MPs Warn Sunak’s £1bn Rural Mobile Network Plan at Risk Due to Surging Costs

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The Government’s ambitious £1 billion plan to eradicate mobile signal “not spots” in rural areas is facing potential derailment due to surging costs, according to a recent warning from MPs.

The Public Accounts Committee (PAC) released a report on Tuesday highlighting “significant cost challenges” within the programme, adding that officials remain uncertain about the final expenses. The scheme, overseen by Building Digital UK (BDUK), an arm’s-length body, involves mobile operators absorbing additional costs as part of their licence obligations.

However, regulator Ofcom might offer operators relief from these obligations if costs become excessive. The PAC cautioned that such a move could jeopardise the programme’s viability.

The Shared Rural Network (SRN), an industry-wide scheme, is a collaboration between BT-owned EE, Vodafone, Virgin Media O2, and Three. The first phase of the SRN focuses on “partial not-spots,” areas where at least one operator provides coverage, but not all. The Government-funded second phase aims to address “total not spots,” where no operators currently offer 4G services.

Ministers have set a target to cover 95% of the UK’s landmass by the end of next year. However, escalating costs have raised doubts about meeting this deadline and who will bear the additional expenses.

One segment of the programme, where the Home Office is opening up masts built for its Emergency Services Network to commercial operators, has seen costs rise by £44 million due to irrecoverable VAT and inflation. Mobile networks have also warned that the second phase’s expenses are likely to exceed the current level of government funding.

The PAC noted that ministers are exploring options to manage the extra costs, including potentially achieving the required increase in 4G coverage with fewer mobile masts.

This challenge marks the latest setback for the SRN. Recently, three of the UK’s four mobile network providers—Vodafone, Three, and Virgin Media O2—requested an 18-month extension for the first phase deadline, citing the pandemic and planning permission delays. This request was denied, raising the possibility of hefty fines from Ofcom.

The PAC’s report also criticised the Government for not identifying which specific areas fall within the 5% of the UK landmass that will remain uncovered by the scheme. Additionally, it faulted ministers for failing to clearly articulate the specific benefits aimed for in rural areas and for not demonstrating the achievements from investing taxpayer money in 5G so far.

The Department for Science, Innovation and Technology declined to comment. Ofcom has been contacted for a statement.

As the deadline approaches, it remains uncertain how the Government and mobile operators will navigate the financial and logistical hurdles to achieve the ambitious coverage targets set out in the SRN.