Welsh Government talks of plugging BT gaps
The Welsh Government has started the process of tendering for firms to partner to deliver superfast broadband to 100% of the country. The tender is described as being in the range of £1 million to £3 million and will have a duration of seven years.
"It is expected that the current Superfast Cymru contract with BT will not provide Superfast Broadband services to 100 % of premises in Wales by 30.6.2016 due to combinations of the following BT-reported issues in some locations:
- Legacy network architecture, such as ‘exchange-only lines’ preventing standard product deployment.
- Relatively low forecast revenue density for standard product development, such as business parks where investment may be more involved than in residential areas.
- Relatively high-cost of deploying non-standard products, some of which may exceed cost per premise expectations.
The Welsh Government accepts these issues are real and to address the resulting gaps in service provision. To this end, the Welsh Government has decided to establish a project to procure a service/s that:
- Provides Superfast Broadband services to these areas (as identified by the latest Open Market Review).
- Meets the necessary and sufficient requirements for compliance with the EC State Aid Decision as interpreted by latest BDUK Guidance.
- May use additional grant aid funding over and above that secured for Superfast Cymru.
- Promotes maximum possible competition from across the market and the various technical solutions.
This procurement will cover infill requirements for business and industrial parks (not residential) only and will be divided into 2 by geography (South Wales and North Wales).Key part of tender document
Reading the description it sounds like BT have had an epic fail and are about to fail on their Superfast Cymru contract, but it must be emphasised that the contracted target was 96% coverage with fibre based broadband. So there was always going to be 4% who had no boost in speeds available to them and also those in areas with FTTC where speeds were less than superfast. The performance of FTTC means that the expected coverage at superfast speeds based on our analysis is in the 90 to 91% region.
Looking at the tender, if it is meant to help the 4% who got nothing from the existing BT contract then it needs to help some 6,000 premises and £3 million of funding equates to just £500 of funding per business premise. If this is about getting the final 9 to 10% up to superfast speeds the public money is just £200/premise.
Update 3pm The original estimates on gap funding have been adjusted to take into account that this funding is for businesses, where generally businesses account for 1 in 10 premises, though may be higher in some areas, e.g. rural farms and people working from home can skew the 1 in 10 approximation. Essentially though it means the funding has to deliver for fewer premises increasing the amount available to around £200 to £500 per business. Another difficulty of just trying to address business premises is that any economy of scale is lost and the geographic spread of the premises is much wider. Certainly compared to traditional estimates for the most rural areas £500 does not go very far, particularly when we know Virgin Media is looking to spend around £750 per property passed in urban areas, which means likely bidders will be fixed wireless or satellite based solutions.
Maybe there is a different story, that cost savings in the current BT project are looking like they may be able to extend beyond 96% fibre based coverage and that the number needing intervention is going to be much smaller and for the tender to make sense this suggests a figure of under 1,000 premises. Though if the number of premises is so low why is this contract being given a seven year life span?
The uncertainty perhaps explains why in other parts of the UK firms show initial interest and then hardly anyone bids for the work once they get to find out some more detail.
Update 6pm The Welsh Government has requested we include a statement 'in order to clarify some of the points and inaccuracies which have been made'.
The article on thinkbroadband has made some highly inaccurate assumptions about a current procurement tender which has been issued by the Welsh Government. We would like to clarify some points.
“Superfast Cymru, the partnership between the Welsh Government and BT, is making excellent progress towards achieving the aim of having 96 per cent of premises being able to access fast fibre broadband by 2016. That has always been the aim. The Welsh Government is currently out to tender on covering some of those areas which are not included in Superfast Cymru for a variety of reasons. This was always going to be the case. This is in addition to Superfast Cymru which is an ambitious programme and the largest partnership of its kind. Our partners in Superfast Cymru, BT, are making excellent progress in often difficult conditions in bringing superfast broadband across Wales. It has already been credited by Ofcom as having an impact on improving access to broadband in Wales.
“To suggest that this planned procurement means there has been any failure by Superfast Cymru or BT is an entirely inaccurate assumption.Welsh Government spokesperson
We have included the full un-edited statement above but feel it is a little unfair as we did highlight that the original contract was for a 96% fibre based target, so there was going to be premises missing out. The EU tender did talk of BT issues rather than just a project to look at areas that were always outside the scope of the 96% project. We have asked the Government to confirm if they feel the 90 to 91% at superfast speeds estimate is incorrect and will happily publish what they state as an accurate figure.