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Virgin Media mauls UK.gov for pumping millions into BT

Cash gift 'not in Blighty's best interests'

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Virgin Media's monopolistic cable network is closed to competition - unlike BT's - but that hasn't stopped the telco from grumbling about government subsidies being dished out to its rival.

VM's chief operating officer Andrew Barron has penned a letter, published in the Guardian last night, ahead of a Lord's committee hearing on the future of broadband in the UK later today.

In the missive he said that "providing the vast majority of available public funding to an incumbent is not in the UK's best interests".

Barron added:

Throughout the formation of the government's broadband policy, we've advocated the most open and ambitious fibre-optic proposals, not just breathing life into the existing copper network. However, this requires a national approach and an appetite for helping the rapid roll-out of alternatives.

Without the 1984 Cable and Broadcasting Act for example, Virgin Media's network would not exist and there would be no challenger today. The absence of such a national view means the noble ambition of locally procured rural broadband networks is protracted and likely to favour the incumbent, freezing out new entrants, while the availability of public Wi-Fi in major cities remains inconsistent and piecemeal.

The government subsidy he is referring to is the £530m Broadband Delivery UK (BDUK) pot dished out to local authorities and Scotland to help pay towards the rollout of superfast internet in their areas.

As The Register has previously reported, smaller telcos have already turned their back on chasing cabling projects bankrolled by this mountain of taxpayers' cash. Geo Networks and Cable & Wireless Worldwide withdrew from bidding for the funds in November.

Fujitsu, which is heavily backed by Virgin Media, is the only other telco still in the running for the BDUK money and is hoping to bag cabling projects in just two areas - Cumbria and North Yorkshire.

It had grand plans to bring rural broadband to five million homes over the next three to five years at a cost of £2bn. But to achieve that the Japanese company needed to secure £500m from the public purse.

So far, BT has won two contracts in Lancashire and Rutland. The national telco was quick to slam Virgin Media's own cabling monopoly, however.

“BT would be more than happy to compete directly with Virgin Media for BDUK funds but we doubt that will happen," a BT spokesman told El Reg.

"That is because Virgin Media have steadfastly refused to provide open wholesale access to their network – a key BDUK requirement – and because they have shown no interest to date in supplying rural areas with broadband.

"This is in contrast to BT who offer broadband services on a wholesale basis to 99 per cent of UK premises. Fujitsu have announced their intention to bid for funds and so there will be a competitive process. We are already seeing this in several part of the UK.”

The Broadband for the Nation Lords' hearing takes place in Westminster later this afternoon where Barron, ex-Openreach boss Steve Robertson and shadow minister for the Department for Business, Innovation & Skills, Chi Onwurah, will all be giving evidence. ®

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