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BT is to pay back £129m of the money it received from local authorities to roll out superfast broadband, as a result of exceeding targets for take-up of the services. The cash will be returned to councils for re-investment into further roll-out of fibre-based connectivity.
BT won most of the £1.7bn funds provided by the government to install superfast broadband into areas previously considered not commercially viable, as part of a programme to reach 95% of the population by the end of 2017. As part of BT’s contracts with councils, there was a “claw-back” clause specifying that BT would pay back some of the cash when adoption of the publicly funded roll-out exceeded 20%.
BT reached the targets ahead of expectations, and said it has revised its business case to reach 30% take-up instead, meaning it can return some of the funds it received.
“It's fantastic to see that the roll-out of superfast broadband is delivering for customers and for the taxpayer. The government was clear from the start that, as levels of people taking up superfast broadband went beyond our expectations in areas where we invested public money, BT would re-imburse the taxpayer for re-investing into further coverage across the UK. This now means that BT will be providing up to £129m cashback for some of the most hard to reach areas,” said John Whittingdale, secretary of state for culture, media and sport.
More than 2.5 million additional premises across the UK now have access to superfast broadband as a result of the government funding, which was channelled through its BDUK agency. The figure is expected to reach three million premises by August 2015. BT's fibre-based broadband network now covers about 80% of the country, making superfast services available to 23 million premises. Some 20% of those premises have so far installed high-speed broadband.
“We’ve hit our original take-up assumption and have rolled out ahead of target and on budget. This is a real success story for the UK,” said BT CEO Gavin Patterson.
“We are delighted to be able to share that success by making up to £129m available to extend the roll-out to more BDUK homes and businesses, earlier than planned and at no extra cost to the taxpayer.”
Rural broadband criticism
BT said it will work with councils to identify where the claw-back funds can be invested to increase fibre-based coverage sooner than would previously have been the case.
A recent assessment by the Department for Culture, Media and Sport showed that BDUK has so far spent £352,718,218 – which equates to 6,837 premises for each million pounds spent. Local authorities have to match the BDUK funding for their area to be eligible for the programme.
In January 2015, the Public Accounts Committee (PAC) criticised BDUK for not being vigilant enough in delivering its own superfast broadband coverage targets. The MPs found there were still pockets in rural areas without broadband; and that surveys found only 16% of rural small and medium sized businesses (SMEs) have access to superfast broadband, while half are not satisfied with the service they have.
The PAC previously criticised BDUK for awarding all its contracts to BT, and attacked BT for a lack of transparency about the details of its roll-out, following claims from smaller, rural broadband providers over unfair competition.
However, the most advanced of BT’s council-backed projects – in Cornwall – recently hit its 95% coverage target and estimated that superfast broadband had brought more than £186m of economic benefit to the region.
This week, MPs on the Culture, Media and Sport Committee launched an inquiry into delivering superfast broadband to the final 5% of UK premises that will not be included in the existing BDUK and BT plans for rolling out higher-speed connectivity.
Read more about BDUK's broadband programme
- Devon and Somerset Councils reject BT’s bid for Phase 2 of BDUK and will put the contract back out to tender.
- BDUK scheme passed its two-millionth property, as the controversial government-sponsored national broadband roll out continues.
- Almost half of local authorities in England don’t think they’ll reach the government’s 95% broadband coverage target in the allotted timeframe.