BT Reinvests $360 Million Government Subsidy in U.K. Broadband

  • Money clawed back frees $550 million to connect remote areas
  • Culture Secretary Bradley: 600,000 businesses, homes to gain
Photographer: Chris Ratcliffe/Bloomberg

The U.K. government is clawing back 292 million pounds ($360 million) in subsidies from BT Group Plc to reinvest in spreading super-fast broadband connections to businesses and homes in remote areas.

Under a contract with the government, BT receives taxpayer funds to support the rollout of super-fast broadband, with speeds of 24 megabits per second or more, but returns some of the subsidy when more customers than expected take up the service. The clawback from BT and savings from efficiencies in the delivery of the program release 442 million pounds to be reinvested in broadband, Culture Secretary Karen Bradley said in an e-mailed statement on Thursday.

The program “is giving families and businesses in hard-to-reach areas the fast and reliable Internet connections which are increasingly at the heart of modern life,” Bradley said. The reinvestment “will benefit around 600,000 extra premises.”

The U.K. government has promised to prioritize connecting rural areas with super-fast broadband, and made subsidies available because providers said installing infrastructure in remote locations was too costly. Ministers are seeking to link 95 percent of homes to the network by 2017.

The technology allows businesses to run websites at the same time as trading online, while allowing consumers to watch video or television on multiple devices at the same time.

The government said about 1.5 million homes and businesses signed up for fast connections in areas where it has subsidized the rollout.

“We have made great progress but there is still more to do,” Bradley said. “Increasing take-up is a win-win-win: consumers get a better service, it encourages providers to invest.” When more people sign up in the priority areas, “money is clawed back to pay for more connections.”

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