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Fujitsu pulls out of Wales
Monday 23 January 2012 15:37:29 by Andrew Ferguson

Since the inception of the Broadband Delivery UK project in the UK, there have been those who saw the various rules and regulations involved as favouring the BT Group. The news on PC Pro that Fujitsu is voluntarily withdrawing from the bidding process in Wales will reinforce the opinions of those critical of the BDUK process.

"After careful consideration, Fujitsu felt the risk levels within the Welsh Government contract terms were too high and therefore had no alternative but to withdraw.

Fujitsu, however, remains focused on Next Generation Broadband projects in other regions where the terms are more agreeable."

Fujitsu statement

The BDUK project was intended to allow commercial projects to extend their reach, beyond the two thirds of the UK where the commercial returns on investment were reasonable. It seems if Fujitsu is withdrawing then its plan to extensively use fibre to the home in an area like Wales would require too much investment from them, and thus increase the size of the risk to shareholders. In short the money on offer via BDUK and Welsh Assembly was probably too small. Installing full fibre to the home when the money from BDUK was often only around £100 per home, meant that unless the BDUK money was invested in a much smaller part of the UK then full fibre was always unlikely to happen.

Can this be seen as a failure of the Government or Welsh Assembly? Well it all depends on where you are sitting, Westminster will blame the Welsh Assembly and vice versa, the opposition will also add its own issues. The reality is that the amount of money promised between 2012 and 2017 by the previous Labour Government was pretty much the same.

At least Fujitsu is indicating it is still working with other regions, and for those authorities where the not-spots are not so geographically dispersed there is a real chance still of a solution where full fibre to the premises is the dominant solution.

The Openreach solutions rely heavily on a partial fibre to the cabinet (FTTC) solution, due largely to its lower cost per home passed. Original estimates from a few years ago had FTTP costing some £29 billion and FTTC £5 billion to cover the whole UK. It is likely though that Openreach will deploy some FTTP in each region where it wins the BDUK process, though probably only 10% to 20% of the homes covered by the BDUK funding.

The result of todays news, is that while people in Wales should still see superfast broadband hitting a coverage level well above that of other similar countries, it will have small businesses and consumers looking for another wave of upgrades in seven to ten years time. The Digital Divide between rural areas and those with both BT and Virgin Media operating will still exist though.


Posted by undecidedadrian over 5 years ago
Given that Fujitsu announced that if they were given the full 800million from BDUK they would have rolled out fibre to almost the whole of the final third.

So now it has gone all piecemeal, like every other supplier is now going to look very selectivly at where to supply.

Makes you wonder why they even bothered to enter the market?
Posted by PhilCoates over 5 years ago
Someone more knowledgeable than me suggested some time ago that the Fujitsu entry into the market was more to do with chivvying BT to sign off the contracts for Fujitsu kit than a real intention to supply fibre.

All I have heard is of Fujitsu pulling out of tendering - have they actually laid any fibre anywhere in the UK?
Posted by themanstan over 5 years ago
To be honest, Fujitsu supplied it's projected costings for rolling out FTTP to the next 20% with £800m from BDUK and £1.5-2b from Fujitsu Global. That's only ~£3B for 10 million homes. Given initial costing for UK FTTP were £29b for 25m homes, even using silly math at £1.16b per million homes (£1160/home) you come up ~£7b short and these are the more expensive to service properties.
Posted by themanstan over 5 years ago

They've started a trial in the Wirral...
Posted by PhilCoates over 5 years ago

Thanks - I do remember reading that now. I wonder if they would run fibre along the poles the 7km to my exchange if I asked nicely!! :>)
Posted by cyberdoyle over 5 years ago
There will only be one successful company, as there isn't a level playing field, and government have not done anything to provide one. VOA, PIA, ofcom and ASA have stacked up the odds against every other company competing, and BT will get all the funding, not that they need it, but just so nobody else gets it. Then they will shove BET and Satellites in to rurals, and upgrade their exchanges in semi urban areas with a few cabs. That's the way its going in every county... despite the hype.
Posted by GMAN99 over 5 years ago
And so the penny drops, oh... FTTH really is quite expensive actually

It will be the same for most rural areas, costs outway the profits
Posted by Somerset over 5 years ago
We are where we are because of decisions made by governments many years ago.
Posted by opticalgirl over 5 years ago
I believe that Fujitsu is still officially in the running in Cumbria and North Yorkshire - at least that's what they said in November. Sadly that means that they're not in the running where I live (Borders Broadband in Hereford & Gloucestershire). Does anyone know if Fujitsu is still in anywhere else?
Posted by otester over 5 years ago
This is why you have a free market, apart from freedom of choice, government is inefficient.
Posted by themanstan over 5 years ago
Agreed CD BT don't need support for the majority of the UK (70% which is pretty much what they doing). However, where rolllout is expensive. B4rns own figures quote £6k+ per property for commercial fibre rollout it pays not to do so as the tech cycle is shorter than the ROI, so no company would never make their money back.
Posted by nickkcin over 5 years ago
Actually there are ways that FTTH can be done in the funding envelope, it is just the Govt doesn't want to structure the funding in such a way to make it possible. With Vectoring you need a monopoly supplier other wise you can't make it work. With the con of the BDUK criteria for the 'best broadband in Europe' by 2015 they were obviously persuaded by BT that the only way to make it work was to skew the bidding process to make sure only BT could win. And here we are BT is the only one left in most of them (and probably all of them by the time they are finished)
Posted by nickkcin over 5 years ago
By the way I think you will find Fujitsu have pulled out of more projects than you think, but have not formally announced them yet.
Posted by Bob_s2 over 5 years ago
Once BDUK split the funding up it was pretty much a foregone conclusion that 99% of the contracts would go to BT

What little Broadband competition we had is fast disappearing

I am not quite sure how they get this past the EU though as in most cases they are down to just 1 tender

Posted by themanstan over 5 years ago

Using Fujitsu as a funding model how does one connect up at less than £2k per property?
Posted by GMAN99 over 5 years ago
What competition was there fujitsu didn't do anything?

Why don't they do what BT have done and spend a few billion of their own money and bid for BDUK money? Fujitsu was never going to get all of the BDUK I thought it was a publicity stunt back then and still do now
Posted by creakycopperline over 5 years ago
GMANN99= a BT lackey if i ever saw one, maybe if fujitsu set up their own phone and BB provider and had millions of customers and their own physical network maybe they would.
but bt's monopoly ensures no one gets a chance.
and i thought they weren't charities? tell that to your BT paymasters.
Posted by GMAN99 over 5 years ago
Boooo so BT already have a network, everyone should give up is that your answer?

Fujitsu waded in saying they'd bring true fibre to rural areas and made a big public fuss, now they are trotting off with their tails between their legs as its too expensive.

My point stands, fujitsu competition, what competition, they've done nothing apart from provided Virgin with a small trial on a street.

Don't tell me Fujistu have no money for this, they have... they obviously don't want to spend it, maybe they never planned to.
Posted by GMAN99 over 5 years ago
BT is not stopping anyone winning these bids, the councils choose the winning bid, they can't choose Fuji if they pull out :o)
Posted by nickkcin over 5 years ago
While GMAN99 is on here there will never be a sensible adult conversation. Either he works for BT or is someone who posts for the fun of it without any real in depth knowledge of the telecom market in the UK (not sure which is worse)

I did start drafting a response to GMAN and themanstan last night, but then thought 'what's the point'. I have explained it many times on here already why the Business Case is skewed to BT, but while the apologists exist I don't see why I have to keep repeating myself.

If people want to know the answer search on my ID and see previous answers
Posted by themanstan over 5 years ago

If you read carefully all of my posts you'll see that i apply financial, regulatory and business cases. I don't give BT any leeway here at all and I find it odd that you consider me a BTist.

What i object to is cases where people expect BT to operate not as a business and I make that perfectly clear. And I apply the same for all other ISPs that are trying to roll-out.
Posted by themanstan over 5 years ago
I consider the arch nemesis to be UKgov and OFCOM for applying a restrictive regulation, rather than encouraging infrastructure build.

VM I do think has SMP, however as a business I see them as cleverly stepping up to the regulatory line so that they don't have to wholesale. This is "good" business practise, in the sense the have batter margins and shorter ROI. With luck be truly profitable in the next couple of years.
Posted by themanstan over 5 years ago
I whole heartedly support any companies that bring proper competition to the market place or bring solutions in shorter time frames that larger companies cannot supply.

Such as the urban FTTP and rural solutions, the smaller companies being better at delivering bespoke solutions that are needed. Larger companies such as BT and VM are crap at this, but for a good reason they need standardised equipment and methods to deliver nationwide solutions.
Posted by nickkcin over 5 years ago
Sorry I didn't think I implied you were a BTist (sorry if I lumped you in with others) - but it is true I did start drafting a response to both comments last night

You can do FTTH in large rollouts for £1500 or even less with demand aggregation, but the cards are stacked against you when you have to compete with the monopoly incumbent (remember by definition the BDUK projects only get funding where BT is the monopoly access provider - all LLU is over BT copper no matter who your ISP is)
Posted by GMAN99 over 5 years ago
nick if your saying the government is playing underhand tactics to give BT all of this money your beef is with the government not me. BT are in a favourable position just by the very nature of what they bought I'm not arguing that, no reason for personal digs either
Posted by nickkcin over 5 years ago
as I said 'pointless'
Posted by GMAN99 over 5 years ago
What is non adult (implying childish) about my comments, I can't see any you should have seen some of the comments previous anti-BT posters have made that have thankfully now moved on. I've said it before and I'll say it again , Fujitsu came in with unachievable demands from the word go (all of the BDUK funding) just based on that it could have have been serious. If they "only" wanted 500m from BDUK why don't they just invest it themselves to make it work?
Posted by GMAN99 over 5 years ago
Fine if you can't reply to what I see as perfectly valid comments, pointless it is.
Posted by themanstan over 5 years ago
For that level a company would need substantial capital for economies of scale and other parts of their business to provide positive cash flow. You need really aggressive marketing to make this work and even lower PIA pricing from BT. And as I've pointed out to others PIA is not leasing, it is infrastructure access, so where there are problems with roll-out it's not their cost but yours to pay for. Because fit for purpose is "does telephone work".
Posted by GMAN99 over 5 years ago
nick a question for you, if BT were not bidding in any of these areas would Fujitsu and others win or still do a no bid?

You say its stacked in BT's favour, quite possibly (again an issue for government) but if BT didn't put in a bid would the others pick up the work?
Posted by nickkcin over 5 years ago
OK, one last chance to see if I can bang it into GMAN's brain. BT is not a 'business' in the normal sense (like Waterstones, or Tesco etc) it is a (poorly) regulated monopoly. For huge swathes of the country it is the 100% MONOPOLY provider of access. BDUK money is targeted at these areas because the MONOPOLY incumbent is quite happy to continuing raking in our money to provide a sub-standard service. If the procurement's fail (as they have now done) BT is quids in. It had 100% MONOPOLY before and it has 100% MONOPOLY now. So going forward you pay the BT price or the BT Price full stop.
Posted by nickkcin over 5 years ago
Yes others would step in, because the procurement would be structured in such a way to make it possible. It can be structured to work and to provide FTTH, but BDUK et al do not want to make it work
Posted by GMAN99 over 5 years ago
But you are not answering the question nick.

You are saying BT are being given the bids on a plate (not questioning that).

But I'm saying two things, if BT were not bidding would Fuji et al win and rollout or would it still not be viable? Your argument is that BT are getting it on a plate but if were are not bidding that gripe goes?
Posted by GMAN99 over 5 years ago
Secondly the BDUK money is to be quite honest insignificant in the whole scheme of things when it comes to rolling out a new fibre network across the UK, so why don't the other parties just rollout regardless, 500m doesn't go far anyway, sure its nice to have but its not a deal breaker?so why don't the other parties just rollout regardless, 500m doesn't go far anyway, sure its nice to have but its not a deal breaker?
Posted by GMAN99 over 5 years ago
It sounds like your argument is with BDUK, if BT win all of the funds then I'd agree something is very wrong with the process. However I don't believe others would rollout even if BT were not bidding. Its difficult times and companies probably don't want high cost long term investments, C&W , Mercury & NTL built their own networks to become Virgin (as you know) and it cost them dearly and that was during a period when there wasn't economic uncertainty, well not as bad as it is now anyway.
Posted by nickkcin over 5 years ago
OK. I failed. I apologise the rest of the site. Back to 'pointless'
Posted by GMAN99 over 5 years ago
Its hard to decipher what you are actually getting at with such short pointless responses. It sounds to me that your real issue is with the fact that BT are the access provider for most parts of the UK and have an advantage. No arguments there either its a no brainer of course they have. But that is a related but different issue to what I'm talking about, I'm saying if BT were not bidding I don't think Fuji would have bid and rolled out in Wales using PIA to rollout anyway.

You seem to think they would?
Posted by andrew (Favicon staff member) over 5 years ago
Here is a thought, BT would most likely make more money for its shareholders if it opted to hand back its telephone USO and concentrate on the profitable areas of the UK, both for broadband and telephone.

Losing its dominant moniker would allow much more cut throat tactics and money to have a larger FTTP penetration, and possibly avoid having to wholesale it too.
Posted by GMAN99 over 5 years ago
But it would still hold the access infrastructure ducts/poles wouldn't it, which is what the gripe is for most people, that it was ahem "gifted".

The telephone USO itself surely must become defunct over the coming years anyway with more and more using mobile phones.
Posted by RandomJointer over 5 years ago
Openreach are the best option for BDUK.

They have the experience which leads to lower build costs and they have the retail brands that people want to buy.

South Yorkshire has taught us that a non Openreach subsidised deployment only leads to wasted taxpayer money.
Posted by themanstan over 5 years ago

with respect to the monopoly status, it's not through poor regulation of BT, it's poor regulation of the market. Instead of generating a rewarding environment for competition, there is a restricted environment. Other european countries with deregulated their telecoms market have ample proper competition. Yes, their incumbents still have effective monopolies in rural areas, but that isn't going to change as they are the least profitable and most expensive to service without significant government intervention (e.g. Cornwall and Lithuania, which also have EU support).
Posted by themanstan over 5 years ago
The only other alternative is to treat broadband as a utility, which should be have USO applied for simplicity. Because then the rules and costs for connection become the same as electricity and gas. The solution to connections which is then really understood by the customer at that point.
Posted by Somerset over 5 years ago
In 1980 BT was a total monopoly. Now we can have LLU from eg. TalkTalk or broadband from many ISPs and calls from other companies.

Somebody has to own the shared cables into properties.
Posted by themanstan over 5 years ago
Although, there is a third way... and my least favourite and that is to use BT's effective monopoly. Remove wholesale from rural areas, but require that BT connect up 28%. Leaving the unrealistic 1-2% to government assistance. Removal of wholesale allows better margins so there is ROI and level of service is regulated.
Posted by Somerset over 5 years ago
Remove wholesale and that means no choice of ISP or call provider.
Posted by NilSatisOptimum over 5 years ago
No surprise really, always thought the answer to this will be based around 4g
Posted by themanstan over 5 years ago
Indeed Somerset, but for commercial roll-outs in rural areas there are two options, expensive plans e.g. Gigaclears £50pcm or remove wholesale so that ROI is maximised. If you have wholesale, margins are trimmed and makes ROI very long and simply far worse than leaving your money in the bank.
Posted by Somerset over 5 years ago
OK, you tell TalkTalk, Sky etc. they will lose all their customers in those areas.
Posted by chrysalis over 5 years ago
My prediction is rural will get more FTTP than urban, the rollout of FTTP commercially is extremely limited, so far most of it is subsidised.
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