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Village Networks in Illegal State Aid Complaint vs Aylesbury Vale Broadband

Monday, November 16th, 2015 (9:31 am) - Score 2,530
aylesbury_vale_ftth_rollout

The publicly funded Aylesbury Vale Broadband project, which is deploying a Fibre-to-the-Home (FTTH) network across the rural Buckinghamshire (England) villages of North Marston and Granborough, is facing an official complaint from a nearby wireless ISP.

The new ultrafast broadband network, which is supported by public investment from the local New Homes Bonus Fund (a somewhat unusual source), officially began its deployment phase in August 2015 (here) and the first customers in North Marston (home to around 800 people) are expected to go live today or sometime this week.

Early subscribers can expect to pay from £30 per month for an unlimited 30Mbps service (symmetrical), which rises to £38 if you want the top 100Mbps connection (more expensive business options are also available) and the first month of service will be FREE. On top of that there’s a £150 connection fee, which offers a rather unique self-install package (here).

But since the start AVB has been dogged by unhappy grumbles from two local fixed wireless broadband ISPs, Village Networks and Rapid Rural, both of which claim to either have the area covered with superfast speeds or be planning to do so. However AVB disputes this and claims that its network will be much more future proof and capable, which is almost certainly true given the use of FTTH.

The situation has now taken another turn after the boss of Village Networks, Roger Carey, decided on Friday 13th November 2015 to lodge a formal complaint against Aylesbury Vale District Council, which among other things alleges that the local authority shunned their alternative proposals (Carey says it would have required less public funding to build).

Furthermore Village Networks alleges that they were “discouraged” from developing existing proposals to roll-out wireless broadband to the two villages by individuals that have since taken up senior position(s) in AVB. ISPreview.co.uk has seen a copy of the letter and we’ve pasted the key list of allegations against AVDC below.

The Village Networks Allegations

Specifically, but not exclusively, our complaint identifies that:

1) neither the Council, nor any of its agents, undertook a market analysis of the proposed territory which proved market failure.

2) The Council and its agents were clearly aware of the presence of at least two established, independently funded local enterprises who were willing, able and planning to deliver superfast broadband not only to the proposed pilot area, but beyond it, but engaged in no appropriate consultation to inform its decisions.

3) Prior to launching the venture, no competitive tendering process was undertaken.

4) Prior to announcing the venture, at least one commercial provider was discouraged from continuance of its plans to deliver superfast broadband to the communities in the pilot area. Member of the Internet Services Providers Association.

5) The application of funds, the amount of which do or will exceed any de minimis exemptions from state aid rules, from the New Homes Bonus constitutes illegal state aid, given that it confers an economic advantage to the undertaking and distorts or threatens to distort competition, in contravention of Article 87 (1) of the EC Treaty.

AVDC has not defined the process it proposes to use to evaluate the AVB pilot project, nor defined any criteria for its success. We will use all available means to ensure that the process and criteria applied are appropriate, rigorous and able to withstand impartial scrutiny.

At this point we should note that the top package offered by Village Networks is an unlimited 30Mbps (1Mbps upload) service that costs £30 per month and £222 to install, which also includes up to 10 email addresses, 50MB of webspace and webmail access. But customers do not get an included wireless router.

The news threatens to overshadow AVB’s plan to announce its first live customers this week, which was probably the intention. On the other hand Village Networks does appear to raise some fair points in their complaint and we have already reached out to the local authority for comment (expect an update later).

ISPreview.co.uk understands that the same complaint has also been forwarded to the Government’s largely separate Broadband Delivery UK programme, including the related Departments for Culture (DCMS) and Business (BIS). Buckinghamshire’s regional Connected Counties scheme has also received a copy of the complaint.

Mind you it wouldn’t be the first time that a local authority has shunned an alternative fixed wireless broadband scheme, with ISPs like Kijoma suffering some similar challenges (here). It’s worth pointing out that BDUK’s Phase 2 contracts have sometimes, but not always, been a bit more open to such ISPs and their future Phase 3 deployment is also piloting such services to help connect the final 5% of the UK.

UPDATE 20th November 2015

AVB’s Director, Andrew Mills, has kindly furnished us with a response to the allegations from Village Networks, which we will post in full.

Dear Sir,

Re: Article published 16th November titled “Village Networks in Illegal State Aid Complaint vs Aylesbury Vale Broadband”

Thank you for your recent article about Aylesbury Vale Broadband (AVB) however it contains numerous inaccuracies which we would appreciate the opportunity to correct.

First, AVB has NOT received £1.5M in funding from Aylesbury Vale District Council, only a small fraction of these funds have been allocated to launch AVB’s pilot project (focused on the villages of North Marston and Granborough). The funds that have been provided are in the form of a loan to the company. The headline figure of £1.5M represents the total amount of funds AVDC have set aside to help deliver at least super-fast broadband in Aylesbury Vale. We understand the rest of the funds committed by the Council will be used to support other broadband initiatives, including the Connected Counties/BDUK project.

For the past eighteen months AVB has consulted closely with Connected Counties and the pilot location was selected as part of these consultations as it was categorised as “white” (no recognised commercial provider of super-fast broadband in the area). At the time of establishing AVB, Village Networks was not (and is still not) providing super-fast broadband in the pilot area. Village Networks’ claim that the reason for this is that they were asked not to over 12 months ago is not true. To quote from an email sent by Paul Firth (a director of Village Networks) in April this year: “One of the reasons we’re not already in Granborough and North Marston is that many people already receive reasonable broadband speeds.” (please note those reasonable speeds were between 0.5Mb/s and 5Mb/s at the time). Clearly this was a commercial decision made by Village Networks and had nothing to do with any requests by AVB or indeed AVDC.

We are also aware that Village Networks has previously met with AVDC to present and discuss their proposal to deliver super-fast broadband to Aylesbury Vale but we understand their proposal was based on a pure grant subsidy rather than a loan or equity model, which is clearly different from the AVB business model (which AVDC feel represents good value for the residents in Aylesbury Vale).

With regards to the second wireless provider referred to in your article, the owner of this service only started offering his service in North Marston in June this year, well after AVB’s work had begun. Again, this was a commercial decision taken in full knowledge of our existence and plans, which is clearly not within our control.

Over the past six months, AVB has also held several meetings with both wireless providers. AVB has repeatedly offered to provide assistance to both wireless providers, including the provision of access to our backhaul, as well as inviting the wireless providers to tender for undertaking elements of AVB’s rollout work. AVB’s offers of help have not been accepted and the tenders received from the wireless providers were not considered viable.

To be clear, AVB and AVDC share the common goal of delivering at least super-fast broadband to all residents throughout Aylesbury Vale and any Internet provider that helps achieve this goal is welcome.

AVB is a “community driven” company – a hybrid of Gigaclear and B4RN. We call it community driven for whilst it is a commercial company its primary objective is to expand its fibre network to deliver ultra-fast broadband speeds to all of Aylesbury Vale. To guarantee this objective is kept and the loaned funds are used solely for this purpose, AVDC has received 95% equity in the company.

Aylesbury Vale faces a massive problem in delivering (at least) super-fast broadband to the mostly rural Aylesbury Vale (this problem is the same as many areas of the UK) and to solve this problem different approaches are required which need to be encouraged and supported. AVB is one such approach and it is delivering ultra-fast broadband (fibre to the home) for a fraction of the costs normally associated with such an endeavour – especially when you consider the work being undertaken is in a rural area.

And yes, our network is now live and we are busy connecting customers to our pure fibre network.

Yours sincerely,

Andrew Mills
Director
Aylesbury Vale Broadband

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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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22 Responses
  1. Avatar fastman

    what a surprise or not as the case may be

  2. Avatar PeterM

    The logical answer is for Aylesbury Vale DC to extend its subsidy to the wireless networks to allow them to provide a service for all of its taxpayers.

    • Avatar Bob

      I doubt they could as presumably the wireless network is being tolled out on a commercial basis

    • Avatar PeterM

      @Bob
      Vouchers are being used for commercial satellite.
      Why not extend the scheme to include commercial fixed wireless as well?

  3. Avatar Ignition

    Damn that copper cabal defending their monopoly position and trying to prevent real fibre broadband. What a superfarce. We need fibre. Moral and optic.

    Oh, hang on, it was a complaint from an altnet.

    The first paragraph is conspicuous by its absence. Had this been Openreach there’d be 20 responses by now.

    Come on ISPR denizens. Can’t just complain when BT do it…

    • Avatar PeterM

      @Ignition
      Yes, but who is going to pay? how long will it take to roll out?
      In rural areas the easiest, cheapest and quickest option for superfast is fixed wireless.

    • Avatar Gadget

      StateAid rules are pretty complex but the principles are quite clear (http://ec.europa.eu/competition/state_aid/overview/index_en.html) that it if the aid is deemed illegal then it is the recipient who has to refund all the monies claimed, and if memory serves the investigation extends to the correctness of the procurement as well as any delivery transgressions – so if the proper procurement process wasn’t followed it is possible that the aid may be found to break the rules.

  4. Avatar fastman

    the logical answer would have been to run a competitive procurement in the first place !!!! — that would have been a fair and level playing field

    • Avatar PeterM

      @fastman
      Yes, but now they are in this position and it is clear that they do want to improve broadband for their local community.
      The next step is to extend that help throughout their district. They can use the new FTTH network and fixed wireless to plug the gaps that BDUK have left.
      Aylesbury Vale DC have made this commitment by starting the process it is up to them to complete the task.

    • Avatar fastman

      I think it will end up stopping dead in its tracks will see what the challenge is and how seriously it is taken

    • Avatar Bob

      I would assume they did.

  5. Avatar DTMark

    This appears to hinge on the “planning to deliver” claim by the wireless ISPs.

    Is that “planning to deliver” as in: a fully costed proposal had been submitted and plans had been drawn up, or is it the “BT is planning to deliver G.Fast” carrot style “planning to deliver to an indeterminate number of premises in indeterminate areas maybe at some point in the indeterminate future?”

    I’ll be interested to see the local authority’s comments.

    • Avatar MikeW

      True.

      Or it would have hinged on the authority’s analysis of the claims … if only they’d done the consultations.

  6. Avatar tonyp

    With the amount of greenfield housing going up in Aylesbury Vale, I wonder if this is the tip of the iceberg in complaint terms? It would be, ahem, interesting to see the infrastructure supplier directorship lists and possible relationships with the various local government agents.

  7. Avatar fastman

    peter orry to be a bit of a record but if that is the case they would have wanted to get the best deal at a value for money criteria and should have to run a competitive procurement as determined by state aid in the first place !!!! no you have the slight matter of 1.5m of public money to consider

    • Avatar PeterM

      @fastman
      My point is that having got themselves into something of a mess, the best course of action would be to turn a negative into a positive and actually help provide what the residents actually want – faster broadband.

  8. Avatar dragoneast

    I suspect at the root of it there’s a strategic issue with the State Aid rules, indeed the whole single market. It’s all designed to serve the interests of business, more than the interests of the consumer. But of course the PR states the latter, as ever.

  9. Avatar Justin

    Why has nobody bothered to speak to AVB? From my understanding AVB is a commercial company run completely separately from AVDC – let AVB defend itself.

    I live in Granborough and I know from experience that Village Networks provides a maximum speed of 10 Mb/s download on a good day – more often than not it’s around 5 Mb/s (that’s far worst than the 30 Mb/s mentioned in this article – and I’d love to know where in Aylesbury Vale they are actually providing this speed – no where I know).

    • Avatar fastman

      Justin its a commercial company funded by public money without procurement — that’s a massive no no and that’s why the challenge has been raised its not to do with speed its about spending of public money without procurement

      had there been a procurement then a number od solution may have been raised and then chosen based on state aid rules

      can you imagine the uproar if someone else had been given that money wirhout procurement

  10. Avatar Roger Carey, Village Networks Ltd

    If Justin wanted to know where we provide an up to 30Mbps service, he could simply have asked us. We have hundreds of subscribers across the east of the Vale of Aylesbury and in the Thames Valley who receive such a service. Connections are in fact managed to provide closer to 24Mbps (while it’s OK for BT call 24Mbps superfast, BDUK require non-BT providers to deliver up to 30Mbps in order to define our service as superfast). The difference to our subscribers is not significant, but helps to conserve bandwidth. A large portion of our network is capable of delivering much higher speeds.

    We are steadily rolling out our unlimited superfast service across the west and north of Bucks. We could do it faster, but we’re doing it on our own money. In this territory, amongst BT and Openreach, Gigaclear and AVB, that self-funding makes us unique. I don’t know where Justin gained his previous experience of our service, but it could well have been in earlier times, or other parts of our network. We started at 2Mbps in 2003 and have worked to keep pace with demand for faster speeds ever since.

    Justin gives the impression that we provide a service in Granborough. We don’t. We could have been connecting both Granborough or North Marston at up to 30Mbps a year or more ago, but we were asked to suspend our plans to do that. We thought we were doing the right thing by complying with that request.

    Justin is also wrong in suggesting that AVB is completely separate from the District Council. It’s 95% owned by the Council, two of the directors are District Councillors, and one is a council officer (that’s three out of four), so the degrees of separation are somewhat less than six.

    Village Networks’ position is simple. We’re committed to the fastest possible rollout of superfast broadband to the largest possible number of premises across the Vale of Aylesbury, and other areas. Most important, we don’t believe that any one solution, or any one organisation is capable of achieving that end (and yes, we use our own fibre, too). We’re more than happy to work alongside any other like-minded providers in a team effort to get there. There’s more than enough work for everyone to get on with.

    We’re disappointed that such a view isn’t more widely shared. Our offers to contribute in any way at all to AVDC’s objectives have gone entirely unacknowledged. AVB continues a visible and active negative campaign against wireless. In terms of accelerating the rollout of vital rural broadband, other than working for its own commercial ambitions, AVDC’s conduct seems nothing more than counterproductive. None of this makes any sense to us.

    Against that background, our complaint to the Council is a reluctant but necessary marker of our position, in terms of protecting our business, our employees and, most important, our subscribers.

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