Auditor General seeks value in £425m Welsh broadband projects

The Auditor General for Wales has begun a review of Superfast Cymru, the Welsh government’s £425m investment (half from BT) in high speed broadband infrastructure, seeking value for money.

He has postponed a study of public sector broadband aggregation (PSBA) in favour of the value for money review, which is due out by the end of the year.

The study will try to answer three questions:

• Does the Welsh government have a coherent strategy for investing in high speed broadband infrastructure in Wales?
• Does the Welsh government have robust contractual arrangements for Superfast Cymru?
• Are the Welsh government’s high speed broadband programmes likely to achieve the intended benefits?

In scope is the effectiveness of the government’s strategy and targets; the programme’s financial planning and governance; the contractual arrangements with BT; the procurement processes, risk management arrangements, and the monitoring and evaluation of the contract.

Not in scope is the propriety of having BT staff represent the Welsh government’s fund-raising effort in Europe, says Rachel Moss, head of communications at the Auditor General’s office.

The question of a possible conflict of interest in having Ann Beynon, BT director of Wales, sit on the European Programmes Partnership Forum in the Welsh European Funding Office was questioned in March 2013. £90m of the money for Superfast Cymru comes from the European Regional Development Fund (ERDF.)

At the time the Audit Office said, “We need to establish the risks arising from any real or perceived conflicts of interest, how they have been managed and the extent to which appropriate declarations of interest have been made.”

The value for money review follows the National Audit Office’s scathing review of the UK government’s next generation broadband programme overseen by Broadband Delivery UK (BDUK). The NAO said there was no clear way to assess whether taxpayers would see value for money, and the £1.2bn they were giving BT would strengthen BT’s monopoly.

The review also follows a damning critique of the Superfast Cymru contract with BT by broadband consultant Richard Brown. “BT will deliver exactly what it contracted for, which is 95% of homes passed,” he said.

BT’s local network subsidiary Openreach is expected to lay 17,500km optical fibre and install around 3,000 new fibre broadband cabinets in parts of the country not covered by BT’s commercial plans. The government hopes to cover 96 per cent of the population.

Asked why the study is being done now, despite criticism of the project and its process before the contract was awarded, Moss said, “It would have been premature to carry out a review of this nature before the contract was signed – this would be straying into policy decisions which are not matters for the Auditor General, and limited evidence would have been available on the likelihood of the project delivering its intended benefits. The current timing of the study allows for a broader examination of the likely impact of the Welsh Government’s investment in broadband infrastructure.

Part of the report will compare the Welsh project with that of England. “The NAO’s work in England and that of the Public Accounts Committee (PAC) is certainly helpful in enabling us to compare the situation in England with Wales and this will be reflected in the final report,” Moss said.

The PAC has said it will recall BT a second time because it is unhappy with BT’s answers to its questions at two earlier hearings to discuss the NAO’s findings.

The Welsh Auditor General will survey around 1000 businesses and households in Blaenau Gwent and Gwynedd, the two areas where there has been “significant progress”, to see what difference access to BT’s Infinity product is making.

The general public can also recount their experiences of the Superfast Cymru programme by emailing broadband.study@wao.gov.uk. The auditors will not able to take up any complaints about BT or other broadband service providers and may not be able to reply to individual correspondence, the Auditor General’s office warned.

Note: Brown has submitted a Freedom of Information request for the test data and methodology that led the Welsh deputy minister for skills and technology Ken Skates to associate himself with press claims that over 100,000 premises are now able to access fast fibre broadband as a result of Superfast Cymru.

“The houses have been tested and verified as being able to receive superfast speeds. The average download speed of 61 Mbps is also more than double the contractual minimum for the programme,” the News Wales web site said.

It then went on to quote Skates as saying, “The fact that where premises are already benefiting as a result of the programme, with an average speed three times the UK average, shows the positive impact it is having as roll-out continues.”

Dolphinholme overcomes FUD to light up on B4RN’s 1Gbps fibre

Dolphinholme is where the marker is in the lower right hand corner. Map by Google Maps.

“I am delighted to tell you all that Dolphinholme now has hyperspeed broadband! Thanks to the ‘fusing team’ the Village Hall and the first few houses came online today. A fantastic effort by everyone concerned, those who planned, those to dug and those who did the ‘technical stuff’. A real community effort by everyone involved. Particular thanks to those who have given us access over their land, those who have invested time and money and those who have supported this is so many ways.

“Of course there is still a huge amount to do and at the Fleece meeting this evening the DB4RNAG dedicated ourselves to completing this project, which means bringing the service to all those in Dolphinholme who want it. This will of course take time, but in the meantime having the Village Hall live means that there is a facility for anyone in the Village who needs to use it.”

Thus was the news broken last night that a tiny Lancashire village overcame red tape, appalling weather, and a fear, uncertainty and doubt campaign to get future-proof, fit for purpose broadband access to their residents.

After learning that Dolphinholme, which is less than five miles from the county seat in Lancaster, was unlikely to get high speed broadband from BT in the Lancashire County Council next generation roll-out, residents resolved to dig their way to hook up with the 1Gbps network installed by B4RN.

B4RN had included Dolphinholme in its original plans, but in a later phase. Impatient villagers vowed to speed things up. This led to correspondence reported  in July last year by the well-connected blogger Philip Virgo. It went as follows:

I thought you might be interested in an update on how BT is behaving around the B4RN patch.

We are busy digging towards a village called Dolphinholme (included in our list of postcodes for B4RN build out which RCBF/BT and LCC have had for a very long time). As we are getting close interest has climbed and some villagers held a meeting to see how to progress things into the village and the distribution around it.

One inhabitant of the village  is very pro BT and went back to Lancashire County Council to ask for an update on where the Lancashire County Council SFBB project was in relationship to Dolphinholme.

LCC wrote back saying they were going to deliver SFBB soon and there was no need for them to support B4RN, the villager then emailed everyone saying B4RN wasn’t needed as BT were going to do it.

I responded saying the patch was in the B4RN build out and we thought we had an agreement that LCC’s build out wouldn’t overbuild us. Also that because the village was a long way from the exchange and there was no PCP then FTTC would not deliver true NGA broadband to the village.

This was apparently fed back to LCC/BT (see snippet 1/ below) and triggered what appears to be a general letter about to go out to residents, see snippet 2/ below

1/

In view of Barry Forde’s comments, I wrote and subsequently spoke to Andrew Halliwell, Assistant Director at the Lancashire CC, overseeing the roll out scheme throughout Lancashire, and he has assured me the roll out to Dolphinholme is still on schedule to arrive sometime between September and December, 2013.  In order to allay any scepticism, Andrew Halliwell  has agreed to give us written assurances and I will notify you upon receipt of same.  

2/

Dear <resident>,

Due to the distance from the exchange BT will use FTTP technology in order to ensure that you and your residents in Dolphinholme get the best possible service.

This means that the cabinet location will not effect the installation of fibre into Dolphinholme as this will be fed direct from the exchange to the homes and business’s.  

This is excellent news for you and your residents and I will look forward to keeping you upto date with the latest plans!

With Kind Regards

Judith Brown

Superfast Lancashire Programme Control Manager

So what do we make of the fact that BT are choosing to roll out an FTTP deployment, focused entirely within the B4RN footprint targeting the core of a village we are digging into?

Also that they can find the resources to do this between September and December, before any other bits of the county are done but coincidentally matching the time frame for our service build and go live dates . I’ve not got any data on which properties they are targeting but wouldn’t be surprised to find it’s just the easy to service core of the village and that all the surrounding isolated properties are excluded unlike our project that is 100% inclusive.

That is now water under the bridge, although people in these parts have long memories. As Dolphinhome says, “The work goes on. Tomorrow we hope to bring a few more houses online and then in the afternoon at 2:00 we hope to start the duct from the cabinet to Corless Cottages.”

But for the moment, take a bow, chaps – you deserve it.

Why Wi-Fi should be free in hospitals

Free Wi-Fi access to the internet and greater use of electronic ways to monitor convalescence could help patients recover quicker, according to Gary Hotine, informatics director at the South Devon NHS Foundation Trust.
In a world first, Hotine pioneered free public access for patients and staff at the Torbay hospital and associated community hospitals.

Hotine – connectivity for patients is a ‘no-brainer’.

Speaking on TechQT, Hotine said although the clinicians at South Devon have not explicitly provided evidence of the benefits of patient connectivity, they regard it as a “no-brainer”, he says.
Hotine says it’s “common sense” that if people are in touch with people who care about them, they will be less anxious about going to hospital and this will speed up recovery and/or provide more comfort while they are in hospital.
“Just recently we had a terminally ill patient in our cancer ward who was being blocked from getting into a bingo site. (South Devon’s policy is that providing access to gambling sites is inappropriate in a state-owned service.) She contacted our service desk; we asked the ward if they had any objection, which, under the circumstances, they didn’t, so we were able to unblock it fairly quickly. So you can’t just leave people hanging; you have to provide a level of support.”
John Popham, a campaigner for free Wi-Fi in hospitals, said he’d seen an early stage dementia patient speaking about how having an iPhone has transformed his life. Although it had a number of apps to help him, the most important thing for him was the stored numbers of people he could call if he was unsure or in trouble.

We wanted to use something people were already familiar with when they came to hospital.

Popham also reported on a patient who was recovering from stem cell surgery and had to live in an isolation pod for six weeks. The hospital gave him a laptop and an outside link for the time. According to the supervising doctor, the laptop did the patient more good than all the drugs they gave him. “Those are the kind of stories we need to be telling,” he said.
Hotine put in Wi-Fi two years ago because South Devon asked themselves what they would like if they were patients.
“We go to a lot of meetings in hotels, and it’s extremely irritating if the hotel doesn’t have Wi-Fi, and only slightly less irritating if they make you jump through hoops to authenticate, or you disconnect suddenly,” he says.
“We wanted to use something people were already familiar with when they came to hospital. The opportunity arose to put Wi-Fi into hospitals about four years ago. I asked my technical teams to see if we couldn’t use the same infrastructure to provide a publicly accessible, secure and robust Wi-Fi infrastructure.
“They found a way, and we did penetration tests to make sure that there could be no unauthorised access to the hospital and patient records systems, which of course would be a major concern.

From 2Mbps to 30Mbps
“Then we bought some capacity from the company that provides the junior doctors’ residence with Wi-Fi with I think a 2Mbps pipe originally. The idea was that we’d let the patients and public use it, and if it filled up and slowed down, we’d monitor it. To justify an increase we could show the trust board that it was having a beneficial effect on our patient community.
“We’re currently up to 30Mbps of bandwidth. The bearer circuit we’re on will allow us to go up to 100Mbps, but the present demand is satisfied by 30Mbps.
“The busiest period is 10am when we have about 1,500 connections, and the quietest period is 4am to 5am when we have about 220, mostly patients connecting to iPlayer and email.”
A significant percentage of the 1,500 are staff who are using their private devices to access the internet during breaks.
Staff at hospitals in neighbouring towns have been nagging their managers for similar access, and Hotine has been taking calls for information on how he’s done it.

Popham – hospitalisation is an isolating event

Popham says hospitalisation, especially for long term patients, is a very isolating experience, both for patients and visitors. The equipment now in hospitals to access the internet is out of date, he says.
“Being able to access the outside world would be helpful in the recovery process because being able to speak to others is therapeutic.
“Making telephone calls on those units costs about 39p/min. If you’re online you can use Skype or Hangouts and talk to anybody for free for as long as you want.
“Even if you are on 3G or 4G, half the time you can’t connect because the wards are in a basement or the walls are steel and glass and the signal can’t get out.”
Popham’s campaign is growing – he has about 400 members on Facebook, and he claims it’s becoming accepted that public access Wi-Fi should be available free in hospitals. “I reckon there’s about 25% of hospitals now that have it; that’s a big increase on what it was four or five years ago, but still not enough.”

Marginal cost
Hotine says provided a hospital already has a 24×7 IT service desk, the extra cost of providing public access Wi-Fi is the marginal cost of receiving a telephone call from the public. In the year since the system was in place he counts four or five logged incidents. “You can’t really measure the cost of that, in our experience,” he says.
Hotine notes that the £10,000/y he pays for the South Devon’s 30Mbps bandwidth seems a lot more than what people pay for their home broadband. But it’s the service level agreement, which includes the managed service, the walled garden, the site blocking and uptime requirements that pushes up the price. “Typically at home when there’s an outage you are in the lap of the gods as to when service is restored,” he says.

Being able to speak to others is therapeutic.

The Wi-Fi system supports Torbay Hospital with 400-500 beds plus another couple of hundred beds in community hospitals. The main hospital has about 1,500 access points, which Hotine expects to rise to about 2,500.
He notes that the existing patient entertainment system is rare in hospitals with fewer than 200 beds, but few community hospitals have that many. Closing the gap was key to the design of the Wi-Fi system.
Hotine said the trust has an active ‘league of friends’. He is considering asking them if they’d like to support building up a library of access devices, such as laptops or iPads, for patients’ use.
He hasn’t done it yet because the advent of mobile phones in hospitals has hurt the revenues of the firm that supplies the trust’s patient entertainment system and services.

An offer refused

Hotine notes that patient turnover has been rising in Torbay hospital, but the community hospitals take patients who need long term care. Remembering to collect devices that the patient has rented is likely to be low on the list of priorities once the clinical decision to discharge a patient has been taken, so an efficient collection service is a must, he says.
“We’ve made (the company) an offer asking them if they’d like to offer a paid-for service whereby they would supply the access devices. They haven’t been very keen, so we’re probably getting to the point where we will ask the Torbay league of friends. They’ve got a small army of volunteers who could get around the wards to handle the logistics.”
Hotine and Popham also spoke about the use of tech to monitor and diagnose patients remotely.
South Devon uses data provided by Patients Know Best, a private firm run by UK-trained doctors. Data privacy is governed by the patients’ contractual relationship with PKB. This allows the patients to give their data to South Devon without the trust having to abide by the duty of care restrictions that would apply if it were the primary data collector. Doing it this way has been “quite liberating and allowed us to make the progress we have,” Hotine says.
To hear the full discussion go to TechQT.

MPs, lords to face anger over failing UK broadband roll-out

Sweating the physical network assets since 1997. Source: ONS

Parliamentarians will meet tomorrow to discuss broadband policy amid growing anger and concern among businesses that almost £2bn in taxpayers’ subsidy will leave the UK in a worsening competitive position.

Digital Policy Alliance chairman Lord Erroll will chair the meeting (see below for details) that will hear from two recent papers that show that large parts of the UK will end up with broadband access one-fortieth of that of South Korea, and far behind France, Brazil and China by 2017, the deadline for the government’s current broadband spending plans.

The report from Digital Business First (DBF) flatly contradicts Ofcom’s recent finding that the UK leads Europe in high speed broadband. In an open letter to Ofcom CEO Ed Richardson, the DBF said, “When ranked against all 27 EU states (not just the five Ofcom conveniently chose for the sake of a headline) the UK ranks tenth, behind countries like Portugal, Denmark, Belgium, Lithuania and Latvia.

“Secondly, there are large areas of the UK (approximately 10 million homes and businesses according to the government’s own figures) that are to be supported with public funding to deliver ‘target’ broadband speeds of just 2Mbps and 24Mbps (via the BT network). These speeds are well below even Ofcom’s low threshold of ‘superfast’ broadband. These ‘have nots’, which include some of our most productive business premises in rural locations, are being left to languish in the slow connectivity lane indefinitely.”

The forum’s assertions are supported by a study of the effect of line lengths on broadband speeds by researchers at Edinburgh University. The researchers found that one in eight Scottish homes is unlikely to be able to get more than 24Mbps, and 40% of rural homes and businesses will struggle to get more than 2Mbps.

The average line length of Openreach’s network is around 3.4km. The average length from street cabinet to a premises is around 420m. This is enough for 40Mbps download speed provided BT implements vectoring on its VDSL lines. Not every line in every cabinet is being so enabled in its next generation roll-out, and at least 10% of cabinets are unlikely to be enabled.

Openreach, BT’s network infrastructure division, redacts its line length information in recent public documents. However, in a 2011 report on line lengths and line costs to Ofcom, Analysys Mason said that BT had confirmed (in 2004) that its average line length (between the exchange and the premises) was 3.47km (including the dropwire length). “This provides a reasonably good reconciliation with the (2008) Sagentia analysis (3.34km average line length). The same presentation also confirmed the distribution of lengths between the cabinet and the customer, with a typical 420m length and a small proportion of lines (10%) with a very long length,” it said. Analysys Mason later calculated the average Openreach line length at 1.704km – a figure hotly disputed by Openreach.

A 2011 White Paper by Alcatel-Lucent on the use of vector technology with VDSL2, the technology chosen by BT for its next generation broadband roll-out, found that at 420m, the average download speed would be about 40Mbps, while at 1.2km, it would drop to about 24Mbps (see graph).

How broadband peters out. Source: Alcatel-Lucent http://bit.ly/OO9Ovy

Figures from the Office of National Statistics show a declining trend in the construction of communications infrastructure (see graph). The ONS figures include post office buildings and sorting offices, but also exchanges and cables. This suggests that few new cables have been laid in the past 15 years, so Sagentia’s figures are likely to be reasonably accurate.

(Unfortunately, the ONS bundles sales figures for telecommunications equipment with those of computers. This makes it impossible to establish accurately what UK network operators have invested in network hardware and software.)

As noted earlier, Openreach’s capex has been steady at around £1bn for several years. But it is starting to decline as it comes to the end of its “commercial” broadband roll-out to cover two-thirds of the population, but only one-third of physical UK.

BT’s capex spend shows a gentle but steady decline.

In BT’s case, Alcatel-Lucent appears to have made a convincing argument to go for vectoring over VDSL2. It said, “Reusing existing infrastructure reduces investment costs and risks. It also helps with eco-sustainability targets. With VDSL2 Vectoring, you can deliver higher speeds at about 1/3 the cost of deploying fibre. And any fibre investments to support VDSL2 Vectoring lower costs for future fibre deployments.”

But as its own figures show, this is true only where line lengths are short, and it does not appear to include any offset for reclaiming the copper and reusing the ducts.

DBF members Alex Pratt and Frank Nigrello, who represent local enterprise partnerships in Buckinghamshire and Oxfordshire respectively, accuse Ofcom of painting an “unduly rosy picture” that serves the UK badly. “It amounts to institutional denial of the need for a significant change in policy towards investment in digital infrastructure. It is leading to an unnecessary rapid regional and national decline in our relative productivity and competitiveness. It is akin to adding extra weight to handicap our businesses in what the prime minister has called ‘The Global Economic Race’.”

The DBF is highly critical of what it sees as the government’s casual approach to broadband. “Current government policy and funding has failed to bridge the superfast broadband infrastructure deficit for 35% of the UK,” it says. It attributes this to a lack of consultation with user communities; adopting the “least ambitious targets and technological means” to deliver them, and to a lack genuine incentives for investment in future-proof high speed broadband networks.

Quoting from the National Audit Office report on the rural broadband roll-out, the DBF said, “The department (of culture media and sport said) its aim was to achieve the most possible with the given funding, not to lever the maximum amount of private investment.”

It added, “The current argument between Ofcom and mobile networks on spectrum fees, with the latter threatening to reduce 4G coverage unless fees are lowered, points to a far less investment friendly approach in the UK.”

The DBF report also criticises the lack of ambition in making high speed broadband a universal service. Again quoting the NAO report it said, “The effect of designing a programme which only reaches 90% of the target area will make it more expensive at a later stage to cover the final 10%. It will also make it less commercially viable for anyone other than BT to bid, as no-one else will have existing infrastructure to bolt it on to.

“Matters are made worse by the fact that BT is preventing local authorities from publishing plans showing which areas will not be covered, which would enable other, often community-based consumers, from filling the gap and ensuring 100% coverage.

“Witnesses from the broadband industry told us that potential investment by competitors had been lost. For example, UK Broadband has spent none of the £150m it had allocated for the programme. Fujitsu had also stated an intention to invest £1.5bn which has not been invested. In total, INCA estimated that the investment that had been foregone was at least £2.7bn.”

The DBF calls for a national broadband plan and responsibility for its delivery to be moved the department responsible for business and enterprise.

“Any incoming government in 2015 should be specifying a target of at least 100Mbps for the UK ‘have nots’ within two years,” it says.

It called for the UK to re-establish its world lead in mobile communications by “adopting an ambitious ‘can do’ approach to 5G technology”. 5G networks offer the prospect of universal ultrafast (1Gbps) broadband across the UK, it said.

It also called for changes to the terms of the 4G mobile licences to ensure that the coverage obligations include a signal strong enough to deliver 10Mbps inside a home for 98% of the UK population, a voice service, and for more than one 4G mobile network to have the above coverage obligation.

The meeting takes place on 24 March at 15.10-17.00 in Committee Room 4A, House of Lords, Westminster.

The agenda is:

* Welcome and introduction by Lord Erroll, DPA chairman

* Presentation of European Internet Foundation’s (EIF) report ‘The Digital World in 2030: What Place for Europe?’ by Peter Linton, advisor to EIF board of governors and co-author of the report

* Presentation of Digital Business First’s report “The UK’s enduring broadband deficit: A divided nation – Time for an effective plan” by Alex Pratt, chairman Buckinghamshire Business First and Buckinghamshire Local Enterprise Partnership (LEP).

* Comments by Stephen McGibbon, EMEA regional technical officer, Microsoft; Peter Olson, president of Digitaleurope and head of European Affairs, Ericsson; Alexandra Birtles, head of external communications, TalkTalk Group; and parliamentary contributions with closing remarks by James Elles, MEP and EIF co-founder.

Show us the money, PAC’s Hodge warns contractors

PAC chairman Hodge – ‘There is a lack of transparency and openness around government’s contracts with private providers’.

A government report into private contractors who deliver public services has suggested the government is to blame for the lack of transparency that has led to serious shortcomings in value for money for taxpayers.

“These failures have exposed serious weaknesses in the government’s ability to negotiate and manage contracts with private companies on our behalf,” public accounts committee chairman Margaret Hodge said at the release of the PAC’s report on private contractors and public spending. The report may have implications for contracts worth £1.4bn BT has signed with county councils to deliver next generation broadband.

The PAC report looked at contracts with G4S, Atos, Serco and Capita. Some, such as the G4S and Serco contracts to tag prisoners electronically, and G4S to supply security to the 2012 Olympics, have become notorious for their abuse of the spirit of partnership, in particular for over-charging.

“There is a lack of transparency and openness around government’s contracts with private providers, with ‘commercial confidentiality’ frequently invoked as an excuse to withhold information,” Hodge said.

The PAC earlier identified these traits in the BT contracts, all of which are subject to non-disclosure clauses and restrictions on speed and coverage details and financial information.

“These failures have also exposed serious weaknesses in the government’s ability to negotiate and manage contracts with private companies on our behalf,” Hodge said.

“It is vital that parliament and the public are able to follow the taxpayers’ pound to ensure value for money. So, today we are calling for three basic transparency measures:

• the extension of Freedom of Information to public contracts with private providers;
• access rights for the National Audit Office; and
• a requirement for contractors to open their books up to scrutiny by officials

“The four private contractors we met – G4S, Atos, Serco and Capita – all told us they were prepared to accept these measures. It therefore appears that the main barriers to greater transparency lie within government itself.”
Hodge said an absence of real competition had led to privately-owned public monopolies that had become “too big to fail”.

Small and medium enterprises (SMEs) had been crowded out by the complexity of the contracting process, excessive bureaucracy and high bidding costs.

Contracting had led to the evolution of privately-owned public monopolies, who largely, or in some cases wholly, relied on taxpayers’ money for their income. “The state is then constrained in finding alternatives where a big private company fails,” she said.

“We intend to return to this issue. Government is clearly failing to manage performance across the board, and to achieve the best for citizens out of the contracts into which they have entered. Government needs a far more professional and skilled approach to managing contracts and contractors, and contractors need to demonstrate the high standards of ethics expected in the conduct of public business, and be more transparent about their performance and costs,” Hodge said.
“With the government choosing to contract out more and more public services to the private sector, these issues become ever more important. This report is intended as a recipe for better services, better governance and greater openness. We hope the government will take heed of our recommendations.”

What does BT’s bikini broadband budget reveal?

It’s always interesting to play with numbers, and few are as interesting to this blog’s readership as BT’s. As someone once said of bikinis, the figures they reveal are interesting; what they conceal is vital.

BT’s capex spend shows a gentle but steady decline.

Of special interest at present is BT’s capital spending plans. As we can see from the graph, which is compiled from BT’s annual reports and analysts’ estimates, BT spends around £2.5bn a year on capital goods. Of this, Openreach is responsible for around £1bn a year, so we can assume that’s what BT spends on its network infrastructure.

To put that into perspective, Vodafone plans to spend £900m this year to bring its network up to speed with 4G/LTE technology and 98% national indoor coverage. Mobile rival EE spent £606m in 2012 and another £583m in 2013.

Back to BT. On page 76 of a presentation to shareholders in May last year, which accompanied BT’s 2013 annual report, BT sketched the scenario shown at right.

Openreach believes superfast broadband take-up will reach at least 15% in 3-4 years. It’s already 11%.

This suggests that of the billion quid a year that Openreach spends, some £300m to £400m will go on General Ethernet Access, which we all know as Next Generation Broadband. Keep that up for four years and BT will have invested some £1.4bn getting its fibre network to “pass” more than 90% of the population. After that, its ongoing GEA capex drops to “tens of millions” a year, but its revenue rises to £350m to £400m a year. Which looks like a nice little earner for BT from Year 4 on.

That’s very interesting, especially to shareholders and the government, which has at least two different reasons to be interested – the resulting contribution BT could make to BT pension deficit, and the £1.4 billion it is giving BT to roll out next generation broadband in those areas that BT deems uneconomic.

Hang on a sec. BT says it will invest £1.4bn to cover more than 90% of the population, and the government is giving BT £1.4bn to cover the one-third of the population that BT claims it can’t afford to cover. Now that’s really interesting. It rather looks as if BT has managed to redefine matched funding as meaning it has matched the government’s supply of money with its demand for money. Alternatively, that taxpayers are paying for BT’s commercial roll-out as well the Final third.

And, lest we forget, what happened to the £2.5bn former CEO now trade minister Ian Livingston was keen to say BT was spending on its next generation broadband upgrade? Where’s that now? Did he mean BT’s commercial upgrade or the total upgrade?

This might offer a clue. BT has around 55,000 street cabinets to upgrade. If we assume that 50% of the £1.4bn is overhead, contingency and profit, that works out to capex of £12,727 per cabinet and its associated fibre “path”.

Which is not a million miles from  the £12,667 Iwade paid for its single cabinet and path, nor the £13,000 average it cost Northern Ireland in its BT-run NGA roll-out.

Iwade’s cabinet cost £13k. Lucky them.s single cabinet and path, nor the £13,000 average it cost Northern Ireland in its BT-run NGA roll-out.

The vital information that is still hidden are the numbers that persuaded the National Audit Office that BT has to spend an average of £28,900 per cabinet and path in England’s Final Third, likely to be the cheapest

Nevertheless, one can now start to see how BDUK can claim to be able to cut 30% out of BT’s invoices for non-hardware items in the few framework invoices it has seen.

Lies, damn lies, and broadband statistics

VM’s contribution to the UK’s high speed broadband figures is twice that of BT. Source: Company quarterly reports

Ofcom has released a report suggesting that the UK is leading its peers in the race to become a superfast broadband nation.

For various reasons it chose to measure the UK against France, Germany, Spain and Italy, rather than the EU28, the Nordics or the members of the Commonwealth of Independent States, formerly known as the Soviet Union.

Ofcom found the UK has the highest broadband take-up (all types, by household), at 83%; the highest proportion of people to have bought goods online over a year (77%); the highest weekly usage of the internet (87%); and the lowest proportion of people who have never used the internet (8%).

Ofcom’s own figures for fixed connections, quoted in the report, give a more optimistic view: “France (is) still leading the EU5 with 36 connections per 100 people, followed by Germany (35 connections per 100 people), the UK (34), Spain (24) and Italy (22).”

Ofcom went on to say, “Eurostat data suggests that 83% of UK households had fixed broadband access at that time, the highest reported rate of household penetration among the EU5. Our own research suggests that 75% of UK households had fixed access broadband connections in October-December 2013.

“Take-up of superfast broadband, which is capable of providing speeds equal to or greater than 30Mbps, had reached nine in every 100 people in the UK at the start of last year, the highest in the EU5 ahead of Spain (6 in 100) in second place.”

When questioned on this, Ofcom responded, “We’re slightly mixing data here. 83% refers to households and comes from Eurostat (Q1 2013); the 9% superfast up figure is for individuals and comes from Cocom (Jan 2013). So we can’t combine the two.”

We also asked how many households could access broadband at more than 30Mbps, and how many received less than 2Mbps in Market 1 and Marlket 2 areas, ie those where BT has little or no competition. Ofcom can’t tell us because it doesn’t have the data.

Ofcom responded, “In order to get the picture across speeds, I’d suggest our Infrastructure Report Update 2013, which has this:

Broadband take-up: 72% of households (Q1 2013 – p.19)

>30Mbit/s take-up: 16% of premises (households and small businesses) have superfast connections/22% of BB connections are superfast (June 2013 – p.27)

<2Mbit/s take-up: 8% of connections (p.21)”

The Office for National Statistics (ONS) says there were 26.4 million households in the UK in 2013. Of these, 29% consisted of only one person and 20% consisted of four or more people.

BT, in its quarterly report to 31 December, said it had “now passed more than 18m premises in the UK with our fibre broadband network and (is) making progress with extending the reach of fibre to rural areas.”

As that covers 68% of UK homes, that suggests that BT has completed its roll-out to “two-thirds” of commercially viable UK homes.

BT went on to say “Openreach achieved 339,000 net fibre connections, an increase of 38%, with around 2.4m homes and businesses now connected. We added 228,000 retail fibre broadband customers, up 14%, and now have around 1.9m customers.”

Regrettably, BT doesn’t say what speeds its customers get. Regular readers will know that BT’s “up to 80Mbps” service, based on fibre to the cabinet GPON/VDSL technology, is a bit of a pig in a poke. Actual speeds depend on distance between the cabinet and the premises, line condition, network congestion, content filtering, traffic shaping and other factors that degrade the service people pay for.

Other things being equal, line length is the main factor that affects broadband speed. Openreach keeps secret the average line length, but it is longer than 1km. Analysys Mason has calculated it at 1.704km. According to ThinkBroadband, that should deliver a download speed of under 15Mbps; for 30Mbps you need to live within 750m of the cabinet. BT speakers have earlier claimed the average length of the line between premises and cabinets is around 900m. According to ThinkBroadband, this would give a download spped of about 24Mbps.

Virgin Media also operates a fibre to the cabinet (FTTC) service based on DOCSIS 3.0 technology using coaxial TV cable rather than twisted copper pair wires between the cabinet and the home. Its latest quarterly report reveals that “Of all of our 4.4 million internet customers, 3.2 million, or 74%, subscribe to superfast broadband services of 30 Mbps or faster, an increase of 1.0 million in twelve months, including a 209,300 increase in Q4. We continue to see that nearly half of our new internet customers subscribe to speeds of 60 Mbps or higher, showing the strong, ongoing demand for faster speeds.”

Now we are in a position to judge whether Ofcom’s claims to be leading Europe are worth anything, even if true in the limited context it chooses.

Adding BT’s 1.9 million and VM’s 4.4 million gives us 6.3 million customers. BT said Openreach had connected 2.4 million premises, so we should add 500,000 LLU lines, giving a total of 6.8 million customers connected to a fibre-enabled cabinet. That is a fixed line penetration rate of 26%. However, if we consider that, according to Analysys Mason’s figures,  less than half of those on Openreach lines will receive a service of 30Mbps or faster, the household penetration rate drops to around 17%.

If the Ofcom report is measuring progress towards the EU’s 2020 target of 30Mbps for all with 50% using a 100Mbps service, as it seems to be, then we are a long way short of achieving the EU targets, or even Ed Vaizey’s nebulous “best broadband in Europe”.

Fibre tax no longer fit for purpose?

Picture by BigRiz. Some rights retained.

The current system of business rates is not fit for purpose and needs to be fundamentally reformed, say MPs.

The call could open the way for a reassessment of the so-called fibre tax that makes BT’s competitors pay 20 times more to operate fibre networks. It could also kill efforts by civil servants to tax Wi-Fi hot-spots, which areincreasingly important to backhaul data on mobile broadband networks.

A spokesman for the business, innovation and skills committee said that while its study focused purely on the effect of the tax on the retail sector, it was possible a full review would examine the effect and desirability of the fibre tax.

Normal network operators must pay the tax whether or not they make a profit and in advance of sales. However BT pays the tax in arrears and on profits, while Virgin Media pays based on the number of homes passed by its network.

The committee called for a “wholesale review” to examine whether non-domestic property taxes aka business rates should be based on sales rather than the rateable value of a property and how frequently revaluations should take place, among other things.

The call for the review was prompted by the growing success of e-commerce and consequent slackening in demand for high street premises as a sales channel.

Chairman Adrian Bailey said business rates are one of the highest forms of local property tax in the European Union, adding, “Business rates are the single biggest threat to the survival of retail businesses on the high street. Since the system was created (in the 1600s) the retail environment has changed beyond all recognition. A system of business taxation based on physical property is simply no longer appropriate in an increasingly online retail world.

“This is a time for wholesale review and fundamental reform, not for tinkering around the edges. Business rates are not fit for purpose and minor administrative changes will not alter that.

“The government’s retail strategies are full of warm words that fail to address the most debilitating levy on existing businesses and the most crucial deterrent to new businesses appearing on the high street – business rates. Fewer strategies are required; simple, decisive action is needed.”

The government must respond by 4 May.

Real fibre broadband comes to 500 Northmoor homes

In a rare bit of good news for the altnet community, Gigaclear announced it has won funding from the Rural Community Broadband Fund (RCBF) to design, build, implement, and operate a fibre to the premises (FTTP) broadband network to serve around 500 homes in Northmoor, Oxfordshire.

Just weeks ago Gigaclear scrapped a planned rollout in Dun Valley, Wiltshire after it discovered BT planned to use taxpayers’ money to provide a fibre to the cabinet (FTTC) service to the area.

Gigaclear won the contract in an open procurement by West Oxfordshire District Council (WODC) after the parish secured an RCBF grant from the Department for the EnvironmentFood and Rural Affairs (DEFRA). The value was not disclosed.

In a survey of residents’ needs, 14% of respondents said they could get no broadband service at all. A quarter of responses were either from business premises or from residential premises used by people to work from home and/or run their own businesses. Better broadband was high on their priority list.

Graham Shelton, chairman of the parish council and leader of the broadband group, said talks with Oxfordshire County Council revealed the parish would be likely to fall outside the area covered by Oxfordshire’s £4m Broadband Delivery UK (BDUK) subsidy. “That freed us to pursue other options. We were aware of Gigaclear’s work elsewhere, so were delighted they won on merit.

“The network will ensure that everyone can obtain equally superfast broadband and that it will be available to all properties in the parish – including a number of caravans.”

Gigaclear is expected to finish the network in September.

Scotland’s broadband plan leaves 356,000 out in the cold

UPDATE

One in eight Scottish homes is unlikely to get a broadband service greater than 24Mbps, but up to 40% of rural homes will be left behind, following million of pounds of taxpayers’ money given to BT, say researchers  at Edinburgh University.

Michael Fourman and  Peter Buneman, professors at at the School for Informatics, say the current claim that the £410m investment to get  95% of premises in Scotland on to superfast broadband by the end of 2017-18 “is not credible”.

“According to our calculations, less than 85% of Scottish households will have access to superfast broadband, and the long-term prospects for rural Scotland are dismal. We predict that  at least 43% of the 450,000 households in rural Scotland will not receive superfast broadband from the current programme.”

Fourman and Buneman have revised their estimates downward after they discovered a bug in the program they used to calculate the expected shortfall, and in  response to feedback over the correct distance over which to calculate VDSL performance. Fourman  has sent an exhaustive reply complete with tables.

He says:

There are many approximations to be chosen and caveats to be stated. We can produce many different sets of estimates, but that fact should not obscure the underlying issues:

Unless there is substantial investment in hundreds new fibre-fed cabinets (or equivalents), (or in FTTH where there are exchange only or too-long lines 🙂 :

1. In rural areas at least 40% of households will not get superfast (>24Mbps) unless we shorten some copper beyond existing exchanges. If we focus on remote rural areas, that number rises to 45% and in very remote rural areas to over 60%.

These are optimistic estimates based on theoretical performance of good copper. Using empirically-based estimates for copper speeds gives higher stillslow figures: 49% for rural overall; 52% for remote rural; and 71% for very remote rural.

2. Even in urban areas it is unlikely that 95% will get superfast (>24Mbps) speeds. If we use empirically-based estimates for copper speeds then one in eight households in urban areas of Scotland are unlikely to be able to achieve the EU target of 30Mbps.

Now please fill in the poll below so that we can get some reliable numbers.