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Virgin Media has slammed the government's Broadband Delivery UK (BDUK) scheme for giving "hundreds of millions of pounds of excess returns" to rival provider BT.

According to the Financial Times, Virgin has written to the European Commission to voice its opposition to the donations of any future state aid for broadband investment.

The government has so far invested £1.6 billion on extending superfast coverage to around 95% of the country as part of the BDUK scheme.

Most of the cash has been awarded to BT as the only registered supplier to the main tender, with the government now looking for approval from Europe to renew the programme.

However, Virgin claims the government should stop subsidising superfast infrastructure for the remaining 5-10% of the UK, adding it would instead like to raise demand or invest in satellite service.

Another area of criticism for Virgin is related to the clawback on related BDUK contracts, which are applicable over a seven-year period and require BT to return part of that investment when adoption of new services goes beyond 20%

While the money is intended to improve coverage, Virgin argues it could lead to excess revenues of £320 million to £869 million for BT over a 20-year period that could in turn be used to overbuild.

Tom Mockridge, Virgin Media chief executive, told the Financial Times: “The BDUK scheme does not offer the taxpayer value for money. It is no longer necessary in today’s investment-rich market and it leads to wasteful overbuild. Strong, competing networks are the answer; there is no longer a need for taxpayer-funded broadband rollout.”

However, a BT spokesman has rejected the claims, telling the news provider: “Virgin appears to have little grasp of how the project works as BT cannot make excess returns under the contracts and the seven-year period for gainshare is set under EU aid law.

“It is also the case that any higher returns are not split on a 50/50 basis. In fact, the majority of those funds will be returned to the public sector to improve coverage even further.”

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