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UPDATE3 BT’s Broadband Rollout Deal for Devon and Somerset Collapses

Friday, June 26th, 2015 (9:56 pm) - Score 2,991
connecting devon and somerset uk logo map

The second round of contracts for the Government’s Superfast Extension Programme (SEP), which is designed to push UK coverage of superfast broadband (24Mbps+) services from 90% in early 2016 to 95% by the end of 2017, has in some cases struggled to reach a deal with BT and the latest contract to fall foul is for Devon and Somerset in England.

The original £94m Connecting Devon and Somerset contract is already working with BT to make “superfast broadband” speeds available to over 90% of local homes and businesses by the end of 2016, although more recently another £22.75m had also been allocated by the Broadband Delivery UK programme for a second (SEP) contract.

The new contract aimed to push the local coverage closer to the 95% goal and thus help with the councils medium-term strategy of achieving 100% coverage by 2020. But in the end the total public funding for this ended up being smaller than planned (£35m) because the council had struggled to find enough match-funding due to local budget cuts.

At this point it’s worth noting that the original plan was for the second contract to form part of an open market tender, although BT said they wouldn’t bid on such a deal and this effectively forced the local authorities back to a BDUK-based framework (here and here).

But tonight we learn that the local CDS project has been “unable to secure a value for money deal” and thus BT will not be awarded the public-funded SEP contract because their “best offer” was not able to reach the contract’s required coverage target of 95%. Furthermore CDS stated that BT’s offer was “high risk” and “does not meet the public value for money standards required under Section 151 of the Local Government Act.” Ouch.

David Hall, Cabinet Member for Somerset County Council, said:

This is a huge disappointment for us. BT have let the County Councils down, they have also let the Connecting Devon and Somerset Partnership down, and worst of all they have let residents, communities and businesses in Somerset and Devon down. We have a duty to seek best value for all our residents and their tender for the next phase of the programme was just not up to scratch.

We are actually aware of the importance of Superfast Broadband for all our residents but we also needed to make sure we got value for money on behalf of our taxpayers. In taking this action we have acted in the best interests of those who live and run businesses in the region and we will now do everything we can to minimise the delay this causes to the programme. CDS will issue more details once timescales for a new procurement are confirmed. CDS will continue to work with BT on the delivery of phase one of the programme to meet the Government’s target of 90% coverage by the end of 2016.”

Andrew Leadbetter, Cabinet Member for Devon County Council, said:

I feel let down by BT and their lack of ambition, as well as their unwillingness to negotiate a good deal for the residents and businesses of Devon and Somerset! What they were offering did not represent good value for money and would not have addressed the issues of providing universal provision.

I am only too well aware of how important good broadband connections are to our rural businesses and residents. But we’re committed to delivering value for money for our residents in everything we do. In all conscience we couldn’t sign up to this new deal because it just didn’t deliver. We are, however, still on track through the first phase of the project. We will now go to an open procurement process without delay. I am determined that this should be done as quickly as possible.”

The situation will no doubt fuel growing question marks over whether or not BT is truly paying their fair share towards helping to support such projects, with related public contributions (£) often seeming to dwarf BT’s own allocations for the second round of BDUK contracts.

The situation also somewhat highlights the problem with having a single primary / dominant infrastructure supplier, which in turn reflects the UK’s current regulatory model and the way in which much of the underlying telecoms infrastructure outside of urban areas is still broadly dominated by BT.

On the flip side BT are a commercial operator and forcing them to do something that doesn’t work in their interests was always going to create conflict, especially when it comes to deploying into expensive rural areas where gaining a return on such investment can be much more challenging due to the smaller population sizes.

The CDS project is one of the single largest in the whole Broadband Delivery UK programme and as such any failure to reach a deal here may have an impact on the national target. Today’s situation may also go someway to explaining why so many MPs in the South West of England have setup a new All-Party Parliamentary Group to review the BDUK programme (here).

So what next?

Unsurprisingly CDS has been left with little choice but to return their SEP contract to an open market tender. But of course finding any alternative suppliers that can work at this sort of scale and investment will be rather challenging.

In some areas we have seen Gigaclear pick-up the baton, but they’d surely struggle to match fund with a project of this size and even if they could then the coverage challenge of pushing FTTH/P to 95% would be extremely tough and might well fall short. Meanwhile Virgin Media are only interested in the more lucrative urban areas, which leaves CDS in somewhat of a pickle.

One small bit of good news is that the a new contract for the Exmoor and Dartmoor national parks, which was earlier this year able to proceed as an open tender, has not been affected and the results of that are due to be announced next week.

UPDATE 10:33pm

Several hours after issuing the update CDS has now attempted to recall their press release. We are seeking clarity as it’s a bit late to pull the news without explanation, especially in light of how specific and detailed it all is. We hope to update again, ideally with a comment from BT, in the not too distant future. But for now it’s Friday night = relaxing beer.

UPDATE 10:47pm

Apparently the recall only relates to incorrect contact details in the PR and the above content is thus unchanged. Back to that beer.

UPDATE 27th June 2015 (6am)

It came in a little too late last night, but a spokesperson for BT has stressed that they’re still committed to making “high-speed fibre broadband” as widely available as possible and spoke of being similarly “disappointed” that they had been unable to reach agreement on the contract.

A BT Spokesperson said:

BT is committed to making high-speed fibre broadband as widely available as possible and we are disappointed that we have not yet been able to reach agreement on the next phase of the Connecting Devon and Somerset programme. We believe we have made the best possible offer to take superfast broadband coverage beyond the current target of around 90 per cent by the end of next year, taking into account the challenging and remote nature of some locations in the two counties.

Our offer would mean that an additional 34,400 households and businesses in the two counties would have access to superfast broadband by the middle of 2020. A huge engineering operation, would be required, including the laying of thousands of kilometres of fibre optic cable and the installation of over 1000 fibre broadband cabinets and other structures. It is estimated that it would take more than 15 years for BT to get a return on its investment.

Our work with superfast broadband partnerships around the country has shown that when we make a commitment we stick to it and we have successfully agreed extension contracts with dozens of partnerships. We would very much welcome working with Connecting Devon and Somerset and making another substantial investment to further extend superfast broadband coverage, but of course any agreement has to be based on what can realistically be achieved. We will continue to work to try to find a solution.”

At present the only certainty is that any deal for the CDS extension project will be very delayed as the procurement process has had to start all over again.

UPDATE 27th June 2015 (7:34am)

The Government’s Department for Culture, Media & Sport (DCMS), which oversees BDUK, has now also responded to our request for comment and added that they too were disappointed in the news.

A DCMS Spokesperson told ISPreview.co.uk:

The Government’s nationwide rollout of superfast broadband is now reaching 40,000 homes and businesses every week and is on track to reach 95 per cent of the UK by 2017.

Procurement is managed by Local Authorities and whilst it is disappointing that an agreement has not yet been reached, Government will continue to work with all parties involved to ensure any delay to the project is minimised.”

UPDATE 30th June 2015

The CDS project has updated their website with a more detailed explanation (here), which interestingly notes that BT was “unable to commit to achieving the target of 95% superfast broadband coverage by the end of 2017. In addition, BT could not give us any reassurances that the 95% target could be reached by 2021/22.”

Otherwise the update doesn’t add much new to the debate.

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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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31 Responses
  1. Martin Egan

    So in the end everything interwebby seems to orbit around British Telecom.
    If this is true then BT should be brought fully into the realm of public ownership as they seem to be the only game in town with all the gear, plug boxes, tits and terminals ad nationalum.

  2. MikeW

    Interesting to see that BT has a limit. That they’re not willing to chase every contract, at *any* price.

    And now that the relationship is obviously fractious, I wonder how the USC portion will go here.

    • FibreFred

      And too right go for something that gives good return in a good time frame, if not don’t bid

  3. PeterM

    To me this is just the project evolving. When all the cabinets are upgraded there is little point in using BT Openreach as the main contractor.
    Alternative ways have to be found using alternative technologies.
    The obvious way to connect scattered rural communities is by using fixed wireless.
    Strategically placed transmitter masts with a relay of high level antenna could serve most of rural Britain.
    It would be up to rural communities to stimulate local demand and apply to BDUK for funding their local antenna in much the same way as connection vouchers work.
    Giving local communities the ability to fund their own project from the bottom up would encourage wireless ISP to invest in the sector.

    • fastman

      you cannot use vouchers to build networks that is outside state aid
      all those cabinets remain under openreach control and are part of BT Estate

    • PeterM

      @fastman
      The network would be the transmitter and the backhaul. The high level antenna would be a private network for the local community. No BT cabinets would be used.

    • fastman

      that infrastructure –network Build so you cannot use comnection vouchers for that as it is outsise state aid clearance

    • PeterM

      @fastman
      I understand what you are saying but try and follow this logic. It is the same sort of logic that allows businesses on an industrial estate to use their vouchers for what are in reality infrastructure projects.
      A local rural community with poor broadband speeds needs to fund their connection to an existing fixed wireless network. To access the network they need an aerial and they will probably also need a high level booster antenna to relay the signal. The aerial and the antenna are part of the private network not a public network. The key is that the community would be seeking funding from BDUK for their own private network, hence they would not be breaking EU rules.

  4. Arls

    Am I right in thinking that the process either requires or otherwise strongly favours bids where the resultant network will offer consumer choice?

    BT can claim that but all others I’m aware of can’t.

    It’s a pity because some government money could get 4G or similar going relatively quickly.

    • themanstan

      Gigaclear can they´ve partnered with Fluidata so can offer some 20 odd ISPs for wholesale.
      Hence, the recent Essex bid win.

    • Steve Jones

      EU state aid rules mandate that networks built with assistance have a wholesale product. Gigaclear have already committed to this for other BDUK funded projects.

      However, we have yet to see how it works out. Integrating a new wholesale operator is quite a big job for an ISP. It means any number of issues involving product definition, pricing, order handling, configuration management, problem management, cessation, change management before you even think about physical interconnection.

      In many ways it’s much easier for a smaller ISP who can use what’s called “swivel chair” integration. That is manually handling the wholesale operators interfaces rather than using automated interfaces. Bear in mind that limited support there is for BT’s GEA/FTTP product and that is despite it using the other systems interfaces as the other GEA products.

      Also, BT is subject to margin squeeze tests, and I’m not sure the altnets will be regulated so tightly. It might just be that, if the number of potential customers are small, then bigger ISPs might not bother.

      What those ISPs with content services might do is do deals with the altnets so they can bundle things like Sky or BT TV services at attractive wholesale rates. In any event, I rather suspect the bigger ISPs will be scratching their heads on how to deal with small scale altnets which offer wholesale services (I believe some, like Cotswolf Fibre are not even planning to have a retail service). Quite possibly the decisions will be made to support these ventures by some ISPs on a strategic, rather than immediate commercial basis.

    • fastman

      you will still need an Equivalence managemenet platform the manage the CPs

  5. Chris

    Interesting to see the people featured in the article expressing how let down they feel with BT. Personally I feel let down by the government, BDUK and Connecting Devon and Somerset. Dumping all of this on BT is using BT as a bit of a scapegoat. The failings appear to be throughout the whole rotten process. I am not suggesting that BT is blameless but in my opinion the bulk of the blame lives with the bodies who are supposed to be acting on behalf of the constituents and taxpayers, not an organisation who’s primary responsibility it to its shareholders.

    A usable internet service looks further out of reach of me than ever before. As a taxpayer I am certainly not happy with how my money has been spent. I have funded internet for the masses and look set to get nothing in return within a sensible timeline.

    • Craski

      Living in an area which is still classified as “Exploring Solutions” by the BTOR checker, this news doesnt bode well for similar rural areas. It is a really unfair situation that tax payers in some areas are being left yet further behind the vast majority of the country. If tax payers money is being used, it should be fair across the board; sure there are going to be areas where it is more expensive to provide coverage but on the flipside, there will be plenty areas where lots of properties are passed by FTTC rollouts relatively easily balancing things out in the end. B4RN definitely got that bit of policy correct in that no property was excluded on their project.

    • MikeW

      As you can see from subsequent news, other counties continue to announce phase 2 projects … so this debacle doesn’t necessarily map to any other similar areas.

      Chris – Remember that this is just a failure of CDS to choose BT; it isn’t yet a failure to deploy services further … but it will be delayed some.

      But will that delay be significant? Even if BT won the contract, they wouldn’t have started any real work on it until the existing contract was completed (or close to). The work there is due to continue on until the end of 2016 – another 18 months.

      If CDS took another year to run a new procurement, they’d probably still manage to be able to get phase 2 started at the same time.

    • Niall chatfield

      All parties are responsible although I think BT’s offer of another 5 years for less than 5% to be connected demonstrates a lack of interest in completing the Programme. They clearly prefer to focus on GFast deployment and have not recruited sufficient engineers over the last 5 years to do both. CDS should never have contracted with BT on the basis that they did for P1 – if you take my local exchange BT have deployed FTTC which has probably covered 90% of the c.2000 lines. Who is going to be interested in deploying to a couple of hundred houses spread across the exchange area? Our village is c100 house 4km from the FTTC cabinet and 5 km from the exchange – is that really a big enough market for Alternative Provider.

      CDS have provided minimal and misleading information since day 1 and hidden behind their contract with BT and the non disclosure agreements that they signed up to. If there had been transparency I think there would have been a public outcry as it would have been obvious that many Superslow areas where going to see no benefit under P1. We still don’t know when the 2mbps USO is being deployed, what it is and how much it will cost. If you look at the CDS map the coverage looks fantastic until you understand all its shows is the geographic areas covered by PCPs that have enabled with an FTTC twin – as soon as you factor in the 1.8km limitation you realise that coverage is nowhere as good as it looks. When you point out inconsistencies in CDS data and ask them to clarify they just aren’t interested.. We are 18 months from completion of P1 and yet still no one will clarify whether we are in or out of scope.

      I have a feeling the CDS Programme will be viewed as a monumental failure in a few years and will have primarily provided superfast to areas that already had pretty reasonable speeds, but the sub 2mbps areas will have been largely ignored in P1 and now it looks like the 2017 government objective will be missed by a country mile. We can only hope the decision makers are held accountable not that helps rural communities in the short or medium term

  6. Chris

    For me a big part of the issue is that the more challenging areas of the country were left for too long. Only now are BDUK running trials of alternative technologies. Technologies earmarked as for the last 5% may end up being used in the last 10% and by this stage commercial companies should have been encouraged and given the incentives to have developed those technologies further. With the BT offer to CDS being rejected there is finally a bit more incentive. I know I am talking in hindsight but there have been enough highly paid public servants looking at this problem for years who should have been able to predict and avoid this shambles.

    My fear is that CDS have kicked out BT but will struggle to find anybody who has the clout and is technically ready to fill the gap at short notice. Plan A has been rejected but there is no plan B or C.

    And as far as providing good value for money, CDS has, in my son’s words, scored an epic fail. They have had their heads in the sand along with BDUK.

    In the end I think rural communities will get there but not for another 10 years. By that time many communities will have suffered irreversible economic damage. Internet services which are marginal today will become totally unusable as time goes on and parts of the population will need to relocate such as home workers and businesses. Young families will be put off rural properties and house values will drop relative to other areas. We are already seeing this in our community where people refuse to move into the area because of lack of internet.

    • TheFacts

      Without 100% coverage it would be interesting to identify the eg. 5% not to be covered on the CDS map.

      Apart from Upottery where are other significant areas of population?

    • MikeW

      The value-for-money tests probably suggest that BT runs out of consideration around the 95% coverage mark, averaged over the country as a whole. Likely replaced by Fixed Wireless, but I’d be happy if fibre alternatives could manage something.

      Averaging like that probably means that coverage gets to 98% around Leeds’, Manchester’s and Birmingham’s urban areas, but is probably limited to 90% in the most rural counties.

      Devon and Somerset probably qualify, similar to North Yorkshire; fixed wireless is probably needed in these places to even get to 95%.

      A contract hitch might be new in CDS, but North Yorkshire put itself on hold over 6 months ago, refusing to spend their SEP money because BT weren’t going to offer enough value unless they got FTTRN solutions working. The remaining SEP money wouldn’t be enough to get close to a 95% target, and (from presentations to councillors) they’d probably have had a similar 2020 end-date.

      Luckily, NY has a mini-phase-1-extension project running with BT, that will keep going until the end of 2016, so they have some breathing space. They also have their own EU approval, so aren’t subject to this week’s deadline like CDS.

      That county is now, essentially, waiting for the government to decide on the phase 3 technology & funding policies – because North Yorkshire probably needs those now, for its “proper” phase 2 choices.

    • @MikeW Thanks CDS will be similar, the BT press release said 1200 cabs for CDS, so this not come near the £50m+ subsidy let alone anything BT might eventually be caught for in state aid.
      Had they yet got to 140,000 of the 360,000 in the intervention area. Total billing for 700 would less than £20m.
      CDS should not have to rush, given BT has to move the available resource around.

    • gerarda

      @mikew

      The value for money tests of course run contrary to the original purpose of the funding which was to ensure an adequate level of connectivity for all. Not 90% or 95%

    • MikeW

      @NFA
      Agreed. No real need to rush over this decision.

      @gerarda
      I agree. It does seem counter-intuitive.

      There needs to be a “you’re taking the P*&^” test, but that test needs to increase as coverage gets deeper.

      I’m also slightly baffled, because the Devon County Council discussions about the extension project (in Cabinet) suggest that CDS aimed at the hardest-to-reach 5%, rather than the easiest-to-reach 5%.

      I guess this choice will have won them plaudits from their electorate, but you’d have expected it to end up both more expensive and slower to deploy.

  7. MikeW

    @TheFacts

    I’m not sure Upottery is a good example of a “significant area of population”. It certainly doesn’t make it into the ONS statistics on built-up areas which capture 95% of England+Wales’ population (where the smallest such BUAs have 100 people, and less than 50 premises).

    The Upottery parish does have 700 people & 280 premises, but they are spread over a wide area including at least 3 villages. The parish is around 6,000 acres, and plenty of properties are spread around a number of back-roads, making it seem unsuitable for either FTTC or FTTP.

    Nearby, the town of Chard is also roughly 6,000 acres. It has a population of 13,000 in 6,000 homes; those stats put it around the 80th percentile in built-up-areas, and well inside the target zone for CDS … and CDS has activated all 26 cabinets in the exchange there.

    Just what kind of places should CDS be targeting? Would these MP’s prefer to be campaigning for the 700 people in Upottery or the 13,000 in Chard?

    • I would suggest the money exists for these and Priddy and many many more, it is getting them on a list. Perhaps the problem is this coverage stat which allow BT to take a breather, once the easiest 1200 cabs are done.

    • TheFacts

      @NGA – What to you use as the cost of clearing a blockage in your calculations and how many per cabinet? What’s the day rate for installing fibre duct and cable?

    • @Facts – I used to use two interventions (clearing or repair) per 1.5km of duct, but it is better to use the NAO total averages.
      I had two objectives which will sound pathetic, 1) Get to the point where there was a common enough understanding that for the most part, 90% coverage could be achieved by installing 30,000 cabs at an average of £20-£25k each before BT’s contribution. Then things get difficult, but 2) if BT are contribtuing c£300m for the 30,000, it leaves well over £1bn to begin tackling the final 10% including plenty of FTT dp with customers paying for final bit.
      I do not understand the CDS issue if so much money can be rolled over. I guess it becomes more of a resource and time issue given the fewer number of properties.
      I am sure residents would sacifice the time issue in exchange for getting on the list.

    • Craski

      @NGA for all
      “I am sure residents would sacifice the time issue in exchange for getting on the list.”
      Thats the key issue for my area, just getting on the list/being on a plan would be a huge step forward for us.

    • MikeW

      @NFA

      Your post suggests you know the CDS landscape well. Are you the “technical consultant” the CDS partners engaged to model the cost of delivery of the next 5%?

    • @MikeW No. I am interested in the current location of approximately £18m capital of the £41m funding promised by BT.

  8. Somerset

    I guess the problem is the known unknowns in terms of blockages and road closures required which make it difficult to commit to precise timescales.

  9. Jacob

    “BT was “unable to commit to achieving the target of 95% superfast broadband coverage by the end of 2017. In addition, BT could not give us any reassurances that the 95% target could be reached by 2021/22.”

    OMG they actually told the truth for a change rather than lied and blagged.

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