BT Attacked on Broadband Costs

MPs have accused BT of "vastly overestimating" the cost of providing broadband to rural areas.

It follows a National Audit Office report, which revealed that the rollout will cost at least £92m less than BT had originally said.

The government had said that the spare cash would be ploughed back into offering fast broadband to more remote areas.

BT said the claim made by MPs on the Public Accounts Committee (PAC) was "bizarre".

Margaret Hodge, chair of the PAC said: "Although it's reassuring that the cost to the public purse could end up being £92m (25%) less than what BT had originally forecast in its bid, I worry that this does not stack up with what BT told my committee in 2013 - that it factors in a contingency of between 5% and 8%, which might not get spent, a much smaller proportion than 25%.

"It is very concerning that it looks like BT could have abused its dominant position in the market by vastly overestimating forecast costs in the first place when it put in its original bid, and we also have broader concerns about whether the deal represents value for money."

BT said in response: "We have come in under budget in several areas which is good news for the taxpayer as we only charge for the costs we incur, not those we first forecast. The savings can now be reinvested to take fibre to additional areas.

"The suggestion we inflated those costs is bizarre as by doing so we would have hindered our chances of winning the work.

"The NAO report this week confirmed our costs were 20% below those others would have charged in a sample area, so we are clearly delivering excellent value for money."

The distribution of broadband is overseen by Broadband Delivery UK, which is part of the department of Culture, Media and Sport.

The NAO said: "As at September 2014, BT's total reported capital spend on phase 1 of the programme was £142 million (38%) under the estimated price, including work in progress not yet invoiced.

The report concludes that taking into account possible further costs, BT would still have spent "approximately £92m less".

print this article

Return to internet news headlines
View Internet News Archive

Share with: