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BT fails to secure phase 2 Devon and Somerset contract
Friday 26 June 2015 22:00:45 by Andrew Ferguson

The phase 1 BDUK projects did not present this opportunity but as Devon and Somerset councils have apparently decided not to sign with BT for phase 2 project to help take superfast broadband coverage in the UK to 95% there is now a massive opportunity for those firms who have complained about being left out of the phase 1 contracts.

"CDS’ decision follows lengthy discussions with BT and BDUK – the Government agency responsible for the national broadband roll-out. It emerged that BT could not meet the Government’s and CDS target of achieving 95% superfast broadband coverage by the end of 2017.

BT’s best offer does not meet the public value for money standards required under Section 151 of the Local Government Act. Finance officers who have a fiduciary duty to tax-payers said the offer was high risk.

After seeking clarification from BT about their bid, the Connecting Devon and Somerset (CDS) Partnership have decided to reissue the tender for this work as an open procurement exercise. The local authority partners of CDS are naturally disappointed on behalf of local residents and businesses that they could not agree a contract at this stage.

BT has said they would not be able to deliver the extent of superfast broadband required by 2017, prompting the partnership to re-engage in the market through an open procurement process.

CDS is the largest single superfast broadband programme in England and makes an important contribution to the Government’s national targets for the broadband roll-out".

Extract from Connecting Devon and Somerset Press Release

This does not affect the phase 1 roll-out which is meant to deliver 90% superfast coverage as part of its contract which BT are signed up to. Devon County excluding Plymouth and Exeter currently has 60.8% superfast (>30 Mbps) coverage, Plymouth 96.7%, Exeter District 90.7%, Somerset County is 56.7%.

There are no details of what the BT bid actually entailed and it is too early to know who will bid for the work under the open procurement process, it is entirely possible given the size of the CDS footprint and dispersed nature that BT may end up being the only bidder, or a consortium of other smaller providers may work together to provide diverse solutions for varying parts of the contract area.

"This is a huge disappointment for us. BT have let the County Councils down, they have also let the Connecting Devon and Somerset Partnership down, and worst of all they have let residents, communities and businesses in Somerset and Devon down. We have a duty to seek best value for all our residents and their tender for the next phase of the programme was just not up to scratch.

"We are actually aware of the importance of Superfast Broadband for all our residents but we also needed to make sure we got value for money on behalf of our taxpayers. In taking this action we have acted in the best interests of those who live and run businesses in the region and we will now do everything we can to minimise the delay this causes to the programme. CDS will issue more details once timescales for a new procurement are confirmed. CDS will continue to work with BT on the delivery of phase one of the programme to meet the Government’s target of 90% coverage by the end of 2016."

Councillor David Hall, Cabinet Member for Somerset County Council

The failure to find a suitable agreement with BT is not too much of a surprise given the level of feeling made public by representatives from the South West in the last month or two and the risk that a new procurement phase might drag on and risk compromising the Governments 2017 95% target will be an embarrassment for the Conservatives.

As things stand it is interesting to watch a game of hard ball, but the holy grail of value for money has to be balanced against improving services for people as soon as possible. What seems very likely now is that BT will ensure it sticks to the letter of its existing contract and no more, and basically we believe that any USC type work for Devon and Somerset will now revolve around satellite based connections.

"BT is committed to making high-speed fibre broadband as widely available as possible and we are disappointed that we have not yet been able to reach agreement on the next phase of the Connecting Devon and Somerset programme. We believe we have made the best possible offer to take superfast broadband coverage beyond the current target of around 90 per cent by the end of next year, taking into account the challenging and remote nature of some locations in the two counties.

Our offer would mean that an additional 34,400 households and businesses in the two counties would have access to superfast broadband by the middle of 2020. A huge engineering operation, would be required, including the laying of thousands of kilometres of fibre optic cable and the installation of over 1000 fibre broadband cabinets and other structures. It is estimated that it would take more than 15 years for BT to get a return on its investment. We will continue to work to try to find a solution."

BT spokesperson on CDS contract news

Update Late Friday Just added a late evening response from BT. There is a few days left for the existing EU State Aid approvals, so any procurement process if no last minute deals are reached will be looking at a 6 month to a year pause for new EU approval or a piecemeal approach taken that avoids the need for EU approval.

Update 2 Saturday morning The BT figure of 34,400 represents 5% of the premises across the two counties and at 1,000 cabinets to serve those you get an idea of the low population densities involved, i.e. if cabinets are spread evenly and no FTTP used it would be 34 premises per cabinet. Funding was fairly good at (£45m from Westminster) plus whatever local councils and BT was putting on the table, this means the potential intervention cost per premise was in the £1,000 to £1,700 region and will appear to be less value for money than the phase 1 project. The week was building up to this hardball stand-off and it would not surprise us if a lot of the problem is that BT will not commit to which exact 34,400 premises will be served out of the final 10% at the time of the contract signing. The 2020 finish data seems many years away, but with the existing project due to run for 12 to 18 months more it was always unlikely that 95% by or in 2017 was achievable in Devon and Somerset.

12 months ago we did a theoretical exercise where if every existing Openreach cabinet was enabled for VDSL2 what coverage would that provide across the area, this suggested 80% was the natural level of superfast coverage (24 Mbps) for Devon and Somerset (higher if you include Torbay, Plymouth, North East Somerset) but since then there has been a good amount of Exchange Only work so figures would go higher.


Posted by cyberdoyle about 1 year ago
thin edge of the wedge. great stuff, at last the councils start to see the emperor has no clothes. Bring on the altnets who will go the extra mile.
Posted by Somerset about 1 year ago
@CD - how many altnets will fill in the gaps of small cabinet areas and long FTTC lines? Particularly in built up areas.
Posted by AndrueC about 1 year ago
Isn't access equivalence a condition of BDUK? That would rule out most of the altnets.
Posted by chilting about 1 year ago
Excellent news!!
Posted by gerarda about 1 year ago
Having allowed BT to cherry pick the phase 1 locations I dont think there is a massive opportunity for the other firms and technologies as the pockets that are left are likely to be too disparate and widespread to be very profitable.
Posted by WWWombat about 1 year ago
Interesting choice of words from David Hall - to accuse BT of letting CDS down.

Letting CDS down would be if they took the contract, but deliberately failed to deliver (£38bn rail upgrade, anyone?).

Being honest, and getting to the point of having the tender rejected, is obviously more respectful. I don't doubt it is disappointing, though.

We've seen some counties go for partial p2 contract, so I'm surprised CDS haven't. Conversely, we've seen some sparse counties reaching the point of fixed wireless. Perhaps CDS are there too.

It'll be interesting to see how things play out now
Posted by WWWombat about 1 year ago
The obvious alternate strategy would be for CDS to have required total coverage of whole areas - perhaps parish level

I wonder if that approach would hit the value requirements either, and what coverage the money would have bought.
Posted by WWWombat about 1 year ago
In phase 1, the EC approval caused Lancashire & Rutland to wait months before starting deployment, but it didn't stop the procurement process going ahead. The contracts were signed long before the (eventual) EC approval.
Posted by SLAMDUNC about 1 year ago
So BT was offering a solution by 2020 but CDS rejected partly on the grounds of it not being in place by end 2017. We've seen other Phase2 projects (Essex) with that very low delivery target, but no-one has publicly challenged that until now.
Posted by gerarda about 1 year ago

Unfortunately we will never know the cost of that alternative. What is almost certain is that the cost of doing little bits of infill work will be disproportionately higher that doing larger adjacent areas. Which is why it has always been my belief that the BDUK approach of leaving the worst spots ot last was wrong
Posted by andrew (Favicon staff member) about 1 year ago
On the EU State Aid a lot hinges on what the EU may want to change in how it defines various elements. The aid approval about to expire had had a lot of work done on it, and was pretty much there.

I cannot see anyone wanting to sign a contract unless they are pretty sure the new rules will pretty much identical.

My money is on some wanting guarantees on the number of premises in individual district/constituencies that would benefit.
Posted by chilting about 1 year ago
To me this is the BDUK project evolving it is now time to use fixed wireless for the remaining 10%. Strategically placed transmitter masts with a relay of high level antenna could serve most of rural Britain. The initiative needs to be given to local communities to start their own projects, therefore, funding for antenna could be provided on a connection voucher basis. Having vouchers would encourage fixed wireless providers to invest.
Posted by ValueforMoney about 1 year ago
@andrew I would hope the state aid secures a sure ans certain capital contribution from BT in the form of reductions from the LA bills. £353m (as per NAO report 1)/6m premises would remove discussion on overbuild and BT reducing its planned footprint.
It would also simpify the extension projects.
Posted by andrew (Favicon staff member) about 1 year ago
New state aid will apply to whoever undertakes new contract, no where does it say it have to be BT
Posted by ValueforMoney about 1 year ago
State aid modifications will apply to the whole programme, it is a mid-term review.
Posted by Jerrym1 about 1 year ago
This is a huge blow to the final 10% (of which I am one). There is no chance of the Programme hitting the 2017 target and I think the Programme leadership should be held accountable for their failings. Their approach has been flawed from the beginning and they have been played by BT who have got themselves into a dominant position and can now call the shots
Posted by chilting about 1 year ago
I feel that we have been duped here in West Sussex as well, about 20% of us on our exchange got nothing out of FTTC and never will. FTTP and its variants are pie in the sky and never will deployed on a wide scale basis in rural areas. Devon and Somerset have done you a favour ditching BT. Just hope they choose fixed wireless, then you may get superfast much faster than you ever thought possible.
Posted by Llety about 1 year ago
I am puzzled how rural lead community projects get backhaul. Will BT won't make it easy? Maybe, maybe not, even if the infrastructure is there. Local councils may not support putting ducts under roads, so the alternative is wireless from other sites, possibly hops over many 10's of miles. Mobile phone operators provide very slow 3G when contended.

B4RN proved it can be done, but many parts of the UK have more difficult access to infrastructure and less supportive local government.

So how do "local communities" who set up their own wireless project get access to backhaul with a viable speed ?
Posted by AndyCZ about 1 year ago
In individual or small areas, backhaul is not that expensive if you have close access to a tier 1 provider's PoP.
Posted by gerarda about 1 year ago

Unless BT have changed their approach in the last 10 years getting backhaul from them is very problematic if they see the community project as any sort of threat, however minor, to their commercial interests.
Posted by WWWombat about 1 year ago
Wireless backhaul is an option being trialled in the phase 3 market trials.

I could be wrong, but my understanding of the Airwave trial is partly about how they would come up with wholesale wireless backhaul using their emergency services infrastructure, combined with local wireless ISPs to serve the consumers.

I think.
Posted by WWWombat about 1 year ago
I'm sure state aid already does secure a sure and certain contribution, with any uncertainty entirely at the bidder's risk. The only uncertain thing is that *you* don't know what it is.

I'm not sure how *anything* financial can remove discussions on overbuild.

As far as I can see, the only thing that reduces "discussion" will be firm rules. We seem to have rules already, though not consistent, and accusations of overbuild seem to prove unfounded when investigated.

Rules, it seems, only reduce discussion when the outraged citizens bother to try to understand them.
Posted by WWWombat about 1 year ago
Isn't it 1,000 new cabinets *and* other structures.

I wonder what counts as "other structure"? New chambers for FTTP? Splitters and fDPs? New poles? Power cabinets for FTTRN?

Or perhaps there was more than just the access network. The build for H+I of Scotland looks to have included 30 new WDM nodes and 500km of land-based fibre, on top of the well-reported submarine cable, which all sounds distinctly closer to the core network.

Maybe CDS needed more core buildout too.
Posted by andrew (Favicon staff member) about 1 year ago
@chilting and where in any contracts has anyone promised 100% coverage of an exchange?

Am worried that people mis-understand what 90% of the UK coverage means.

West Sussex it seems was aiming at 90% fibre based I belive, so superfast obviously lower but is coming in better than that

95.6% fibre based dropping to 87.1% at 30 Mbps or faster. Using 24 Mbps it is very close to 90%.

Posted by ValueforMoney about 1 year ago
@WWWombat - explain from the numbers available including the reported state aid receipts where you see BT's capital contribution.
I would hope to see the £353m (c£60 per premise pased) in reduced costs, or for the work done so far BT paying the £10k per cabinet installed or £125m to April for the 12.5k cabinets and 2.5m homes passed?
Posted by ValueforMoney about 1 year ago
@WWWombat for the record, I have seen one Council (pre-BDUK) confirm it is seeing total cost which align with the NAO numbers with reduction then applied for BTs contribution. This reduces to subsidy to closer to the NI rates oberved in 2010/2012.
Need to see confirmed a BDUK Framework contract as BT state aid receipts too high to suggest BT is making any contribution.
I do not undestand the secracy given the level of consequential cost transformation possible.
Posted by fastman about 1 year ago
NGA --Need to see confirmed a BDUK Framework contract as BT state aid receipts too high to suggest BT is making any contribution.
I do not undestand the secracy given the level of consequential cost transformation possible

So NGa perhaps youd likeke to share your commercial rates for consultancy so we can your marp and cost basis

I think the next few months will prove how complex this stuff really is (rather than how simple some actually think it is) and will then be interesting what some of these areas who have chosen an different path will actually get at the end of it
Posted by chilting about 1 year ago
The problem at the moment is that we are only getting about 80% coverage on the West Chiltington exchange. The remaining 20%, with some lines more than 5 miles from the exchange in Storrington could only benefit from FTTP. But this not viable because it would involve 20 miles+ ducting. Rearranging the copper would only benefit a few people. Hence, no Openreach solution.
Posted by chilting about 1 year ago
We are at the moment trying to get interest in the area to connect to the Blaze Wireless transmitter on Trundle Hill Goodwood. This transmitter has the potential to cover a good part of West Sussex. Anyone who is interested can register their interest on the Blaze website.
Posted by ValueforMoney about 1 year ago
@Fastman, the detail shared by WWWombat re H&I is very welcome, hence the £130,000 per cabinet and the expectation the unit cost will drop as many of spine costs and planning is conducted early.

So it has not been complex so far with cabs serving 200, so BT's contribution should be high leaving the money for the more difficult areas.

BT capital contribution to the project is not part of that complexity.
Posted by fastman about 1 year ago
VFM So it has not been complex so far with cabs serving 200, --is whose opinion has it nor been complex, yours or the actual network solution designers
Posted by andrew (Favicon staff member) about 1 year ago
But then how many of the BDUK cabinets delivered so far actually serve 200 premises?
Posted by fastman about 1 year ago
Andrew probably quite a few -- any to do with business parks almost definitely but these would not greatest value for money and some mogt be downright poor value for money and depending on how many have been done could badly skew the county % target
Posted by Somerset about 1 year ago
@chilting - How do you calculate 80%, all cabs have FTTC so where are the 440 premises without coverage?

On another item you say it's 250 slow lines, how slow?
Posted by chilting about 1 year ago
The 80% is a estimate of superfast coverage. The 250 on slow lines are mainly on ADSL but a few of us can get up to 4 or 5 Mbps on FTTC.
ALL the slow ADSL lines are below 2Mbps because of the distance from the exchange. Our exchange is 2 miles from West Chiltington in Storrington. Some of the lines are more than 5 miles from the exchange. The other 150 slower lines get reasonable speeds but not superfast if they upgrade to FTTC.
Posted by gah789 about 1 year ago
What is going to happen when they get no bids other than from BT? BDUK contracts are unattractive to SMEs because of their scale, complexity, working capital needs, etc. Bidding costs are high and it is likely that you are being used as a lever against BT. Councils prefer to deal with one large contract and a contractor with the capacity to bear the risks. Someone has to bear the coordination costs for multiple small projects. A predictable mess but the only serious alternative is another utility operating in the same area. There is no evidence that any of them are interested.
Posted by Blackmamba about 1 year ago
Hi Chi.
There are many Adsl lines showing on your exchange with low results that are very close) to a Cab so they only to order FTTC service which may be cheaper. I have recorded they are slowly being removed under the 180 day thinkbroadband window. I have found in Surrey that many customers are stating they are unable to get a better service due to not contacting other ISP,s that can offer a higher speed. I see on your Post Code your are stating over 2 meg at 2000 Mtres .
Posted by Somerset about 1 year ago
@chi - so some lines are slow because people have not upgraded to FTTC?
Posted by chilting about 1 year ago
No, my figures do not include those people who have not upgraded that would be very misleading. My figures are something of a guesstimate but the figures from WSCC for cabinet 4, the cabinet I am on, are 288 lines with just under 200 having access to superfast. There are 3 other cabinets on this exchange with long lines out of a total of 8 cabinets.
Posted by WWWombat about 1 year ago
"Where you see BT's capital contribution?"

I don't expect to see it as a line item anywhere - either BT accounts or in contracts. Expectation set because this is the key thing they want to NDA. Expectation met.

However, I do expect to judge it from the BT accounts, by seeing Openreach capital expenditure continue. If we see them spend at the same rate as when NGA rollout was fully commercial, then they're still spending on *something*. What could it be?
Posted by WWWombat about 1 year ago
Openreach expenditure *is* continuing as before, visible within BT accounts, even before taking account of the state aid receipts. The two combined is much bigger.

I surmise this spend is BT's contribution continuing. If you don't think it represents BT's contribution, tell me what you think they are spending on instead ... because whatever it is, it has the same run rate as a full FTTC deployment.
Posted by andrew (Favicon staff member) about 1 year ago
Based on Sky report today it is not the copper network :-)
Posted by WWWombat about 1 year ago
Good to see confirmation from one council on the average spend per cabinet.

My contention with your figures is that you don't always count the same average.

For example, what budget do you think the work to extend BT's core DWDM transmission network in H+I came from? The submarine + 500km land fibre plus 30 DWDM nodes running 10x10Gb? It won't be cheap.

Would that be part of BT's £2.5bn? Or part of the H+I subsidy? Or part of BT's contribution to the H+I project?

Would it be averaged per cabinet? By BT? By You? By a council? By NAO?
Posted by WWWombat about 1 year ago
Not looked at stuff today. Need to go, but will check later...
Posted by ValueforMoney about 1 year ago
@WWWombat the H&I work includes all of the DWDM kit and submarine cables. It is £126m of subsidy and Oxera report an expected contribution from BT of 5%.
No problem with that, it is pre-BDUK Framework, I am sure H&I only problem will be on resource and transparency on use of existing assets.
Posted by Blackmamba about 1 year ago
Hi Chi
I exspect the 88 customers on Cab 4 are on Post Codes that are over 1 mile from the CAB and have been barred ,to me this is a high % there could be a Data error or new data not checked. As you are at 2000 Mtres and getting 4-5 meg.
Posted by WWWombat about 1 year ago
I didn't ask what work it was included in, but whose budget, and how cost per cab was calculated.

In general, in all other comments, all other projects, you blindly divide the full budget by the number of houses, and come up with £££ per cabinet. and you ignore what part of the budget gets spent on ancillary work like the H+I DWDM transmission network.

I'm pretty sure the NAO does not.

It just doesn't make sense to do it that way - at least not if you want to be able to make valid comparisons between projects.
Posted by ahockings about 1 year ago
4-5meg at 2Km?? That's pretty bad isn't it? Must be really poor copper there.
BDUK cab 21 in Harberton Mid Devon (Totnes Exchange) must have really good lines. I have a customer at 1Km getting 36 Mbps and another at 2Km with 21 Mbps!!
Cab is right in the village (4Km from Exchange) and everyone within 500m is getting 40 or 80Meg.
lines to the cab (from the exchange) are aluminium (installed way back when BT had no cash) so previously most of the village couldn't do iPlayer at all.
Now it's like a mini South Korea in the heart of the South Hams! :)
Posted by Blackmamba about 1 year ago
Hi Ako
Thanks for your reply on the the line at 2Km do you know the line resistance in ohms that would prove what type of copper it is on (gauge wire) it could be on an old junction route. I have been trying to get information on lines above 1 mile and there max speed on CN 21 Equiptment Band A. I have located a few in Surrey but are unable to get a confirmation your remarks could help many customers to get over 15 meg down.
Posted by andrew (Favicon staff member) about 1 year ago
What is "CN 21 Equiptment Band A"?

Sounds like ADSL2+ on an Ofcom designated Market A exchange.

Also how do people people measure the resistance of the phone line? Then how do they tell which part is due to the D side and which is due to the E side?
Posted by chilting about 1 year ago
I have no complaints about the quality of my 2km line. It functions very well most of the time. A section of aluminum was replaced about 3 years ago and this has greatly improved reliability. As a phone line - no problems. For superfast broadband - useless!
Posted by ValueforMoney about 1 year ago
@WWWombat the NAO and Audit Scotland in this case include all invoices presented for payment including work in progress.
Audit Scotland make the point that high up front costs will mean the total average cost will drop.
NAO did include all invoices, so any spine costs, planning, are all included in the averages presented so far, even where more cabs might added to the spine later.
Not ideal but that's what is available.
Posted by Somerset about 1 year ago
@chilting - how have you estimated 80%? What minimum speed have you used and what data?

Some people have to be in the last x%.
Posted by chilting about 1 year ago
There are just over 2,000 lines on the exchange
80% Can get superfast speeds over 24Mbps
Of the remaining 20% - approximately 150 can get speeds between 5 and 24Mbps. The remaining 250 can get slow FTTC up to 5Mbps if they are lucky but most are beyond the reach of fibre and can only get up to 2Mbps on ADSL. All these slow ADSL lines are between 2.5 miles and 5.5 miles from the exchange.

Posted by Gadget about 1 year ago
@VFM - are you only counting the invoiced amounts to the Authority as the only spend by BT in delivering the project?
Posted by WWWombat about 1 year ago
So you believe NAO include all invoices presented. But how do you know invoices for this work were presented?
Posted by ValueforMoney about 1 year ago
@WWWombat - I asked them.
@Gagdet Oxera reports makes a virute noting that BT cannot charge more than 100% of costs where the miletsones to cash process is used.
Note places like Wales are paying a proxy cost per premise passed.
So not absolute thus worth posing the question as when and how the BT's contribution kicks in.
We may learn with the renewal of state aid measure.
Posted by Gadget about 1 year ago
@VFM - the comment was about those contracts where receipts are required. It is my understanding that not every cost incurred by the contractor can be claimed back, resulting in a position, for example, where say £1m is claimed but internally the costs are £1m claimed back plus perhaps another £1m is not eligible and which would not be shown on the contract receipts.
Posted by ValueforMoney about 1 year ago
@Gadget let's try this from BT data.
Maximum BT expenditure on commercial programme £300-£400m a year - BT presentation to analsysts
April 2013 - April 2014 BT add 4m presmies (15-19m) and 20,000 cabs as per unmetered power application.
That provides a total cost range of £15-£20k.
NAO seeing a total of c£25k for slightly more rural. I do not see room for BT to double.
Posted by Blackmamba about 1 year ago
Hi Chi.
I Have noticed that a Post Code very close to you on Thinkbroadband Maps (31 meg) so have you located the fibre node close to you so fibre could be extended to your local area off a differant CAB.
Posted by Somerset about 1 year ago
@BM - how does one locate a fibre node in the BT network and how would it be extended to an area off a different cab?

Do you mean copper rearrangement?
Posted by Somerset about 1 year ago
@bm - What is "CN 21 Equiptment Band A"?

I'm getting the feeling you know a bit about broadband, but not quite enough.
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