The government has been accused of watering down plans to boost urban internet speeds after it emerged that most of the £150m Urban Broadband Fund could be spent on vouchers rather than infrastructure. The Independent Networks Co-operative Association (INCA) said the original ambition to create 'gigabit districts' had been replaced by a scheme to help small businesses pay for a BT connection.
Under the revised plans, up to £90m of the fund will be offered as vouchers to subsidise 30Mbps+ broadband connections for small businesses with fewer than 250 employees and turnover under £37m. The wireless side of the plan, including new wi-fi hotspots, remains unchanged.
The change follows a legal challenge by BT and Virgin Media against Birmingham City Council's plan to build a 100Mbps+ network. The European Commission revised state aid guidelines after the challenge, leading the Department for Culture, Media and Sport (DCMS) to overhaul its approach to avoid delays and potential blockages.
Culture Minister Ed Vaizey said the system was designed to generate maximum competition among internet service providers, adding that public money should not be used where companies are already investing. However, INCA chief executive Malcolm Corbett said: 'What started as a big ambition to create gigabit districts has become a scheme to help small businesses pay for a BT connection.'
The DCMS insisted the voucher scheme was only one element of the super-connected cities programme and did not represent a scaling down. A spokesman said the Urban Broadband Fund would still enhance business connectivity, drive economic growth and improve wireless coverage.
