Freed hacker faces strict measures

24 June 2013 Last updated at 09:40 ET By Dave Lee Technology reporter, BBC News

A convicted hacker who was detained in a young offender institution has been released - but will now face strict limitations on his technology use.

Jake Davis, 20, was convicted of computer hacking for his role in the notorious group LulzSec.

He cannot contact anyone who associates themselves with the wider Anonymous hacktivist collective.

He told the BBC he planned to release a prison diary and to write a film about the internet.

Davis returned to Twitter on 22 June after finishing his 37-day term at Feltham young offender institution.

During that time he penned what he described as a "nerdy" diary, written using pen and paper, which he hopes to publish online once it has been subjected to legal checks.

He is forbidden from creating encrypted files, securely wiping any data or deleting his internet history.

In June 2012 he pleaded guilty to being part of LulzSec, an offshoot of Anonymous famed for attacking several high profile sites including Sony Pictures and the UK's Serious Organised Crime Agency.

Shortly after being released, he tweeted: "654 days on curfew and 37 days in Feltham. Up next: Another 365 days on licence (parole) and 1,825 days of intense monitoring. Free though!"

He had been sentenced to 24 months - but he had been wearing an electronic tag for 21 months which counted against his term.

Licking elbows

Davis is now based in Islington, north London, where he said he was working on a number of projects.

He said he had begun an unspecified project with contemporary art firm Artangel - the company told the BBC it had had "several exploratory chats with Jake over the past six months", but would not go into further detail.

Longer term, he told the BBC he would write a fictional film about the internet, working with production company Fly Film, who could not be reached for comment on Monday.

Publically on Twitter, he has been sharing anecdotes about his time inside.

In one post, he wrote: "I was sacked as a prison cleaner for mopping too near a computer. Those deadly, soapy mops are a serious threat to GCHQ, make no mistake!"

Continue reading the main story

In May, several hackers were sentenced at Southwark Crown Court, London. They were:

• Jake Davis (aka Topiary) - 24 months in a young offender institution, of which he served 37 days. He had been wearing an electronic tag for 21 months which counted against his sentence
• Ryan Ackroyd (aka Kayla) - 30 month custodial sentence, of which he is expected to serve half
• Mustafa al-Bassam (aka Tflow) - 20 month sentence, suspended for two years, plus 300 hours of unpaid work
• Ryan Cleary (aka Viral) - 32 month sentence. Cleary was not a core member of Lulzsec.

As alter ego Topiary, Davis's last tweet before his arrest in July 2011 read: "You cannot arrest an idea."

On Sunday, in a nod to that sign off, Davis joked: "You can arrest an idea, you can imprison an idea, you can warp an idea, you can break an idea, but you still can't lick your own elbow."

While he wishes to distance himself from the hacking world, he has pledged support to Edward Snowden, the former US intelligence contractor who leaked secret documents regarding the monitoring of internet users.

At the time of Davis's sentencing, prosecutors said the actions of the LulzSec group had been "cowardly and vindictive".

"The harm they caused was foreseeable, extensive and intended," said Andrew Hadik, a lawyer for the Crown Prosecution Service. "Indeed, they boasted of how clever they were with a complete disregard for the impact their actions had on real people's lives."

He added: "This case should serve as a warning to other cybercriminals that they are not invincible."

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Cyber attack hits S Korea websites

25 June 2013 Last updated at 02:42 ET

South Korea has issued a cyber alert after an apparent hacking attack on government websites.

The website of the presidential office was one of several official and media sites hit by an apparently co-ordinated attack on Tuesday morning, reports said.

The identity of the hackers was not known, a government statement said.

The incident came on the anniversary of the start of the 1950-53 Korean War, which divided the Korean peninsula.

"The government can confirm a cyber attack by unidentified hackers that shut down several sites including the Blue House," the Science Ministry said in a statement, referring to the presidential office.

The website for the office for Government Policy Co-ordination and some media servers were also said to be affected by the attack.

'Anonymous messages'

Messages praising North Korean leader Kim Jong-un and claiming that hacking collective Anonymous was responsible were left on the hacked websites.

However, Anonymous denied any involvement in the South Korean cyber-attacks on its official Twitter account, AFP news agency reported.

Instead, the "hacktivist" group was said to have planned attacks against North Korean websites.

A number of North Korean websites went offline on Tuesday morning and appeared to have been targeted by hackers on Tuesday, South Korea's Yonhap news agency reported, citing unnamed sources.

These included the websites of North Korea's Korean Central News Agency, newspaper Rodong Sinmun, and portal Naenara.

Anonymous has previously claimed to have hacked and vandalised social networking profiles linked to North Korea as part of its Operation Free Korea.

South Korea has raised its cyber-alert level, and asked citizens to review their internet security, the BBC's Lucy Williamson in Seoul reports.

South Korean investigators say North Korea has frequently carried out cyber attacks in the South, our correspondent adds.

On 20 March, cyber attacks on six South Korean banks and broadcasters affected 32,000 computers and disrupted banking services.

South Korea has blamed that incident - which came at a time of heightened tensions between the two Koreas following Pyongyang's nuclear test on 12 February - on North Korea.

North Korea has also been blamed for previous cyber attacks in 2009 and 2011.

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Sony launches waterproof giant phone

25 June 2013 Last updated at 05:03 ET By Leo Kelion Technology reporter

Sony has announced a waterproof Android smartphone with a 6.4in screen (16.3cm).

The firm is pitching the Xperia Z Ultra as being the slimmest large-screened handset on the market.

It can also accept sketches or notes written using a standard pencil or metal-tipped pen in addition to an optional stylus.

The firm says it intends for the device to challenge Samsung's dominance of the jumbo-sized handset sector.

According to a study by consultants Transparency Market Research, Samsung accounted for 70% of the overall "superphone and phablet" market in 2012 thanks to the popularity of models including the Galaxy S3 and Galaxy Note 2.

Earlier this year, it added the Galaxy S4 and Galaxy Mega - a 6.3in-screened handset - to its line-up.

Sony already offers a 5in handset of its own, the original Xperia Z, which it unveiled in January.

The Ultra follow-up was unveiled at the Mobile Asia Expo in Shanghai. The new device will go on sale in China, Indonesia and Singapore in July and August, and then in Europe from September.

"Southeast Asia is the key market for the product because the trend towards large-screened smartphone devices is stronger there," Calum MacDougall, director of Xperia marketing, told the BBC.

"But we also see the trend in Europe as well.

"In the large-screen segment at the moment most consumers are looking at the Galaxy Note. Now we can offer something that is really distinct: a stronger screen, greater portability, waterproofing and something different around the stylus and the pen."

Sony is not alone in seeking to erode Samsung's lead.

Over recent months Huawei has announced the the 6.1in Ascend Mate; ZTE the 5.7in Grand Memo; Acer the 5.7in Liquid S1; Asus the 6in FonePad Note; and Lenovo the 5.5in Ideaphone K900.

Mr MacDougall said Sony intended to compete against these by promoting the Xperia Z Ultra's "premium" features rather than trying to match or undercut the Chinese and Taiwanese firms' prices.

The Japanese firm reported its first annual profit in five years in May, but some analysts said its figures were skewed by asset sales and did not reflect a turnaround for its electronics divisions.

Headphone flap-free

The Xperia Z Ultra is 6.5mm (0.26in) thick - only slightly deeper than the thinnest device on the market, Huawei's Ascend P6.

Unlike the original Xperia Z the new phone does not need a flap over its headphone socket to protect it from water damage, addressing complaints the feature was fiddly to use.

It can also be submerged to a deeper limit - 1.5m (4.9ft) in freshwater for up to half an hour.

The device also features:

• A 1080p resolution screen with in-built software to upgrade lower definition videos and photos
• 16 gigabytes of internal storage with support for 64GB microSD cards
• An 8 megapixel rear camera
• A battery offering up to 11 hours talk time or 120 hours of audio playback - a figure which Sony claims is a record

Those concerned about using such a big device for quick tasks are also offered an optional bluetooth add-on which can be paired to the handset using NFC (near field communication) to make calls, view text messages or stream music.

The accessory is similar to the HTC's Mini accessory announced in January for its 5in Butterfly handset.

Transparency Market Research said that over 150 million Android super-sized phones were sold in 2012 and predicted the market would grow to 400 million by 2018.

Another consultancy firm, Frost & Sullivan, agrees that demand for such devices appears to be robust despite the fact many users would struggle to use them unless they had both hands free.

"For many people in developing parts the phablet is their first communications and computing device and allows them to have a single machine rather than multiple ones," the firm's managing director Manoj Menon told the BBC.

"But going forward companies are going to find it increasingly hard to differentiate between their products on size - it will have to be on software and other features. So, Sony seems to have the right strategy at this time."

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Google not obliged to delete data

25 June 2013 Last updated at 09:27 ET

Google cannot be obliged to delete sensitive information from its search index, a key adviser to the European Court of Justice has said.

It follows a Spanish case which challenged Google to remove outdated financial details about an individual.

The opinion of advocate general Niilo Jaaskinen could influence a wider EU debate over whether people have "the right to be forgotten".

Privacy campaigners believe individuals should have greater control over data.

No controller

The specific case Mr Jaaskinen was considering goes back to November 2009 when a Spanish man complained about links on Google to an e-newspaper report detailing how debts had led to his house being repossessed.

He argued that, as the report was 10 years old, the links were no longer relevant and should be removed. He failed to get the original article removed because it was deemed to be in the public interest.

He lodged a complaint with the Spanish Data Protection Agency who upheld it.

The case later moved the European Court of Justice.

In his written opinion on the case, Mr Jaaskinen took the view that Google was "not generally to be considered as a controller of the personal data appearing on web pages it processes".

"Therefore, a national data protection authority cannot require an internet search engine provider to withdraw information from its index," he wrote.

He added that this meant users would not be able to invoke "a general right to be forgotten... against search engine service providers".

The court is not bound by Mr Jaaskinen's opinion although generally such recommendations are followed.

A final judgement on the case is expected before the end of the year.

Erasing profiles

Continue reading the main story

It's important that citizens have better rights when it comes to stopping companies collecting data without proper consent or holding on to information for an unjustifiable length of time, even when people have ceased to use a service"

End Quote Nick Pickles Director, Big Brother Watch

The case will be seen as a test of "the right to be forgotten" strand of the Data Protection Regulation, which is currently being debated by the European Parliament.

The EU is planning updates for the Data Protection directive, which was originally adopted in 1995 when the internet was in its infancy.

The right to be forgotten clause, which has the support of EU Justice Commissioner Viviane Reding, was developed in response to complaints about the way search engines and social media firms handle information.

Increasingly users are concerned about a range of issues - from difficulties erasing social media accounts, to lack of control of photographs published by others.

Google welcomed the views of Mr Jaaskinen.

Bill Echikson, head of free expression at Google, said: "This is a good opinion for free expression. We're glad to see it supports our long-held view that requiring search engines to suppress 'legitimate and legal information' would amount to censorship."

But Big Brother Watch said that that making a connection between this particular case and the rights of citizens to delete data was "absurd".

"The right to be forgotten was never intended to be a way for people to rewrite history," said director Nick Pickles.

"The whole point was to allow people to tackle information at source and Google was not the source of this information - a Spanish newspaper was.

"A better example of why it is needed would be when someone wants to close a Facebook account. Facebook shouldn't be able to hold on to our information just in case you want to re-join," he added.

"It's important that citizens have better rights when it comes to stopping companies collecting data without proper consent or holding on to information for an unjustifiable length of time, even when people have ceased to use a service."

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Councils 'yet to get' broadband cash

25 June 2013 Last updated at 13:38 ET By Ross Hawkins Political correspondent

A survey of English councils that are commissioning high-speed broadband access in rural areas has found many have yet to receive their share of a half billion pound government fund.

Only two of the respondents said they had been given any money by this March.

The government has allocated £530m to help meet its aim of delivering broadband to virtually all of the country by the next election in 2015.

But a survey of councils found that just over £3m had been transferred.

The Countryside Alliance submitted Freedom of Information requests to every English local authority and received responses from all but six of the groups of councils responsible for delivering rural broadband.

"We feel that the government have been talking the right game and we welcome the money but the action and support for local authorities and the delivery of local authorities has been very limited," said the Alliance's Sarah Lee.

'Confident'

A Department for Culture Media and Sport (DCMS) spokesman said: "Following procurement, we are at the beginning of the nationwide delivery stage, so it is to be expected that most local authorities are not at the stage where they would have claimed the money allocated to them.

"Work is underway in sites across the country and we are confident the vast majority of projects will be completed by 2015."

But the DCMS is understood to be considering a shake-up of the project.

Asked about the future of the government body in charge of the scheme - Broadband Delivery UK (BDUK) - a government source said "all options are on the table".

No decisions have been taken, but some within the DCMS are questioning whether civil servants - who it is feared lack "commercial nous" - are best placed to conclude the project.

Reports in the FT and the Daily Telegraph have suggested BDUK could be spun off as a private company. The DCMS is bidding for extra capital funding in the current spending review.

Culture Secretary Maria Miller commissioned an internal report on the project at the start of the year and another report, said to be critical, is due to be published by the National Audit Office shortly.

The Treasury minister Lord Deighton, who was the chief executive of the Olympics body LOCOG, is also examining the scheme.

In Wales, Northern Ireland and Scotland, administration of the projects is undertaken by the devolved administrations.

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UK electric car breaks speed record

25 June 2013 Last updated at 16:33 ET By Leo Kelion Technology reporter

Drayson Racing Technologies has broken the world land speed record for a lightweight electric car.

Its Lola B12 69/EV vehicle hit a top speed of 204.2mph (328.6km/h) at a racetrack at RAF Elvington in Yorkshire.

Chief executive Lord Drayson, who was behind the wheel, said the achievement was designed to highlight electronic vehicle technology's potential.

The previous 175mph record was set by Battery Box General Electric in 1974.

Drayson Racing is not the only electric vehicle-maker hoping to use motorsport to spur on adoption of the technology.

Last week Nissan unveiled the Zeod RC (Zero Emission On Demand Racing Car), which can switch between electric and petrol power.

The firm intends to enter the vehicle into next year's Le Mans 24 race saying the competition would act as a "challenging test bed" for technologies that could eventually find their way into road cars.

Recycled chassis

Drayson Racing was founded in 2007 by self-declared "car nut" Paul Drayson, who was then a minister in the Labour government.

The firm, based in Kidlington, Oxfordshire, works with others to develop more sustainable automotive technologies and uses motorsport competitions as a means to focus its efforts.

In order to qualify for an attempt on the Federation Internationale de l'Automobile's (FIA) world electric land speed record it had to make its vehicle weigh less than 1,000kg (2,204lb) without the driver.

To do this it adapted a Le Mans Series car it had previously designed which originally had a bio-ethanol fuel engine and replaced the part with a lightweight 20 kilowatt hour battery offering 850 horsepower.

It also adapted the vehicle's chassis, which is made out of recycled carbon fibre, to minimise air friction.

"What it, I hope, shows to people is just what the future potential of electric cars is," Lord Drayson told the BBC shortly after his record-breaking time was confirmed.

"Obviously this is a very special racing car, but by setting this new world record here in Britain we say two things.

"One it is a pointer to the future - the technology that we developed for this car will filter down to the cars we use every day.

"And secondly it's a message about how here in the UK we're a world leader with this technology. We've led motorsport engineering, now we're also leading with electric motorsport engineering."

Google's chairman Eric Schmidt spent two hours at the race track watching practice runs but was not able to stay for the record-setting drive.

"Google has a very active R&D programme with regard to electric vehicle technology so it's great that one of the world's leading technology companies came to our event today," Lord Drayson added.

"It was lovely meeting him."

Formula E

Drayson Racing's attention will now switch to the launch of the FIA's Formula E championship, which is due to begin in September next year.

London will host the first electric car race. Rome, Miami, Beijing and Rio de Janeiro are among the other seven locations.

A different vehicle - similar to a Formula One machine - is being developed for the firm by Singapore's Spark and Surrey-based McLaren for the first year of the competition.

However, Drayson Racing plans to build its own machine for the 2015 competition using some of the same components used in its record breaking Lola B12 69/EV.

One analyst said such such efforts were an excellent way to promote electric cars, but questioned how many of the technologies being developed would actually find their way onto the road.

"I think that any kind of competition-led design will have spin-offs - it might be that electric motors become more efficient," said Paul Newton, auto analyst at IHS Global Insight.

"The problem is that making an electric car go faster is relatively straightforward.

"Making it go further and become more practical is infinitely more difficult, and that's down to the basic physics of how batteries store energy and release it."

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US-UK intelligence-sharing 'vital'

26 June 2013 Last updated at 00:14 ET

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William Hague: "Intelligence work takes place within a strong legal framework"

Britain and the US should have "nothing but pride" in their "indispensable intelligence-sharing relationship", the UK foreign secretary has said.

William Hague, speaking in Los Angeles, acknowledged recent controversy over intelligence gathering by the UK's GCHQ and the US National Security Agency.

But he said the nations operated "under the rule of law" and used information only to protect citizens' freedoms.

Mr Hague also praised the transatlantic "special relationship" as "solid".

In recent weeks there has been concern about the monitoring activities of GCHQ, the UK's eavesdropping centre.

Continue reading the main story

In some countries secret intelligence is used to control their people. In ours, it only exists to protect their freedoms"

End Quote William Hague Foreign Secretary

'Strong legal framework'

It accessed information about UK citizens from the US National Security Agency's monitoring programme, Prism, documents leaked by American whistleblower Edward Snowden suggest.

He remains wanted for questioning by US authorities, but is currently in the transit area at Moscow airport.

GCHQ has insisted it is "scrupulous" in complying with the law.

"We should have nothing but pride in the unique and indispensable intelligence-sharing relationship between Britain and the United States," Mr Hague said in his speech at the Ronald Reagan Library.

"In recent weeks this has been a subject of some discussion.

"Let us be clear about it. In both our countries, intelligence work takes place within a strong legal framework.

'Special relationship'

"We operate under the rule of law and are accountable for it. In some countries secret intelligence is used to control their people. In ours, it only exists to protect their freedoms."

Mr Hague also sought to portray the UK coalition government's policies as an ideological continuation of those espoused by Prime Minister Margaret Thatcher in the 1980s.

He said: "Not all countries are willing to exert themselves to defend the freedoms they enjoy, but in the United Kingdom and United States of America we are.

"There is no greater bastion of freedom than the transatlantic alliance, and within it the special relationship, always solid but never slavish."

Mr Hague added: "Some say it is not possible to build up our countries' ties in other parts of the world without weakening those between us. But I say these things go together.

'Win over global opinion'

"The stronger our relationships are elsewhere in the world, the more we can do to support each other and our allies."

On broader policy, Mr Hague said: "We do not need to accept sleepwalking into decline any more than Reagan and Thatcher did before us.

"We have centuries of experience in building up democratic institutions, from our courts to our free media, that other countries wish to draw on and adapt, from Burma to North Africa.

"We have the soft power and cultural appeal to attract and influence others and win over global opinion."

Mr Hague went on: "We have not yet exhausted all the means of building up and extending our influence. It is not so much the relative size of our power that matters in the 21st Century, but the nature of it, and how agile and effective we can be in exerting it."

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BitTorrent hits back at piracy claim

By Jim Taylor
Newsbeat reporter Game of Thrones is the most pirated show on BitTorrent

The file-sharing company BitTorrent has hit back at claims of piracy saying it "doesn't host infringing content".

It is after the series finale of Game of Thrones, shown on Sky Atlantic in the UK, was reported to have been the most popular illegal torrent ever.

The final episode of the third season of HBO's fantasy drama was reportedly downloaded a million times in 24 hours.

Continue reading the main story

To pirate stuff, you need more than a protocol. You need search, a pirate content site and a content manager. We offer none of those things

Matt Mason BitTorrent's vice president of marketing

BitTorrent is a technology used to share large amounts of data between many users.

Torrent files are often used to download pirated music, movies, and games but the company responsible for the technology says it wants to focus on promoting legal content.

In a blog post on BitTorrent's website, vice president of marketing Matt Mason wrote: "We don't host infringing content. We don't point to it.

"It's literally impossible to illegally download something on BitTorrent.

"To pirate stuff, you need more than a protocol. You need search, a pirate content site and a content manager. We offer none of those things.

"If you're using BitTorrent for piracy, you're doing it wrong."

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Game of Thrones cast on web piracy

The website TorrentFreak recently claimed there were more than 170,000 simultaneous peers sharing one Game of Thrones file.

But Mason said the most popular torrent was actually a legally distributed show called Epic Meal Time.

In April, HBO programming president Michael Lombardo told Entertainment Weekly that the piracy of Game of Thrones was a "compliment of sorts".

He said: "The demand is there. And it certainly didn't negatively impact the DVD sales. [Piracy is] something that comes along with having a wildly successful show on a subscription network."

BitTorrent's post ended with a plea to fans to watch the show legally.

Follow @BBCNewsbeat on Twitter

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BA to relax mobile phone rules

26 June 2013 Last updated at 08:22 ET

British Airways is to become the first European airline to let passengers switch on their mobile phones and other devices just after landing.

From 1 July, once an aircraft has got off the runway people can power up their electronics, rather than having to wait until it has stopped.

The Civil Aviation Authority (CAA) has said it is satisfied there are no safety implications.

Airlines from other countries have allowed similar rules for some time.

Passengers have generally been forbidden from using their electronic devices on planes owing to fears of interference, especially when taking off and landing.

BA's new rules will allow mobiles to be switched on and used as soon as the aircraft is off the runway.

"Customers will no longer have the frustration of having to wait until their plane has arrived at the terminal building before being able to use their mobile phones and other handheld electronic devices," said Ian Pringle, BA flight training manager.

"Now they'll have that extra time to phone ahead for that important business meeting, check their emails, or make sure someone is there to meet them at the airport."

The rules will not affect restrictions during take-off, however, where devices will still have to be switched off until the plane reaches 10,000ft (3,050m).

Minimal interference

The change, which will apply to BA flights landing anywhere in the world, is in response to feedback from customers, the airline said.

The Federal Aviation Administration (FAA), the equivalent of the CAA in the United States, has also been looking at allowing wider use of personal electronics on flights.

A draft proposal published last week said existing rules, first drawn up in 1966, had become "untenable" in an age of modern technology and communication.

Several studies later, the FAA has agreed to change guidelines, but is still debating to what degree.

The FAA agreed with experts that advances in technology, both in aviation and consumer electronics, mean any threat of interference is either minimal or non-existent.

But there is greater concern about take-off and landing, with authorities keen both to ensure aircraft equipment is not interfered with and that passengers are not overly distracted at "critical" moments.

It is likely that pressure on aviation authorities worldwide to relax rules has been driven by a major revenue opportunity for airlines.

Technology exists, and is in limited use, for passengers to use wi-fi internet and to make calls at high altitude, usually at premium rates.

Any change in policy would be welcome news for Alec Baldwin, the actor. In December 2011, he was kicked off an American Airlines flight before take-off after refusing to stop playing the popular Scrabble-like game Words With Friends.

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UK broadband voucher scheme attacked

26 June 2013 Last updated at 10:27 ET By Leo Kelion Technology reporter

The government has been accused of "scaling back" a plan to boost urban internet speeds, after it said most of the cash might be spent on vouchers.

The Independent Networks Co-operative Association said the scheme had now been "watered down" as a consequence.

But the government said the public would still benefit from new wi-fi hotspots and other efforts.

The news follows a legal challenge by BT and Virgin Media to Birmingham's plan to fund a new fibre-optic network.

Meanwhile it has emerged that, as of March, many councils in England had yet to receive funds from a separate pot of money announced two years ago, which was supposed to be spent on rural projects.

Former Culture Secretary Jeremy Hunt said last September the UK would have "not just the best, but specifically the fastest broadband of any major European country by 2015".

And on Wednesday a spokesman for the Department of Culture Media and Sport (DCMS) said it still had the same ambition.

"The voucher scheme is only one element of the super-connected cities programme, and certainly does not represent a scaling down," he said.

"The Urban Broadband Fund will be invested in a range of high-speed broadband projects that enhance business connectivity, drive economic growth and improve wireless coverage."

Ultra-fast internet

A total of £150m has been pledged to boost broadband speeds in 22 cities: London, Edinburgh, Cardiff, Belfast, Birmingham, Bradford, Brighton, Hove, Cambridge, Coventry, Derby, Leeds, Oxford, Portsmouth, Salford, York, Newcastle, Manchester, Newport, Aberdeen, Perth and Londonderry.

When the plan was first announced in 2012, the government said it hoped to provide "ultra-fast broadband" coverage to 1.7 million households and 200,000 businesses in high-growth areas, as well as high-speed wireless broadband to three million residents.

Ultra-fast broadband was defined as connections with a minimum download speed of 80 Mbps.

While the wireless side of the plan remains unchanged, a new consultation document suggests the "primary focus" of the other part is now to offer up to £90m of vouchers to subsidise the cost of businesses installing 30+Mbps broadband connections.

The offer would be limited to companies with fewer than 250 employees and turnover of no more than £37m.

Rule change

The move follows a legal challenge brought by BT and Virgin Media in October against Birmingham City Council's plan to build a 100+Mbps network to serve parts of the city.

Birmingham had been one of the first places to have its proposal for how to use cash provided by the super-connected cities scheme approved by the European Commission.

BT and Virgin Media argued that new network would pose unfair competition to their own projects in the area and objected to the fact they had been barred from bidding for the work.

The European Commission subsequently revised its state aid guidelines. As a consequence of the change the DCMS believed there would be delays to getting other cities' proposals approved and that some could even be blocked. As a result, it said it had decided to overhaul its plans.

Culture Minister Ed Vaizey, said the system was now designed to "generate maximum competition" among internet service providers (ISPs)

Virgin Media welcomed the news.

"Where companies are already investing in world-class connections, government has recognised public money should not be used to build more networks," it said.

BT said: "The government's voucher scheme for super-connected cities is being pursued as a practical means of contributing state funds to the deployment of fibre infrastructure in unserved parts of the participating cities."

But a group representing other internet firms and local authorities voiced its disappointment.

"It is a pity that the original government plans have been so watered down," said Malcolm Corbett, chief executive of the Independent Networks Co-operative Association.

"What started as a big ambition to create 'gigabit districts' in our cities with high capacity, low-cost digital networks to support growth in the creative and digital sectors, has become a scheme to help small businesses pay for a BT connection.

"The voucher scheme could be useful, but it will not create the sort of transformational digital infrastructure that ministers and the cities wanted and that our economy needs."

The DCMS said money not spent on vouchers would be used to provide wi-fi hot spots in public buildings such as libraries, museums and on selected public transport, and investment in regional tech clusters, enterprise zones and business parks.

It indicated it would have more to say about the scheme on Thursday.

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