Fujitsu Withdraw from Broadband Projects in Cumbria and North Yorkshire UK

Japanese technology giant Fujitsu UK, which is one of only two major telecoms operators left in the government’s Broadband Delivery UK (BDUK) project to improve the country’s national internet infrastructure (the other is BT), plans to withdraw from bidding in two further regions – Cumbria and allegedly also North Yorkshire.

The BDUK project, which aims to roll-out superfast broadband (24Mbps+) services to 90% of the UK by 2015 (with the last 10% receiving a download speed of at least 2Mbps), has in recent months come under increasing pressure as various operators (e.g. GEO, Cable & Wireless etc.) have exited the process citing economic and competitive concerns. At the same time the European Commission (EC) has stalled approval of some new plans until they can resolve a number of related differences with the UK (here).

Smaller ISPs have also accused the government of setting the bar too high (i.e. it’s only friendly to big Telco’s like BT) for them to get involved, which has resulted in many expecting BT to win the lion’s share of public subsidy. So far the evidence appears to bear out those fears, with Fujitsu yet to win any of the tenders on offer. Meanwhile BT has nabbed Rutland, Lancashire and is the only option left for Wales and the Scottish Highland & Islands where Fujitsu is no longer taking part.

The problem has also been complicated after the Cumbria County Council (CCC) last month rejected the only two available bids from BT and Fujitsu, instead asking them to go away and return with improved offers (here). Now Fujitsu has decided not to return.

Duncan Tait, CEO of Fujitsu, told the FT:

“We withdrew from Cumbria because we cannot currently see a clear path towards a mass market that is required to attract leading retail service providers. We continue to monitor the market place and see where we can get this to make sense.

We will look at each on its own merits and see if there is a way to make it work and get to the scale we need for our anchor tenants.”

Fujitsu originally planned to build an ultrafast 1Gbps capable fibre optic (FTTH) broadband network that could have reached 5 Million UK premises in rural areas by 2016, although not unlike BT it would have required almost all of BDUK’s then £530m budget until 2015 to do it.

That’s a tough ask for a project that has yet to prove itself beyond the confines of a tiny trial in Greasby (Wirral Peninsula). The operator is now understood to require at least 1 million premises in order to make its model work, which looks increasingly unlikely to happen.

On top of all that the contract for North Yorkshire is now also expected to go BT’s way, which would naturally result in Fujitsu needing to withdraw. Many fear that problems like this might not be resolved unless stiffer regulation is introduced to make the BDUK process and market as a whole more open and flexible to non-BT providers.