back to article Spending watchdog SAVAGES rural broadband push

The government's crashingly expensive rural broadband deployment project has failed to demonstrate that it represents value for money to Britain's taxpayers, the National Audit Office concluded today in a scathing report. Just last week, the Department for Culture, Media and Sport, which is steering the Broadband Delivery UK ( …


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  1. Anonymous Coward
    Anonymous Coward

    Color me surprised

    Do you expect any different considering that the offices of all of the above are connected by revolving doors so that the musical chairs game can extend from one office to ther other.

    Anyone with the expectations that the tendering process will ever be won by anyone but BT was quite delusional.

    As far as costs - it is another consequence of the musical chairs environment. BT Openreach is regulated by Ofcom to operate on a cost+fixed margin basis _WITHOUT_ doing a full report on its costs which can be audited by a 3rd party. WTF...

    1. Anonymous Coward
      Anonymous Coward

      Re: Color me surprised

      One reason I have refused to move house to the idyllic paradise my wife wants is broadband speed. The particular village in question has speeds no better than dial up.

      Could this lead to divorce?

      1. Matt 21

        Re: Colour me surprised

        Does make you wonder when no one else will bid. Definitely hints that BT are getting something the others aren't.

        1. Anonymous Coward
          Anonymous Coward

          Re: Colour me surprised

          "Does make you wonder when no one else will bid. Definitely hints that BT are getting something the others aren't."

          No-one else was prepared to invest money with no prospect of making any back for at least 8 years.

          If you shorten the payback period your cost goes up and you lose the bid.

  2. john loader

    Rural is misleading

    BT has done what it wants - targetting the bigger towns first which it would have got around to eventually without BDUK (remember how broadband rollout happened with BT drip feeding exchange by exchange, a few councils paying BT to install then suddenly every exchange done). So some vilages surrounding a town get better broadband but those of us in villages of under 300 residences don't stand an earthly of early deployment or possibly any. If only we could have had a contractor with imagination, using wi fi and microwave but all BT knows is stick a cable in a pipe.

    1. Refugee from Windows

      Re: Rural is misleading

      Exactly what has occurred here. I'm less than half a mile from a fancy new green box, but we can't have it on the edge of town. Something to do with 60 year old cables, not ducted (to save money) that they don't want to replace whilst they still have some good pairs left. Next door has a blistering 1MB on a good stretch! As for the village two miles down the road, it'll stay in the 10% not getting anything, after all the target is just 90% of the population.

    2. John Smith 19 Gold badge

      Re: Rural is misleading

      "If only we could have had a contractor with imagination, using wi fi and microwave but all BT knows is stick a cable in a pipe."

      Or IDK maybe you could form a group of your own to handle the work, as seen here, below the crab

      1. Anonymous Coward
        Anonymous Coward

        Re: Rural is misleading

        " using wi fi and microwave but all BT knows is stick a cable in a pipe"

        WiFi and microwave don't scale. You can use it to serve a handful of properties but not a community. There's an argument for doing FTTC and then WTTH in some cases - but if those homes have an existing phone line you'll almost certainly see better throughput using that than WiFi. 4G kit deployed at an FTTC cabinet looks promising but geography will mean it's not a universal solution and the kit will be more expensive, certainly to start with.

      2. Anonymous Coward
        Anonymous Coward

        Re: Rural is misleading

        "Or IDK maybe you could form a group of your own to handle the work, as seen here, below the crab "

        I checked the link. The installation cost £3K per household and monthly rental is £30. Even if there are zero other costs and the rental goes straight to paying back investors, that's 8 years before you see a return. If prices drop or if fewer people take up the service than expected, bye bye investment!

    3. Aggrajag

      Re: Rural is misleading

      I feel for you - I live in a village with a population of 4,000, which has fibre-to-the-cabinet. I have fibre down my street (new built estate 14 years ago) yet it transpires that FTTC doesn't go to every cabinet, just the chosen few and my particular cabinet fails to meet the qualification, I quote "Our deployment is based on the commercial criteria for each cabinet and your cabinet 26 fails to meet the commercial criteria. This is because the cabinet is too small to provide a return on the investment based on the costs for the construction and on-going running costs of providing a new FTTC cabinet."

      I just can't believe it, I'm in the middle of an estate of 77 homes.

      It stinks and I'm stuck with a paltry 1Mb.

      Grumble over, for a moment or two.

  3. Yet Another Commentard

    Do I understand this correctly?

    We, as in, the TaxPayer pays BT to install broadband on the basis that BT quotes us some unauditable cost of installation on a timescale of its choosing.

    Once complete BT then owns the aforementioned kit that we paid for and it charges its customers for using it.

    Is that really correct - we are paying to give BT an asset it can keep free to make cash of us, the taxpayer?

    As another notes above, BT will always win, look at who Dave C has in his office these days. There has to be some new rule that states that any person moving to a Government job must declare all prior employment. Any company on the list cannot do any Government work for ten years. Any extant projects will be subject to a public inquiry, paid for by the firm in question. There should be some reciprocal arrangement too, where Government employees moving to a private firm preclude that firm from bidding for Government work for ten years.

    That would sort this revolving door nonsense out.

    1. IHateWearingATie

      Re: Do I understand this correctly?

      Ah, the lazy assumption that its all a stitch-up. It's very easy to make when it's a faceless department but harder to make when you have someone specific to accuse.

      I was one of the small team who set up BDUK (haven't been involved for a while), and I was there when the decisions were made on how to approach this. If you're accusing anyone of fraud or being bribed particularly in favour of BT, then it's me, and my old colleagues.

      Substantiate your claim, or shut the hell up.

      If I was being bribed, I'd have wanted a Porchse, or maybe a great foreign holiday. Instead I drive a Skoda and go to Norfolk for a week.

      Of course, if you want to accuse us of incompetence (particularly on the back of this report), that's another thing...

      @Dave Glasgow - good reminder, must drop Mike a mail and meet him for a coffee

      1. Yet Another Commentard

        Re: Do I understand this correctly?

        Not that simple. Government should be, and BE SEEN TO BE independent of those companies with whom it contracts. By the same token I would be appalled if (say) Fred the Shred was given a significant post within the PRA/FCA given he is simply too close to those he would be policing.

        This is nothing about bribes, its about perception.

        Yes, I see that there is usefulness in getting private/public sector crossover of experience, but that should not carry with it anything put the perception of experience. If you are precluded from helping your ex-employer in your new employment and you decide not to take the job as a result, are you really considering the job for the right reasons?

        A comparison would be audit firms. For good and sound reasons auditors can't hold shares in the companies they audit. They can't leave the audit firm and join a company they audited without going through this type of "cooling off" and pain for the ex-employer. This is simply a "being seen to be" independent, not merely being independent. This is sensible, and necessary following from previous audit scandals. It's not foolproof, but it helps, and seems to work. Why won't it work with Government?.

        My query on the process is simple - are UK taxpayers paying BT for BT to obtain an asset that it will then seek to charge taxpayers for the use of?

        If BT is saying that it won't because it will make no money off the infrastructure, then keep it in public ownership (BT becomes a hole digger) and charge BT (and others) for its use as and when they get customers on the end.

        Or, if this is an incentive to build, make it a cheap loan to be repaid such that a proportion of each subscriber's bill (from any telco) is given back to HM Government until the loan is repaid. Obviously the subscriber pays the same no matter where he/she is located, consider the loan repayment a cash version of depreciation on something BT had self-financed.

        It's the same argument that one could put to Starbucks - if you make no profit in the UK why do you do business here?

        1. IHateWearingATie

          Re: Do I understand this correctly?

          Glad you're not accusing me (or the people I used to work with) of taking bribes or being under undue influence. It's very easy to make the usual 'it's all a stich up, they're taking back handers' comment when it's not directed at anyone. Much harder when you put a face (well, anonomous internet hande anyway) to it.

          As for the revolving door, if you don't have people moving in an out, particularly in more specialist areas such as telecoms, how do you expect to get any kind of expertise at all? In my view there are already too many Civil Servants with generic policy skills and no commercial or delivery nous - banning movement would make this situation worse.

          Of course there needs to be rules to stop abuse going on, but in my experiencep people who move both ways do for geniune reasons - I would say in most situations the company the person has left to join the government is at a bit of a disadvantage as they will be able to see through the FUD easier!

    2. Terry Barnes

      Re: Do I understand this correctly?

      "That would sort this revolving door nonsense out."

      You'd simply create an environment where shareholders place a covenant on employees to prevent them taking up government posts.

      There is benefit to people moving between private and public - it's long been the norm in France, where a successful career is likely to have involved time spent in both public and private employment.

      We, as voters, can't complain that no-one in government has any idea of how to run a business and then put in place measures to *ensure* that that's the case.

  4. David Glasgow

    What happened to

    Mike Kiely who blew the whistle on BT plumping up its prices for no good reason (other than greed and lack of competition)?

  5. AndrueC Silver badge

    using wi fi and microwave but all BT knows is stick a cable in a pipe.

    Microwave has issues with the weather, and wifi is a poor solution. Too many people sharing a single transmitter leads to contention. 'Sticking a cable in a pipe' offers the best service but yes, you have to pay a bit extra. Now if you're saying that people in not-spots would accept a second rate service then by all means go with wifi.

    Is that really correct - we are paying to give BT an asset it can keep free to make cash of us, the taxpayer?

    Essentially, yes but what a lot of people overlook is that whoever 'sticks a cable in a pipe' has to allow everyone else to offer a service over it - for whatever low price Ofcom thinks is appropriate. So whichever company goes to the expense of installing the service doesn't even get all the resulting profits. The cable in the ground becomes worth as much or as little as Ofcom is prepared to allow. And of course if you don't provide the extra funds you don't get the cable at all.

    At the end of the day it was a bidding process. The idea behind a bidding process is usually to find the best provider (price and quality of service usually being the primary concerns). BT won. If there are companies out there can provide a better service and/or for a lower price then where are they? BT will get the job done. They've been getting the job done in Cornwall in partnership with the EU.

    Anyway there's another good article on this here.

    There are no easy answers. I think most of the problems stem from the basic fact that the public demands a high standard of service but doesn't want to pay much for it. Margins for ISPs are wafer thin and yet we expect someone to invest billions in improving the network.

    1. Anonymous Coward
      Anonymous Coward

      The margins for ***ISPs*** are wafer thin. This is NOT the case for last mile network Operators!

      Take a look at Openreach's profit margin compared to the rest of BT group. BT have been moving all of their profits from Retail & Wholesale into Openreach. Competition is rife in retail, but lacks in the last mile.

      I was part of a team which performed quite a lot of cost modelling on FTTP, and over half of the team were made up from actual civil engineers who already work for BT / Virgin Media, so know EXACTLY the costs for installing ducting and pulling fibre (the companies involved make a good profit doing that already). We were able to develop distribution techniques and a business plan with a cost per home passed of under £500 in you average English village. The repayment time that BT quotes for their FTTC network is unrealistically high.

      1. Anonymous Coward
        Anonymous Coward

        "We were able to develop distribution techniques and a business plan with a cost per home passed of under £500 in you average English village."

        The problem then being that with 15% takeup, you have to pass 7 households at £500 each before one of them takes it up.

  6. Da Weezil

    Its just as bad in Wales where the ASSembly in Cardiff seem to have used the money to reward areas that voted for the party in power - especially those around Urban areas and most notably the ministers own very "rural" constituency (a whole bus ride from Swansea City centre) while really rural areas are told to wait for the second phase. I couldn't work out why the patchwork approach till I looked up the MP party affiliation and compared it to the roll out list. despite being the sort of area that the Superfast Wales site says is a priority for the service (an enterprise zone) we have been left behind - we only got WBC last month because TalkTalk came to town - before that BT claimed the 10000 line exchange wasn't viable for it, what they really meant was we have a captive audience - we don't need to invest because you you have no alternative

    So In Wales - you have to add Political patronage to the BT issues. Some BT person was spouting about how superfast services would bring easy access to many services for the really rural parts of Wales an d yet the really rural parts are being left to wait.Once again the rural areas get screwed over - maybe we should cut off the oil gas and power hat comes from this area just to remind Cardiff what being without stuff is like.

    Im with Andrue, 4g/ wont work here - for one thing this isn't a village with a tiny shed exchange on a green contention would be horrible, I'm paying over £20 a month for a decent service without a hard cap, for not much more I should be able to get a bit more than 6 megs, which across several users in a household is not enough.

    1. Wish You Were Here

      Ideal profit margin

      "I'm paying over £20 a month"

      How much digging/fibre/DSLAM/Cabinet/other fixed assets do you think £20/month buys? If this was the huge cash cow everyone seems to think BT thinks it is, why did everyone else drop out? Simple. It's bloody expensive to build and pay back takes a long time, by which time the kit's out of date and it all starts again.

      One alternative would be to split the network off BT, Virgin et al and have a single government owned network. No digging the same road up three times to supply different suppliers. Only QOS as a benchmark. Guaranteed to work. Like the railways, or the roads.

      Oh, hang on.

      1. Anonymous Coward
        Anonymous Coward

        Re: Ideal profit margin

        "It's bloody expensive to build and pay back takes a long time, by which time the kit's out of date and it all starts again."

        Yeah, my take is that the others couldn't make a good business case out of an 8 year return on investment that only materialises if nothing adverse happens in the market and if the kit is still viable for delivering service at the end of that period.

        And logically, that must be the case. If others could do it cheaper (and profitably) they would have done. BT can't simultaneously be an aggressive monopolist undercutting anyone who tries to enter the market, while at the same time inflating costs and providing an expensive service. It's possible to be one or the other, but not both at the same time.

      2. This Side Up
        Thumb Up

        Re: Ideal profit margin

        "One alternative would be to split the network off BT, Virgin et al and have a single government owned network. No digging the same road up three times to supply different suppliers. Only QOS as a benchmark. Guaranteed to work. Like the railways, or the roads."

        Yes, we need a publicly owned infrastructure provider like Network Rail, not like Railtrack. This could be BT Wholesale/Openreach. The service providers could then compete on a level playing field. Private monopolies are always in it for what they can grab for their shareholders.

        If we still had the GPO they would just do it because they were being paid to do it, not because they expected to make a profit. They might use far more people than were really needed (like British Rail) but they would get there in the end.

        1. Kubla Cant Silver badge
          Thumb Down

          Re: Ideal profit margin

          "If we still had the GPO they would just do it because they were being paid to do it"

          I can only assume that you weren't of phone-service-buying age in the halcyon days of Post Office Telephones. It used to take months to get a connection. There was little or no choice of phone or modem because anything connected to the network had to be certified in a locked office in a cellar with "Beware of the leopard" on the door.

          1. Anonymous Coward
            Anonymous Coward

            @This Side Up

            "If we still had the GPO they would just do it because they were being paid to do it"

            If you want to see how things would look if we still had the GPO, just ask the good folk of Hull...

        2. Anonymous Coward
          Anonymous Coward

          Re: Ideal profit margin

          "If we still had the GPO they would just do it because they were being paid to do it, not because they expected to make a profit."

          It didn't work that way. The government used the GPO as a cash cow - they were expected to make profits and those profits were used to prop up government spending, essentially keeping tax bills lower. Once they'd paid the wages and the electricity bill the rest got handed over to the treasury.

          For years and years investment fell far behind demand because the government wouldn't allocate enough funds for growth. Privatisation was intended to rectify that situation by allowing them to seek funding on the open market.

      3. Da Weezil

        Re: Ideal profit margin

        The point of my statement about my current monthly costs was I was trying to illustrate I don't expect a gazillion megabits per second with unlimited bandwidth for £3.99 including once a week visit from a Swedish masseuse thrown in.

        It annoys me to see BT selling FTTC services to luckier areas than mine for only a couple of pounds more than I am paying for 6 Megs (on a good day) of ADSL2, I have to wonder "What profit margin?"

  7. Jemma

    Do they call them watchdogs?

    Cos they spend most of the time licking their testicles? They're no bloody use for anything else I do know that...

    It'd be interesting would it not to find out how much this audit of the bleeding obvious cost - after all if you're over the age of 12 and you haven't realised the words government & project = waste of money there's probably no hope for you.. Or you're an NHS project yourself.

    1. h3

      Re: Do they call them watchdogs?

      National Grid was done properly. So was the initial BT Network.

      Over time doing something in a shabby manner ends up costing more. (Compare our motorways to Germany's Autobahn's). Look at California's broken electricity grid. (That same thing will happen to us might take a while but private companies won't invest properly). We had a great rail and tram network before it was all removed.

      Sometimes it is worth having something done properly private companies don't do things properly when it comes to infrastructure.

  8. Anonymous Coward
    Anonymous Coward

    It does appear that the approach to rural broadband is unstructured and not really geared toward the people in most need. I suppose politically their is minimal value in each small community and this does not help matters.

    In Gloucestershire the bid was completed in conjunction with Herefordshire and despite promises of regular updates in the next 4 months or so nothing useful have been published so all that can be assumed is this roll out will be protracted as well and miss the dates.

    I don' mind BT doing the work but someone needs to be on top of the process to check on value for money and that the public , who are now funding the majority of this via taxation, are actually to be kept informed of what is happening and when to expect things to happen

  9. John Smith 19 Gold badge

    Cost+ contract with *unauditied* costs and BT as the *sole* prime contractor.

    What could possibly go wrong with this scenario?


    Given BT know exactly how far those phones are from their exchanges (and I'd put a modest wager down that 99% of them are BT lines) I'd think they could put in a fairly accurate bid.

    Not so sure about other competitors but couldn't OFFCOM requested a copy of that information to give a level playing field?

    1. Anonymous Coward
      Anonymous Coward

      Re: Cost+ contract with *unauditied* costs and BT as the *sole* prime contractor.

      Huh? The list of exchanges and their locations is publicly available - even just using a site like samknows.

      The list of dwellings and their locations is also publicly available from the land registry.

      You're not seriously suggesting that BT has a monopoly on knowing a) where telephone exchanges are and b) where houses are?

      Hell, it's been a while, but give me a copy of MapInfo, a couple of hundred quid for some map data and 2 days (not the most up to date PC, this) and I'll do it for you.

  10. A J Stiles

    For crying out loud

    Some of us remember the days when GPO ran the phone system. Waiting a year to get a phone put in, in the coldest part of the house (tethered to the wall; there were no modular plugs and sockets in those days). And then often not being able to use it because the other party on the shared-service line was using it.

    If that lot were still in charge, there'd be a 5-year waiting list for a 2400 baud modem.

    1. Jemma

      Re: For crying out loud

      Ahh memories ... walking to school while yellow GPO Viva vans wheeze past barely faster than I could jog (at 8 years old..).

      I can't really see the improvement myself the only difference is what you've got to wait for not how long.. good old government inertia ..

    2. Anonymous Coward
      Anonymous Coward

      Re: For crying out loud

      O yeah, that old chestnut of long waits etc during the GPO days. Of course it had nothing to do with the fact that the GPO were still installing the system so if you wanted a phone, they had to install the physical line (and possibly telegraph pole) whereas now all the lines are installed so BT only have to flick a switch. It has nothing to do with the fact that the old Strowger (can't spell it!) exchanges were complicated mechanical systems that were unreliable, whereas modern exchanges are very reliable (the GPO started installing system x not BT). It had nothing to do with the fact that phones were standardized because they were mechanical and they couldn't be made in many different shapes. No of course not, it was all to do with the private good state bad bollox. Just look at the internet, a state built system. I wish we still had the privately built Compuserve and AOL online services.

      If we had the GPO everyone would have FTTH and 200Mb speeds (like the Dutch are building - after all I'm writing this on my 120Mb connection built by the state.) Instead you call 20Mb superfast, what a joke!!

      Bring back the GPO

  11. This Side Up

    Mags down pants?

    Phone books aren't what they used to be. :(

  12. gary27

    our leaders and mandarins are simpletons

    I don't care if we overspend a little bit or if bt makes a good profit or if a few favors are made - I'm just desperate to get fibre - where i live near Caerphilly.

    The total subsidies budgeted are peanuts in the grand scheme of things - less than 1 billion - yet we are spending £50 Bn thats right over fifty billion - inc rolling stock - on 1 short railway line !!

    This is ludicrous we could probably give everyone in the uk gigabyte ethernet - for a quarter of this cost - also similar to our annual spend on foreign aid.

    The benefits of such would be massive - to all parts of the economy - would reduce congestion reduce pollution - drive creativity innovation and investment.

    Yet our simpleton leaders and miserable failed accountants (who work in public sector) just don't get it - a real depressing shame in my opinion.

  13. Gary Heard

    Superfast?? Can I have a stable Broadband first?

    Rural North Norfolk,, an idyllic part of the world except when you need to use VPN to work. I've had a problem for a long time with my Broadband disconnecting if I have an incoming phone call, not a problem if you are just browsing, but using a vpn means that you lose your connection and any unsaved work. As I've been working from home these last 10 days this problem has forced me to get in touch with my communications provider and try to get it sorted.

    After numerous attempts, a broadband engineer from Openreach came yesterday (Yes -- on a Sunday) and spent just under 3 hours both at my home and at the exchange. Did he manage to fix it? No, but not through any fault of his own. When talking with the BT Helpdesk he was informed that there is a known hardware fault with the type of DSLAM in use at our exchange and the problem could not be fixed. There was another problem that he did fix which means that now the failure rate for the ADSL line is only between 33 and 50% instead of 100% when a call comes in, depending on how the DSLAM 'feels' when the call initiates. I don't even have to answer for the line to go down, just to get a call.

    In the past 6 months I have bought 3 ADSL routers to try to resolve this, only to be told that it's BT's fault. Angry? Bloody furious!!

  14. Anonymous Coward
    Anonymous Coward

    what the Government should fine BT one million for going over the time same as contractors are they give a date then never keep it theres loads of contractors out there in need of work so BT should set them on so the work can be done on time

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