UPD Controversy as UK Councils Decide Superfast Broadband Contract Winners

Several local authorities are this week expected to pick the winner(s) of their respective Local Broadband Plan (LBP) tenders, which will give them access to a slice of the £1bn+ Broadband Delivery UK (BDUK) budget and bring faster internet access to more homes and businesses. But the outcome might also inflame Europe’s competition concerns.

Both Cumbria and Norfolk, to name just two out of a slightly larger group, will this week hold private meetings in order to decide whether BT or Fujitsu deserve their public subsidy support to help 90% of people in each local authority area gain access to a superfast broadband (25Mbps+) service by the end of March 2015 (note: a firm post-2015 to 2020 plan has yet to be announced).

Sadly the public isn’t expected to learn the official outcome of these secret debates until at least the end of next week (assuming no media leaks.. hah), although many are already predicting that the result will be similar to other recent contract awards in North Yorkshire, Lancashire, Wales and Scottish Highlands and Islands where BT won.

In the case of North Yorkshire and Wales, BT simply had no competition after Fujitsu “voluntarily” withdrew over high “risk levels” and broader economic concerns (outside of a small trial Fujitsu’s FTTH project is expensive, somewhat unproven and thus perhaps carries a greater risk for councils than picking BT). A similar situation has already hit Cumbria (here), which yet again leaves BT as the only option.

Critics, such as Cumbria’s South Lakes MP, Tim Farron (LibDem), have also warned that a BT win would result in the operator using “some of the money that they will receive to do things that they would do anyway” (i.e. bring faster speeds to areas that already have good connectivity). BT understandably denies this and states that the money will only go towards areas where private sector investment alone cannot reach (this is a requirement of BDUK funding).

Sadly the heavy restrictions imposed by BDUK’s framework prevent smaller local ISPs (altnets) from taking part, while the Independent Networks Cooperative Association’s (INCA) effort to make the process more accessible might simply come too late to help existing tenders (assuming it arrives at all); in any case most councils only seem to have eyes for a one-operator-only solution.

Meanwhile the European Commission (EC) is continuing to block the release of state aid funding by the UK government until its competition concerns with the BDUK process have been adequately addressed (i.e. lack of competing operators, no Dark Fibre access, sub-30Mbps speed targets etc.). A decision is expected this autumn and most of the affected local projects will be unable to start building until this is resolved.

It’s important to remember that the majority of local BDUK based projects, except for a small proportion (e.g. Birmingham city has already won EU approval), face similar hurdles to the above. Ultimately the UK government expects the procurement process for all counties to be completed by July 2013, though few would be surprised if BT won the lion’s share of funding for its predominantly FTTC based solution.

None of this is to say that a BT win would be a bad thing, indeed their FTTC, FTTP and forthcoming FTTP-On-Demand services are a lot stronger than some give credit and would surely go a long way to improving the connections for millions of UK homes and businesses. At the same time it’s difficult to appreciate what alternatives might have existed if smaller ISPs were never given a fair chance in the first place.

UPDATE

Sorry we forgot to mention that Norfolk County Council (NCC) has delayed its decision until 17th September 2012. This is due to the “sudden and tragic loss of a key member of a team preparing to submit a bid to partner the County Council in the Better Broadband for Norfolk project”

UPDATE 14th September 2012

It was noted earlier this week in the FT that Fujitsu had allegedly been blacklisted by the UK government for being too “high risk” to take on new public sector contracts (here). However that doesn’t mean that they’ve been totally banned and indeed we’ve not been able to find any confirmation of a ban. Fujitsu has said that it is continuing to engage with BDUK as normal, which doesn’t mean much since they’ve yet to win ANYTHING.