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Government Shuns INCA Plan to Help Small UK ISPs Gain Broadband Funds

Tuesday, April 2nd, 2013 (8:50 am) - Score 986

The UK government’s Department for Culture, Media and Sport (DCMS) has rejected a new framework proposal that could have helped smaller internet providers (altnets) to challenge BT and secure a slice of public funding in order to rollout new rural superfast broadband networks.

The new framework, which was outlined by the Independent Networks Cooperative Association at the end of February 2013 (here), had been intended to target the additional £300m that has already been allocated to the Broadband Delivery UK (BDUK) office from the BBC TV Licence fee for 2015-2017 (here).

At present BT is the only operator left that can bid for projects under the current BDUK framework, which has left smaller rivals (those that typically tend to focus on the last 5-10% of rural premises) at somewhat of a disadvantage. It had been widely expected that the extra £300m would thus be used to tackle these areas, perhaps as part of a new strategy.

INCA’s new proposal, which had the backing of many non-incumbent telecoms companies (e.g. Cable & Wireless Worldwide, Calix, CityFibre, Entanet, Gigaclear, UK Broadband and a few others), was intended to compliment BDUK’s framework rather than replace it. Sadly the proposal, which was initially given a positive reception by Maria Miller (DCMS Secretary of State), now appears to have been shunned.

INCA Statement

INCA members will be disappointed to learn that officials in DCMS have rejected proposals to provide support for the development of a new, more competitive framework for next generation access, focused on the Government’s £300m Additional Funding Project. This is despite an enthusiastic response from the Secretary of State during a meeting with INCA representatives in January.

Officials stated that they had hoped to see “a detailed analysis of a proposed alternative competitive delivery model, including network design, commercial approach, technical standards, names of investors and specifically the purpose of any funding requirement”. In other words, they won’t believe there is an alternative unless someone delivers it to them fully completed and with all the bases covered. They have left the door ajar saying that ‘delivering competitive solutions in the broadband market remains of interest’ and are happy to meet to hear more details if the proposals can be developed under other arrangements.

This result is not wholly unexpected but it does leave industry and government in what one INCA board member has described as a ‘Mexican stand-off’. Whilst non-incumbent players believe that government is not serious about creating conditions that encourage genuine competition, they won’t engage. Without competition Government struggles to deliver genuine value for money or generate substantially more non-incumbent investment.

As concerns grow about the value for money issue of the current approach favoured by BDUK, MPs are asking questions in Parliament and the Public Accounts Committee is starting to get involved. INCA will continue to argue that investment and innovation can only be maximised by encouraging a more competitive approach to infrastructure delivery and that this is being demonstrated right now in projects around the country in both deeply rural and urban environments.

At this point it’s perhaps worth remembering that BTOpenreach has previously stated that it would most likely require all of BDUK’s £830m in state aid to achieve the government’s 90% UK coverage target for superfast broadband via its FTTC/P solution.

The door has at least been left open for further discussion, while critics complain that INCA’s framework could have added to existing delays and would have cost another £600k to setup. A small price to pay for some but a political problem for others.

On the bright side the National Audit Office has confirmed that it will publish a report on the value for money aspects of the BDUK programme. The NAO will examine the ‘case for the scheme, the design of the procurement framework, the appointment of framework partners and the role played by DCSM in local authority procurements’. INCA has been asked to contribute to the investigation.

Leave a Comment
8 Responses
  1. Avatar New_Londoner says:

    No idea why the government would want to help smaller internet providers to “challenge secure a slice of public funding in order to rollout new rural superfast broadband networks”?

    I can see why the government would want to prove it is getting value for (our) money, that the chosen provider(s) will invest some of their own capital and are viable busineses. I can’t see why they need to purchase from smaller internet providers though, or indeed larger ones, just those that meet the other criteria. Would something that overtly favours smaller companies meet state aid rules anyway?

    1. Mark Jackson Mark Jackson says:

      The current system seems to favour bigger providers, so it’s the same problem. A fair balance would perhaps be beneficial.

  2. Avatar Sledgehammer says:

    The BDUK only favours BT as the sole bidder, which will lead to a monopoly for the provision of fibre. No choice as the same product will be supplied by Sky,Plusnet,BT and any other ISP’s selling FTTC. So much for a competitive infrastructure.

    This will pave the way for BT to grab the next £300m when it becomes available.

    1. Avatar DTMark says:

      Quite so. The effect of BDUK’s approach is that we are embarking on a road to continued State investment in something which should be a thriving private industry, with the incentives of competition being the mechanism which raises standards as opposed to taxpayer’s money being being placed in private hands.

  3. Avatar zemadeiran says:

    Why should the upper echelon of society give public money to smaller start up’s when they can funnel that money into the incumbents bottom line and thus lining their own pockets via their shares in said incumbent?

    You must be crazy to think that a level playing field, transparency and openness actually has a look in!

    We need an open source scalable mesh fibre network across the country run by hundreds of small network providers with backing from public funds to a open and ratified best of breed model.

    This could all be completed easily by 2020 via a gradual transition.

    We need to look at implementing a completely separate national public network without the use of current exchanges in order to truly provide a future proof open system.

    Yes I know,

    Where will the money come from…
    Why build such a thing if BT already exists…
    etc etc…

    How long are we going to continue to take it in the arse while saying thank you sir?

    1. Avatar TheFacts says:

      ‘small network providers’. Are you serious? How many would have the skill, experience, financial backing etc? There were a number of separate cable TV companies that soon combined to end up as VM.

      Please explain in some detail what a future proof open system looks like.

  4. Avatar dragoneast says:

    The “anyone but BT” brigade will never be satisfied.

  5. Avatar Zemadeiran says:

    It appears so…

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