BDUK Confirm GBP408m for Expanded Rollout of Superfast Broadband

The Government’s Broadband Delivery UK programme, which has already helped to make superfast broadband (24Mbps+) services available to 90% of the UK and is now working towards 95-97% within the next few years, has confirmed that £408m of public investment is being returned for future expansion.

We already know that £258 million of this total is due to clawback (gainshare) from the first phase of the BDUK programme, which incidentally saw the Government allocate around £530m of public money (this excludes council, EU and commercial operator contributions) to a BT (Openreach) supported roll-out of their FTTC/P based “fibre broadband” network (i.e. the original 90% target).

The clawback mechanism of related contracts required BT to return part of the public investment when adoption of the new service passes beyond the 20% mark in related areas, which it has done and indeed most local authorities are now on course to hit 30% and release yet more money for reinvestment.

We should point out that about £129m of the £258m stated above was already confirmed last summer (earlier than expected) and some of this has already been reinvested to boost future expansion. By contrast the remaining half was only confirmed a couple of months ago and completes a general total from all of the local BDUK phase 1 projects’ so far. Much of this investment should find its way into the forthcoming BDUK Phase 3 contracts (i.e. many of those aim go beyond the current 95% coverage goal).

However the CEO of BDUK, Chris Townsend, has now also confirmed to the Connected Britain event in London this week that a separate pot of £150 million (underspend) will also be made available for future network expansion. Part of this is perhaps due to BT’s greater focus on deploying cheaper / slower FTTC instead of pure fibre optic FTTP, while other bits stem from general efficiency and operational savings.

It is worth noting that many of the BDUK Phase 2 (i.e. 95% coverage by 2017/18) contracts were signed before the level of clawback and underspend was confirmed, hence why we expect much of the above to go back in via future programme phases. A lot of the new contracts are already entering procurement or consultation and smaller alternative network providers are expected to play a bigger role in the bidding process.