Broadband battles: BT and Virgin Media trade blows over the government's broadband delivery scheme

BRITAIN-US-MEDIA-TELEVISION-COMPANY-VIRGINMEDIA-LIBERTY
Virgin argues that the scheme "leads to wasteful overbuild" (Source: Getty)

Join us for the latest act in the telco giant drama:

Virgin Media has lashed out against the government’s broadband scheme, complaining it gives BT an unfair advantage to the tune of hundreds of millions of pounds out of taxpayers’ pockets.

BT and the Department of Culture, Media and Sport (DCMS) have hit back at claims, defending the use of the money.

BT said: “Virgin appears to have little grasp of how the project works as BT cannot make excess returns under the contracts and the seven-year period for gainshare is set under EU aid law.”

Virgin Media wants the subsidies stopped and has written to the European Commission, “strongly opposing” plans to continue state-aided broadband investment across the remaining five or so per cent of the country.

BT added that Virgin has “shown little or no interest in these rural areas to date.

A DCMS spokesperson said the “rollout of superfast broadband represents value for money for the taxpayer and has been assessed by independent experts including the National Audit Office.

“Without our investment, millions of homes and businesses would be left without access to superfast speeds.”

The government has committed £1.6bn to extending broadband coverage through the Broadband Delivery UK (BDUK), securing superfast coverage across 95 per cent of the country.

Virgin Media wants the subsidies stopped. The firm has written to the European Commission, “strongly opposing” plans to continue state-aided broadband investment across the remaining five or so per cent of the country.

Tom Mockridge, the company’s chief executive, argued that the scheme, which has mostly gone to BT, is unnecessary when demand will foster commercial options:

The BDUK scheme does not offer the taxpayer value for money. It is no longer necessary in today’s investment-rich market and it leads to wasteful overbuild.

Today’s news comes as the deadline for watchdog Ofcom’s probe into the broadband market looms closer.

BT’s rivals have criticised the telco’s giant’s control over the UK broadband network through Openreach, arguing that this causes a conflict of interests.

Sky, TalkTalk and Vodafone have all called for Openreach to be spun off into a separate authority, with Vodafone boss Vittorio Colao attacking BT's "re-monopolisation" of the market. Virgin, however, has backed BT on this point, arguing that a break-up would deter investment in the network.

Ofcom is due to deliver its verdict on whether or not Openreach should be carved out from BT by January.

Related articles