BT 'criticised' over rural broadband costs header image

Published: 22nd Jun 2016

Telecommunications provider BT has been criticised by a group of MPs for "vastly overestimating" the cost of broadband for customers living in rural communities.

The Public Accounts Committee (PAC) lambasted the firm after the National Audit Office (NAO) published figures that indicated the rollout of super-fast broadband will cost at least £92 million less than was originally estimated by BT.

Upon seeing the NAO's report, the government announced that the surplus funds would be ploughed back into offering faster internet speeds to more remote areas across the UK.

Margaret Hodge, chairperson of the committee, told the BBC it had questioned the firm about why it had told the PAC that the rollout would cost more than it will.  

"Although it's reassuring that the cost to the public purse could end up being £92 million (25 per cent) less than what BT had originally forecast in its bid, I worry that this does not stack up with what BT told my committee in 2013 - that it factors in a contingency of between five and eight per cent, which might not get spent, a much smaller proportion than 25 per cent," she said.

Ms Hodge believes it is disconcerting that BT could have abused its dominant market position by vastly overestimating its predictions for costs in its original bid, which has led the PAC to have broader concerns about whether the deal represents true value for money.

In response, the telecommunications firm said that its initial cost forecasts were based on how much deploying fibre in rural areas would be. The spokesperson added that BT has come under budget in several areas, which is "good news for the taxpayer" as it can only charge the actual price rather than the predicted cost.

The representative also labelled the PAC's accusations as "bizarre" as inflating costs would have hindered the firm's chance of winning the substantial contract. The NAO report confirmed BT's costs were 20 per cent less than others would have charged in a sample area, which the spokesperson believed made it clear that the firm was delivering value for money.