Feeds

BT and Virgin sue over £10m state-funded Birmingham broadband

Telcos: 'New broadband service is a dangerous precedent'

Boost IT visibility and business value

BT and Virgin Media have thrown another legal block in front of a £10m investment in Birmingham's broadband infrastructure.

The two telcos are dragging Birmingham City Council back to the European Commission by challenging a decision to allow the City council to improve broadband pipes. It means that the £10m investment plan in Birmingham's broadband will be delayed, if not dropped.

Virgin and BT allege that that public money will skew the private market and undercut their own investment in Birmingham.

The £10m that the council planned to plough into Birmingham's broadband comes from a £150m pot that George Osborne set aside to fund broadband in 20 cities across the UK, part of his "super-connected cities" initiative. In Birmingham the cash was intended in particular to help small biz in the Digbeth, Eastside and The Jewellery Quarter areas of the city by providing them with affordable high speed broadband.

Birmingham City Council accused BT and Virgin Media of standing in the way of 1,000 new jobs and an estimated £200m yearly benefit that the service would create.

Councillor James McKay said he was "extremely disappointed" by Virgin's new lawsuit, because the Council had consulted extensively with VM to prove that the market alone couldn't provide the service:

The city has worked in a very positive and collaborative way with them over the last few years to help inform and develop our business case and we are surprised that they have now chosen to appeal at such a late stage.

We developed a robust State Aid case, based heavily on evidence that Virgin Media and others provided to us that clearly demonstrates a strong market failure.

BT said that the decision to allow government money into a private market is "substantially flawed":

It would have discouraged commercial investment in high speed networks at precisely the time when such investment is required. It would also have set a dangerous precedent. We hope an alternative solution can be found as soon as possible so that companies such as BT can invest further in Britain’s cities.

Virgin Media spokespeople argued that the planned investment was being made in the wrong place:

We fully support the Urban Broadband Fund and government ambitions to bring superfast broadband to areas not currently served by existing fibre networks. So it’s disappointing that Birmingham City Council has put forward a scheme which is not in the interests of local people and we believe, as a result, the European Commission has made a decision based on inaccurate and misleading information which could waste public money.

Birmingham Council got the go-ahead from the EC last month, the challenge by BT and Virgin was decided last week and has come to light today.

The ruling could affect other cities in line for a broadband handout - including Belfast, Manchester and Bristol. ®

Seven Steps to Software Security

More from The Register

next story
Scotland's BIG question: Will independence cost me my broadband?
They can take our lives, but they'll never take our SPECTRUM
Bring back error correction, say Danish 'net boffins
We don't need no steenkin' TCP/IP retransmission and the congestion it causes
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
NBN Co adds apartments to FTTP rollout
Commercial trial locations to go live in September
Samsung Z Tizen OS mobe is post-phoned – this time for good?
Russian launch for Sammy's non-droid knocked back
Telstra to KILL 2G network by end of 2016
GSM now stands for Grave-Seeking-Mobile network
Seeking LTE expert to insert small cells into BT customers' places
Is this the first step to a FON-a-like 4G network?
What FTC lawsuit? T-Mobile US touts 10GB, $100 family-of-4 plan
Folks 'could use that money for more important things' says CEO Legere
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.