The Government's plans for rural broadband are "a train crash waiting to happen" according to insiders who have seen a report by the National Audit Office which is due for publication next month.

The Department for Culture, Media and Sport (DCMS) objective is for the UK to meet European targets for a superfast broadband network in Europe by 2015 although 10% of households will be lucky to have broadband speeds of 2 Mbps.

As the top broadband providers have cherry picked the best areas, there is a lack of appetite for running infrastructure in the lower populated rural areas of the UK leaving just BT bidding for the contracts. The resultant lack of competition has allowed BT to overcharge - by up to 80% (according to The Telegraph) and BT's over dominance will lead to a failure in the market. This has led the National Audit Office to investigate.

According to the Telegraph: Culture secretary Maria Miller and her ministerial junior Ed Vaizey are said by insiders to be “apopleptic” about how the scheme is operating. Most worryingly there are also concerns that councils are not being allowed contractually to compare the prices BT is offering to connect them to broadband.

Margaret Hodge, the chairman of the Public Accounts Committee, said she would be calling BT to give evidence about the NAO report in mid-July. She said: "We will be definitely holding an enquiry".

Malcolm Corbett, from the Independent Networks Cooperative Association, said that the current way of letting the broadband contracts pushed out smaller suppliers.

He said: “There are quite a number large and small independent, very capable UK companies which are very willing to help the Government deliver its target. But currently they are completely excluded and it seems mad, a real shame, and this is very unlike other parts of Europe.”

BT confirmed it was aware of a draft copy of the NAO report which was being checked in Whitehall for accuracy, as is normal practice.

The Department for Culture, Media and Sport is spending £530m to subsidise investment in broadband infrastructure in rural areas of the UK. Its primary objective is for the UK to have the best superfast broadband network in Europe by 2015.

The Department’s rural broadband programme aims for 90 per cent of premises in each area of the UK to have access to superfast internet speeds of above 24 Megabits per second (Mbps) and for all premises to have broadband speeds of at least 2 Mbps. This report examines how well the Department has designed the rural broadband programme and the extent to which its safeguards assure value for money. It also considers whether the 2015 targets for rural broadband provision are likely to be met.

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