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Gov claws back £645m in BT broadband from subsidy

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Er.. what?

Gov claws back £645m in BT broadband from subsidy

I think the headline might benefit from a small rewrite.

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Paris Hilton

Re: Er.. what?

Gov claws back £645m from BT broadband subsidy ?

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Anonymous Coward

Re: Er.. what?

The govt don't get the cash back, it gets spent on more broadband roll out- so technically the headline is correct it's "...in BT broadband [infrastructure investment]..."

The rural local authority I work for are already well into planning where the reclaimed subsidy will be spent and are under no illusions that the 5% are easy to get to - technologies like Mesh networks come with their own set of problems, but also it turns out it's easier to dig fibre through fields to get to 3 or 4 homes than it is to dig though pavements in cities, so there's hope for the 5% yet.

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Re: Er.. what?

"Gov claws back £645m in BT broadband from subsidy"

..."Gov claws back £645m from BT broadband subsidy ?"

Probably.

But if a similar sort of thing appeared in a system or program specification would you just unquestioningly do what you thought was probably intended?

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would be good if other government initiatives where run under similar financial control.

The original investment has been used for good causes, reduced risk for the corporate operator to install where their planning said it was too risky and has resulted in win win for all involved.

It seems the balance of incentives for all involved has resulted in good outcomes for all.

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Trollface

Careful blotto, you've have all the neocons reaching for their outrage and indignation at the suggestion that free markets should be sullied and corrupted by such an idea.

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Anonymous Coward

>Careful blotto, you've have all the neocons....

Or alternatively the left-wing council lovvies decide to spend the cash on a save the beetroot campaign or some other ridiculous pet project.

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Only 4.8m homes in the UK?

"DDCMS estimated that almost 94 per cent of UK homes and businesses (4.5m) currently have the option to buy superfast broadband"

I'm not sure if this is an error in the article or DDCMS having their facts wrong, but 4.5m is not "94% of UK homes and businesses"; a simple Google search found this article that there are around 23m dwellings in the UK.

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Joke

Re: Only 4.8m homes in the UK?

The other 18.5m are obviously second homes for expense claims.

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Re: Only 4.8m homes in the UK?

Nope, the others are outside the communter belt and thats where there be dragons.

We only eat turnips and light fires with sticks rubbed together.

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Re: Only 4.8m homes in the UK?

DDCMS estimated that almost 94 per cent of UK homes and businesses (4.5m) currently have the option to buy superfast broadband

Assuming the above statement to be correct (other than the 4.5m that has already been questioned) I wonder why the DCMS never seems to put out the sentence that follows from it, specifically "of those 94% "x%" have taken up the option while the remainder have not".

It might be both revealing and informative.

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Re: Only 4.8m homes in the UK?

"We only eat turnips and light fires with sticks rubbed together."

Do you still have gas tellies?

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FAIL

BT should return ALL the subsidy...

I strongly believe BT has deliberately misused the subsidy to build market share by squandering it on sports as an excuse the buy customers from Sky in densely-populated, well-provided areas, which has nothing to do with installing fast broadband in places with very poor broadband (<2 Mb/s) who really need more speed just to do normal stuff like use gov.uk and Amazon.

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Stop

Re: BT should return ALL the subsidy...

I strongly believe BT has deliberately misused the subsidy to build market share by squandering it on sports

That would be a different company. The money was 'given' to Openreach. It's BT Retail that has bought sports rights. Yes, they are part of the same group but there are very strict rules and even laws about how funds can be moved around the group. If they have done what you are suggesting then it is a serious misuse of government funds, a violation of their license and almost certainly fraud.

It is of course possible that the kind of accounting/business fraud that you propose has taken place but if you have evidence I suggest you send it to Ofcom and/or the police. It would probably be one of the biggest scandals of the decade.

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This post has been deleted by its author

Re: BT should return ALL the subsidy...

@AndrueC

I'm guessing you haven't seen the ways big business finance directors, politicians and the like operate behind the scenes? Im also guessing that it IS a huge scandal, and the way they wangled the 'split but not split' is part of it.

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Re: BT should return ALL the subsidy...

I think you'll find that BT Openreach and BT are the same company. If you check Companies House, there is no separate company.

BT Openreach can simply jack up their wholesale prices and BT retail can simply reduce their margins, the overall group still makes a profit on each internet connection provided.

In fact, BTOR jacking up wholesale prices means that they make their resellers more expensive and thus benefits BT Retail.

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Meh

Re: BT should return ALL the subsidy...

I think you'll find that BT Openreach and BT are the same company

Well, alright, yes. But all divisions are kept isolated by regulation. They can't just move funds around as they see fit. Certainly not funds given to one particular division for a specific purpose by the government.

BT Openreach can simply jack up their wholesale prices...In fact, BTOR jacking up wholesale prices means that they make their resellers more expensive and thus benefits BT Retail

Ofcom regulates those, precisely to ensure that Openreach doesn't squeeze out competitors.

A recent example here.

Of course there are things BT does to try and reduce the costs of regulation but the kind of funding reallocation the OP is suggesting is a whole order of magnitude beyond what most industry pundits would be prepared to consider. But anyway if you reread my post I didn't actually deny it or try to defend BT. I just implied that I felt it unlikely and that the OP should report what evidence they have to the appropriate authorities.

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Re: BT should return ALL the subsidy...

Well, alright, yes. But all divisions are kept isolated by regulation.

I don't believe that, having worked in a couple of much better regulated sectors myself. Because BT and Openreach are one single entity, Ofcom have to rely on management accounts, not statutory accounts. In practical terms that means Ofcom have to believe what they are told, and there's no way of reconciling those to any audited IAS statements.

The only way of working out what is really going on is through having separate company entities, AND making them use their own bank accounts rather than a single corporate pooling cash account. Having said that, government and Ofcom don't want to know what is going on. BT's huge pension deficit can only be paid off if the company continue to enjoy a profitable monopoly, so the last thing the pols and regulators want is visibility on how much cash Openreach is churning up.

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@Paul

I think you'll find that there is now an Openreach Limited (incorporated earlier this year), as well as BT Limited. Both appear to be operating companies within the BT Group PLC corporate structure.

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DCMS think the final 5% costs the same as the first 95%?

Back to school time for the minister and his soundbites. BT Openreach's transparency in costs has been an issue from start to finish from the BDUK programme.

DSL will not provide meaningful broadband speeds to rural folk more than 1.2Km from a cabinet. Ye cannae brek the laws o' physics laddie.

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Re: DCMS think the final 5% costs the same as the first 95%?

I know that we have fibre to the cabinet. I'm not sure whet length of copper is needed to the cabinet, or the cable run from cabinet to the exchange but I'm getting over 3 megabits over copper all the way to an exchange 1.6km away, straight line distance. Cable length might be twice that.

It might not be enough for a family, but I wonder how many people are sharing what you think is "meaningful broadband"? If you're using labels such as that, instead of definite numbers, I can't help but distrust you.

I am seeing claims that some new, VR-based, services need 10 megabits. We're all talking about superfast connections to the exchange, but I wonder if the networks on the other side of the exchange can cope with that sort of increase. Are they planning for 10 megabits per family, or 10 megabits per person?

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Re: DCMS think the final 5% costs the same as the first 95%?

@Dave Bell I presume you also distrust all BDUK announcements and any definition of "Super Fast" that doesn't also define latency, packet loss and most importantly upstream speed. Our government doesn't like to use real figures, as their poor technology choice would become apparent.

For a graph of VDSL distance/speed using a "perfect" conductor - not aluminium or rusty copper, or rat chewed coaxial cable, go here:

http://www.increasebroadbandspeed.co.uk/2013/chart-bt-fttc-vdsl2-speed-against-distance

My point is, this isn't going to get materially faster due to the presence of the copper/aluminium. 20 Mbps downstream is good today, but it won't be long until that is woefully short of capacity. Upstream is already a problem for me. BT decided we were all consumers of content, not producers. That is changing now with the advent of highly capable tablet and phone cameras, for example.

I used "meaningful broadband" as a flexible term allowing a user to interact with all "reasonable" services as we head full speed into our digital futures. It may be fine for some, who don't wish to avail themselves of the newer services (e.g. 15-20 Mbps for a reliable 4K stream from Netflix). They may hope that HMRC doesn't add video guides and colourful animated icons to the TAX return website, or 4MB pictures of their cats. If they have the time and patience, then that's their choice.

I imagine your upload speed at 1.6Km from the cabinet means you have no "meaningful" way of sending data to the internet. How long does it take you to send a 5MB image from a phone or camera? Downloading one at 3Mbps is 14s. That's fine if you have time, but not realistic in my job where files are often 50-100MB in size, and the kids are watching Netflix (not 4K). If you dare send a 5MB cat picture, then you are probably tying up your VoIP phone for best part of a minute. I don't have your upstream speed stats for your line, which are unique to you, so I don't know. This is another problem with DSL service levels - predictability. If you want to survive with 3Mbps downstream and 500Kbps(?) upsteam, that's your choice. Both you and your ISP need to run QoS, or latency sensitive traffic such as a VoIP phone will stop working when an Email arrives with a cat picture. I don't know any that do over a retail DSL circuit. This isn't a "meaningful" service in my view. My view is mine. Nobody else's, obviously...

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"DDCMS estimated that almost 94 per cent of UK homes and businesses (4.5m) currently have the option to buy superfast broadband, and reckoned this would rise to 95 per cent by year-end."

94% of homes in the commuter belt, what about the rest of the country?

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the rest of the country simply need to breed faster carrier pigeons!

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Can someone explain please?

Correct me if I'm wrong but HM Pip-Squeezer has taken back some subsidy money (or not actually given it to them) from Openreach who are installing broadband. As a result, HM Money-Bags will immediately give that money back to Openreach to install broadband ...?

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Meh

Re: Can someone explain please?

As a result, HM Money-Bags will immediately give that money back to Openreach to install broadband

Not quite. BT will refund the money to the councils. It's then up to the councils what they do with it.

It's like you paying Amazon £10 for a book with the promise by Amazon that if it proves popular they will drop the price and refund you. A year later the book has turned out to be more popular than Amazon expected so they credit your account with £5. What you do with that £5 is up to you.

Councils can pay BT for more coverage. Or they can pay someone else for more coverage. Or they can buy some pretty flowers for the park. Or they can pay for a jollyfact finding trip to the Bahamas. Or they can put the money in their savings account.

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Sooooo

If I were to live in a Hamlet where you'd have more luck lighting a signal beacon - Do we now start asking our County Council or Borough Council to get moving ?

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"Sorry, your property is in a RED area which means no properties are planned to have access to fast broadband. Scroll down to see the options available to you."

<clicky>

Ooh, subsidised satellite, maybe that's better than the <250kbps over the landline.

<checks>

Nope, it's subsidised installation, but with a long contract and still over £1/Gbyte, but with added latency. I'll stick with my 3G & 4G dongles. I guess that's broadband - and at least I'm not giving the BT weasels anything.

I've got to admit that I'm reasonably happy with EE's 4G->Ethernet widget. Shame it's not unlimited, but it gets the job done. Reluctant to squander precious bytes on a speedtest, but it never feels much slower than the VM 50Meg I moved away from. If you're getting crap service but have 3G or 4G coverage, it's worth a look. Port your phone number to VoIP and ditch the wire.

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Facepalm

"...and at least I'm not giving the BT weasels anything.

I've got to admit that I'm reasonably happy with EE's 4G->Ethernet widget. "

erm, not wanting to start another discussion like the BT/Openreach thing above, but you may want to look into who owns EE these days.

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Yeah, I know. It's only BT directly with whom I have a gripe - any dealing with them has, over the last 30 years, been somewhere between unsatisfactory and a shambles. I've learned my lesson.

Dealing with the weasel's tentacles, though, doesn't seem to be doomed (yet). Cellnet - tolerable. OpenReach - tolerable. EE, tolerable. Wish me luck.

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Anonymous Coward

3G/4G unlimited data can be had for £20 per month, though it gets bandwidth throttled. That looks as though it could be a good option if you don't want video streams. Prices and other details can vary, and it would depend which networks cover your location, but it makes landlines look damn expensive. It's something to check, at least.

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