Posts Tagged ‘BDUK’
Under pressure from the Public Accounts Committee to show value for money for the £1.7bn it is receiving for BDUK contracts, BT is fighting back.
Bill Broadband has just retweeted a Guido Fawkes tweet that it will “revisit” PAC chair Margaret Hodge’s tax affairs.
Bill Broadband is one of the names used by BT’s astroturf community to defend BT’s NGA roll-out and intimidate would-be competitors.
Hodge is away and unavailable for comment.
The National Audit Office (NAO) report on the BDUK’s former Rural Broadband Programme, now renamed the Superfast Broadband Programme, contains elements that might lead to cognitive dissonance.
It reports that BDUK commissioned Atkins, a primary supplier of services to government, to look at BT’s costs to provide high speed broadband in rural areas. After looking at a few sites in Suffolk, Atkins concluded “BT had charged Suffolk nearly 20% less than would hypothetically be charged by another efficient supplier, in part reflecting that BT benefits from substantial national bulk buying power compared with other providers.” Paragraph 3.10)
That’s good news, right? But it seems there’s more joy to come for taxpayers. In Paragraph 5 NAO reports “BDUK’s experience of actual costs in phase 1 has led to BT agreeing to submit lower costs in its financial model for phase 2.”
However, it carefully notes that BT was picking low hanging fruit in Phase 1, namely peri-urban areas rather than deep rural ones where is cost to reach them is likely to be higher, unless you use a satellite.
NAO also suggests BT got other sums wrong. BrOkenTeleph0n3 revealed that BT’s planners estimated BT would break even on a 20% take-up in 12-14 years. “Take-up of superfast broadband so far has been significantly faster than forecast by BT in the phase 1 contracts. Take-up has risen to more than 20% already for two non framework projects”, the NAO found. This “should bring greater coverage than contracted, as local bodies will be able to extend their rollout with remaining funds,” it says.
BT is the only framework supplier left, and 43 out of 47 county councils have opted to use the framework to procure Phase 2, although 10 may elect to hold money back for Phase 3, the final 5%.
“Overall, the effect of the first 2 phases will be to reinforce BT’s already strong position in the wholesale market for broadband infrastructure (the Wholesale Local Access Market). BT’s assets and infrastructure will benefit from approximately £1.7 billion of public sector investment although BT must maintain these assets at its own expense. BT is also required by regulatory conditions to provide wholesale access to other suppliers.”
The NAO also revealed that the public will benefit from clawbacks due to higher than expected take-up for only seven years. “After these seven years, the supplier will keep all of the extra wholesale profit.”
BT amortises its fibre over five to 20 years, and its exchange equipment over three to 13 years.
BTW, in its 2013 rural broadband report on page 35, the NAO said “The Atkins ‘should cost’ model for Northamptonshire is three per cent higher than BT’s actual bid for the area. Atkins was not able to complete analysis of a second local body area, Suffolk, due to the difficulties it encountered in modelling a more complex technical solution. Atkins’ model is the only model available to us that has tried to match a corresponding BT bid identically.”
The hour-long Public Accounts Committee interview on the NAO report, featuring DCMS, BDUK and BT officials, took place on 28 January 2015. You can see the video here.
There are still some people who are interested in seeing what’s happening to the near £2bn of taxpayers’ money given to BT to roll out next generation broadband in the “Final Third”. Many of them probably sit on the Commons’ Public Accounts Committee, which is taking its third stab at finding if BT is delivering value for money this coming Wednesday.
The PAC, chaired by Margaret Hodge, was previously frustrated by the answers it received (here and here), and vowed to keep asking questions until it was satisfied. BT’s director of strategy, policy and portfolio, Sean Williams, who was the source of much of Ms Hodge’s frustration, gets a third act in front of the committee.
Supporting players are DCMS boss Sue Owen, BDUK CEO Chris Townsend and superfast broadband programme director Andrew Field, and Openreach MD for infrastructure delivery Kim Mears.
In its preamble the PAC said its reports on the rural broadband programme in September 2013 and April 2014 “raised concerns over lack of published information on BT’s plans for superfast broadband coverage, the availability and transparency of cost data and the level of competition secured throughout the programme. This recall session will examine the transparency of cost and rollout information and explore whether the department has done enough to promote greater competition for phases 2 and 3 of the programme.”
The curtain for the hour-long show goes up at 2.15pm on Wednesday 28 January 2015, Committee Room 15, Palace of Westminster. If you can’t make it in person you can follow on Parliament TV: Rural broadband: progress update session.
The government is looking at how to get high speed broadband to urban businesses despite state aid rules that appear to preclude using some of the £2bn of BDUK money to do so, culture secretary Sajid Javid told MPs on the Culture, Media & Sport parliamentary committee yesterday.
Javid said DCMS is talking to stakeholders, including the Federation of Small Businesses, which this month produced a second damning report on broadband, to resolve the situation.
Javid also revealed that the contracts between BT and country councils for rolling out “superfast broadband” have claw-back clauses that come into effect when take-up reaches 20%.
Javid added that the government was updating the Electronic Communications Code as part of a deal with mobile network operators to extend mobile coverage to 90% of the UK land mass announced late last year.
In February 2013 the Law Commission recommended changes to provide a clearer definition of the market value that landowners can charge for wayleaves, resolve inconsistencies with other legislation, clarify network upgrade and sharing rights, and establish the rights of land owners and network operators with respect to access to land and removal of equipment, as well as ways to resolve disputes
This link Culture secretary Sajid Javid on the DCMS annual report opens a new window. Javid’s comments on the code are at 12.43, and on broadband at 12.53.
MPs have launched an inquiry into rural broadband speeds following on-going concerns that nearly £2bn of taxpayers’ money is unlikely to produce the expected results.
- the extent of broadband coverage in hardest to reach rural areas
- digital access and experience of digital─only programmes, such as the new CAP system applications
- support available for those required to use digital─only programmes
Written submissions should be submitted via the Rural broadband and digital─only services inquiry page on the Environment, Food and Rural Affairs website.
The deadline is Wednesday 19 November 2014.
Last week ministers claimed that the government’s £1.7bn budget has paid for superfast broadband to pass one million homes, so far.
This is 12% of the 8.8 million homes it is meant to serve with speeds above 24Mbps by 2017. As there appears to be no official source for the number of business premises, ministers are free to ad lib broadband availability to businesses.
There was no indication of what upload and download speeds users receive, and there are growing reports that services promised from some cabinets are now being deferred, perhaps indefinitely.
The money is all going to BT under the Broadband Delivery UK (BDUK) programme. It supplements the £2.5bn BT claims to have spent providing “superfast” service to the two-thirds of the population deemed “economically viable”, roughly the area covered by Virgin Media’s cable network.
A department of culture, media & sport spokesman said: “The £1.7bn is comprised of £1.2bn for phase 1 (£530m of BDUK funding plus local and European funding taking this up to £1.2bn) and £500m for phase 2 (£250m from BDUK to be matched by £250m further local and European funding).”
Based on the 2011 census, 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% had four or more people.
According to the department of business, innovation & skills, there were 4,895,655 UK businesses in 2013. Nor BIS, nor the ONS, nor the department of communities and local government (DCLG), which counts the cash raised from business rates, has a number for the physical shops, offices and factories businesses occupy.
That did not stop the Federation of Small Businesses last month from reporting that the national broadband network is unfit for business use. “The current government targets of 24Mbps for 95 per cent of the population and 2Mbps for the remaining five per cent will not meet the future demands of UK businesses.” it said. This includes video conferencing, remote back-ups and cloud applications.
This was tacitly confirmed by HMRC, which now allows firms in “remote locations” to submit their VAT returns by paper instead of online. FSB national chairman John Allan said the move will benefit many small businesses. “However, it clearly highlights the need for the government to tackle the poor state of digital infrastructure in the UK. Too many firms are negatively impacted by sub-standard broadband. It is vital business owners spend more energy doing business and less doing paperwork.”
There are also widespread reports that BT has deliberately ignored central business districts and business parks in both its commercial and taxpayer-subsidised broadband roll-outs. As a result, DCMS set up a £150m SuperConnected Cities fund that will give small business a £3,000 grant to upgrade their broadband connections in up to 22 cities.
The scheme was “red-lighted” In a Cabinet Office report in May 2013. A year later these cities had issued 1,008 vouchers.
Fixed to wireless connectivity was 77:23 with Virgin Media leading the list of suppliers followed by Metronet UK. DCMS said 149 suppliers had registered; 90 had won business as a result.
BDUK’s quarterly broadband performance indicator for June said the £72.4m BDUK has spent so far guaranteed at least 24Mbps download speeds to 888,133 premises. That is £81.56 per premises passed.
Put another way, the government is covering 12,260 premises for every million pounds spent so far. Ministers say they expect a £20 return on every pound spent on this roll-out.
Nice to see that Broadway Partners’ affiliate company Cotswolds Broadband has received funding commitments for £1.6m from West Oxfordshire District Council to make superfast broadband available to every home and business in the hardest to reach areas of West Oxfordshire, some 4,000 premises.
BT’s £25m county-wide project with the Oxfordshire County Council would have left 2,000 premises without access to high speed services. The new deal will address that shortfall.
The district council will supply a loan, BDUK is expected to chip in a grant, and private investors will match the funds so raised. Broadway Partners’ Adrian Wooster, late of BDUK, says this is the first time a a public private partnership has been set up for a UK rural broadband project.
The network will be mainly fibre to the premises (FTTP). It will offer open access to attract multiple ISPs and a richer choice of service offerings, and could backhaul 4G mobile in the area.
It’s an interesting approach, and one contrary to BT’s. BT’s approach has been to optimise the delivery of next generation broadband to rural area for its shareholders. Cotswold Broadband (and B4RN and all the other FTTP projects) are about optimising for the users.
According to a TED talk that I can no longer find, the maths insists that the optimal solution to a problem like delivering superfast broadband to rural areas optimises for one or the many. You can’t do both
So, as BT is beholden to its shareholders, it’s rational for it to do the least it can for the money it is given. In practical terms, that means making minimal investment in its network for as long as possible and persuading everyone that this is as good as it gets for the money, and besides they don’t need more.
In optimising for users Cotswold Broadband has to use a variety of technologies to connect the 4,000-odd premises to be cost-effective.
Assuming BDUK chips in £400k and the investors match the public sector money with their own £2m, what can Cotswold Broadband buy for £1000/premises? It’s already said most will get FTTP; if it can persuade a cellco or two, 4G mobile broadband is possibility. It could also consider microwave in E-band, Carrier Wi-Fi or and upcoming free to air WiGig wireless access, which is all becoming cheaper, and is more flexible to apply than fixed lines like copper and fibre. Over time it could use spare cash from wireless customers to extend the fibre where there is a demand.
Of course, these technology options are also available to BT, but the fact that Cotswold’s deal exists suggests BT has had no interest in supplying the area, presumably because of cost. Besides, using the new tech would involve it getting into new technologies. Going through the learning curve would sub-optimise its return on capital employed, so logically it won’t. The best it can do, logically, is to become an ISP on the Cotswold Broadband network.
Having behaved rationally so far, let’s see if BT’s common sense will prevail.