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Anger from firms over wi-fi decision
9:30pm Thursday 17th December 2009 in News
A BUSINESS association is weighing up its legal options after accusing the council of giving an non-Swindon firm a ‘wi-fi monopoly’ in town.
The legal advice has been sought from the Federation for Small Business (FSB) on behalf of one of its Swindon members amid claims that at least five Swindon-based IT firms, with wi-fi capabilities, should have been given procurement opportunities.
Emma Faramarzi, chair of the FSB’s Swindon Branch, has said this is the second time in seven months the council has spent public investment money – totalling almost £1m – outside the town.
“Swindon council has assured local businesses under the business charter that we would be consulted - especially after £500,000 was spent during the Big Weekend fiasco,” she said. “That money should have been reserved to help businesses recover the recession, same as the £450,000 going towards wi-fi.”
The scheme, which is to offer free internet for two hours a day to the entire borough in April, and went live in Highworth on Wednesday, has been delivered by Rod Bluh, leader of the council – promising great benefit for residents and businesses in Swindon.
However, it was condemned by local IT companies.
Chris Watts, who owns Fourtiers, a Swindon based IT firm, has lambasted the council’s moves, questioning what due diligence was taken in the lead-up to taxpayers’ money being spent.
He said: “The council didn’t seek advice from any business experts or independent consultants to see if this was a wise decision.
“It appears the only people involved in this are a few councillors, and the businessmen who could make a huge gains from this.
“They’re hiding behind a wall of commercial confidentiality, however it’s standard practice to sign non-disclosure agreements in order to find out if the investment it sound – especially if like the council they have no experience.”
The 42-year-old said he would expect experts to question whether investing the money in a company that hopes to compete with giants like Sky, Virgin and BT was wise.
He added that experts would have ensured a number of details would be looked into – including how many people in town are signed up to Sky, something Coun Bluh has failed to disclose whether he knows or not.
He added: “Why is the council investing Swindon taxpayers’ money into an out-of-town firm – which has yet to file its first year accounts?
“From a legal aspect I would want to know whether the council has given a unfair advantage to Digital City UK, by gifting them free offices, permission to put up transmitters, nation and worldwide publicity, access into everyone’s homes, and half a million worth of investment to boot.
“I know many people who would love to put up boxes – but I clearly can’t without council permission – the market in Swindon is now skewed.”
Councillor Junab Ali (Lab, Central) has now officially referred the issue to the Audit Commission.
Councillor Rod Bluh's response
Rod Bluh, Swindon Borough Council leader, said: “I am disappointed and surprised that the Federation of Small Businesses has not embraced this scheme, especially as it will bring great benefits to residents and businesses alike.
“Digital City has its registered office in Swindon and has already used one Swindon firm to help install equipment. Digital City is in active discussions with another Swindon company to provide long term business support and is talking with other local firms about different services.
“Talks are also ongoing with a young local entrepreneur who is coming up with a fantastic application that can be used on the network and it is envisaged that many of the 50 to 100 applications provided by the project will be developed by local businesses.
“As I outlined in scrutiny, this is not business as usual. Local authorities are going to be forced to make commercial decisions to maintain their budgets.
“The money invested in Digital City cannot be used to plug a gap in our budget or operating services, it forms part of a sum we would normally invest in order to get a better return for the council. The money investment in Digital City is in the form of a loan repayable with commercial rates of interest.
“As for whether due diligence was followed, of course we looked at the risks and exposure of the investment. There is absolutely no requirement for us to seek third party independent advice. We have successfully concluded many multi-million deals and transactions and, as a result, have built up a high level of legal, commercial and technical expertise. In fact, many other local authorities and public bodies actually come to us for advice. So in light of these deals £450,000 is very small and we did not see the need to pay consultants to advise us on this. Our financial management of the council has put us as the third best unitary in the country.
“We have never had a previous Wi-Fi partner. We have been looking at providing free Wi-Fi for the last three years as part of ‘Swindon’s Digital Challenge Proposal’ and it is only recently we have been approached by Digital City UK who had a technical partnership with aQovia. They came to us because they wanted to set up services to sell in Swindon and we invested in them, so we have not disadvantaged any other businesses in Swindon.
“Let us be clear on one thing, this is a huge opportunity for Swindon. Not only are there real benefits in terms of social inclusion, but our town has received global publicity because of this project. Swindon has been beamed out to Russia and China and we expect our economy to benefit from this exposure.
“Any companies that do feel they can support the project should send an email to email@example.com.”