Archive for July 2013
SMEs keen to take advantage of up to £3,000 of the taxpayers’ largesse have until 2pm on Thursday to register to receive a superconnected city voucher that they can spend with an approved supplier to get connected at >30Mbps.
Letters inviting applications for vouchers and for suppliers went out on Tuesday. The government hopes to decide over the weekend and to have shovels hitting the ground on Monday 5 August.
The initial phase covers only Belfast, Cardiff, Edinburgh and Manchester/Salford, and runs from August to September. The literature says there is no bias for or against fixed or wireless solutions, merely that there should be a step-change in the speeds.
Amid the Roman circus atmosphere of the Public Accounts Committee meeting to question various stakeholders over the National Audit Office’s report on the value, if any, for money that taxpayers will get for giving BT £1.2bn to roll out next generation broadband in the Final Third of the UK, it was easy to forget what fast broadband means to people.
This past week B4RN co-founder Chris Conder was teaching her 14 year old nephew how to fuse fibre. They were working on a council home in rural Lancashire, chatting with the homeowner who was partially deaf but helped by a large hearing aid, and his wife, who didn’t say a word but smiled indulgently as the work went on.
At some point the wife disappeared and their son, in his mid-20s, joined the three in the front room. In the course of the conversation the son and Conder’s nephew discovered they were both avid gamers. Further chat revealed that the son had a new job that meant he would be away from home most of the week. He was anxious to get the high speed connection in because their BT connection couldn’t support Skype, and BT had no plans to improve their service.
Why was Skype so important?
Because the mother had been deaf since birth and could only type and sign. Her husband could speak but couldn’t type. Skype video was the only way for them both to stay in touch with their son while he was away.
“When we went back the next day to check, he was installing a great big monitor,” Conder said.
Monday’s meeting between culture secretary Maria Miller and representatives from BT, BDUK and would-be network operators in the Final 10% (altnets) failed to produce concrete evidence of the government’s willingness to engage with the issues that bedevil the roll-out of a true value for money next generation broadband network in the UK.
The official statement reads:
This was a constructive meeting between the Secretary of State, BT and the most advanced community-led rural broadband schemes. It was agreed that all parties would work together, along with local authorities, to ensure that projects applying for the Rural Community Broadband Fund could co-exist happily alongside the wider rural broadband scheme, being led by BT.
The Government is clear that there is a range of options for the delivery of superfast broadband to the hardest parts to reach of the UK. The recently announced £250 million extra funding will ensure that superfast broadband can reach 95 per cent of premises by 2017.
BT declined to add anything from its side, while INCA (Independent Networks Co-operative Association) executive director Malcolm Corbett was emollient in his response. : “It’s clear that Maria Miller wants to see the RCBF projects go ahead,” he said.
In the meeting, Miller may have had BT’s Liv Garfield and Bill Murphy on the back foot, but their defence was worthy of Geoffrey Boycott because the meeting failed to agree:
- whether the altnets have access to the £250m
- when the RCBF money will be released to the six altnets
- the speed, coverage and timing details of BT’s roll-out in the areas the altnets propose to cover
- a guarantee that BT will not be allowed to overbuild the altnets
- what BT will do to improve NGA access to business parks and other business clusters
In short, the meeting allowed those in the room to air their frustrations and Miller to save some face in the wake of the highly critical NAO, Pennell, and National Projects reports. The Public Accounts Committee meets today to discuss the NAO report.
This is not to say that the above details won’t emerge in the fullness of time. However, the government has already granted itself a two year extension of delivering “the best broadband network in Europe by 2015”.
There is growing evidence that BT is using the same fear, uncertainty and doubt (FUD) tactics it employed in 2003 to disrupt the efforts of altnets to establish themselves: unfulfilled promises to deliver services, visits to local councillors, delays in releasing speed and coverage details, counter-proposals once demand has been established in an area, etc. This may be acceptable if the market is competitive; but Ofcom has found it is not, and the NAO has said the BDUK money will entrench BT’s monopoly.
Miller needs to ask whether the cost to the nation of BT’s behaviour is acceptable, and to act accordingly.
If tomorrow’s meeting to get a grip on the provision of next generation broadband access (NGA) in the “Final 10%” is not to produce a damp squib, the government needs to commit itself to true competition in telecoms market.
Culture minister Maria Miller called the meeting between her, communications minister Ed Vaizey, and representatives from BT, BDUK and six would-be alternative network operators (altnets) who are looking for money from the Rural Community Broadband Fund (RCBF) in the wake of the highly critical National Audit Office report into value for money from the rural broadband process overseen by BDUK.
Some of the six altnets have been waiting more than a year because the fund won’t release the money until it knows for sure that the areas the altnets plan to cover won’t be over-built by BT’s BDUK-funded roll-out.
BT claims commercial confidentiality in the terms and conditions of its contracts with local councils, especially the speed and coverage details of its roll-out, Besides, they are subject to change following a survey of its local assets, it claims.
BT may claim, but the claim does not stand up. In the appeal of Derry vs the Information Commissioner, the Information Tribunal “upheld the ICO view that a written agreement between two parties did not constitute information provided by one of them to the other, and that therefore, a concluded contract between a public authority and a third party does not fall within section 41(1)(a) of the (Freedom of Information) Act.”
S41 is the bit about commercial confidentiality.
The tribunal went on to say, “We are aware that the effect of our conclusion is that the whole of any contract with a public authority may be available to the public, no matter how confidential the content or how clearly expressed the confidentiality provisions incorporated in it, unless another exemption applies.” (Emphasis mine.)
It also noted that depending on the circumstances, some information obtained from a third party may count as confidential. This was information regarding a pre-contractual negotiating position, and “technical information” either contained within the body of a contract or provided as a separate schedule.
Regarding prior negotiating positions: as noted by reader Mike Phillips, the councils last year ran their open market consultations to identify the so-called ‘white areas’, i.e. locations that require subsidy as well as the ‘no-build’ areas that BT would not consider for three years.
It is not clear why BT should be granted the latitude of service delivery promises being “subject to survey” when it is not available to other suppliers, nor that end users should be denied a higher degree of certainty about where, when and what kind of service they might receive from BT.
BT and the local authorities with whom it has contracts might like to argue that the speed and coverage templates (SCTs) falls into the “technical information” category.
BT is not using secret technology to fulfill its BDUK contracts . It is hard to see why it should keep the SCT secret. However, it does stop altnets from identifying and working in the remaining white areas. This cannot in the public interest, and one could argue that for local authorities to think and act otherwise would be in dereliction of their fiduciary duties.
Having sought and received legal opinion on publishing the SCT details, it is inconceivable that BDUK is not aware of these issues. Moreover, in response to a Freedom of Information request, it has indicated that it expects the SCT details to come out in due course.
One need not wonder whether BT will defend its carefully-orchestrated position and resist the disclosure of SCTs. It has form. The FOI trail on Liverpool Direct (BT’s controversial joint venture with the Liverpool City Council) and here and here shows how hard it will fight (but lose) to keep its contracts secret.
Just who will fight BT’s corner has been subject to change. However, it was revealed on Friday that BT had dropped Sean Williams, its head of strategy, who spoke for the telco when the House of Lords was interested in broadband. BT will now be represented by Openreach CEO Liv Garfield and NGA roll-out boss Bill Murphy, who were the original choices.
Had Williams stayed on, Miller would be been within her rights to question his deal-making authority. This is because Ofcom has required BT to run Openreach “functionally separate” from its other operating companies, even though Williams admitted to the lords that Openreach contributes to and shares the same capital pool as the other BT operating companies.
Because of “functional separation” Williams would be have been hard-pressed to commit Openreach to anything. If he could, it would reveal functional separation as a myth and possibly expose Ofcom for improper application of its own regulation.
Whether this matters is moot. At the annual seminar of INCA, the Independent Networks Co-operative Association, last week, Frank Mather, the DG Connect official who looks after the UK broadband issues, said the European view was that Britain has forsaken competition for transparency as a way of regulating and achieving its broadband goals.
The NAO showed how successful that strategy has been with respect to the £1.2bn BDUK process. In fact, both MPs and civil service have done even worse trying to govern using transparency – the banking crisis, Libor, crime statistics, even MPs’ pay, to name some more serious incidents.
In a recent blog, the well-connected Philip Virgo paraphrases economist Michael Beesley’s insight that “it is impossible for officials or regulators to understand that cost bases of the industries they seek to plan or control. Therefore they should not try. They should instead focus on quality of service, price and barriers to competition (particularly those blocking innovative new entrants), leaving those regulated to work out how to exploit opportunities to make more money by using innovation to deliver better services at lower cost. ”
Part of Beesley’s heritage is due his exposure to the privatisation of British Telecom in the 1980s. In an obituary, Christopher Foster wrote of Beesley, “Sir Keith Joseph asked him to look into the possibility of liberalising British Telecom. Though not all his recommendations were accepted, he argued for more competition than the government was ready for (it would have been better if he had been listened to). Nonetheless, his views were influential on the form of that privatisation – and all subsequent privatisations, and their regulation.”
Beesley’s ideas were later incorporated in the monopoly price governing formula “Retail Price Index-x%”, which Ofcom modified to “Consumer Price Index-x%” in its latest proposals governing Openreach’s monopoly over wholesale broadband and landline services.
So what can Miller get from tomorrow’s meeting? Clearly BT must give her a bone to throw to the Public Accounts Committee, which meets to discuss the NAO report, to save her face. The (leaked) Pennell report that BDUK “lacks commercial nous” suggests she now has the power to bend her civil servants to her will or to ignore them.
Malcolm Corbett, INCA’s executive director, who will be at the meeting, says altnets will be seeking the following:
- that the six projects in the room get their money and protection against BT overbuilding them for a period
- that BT publishes its actual costs, ie invoices and payslips, for state-aided NGA roll-outs
- that Miller re-opens negotiations on Open Access with respect to BT (and other networks) poles and ducts and even fibre
- that the government allows the introduction of alternative models to gap funding and sources for future roll-outs. (The INCA seminar revealed that the only public money in Stockholm’s highly successful Stokab dark fibre to the premises network was SEK50,000 spent on the feasibility study; the rest came from government and bank loans and re-invested profits.)
One more thing Miller might get. The INCA meeting heard that there is apparently a consultants’ report doing the rounds in BDUK that cross-matches business premises against postcodes and BT’s NGA roll-out. The relationship is inversely proportional, ie the more densely businesses cluster the less likely they are to be passed by BT fibre. This is because BT doesn’t want to swop relatively lucrative leased lines for cheaper broadband connections.
There is plenty of evidence:
- the legal challenge to BDUK’s original Superconnected Cities project
- Virgo’s reportage of BT’s preference to build fibre to the home in sparsely-populated rural Lancashire in competition to B4RN rather than crowded EC1
- former BDUK-community linkman Mike Kiely’s frustrated attempts to get fibre into a Shoreditch co-op that houses 89 mainly high tech start-ups
- a new proposal from BT to Lorne Mitchell’s Goudhurst NGA project, just as they are about to award a contracts, among others.
If true, it shows two things. One is that BT responds only to competition. Secondly, it appears BT is sabotaging Miller’s efforts to build Britain’s economic renaissance on the networked creative, innovative, entrepreneurial sector. Four hundred years ago the heads of those responsible would have decorated London Bridge.
Br0kenTeleph0n3 has just learned that BT has dropped Sean Williams, BT’s head of strategy, who spoke for the telco when the House of Lords was interested in broadband, from tomorrow’s talks with culture secretary Maria Miller on how to roll out broadband in the Final 10%.
BT will now be represented by Openreach CEO Liv Garfield and NGA roll-out boss Bill Murphy. Both were the original choice but were dropped in favour of Williams.
To be continued.
It is sad but true that the National Audit Office’s investigation into the value for money from the BDUK Framework procurement has largely vindicated Br0kenTeleph0n3’s reportage over the past three years.
Fearing a repeat of the folly and waste that was the NHS’s National Programme for IT, we hoped that following the BDUK money would alert ministers and civil servants to the fact they were under scrutiny, and that they would be resolute in defending the public interest.
The NAO’s report shows, with understated clarity, that Br0kenTeleph0n3 failed to achieve that goal.
The NAO found that, despite ministers’ and civil servants’ best efforts, BT’s network will benefit from £1.2bn of taxpayers’ money, that BT’s monopoly outside the cities will be further entrenched, that there is no clear way here to assess value for taxpayers’ money, and that whatever BT delivers under the framework will be late and less than “the best broadband network in Europe” the nation was promised.
The NAO offered a number of recommendations and lessons learned, one of which was to benchmark prices to industry standards or a ‘should-cost’ model early in the process. This would inform the assessment of all supplier costs.
The Public Accounts Committee (PAC) will meet to discuss the NAO report on Wednesday. Even as the first drafts of the NAO’s report were doing the rounds in Whitehall, culture secretary Maria Miller moved to limit the damage.
Miller has summoned six would-be community network operators (altnets) from the “Final 10%” to meet BT and BDUK representatives to thrash out a potentially less embarrassing scenario than BDUK has proved. She hopes to offer that as a sop to the PAC.
The six altnets are bidding for money from the £20m Rural Community Broadband Fund (RCBF), which is available only to projects in the “Final 10%”. The amount is trivial in the next generation broadband accounts, and besides, the department of the environment, food and rural affairs (DEFRA) is putting up half.
BT has already said serving these areas, indeed the whole “Final Third”, is “uneconomic”; why then is it fighting so hard to keep out altnets? Why has it insisted that the speed and coverage details of its BDUK-funded roll-out are kept secret?
The official version is that BT’s roll-out is “subject to survey” i.e. it doesn’t know where its assets are or what condition they are in, and that therefore its plans may change. Such a change might result in BT overbuilding an altnet’s network, which is illegal under state aid rules. Better therefore not to risk BDUK money competing with RCBF money by stopping the altnets from building, at least until BT’s finished its bit.
Or, since altnets have to give BT an effective veto over their plans, to let BT cherry-pick the few villages and hamlets that might provide the altnets with a viable user base, and leave the “Final 2%” to the altnets and the satellite operators to mop up after 2017.
This is a seductive argument in terms of political risk. But what if Miller is more imaginative? These six altnets could be the true pilot projects that point the way to a different status quo for rural broadband.
More importantly, they could provide real benchmarks against which to measure BT’s performance. That alone could offer a real shot at extracting value for taxpayers, fulfill an NAO key lesson, and provide Miller a meaty bone for the PAC.
The government’s rural broadband programme will transfer £1.2bn to BT, finish two years late, and rely on civil servants to establish whether it has received value for money.
“The rural broadband project is moving forward late and without the benefit of strong competition to protect public value. For this we will have to rely on the department’s (culture media & sport – DCMS) active use of the controls it has negotiated and strong supervision by Ofcom,” said Amyas Morse, head of the National Audit Office.
The NAO has been investigating whether Broadband Delivery UK, the quango set up in DCMS, will deliver value for money.
It was expected to be critical; the Cabinet Office National Project report recently judged the BDUK project amber/red, meaning it is in danger of missing its targets. Few will have guessed how bad things are.
In the very baldest terms, the NAO said there is £1.2bn available to provide high speed (>24Mbps download) to areas outside BT’s commercial roll-out to two-thirds of the country. All of it will go to BT.
Central government’s contribution is £530m; the balance comes from local authorities’ budgets which are funded by the taxpayer, and BT. BT’s contribution will be 23%, way down on the 36% estimated in 2011.
There are 44 projects that call for 4.6 million houses to have access to ‘next generation’ broadband; BT has already won 26, and it has no competitors.
The original completion date for 90% of homes was May 2015. Last week DCMS increased the coverage target to 95%, and extended the deadline to 2017.
BT said in response, “BT’s fibre programme has been one of the most efficient in the world with the company going further and faster than industry experts thought possible. BT has applied these cost efficiencies to its BDUK work and so the company is delivering excellent value for money.”
It argues there was strong competition when prices were set at the start of the process. “That ensured counties have benefited from the best possible terms.
“Deploying fibre broadband is an expensive long-term business and so it no surprise that others dropped out as the going got tough,” it said.
On the specific claim that BT is likely to contribute 23% of the total funding or some £356m, BT said, “We would like to highlight we have committed more than £500m to date. With more than a third of the contracts yet to be signed, including a very large one in Scotland. We believe we will contribute around 38% of the total funds by the end of the programme, which is well above the 23% claimed in the report.”
Asked why, when the state aid issue delayed things for six months, the deadline is now two years later, BT said, “The timescales for when individual contracts are signed are out of our hands as these are dictated by the individual councils. Our commercial fibre roll out is at least 18 months ahead of schedule so we have proved we can roll out fibre at great pace.”
Few Br0kenTeleph0n3 readers will be surprised by the NAO’s findings. But some might be taken aback by the NAO’s plain-spoken statements of fact. It is rare, given that ‘superfast broadband’ has been such an iconic target for this government, and the vested interest in BT’s on-going attempts to rubbish criticism of the project, that the circumstances have been set out so plainly.
Indeed, the NAO has merely scratched the surface. It could have explored and said much more about why the BDUK Framework process attracted just two bidders from nine invited. These were BT and Fujitsu, which pulled out in March.
It could have said much more about the reasons for the six month delay before the European Commission swallowed its reservations and passed the Framework as fit for purpose. The commission spent weeks waiting for information from BDUK.
However, these would have placed responsibility squarely with individuals, and the tradition here is to apportion responsibility collectively, except in the most egregious circumstances.
That said, some people will have a chance to explain what they have been doing for the past three years. They include Colette Bowe and Ed Richardson, chairman and CEO respectively of Ofcom, the regulatory watchdog that became BT’s lapdog. They will face MPs on the culture, media and sport committee on Tuesday 9 July.
Next up on Monday 15 July are believed to be BT Openreach CEO Liv Garfield and Bill Murphy, MD of BT’s NGA project. They have been invited by culture secretary Maria Miller to face representatives from six alt-nets, including B4RN CEO Barry Forde, who are trying to get the go-ahead to build in the ‘Final 10%’ that BT won’t cover. The trouble is, BT won’t say what it’ll cover and when, leaving the alt-net vulnerable to state-funded competition from BT.
If that meeting agrees that BT is not allowed to overbuild where the alt-nets run, the alt-nets might say it was worth the trip.
Finally the Public Accounts Committee, chaired by Labour leader Margaret Hodge, is likely to want to explore why the Conservatives scrapped Labour’s plan for a national 50Mbps broadband network by 2013, funded by a 50p ‘broadband tax’ on fixed phone lines. But who shall be the victims? Will it be communications minister Ed Vaizey, who has presided over BDUK for the duration. What about BDUK head Rob Sullivan, or Matt Agar, who has been the lynchpin in the BDUK works? Or BT CEO Ian Livingston, who in September is destined for the lords and a job as investment minister at the department of business, innovation and skills? Or his successor, the former Procter & Gamble soap and nappy salesman Gavin Patterson?
Entertaining as such spectacles might be, there is serious work to be done. Ofcom’s role may be crucial. But it may need a shake up. It refuses to accept its decision to allow BT to refuse the use of its physical poles and ducts for third party leased lines had any effect on the BDUK process. Yet this was the main reason why everyone except BT and Fujitsu dropped out of the BDUK framework bid. Geo CEO Chris Smedley was particularly forthright in his comments.
Ofcom suggests he should have gone through proper channels rather than ‘have a slanging match’ in the press. Asked why, if it was aware of the problem BT’s terms and conditions for access to its physical infrastructure (PIA) were causing, it did not consult further, an Ofcom spokesman said it believed its feedback process was clear and transparent and should have been used.
The spokesman felt there may be “a new role” for PIA in future. This might also involve Active Line Access, a standard way for fibre carriers to connect that was developed but not enforced by Ofcom.
(There is more to be said about PIA because it is addressed in detail in Ofcom’s Fixed Access Market Review consultation published the day before the NAO report. But that is for another time.)
Just ahead of the NAO report Ofcom set out a consultation that makes it easier and cheaper for firms that rent fibre from BT to switch.
In a more formal statement referring to the Office of Fair Trading investigation into competition in public sector procurements, which include rural broadband and the still-born £150m Superconnected Cities project, Ofcom said it doesn’t regulate public service procurement or contracts. “Rather, we regulate competition in the private telecoms sector. Likewise, the BDUK programmes are entirely matters for DCMS,” it said.
Whether it can persuade others that is the case remains to be seen.