UPD2 Fujitsu Withdraw from all Remaining Broadband Delivery UK Procurements

Japanese technology firm Fujitsu UK has, according to the FT, now completely withdrawn from the government’s £530m national broadband scheme (Broadband Delivery UK) and thus left BT as the only remaining bidder in the process. So much for the “competitive tender“.

The move will not come as a great shock to readers of ISPreview.co.uk. Fujitsu UK, backed by Virgin Media, TalkTalk and Cisco, originally envisaged building an ultrafast 1Gbps capable Fibre-to-the-Home (FTTH) style broadband network, using BT’s own cable ducts (Physical Infrastructure Access), that could have reached almost 5 million UK premises in rural areas by 2016.

The idea of building a truly competitive national alternative to BT in rural areas was compelling but, like BT, it would have also required the lion’s share of public funding (£500m) just to get started. On top of that Fujitsu’s £2bn project was largely unproven, aside from a tiny 2011 trial in Greasby on the Wirral Peninsula (here), and many critics doubted its credibility.

Under the original plan Fujitsu aimed to have its first retail customers connected to their Open Access Wholesale Network (OAWN) in 2012. Instead the operator has spent the best part of the past two years withdrawing from most of the relevant tenders, usually citing high “risk levels” (e.g. Wales) or other economic feasibility concerns (e.g. Cumbria, Scotland etc.).

At the start of 2012 Fujitsu UK confirmed that it would now need at least 1 million premises to make its OAWN model work. But perhaps the final nail in the coffin came in September 2012 after the UK government confirmed that Fujitsu UK had now been classified as “high risk” for future IT/BDUK contracts and would thus be subject to additional scrutiny (here). Since then the operator has remained broadly silent.

A Fujitsu UK Spokesperson said:

“While we remain supportive of the [BDUK] process and its objectives, we are not actively pursuing opportunities within it.”

The government’s BDUK scheme, which aims to roll-out superfast broadband (25Mbps+) services to 90% of the UK by 2015 (with the last 10% receiving a download speed of at least 2Mbps), is now entirely BT’s domain. In fairness it’s been that way for some time and few expected the outcome of Fujitsu’s efforts to be any different from what has now happened.

Meanwhile councils have been left with fewer options, which could limit their ability to negotiate a better deal.

UPDATE 20th March 2013

The government’s Department for Culture Media and Sport (DCMS) and BT have issued the following statements.

A DCMS Spokesperson said:

“The government is keen there is as much competition as possible for these contracts but has always accepted that there are some projects which are not as commercially competitive due to the scale of work and infrastructure required.

We knew right from the start that in some places there would only ever be one bidder, so the framework was designed to function effectively in situations where there is only one bidder. It was designed to be able to deal with this, so there’s no need to rework it

The government is confident that the strong framework put in place delivers projects that have real value for money.”

A Spokesperson for BT added:

“If other companies have withdrawn from the process, it is because they are unwilling to invest the large sums that are required without being guaranteed a short-term return. That is despite several of them pledging to make such an investment. In contrast, BT has stood by its promises saying it will invest up to a billion pounds via the process, but accepting that the payback period will be more than ten years.

This approach has proved popular with county councils who are seeking a long term partner who will deliver a network that is open to all ISPs.”

UPDATE 25th March 2013

It looks like Fujitsu UK, which has just received an £800m injection from its Japanese parent, might still bid for a slice of the £150m Urban Broadband Fund (UBF) but it will not return to bid for any of the £530m semi-rural focused BDUK cash. The firm is also still tagged as “high-risk” and thus it will be interesting to see if they managed to win any contracts.