.

My running total makes BT's contribution 36%, at £475m, though that includes £147m for Wales (based on the TBB estimations) and £19.4m for the Scottish Highlands, but doesn't include NI or Cornwall.

The report indicates that BDUK allocated £100m to Scotland, whereas the Scottish broadband budget documents only mention £68.8m
Posted by camieabz over 4 years ago
Has there been any realistic speculation as to what happens to any of the targets if the government changes in 2015 (which is very likely, given its current political make-up)?

Posted by WWWombat over 4 years ago
Thanks for that. I could have sworn the Scottish budget documents I saw post-dated that, but still referred to the old amount.

With today's announcement of the "rest-of-Scotland" project, we can now see the allocation of funding used by the Scottish government.
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