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Smaller UK Altnet ISPs form Group to Challenge BT for Public Broadband Funds

Tuesday, July 24th, 2012 (8:21 am) - Score 1,303
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The Independent Networks Cooperative Association (INCA), which works to support the development of next generation internet access around the UK, has announced the forming of a new group of smaller ISPs that could challenge BT’s apparent dominance of the publicly funded superfast broadband roll-out. But is it too little, too late?

So far the framework for the governments Broadband Delivery UK (BDUK) plan, which aims to roll-out superfast broadband (24Mbps+) services to 90% of the UK by 2015, has managed to whittle its choice of telecoms operators down to just BT and Fujitsu. But BT, with its established network, is the only one to win any major contracts. Meanwhile few expect Fujitsu’s largely unproven plan for a rival rural focused fibre optic (FTTH) network to become anything more than a pipe dream.

The situation has already caused the European Commission (EC) to express concern over the UK governments allocation of state aid (here), which may or may not cause delays to future Local Broadband Plan (LBP) approvals (the EC assesses each plan on a case by case basis and has already approved others, such as the one for Birmingham). Indeed BDUK’s framework is often perceived to have set the economic bar too high for smaller ISPs (altnets) to get involved, which has resulted in many of the original bidders (e.g. GEO, Vtesse, Cable & Wireless Worldwide etc.) leaving the process (example).

On 20th July INCA moved to tackle these concerns by bringing together a sizeable group of non-incumbent telecoms companies, which included BeyonDSL, Cable & Wireless Worldwide (CWW), Calix, CityFibre Holdings, Entanet, Gigaclear (Rutland Telecom), UK Broadband (PCCW), Virgin Media and a few others that don’t wish to be named. Representatives’ from Birmingham City Council (BCC) and the Communications Managers Association (CMA) were also present.

INCA Meeting Statement

Our analysis indicates that a large proportion of the BDUK funding set aside for state support of broadband roll-out will go to BT, but capacity limitations both in contracting and deployment will make the 2015 target difficult to reach. Participants at the meeting discussed plans to develop a co-operative approach enabling them to offer their expertise and capacity on a larger scale than they can individually to help overcome these limitations.

This will offer additional horsepower to the UK’s deployment as well as presenting a more competitive environment to help local authorities to get the biggest bang possible for their taxpayer’s buck. The participants agreed to support development of these proposals further over the next two months. These proposals will be shared with BDUK and other interested parties as they develop to ensure as far as possible that they complement the existing national plans.”

The BDUK framework does allow for the formation of a consortium, although this would still need to show significant financial clout. For example, it requires that an ISPs annual turnover or revenue over the two most recent financial years exceed the threshold of £20m. Any new network must also offer its services to other ISPs via open wholesale access, which makes some smaller ISP models more challenging to achieve but is an understandable requirement for state aid.

However, despite EC concerns, BDUK has already chosen its final two suppliers and the majority of LBP’s have now been approved for tender. This means that councils are effectively already spending public money to finalise the process and pick from an admittedly very limited choice of operators. By the time INCA completes its first proposals, which will take place “over the next two months“, it might already be too late to have much of an impact. This sort of work needed to be done well over a year ago.

But that’s assuming that the new consortium even targets BDUK funding and might instead choose a different tactic. For example, the government has yet to establish a firm plan for the 2015 to 2020 period, where tackling the last 10% of UK rural areas would become the priority (i.e. Europe’s Digital Agenda expects 100% to have access to 30Mbps+ services by 2020).

According to a related article on Ian Grant’s Br0kenTeleph0n3 blog, INCA will hold another seminar today to inform delegates about how to gain EU funding for broadband projects. This could form another aspect and allow the group of smaller ISPs to proceed without immediate access to BDUK funding. But at this stage there are still many more questions than answers.

Meanwhile the leader of East Sussex County Council (ESCC), Peter Jones, has this week become the latest to blame the EC for an alleged delay in the approval of its own £57m Local Broadband Plan (LBP), due to the aforementioned concern over state aid and related matters; such as the lack of access to BT’s Dark Fibre lines (here).

Mr Jones said, “The EU has to give approval of all projects that use public funds. So far it has refused to do so as it does not agree with the UK over some technical points. We are furious that European bureaucracy is holding up essential progress.” However ESCC’s own LBP doesn’t even anticipate final approval to be confirmed until October 2012. Politics.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
Leave a Comment
5 Responses
  1. Avatar FibreFred

    Good idea, but about 3yrs too late. Certainly too late for BDUK but it might work if they can tick all of the boxes and there is further EU funding available

  2. Avatar New_Londoner

    this story paints a very different picture to that suggested by the many comments about how fleet of foot, flexible the so-called altnets are. Its already too late and it will apparently take another two months before anything is ready!

  3. Avatar DTMark

    My often repeated comment “bye bye, all the small ISPs.. unless you band together and come up with something” was aimed at exactly this type of thing.

    The hopes of some of them for a continued business model rest on the EC blocking the BDUK projects. However I have to suspect that it is too little, too late.

  4. Avatar telephone engineer

    It was inevitable that some smaller niche altnets would dissappear once the big boys rolled out a useable service. How many wifi networks will still be viable once Bt finish nga rollout?
    The good thing is if their cs is up to scratch they will always have the opportunity of leveraging their goodnames as isps on wholesale networks..

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