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U.K. Auditors Slam BT Rural Broadband Project

BT is taking advantage of taxpayers, charging a high premium for the £530 million project to bring high-speed networks to rural areas, claims leaked government report.
Broadband Delivery U.K., the U.K. government's £530 million ($824 million) plan to make high-speed broadband available, even in less commercially attractive areas like the countryside, appears to be the focus of sharp criticism by the nation's public spending watchdog, the National Audit Office (NAO).

Leaks appeared in the Telegraph Tuesday about a claimed NAO report, due for publication in July, about the program.

And it doesn't make good reading -- for either ministers or dominant British telco BT, which seems to have made itself the only option for building out such a network.

According to the leaked report, the Department of Culture, Media and Sport (DCMS), which is leading the project, has poorly handled the contract, allowing BT to charge it an 80% premium over what it would normally charge. The NAO is also expected to criticize the U.K.'s reliance on a single, big supplier as risky and less sure of delivering value to the taxpayer, compared to alternative rural broadband plans in Europe, which are set up to involve more suppliers and less exposure to the taxpayer.

[ Want to learn about another troubled British IT project? See U.K. Ministry Of Justice Postpones Major IT Contract. ]

According to the Telegraph's report, insiders who have seen the study say the DCMS has a "naive" approach to working with the vendor that lacks "transparency or competition."

If this is true, it would negate all government claims that it had figured out a way to "stimulate," not underwrite, broadband infrastructure creation.

Another insider is rather dramatically quoted as worrying that the program is now nothing less than "a train crash waiting to happen. ... We will either end up with some sort of meltdown in the next year or so, or there will be significant cost in the next Parliament to unpick it."

Both BT and DCMS responded to the allegations, with both reiterating their conviction that the process is not flawed. DCMS told the Telegraph that the program will "deliver projects that are real value for money and result in a transformation of broadband in the U.K. by 2015." The leak came as more details were aired in Parliament about another British public sector IT initiative that spectacularly crashed and burned last month: the botched £100 million ($155 million) BBC IT project.

In testimony before a committee of MPs Monday, the plan -- to create a special advanced in-house fully digital production platform -- was described by one stakeholder, Anthony Fry, a member of the BBC's governing body, the BBC Trust, as "the most seriously embarrassing thing I've ever seen" and a "complete catastrophe." (The MPs are investigating a pricey relocation of BBC facilities out of London this week.)

Fry implied that the root of the disaster may have been in BBC arrogance: "On the back of the successful delivery of iPlayer, and on the back of what the BBC was hoping to achieve and did achieve successfully in terms of the delivery of the Olympics, I think there was a sort of feeling that the BBC could walk on water."

However, "there was not enough technological expertise" available for it to "actually go ahead on something of this scale and complexity," Fry told the committee.

PriceWaterhouseCoopers has been retained by the BBC Trust to produce a separate, in-depth report for taxpayers, with that study expected to be completed in the fall.