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B4RN Explains the Problem of Bidding for Public Broadband Funds

Wednesday, July 9th, 2014 (11:13 am) - Score 914

The CEO of B4RN’s 1000Mbps capable fibre optic broadband (FTTP/H) roll-out in rural Lancashire (England), Barry Forde, has offered up an interest insight into the difficulty of being an alternative network operator to BT when bidding for public funds from the Government’s Broadband Delivery UK (BDUK) office.

Forde’s latest opinion piece, which was published on Trefor.net today, discusses the challenges of putting a bid in for a slice of the additional £250 million that was recently allocated to local authorities across the United Kingdom as part of BDUK’s Superfast Extension Programme.

It’s hoped that the extra funding will help to extend fixed line superfast broadband (24Mbps+) coverage to reach 95% of the population by 2017. But first many councils will need to conduct another Open Market Review (OMR) and Forde suggests that, unless your name is BT, there’s probably not a lot of point in even attempting to bid.

Barry Forde, CEO of B4RN, said:

The suspicion is that most will simply extend the phase 1 contracts with BT but, fingers crossed, some might take the opportunity to run genuine tenders which could open things up for community groups. First, though, each authority needs to run an Open Market Review to establish what work is going to be done by the commercial operators in the coming three years.

So let’s look at how all of this works from B4RN’s point of view. As a network operator building a network we have been asked to respond to Lancashire’s OMR with details of what our plans are, and as I see it we have three options, none of which appeals to me:

1.Ignore the OMR and don’t respond. If we do this then our Local Authority can ignore us and assume that any areas not covered in phase 1 is “White” (i.e., no existing operator), and therefore eligible for subsidies from the phase 2 kitty. They could choose to simply add these areas to the existing phase 1 contract or they could go out to tender for them, in which case B4RN could respond to the tender.

2.Respond to the OMR and list our targeted areas but say that these plans involve us bidding for public funds. The Local Authority is then perfectly free to ignore our plans as they involve public money and the OMR rules says these plans can be ignored, so the area stays White and we revert to 1 above.

3.Respond to the OMR saying that our target area is going to be built come hell or high water, and we will find some way of building out to all 3500 properties in our patch. If we do this then the State Aid rules say we cannot bid for any public funds as the market is going to deliver ,and our area is now grey and not eligible for grants. In theory, this should also prevent LCC from funding BT to build out in those post codes too. As the phase 1 postcodes have not been disclosed by LCC, however, they can at any time state that a specific patch is being done via phase 1 funding, not phase 2, and go ahead. I cannot see any way to stop this from happening.

Options 1 and 2 mean that it is very unlikely we would get any funding via the phase 2 project, as our Local Authority has a close working relationship with BT and I’d be utterly astonished if they allowed us a sniff at the money. The probability is that they would extend the phase 1 contract with BT or, if not, do a new procurement structured to keep B4RN out.

Option 3 means we are locked out of any funding anyway, and still will not have protected ourselves from a BT overbuild. But what we have done is committed the rural community to find 100% of the money and effort needed to build out the network. It becomes simply a matter for the Local Authority and BT to cherry-pick anything that looks remotely attractive to them, claiming it was in the phase 1 plan, and leave B4RN with the extortionately expensive and difficult bits.”

The full article is well worth reading and Forde concludes that the decision they’re left with is “do we drown or do we burn?“. Forde also complains about the short 28-day window to respond to LCC’s OMR and suggests that “the best way would be to not respond and to let the Local Authority fund BT to go out as far as it can, and then B4RN simply overbuild BT as and when community effort and funds permit … we have no worries about competing with a subsidised BT“.

The community investment behind B4RN, which sees local people putting both their own time and sometimes money into helping to build out the network, tends to result in strong take-up and Forde appears to be banking on that for the future. But it could be risky to shun the OMR because it’s a lot easier to attract support for a product in areas where only slow broadband is available than in those where BT has already rolled out FTTC or perhaps even FTTP.

Never the less it’s hard not to sympathise with B4RN’s position and the sometimes stifling bureaucracy, which often seems to defy common sense, of how the BDUK programme appears designed to work.

Leave a Comment
29 Responses
  1. Avatar New_Londoner says:

    Surely to point of the OMR is to remove any areas that will be served by the market from possible public funding? The points made by Barry ignore this and highlight artificial “issues” that don’t apply to any firm plans with funding.

    If the council also included speculative proposals that didn’t subsequently happen surely the affected communities would be rightly very angry?

    1. Avatar gerarda says:

      I think you will find areas all over the country that were excluded from Phase 1 because BT speculated that they would be in their commercial roll out and subsequent to the award of the BDUK contract decided otherwise. And yes the affected communities are angry.

  2. Avatar Barry Forde says:

    New_Londoner
    Actually the council is including speculative proposals that won’t subsequently happen. Because they won’t commit to delivering any specific speed to any particular properties the final outcome will be that a significant percentage, probably north of 20%, of the properties they are declaring as “NGA available” won’t get NGA speeds of 24Mbs or better. And yes the affected communities are rightly going to be very angry when they find this to the case.

    The flaw with the OMR process is that if a community group flags up its commitment to build an area that automatically rules them out of any public funding. So they have to raise 100% of the costs themselves. If they don’t flag up a commitment then its entirely down to the LA to decide how to handle the subsequent process of allocating the public subsidy to the white area. If you look at what happened with phase 1 its obvious what will happen with phase 2. So community projects get completely locked out of access to the funding UNLESS their LA wants to support them. The probability is that most will take the easy option of just adding them to their existing phase 1 contract.

    1. Avatar Gadget says:

      So Barry which option did you take of the three for Dolphinholme?

  3. Avatar NGA for all says:

    As a BARN and a BT Shareholder, I would suggest BARN submit their FTTP plans for what must be the extra 2,500 coverage with a gap funding request for some of the extra funding or surrendered USC funding, efficiency savings, or earmarked clawback funds. BARN could on behalf of you customers do 2 costings BARN design or BARN/BT design as per Fell End in Cumbria.

    BARN has a solution that may not suit the masses (choice, sustainability, CPE) while BT is only comfortable with cabinets for now. BT group will need re-think their altered and offensive position on FTTP and FOD and so needs some projects to work on to encourage other communities to follow suit.

    Imagine the shock to LCC and BDUK if BARN/BT decided to work together for the benefit of the customers ocassionally referenced.

    1. Avatar Steve Jones says:

      You are correct of course, but the problem is that B4RN are not a full commercial operator. They rely on community involvement, volunteer efforts and landowners providing free (or, at least, very cheap wayleaves. Indeed, that’s exactly what their website says. If they don’t manage to agree this, then they are into the expensive stuff of public roadworks and/or using BT’s infrastructure via PIA. They would also need the finance to support this.

      Then there’s the issue of wholesale provision. Whatever they came up with would have to be available to service providers on non-discriminatory terms. If a business plan depends on monopolising the retail revenue as well (as it does on many altnets), it becomes a problem. What that means is it’s very difficult for them to compete with a large company with many resources, and the people who assess the commercial risks of going with small altnets will be well aware of these issues.

      Also, putting a commercial bid together is a very expensive process in its own right.

      So basically this is a fundamental problem of small companies bidding for complex infrastructure when they lack the critical mass and finance. The alternative is that counties have to subdivide their areas up into lots of relatively small areas and then they run the risk of generating a patchwork solution supplied by several different companies, any of which might be at risk. Not surprisingly, counties and government agencies aren’t equipped to dealing with many suppliers.

    2. Avatar Chris Conder says:

      You can’t compare B4RN and Fell End.
      B4RN is a sustainable network in its own right. It can supply wholesale access to any ISP, but none are interested in rural areas, that is why there is no LLU in small exchanges. BT say they are open access but reality is a tad different.

      Fell End is ‘build and benefit’, which means the community do all the work and raise the funding, then hand the network over to BT for infinity. Not fibre. Just infinity. But yes, they will have a choice of multiple ISPs who may want to provide a service to them. Bought from a monopoly called openreach. That isn’t real choice is it?

      B4RN could have started out as a full commercial operator if they had the funding that BT got. As it is, the community are doing it, and gradually as it generates income it will become commercial, but if it hadn’t done it with volunteers it would still be on dial up.

      So you have another choice, support a local initiative, own it yourself and keep the profits within your patch for the benefit of the community, or support a national monopoly who will allow anyone to deliver a vastly inferior service at a higher price.

      Choice is indeed a wonderful thing. Shame the rest of the country hasn’t got a choice, its copper or nowt unless you can find or build an altnet. BT FOD is out of price range. Its become a superfarce.

    3. Avatar Steve Jones says:

      No, B4RNs business model is fundamentally based on not incurring the costs of commercial operators through community involvement. They actually make a point of saying exactly that.

      I’d invite you to read section 3 of their business plan which actually makes the point it avoids the very high costs of a commercial operator by using volunteer labour, free wayleaves across private land and so on. They do have a sustainable plan for support, but the initial installation is not that of a full commercial operator. Indeed, they make a big play on exactly that point. If they operated as BT , Virgin or other operators have to, then they couldn’t do the same thing. Which is exactly their point.

      http://b4rn.org.uk/wp-content/uploads/2011/11/B4RN-Business-Plan-v5-2.pdf

    4. Avatar TheFacts says:

      @CC – if you are unhappy about Openreach being a monopoly, or current sole supplier of infrastructure in an area, then the same applies to National Grid for our gas and electricity?

      Unclear why ISPs not interested in B4RN, the location is irrevelant as the interconnect could be in Manchester.

    5. Avatar FibreFred says:

      “Unclear why ISPs not interested in B4RN, the location is irrevelant as the interconnect could be in Manchester.”

      How many are connected to B4RN now is it about 500? I doubt any of the big ISP’s would bother to set-up commercial contracts to try to poach 500 customers even if they could get them all.

    6. Avatar No Clue says:

      National Grid is something like 12 separate companies nowadays, nothing like Openreach. Dunno what cave you have been living in.

    7. Avatar TheFacts says:

      National Grid – We own the electricity transmission system in England and Wales. All gas in the UK passes through National Grid’s national transmission system on its way to consumers.

    8. Avatar DTMark says:

      We get, on average, about a dozen power cuts a year. Shortest is about 4 hours, longest was 26 hours last year.

      I can always change supplier.

      How does that fix the problem?

    9. Avatar PhilT says:

      “B4RN is a sustainable network in its own right” – and yet seems strangely focussed on public funding.

      If it’s a viable sustainable model that stands alone then why would it not declare areas to the OMR and keep subsidised BT activity out of that area ?

    10. Avatar NGA for all says:

      @Chris Fell End through community effort, but with no desire to run a network have achieved a great outcome for their community. Bar4n has done a great job building its own facilities for the c1,000 customers and deserve full praise.
      If the appetite exists amongst customets in the area you could cost both approaches and in doing so the BAR4N apporach is likely to be cheaper so LCC/BDUK have less reason to refuse you. But you not doing a bad thing by attempting to force BT’s hand for this area and making the comparison.
      Constructing the case would have been a good use of the feasibility phase of the Innovation Fund.

    11. Avatar No Clue says:

      Oh dear thefacts you really need to get out more…….
      http://www2.nationalgrid.com/UK/Our-company/Electricity/
      and the full list is
      https://www.ofgem.gov.uk/electricity/distribution-networks/gb-electricity-distribution-network
      and
      http://www.energynetworks.org/info/faqs/electricity-distribution-map.html

      SO NO NOTHING LIKE OPENREACH AND NO THEY DO NOT OWN THE ENTIRE NETWORK.

    12. Avatar FibreFred says:

      “If it’s a viable sustainable model that stands alone then why would it not declare areas to the OMR and keep subsidised BT activity out of that area ?”

      🙂

      Classic

    13. Avatar No Clue says:

      Dunno what you are on about that seems to be a list of nothing more than organisations given code powers. Nothing to do with people owning anything. Maybe you should just go back to calling yourself Somerset that way we will all know when a pointless inane question is coming along with a pointless and inaccurate comparison of broadband to power networks.

    14. Avatar Raindrops says:

      LOL i had wondered what had happened to him and his regular Gas and Electricity compares to broadband… It suddenly all now makes sense.

  4. Avatar No Clue says:

    An excellent article that explains just how flawed these processes actually are and how they favoured BT from the very start.

    1. Avatar Ignitionnet says:

      Someone said to me a while back that the crown is still on the hook for the BT pension fund and BDUK was as good a way as any of topping it up via the taxpayer.

    2. Avatar No Clue says:

      Please refrain from talking about anything financial when it comes to BT their angry employee will call you a troll. http://www.ispreview.co.uk/index.php/2014/07/bt-claims-broadband-refusenik-missing-1k-benefits.html#comment-145234

    3. Avatar No Clue says:

      ^^^ LOL so not really a private company at all

  5. Avatar fastman2 says:

    Gerada

    i think they were covered commercially at a postcode level but not gain speed uplift — this is the same scenario in some communitiues in BDUK where cab upgraded but communities too far to get benefit – not quite the same as your assesment

    1. Avatar gerarda says:

      It is if they are too far from the cabinet to get any service – as it eliminates them even from the 2mb minimum commitment under the BDUK rollout

  6. Avatar fastman2 says:

    chris actually i think openrreach provides thernet GEA (infinity ia a ISP products) Ethernet GEA is what Openreach actualy deploy – ISP then chose how they brand that as you are well aware

  7. Avatar dragoneast says:

    This is part of a much bigger problem. Despite all the political noise, competition doesn’t support smaller businesses. It’s always a skewed playing field. But never mind, it’s a nice selling word. And means we don’t have to tackle the difficult stuff.

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