Read, digest NAO BDUK report and then watch PAC take on BT and BDUK
The latest National Audit Report entitled 'The Superfast (Rural) Broadband Programme: update' has been published and with all 44 projects underway it is able to give much better view on the progress on the projects.
The Public Accounts Committee is meeting on Wednesday 28th January, where the NAO report and other BDUK related matters will be discussed, you can watch it live and see what new questions are asked of BT.
The latest report could be seen as a blow for those who are campaigning against the involvement of BT in the BDUK process, since the NAO appears to identify savings made in the projects brought about by the synergies of the BDUK and counties having to manage just one supplier, and additionally BT appears to have over estimated its costs.
Phase 1 actual cost data
3.6 The contracts between BT and local bodies require BT to bear the risk of overspends, so these contracts effectively set BT’s maximum claim amount for each project. It therefore made good financial sense for BT to include some contingency in its bids. BT told the Committee in July 2013 that it typically included 5% to 8% contingency in project bids.
3.7 BDUK’s analysis of the cost information it has received suggests that so far actual phase 1 costs are significantly lower than BT’s financial model. As at September 2014, BT’s total reported capital spend on phase 1 of the Programme was £142 million (38%) under the estimated price, including work in progress not yet invoiced. BDUK estimates that this £142 million variance reported so far is likely to be reduced by between £30 and £50 million. This is partly because of timing issues, as BT’s financial model profiled average unit costs, rather than profiling projected specific unit costs. There are also some possible further costs not yet charged by BT. But even if all of these costs materialise, BT would still have spent approximately £92 million (25%) less than its contracted forecast cost.Extract from NAO January 2015 report
The price of each fibre cabinet has been adjusted the calculation in July 2013 suggested an average price of £28,900, which by September 2014 had dropped to £21,000. Though with no indications of which cabinet size has been analysed and how many are semi-urban or deep rural, the NAO cautions that costs may rise as projects push away from the easier areas. Deployment of FTTP as part of the projects has been acknowledged for the first time we believe, but reports that FTTC is being used more than FTTP than some of the original plans with the note that in terms of value for money this may be a good thing.
At the end of the day, when producing models which an awful lot of the previous BDUK/BT arguments have revolved around it is difficult to get them right when a broadband project on this scale has not been done in the UK before. Most telling is that an Atkins report on a small sample of the roll-out in Suffolk suggested that 'BT had charged Suffolk nearly 20% less than would hypothetically be charged by another efficient supplier'.
Compared to previous reports generally much more positive, but there is little analysis of the speeds delivered something which the BT critics like to highlight. In defence of the NAO their report is reporting on the numbers who can get 24 Mbps or faster, so should be applying a speed filter to the coverage data they have access to for premises covered. Our own analysis shows that of those able to get a fibre based solution, 4.5% are getting speeds below 30 Mbps, so when the UK hits the 90% superfast target around 94.5% will be on a fibre based solution with a good number of those still getting better speeds than they got from existing ADSL/ADSL2+ services.