The report which examines the government’s rural broadband programme, designed to help get superfast broadband predominately rural areas , was published today.
Committee chair, Margaret Hodge MP, accused DCMS of “mismanaging” the programme and allowing for “sole provider BT” to be placed in a “quasi-monopolistic position which it is exploiting by restricting access to cost and roll-out information”.
Under the Ppogramme, DCMS provides grant funding to 44 bodies - local authorities or groups of authorities - to subsidise them to procure the superfast broadband services for their areas.
The report says the “department’s procurement approach failed to deliver meaningful competition for the letting of local contracts”.
It adds that DCMS appointed only two bidders – BT and Fujitsu - to the framework contract, and that BT, which won 26 of them by June this year, is “likely to win the remaining 18”.
BT is, according to today’s findings, committing £207m less - £356m rather than £563m - in capital funding than DCMS anticipated in its business case, with local authorities paying out £236m more - £730m, rather than £494m.
The report continues that “BT will still benefit from owning assets created from £1.2bn of public funding once the programme is complete” and says that the department’s assumptions in its 2011 business case were “wildly inaccurate”.
Hodge said: “The consumer is failing to get the benefits of healthy competition and BT will end up owning assets created from £1.2 billion of public money.
“Overall, BT is supposed to provide at least 90% coverage in rural areas but it is preventing local authorities from publishing proper information on the areas the company will and will not cover.
“Details of speed and coverage in each local project are also being kept confidential, preventing other suppliers from developing schemes aimed at reaching the remaining 10% of premises and stopping communities and others from identifying alternative ways of providing superfast broadband.”
Hodge added that the department admits the programme will be delivered in 2017—two years later than planned—and that consumers are getting “a raw deal despite the generous public subsidy”.
DCMS said it “disagrees with the views expressed by PAC”, and that it “put in place a fair commercial process and encouraged different suppliers to bid”.
A DCMS spokeswoman said: “We are disappointed that PAC fails to recognise that thousands of rural premises who have never had a decent broadband supply are now getting one, something that is vital for farmers, rural businesses and all those who live outside major cities.”