Welsh government explores ways to pay BT to overbuild £30m state-aided network
The Welsh Assembly Goverment (WAG) is looking for ways to allow its state-aided BT-supplied £425m Superfast Cymru project overbuild the 14 North Wales business parks served by the FibreSpeed wholesale network. If a way is found, taxpayers will be paying twice to provide high speed broadband to the area.
FibreSpeed’s physical infrastructure is owned by the WAG, but supplied and operated under a 15 year contract by FibreSpeed, a Geo Networks subsidiary. The business parks and industrial estates on the FibreSpeed network were excluded from the Superfast Cymru plan because they overlapped.
In a letter to Assembly Members, economy, science and transport minister Edwina Hart said a change in the guidelines governing state aid for broadband may allow the overbuild.
“I have commissioned a technical and legal review to consider whether it is possible to provide support for Superfast Cymru in locations already served by FibreSpeed. I hope to provide an update on this shortly,” she wrote on 12 November.
The European Commission gave permission in February 2006 for the WAG to use state aid to commission FibreSpeed. At the time BT’s prices were 2.7 to 7.2 times more expensive than London for the same service (see Note below). This was more than local businesses could afford, the WAG said.
“The EU regulations on state aid for broadband which applied at that time were interpreted as meaning that Superfast Cymru could not be supported in addition to FibreSpeed in those areas directly covered by the State Aid notified FibreSpeed footprint,” Hart wrote.
The WAG earlier refused to allow FibreSpeed to increase its footprint, and refused to answers questions about why it allowed part of it to lay unlit. A Freedom of Information request revealed 126 businesses were using FibreSpeed in June 2011 .
She noted that a number of ISPs are using FibreSpeed links to backhaul wireless broadband connections to homes and businesses across north Wales.
“Many of these ISPs’ customers have benefited from the Broadband Support Scheme to cover the cost of their connection. The beneficiaries of the Broadband Support Scheme aid are the end users, not FibreSpeed nor the retail ISP, so there is not a State Aid issue for these telecoms organisations as a result of the scheme.”
However, Hart allowed ISPs to be paid directly after confusion over who should get the up to £1,000/home subsidy.
Note: The WAG used a BT quotation dated July 2005 for fibre-based services to a site in North Wales to support its claim that the costs were prohibitive.
|Symmetrical connection||Installation fee||Annual rental|
Source: European Commission 22 February 2006