By: MarkJ - 24 January, 2012 (7:19 AM) - Score: 2386 - Fixed Line Broadband
Japanese technology giant Fujitsu UK has "voluntarily withdrawn" from the Next Generation Broadband Wales tender process because it believed the "risk levels" were simply "too high". The move, which mirrors a similar situation in Scotland's Highlands & Islands region (here) and GEO's recent exit (here), once again leaves BT as the only major bidder.Fujitsu UK has been working alongside TalkTalk , Virgin Media and Cisco on a project that aims to deploy an ultrafast 1Gbps (Gigabits per second) capable fibre optic ( FTTP ) based Open Access Wholesale Network (OAWN) into rural areas by 2016.
The network is designed to act as an alternative to BT and has allegedly been making "strong progress to date using Openreach’s poles and ducts" (here), although its heavy dependence upon public funds to get started (it originally wanted £500m from the government) has always been of deep concern.
Fujitsu Statement (PC Pro)
"Fujitsu has voluntarily withdrawn from the Next Generation Broadband Wales tender. After careful consideration, Fujitsu felt the risk levels within the Welsh Government contract terms were too high and therefore had no alternative but to withdraw.
Fujitsu, however, remains focused on Next Generation Broadband projects in other regions where the terms are more agreeable."
"Fujitsu has voluntarily withdrawn from the Next Generation Broadband Wales tender. After careful consideration, Fujitsu felt the risk levels within the Welsh Government contract terms were too high and therefore had no alternative but to withdraw.
Fujitsu, however, remains focused on Next Generation Broadband projects in other regions where the terms are more agreeable."
Fujitsu has at least pledged to remain "focused" upon other parts of the country, although their 'focus' appears to be increasingly limited to England; we suspect that Wales was also a 'focus' before they pulled out. The future of Fujitsu's project thus remains highly uncertain, much as it has been since the original announcement, and their aim of covering 5 Million UK premises might soon have to be scaled back.
Meanwhile the Welsh Government's Digital Wales Strategy continues to envisage a deployment of 30Mbp+ capable services to 100% of the country's businesses by the middle of 2016 and households by 2020. Some £56.9m of the money for delivering this has come from the Broadband Delivery UK (BDUK) office, with more expected to follow from local, EU and private sector investment.
But having only one major bidder risks leaving Wales at a disadvantage and allowing BT more control to negotiate favourable conditions. On the other hand many ordinary people will just be happy if the 100% target could actually be achieved.
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Comments: 18
NickPosted: 24 January, 2012 - 8:49 AM
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Cornwall - BT last man standing (delivering some nice headlines, but underwritten by a lot of satellite links which undermines the 'high speed' claims). Wales - BT last man standing. BDUK - BT last man standing. Notice a common theme?
Thing is do we care. The politicians don't seem to think we do. Otherwise they would run a proper procurement process rather than one designed to give the money to BT but avoiding State Aid challenges.
I'm sure they will try and claim the process was a 'vaild procurement'.
If we don't really care and aren't prepared to vote differently at the next election they won't change their policies. They will also claim that we have the best Broadband in Europe in 2015, even though we know that will be a con no matter what BT delivers beforehand
KevPosted: 24 January, 2012 - 10:55 AM
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Do you have a percent of the "lot" of satellite links? I though it was a very high percentage of FTTC/FTTH which only the very hard to reach areas done by satellite, not... a lot
KevPosted: 24 January, 2012 - 10:57 AM
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Oh and I don't know whether that choice of picture for the article was intentional (maximum of 40) but it made me laugh all the same
Des CoxPosted: 24 January, 2012 - 11:12 AM
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This seems to be typical of the current tendering process in Wales.
The Welsh Government need to support and help smaller businesses tender fairly for projects like the NGB Wales, this then would lead to more job creation in Wales which in turn would improve the Welsh and UK economy in these hard times.
Instead the Welsh Government has gone power mad by acting like a juvenile Government without any responsibilities and is strangling smaller businesses.
CommoncentsPosted: 24 January, 2012 - 12:09 PM
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Fujitsu didn't think it's strategy through fully before making a PR splash when it announced it's big audacious plans. BDUK is a top up subsidy designed to make otherwise non-viable areas economically marginally viable. It's not free infrastructure. Condemn BT if you like but it's the only business in the UK that's committed to making the capital investment and willing to accept the risk/long term payback to deliver higher speed broadband in rural areas. You can argue that they're big enough to sustain such investment. That's the point. infrastructure is, by definition, a big boys game. I expect similar Fujitsu 'withdrawals' from other regions when it realises the it has to carry the lions share of the capital risk there too.
dragoneastPosted: 24 January, 2012 - 3:42 PM
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I don't blame the Fujitsu consortium (or any other potential bidder, for that matter). The depth of the recession is only just beginning to be felt, and it's a sound assumption that no borrowing is secure, and since that's what all investment is predicated upon, plans will go kaput. Bigger businesses are not immune; rather, I fear, increasingly in the firing line.
NickPosted: 24 January, 2012 - 5:13 PM
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If you are Fujitsu or any of the other bidders (and there were a fair few big companies/consortia in there) you have a lot of challenges.
1) you either a) make a complete new network (FTTH) or b) you do a part build (FTTC)
2) with a) you have a considerable capital cost including depreciation, setting up the relevant organisation etc, but you do have lower ops costs. With b) you are still having to buy services (copper) from the main competitor, subject to the vagaries of their pricing policy (policed by a pretty ineffectual regulator), sharing your rollout plans with the same. I also include PIA in this as it demonstrates very well how ineffectual Ofcom is.
3) and then you have the killer. You have no market share. You are only allowed to build where no NGA player (and one DSL player usually BT) exists. You have to start from zero and try to get people to move across to you
NickPosted: 24 January, 2012 - 5:24 PM
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If you are BT:
1) you are the monopoly incumbent (remember by definition in BDUK terms you they do not fund where NGA exists e.g. Infinity or Virgin). If the procurement fails you are still quids in.
2) you are in 'revenue protection' mode. If you don't win you get an ongoing reduction in revenue, so this can be factored into your Business Case
3) if you can eliminate all competition you now have an completely free hand for say 30 years (or until the next Govt handout comes along to do the fibre upgrade you should have done this time)
4) you have a big chunk of the network (the copper - don't be fooled by the Infinity ads, very few ever get a proper fibre connection) that has no depreciation - this is key on a balance sheet (it is true Ops costs are higher but you have a lot of existing people in place to run this)
5) you can afford a lot of lobbying and free consultancy (lies) to Ofcom
NickPosted: 24 January, 2012 - 5:37 PM
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Predictions:
1) BT will win all (or the vast majority) of the procurements
2) they will only cover 90% of the population with directly connected NGA (copper or fibre) - remember they said this is what they would do if the Govt gave them all the BDUK money
3) Only directly connected (by fibre) customers will see 100M speeds
4) the remaining 10% will have to make do with wireless solutions (either LTE or satellite)
5) in 2015 the UK Govt will claim the inferior copper based BT solution is "the best broadband in Europe". This will be a lie. Germany, Sweden and Holland are already on track to provide a better service.
6) after complaints the Govt will come out with a convoluted formula based and large number of different criteria provided to them by BT's expensive lobbyists 'proving' that the UK has "the best broadband in Europe"
NickPosted: 24 January, 2012 - 5:42 PM
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7) 5 or so years from now, the next Govt will come out with a cunning plan (after many years of complaints from consumers/businesses that we are still lagging well behind Europe) to make sure a large proportion of the country is directly connected by fibre.
8) they will run an 'open' procurement designed to give BT billions more to do the job the Australian Govt are doing today, and BT could do if it wasn't so inefficient and money grabbing
9) we (and me) will still be moaning about it, but won't change our voting habits, as in the end it won't be important enough
KevPosted: 24 January, 2012 - 6:25 PM
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I'm not sure a comparison between an Australian FTTH rollout and a BT FTTH rollout is a good comparison is it?
Without even getting into it in the UK the population is well dispersed, in Australia is very much clustered?
And it doesn't matter who you vote for in the UK they all make a hash of it, they aren't even spending any real money are they its all overspend?
NickPosted: 24 January, 2012 - 6:58 PM
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Australia - % Urban = 90%, UK - % Urban = 90%. Population is a key difference I agree theirs is 30% of ours
You can fit the UK easily into the area to be covered for NBN Co
Main difference is a strong Govt not afraid to take on the incumbent
KevPosted: 24 January, 2012 - 7:18 PM
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But they aren't taking them on are they they are buying services from the incumbent and building their own infrastructure, its not the same as here is it.
CommoncentsPosted: 24 January, 2012 - 10:55 PM
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@Nick. Let's assume, just for a second, that everything you've written above is true. Was it a) not true or b) not known when Fujitsu came out publicly, all guns blazing, claiming it was here to lead the change? It was a PR stunt, pure and simple.
NickPosted: 25 January, 2012 - 11:07 AM
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You are right and I said at the time that it was a) and a PR stunt and I still believe that. In their defence though they did spend a lot of resource trying to come up with a winning bid.
BT said give us all the money and so did Fujitsu. Fujitsu's presence in the telecoms market in the UK has been in major decline so that had to do something, maybe looking to force BT into giving them some business again.
My words come from experience and also are true for all of the other bidders (of which there were quite a few), so this is not just a problem for Fujitsu (I think their mistake was relying to some extent on PIA and that was never going to be credible). If you use anything at all from BT then you are always at their mercy to some extent at the same time they are your major competitor
NickPosted: 25 January, 2012 - 11:15 AM
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Remember here that you have a situation where mostly these projects did not get to the formal tender stage. They went through Prequalification and then into Dialogue but are still not at the final tender stage.
Dialogue is about coming to a common specification that multiple bidders can bid against.
BT is last man standing because the Govt etc were not prepared to move towards something that companies other than BT could bid against, which is a travesty for the whole process.
And of course the 'negotiation' part of the tender process no longer exists as it will be BT's way or no way. Remember, BT is the 100% monopoly incumbent in these areas so they get 100% rental of the copper no matter what. So if the project dies they still get 100% revenue (maybe they get more with NGA, but they still going to have to invest significantly themselves). Win/Win for BT. Lose/lose for consumers.
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