Surprise broadband demand leads to an extra £440m of telecoms infrastructure investment

 
Oliver Gill
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The Conservative Party Conference 2016 - Day Two
Culture secretary Karen Bradley said taxpayers were getting value for money from the partnership with BT (Source: Getty)

Better than expected demand for fibre broadband in Britain's hard to reach areas has provided a £440m boost to the public purse.

In 2013, the government launched its £1.7bn Broadband Delivery UK (BDUK) project.

The initiative included a series of aims culminating in ensuring 97 per cent of the UK's households could connect to superfast broadband by 2020. BT were allocated nearly all of the government cash to deliver on these aims by updating Britain's broadband infrastructure.

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As part of the agreement between the telecoms giant and the department for culture, media and sports (DCMS), if demand for superfast broadband – more than 24 megabits per second – exceeded designated levels, BT would pay a rebate to the government.

And because demand has beaten expectations, the government today announced such rebates would amount to £292m.

Complex

Under the complex terms of the agreement, BT also had to return efficiency savings from building new broadband infrastructure to the public purse. DCMS said these savings amount to a further £150m.

The government promised the savings would be ploughed back into country's telecoms infrastructure.

“Strong take-up and robust value-for-money measures mean £440m will be available for reinvestment where it matters – putting more connections in the ground," said culture secretary Karen Bradley.

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In 2010 less than half of the UK (45 per cent) could access fibre broadband and BDUK aimed to ramp this up to 90 per cent by early 2016 – government sources said the current access levels stand at 92 per cent.

“This will benefit around 600,000 extra premises and is a further sign of our commitment to build a country that works for everyone,” said Bradley.

The money handed back by BT to the government is part of a profit share arrangement, so instead of the telecoms firm being out of pocket it is simply that it's having to remit additional incremental revenues back to the DCMS.

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Proof of success?

“This a huge success story for the UK and shows exactly what can be achieved through close partnerships between the public and private sector," said a BT spokesperson.

“We’re delighted that the success and efficiency of our delivery will mean hundreds of thousands more homes and business could get faster broadband than originally expected."

Nevertheless, the level of rebate – particularly in relation to the efficiency savings – was a concerned for some experts.

“The £150m efficiency saving is a welcome addition, but will not silence critics of the BDUK process who continue to say that BT is over charging and much more could be done with the money, the key now is what will the various projects deliver," said Andrew Ferguson website Thinkbroadband

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