The former public utility is gambling with your money, but doesn't think you should know where it's going
This month, BT launched a very expensive-sounding TV station. BT Sport's ads practically reek of eau de chequebook, as they list all the on-screen talent that has already been signed up: Michael Owen, David Ginola, Martina Navratilova, Lawrence Dallaglio, Clare Balding … on the list goes, like Top Trumps on steroids.
Then there's the £152m for exclusive coverage of the rugby premiership, £736m for 38 football Premier League matches and a vast TV studio in the Olympic Park. Totting up the bill for all this across BT's channels, sportswriters arrive at a round figure of "a billion-pound gamble". But chuck in other sporting rights, presenters' fees, staffing and a marketing blitz, and the sum is surely higher still.
The same BT was last month hauled over the coals for its part in what is fast turning out to be a fiasco: providing rural Britain with decent broadband. This is another billion-pound job: around £1.2bn of public money will be sunk into the project and most will be handed to BT to ensure it makes an "acceptable return" on the job. Except that the telecoms giant's definition of an acceptable return is murky to officials in local government, central government and the state auditors – and has been found to include millions in overcharging of the public.
With one hand, a £25bn company is taking more than a billion off taxpayers, to provide a public good. With the other hand, it's splashing out a billion – and further inflating football's Premier-League bubble. And in that ugly symmetry is a lot that's rotten with big corporates in Britain, and how lightly Westminster lets them off the hook.
But let's go back to broadband. From economists to politicians, everyone agrees that fast internet access is as essential as roads, rail and airports to a modern economy. Whether it's a studio editing films, a company storing files in the cloud, or a care-home warden wanting medical advice on a resident, everyone needs decent internet connection. That's also true if the UK is ever to develop an economic model that isn't obsessed with London.
Yet for swaths of rural Britain and for some deprived urban pockets, the internet is slow to non-existent. Peter Cochrane, former chief technology officer with BT, reckons he has been to Greek islands and parts of Colombia with faster broadband than villages a few miles outside Norwich. This connective dearth is all the more aggravating for city dwellers whose commutes to work are regularly disrupted by roadworks to put down fibre-optic broadband cable.
Given that everyone agrees that getting Britain online is a public good, what do those giants at the Department for Culture do? Why, award juicy subsidies to private companies to bribe them to do the work.
At the root of this is that post-Thatcherite dogma: that competition always helps the customer. Or, as Ofcom puts it: "Competition has driven the success of the current generation of broadband services … the result has been greater choice, innovation, lower prices and high levels of broadband adoption." Except that's plainly not the whole truth, because otherwise we wouldn't have this problem in the first place. In any case, there's only really one private company able to do this work, and that's the one formerly known as the public utility British Telecommunications.
Yet first the thinker-statesman Jeremy Hunt and now Maria Miller have desperately tried to create a vibrant market in laying down cable where none could ever exist. The results have been predictable: of the 44 regional contracts up for tender, a total of 32 had been awarded as of yesterday: all of them to BT. As forthcoming research from Manchester University's centre for research on socio-cultural change observes: "Here is a natural monopoly which the government is unwilling to accept as such."
And in the negotiations, BT's lawyers have run rings around town hall staff and Whitehall civil servants. Like a cowboy builder, the company has quoted prices that public officials have found difficult to verify and has been conveniently vague on how it arrives at its sums. Last month, the National Audit Office recorded BT had overcharged by £3m in one region alone. It also found that BT was withholding contractual details from the Department for Culture, claiming they were commercially sensitive. Auditors noted: "This makes it difficult for the department and for local bodies to gain transparency over the level of costs included in BT's local bids."
This is your money that's being wasted, yet BT doesn't think you should know where it's going. Speaking to the Public Accounts Committee last month, one expert estimated that taxpayers were putting in 77p of every pound going into rural broadband (BT disputes this figure). In Sweden, country of forest and islands, a comparable project had required a maximum of 33% from taxpayers.
Yet government officials who have blown the whistle on BT's opaque charging have been sacked, and community groups who have tried to lay their own broadband connections have found themselves under pressure from local councils.
Given this level of public subsidy and the lack of any real competition, it would have been far simpler and possibly even cheaper to have done this through a public entity. But 21st-century market-fundamentalist Britain must always run a race, if only to give a gold medal and a massive handout to the one competitor that actually ran. Yet, as Cochrane points out, only one part of the British Isles actually has superfast broadband running at 1 gigabyte a second: Jersey, which ran the entire thing through its publicly owned telecom company.
Meanwhile, our former public telecoms firm is busy creating jobs for recent retirees from Premier League football.
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