'No way we’ve been overinflating': BT responds to rural broadband price hike allegations

By Peter Gothard
02 Oct 2012 View Comments

A BT spokesperson has labelled today's allegations that the company has marked up the cost of rural superfast broadband installations by as much as 80 per cent as "quite frankly, untrue," condemning the Daily Telegraph's apparently leaked Whitehall report on the matter as supporting the line of "detractors looking for chinks".

The Telegraph has today claimed it has a leaked report from a Whitehall consultant that states BT's charges for rural superfast broadband installations are so high that they could be cut from the £1bn figure already provided to BT by the government to between £500-£600m and achieve exactly the same result.

Further reading

As it stands, if the report is to be believed, inhabitants of rural UK areas are overpaying council tax bills in contribution to the BT scheme, which is equivalent to an 80 per cent markup.

The consultant, who the Telegraph says accused BT of employing "pseudo retail costs", lists escalating installation prices depending on the remoteness of installation zones, citing £17,000 for "generic" rural areas, £21,858 in "very" rural areas, and £30,000 for the most remote.

A BT spokesperson told Computing: "This charge that we're overcharging and inflating rural cost in order to win public funds is, quite frankly, untrue."

Referring to the "pseudo retail costs" accusation, BT remarked that "the point's not really fleshed out enough."

"The simple fact is that broadband is more expensive to deploy in rural areas than in cities. It's not homogeneous; we've invested heavily in rural areas despite the challenge there. Deploying fibre broadband is an expensive business, and one that only makes sense if you're willing to accept a long-term payback period."

According to the Telegraph, the document stated: "In attempting to establish a wholesale price, there has been significant inflation of costs by adding new job types and not reducing costs where these job types had already been accounted." BT vehemently denies such accusations.

"There's no way we've been overinflating – we signed these contracts with councils," continued BT's spokesperson. "They're not going to expect us to go back to them cap-in-hand and say ‘we need that amount twice over'."

BT put the findings of the leaked report, which was supposedly written by a government-employed consultant in Whitehall, down to ill-feeling caused by BT's telecommunications rivals and their supporters.

"There's a lot of detractors out there looking for chinks in [the contract], and they'd rather we weren't in the process," said the spokesperson.

"They're a bit miffed that a lot of the smaller companies aren't involved. This is a game of scale – one of the reasons we bid successfully is because we can do it to scale for the money."

BT's spokesperson maintained that several of the "nine or so" companies who originally competed for the superfast rollout dropped their bids, admitting "We can't compete with BT on price."

"So now who do you believe? You've got the argument on one hand that we can't be beaten, but on the other that we're inflating our costs, according to this report," BT's spokesperson told Computing.

"We won because we offered the best and the cheapest solution."

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