MPs have slammed BT's business practices in the roll-out of rural and superfast broadband.
In its Rural broadband programme 2013-14 report, the House of Commons Public Accounts Committee (PAC) attacked the approach the supplier has taken to winning UK broadband business.
The PAC recommended that Ofcom should explicitly address the effects on competition of BT’s wholesale pricing structure and the terms and conditions attached to accessing BT’s infrastructure.
In the report, Margaret Hodge, chair of the PAC, challenged BT managing director Sean Williams over how the BDUK funding of UK broadband was being used.
She said: “With great respect, Mr Williams, one of the shocking things in this story is that you are getting £1.2bn of capital assets for free from the state. That is outrageous. That is our money, not your shareholders’ money.”
BT accused of monopolising broadband market
The report highlighted BT's alleged anti-competitive practices, and gave examples of the supplier supposedly blackmailing local authorities.
You [BT] are getting £1.2bn of capital assets for free from the state. That is outrageous. That is our money, not your shareholders’ money
Margaret Hodge, chair of the PAC
Richard Bacon, Conservative MP for South Norfolk, said: “Given the behaviour of BT in relation to the National Programme for IT in the health service, where in many cases it basically blackmailed local health providers, that does not surprise me at all."
The report referred to TalkTalk, which has lodged a Competition Act complaint with Ofcom due to its concern that the margin between BT Openreach’s wholesale price and BT’s retail price is so squeezed that other suppliers cannot sell the product profitably at the same price, thus restricting competition.
"Ofcom told us that, when it reviewed the market in 2010, it had decided not to set a wholesale price, in part because it did not want to reduce incentives to invest in upgrading the UK’s network,” the report stated.
In a statement to the PAC, Dido Harding, CEO of TalkTalk, said: "BT takes approximately a 30% to 35% market share of copper broadband connections. On its network – so excluding Virgin for a second – it accounts for more than 85% of superfast broadband connections. It is doing an excellent job of rebuilding its monopoly.”
Danger of duplicating broadband infrastructure efforts
Malcolm Corbett, CEO of the Independent Networks Cooperative Association (Inca), said: “We have also got a big problem with transparency over BT’s roll-out – where it is going to go and where it is not going to go. There are many other providers around the country which are delivering future-proof networks today, both in the community sector and the private sector. All of those face the danger of being overbuilt – having their networks overbuilt by BT turning up with state funding. That seems to be entirely the wrong way round.”
Asked to comment on his "vampire death squid" statement in July, Corbett claimed BT is using underhand tactics against a network provider called Gigaclear, which aims to aggregate rural broadband demand.
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He said: “I have a letter that Mathew Hare, the chief executive of Gigaclear, has written to [communications minister] Ed Vaizey in the past few days, complaining about the fact that BT is turning up to villages where it has people working to organise demand, saying, 'Don’t worry your pretty little heads about Gigaclear. We’re going to turn up here with our state funding soon, so you don’t need to bother with this project.' There are even some examples of where that apparently has not been true.”
BT defends its approach to broadband roll-out
Commenting on the PAC report, BT said the committee had failed to understand the key fact that BT bills the taxpayer after it has spent money deploying rural fibre broadband and has to show receipts and timesheets.
There is no lack of transparency, BT said in a statement.
"We are disturbed by today's report, which we believe is simply wrong and fails to take on board a point-by-point correction we sent to the committee several weeks ago. We have been transparent from the start and willing to invest when others have not," the statement read.
“It is therefore mystifying that we are being criticised for accepting onerous terms in exchange for public subsidy – terms which drove others away."