The UK government’s Department for Culture, Media and Sport (DCMS) has rejected a new framework proposal that could have helped smaller internet providers (altnets) to challenge BT and secure a slice of public funding in order to rollout new rural superfast broadband networks.
The new framework, which was outlined by the Independent Networks Cooperative Association at the end of February 2013 (here), had been intended to target the additional £300m that has already been allocated to the Broadband Delivery UK (BDUK) office from the BBC TV Licence fee for 2015-2017 (here).
At present BT is the only operator left that can bid for projects under the current BDUK framework, which has left smaller rivals (those that typically tend to focus on the last 5-10% of rural premises) at somewhat of a disadvantage. It had been widely expected that the extra £300m would thus be used to tackle these areas, perhaps as part of a new strategy.
INCA’s new proposal, which had the backing of many non-incumbent telecoms companies (e.g. Cable & Wireless Worldwide, Calix, CityFibre, Entanet, Gigaclear, UK Broadband and a few others), was intended to compliment BDUK’s framework rather than replace it. Sadly the proposal, which was initially given a positive reception by Maria Miller (DCMS Secretary of State), now appears to have been shunned.
INCA members will be disappointed to learn that officials in DCMS have rejected proposals to provide support for the development of a new, more competitive framework for next generation access, focused on the Government’s £300m Additional Funding Project. This is despite an enthusiastic response from the Secretary of State during a meeting with INCA representatives in January.
Officials stated that they had hoped to see “a detailed analysis of a proposed alternative competitive delivery model, including network design, commercial approach, technical standards, names of investors and specifically the purpose of any funding requirement”. In other words, they won’t believe there is an alternative unless someone delivers it to them fully completed and with all the bases covered. They have left the door ajar saying that ‘delivering competitive solutions in the broadband market remains of interest’ and are happy to meet to hear more details if the proposals can be developed under other arrangements.
This result is not wholly unexpected but it does leave industry and government in what one INCA board member has described as a ‘Mexican stand-off’. Whilst non-incumbent players believe that government is not serious about creating conditions that encourage genuine competition, they won’t engage. Without competition Government struggles to deliver genuine value for money or generate substantially more non-incumbent investment.
As concerns grow about the value for money issue of the current approach favoured by BDUK, MPs are asking questions in Parliament and the Public Accounts Committee is starting to get involved. INCA will continue to argue that investment and innovation can only be maximised by encouraging a more competitive approach to infrastructure delivery and that this is being demonstrated right now in projects around the country in both deeply rural and urban environments.
At this point it’s perhaps worth remembering that BTOpenreach has previously stated that it would most likely require all of BDUK’s £830m in state aid to achieve the government’s 90% UK coverage target for superfast broadband via its FTTC/P solution.
The door has at least been left open for further discussion, while critics complain that INCA’s framework could have added to existing delays and would have cost another £600k to setup. A small price to pay for some but a political problem for others.
On the bright side the National Audit Office has confirmed that it will publish a report on the value for money aspects of the BDUK programme. The NAO will examine the ‘case for the scheme, the design of the procurement framework, the appointment of framework partners and the role played by DCSM in local authority procurements’. INCA has been asked to contribute to the investigation.