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Worcestershire Broadband Rollout Criticised Again for Wasting Money

Monday, August 17th, 2015 (8:39 am) - Score 740
internet politics

The Superfast Worcestershire (England) project, which is rolling out “high-speed fibre broadband” (FTTC/P) to 95% of the county by summer 2018 (94% will get “superfast” 24Mbps+ speeds), has been criticised again for low-uptake and giving up to £8.5m of public funding to prop up BT’s commercial business.

Only last week the project boasted about how 35,000 extra homes and businesses in the county had already benefitted from the Broadband Delivery UK and BT based roll-out programme (here), which once complete should have helped to put the service within reach of around 63,000 additional premises.

On top of that the scheme reported a strong level of uptake at 17% and confirmed that this, when combined with savings of £0.9m, would soon return around £3m from BT for reinvestment into further coverage improvements. But the leader of the county’s opposition Labour group, Peter McDonald, isn’t pleased.

Councillor Peter McDonald said (here):

We have destroyed nearly every service the county council has ever been responsible for and here we are giving one of the riches companies in Europe £8 million so they can advance their business. And this is all for a measly 17 per cent take-up.

After this investment we can see the outcome and the outcome is diabolical. We opposed it in the first place and the outcome has proved why.”

The remarks echo a similar statement made by another opposition councillor at the end of last year (here), which likewise appeared to focus upon criticising the core issue of using public money to improve broadband coverage and then putting that money into BT’s pocket. As usual no alternative ideas are offered, so we assume their answer would be to stop all such public investment.

As before the remarks appear to overlook how broadband is often considered to be one of the better uses of public money, at least in terms of its perceived benefit to the local and national economy (plus any social benefits), although there may well be some sympathy for the BT sniping; even if the alternative operators weren’t quite there in 2013 when the contract was first signed.

It’s also unclear by what gauge 17% uptake is to be considered “measly“, particularly since the Worcestershire deployment began in 2014 (somewhat later than most) and yet is now demonstrating a much stronger uptake curve than many other BDUK schemes; despite not being demand-led.

Lest we not forget that the council’s £8.5m wasn’t the only contribution to the local phase one contract, with BT adding up to £8.9m and BDUK putting in £3.5m. On the other hand it’s easy to understand such concerns in the current climate of austerity, although sometimes the best way to make money for public services is by investing in new infrastructure.

So far the public at large appear to be roughly supportive of the Broadband Delivery UK programme, although perhaps in the grander scheme of things it’s simply not as emotive of a subject as funding for schools, hospitals, military or police etc. Mind you that might change if the idea for a tax on broadband ISPs, which would ultimately hit consumers, turns into a serious proposal.

Otherwise it’s a shame that such politicians don’t put their energy into examining the issues that do exist within the Broadband Delivery UK project, such as its failure to embrace smaller alternative ISPs at an earlier stage, the lack of better cost transparency, the lack of clarity over future coverage plans, the issue of how some areas earmarked for BT’s commercial upgrades are being handed back to BDUK and the idea of using a subsidy for Satellite to cater for some of the final 5%.

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27 Responses
  1. Avatar dragoneast

    Politicians have an addiction to soundbites. Which is why I worry about the current fad for politicians to “direct” investment. Their best argument in favour seems to be “we couldn’t do any worse than anyone else”. Really? Haven’t we learned anything?

    • Avatar chris

      Since the Digital britain report in 2009, we haven’t learnt a thing. The councils and politicians make the same mistakes all over again. They are totally fooled by the vital vision propaganda of the incumbent. The regulator and ASA are feckless. This country is doomed as far as being a digital nation goes. We are going to end up a third world country if we don’t get some fibre. Moral and Optic. FTTC is a dead end, a copper patch up and will all be to do again properly one day if we are ever to compete in a digital world. If it comes through a phone line it isn’t fibre broadband, despite millions in advertising, they can’t change the law of physics. Making some folk near cabinets go a bit faster is not a solution. It’s a superfarce.

    • Avatar Steve Jones

      All part of the to and fro of party politics. It’s often immaterial what the topic is. For some politicians the end is just to score points over the opposition.

      Personally, I would have thought 17% was a reasonable uptake rate for a project which is still at a relatively early stage. If the councillor wants to see a real waste of public money, then I suggest he looks at the Digital Region project in South Yorkshire where tens of millions of public money was wasted, with little discernible benefit. Of course, that might be a little embarrassing for his party given the South Yorkshre local authorities involved. It would appear Rotherham alone expect to pay out about £8m as there portion of the failed project.

      http://www.rothbiz.co.uk/2015/03/news-5073-rotherhams-digital-region.html

  2. Avatar DTMark

    Where local authorities ignore potential NGA rollouts involving commercial investment and instead hand the money over to the same incumbent who has failed to deliver for so long, locking out any competition and leaving the entire bill with the taxpayer, I think the expression “wasting public money” is very valid.

    • Avatar Steve Jones

      “leaving the entire bill with the taxpayer”

      That is an out-and-out lie.

    • Avatar Steve Jones

      Just to add some documentary evidence (of which the poster is certainly well aware – it’s been posed enough). This is a quote from the last couple of NAO report on BDUK.

      “The contracts between BT and local bodies require BT to bear the risk of
      overspends, so these contracts effectively set BT’s maximum claim amount for each
      project.”

      http://www.nao.org.uk/wp-content/uploads/2015/01/The-Superfast-Rural-Broadband-Programme-update.pdf

      and

      “The Department has transferred much of the downside risks to BT although BT would benefit from some upside risks. BT bears the risks of costs being higher, or revenues being lower than modelled, including the risk of future price
      regulation. The public sector will benefit from capital costs being lower than modelled.”

      http://www.nao.org.uk/wp-content/uploads/2013/07/10177-001-Rural-Broadband_HC-535-ES.pdf

      So there is never any possibility that the tax payer will be left paying the entire bill. Indeed, the latest evidence (from the takeup rate and the accelerated rate of claw-back based on more optimistic marketing assumptions) is that the amount of gap-funding required from the taxpayer is going to be reduced very significantly.

      I challenge you to find an example where BDUK projects (and public funding) is going to be left with the entire bill as you claim.

  3. Avatar Walter G M Willcox

    Politicians, however well meaning (or otherwise), fail to recognise what the SuperFARCE is all about. “Having access” does NOT equate to being able to connect, at a speed of over 24 Mbps, all those counted in an exchange due to FTTCabinet capacity, insufficient tie cable pairs**, Exchange only lines, bad aluminium alloy lines etc. etc.

    Furthermore far too many people who should know better quote %age figures without defining what they are. Even a GCE mathematics student knows that a percentage figure is worthless and deceitful unless you say precisely what it is a percentage of.

    ** http://tinyurl.com/lgkx28b

    • As mentioned in many past articles, it’s % uptake of BDUK enabled areas. As above we’d assume that’s around 17% of 35,000 premises passed unless you know otherwise?

    • Avatar Steve Jones

      As this is a percentage uptake on enabled lines, then that’s what it is. Quite clearly any lines which are too far away, or where there is a (temporary shortage of capacity – which OR are contractually required to remedy), or where there is some other technical issue will not be counted.

      It’s also clearly in OR’s commercial interests to have uptake as high as possible, even given the operation of claw-back. FTTC is very sensitive to take-up models as the up-front capital cost is fairly high and the marginal cost of provision of each line low.

  4. Premises passed is the deceitful bit. How many of those passed can access greater than 24Mbps today?

    • Avatar DTMark

      Our VDSL estimate – top of Range A is 36 Meg. Bottom of range B is 15 Meg.

      Now which of those numbers qualifies as attainable for the BDUK project and superfast coverage, and which of the numbers is BT confident of delivering?

      And what recourse would the local authority have if the higher number is used, yet the line achieves the lower one?

  5. Avatar rockyv

    I totally agree with Chris here, FTTC is a sticking plaster, and all that will happen is that in 5-7 years time BT will come back to the table for exactly the same amount of money again to remedy the connection from cabinet to property.

    FTTH is an infrastructure worth investing in as it actually means large civil engineering, which ultimately goes to construction companies and real jobs on the ground and stimulating the economy. that should be the KPI we are working to

    if you look at companies like Gigclear and ITS technology that are delivery FTTH, the main output is construction jobs and civils works as well as a technology assets

    BT are just keep all that revenue in house to pull fibre through their existing ducts to existing cabinets and not chaging anything to the property and the taxpayer end…why should they see a benefit, and the phasing out of a 100 year old copper line

    BT get a free network upgrade and retain shareholder returns in line rentals on a phone line to every customer regardless of if they actually deliver a service.

    they will be back to ask for money again to complete the job

    • Avatar MikeW

      You do realise that, even if all you predict turns out to be true, it ends up with no extra money having gone to BT?

      If the government paid BT to upgrade everyone to FTTH now, so it were all over and done with in one go, then they’d be paying out *heaps* more money – perhaps 3x, 4x or 5x as much. And it would take considerably longer to achieve – so slowing down the revenue flow.

      By paying out once now, we get a partial upgrade, start revenue flow faster, and get the deployment done faster. The people at the end of the queue will be happier at that, and the earlier revenue flow makes it less likely to need subsidies in the future.

      Even if the government then needed to dip into its pockets again, it would find that it wouldn’t need so much money … because the fibre spines already exist. And those desperate early adopters will have funded some of the deployment through FoD or FoD2.

      The important question becomes … would subsidy-1 plus subsidy-2 be more or less than a single, one-off, FTTH subsidy? I happen to believe it would be less.

      Why should BT see a benefit?
      Well, the simple answer is that *whoever* won the BDUK contracts would have won themselves a government-subsidised monopoly as a benefit.

      The entire OMR process ensures that no commercial company is interested in those properties, and then authorises the subsidy to the “winning” commercial company … which in turn absolutely guarantees that no other commercial company will be interested ever again.

      If it wasn’t BT gaining the benefit, it would have been another company. It would not have created a competitive environment.

      BT, of course, managed to undercut any other offering because their existing infrastructure made their bid cheapest and best value for money. And that is what the LA’s had to look for – value for money; most bang-per-buck; most homes improved.

      If it wasn’t BT gaining the benefit, it would have been another company. But fewer homes benefitting.

  6. Avatar Walter G M Willcox

    @ DTMark,

    The Range B figures are closer to the real estimates as they used to be the only ones quoted before the weasellers invented Range A & B. They now have the nerve to ignore even a simple bridge tap repair as most installers don’t examine the line performance data which is locked away from end users.

    • Avatar DTMark

      ..which would be why none of the ISPs trust BT enough to quote the Range A figure. A line here about half the length of this one achieves the Range A speed.

      So one would then assume this area is not considered a “superfast broadband” area. That would be restricted to the houses nearest the cabinet on the edge of the village with the shortest D-sides, yes?

      But I’ll bet there’s a tick in the box for “superfast” for the BDUK project now.

      In reality the line might be capable of superfast broadband, but BT really have no idea which is why the estimate covers a range of 21Meg (high minus low).

      This is what puzzles me when we hear announcements about superfast penetration and targets being achieved. In reality, the confidence level of those estimates cannot be higher than BT’s itself, who have little to no confidence in their own kit.

    • Avatar MikeW

      In my experience, the original “single” estimates turned into range A – which makes sense; range A supposedly applies for engineer installations, which every installation was at the time, while range B became necessary for self-install work.

      So you’d expect ISPs that follow the self-install route to quote range B.

      My experience with Plusnet (for 3 different lines, over 4 years, and including the shift from 40/10 to 80/20) is that they quote range A figures.

      Incidentally, BT do indeed have no idea what speed you’ll end up with, but they do know why. The impacts of crosstalk are, in reality, random. The speed range quoted matches the 20th and 80th percentiles of similar lines, so there are plenty of properties with speeds above the bottom of the A range … so BT can certainly give their degree of confidence about whether a property will be superfast or not.

      The 3 lines I have had (150m, 350-400m, and 650m) have all come out to be at the top of the A range. I haven’t found their ranges to be inherently unreasonable.

  7. Avatar Patrick Cosgrove

    i’d be interested to know to what extent areas previously regarded as commercial are being handed back to BT. This is potentially an issue of very legitimate concern for politicians, especially if the claw back money “so generously” being handed back by BT is then used to pay BT to upgrade these areas.

    • Oh, you are such a cynic! 🙂

    • Avatar MikeW

      That’s an easy question to answer…

      As this article is about Worcestershire, I’ll restrict the answer to that area, and point you at the state aid consultation performed by Worcestershire council in 2014, which was done as a prelude to the phase 2 funding.
      http://www.worcestershire.gov.uk/info/20165/connecting_worcestershire_broadband/984/public_consultation_2014
      (Some other counties are providing the same information, in the same way).

      In that consultation, WCC concluded that, after phase 1 upgrades 55,000 premises, there will be 25,000 premises still considered to be “NGA white”, with no prospect of superfast service within 3 years. They also conclude that there are 247 premises that are labelled “NGA Conditional White”, where commercial delivery is “at risk” of not happening.

      Worcestershire has 260,000 premises.

      Therefore the 247 “conditional white” premises (from 26 postcodes) amount to 1% of the phase 2 intervention area, about 0.3% of the phase 1 intervention area, or about 0.1% of the entire county.

  8. Avatar TheFacts

    Following all the comments above does everyone propose that the government should be, or should have been, funding a 100% FTTP rollout for the UK?

    Bearing in mind that this may be a 10-20 year project.

    • Avatar DTMark

      Already asked and answered multiple times.

      No.

      The answer lies in facilitating competition to attract the maximum amount of private investment from multiple operators using multiple technologies with a heavy bias towards NGA tech such as FTTP.

    • Avatar Steve Jones

      @DTMark

      And how do you propose that would happen? What is it that’s actually stopping alternative operators implementing alternative fibre infrastructure other than to a few selected cost-effective locations, like new builds? I find it difficult to believe there will be a proliferation of new infrastructure competing in the same area save some high density areas (where there is already infrastructure competition in the shape of VM and BT).

      In addition, how will that help any areas which are deemed by investors not to be cost-effective?

      It’s worth noting that the US promoted FTTP investment by forbearance on regulating NGA infrastructure. That means the incumbent telco was allowed a monopoly on services over a NGA networks with no wholesaling responsibility.

    • Avatar TheFacts

      Is there any evidence that private investment would be forthcoming for FTTP in hard to reach areas and built up areas where roads and pavements have to be dug up?

      Quite rightly companies will invest where there is a profit to be made. 10 properties at the end of a county lane is not one.

      Was the answer yes or no about government investment?

    • Avatar DTMark

      I’ve already addressed all of those points on more occasions than I care to remember over perhaps the last four years. I bookmarked several pages before so as to simply refer back to them but I can’t locate those now.

      Sorry, to address them here would require an essay of a length that I do not have the time or care to type out over again.

    • Avatar MikeW

      @TheFacts
      Nope. I don’t think the government should be funding a 100% FTTP rollout.

      The government needs the UK to become a proficient digital economy – and this particular need doesn’t require gigabit. Now, or even the nearish future. The needs for an individual property are modest; it is the need for being widespread and robust that are key here.

      A consequence of a decent digital economy is that people will become consumers of more IP-based video, at higher definitions. The wider UK economy doesn’t need this (so the government shouldn’t fund it), but it is likely to place higher demands on the infrastructure … and those demands still aren’t gigabit, and they certainly aren’t symmetric. This aspect should be lead by “the market”; it is certainly key for BT, Sky and VM – so should be able to drive them.

      What does “the market” say right now?

      http://postimg.org/image/bly6o16cl/
      This graph shows takeup of FTTC and DOCSIS packages, which now amounts to around 35% of the overall broadband market.

      It suggests that only around 15% of those markets care to be at 80Mbps, 100Mbps, 150Mbps speeds – and that amounts to 5% of the wider broadband market. Around 50% are content at the 40-50Mbps level (about 18% of the wider market); this leaves around 35% either choosing speeds around the 30Mbps level, or forced to put up with 30Mbps and lower speeds due to line length (twice as many through choice than being forced). That’s about 12% of the wider market.

      At the moment, there isn’t much driving the ultrafast market. No needs, no wants, and no apps. In fact, the only thing likely to be driving BT’s plans right now will be the need to keep up with VM’s future direction (as ‘visible’ in today’s nebulous VM announcement).

      Nesta had it right earlier this year: For now, the best option is to monitor the behaviour of tech-intensive locations, looking for any hint of those businesses needing extreme bandwidth, and finding out what they use it for.

      But for now, for most, it appears that there is nothing wrong with the current choice of technology being used to bring current levels of speed … only that we haven’t finished rolling it out, and that there will be people left out at the end of it.

      We can’t do much to make the current rollout go faster, but for those rural areas who will still be left out at the end, I think we should have a dual goal: They should be given FiWi access now (as phase 3 looks to be aiming at), but we should also set up a long-term solution for them to hit gigabit with wired technology. That could be G.fast, if you get a cluster of <16 properties within 100m (it could be a remote coax segment too), or it could be FTTP.

      It is this latter use – building wired solutions for the final 5% – that I think government could concentrate on better, with a long-term plan. Rather than government fund a 100% FTTP solution, this is where I think they should put their effort.

      Quite how it would get set up, I don't know; B4RN have shown how things can be done at their cheapest, but the attitudes built into that project require everyone to be antagonistic to any commercial involvement. Perhaps a government-funded co-operative is needed to allow everyone remain anti-incumbant, then enforce all big retail ISPs to connect their wholesale offerings.

      The opposite way would be to get the phase 3 FiWi winners (likely all commercial companies) to run upgrades in their counties. Getting wayleaves for free, and landowner involvement, may prove tricky with that commercial element.

    • Avatar Steve Jones

      @MikeW

      Nice to see at least some consideration of real commercial and practical issues rather than the hand waving and repeats of down-right wrong and misleading stuff from several others.

      Everybody who has ever thought about this surely knows this is not a technical problem. It’s one of economics, finance and commercial considerations. The Australian NBN and, on a smaller scale, Digital Region shows us what happens when ill thought out, and implemented grand solutions triumph over the commercial ones. (Except, of course, Digital Region wasn’t even that grand in conception).

      But, to go back to the economic point. Several people have claimed that nothing less than 1Gbps will guarantee economic success, but without, as far as I can see, the slightest bit of evidence that, for a mass-market, this is economically sensible. Note that I’m not denying that there are individuals and companies which needf 1Gbps (or maybe even more). What I’m saying is that the economic case for providing a universal 1Gbps capability using mass-market, consumer broadband products simply doesn’t exist. It might well be that 1Gbps in some areas (where it’s cheap to relatively cheap to roll-out) might well make a viable market. I (and I think you) are making the case that a universal 1Gbps service is simply not justified by the economic return. Of course that means if you want to set up a video production company in a redeveloped medieval barn in the middle of nowhere, then tough. You’ll either have to go somewhere where it is cheaper, or pay for the costs of a private circuit. That’s the way it is. Industries go where things are cheap. It makes economic sense.

      To make this clear, there are good social reasons where it makes sense to deliver services which provide the essentials, especially where modern society dictates the use of online services. However, that’s vastly different from claiming that (somehow) universal provision of a gold standard is a justified economic investment using either public or private money.

      nb. the other factor that everybody omits is the time required. There is simply not the trained workforce that could implement a universal FTTP solution at anything approaching what can be done using FTTC.

    • Avatar TheFacts

      And the reason for 1G? Because the technical development of Ethernet interfaces went 10M, 100M, 1000M.

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