Competition officials in Europe have stalled the UK government's plans to lay superfast fibre optic networks for 90 per cent of homes and businesses in the country by 2015.
However, a spokesman at the Department for Culture, Media and Sport insisted that the next generation broadband rollout would not be delayed as a result of the Brussels' intervention.
"We are working with the Commission to finalise agreement on state aid. We remain on schedule to meet the 2015 target," the DCMS spokesman told The Register.
On Tuesday, broadband minister Ed Vaizey confirmed that BT and Fujitsu were the only two suppliers to have inked contracts to gain access to millions of pounds-worth of gov broadband funds.
The companies had been whittled down from a shortlist of nine telcos. As we've previously reported, many smaller suppliers have complained that the red tape involved with securing government investment had proved too daunting.
On 19 June, Vaizey said:
It was whether or not companies felt confident they could make the investment and whether there was a business case for them actually being involved. You had a range of people who came to our open days to talk about the issue.
Then you had nine who wanted to go to the next stage of it, a bit like the European Cup, and they fell away. The closer you get to being at the point of signing a framework tender document, the businesses themselves have to think very hard, 'Is this the game we want to be in?'
Hyperoptic co-founder Dana Pressman Tobak told us last week that too many "conditions" had been assigned to the bidding process, in effect pushing out smaller telcos.
Just yesterday, Vaizey doggedly dismissed such comments. He told a committee of MPs that he hadn't "had a queue of local authorities coming through my door and telling me it [the bidding process] was complex."
The minister added: "We have a legal obligation to ensure that procurement is undertaken in the right way... people will always complain about the bureaucracy."
Broadband Delivery UK boss Robert Sullivan further pointed out that the process was not mandated by saying that it was ultimately "down to choice among local councils."
It was a comment echoed by the DCMS to El Reg today.
"Councils don't have to use the framework. They can choose to run their own procurement process if they wish. We expect most will use the framework as it will be quicker and cheaper," the DCMS spokesman said.
But the fact remains that competition officials in Brussels are at loggerheads with the UK government. Furthermore, the EC is currently seeking public views on draft guidelines for broadband networks.
In June, it said:
The draft proposes to focus investments on infrastructure elements that are not directly related to the transmission of services, such as ducts or dark fibre (passive infrastructure). Investments into passive infrastructure are particularly expensive.
If such investments are financed through public funds, the infrastructure will be available indiscriminately to all service providers who intend to enter the market. This, in turn, will foster competition, in particular for very high speed broadband networks and contribute to improving broadband services and reducing prices for European consumers.
But it's unlikely that BT will rent out its dark fibre on a wholesale basis to rivals such as BSkyB and TalkTalk, and Ofcom has also declined to intervene on the matter.
The DCMS stressed to The Reg this morning that there remained "a great deal of preparatory work that councils can do" while it awaits a decision from the EC. But there'll be no "spades in the ground" until the impasse is dealt with.
Just yesterday, the Country Land & Business Association (CLA) warned that the "rural-urban digital divide" faced further delays.
"We recognise that delivering this type of infrastructure is not easy but it is unlikely the government will meet these objectives," claimed CLA president Harry Cotterell.
"The BDUK process is too bureaucratic and the allocation of the £530m funding too slow. It would be much simpler if the funding was allocated centrally rather than giving it directly to local authorities because they do not have the resource to plan for a superfast broadband network."
We asked the EC's competition office to provide a statement for this story, but it hadn't returned our request for comment at time of writing.
A BT spokesman said: "Discussions between the UK government and the commission continue on the issue of state aid. This is an EU issue as the commission is developing rules that need to work across Europe as well as taking the different conditions in the UK into consideration.
"We are working with the UK authorities for an outcome that both incentivises further investment in fibre broadband and delivers vibrant competition in broadband services."
Fujitsu declined to comment. ®