Digital minister Ed Vaizey hints EC could allow state aid for broadband in cities

Digital economy minister Ed Vaizey hints European Commission (EC) may relent stance over state aid for superfast broadband in cities

Digital economy minister Ed Vaizey has hinted that the European Commission (EC) may be willing to reconsider its opposition to using state aid to help fund the roll-out of superfast broadband in the UK’s cities.

Figures from the Department for Culture, Media and Sport published last week show some areas of major cities have worse broadband access than rural regions. 

The BDUK project has put £1.7bn of central and local government money into rolling out superfast connectivity to areas deemed not commercially viable by BT and Virgin Media. This week BDUK reached the milestone of availability to two million homes and businesses, meaning four in every five properties can now access higher speed, fibre-optic services.

But the Cities of London and Westminster constituency in the capital still has only 32% availability of superfast broadband – defined as 24Mbps or above – while less than 15% of properties in some areas of Hull have access to such speeds. Suburban areas such as Sevenoaks in Kent, which is just outside the M25, have only 55% availability, less than many rural regions benefiting from the BDUK project. Even the Tech City area of East London, home to many tech startups, has suffered from poor broadband speeds.

EC must approve state spending

The EC had to approve the BDUK cash with regard to its rules over state aid. The EC rules over government spending do not allow public funds to support broadband roll-out in cities, where the commission deems there to be sufficient private sector competition.

But Ed Vaizey, the minister of state for culture and the digital economy (pictured), told Computer Weekly there are signs that might be changing, following last year’s European elections.

“We have a problem with state aid in cities – the commission believes cities are already competitive enough. But a new commission might take a different view, which would be helpful,” Vaizey said.

When asked directly if he meant the EC may be changing its policy regarding state aid for broadband projects in cities, Vaizey said: “There are 'noises off' that, because the EC recognises that networks are vital aspects of the digital single market and for economic growth, it would look at reasonable arguments on cities again.”

So far, the only government support for broadband in cities has come in the form of a voucher scheme to help small businesses, through grants worth up to £3,000 to cover the cost of setting up superfast broadband connections. The scheme was recently extended by 12 months to March 2016 with a further £40m funding, although the initiative was significantly watered down in 2013 after legal challenges from BT and Virgin Media, claiming state aid was illegally helping their rivals.

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Devolved government engagement

Vaizey ruled out any specific UK legislation to help broadband providers install more connectivity in cities, but encouraged local authorities to work with suppliers to tackle any availability problems they have.

“Cities can sit down with BT and Virgin Media to ask how they can help the suppliers to roll out more infrastructure,” he said, citing past problems over planning permission, such as the London borough that refused BT’s request to install street cabinets for fibre broadband because they were considered an eyesore.

Recent reports from the Public Accounts Committee (PAC) and the Environment, Food and Rural Affairs Committee have been critical of the BDUK project. Some Conservative MPs from rural constituencies turned on Vaizey during a Commons debate last week.

But the minister is adamant the project is going in the right direction: “My glass is half full at the moment,” he said.

BT and big engineering

“I am satisfied with where we are – you have to remember this is a big engineering project. If we were talking about something like HS2 then people would understand it takes time."

Much of the criticism has focused on BT winning every one of the BDUK contracts with local authorities, but Vaizey defended the company’s position and pointed out that BT has to pay some of the cash back, once adoption reaches agreed local targets.

“I don’t regard it as dominance. We had a competition for the rural broadband roll-out. BT has a lot of things going for it – a national network and an open network that other retailers can use. Virgin Media doesn’t want to play in that space – it doesn’t want to open its network up to other retailers,” he said.

“We got strong value for money from BT, in the early days we got good benchmarking for costs, so we know it is competitive. The National Audit Office has never criticised the contracts with BT. 

"I’m not here to defend BT or its customer service or say that nothing they do is wrong. But it’s important people remember this is a huge engineering project across the whole of the country. I think it is lazy to say this is a huge disaster because of a BT monopoly.”

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