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Gov Helps Put 2 Million Extra UK Premises in Reach of Superfast Broadband

Monday, February 9th, 2015 (12:01 am) - Score 1,162
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The Government’s £1.7bn state aid fuelled Broadband Delivery UK (BDUK) project, which is predominantly working with BT in order to make fixed line superfast broadband (24Mbps+) connections available to 95% of people in the United Kingdom by 2017, has announced that its efforts have helped to put the service within reach of 2 million premises (total UK coverage of approximately 80%).

The programme was first established during 2010 in order to help upgrade areas that might otherwise have been left either completely excluded from the deployment or forced to wait significantly longer to receive a superfast connection, often due to being considered not commercially viable for an upgrade (i.e. too expensive).

So far most of the related work has been conducted by the national UK telecoms giant, BT (Openreach), which dominates practically all of the primary Local Authority contracts. Admittedly there are a few small exceptions in parts of certain counties, such as the Cotswolds Broadband scheme in West Oxfordshire and several Gigaclear deployments, but BT still remains the dominant force.

As a result most of the additional coverage announced today has been achieved by using the operators ‘up to’ 80Mbps capable Fibre-to-the-Cabinet (FTTC) service, with a little 330Mbps Fibre-to-the-Premises (FTTP).

BT are also busy trialling a number of other technologies that may play a future role, such as the VDSL based Fibre-to-the-Basement (FTTB), Fibre-to-the-Remote-Node (FTTrN), Wireless-to-the-Cabinet (this is already being used on some islands in Scotland), Fibre-to-the-Distribution-Point (FTTdp) and of course G.fast (Click here for more details).

However it must also be remembered that the vast majority of the total coverage for superfast connectivity has so far been achieved through commercial investment from operators like BT and Virgin Media, with some alternative network (altnet) providers like Hyperoptic, Gigaclear and Cityfibre etc. also playing a smaller but still very important role. The work they’ve done is not reflected here because BDUK focuses on the non-commercial areas they don’t reach.

Sajid Javid, Culture Secretary, said:

Today there are two million more UK homes and businesses with access to superfast broadband than there were two years ago as a result of this ambitious project. This is a tremendous result that is already making a huge difference to millions of people. We want everyone in the UK to be able to enjoy the benefits of superfast broadband, that’s why we’ve begun work on reaching the last five per cent of communities not covered by existing plans.”

Joe Garner, CEO of Openreach, said:

We’re proud to be delivering this great British success story in partnership with the Government, and have committed up to £1billion of our shareholders’ money to the projects. The programme is on schedule overall and our people continue to work flat-out on connecting homes and business in the UK’s hard-to-reach areas. If we come in under budget, savings can be reinvested to take coverage even further. Funds will also be released if take-up exceeds expectations, all of which is further great value for the taxpayer.”

BDUK Figures – Premises Passed by Region

North East England – 85,048
DURHAM 42,792*
NORTHUMBERLAND 36,713*
NEWCASTLE 5,543*

Yorkshire and the Humber – 232,536
NYNET 142,751
EAST RIDING OF YORKS 23,234*
WEST YORKSHIRE 40,231*
NORTH LINCS 26,320*

North West England – 272,894
CUMBRIA 66,685*
CHESHIRE 54,831*
MANCHESTER 15,586*
LIVERPOOL MERSEYSIDE 27,901*
LANCS 107,891*

Midlands – 291,985
LINCOLNSHIRE 68,747
DERBYSHIRE 24,876*
LEICESTER 22,188*
RUTLAND 9,416
NOTTINGHAMSHIRE 27,439*
NORTHANTS 36,289
STAFFORDSHIRE AND STOKE 30,137*
SHROPSHIRE 31,808
WORCESTERSHIRE 13,976
CSW 27,109*

South East England – 265,935
KENT 69,105
SURREY 77,456
BERKSHIRE 8687*
EAST SUSSEX 27,661
WEST SUSSEX 26,252
OXFORDSHIRE 26,810
ISLE OF WIGHT 1,655
HAMPSHIRE 28,309

South West England – 200,272
GWB SOUTH GLOUCESTERSHIRE 13,632
GWB WILTSHIRE 25,455
DORSET 22,854
CDS 100,083*
H&G 38,248

East of England – 288,729
SUFFOLK 65,915
NORFOLK 115,764
BEDFORDSHIRE 7,737
CAMBRIDGESHIRE 55,373
ESSEX 20,000*
BUCKS&HERTS 23,940

Scotland – 220,000*

Wales – 299,876

Northern Ireland – 17,500*

The Government has also confirmed that seven pilot schemes (out of the original eight) under their £10m Innovation Fund, which was setup last year to “test innovative solutions” for delivering superfast broadband services to the final 5% of the United Kingdom (i.e. the most difficult to reach rural areas), have now moved into deployment. You can now also find a state aid consultation for the Cybermoor scheme (here) and the Quickline project (here) posted online.

A Quick Note About the Size of the Final 5% (BDUK Data)

The unserved areas vary significantly in terms of the density of premises:

* Approximately 20% of the unserved areas are likely to be in areas with greater than 2,000 premises per km2, however the majority of these are in cities where BDUK’s current approach is to stimulate the market through demand-side measures.

* Approximately 20% of the unserved areas are likely to be in areas with population density between 500 and 2,000 premises per km2; and

* Approximately 60% of the unserved areas are likely to be in areas with population density below 500 premises per km2.

The dropped pilot was MLL’s project to create a common wholesale OSS/BSS platform for integrating / aggregating via a rural fixed wireless network. Apparently MLL found “unforeseen implementation complexity and commercial risks which challenge the pilot’s feasibility within its original cost estimates and budget“. The MLL pilot was thus stopped and the other seven remaining MTP projects are proceeding into deployment; feasibility reports will be updated during the deployment phase which runs until the end of March 2016 (details here). The first customers will be connected by the end of February 2015.

According to today’s update, one of the trials in Exmoor will very shortly be delivering superfast broadband to homes via satellite. “This is the first time that satellite will be used to deliver superfast speeds to residential customers in the UK at affordable prices,” said the PR. Most consumer satellite packages currently top out at speeds of just below 24Mbps (the Exmoor trial is aiming for 30Mbps), although crucially a decent usage allowance via Satellite is normally still very expensive.

Another big question going forwards is what kind of impact “claw-back” (i.e. this could return some public investment for helping future upgrades once take-up in BDUK areas reaches 20%+) and other savings will have on future coverage.

Data published by ISPreview.co.uk last year shows that most areas are still some way off the 20% tape-up goal (here), which is perhaps understandable given the early stages of deployment and complications with service awareness, existing contract lock-in and price premiums etc.

In response to a question posed about this matter last year the CEO of BDUK, Chris Townsend, said, “As we are drawing to the end of phase 1, we are already reviewing the success that we have achieved to date. We are looking at the additional savings that we are making, because as we are working with BT – I mentioned earlier that we have the smart contract management process in place – we are monitoring all BT’s expenditure and we are already receiving significant savings from the first deployment of phase 1, through the smart contract management. We are already deploying those additional funds to extend phase 1 further into deeper rural areas. That is going on with each of the local bodies — we are planning that. Once we finish that further deployment, we are hoping to go seamlessly into phase 2 so that there is not a break between them.”

ISPreview.co.uk recently requested further details on what the “significant savings” are and we were told that it is not possible to provide any figures at this point in time, although some Local Authorities that have already technically completed the Phase 1 contract (e.g. Rutland) will apparently soon be able to help give a practical demonstration of the savings and how they can be reinvested to improve coverage. The National Audit Office recently offered some additional insight for all this (here).

NOTE: For some odd reason this announcement comes only a few days after DCMS published their related Quarterly Broadband Performance Indicator update, which creates a bit of repetition but also adds some context to the above. Personally we wish the Government would publish these announcements together so as to avoid repetition and confusion.

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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.
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11 Responses
  1. The 2m premises passed or circa 10,000 cabinets and 1% FTTP is great but note;

    The NAO report did report they found 38% excess modelled costs in BT’s orginal BDUK offer.
    Adkins work identifed actuals for cabinet/fibre path of £21,000 (including BT’s contribution) not the £46,000 subisidy which is reflected in the milestone payments which are refected in the state aid BT is reporting quarterly.

    I would love if the £1bn extra BT investment was true, but NAO (1) found a possible BT capital of £357m while NAO (2) made no refence to BT actual contribution.

    Great progress, but think what’s possible if we get additional transparency on the numbers.

    • Avatar MikeW

      You still think that BT are given milestone payments in terms of the modelled costs rather than the actual costs?

    • Avatar nga for all

      @mikew Yes £96m state aid in Bt accounts for each of last 2 quarters. BDUK just passed £150m to LA to more than match for Q4. These are milestones not the £21k per cab/fibre parth identified by Atkins for Nao/Bduk. £21k must be a cost based on a rural example.
      I am certain the £21k is before BT contribution.
      The £142m excess costs identified by Nao will be sitting in BT accounts.

    • Avatar MikeW

      That’s not what was reported to PAC. BT is only paid for the invoices of actual costs. And even then, it is not handed over on receipt of the invoice but only once the milestone is reached.

      If they were being paid in the way you suggest, what would they receive each quarter?

      We know the project is working at 40,000 properties per week at superfast speeds, so 520,000 per quarter.

      From NAO, we know that roughly 15% of lines are too long to get superfast speeds; so the total lines passed per quarter gets increased by 78,000 to nigh on 600,000.

      We know they are deploying cabinets sized roughly 100-200 lines. Lets use the average of 150 lines per cabinet (which will be a mix of superfast and slower lines), so 600,000 lines translates to 4,000 cabinets.

      If BT were accruing £46,000 per cabinet, we’d expect them to accrue £184m per quarter – just on cabinets alone. We’d expect them to be adding on some of the other costs split out by NAO, but not much for FTTP yet.

      But BT have only received £96m for each of the last 2 quarters.

      Something wrong in the assumptions, I reckon. But which ones?

    • @Mikew I suggest earlier part of rollout, thus 40k ish by 12.5 weeks = 500k /200 premises average = 2500 cabinets a quarter x £46k = £118m – compared to £94m reported. If 4,000 cabinets in a quarter then job is done in 20 months.

      Atkins/BDUK actuals now reported as £21k -(BT contribution not discussed) so if paid on actuals 2,500 cabs x 21K = £55.5m. 4,000 a quarter is a less than 2 year programme.

      Hence BDUK reported they have yet to find most economic price.

      I think PAC were infomed based on BT info that milestones were related to actuals. NAO /BDUK second report suggest this may need correcting.

    • Avatar The truth

      @NGA. NAO report clearly talks about £21k a cab as compared to bid average of £28k Are you saying the original NAO report was also based on public subsidy?

    • @The Truth NAO report 1, Table 11 P33 showed the cabinet/path of £28.9k accounted for 36% of the total cost, or you derive it is c60% of the subsidy expressed as milestone payments. The milestone payments currently being paid by LA are based on this subsidy of c£200 per premise passed or c£46k ish per cabinet.

      Until NAO 2 arrived – BDUK relying BT information would have to assume milestones and actuals aligned.

      NAO report found actuals which must be based on a rural example of £21k – but this does not in my opinion include a BT contribution. This takes the subsidy lower.

      So the £142m excess modelled costs were I believe, based on the BT recorded state aid, already paid to BT in the form of milestone payments. This is likely to continue for the next 4-5 quarters.

  2. Avatar Jonathan

    Could this mean that Hull could finally be able to get someone other then karoo for fixed line internet? say BT?

    • Avatar MikeW

      Nope.

      There is no BDUK programme covering Hull, even though it was originally given some of the budget back in 2012. However, that budget was grouped alongside East Yorkshire’s share – and they have gone ahead with a BDUK programme.

      It has been said that KC have chosen to run their upgrade programme purely commercially, but I find it hard to believe that they intend to reach 90% of Hull within the next year. They’ve been pretty slow so far, and a good proportion of what they have done has been concentrated in the surrounding villages – perhaps keeping BT at bay.

      BT themselves wouldn’t be able to cover Hull in a cost-effective way, because they don’t have an existing access network in the streets, so there is nothing for them to add FTTC cabinets to.

  3. Avatar david

    government what,s that giving money for this rubbish when its suppose to be superfast lmfao is frigging dial up speeds with the cowboys

    • Avatar X66yh

      …and there we have another well considered, literate, helpful and informative post which adds to the discussion from one of the UK’s highly capable and motivated workforce.
      /sarcasm mode off

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