UK - HMG withdraws Super-Connected Cities Initiative faced with state aid rules problems, going back to drawing board

The Scotsman reports that the UK government has withdrawn its application for clearance under state aid rules of the Super-Connected Cities Initiative. One of the cities was to have been Edinburgh.

But a blunder at the Department of Culture, Media and Sport (DCMS) has left the Capital scrambling to reboot its bid amid threats of an EU investigation into State Aid infringements – used to preserve competition from government intervention.

To avoid an 18-month probe, the funding scheme was scrapped in its original form, with all bids sent back to the drawing board. The city then had just three weeks to redraft a completely different business case before deadline.

Today, finance chiefs spearheading the £10.7m tender said they were “frustrated” and felt “let down” by the botched project, which would have offered speeds of up to 100Mbps (megabits per second).

It quotes a DCMS spokesperson as saying:

Following the revision in State Aid guidelines and developments in the broadband market, the Super Connected Cities programme will now focus on investments in connectivity that drive economic growth and demand for high- speed broadband, including a connection voucher scheme to address the relatively high cost of getting connected for some SMEs.

The original project had been announced by George Osborne in the Budget (see press release).

BT and Virgin Media had launched a legal challenge to Birmingham’s Smart City plan under this scheme.

See also the slides by Iain Bennett (Project Director for Urban Broadband Fund at Broadband Delivery UK), showing a significant reshaping of the project.

The Major Projects Authority annual report classed the Urban Broadband Fund as Amber/Red (see blog from Broadband UK). It gave the same warning for Broadband Delivery Programme.