Rural broadband cost 'vastly overestimated' by BT

MPs have accused BT of "vastly overestimating" the cost of rolling out broadband technology to rural areas of the UK.

A National Audit Office (NAO) report has found that rollout is set to cost at least £92 million less than had originally said by the company.

However, a spokesperson for BT called the claim "bizarre" and insisted that the firm has so far come in under budget when managing the rollout of the new broadband technology.

Margaret Hodge, chair of the Public Accounts Committee, told BBC News that what BT said in 2013 - that it factors in a contingency of between five to eight per cent, which may not get spent - is a much smaller proportion than 25 per cent.

She said: "It is very concerning that it looks like BT could have abused its dominant position in the market by vastly overestimating forecast costs in the first place when it put in its original bid, and we also have broader concerns about whether the deal represents value for money."

BT stated that the initial cost estimates it made regarding the broadband technology were "based on our initial view of how much it would cost to deploy fibre in rural areas".

A spokesperson for the company added: "We have come in under budget in several areas which is good news for the taxpayer as we only charge for the costs we incur, not those we first forecast. The savings can now be reinvested to take fibre to additional areas."

The representative also pointed out that coming in under budget for the rollout of broadband technology shows that the company is "clearly delivering excellent value for money".

Many organisations in rural parts of the UK have been forced to manage with slow and unreliable broadband connections as a result of delays with the rollout of new technology, leaving them at a disadvantage to those with the fastest speeds.

Businesses looking to move services into the cloud should evaluate the performance of their existing network and consider setting up a leased line or MPLS network.