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Rural Broadband Funds: Competition or Monopoly?

# 22 May 2012, 11:27 by cfteam

The government’s Broadband Delivery UK (BDUK) £350million funding mechanism and bidding process to encourage the extension of faster broadband to rural areas has spurred a war of words between Virgin Media and BT.

At a House of Lords Select Committee on Communications, the BBC is reporting that the Shadow Business Minister Chi Onwarah will claim that the current funding system favours BT. This she beleives is risking a new monopoly as BDUK does not consider competition as part of it’s remit.

BT, with it’s existing network, will generally have lower costs to extend cabling than any other bidder. Indeed in many areas of the country Cable & Wireless and Fujitsu have already withdrawn from the process leaving BT as the sole bidder. Fujitsu, who are supported by Virgin Media, remain active in only North Yorkshire and Cumbria.

Meanwhile Virgin Media’s Chief Operating Office Andrew Barron has complained, in a letter published by the Guardian, that providing the vast majority of available public funding to an incumbent (operator) is not in the UK’s best interests. He wonders whether the money would be better spent on alternative networks such as 4G. Were it not for the cable infrastructure installed in the 1980s by Virgin Media’s predecessors, it is claimed the competition to BT has resulted in faster speeds for reduced costs, something that does not apply where there is no cabled network.

Inevitably BT counter that Virgin Media’s network is closed whereas BT’s network generally has open wholesale to other operators. BT also suggest that Virgin Media show no interest in supply to rural areas. BT’s spokesman argues they willing to compete with anyone for funds.

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