Gov claws back £645m in BT broadband from subsidy

What councils spend it on is another matter

A hand squeezing juice from an orange

The government has clawed back £645m from BT under its state-subsidised superfast broadband contracts tendered in 2012.

The Department for Digital, Culture, Media and Sport (DDCMS) has estimated 900,000 additional UK homes and businesses could gain access to speeds of 24Mbps thanks to the cash windfall.

But this seems speculative as coverage will depend on whether cash-strapped local authorities choose to invest that money in broadband subsidies

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.

Minister for Digital Matt Hancock, claimed:

"The money that is now being returned to the programme for reinvestment will help us reach that final 5 per cent, and is all part of our commitment to make sure that 100 per cent of the UK can get affordable, fast and reliable broadband by 2020.”

He said new figures show more than 2 million homes and businesses have signed up for superfast connections in areas where the government has provided subsidies for broadband access.

Under a clause in the original contracts, BT had to repay part of its £1.7bn subsidy for superfast broadband if installing cabinets in areas became commercially viable.

Research published on Saturday showed that that take up has been higher than expected as a result, with BT setting aside £465 million to extend coverage over the full lifetime of the contracts – up from £292m in December last year.

That is in combination with project efficiencies of £180m, said DDCMS.

Andrew Ferguson, editor of Thinkbroadband, said commercial roll-outs would eventually have reached this sort of coverage levels but it would probably have not been for a few more years without government funding.

"The trick now is for people to keep buying the services and making use of the extra speed, since there is still scope for more gainshare to be delivered and pushing superfast coverage even further.

"The reinvestment is not guaranteed as the decision on what to do and what level of re-investment is used is very much down to each local authority," he said. ®

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