UPD3 BT Elect “not to participate” in Herefordshire Fibre Broadband Extension

The Herefordshire Council has said that BT has decided “not to participate” in Stage 3 of their tender to deploy superfast broadband connectivity to the remaining parts of the county, which means that the local authority may have to depend upon alternative network (altnet) providers.

At this point it’s worth noting that the related tender forms one part of the joint Fastershire project, which currently aims to make BT’s “fibre broadband” (FTTC/P) network available to around 85-90% of premises in Herefordshire and Gloucestershire by December 2016 (aka – “Stage 2“).

As per usual the expected reach of “superfast” speeds requires some clarification. Using BT’s Best and Final Offer (BAFO), on which the first contract was based, 77.8% of premises in the intervention area for Herefordshire will be able to access download speeds of 30Mbps+ (i.e. 35,424 out of the 45,532 premises within the relevant area).

On top of that the longer term aspiration for Fastershire has always been to make “superfast” speeds available to 100% by 2018. In keeping with this the Gloucestershire side of the project (excluding the separate South Gloucestershire scheme with Wiltshire) has already signed a contract with Gigaclear to bring 1Gbps FTTP broadband to 6,495 additional premises in the Cotswolds area of the county by May 2017 (here).

Meanwhile questions have arisen over Herefordshire’s future direction beyond the 90% goal, particularly with most local authorities having long since signed extension deals with BT under the Broadband Delivery UK project’s Superfast Extension Scheme (this aims to push superfast broadband to 95% of the UK by 2017/18).

However a recent council meeting document, which was forwarded to us by a representative of the local Cheltenham 151 campaign, confirms that Herefordshire has now “revised” their strategy because “a number of parameters have changed the landscape“, including “BT’s decision not to participate in Stage 3 of [the] 2014 strategy.”

The council stresses that the “overarching objective of the strategy remains the same” (i.e. 100% “superfast broadband” coverage by the end of 2018), although there will need to be a greater focus on altnet ISPs due to BT’s decision not to participate in the next stage.

The Revised Fastershire Broadband Strategy (Document Quote)

Though the overarching objective of the strategy remains the same, namely to reach all those who need it with superfast broadband by the end of 2018, a number of parameters have changed the landscape resulting in the need for a revision. These include:

* As part of the next phase delivery Fastershire became the first area to award a major BDUK funded contract to an alternative provider based on a lot within the Cotswolds.

* This process successfully tested the lot based approach and revealed a change in the market since 2012 with an emergence of companies providing services and technology that are specifically designed for rural delivery.

* The exercise also showed that the need to define consolidated areas was not as critical as had been imagined.

* As the contract with BT nears completion there is a greater understanding of the premises that still require an increase in broadband speeds.

* Additional funding has been secured for Gloucestershire from the South West Superfast Ultra-Fast fund.

* Greater understanding of funding potential and confirmation of funding via the local enterprise partnership.

* BT’s decision not to participate in Stage 3 of 2014 strategy.

ISPreview.co.uk reached out to BT for a comment yesterday, although so far the only reply has been one of silence. However the situation in Devon + Somerset (here) and now Herefordshire shows that BT can’t always be relied upon to invest in the most economically challenging of areas, where the prospect of a viable return on their investment is increasingly difficult to find and political time-scales could be difficult to meet.

Elsewhere BDUK have “ring-fenced maximum capital funds” of up to £5.52m for Herefordshire’s future network deployment, which the council will have to match. In keeping with this the council has already secured an approved allocation from the Local Enterprise Partnership of £1.67m and is seeking additional funds from the EU, as well as other sources.

So far £1m has been included in the capital programme proposals for approval by Council on 18th December 2015 and a further £2.85m of match funding is planned to be identified as the programme progresses, with the opportunity to make a case for future funds in subsequent capital programmes. These will be based on a case made for each lot once bids are received, with a value for money test applied.

Separately, the Government has made additional funds available to the South West region for “ultrafast” deployment, as a member of that region Gloucestershire has been allocated £2m which requires match-funding. This has been combined with £0.52m of funds previously allocated to Herefordshire from BDUK as a result of a bid for Rural Community Broadband. As a consequence public funds are anticipated to be available for Lot 2 of £4.52m (see above), subject to approval by Gloucestershire County Council in December 2015.

The importance of all this to the local economy is not to be underestimated. A recent Economic Impact Assessment suggested that Herefordshire’s current contract could deliver a Gross Value Added (GVA) uplift of £13m per annum and a cumulative GVA uplift of £120m over ten years, which might rise to £134m if 100% coverage of fibre broadband is achieved.

The situation represents a golden opportunity for altnet ISPs, although equally it’s also one that risk averse councils may not relish (see the recent example of Fibre GarDen). Alternative providers that want to compete will have to up their game and scale, particularly as we’re expecting to see more situations like this as the Government switches its focus towards upgrading the final 5%.

UPDATE 11:16am

We are still awaiting an official line from BT, although unofficially the operator appears to be saying that they have not yet taken a decision on the matter because the council have not started the formal process for the next phase (partly because of the on-going EU delay over state aid clearance). Clearly this appears to conflict with Herefordshire’s position in the recent council meeting.

UPDATE 1:58pm

The official line is as follows.

A BT Spokesperson told ISPreview.co.uk:

“We are committed to taking fibre broadband to as many homes and businesses in Herefordshire and Gloucestershire as we can, and our existing BDUK project there is progressing well.

We are constantly exploring the options to extend coverage further, but there has been no formal public consultation on a potential contract extension.”

We are also seeking more insight from the council on why they’re claiming that BT has chosen not to participate, while BT seems to be saying that they haven’t been asked.. albeit “formally“.

It is worth noting that Herefordshire did run an Open Market Review process in 2014, which was partly conducted as a consultation to help establish which areas would still need assistance when the first contract completed and there have been a number of related council meetings on the subject.

UPDATE 9th Dec 2015

A spokesperson for Herefordshire council told ISPreview.co.uk, “The Cabinet report discussed by Herefordshire Council refers to BT not participating in Stage 3 of the original broadband strategy. This could have resulted in a contract extension to BT’s existing deployment in Herefordshire and Gloucestershire using part of the SEP funding. For that, and several other reasons listed in the report, Fastershire will now proceed through a series of open procurements starting in early 2016. BT will remain eligible to bid for any of these new procurements.”

Sadly this still doesn’t answer the question of why BT chose not to participate in the original stage 3, although as above BT suggests that they weren’t asked to do so.