No Gigaclear Deal Yet But Devon and Somerset Get Extension to 2023 UPDATE

The UK Government has officially backed a bid to extend £18.7m of public funding so that it can be used to further extend “superfast broadband” (30Mbps+) in Devon and Somerset up to March 2023, which follows various historic and recent delays to the project’s roll-out plan. Sadly they’ve yet to resolve the Gigaclear situation.

Over the years the Connecting Devon and Somerset (CDS) project has sadly become somewhat better known for its delays than its successes. First there was the c.2 year delay that followed the 2015 collapse of their attempts to secure a Phase 2 “fibre broadband” (FTTC/P) contract with Openreach (here) and more recently a similar delay has afflicted their new Phase 2 contract partner, Gigaclear, which signed the follow-on contract in 2017 (here).

The original contract required Gigaclear to build an entirely new 1Gbps capable Fibre-to-the-Premises (FTTP) network, which would cover 41,000 rural homes and businesses across various parts of the two counties by the end of December 2019 (excluding the ISP’s separate commercial build). This was later extended to June 2020 following Government approval to expand the network to a further 6,810 premises (total of 47,810).

All appeared to be going well until October 2018, when it was revealed that Gigaclear had fallen “significantly behind schedule” (in some areas by as much as 2 years) due to “fundamental issues,” not least including a lack of operational capacity, poor decision making within the ISP, slow deployment by contractors, a lack of detailed planning and a failure to redesign the build methodology (here).

In response the local authorities put Gigaclear on notice of a possible default and withheld further payments, while the ISP’s new owner, Infracapital, made significant changes in order to correct for the mistakes and proposed a revised roll-out plan that would delay completion until June 2022 (the revised roll-out plan still hasn’t gained approval from CDS).

However such a long extension required funding approval from the Government and this has now been secured, albeit seemingly with an even more delayed completion window to March 2023.

Councillor David Hall, CDS Board Member, said:

“The decision by DCMS to back the bid to extend the broadband funding spend-by deadline is a huge boost to our economy and rural communities, and a vote of confidence in the CDS programme.

In recognition of representations made by DCMS and CDS, I am delighted there has been a positive response from HM Treasury which is finalising an agreement for the funding extension with DCMS subject to the Spending Review process.

The effect of such an extension will be to provide CDS with the flexibility to either agree an acceptable revised timetable with Gigaclear to complete a new ultrafast full-fibre network or for CDS to pursue alternative full-fibre solutions for our residents and businesses.

CDS is agreeing similar support from other funders. Whilst every effort to resolve the situation with Gigaclear is being made, CDS is also working with DCMS and the Heart of the South West LEP to consider alternative options and develop a Digital Strategy for the area.

We are grateful to Digital Minister Margot James and her team at DCMS with whom we’ve been working closely, to Liz Truss, Chief Secretary to the Treasury, and to Rebecca Pow, MP for Taunton Deane who has played an important role in co-ordinating the support of Members of Parliament. CDS has also benefited from the strong support of local authorities and LEPs.”

So far CDS has provided access to “superfast broadband” to more than 300,000 additional premises, often in sparsely populated rural areas and over challenging terrain. A further 38,000 homes and businesses have also benefited from improved broadband speed (i.e. not included in the 300K above because they don’t quite achieve superfast speeds but have been upgraded). This is mostly due to Openreach’s Phase 1 contract work.

When the above is combined with commercially-funded networks in the two countries there are, together, over 950,000 homes and businesses across Devon and Somerset now with access to superfast broadband out of a total of 1,083,000 premises currently. You of course have to order such a package from an ISP in order to benefit.

Just for some context, Gigaclear has so far committed to investing £60.5m in the public programme, which covers their 47,810 premises FTTP roll-out and is supported by £31m of public sector subsidy. The ISP is also investing a further £67.3m to connect an additional 43,000 premises under their separate commercial roll-out in the two regions.

Despite today’s news it’s clear that the company “remains on notice of default” and “pending a satisfactory outcome” CDS is still withholding public subsidy. Gigaclear is thus continuing to build the network in the CDS area at its own risk and expense.

Both the Government and CDS are continuing to demand that the ISP provide key reassurances, particularly regarding capacity and acceleration of deployment. On top of that they’re seeking “acceptable plans for each contract area backed by fully costed analysis of the network delivery options and await further information from the company.”

Meanwhile the take-up rate for all CDS-funded services currently stands at 54% and is said to be “generating significant resources for reinvestment” thanks to the gainshare (clawback) agreement with BT (Phase 1 contract). The latest information states that £6m of public investment will soon be returned in order to help Openreach (BT) boost “superfast broadband” coverage to a further 2,000 premises in the hardest to reach areas.

Apparently CDS will provide full details once the final gainshare plans have been agreed with BT and DCMS later this year. Further funding could be returned like this in the future up until 2024. We should add that CDS also has a contract with wireless ISP Airband, which is working to bring superfast broadband to around 21,000 premises across the two counties.

One final point to make is that CDS will finally be joining the Government’s Better Broadband Subsidy Scheme, which is being launched next month (April 2019). Any home or business with less than 2Mbps and not part of planned deployment from another provider should be able to request a voucher worth up to £350 to help cover the installation costs for a faster connection.

UPDATE 19th March 2019

Gigaclear has also issued an apology for the “delays in the delivery of the full fibre network across its contracted areas in Devon and Somerset” (here).