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UPDATE BT Pays Itself to Help co-Fund Rural “Fibre Broadband” Roll-outs

Wednesday, August 24th, 2016 (3:09 pm) - Score 2,089

BT (Openreach) appears to have introduced a new twist on their existing Community Fibre Partnerships scheme, which is now offering grants worth up to £20,000 to help rural and digitally isolated communities get a faster “fibre broadband” (FTTC/P) service installed.

Related partnerships tend to be made available to those living in the final 5% of UK premises, which usually reflects smaller communities that are not currently planned to benefit via the state aid supported roll-out of superfast (Broadband Delivery UK).

The existing partnership scheme offers related areas an alternative option via co-funded FTTC, which effectively requires local residents and businesses to cover any costs that rise above those of BT’s own commercial model for the area. Once agreed, 50% of the gap funding must be paid prior to work starting and the final 50% on completion.

However the new grant scheme introduces an additional twist to this approach by enabling BT to help local communities pay for their upgrade. Eligible communities can apply for match funding of up to £20,000 towards the cost of a new local fibre network, but only so long as the technology is capable of serving the local school.

The village of Ditcham in Hampshire (England) is one of the first to benefit, with BT providing a £17,500 grant to help bring “fibre broadband” to the Ditcham Park Schooland village and this will in turn also benefit local residents.

Chris Pickett, Chair of Governors at Ditcham Park School, said:

“The outstanding contributions from BT and Openreach to get this fibre optic network both designed and installed, whilst offering a very generous grant towards this community project, has ensured that our teachers and pupils can enjoy faster internet access. This will improve the opportunities we are able to offer to our pupils for the commencement of our new academic year.”

Kim Mears, Openreach’s MD of Infrastructure, said:

“Getting faster speeds to communities in the final few percent of the UK is a top priority for Openreach and the people of Ditcham are pioneering a new way to achieve this.

Nearly 90 per cent of households and businesses in Hampshire now have access to superfast speeds and this will rise to 95 per cent by the end of 2017, largely thanks to our commercial investment and our multi million pound partnership with Hampshire council.

More than 120 communities across the country have already signed up to our co-funded Community Fibre Partnerships scheme, with 60 already enjoying the benefits of superfast broadband. We hope that the availability of these new grants will encourage even more communities to work with us on bringing high-speed connectivity to their town or village.”

BT claims that the “new scheme greatly reduces the contribution needed from local residents,” although of course there will be some areas where a maximum grant of £20,000 simply won’t be enough cover the gap and in those locations the community will still be asked to help co-fund the remaining amount. Mind you a lot of these partnerships seem to come in at under the £20k mark.

However there’s no escaping that the new co-funded grant approach does seem to amount to BT paying itself for doing the work, which is a bit quirky. But if it results in more people being able to access superfast broadband and without a huge financial demand falling upon small communities then so much the better.

UPDATE 4:58pm

According to BT, the grant scheme is being funded by the operator’s Purposeful Business unit within BT Group, which exists to support its tech literacy ambitions (e.g. inspiring young people in the UK to embrace the role technology plays in their lives). The business wants to reach 5 million school children by 2020, thus the grant is about equipping schools with the high-speed connectivity they need to champion tech literacy. Obviously the surrounding communities benefit too.

Communities will also have access to BT’s Barefoot Computing programme for schools, which is aimed at equipping primary school teachers with the essential skills needed for them to deliver the IT curriculum. Many BT people are already said to have volunteered their time to deliver many of the training sessions for teachers.

BT also told ISPreview.co.uk that the paper work involved in the grant is very light and apparently all that’s needed is the OFTSED (or equivalent) registration number. After that BT checks availability / speed with the community, and then hopefully progresses to award the grant and move forward with the co-funded fibre roll out.

In addition, BT has set aside £2m for just the grants, at least so says their website.

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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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49 Responses
  1. Lee says:

    **Awaits the “it’s not enough” brigade**

  2. MikeW says:

    I think the grant is meant to cover half of the amount requested to fund the gap, leaving the community to fund the other half.

    A £20k grant would be used for subsidies of £40k or over.

  3. Steve Jones says:

    I’m not quite sure I’d characterise it as BT paying itself. Isn’t it (in effect) just a an extra subsidy or contribution? I’d also wonder about the VAT position (which I believe is chargeable on excess construction charges). Presumably if BT subsidise the installation themselves, this is not chargeable on that element.

    I also have a suspicion that what may help here is that OR have historically worked on fairly conservative assumptions on take-up (which BDUK has revealed as such). BDUK has a clawback system to recover the degree of over-subsidy, but I don’t think this applies to community co-funded schemes (anybody know for sure?). So this may not be as generous as might appear, but the tie-in with local schools would be good publicity.

    1. NGA for all says:

      There is no clawback and very little evidence of any itemisation of cost. There has been no evidence of a BT contribution, so this is welcome. The gap funding could always be 100% community funded as there is no competition or commercial case.
      Most of the schools (LA) will have previously paid ESS costs for the previous schools upgrade, many 100’s of millions of public funds. This school may not have add work done previously.

    2. fastman says:

      NGAS – significat disinfomation again

      all community funded cabs have been gap funded which means openreach has made an contribution consistent with its Gap funding principles to all of those and are at fixed Cost (any cost overruns are at openreach Risk) and not at the community risk

      The grant scheme works as follows the Gap Required is X if the community can raise 50% of that and there is a school eligible they can apply for a grant unto a max of 20k based on a match with the community

    3. Steve Jones says:

      @NGA

      A link would be good. As far as APPC goes, all I can find is the Association of Professional Political Consultants as regards parliament. Do you mean the PAC?

      If Clive Selley has made a presentation to a parliamentary committee, that would be of great interest so a link rather than a fruitless search (I’ve tried) would be good.

  4. NGA for all says:

    An average Phase 1 BDUK cabinet costs £26k before BT contributes its capital, so says BT evidence to the CMS Select Committee.

    So this looks like some internal need to ‘give’ a discount on something where the gap could always mean 100% funded by the community on costs that are not itemised.

    So the £20k is welcome, but peculiar given BT is now sitting on £270m ((£256m +£12M) owed to local authorities. This is before any detailed analysis of BT’s capital contribution.

    Why not say we have amended the gap funding model to show BT pay the first £20k,(or some equivalent in per homes passed) as these costs are recovered through the forthcoming cost recovery regime from 2017.

    1. TheFacts says:

      If the average is £26k what’s the min and max?

    2. NGA for all says:

      Facts – you can draw a bell curve starting at £8k finishing £40k for 95% of cabs including EO -that still those more than 1500 metres from a cabinet. That’s for c23,500 BDUK phase 1 cabs passing 3.9m (my opinion from data in the public domain)

      That bell curve needs to be adjusted downwards for BT’s initial commercial rollout of 51k cabinets passing 19m, but would exclude additional capacity. (my opinion)

      The real issue is resource, not cost, but cost and capital are gamed to the point of contributing to the calls for the separation of BT. This is a shame but has to be slowly unpicked.

    3. TheFacts says:

      @NGA- 2 opinions, which are not enough and where is the resource issue?

      How and where is this calling for separation?

    4. NGA for all says:

      Facts – On resource – please check with Clive Selley and his recent presentation to the APPC in Parliament.

    5. TheFacts says:

      Link please.

    6. NGA for all says:

      Facts – ask Clive!

    7. Steve Jones says:

      @NGA

      I’ve no idea who is in a position to ask Clive Selley. I’m certainly not. You seem to have some inside information on a presentation he made to the APPC in Parliament (a parliamentary body I can’t find any trace of save a professional political consultants).

      If by lack of resource you mean that there’s a limit to the number of trained staff (both within OR and amount subcontractors), then I’ve no doubt. But given that OR are required to work within tight cost pricing constraints by Ofcom and become increasingly efficient), then OR are not going to massively increase their employee numbers. Employees have to be paid and incur lots of extra costs. Some gap-filling can be done by using sub-contractors (as is done for civils), but sub-contractors have capacity limits too.

      So perhaps you will provide some evidence for what you say which is vague to say the least. At the very least, perhaps you’ll tell use what the APPC is. Or perhaps you mean an APPG. In any event, you allude to something and we’ve no idea what it is.

  5. Patrick Cosgrove says:

    After two years of being messed around by BT, of being told that we’d have to pay a non-refundable survey scheme of £50K, of being quoted a ridiculously high price for connecting our village which is three miles along a level river valley from the green caninet, they have made their final offer of £3K per property. But it’ll take a year.

    We’ve declined.

    1. chris phillips says:

      @Patrick Cosgrove
      maybe have a chat with the altnet providers and see what they can come up with?

    2. craski says:

      How many properties at £3k/property?

    3. fastman says:

      FYi its circa 60 premises at 7km of fibre !!!! and 3 km of no duct !!!!

    4. fastman says:

      Patrick cosgrove

      the funding figures you are quoting are incorrect !!!! and significant disinformation

  6. karl says:

    Congrats to BT starting a loans business.

    1. Steve Jones says:

      It’s a grant, not a loan. Do please pay attention.

    2. karl says:

      Like a grant to go to university ah got it.

    3. Curious says:

      Yeah a grant.

      Like the ones you don’t have to pay back.

      You do know the difference between a loan and a grant, right?

    4. karl says:

      Can the money BT give the communities be used via another provider?

    5. AndyH says:

      Why ask questions you know the answer to? Do you think BT grants would be available to be used with their competitors?

    6. karl says:

      So BT give them money and the community then gives it back to BT?
      So the news title is correct.

    7. fastman says:

      Karl

      The grant scheme works as follows the Gap Required is X if the community can raise 50% of that and there is a school eligible they can apply for a grant unto a max of 20k based on a match with the community

    8. Steve Jones says:

      @karl

      No, what happens is that OR cover that extra part of the cost. Given that a high proportion of the cost goes to paying suppliers, external contractors and much else it’s hardly being given back to BT as a gift.

    9. karl says:

      “…f the community can raise 50% of that and there is a school eligible they can apply for a grant unto a max of 20k”

      and then they give it back to BT.

    10. Steve Jones says:

      @Karl

      Why are you having problems with basic arithmetic? The result is that the community end up having to pay up to £20k less than they otherwise would if the grant hadn’t been made.

    11. fastman says:

      Steve OR do not fund that extra — the match up to 20K comes from specific monies set aside as part of the schools funding as the BT update at 4.58– so community get a quote the Gap is X — they need to raise at least 50% and assuming their is n eligible school the fund will match their contribution up to a max of £20k (on a £1 to £1) the gap fund is unchanged and the Openreach contribution is unchanged

    12. karl says:

      “…and the Openreach contribution is unchanged”
      Exactly

    13. fastman says:

      Karl correct
      that’s called equivalence and cnsistenccy — think is sure I know who you are and where you are !!!!

    14. Steve Jones says:

      @Karl

      Apologies, I meant BT and not OR covering this gap. But the point remains. The community is paying up to £20k less than it otherwise would be doing.

    15. karl says:

      “Karl correct
      that’s called equivalence and cnsistenccy — think is sure I know who you are and where you are !!!!”

      Its called giving with one hand and taking with the other. Why you are fascinated with my location is amusing, are you going to send BT after me LOL.

      ” The community is paying up to £20k less than it otherwise would be doing.”

      Yes because BT are effectively paying for it all in the first place. Its like you receiving a £10 Argos voucher for your Birthday and then using it to buy whoever gave it to you in the first place a gift for Xmas.

    16. fastman says:

      Karl if is fundamentally not

      the Schools fund is a specific fund (time bound and specific amount) set aside to support communities with rural schools as part of a match funding so the community knows the gap raises 50% and is able to draw down from the fund into an external account to enable the Gap fund in its total to go to openreach

    17. karl says:

      Inform the author the title is wrong then 😀 Until then its nothing more than BT giving and then taking back.

  7. fastman says:

    Karl positive as ever !!!!

  8. brianv says:

    In match-funding, local communities are always overcharged by BT. e.g. £30,000 per cabinet.

    Any nominal generosity that BT exhibits in “Going Dutch” is entirely clawed back through inflated costs billed to the locals.

    BDUK whistleblower Mike Kiely was skewered for letting the cat out of the bag in this price-gouging scam.

    “£13,000 [is the] average cost of cabinets installed during phase four of BT’s next generation (NGA) broadband NI roll-out, according to Kiely’s confidential report.

    Kiely’s report showed that BT was inflating the cost of rural NGA cabinets to around £30,000 each..”

    The Beast giveth from one hand but with the other taketh even more.

    https://br0kent3l3ph0n3.wordpress.com/2013/04/16/bduk-whistleblower-vindicated-by-bt-cabinet-deal/

    1. TheFacts says:

      Where is he now?

    2. New_Londoner says:

      @Brianv
      Unfortunately Mike’s subsequent posts here and elsewhere show he doesn’t grasp either the details of the BDUK contracts nor of basic accounting. Given that all the BDUK contract costs are routinely audited, are you suggesting that all of the auditors are incompetent? If so, do you have any actual evidence as Mike doesn’t?

    3. NGA for all says:

      New-Londoner The presence of c£270m capital deferral in BT accounts owed to LA’s, the underspends in every county project and the as yet to be confirmed BT capital contribution shows there is plenty of room to dispute your position.

      One of the previous holders of your ‘handle’ spent a quarter saying a cabinet cost a £100k each. BT now say £26k on average (CMS evidence) with BT contribution yet to be established definitvely. If the £65-£70 BT Capital is paid transparently then the subsidies return to the original levels observed in Northern Ireland in 2011.

      Each audit adds a little and there are more due. Each is creating conditions for savings to be declared and changes made to the capital owed, however it is presented. This is pretty amazing given the BDUK reference offer was BT’s most competitive offer as confirmed in writing to PAC by BT in 2013.

      It is unfortunate events are being used to part justify the greater separation of BT. The mis-use of confidentiality agreements to game costs and capital were like suicide notes. This should be the subject of a full internal review on governance of a project where most of Parliament was alienated to point they are calling for BT to be broken up.

    4. fastman says:

      what utter rubbish !!!!!

      match-funding, local communities are always overcharged by BT. e.g. £30,000 per cabinet.

    5. fastman says:

      why don’t you ask him on here !!!!!

    6. fastman says:

      hardly skwerered !!!

  9. TomD says:

    For what it’s worth, our BT man said that in addition BT Community Fibre Partnership may attract the basic broadband voucher for any properties in the parish currently receiving less than 2Mbps, although each property would have to apply separately for the voucher.

  10. fastman says:

    the facts !!!!

    that’s inatersting !!!

  11. Andrew Watkins says:

    Something doesn’t quite add up…

    If you read the FAQs for the grants at http://www.communityfibre.bt.com/grant/grant-faqs, one of the questions is as follows:
    Question: “Do I have to crowdfund for the new fibre structure?”
    BT Answer: “Yes, our grant is conditional on each qualifying community using our crowdfunding partner Spacehive to raise and capture funds for their new fibre infrastructure. The grant is then pledged by BT as part of the crowdfunding.”

    If you go over to the project site on Spacehive – https://www.spacehive.com/fibre-for-ditcham#/idea – you see that they only joined on 12th October 2016. The only backer is BT and the project met its target immediately with BT’s donation.

    Yet the grant was announced in August 2016, two months before the project was launched on Spacehive.

    Why did BT award a grant when it didn’t meet one of the conditions?

    1. Andrew Watkins says:

      More questions after reading here…
      http://www.communityfibre.bt.com/

      The Community Fibre Partnerships are gap-funded… “So, for example, if the cost for a gap-funded solution that serves a school has been quoted as £23,000, the community would pay £11,500 and £11,500 would be match-funded from the grant.”

      Yet according to Spacehive BT was the only backer. Where is the community-funded donation of £17,542?

      Another project – https://www.spacehive.com/kingham – has community donations. What makes Ditcham Park so special?

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