Virgin Media criticises UK rural broadband subsidy policy

Virgin Media has criticised government broadband subsidy policy, claiming that it favours BT

Virgin Media has criticised government broadband subsidy policy, claiming that it favours BT.

Virgin said the broadband policy is slowing down the provision of locally procured rural broadband networks.

Counties around the UK have been allocated a share of £530m by government to help fund the roll out of local broadband networks, but the process is slow.

Contracts have so far been awarded only in Lancashire and Rutland, with both going to BT.

Labour shadow business minister Chi Onwurah has warned the government risks "sleepwalking into another monopoly" in the way it is allocating funds for rural broadband, according to the BBC.

Onwurah said BDUK, the group set up by government to oversee broadband strategy, does not regard competition as its responsibility. She said the system is "skewed towards BT".

BT is in an advantageous position because it has an existing network, which means competitors are always going to have higher costs, Onwurah said.

In a letter published by the Guardian newspaper, Virgin Media chief operating officer Andrew Barron said the absence of a national view is likely to freeze out new entrants.

"If we agree competition is the best way to encourage further sustainable investment, and that embedding dominance in markets is bad for consumers, we must also accept that providing the vast majority of available public funding to an incumbent is not in the UK's best interests," he said.

Barron believed the top priority should be to focus public subsidies in areas where competition is limited, to promote better and alternative infrastructures.

"This will underpin sustained competition, investment and improvement, rather than entrenching an incumbent," he said.

Barron believes a national framework akin to the 1984 Cable Act for public Wi-Fi will encourage a faster and more straightforward way of getting better connectivity out of the home.

"Government should look to other technologies to provide much-needed competition just as cable has done in urban areas. For example, the availability of 4G could provide consumers with genuine choice in areas where there is just a single fixed network," he said.

Barron said adoption can also be encouraged by ensuring content owners and distributors offer consumers new commercial alternatives to access and consume the content they want.

BT responded to Barron's letter by calling on Virgin Media to open up its network to rivals.

"BT would be more than happy to compete directly with Virgin for BDUK broadband development funds but we doubt that will happen. That is because Virgin have steadfastly refused to provide open wholesale access to their network – a key BDUK requirement – and because they have shown no interest to date in supplying rural areas with broadband," a BT spokesman said in a statement.

"This is in contrast to BT who offer broadband services on a wholesale basis to 99% of UK premises. Fujitsu has announced its intention to bid for funds and so there will be a competitive process. We are already seeing this in several parts of the UK," the statement said.

In December, the Countryside Alliance, which has been a leading voice on the campaign for pushing out rural broadband nationwide, said that, unless the whole process of implementing rural broadband projects is simplified, the digital divide will keep growing.

"Unless more is done to simplify the process of acquiring and implementing rural broadband projects, the digital divide will continue to grow and the money pledged by the government will remain all but worthless,” said Alice Barnard, chief executive of the Countryside Alliance.

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