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Hampshire reaches 54,000 premises passed target
Monday 27 April 2015 19:39:24 by Andrew Ferguson

At the end of the last week Hampshire declared that it had reached its premises passed goal for the 2014/2015 financial year with an extra 54,000 able to get 24 Mbps or faster speeds from its Superfast Broadband Programme.

The total number of cabinets enabled in Hampshire via the project to date is 238 and while we have obviously not seen the invoices, the simplistic calculation that if all the £10m of gap funding was spent on those cabinets alone it would work out at £42,000 per cabinet of gap funding. The projects original goal was 90% able to access superfast by the end of 2015 and if more cabinets are added as we expect the coverage estimate to increase ever closer to this original goal.

The wave 2 project that is aiming to take over coverage to 95% at superfast speeds is in the planning stages and detailed information will be released probably after September.

thinkbroadband calculation of current fibre, superfast and new USO broadband coverage in Hampshire and its Parliamentary Constituencies - 30th April 2015
Council Area % fibre based % superfast (>30 Mbps) % cable % Openreach FTTP % Under 2 Mbps USC % Under 5 Mbps (new USO) % Under 15 Mbps
Cities and County combined 91.2% 87.6% 62.4% 0.07% 0.8% 3.8% 8.1%
Hampshire County 89.3% 84.6% 55% 0.1% 1% 4.8% 10.3%
Portsmouth (City) 98.8% 98.6% 91.8% 0% 0% 0.5% 0.9%
Southampton (City) 95.5% 94.7% 78.2% 0% 0.3 1.2% 2.4%
Aldershot 98.3% 97.1% 89% 0% 0.3% 1.3% 1.9%
Basingstoke 94.1% 89% 59.9% 0% 2.2% 5.4% 8.5%
East Hampshire 82.2% 73% 17.8% 0% 1.3% 5.7% 16.4%
Eastleigh 95.4% 94% 62% 0% 0.2% 0.9% 2.6%
Fareham 96.5% 94.9% 84% 0% 0% 1.5% 3.6%
Gosport 97.8% 96.2% 88% 0% 0.6% 1.2% 3%
Havant 98.6% 98.2% 86.2% 0% 0.2% 1% 1.2%
Meon Valley 85% 78.9% 56.2% 0% 1.4% 8.2% 16.3%
New Forest East 84.4% 77.5% 24.6% 0% 1.2% 5.7% 12.5%
New Forest West 86.1% 75.7% 0% 0% 1.2% 5.1% 13.8%
North East Hampshire 86.1% 77.3% 51.3% 0% 2.1% 8.3% 15.6%
North West Hampshire 80.8% 74.9% 38.2% 1.5% 1% 8.8% 18.7%
Portsmouth North 98.6% 98.4% 90.6% 0% 0% 0.5% 1%
Portsmouth South 99% 98.8% 92.9% 0% 0% 0.5% 0.9%
Romsey and Southampton North 77.2% 72.7% 54.7% 0% 1.6% 10.2% 22.8%
Southampton Itchen 93.8% 92.8% 73.8% 0% 0.6% 1.9% 3.7%
Southampton Test 96.8% 96.7% 82.8% 0% 0% 0.3% 0.9%
Winchester 87.3% 83.7% 58.2% 0% 1% 5.1% 9.5%

CORRECTION: 30th April 2015 The USC, USO and 15 Mbps threshold figures were found to be incorrect in some cases. In areas where FTTC was available but slower than ADSL/ADSL2+ and cable was also available, the presence of cable broadband had been ignored when calculating the percentages. The overall figures thus change from USC 0.9% to 0.8%, USO 4.1% to 3.8% and 15 Mbps from 8.5% to 8.1%.

NOTE: These figures are based on an analysis of likely speeds for areas with FTTC/FTTP/cable covering them and for none fibre areas then ADSL/ADSL2+ speed estimates are used. These estimates are indepdent of our speed test databases.

The sub-division of large counties into roughly equal constituencies is a useful way to see which areas are doing very well for coverage and those that are some way behind still.


Posted by ValueforMoney about 1 year ago
Given the geographies, if total cost exceeeded £17k each I would be surprised, which means at 238 cabs that £4m of the £10m public subsidy or £13,9m including BT contribution leaves much in the pot.
The 226 premises per cab is quite high so the subsidy needed ought to be really low for this wave.
There looks to at least another 40k in the intervention areas, but that also carries more money.
The lack of transparency will prove counter productive.
Posted by TheEulerID about 1 year ago
It should be born in mind that gap funding doesn't just cover capital and installation costs of the cabinet, back haul and so on, it's gap funding for the 7 year life of the project. In essence, it's meant to cover the difference between what the total costs are (capital and operational) for the seven years less the expected revenue, allowing for ROI on any BT contribution.
That's why there's a "clawback" mechanism should take up exceed projections.
However, it would be nice to know how much has been paid across to date.
Posted by ValueforMoney about 1 year ago
@TheEulerID - the notion of operational costs as an allowable state aid item is odd.
In this case the subsidy budget of £42k per cab will have borne no relationship to the total capital cost (<£20k per cab).
So the liklihood is BT billed all it could and its capital contribution is reconciled at some point.
So at best this is not gap funding but some form of loan at best.
Posted by andrew (Favicon staff member) about 1 year ago
@valueformoney which is as much a guess and simplistic assumption as the news item, i.e. we don't know what BT has invoiced for. Or how many extra cabs we may see before wave 2 and the complication that some native FTTP was deployed.
Posted by themanstan about 1 year ago
Why odd?

The cost of operation is proportional to customer base take-up, if the customer base is too small the costs of operation are not covered. If the take up is high enough then costs are covered or more than covered and claw back takes effect. Meeting capital costs is not always enough...

E.g. if a bus has a break even level of 20 passengers per trip, but only 10 get on, the bus service runs at a loss, this is irrespective of capital investment. The cost of operation is, driver payroll, insurance, SMR, depreciation. Hence, subsidies for routes

Posted by ValueforMoney about 1 year ago
@andrew the state aid receipts £97m for each of the last two quarters, points to pay as you go. So the assumption remains simplistic but the £97m is huge.
Posted by ValueforMoney about 1 year ago
@themanstan so we understand the total cost is average £24k (NAO January) and we understand the average cab passes/serves 200 homes, but the cabinet is mostly equipped with 48 or 96ports. So your operational costs arise from 48 ports but the clawback is expressed as c20% of those passed - 40 ports.
Once you sell 40 subs - where is the operational cost deficit?
Posted by ValueforMoney about 1 year ago
@themanstand by contrast - a commercial cab of 6x48 ports serving on average 400 homes e.g. 19m/52k cabs.
So we equip this cab with 2x48 port cards and recruit 80 customers.
The differential in operational costs looks pretty minimal.
This focus on operational costs to boost total cost and call it investment, does increasingly looks as quetionable as claiming BT spent £2.5bn on c52,000 cabinets to establish its commercial footprint.
Posted by themanstan about 1 year ago

Why are you talking averages? BDUK looks mostly at non-average situations... you can talk averages when looking at normal scenarios, but often these aren't.
A low population serving cab can take a long time to reach 40 customers... not everyone sees the need for fast service, demographics is not ideal as the more rural areas have an older population spread and a fast service "need" is skewed to younger populations.

Let's be frank, take up is pretty poor given the advantages that a quicker service provides.

Posted by andrew (Favicon staff member) about 1 year ago
Ironically we want FTTC to look expensive and FTTH cheap, but if as people keep suggesting FTTC is cheaper than thought, perhaps they backed the right horse in a time of austerity.
Posted by ValueforMoney about 1 year ago
@andrew I have not suggested it was wrong, it has great ultility, but it is sufficiently cheap to not hesitate with the original mixed economy proposals.
And I am not against G.FAST but would favour state aid contributing to bringing fibre deep into the distribution network, so perhaps the state aid is limited to bringing fibre to a manifold.
Posted by ValueforMoney about 1 year ago
@themanstan you raise a fair point on demand, so it begs the question what is a breakeven point on a commercial cab? No that high, 96 ports at £72pa per wholesale port recovers £20k in three years, but the point on demand is crucial as it points to what are once in a generation changes for rural.
That's why I favour as much FTTP and create conditions to allow a full transition where P is achievable. Within £1.7bn there is quite a bit that could be done now.
Posted by Somerset about 1 year ago
Please describe in detail what 'bringing fibre deep into the distribution network' means.
Posted by andrew (Favicon staff member) about 1 year ago
@valueformoney Fibre to a manifold, is pretty much what native FTTP is. With the native GEA-FTTP roll-outs, homes are only given the final 20m to 50m of fibre from the manifold when their order the service with the free to £99+VAT install cost depending on retailer.
Posted by wrecker about 1 year ago
Its very interesting to see that once again the isolated property is very poorly served. There should be a USC for a minimum of 10Mbits. with more and more government departments now requiring on line submission of forms the rural dweller is very badly placed.
Posted by gerarda about 1 year ago
@wrecker 0.9% under the USC represents more than just isolated properties. The Hampshire site appears to be silent in regards to meeting the USC.
Posted by MCM999 about 1 year ago
@wrecker Why are you only considering rural isolated properties? There are many in cities such as London where speeds are far less than 10Mbps and these users don't have the luxury of tax payer subsidised BDUK to come to their rescue.
Posted by ValueforMoney about 1 year ago
Somerset as per Andrew comment - fibre manifold on a DP.
Posted by themanstan about 1 year ago

Then covering operating costs are crucial, as revenue stream covers the costs of the next step in infrastructure investment.
Much as I've said before, it's very much like getting a mortgage, if you have the cash all when and good to go for the mansion... but if you can only service the debt for a smaller mortgage then you incrementally increase in size as budget allows. BT doesn't have a bad debt ratios, but has a substantial liability in the form of the pension which has consumed almost £3B in the last 3 years...
Posted by HangTime about 1 year ago
Don't know if I'm misinterpreting the figures but to me they don't stack up.

E.g. Portsmouth South has 98.3% over 30mbit and 3.9% under 15mbit. The two are mutually exclusive, so I don't see how the total can be over 100%.
Posted by ValueforMoney about 1 year ago
Pension contributions would not normally feature in allowable state aid, but it would be interesting to speculate what proportion of BT's investment in operational cost needs to be a pension contribution. I guess its fits between the £1bn promised and the c£300m - or £60 per home passed need to make gap funding credible.
But in this case the 238 cabs will have cost c£4m of the £10m subsidy available + £3.9m BT contribution.
Using state aid to improve the network (and ultimately remove legacy costs) must be a better option to handing the money back...cont
Posted by ValueforMoney about 1 year ago
So the pension deficit must better served by taking more state aid, saving BT capital, boosting cash flow, and the labour capitalised is matched with the depreciation charge which is a feature of BT accounts, then cash generated can be used to the contribute to the pension deficit.
I am unsure how the current £97m a quarter state aid will be treated in BT's accounts but bringing forward depreciation charges will probably need to feature to prevent any adverse impact on pricing.
Posted by themanstan about 1 year ago
You are misinterpreting.

The fact that BT has a large pension deficit to service, means that its operating profit (not operating cost) has to be much larger to increase its debt ratio. Of course fundamentally operating costs affect profit.
The amount of debt that can be taken on is limited unless the nature of the debt acquisition increases revenues such as the EE purchase. Do you see the difference?
Posted by andrew (Favicon staff member) about 1 year ago
@hangtime Well spotted, and believe its down to a glitch in the way the cable speeds were handled in non-fttc areas. Working on updated figures now, and will update once I have more news.
Posted by ValueforMoney about 1 year ago
@themanstan - the principal I understand but I maybe missing your point.
I have not seen any debt increase to fund FTTC commercial - I can see c£300m a year allocation from existing capital envelopes - a large allocation of labour and contractor resource which has a real opportunity cost.
If the margin is the issue then this will be all the more reason to make efficient use of the state aid availabe.
Posted by ValueforMoney about 1 year ago
contin.. Iwould want to argue the case that any e-side (FTTC)or d-side fibre upgrade brings benefits to the entire e-side and the capital/resource needed has a big overlap with existing operations/resources, so the new debt required for ongoing network transformation would need to be quantifed.
Posted by themanstan about 1 year ago
Sorry, I was referring to your desire to see as much FTTP as possible, this relates to the how much debt can be taken on and serviced. There is nowhere near enough state-aid to cover any significant FTTP rollout. Take VMs ~16% increase in footprint from ~50% to 66%, the costs will not be dissimilar for FTTP... investment forecast £3B.
Posted by andrew (Favicon staff member) about 1 year ago
@hangtime ok have nailed the bug, and was because where ADSL was faster than FTTC was not taking into account postcode may be served by cable.

Has an impact on USC, USO and 15 Mbps result but only significant in areas with high cable coverage. But apart from a few premises Portmouth South has hit the 2 Mbps USC.
Posted by ValueforMoney about 1 year ago
@themanstan - I was specifically referring to what will be several hundred million of unspent state aid available which could be used to stretch and improve rural coverage using the FTTP lessona learned in Cornwall for instance.
Posted by andrew (Favicon staff member) about 1 year ago
Not BT's decision but those who control the contracts.

Councils may want to spend it on other more critical items and be glad to not have spent it all.
Posted by ValueforMoney about 1 year ago
@andew your answer is logical and rationale but must be wrong, or at least sub-optimal for the UK.
Perhaps the notion of best in Europe to be achievable needed a partnership where BT did not mis-lead on its costs, and FTTP was not re-positioned as a premium service.
Putting the default re-set button in the Local Authorities hands suggests BT cororately are indifferent or have no vision for the transformation of their network.
Posted by andrew (Favicon staff member) about 1 year ago
@hangtime Corrected results are now in the table, generally was a 0.1% to 0.2% improvement, hence why not spotted before. Took the Portsmouth constituencies with their particular coverage pattern to highlight the mistake.
Posted by WWWombat about 1 year ago
The choice has to be in the LA's hands. It can't be just a free hand to BT, and the LA has very different priorities.

If the LA wants to use the unspent money in a SEP contract, then they are free to spend it with someone other than BT.

Likewise the clawback funds have to go back to the LA. It wouldn't be right for BT to just use them either, in the face of an LA that wants it spent differently.
Posted by ValueforMoney about 1 year ago
@wwwombat Given the current dynamics your correct, but if your sitting in Openreach as opposed to BT Group, you could not help but suggest the need to need to publish in advance white papers on the how much could be done, as opposed promises of G.Fast some time in the future.
SEPs do not appear to referencing the cheaper costs but identify more premises with new central funds.
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