Why is BT willing to risk having to refund the BDUK State Aid?

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The BT decision to backtrack on its willingness to release post code data on the grounds of commercial confidentiality may have been the equivalent of a red rag in a field of North American (i.e. uncastrated) bullocks.  INCA (the "Individually neutered cattle association", i.e. the British definitions of bullocks) has just issued a surprisingly robust statement on the slaughter of two uncastrated calves.

On a slightly different note - I now receive the e-mails sent by Patrick Cosgrove to the members of the Shropshire campaign. There are growing number of similar campaigns. His opening comments on the impact of the latest DCMS study on the economic value of broadband led me to wonder how long it will be before one of these uses the new Rightmove  service to map the effect Broadband availability has on local property prices. I suspect that could trigger a stampede and help change the nature of debate.

I was struck by Patrick's succinct thoughts on "Who really does run this country?", linking to the Computer Weekly article on  the BT.

How long will it be before groups like his begin asking their local MPs how the conditions (particularly paragraphs 35 - 40) in the EU conditional approval   are being met?" 

I looked for the information website mandated as part of the approval.

If what I found is indeed  "it", then I invite readers to ponder the following questions:  

•    Where is the detail required in para 36?
•    Who did the independent review (para 37)?
•    Who will be doing the evaluation before the next phase of state aid (para38)?
•    What happened to the  "public consultations" (para 40)

and so on?

The more interesting question is, however, whether BT has taken legal advice and concluded that, in the unlikely event of the campaigning groups getting their act together and receiving support from those prevented from bidding to address their needs, BDUK (alias DCMS and Central Government) and/or the Local Authorities will bear the brunt of any enforcement action. In other words there is little or no risk that BT will be called on to refund a serious part of the "state aid" it has received.  

If that is correct, who will the Public Accounts Committee  and/or the DCMS Select Committee seek to hold to account - given that this is related to the implementation of policy (i.e. the responsibility of officials) not the original policy (the responsibility of ministers)?

But will BT shareholders take the same view? 

Or have they already factored the potential liability into the share price? 

This is said by some analysts to currently be at least 10% below what the underlying communications business (forgetting the content operations) is worth. 

This still leaves open the further question of why BT is willling to take the risk and whether the reason for that willingness undermines (information of value to commercial rivals) or reinforces (national security and tier one operations) the case for state aid

Below is the e-mail from Patrick Cosgrove
Sent: 15 November 2013 00:16
Subject: Shropshire and Marches Campaign for Better Rural Broadband - Update 14th November 2013

Dear Rural Broadband Users,

Please reply "unsubscribe" if you do not wish to receive these emails.
This week there has been so much in the news about rural broadband that we almost feel an apology is due for the sheer volume in this email. The highlight has to be the report commissioned by DCMS from SQW Consultants which suggests that for every £1 of public subsidy invested in broadband infrastructure there will be a net economic impact of £20 by 2024. If true it's brilliant news for those who are getting connected, but surely a red rag to the 10% in the most rural areas that are being neglected, and a further widening of the digital divide. These are the places where the percentages of home-based business are far higher than in many of the areas being upgraded by the so-called "rural" broadband programme.
Call us cynics, but one also can't help wondering if there's a link between the timing of this very upbeat report and the reports further down of BT and local authorities unwilling to help community broadband efforts.
One of the many questions we asked Shropshire Council last summer was on this very subject.
Q. if some communities either wish to or may have no other option but to manage their own projects in order to receive Superfast Broadband, is there assistance from Shropshire Council to help build local capacity?
A. CS are continuing to review all available funding options:
- Rural Community Broadband Fund (RCBF)
- European Structural Investment Fund (SIF) 2014-2020
- £250m (future government funding)
- Additional self-funded community schemes - Self dig/build and benefit. CS will facilitate any direct engagement with communities wishing to explore this potential option.
This week our campaign group has written to Shropshire Council to ask if they would be  willing to work with communities interested in establishing separate broadband schemes in remote areas where only 2 Mb is guaranteed, and using technology that is better than the satellite technology we fear will be the preferred method of delivery for these large swathes of Shropshire.
The campaign group has recently been contacted by Phil Bennion, a West Midlands MEP, because of concerns he has received from a number of constituents about the rural roll-out of broadband. On 8th November three members of our campaign group met with him to discuss these. There are reports of that meeting here  and  here
His concerns centred around the imprecise nature of the deployment plans for broadband roll-out, and the apparent adherence in the West Midlands to a single technology when EC State Aid rules, to which the local authority programmes must conform, very clearly state that other methods of transmitting broadband are permitted.
An article by Philip Dunne on the subject of broadband and mobile technology has come out very strongly in support of our aims. It has appeared twice - once as part of his regular newsletter emailing, and again in the November edition of the Clun Chronicle.
The campaign is grateful for his thoughts on the subject and we're in fairly regular contact with his office, the most recent communication being to express concern that community broadband efforts across the country are being held up because of the failure by local authorities and BT to release precise information on their roll-out plans. He has written to BT  asking what they can do to provide better information for Shropshire "given the knowledge the company has of existing equipment and cable runs." We're also grateful for that. We will report whatever reply is received.
Well, if you read these astonishing reports (Computer Weekly) and ISP Preview you'll realise that it's not the Coalition government nor our local authorities when it comes to the provision of essential services such as rural broadband.
And following this announcement, one starts to wonder if any local community broadband projects will ever get off the ground with the help of public subsidy. It will be a great embarrassment for DEFRA and DCMS if the Rural Community Broadband money stays in Europe.
We're gradually making contact with campaign groups across the country similar to our own . Here's an illuminating quotation from Upottery's website in East Devon
The (East Devon) Midweek Herald edited the letter they published on November 16 by removing the following paragraph, which they have refused to publish:

The fact that Connecting Devon and Somerset (CDS) and BT appear to want to keep things hidden is reinforced by CDS/BT's requirement for our elected representatives (County and District Councillors) to sign a Non Disclosure Agreement (Gagging Order) before CDS/BT will share details of their broadband implementation plans with them. To require parties to sign an NDA whilst a contract is being negotiated makes commercial sense. This £94M contract between CDS and BT was signed in January 2013, but CDS will still not share details with Councillors or their electors, 10 months after the contract was signed, unless they first sign an NDA. What are they trying to hide?

It has been suggested to this website that simply knowing that the CDS/BT Non Disclosure Agreement exists is "privileged information" and it is because of this that the Editor of the Midweek Herald removed this paragraph.
Perhaps we are living in George Orwell's 1984!
They're doing a good job down in the Blackdown Hills. Take a look at their website: Including the latest news and their petition
This link describes how over 100 MPs representing rural areas handed in of over 100 petitions requesting a fairer statement for rural local authorities. With better funding, local authorities would be far better placed to support a better broadband service for rural areas.
As a campaign group we're slightly kicking ourselves for not having contributed to this, but it was good to see that Daniel Kawczinsky handed in a petition on behalf of his Shrewsbury constituency.

Meeting on 20th November
Our electronic petition asking Shropshire Council to revisit its priorities for the roll-out of rural broadband gathered 1,208 signatures, meaning that we may address the full Council. A date for that event has been set for  Thursday 27th February (we don't know the time yet). With so much taking place at present it's far too early to decide what our message will be, but we'll inform you well in advance, and perhaps some of you could come along to provide support.
(1) Talking up the UK. Really?
You've heard a lot from us in recent weeks about the Public Accounts Committee's savaging of BT's role in the  rural roll-out programme. The man in charge of BT at the time was Ian (Lord) Livingstone. He has now left BT with a £20m share packet and is due to take up the post of trade advisor to the Prime Minister in July. In this article he fights back at what the PAC had to say, and also states that "It is just a shame that a number of people in the UK don't want to talk up the UK".
Will he do anything to talk up the rural economy when he takes up his new post? Without decent broadband, the rural economy, if not dead will certainly be sickly.
(2) Base broadband plans on need, not on ease of installation
The Broadband Stakeholder Group (BSG) has published a report outlining a new way for measuring and forecasting demand for bandwidth in UK homes. The group called for greater policy attention to be given to how demand relates to infrastructure provision.
This is just a slightly more professional way of asking for what this campaign has been calling for: an infrastructure that is developed according to the needs of users rather than ease of installation.
(3) Tory MEP expresses concerns
Last week we reported that three Conservative MPs had been asking  awkward questions about the rural broadband programme in the House of Commons. This week it's James Elles, a Conservative MEP from the South-east who's expressing reservations.
Apparently Telford is the first part of the country where broadband speeds are about to exceed the 24 Mbs superfast threshold.
(6) A helpful overview from Computer World Magazine
If Telford has the fastest broadband, Llandrindod Wells, Hereford and Shrewsbury have the slowest.
(7) More on the potential for 4G.
This article is a few weeks old, but entirely relevant. 
And  in this one Dan Rogerson, the new minister at DEFRA with the rural brief for broadband, also extolls the virtues of 4G.
And in this one, OFCOM pledges to improve 4G coverage for rural areas.
While in this one the head of mobile giant EE, slams the government for its obsession with fibre at the expense of 4G technology.
(8) Imitation is the greatest for of flattery
But quoting directly even more so. This is from Ian Grant's Br0kenteleph0n blog for Wales (why isn't that 'Br0kentelef0n', Ian?). Supporters on the other side of the Teme should add this website to their favourites.
"As the 21st Century has progressed, the uptake and reliance on digital means of communication has been dramatic. Most of us use mobile phones, and almost all of us now use email or the internet for communicating via email, online shopping or banking. Television has become digital and radio transmission is too.
We need to ensure that rural areas are not left disadvantaged as we move into this digital age.
The Government has committed to increasing broadband rollout within the UK, meaning that an estimated 90% of all households will have superfast broadband by 2016. In Shropshire, I have campaigned for rural access to digital technology for years. Shropshire Council are working hard with the Government's delivery agency BDUK and BT, alongside other commercial suppliers, to provide broadband at a minimum level of 2mbps for homes and businesses. The vast majority of these properties, some 93% will be served by fibre, 87% of which will receive superfast speeds of at least 24 mbps.
But I am also working with local campaigners to maintain focus on improving provision to all those in remote rural areas of South Shropshire who have missed out. The development of broadband in Shropshire is increasingly important. We already have one of the highest proportions of home workers in the country. I know through my regular advice surgeries and recent Jobs Fairs that there are many budding entrepreneurs across the constituency. These aspirational people could be growing their businesses through exploring new online markets and suppliers, creating new investment and jobs for local people and in the process growing prosperity in Shropshire. We need to ensure that businesses have the platform to succeed here, and that means connectivity.
Mobile telephone network coverage faces similar challenges. I know only too well from travelling all over the Ludlow constituency how many areas within South Shropshire suffer from lack of mobile signal coverage. With the advent of 4G technology, if we are to make Shropshire as business and consumer friendly as possible, mobile network coverage and broadband are two issues we must tackle now. At present there are still an estimated 1,300 properties in Shropshire with no network coverage from any provider. So this Government has recently launched a Mobile Infrastructure Project with funds available to provide network coverage to rural areas. In the Ludlow constituency, Council wards identified for better coverage by 2015 are Brown Clee, Chirbury and Worthen, Clun, Corvedale and Highley. Better provision of mobile and broadband networks will allow local residents more choice and make switching to a different provider or tariff easier. For many of us, the choice over what company we choose for our mobile phone is dictated by the best coverage we can receive in our home or place of work. More coverage will mean more choice, helping to offer better value for the consumer. We need to keep Shropshire open to all kinds of business, promoting more choice and better services for residents at the same time. Improved mobile and network coverage will help bring growth, jobs and tourism as well as wider accessibility of modern public services to our area. Action is needed now to ensure that Shropshire does not fall behind in future".
From Patrick Cosgrove
On behalf of the Shropshire and Marches Campaign for Better Rural Broadband

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In answer to the question "Why is BT willing to risk having to refund the BDUK State Aid?", perhaps BT is content to risk this worst case scenario on the basis of scorched earth?

ie the primary objective for BT is to prevent any potential alternative infrastructure provider from getting a look in and is achieving that outcome by preventing anyone else other than BT from accessing public money, combined with total opacity surrounding where that funding is to be spent.

It is worth considering what the risk actually is though.

Worst case the whole £1.2 Billion ultimately has to be repaid by BT to the Public and unless there is a credible risk that the actual infrastructure partially subsidised by that funding is seized by the State as well, then BT gets to retain the main prize, namely:

line rental aka the monthly standing charge of >£15 per home in exchange for the cost of a home visit once every seven years perhaps?

It occurs that the sight and sound of Bill Murphy explaining to PAC about commercial confidentiality would make for some enlightening parliamentary TV programming.

Can Margaret Hodge haul him in front I wonder and has anyone thought to point out to her the discrepancy re what Sean Williams previously assured PAC http://www.parliamentlive.tv/Main/Player.aspx?meetingId=13646 (from 15M33S and after) ?

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This page contains a single entry by Philip Virgo published on November 18, 2013 11:48 AM.

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