National Audit Office reports on rural broadband projects
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.