Threat to Broadband Upgrades as UK Gov Extends Lane Rental Scheme UPDATE

The UK Government has approved the extension of a controversial new “lane rental” power, which will allow local authorities across England and Wales to charge utility companies by the hour for civil engineering work that causes significant disruption (traffic congestion etc.).

At present the Lane Rental Scheme has only been trialled in London (TfL) and Kent. This allows both to impose a charge of up to £2,500 for each day their roads are occupied by the works. The charge was set at a level that reflected the costs of congestion caused by the works, and that would encourage works promoters to: “reduce the length of time taken to carry out the works; improve planning, coordination and working methods; carry out more works outside of peak times; complete works to the required standard first time.”

Last year an impact assessment of the scheme stated that there are around 2.5 million road works carried out in England each year causing significant disruption and delay to road users, with delays caused by works estimated to cost more than £4 billion a year. In addition, delays increase the likelihood of an accident and lead to greater carbon emissions and pollution.

The charges are intended to be focused on the busiest streets at the busiest times (e.g. encouraging work to take place at night etc.).

Government Statement

New schemes will be permitted. It will be for local authorities to ask for the Secretary of State’s approval for schemes, based on bidding guidance that will be issued by the DfT. The guidance will include advice on how to assess the cost benefit analysis of schemes, and this in turn will be based on performance data from the existing schemes in London and in Kent.

Around 30 local authorities responded to the consultation saying that they would like to set up schemes within the next 5 years. This marries with the mid-range assumption used in the consultation version. It should be noted that there will continue to be some uncertainly around how many authorities will implement schemes.

Schemes will be set up on the basis of current legislation. We asked in the consultation if changes should be made, for example, whether charges should be hourly and about the use of surplus lane rental charges. These amendments were, however, not supported by respondents so no further legislation is needed to implement this option. Charges will therefore continue to be set at a maximum of £2,500 per day.

Authorities will, as now, be able to set a charging structure following consultation. Kent County Council for example include a range, based on congestion from £300 to £2000. Any surplus revenue must be used on ways ‘to reduce the disruption and other adverse effects caused by the street works’, as set out in legislation. This will ensure that any surplus revenue raised will be spend on reducing congestion caused by the works.

On the surface this makes sense, although it comes at a time when the Government are also trying to deliver significant infrastructure upgrades and that includes support for the rollout of both “superfast broadband” (24Mbps+) and new “ultrafast broadband” (100Mbps+) capable ISP networks. In particularly they’ve been very keen to encourage the deployment of Gigabit capable “full fibre” (FTTH/P) networks.

The problem is that building all of this requires a significant investment and risk, which can easily be disrupted if local authorities suddenly decide to clamp down on Utility Companies by imposing extra charges on related street weeks. All sorts of unexpected complications can hit civil engineering teams (e.g. blocked cable ducts) and imposing huge fines is unlikely to help (some areas might become unviable to reach or ISPs could raise prices to compensate etc.).

Last year a stakeholder group representing utility companies estimated that implementation of lane rental across England and Wales could increase annual costs of street works by £327m. They also estimate that it would “deter over £2.2 billion of investment” in infrastructure.

Bob Gallienne, CEO of Street Works UK, said:

“It is disappointing that the Government has decided to extend lane rental without any clear evidence that it reduces congestion. We support initiatives to reduce congestion but we believe this approach is a blunt instrument that will make it harder for utilities companies to deliver vital infrastructure that powers the economy. The government’s own analysis of the existing lane rental schemes concludes that there is no causal link between lane rental schemes and reduced congestion.

Utilities companies are delivering the infrastructure that the UK needs to drive up productivity, create economic growth and deliver on government’s priorities such as broadband and new homes. While we do not believe Lane Rental is the best solution, we will continue to work closely with the Government to ensure their proposals are implemented in a manner that reduces complexity, recognises the need for consistency and is only used in targeted and limited situations.

Local authorities already have the powers to manage and co-ordinate street works, but are currently not using these effectively. Data shows that utilities are performing to a significantly higher standard than highways. It is therefore essential that these proposals apply equally to both utilities and local authorities.”

However the Government has at least told Local Highway Authorities that new schemes would only be approved if key conditions are met, which includes requiring LHAs to operate a “best in class” permit scheme where “fees are proportionate and the offering of discounts for joint works, full compliance with permitting regulations and guidance and schemes fully supported the delivery of national infrastructure projects like HS2 and full fibre networks roll-out.”

Caveats of Government Approval

Government approval would be given on condition that LHAs:

─ Operate a permit scheme in line with ‘best in class’, for example, where permit fees are proportionate and the offering of discounts for joint works, full compliance with permitting regulations and guidance and schemes fully supported the delivery of national infrastructure projects like HS2 and full fibre networks roll-out.

─ Schemes applied to a LHA’s works in the same way as in Kent and London. Schemes are voluntary so there would be no ‘new burdens’ for Government.

─ Lane rental charges are used to provide incentives to work outside of peak times, they were waived for joint works, caps were put in place for major works to install and to replace apparatus so that these works were not unfairly penalised and delayed.

─ Schemes cover no more than 5% of the local network, are trialled for a period of time before ‘going live’ and reviewed annually to ensure charges remained proportionate and were applied to the most congested roads.

The suggestion is that LHAs would probably have to make an exception for certain work (e.g. full fibre network deployments), although the Government’s position on this is still quite vague. We suspect that some local authorities may simply choose to charge lower fees for such works rather than a total exemption, which would still be an extra cost and one that could create problems.

Ultimately the approach may depend upon how much common sense each LHA and the Government chooses to apply for any given region. We will be keeping a close eye on this to monitor how it impacts broadband related civil engineering work / upgrades.

Government Response
https://www.gov.uk/../consultation-response-lane-rental.pdf

UPDATE 20th Feb 2018

Gigaclear has offered a network operator’s perspective.

Brett Shepherd, COO of Gigaclear, told ISPreview.co.uk:

“While we welcome measures that look to reduce congestion, we remain concerned that Lane Rental will provide a further barrier to rolling out fibre-to-the-home (FTTH) technology across the country. It will increase the cost of improving connectivity to rural areas that are crying out for high quality broadband. This, in turn, is likely to impact the amount of properties that will receive this service.

Next steps are to understand the Department for Transport’s (DfT) condition that any new schemes must ‘fully support the delivery of national infrastructure projects, including full fibre roll out’. To address the above concerns, DfT must ensure that Lane Rental does not deter investment, otherwise this decision will be contrary to the government’s ambition for widespread fibre-to-the-home.

As the leading supplier of full fibre broadband to rural locations, we are already innovating with techniques which reduce build time and increase efficiencies. Schemes like this introduce complexities and in my opinion, add further hurdles, which will only slow down the implementation of a full fibre Britain.”