Wales Commits £80m to Expand Superfast Broadband Cover Toward 100%

The Welsh Government’s Superfast Cymru project will shortly receive a public funding boost of ‘up to’ £80 million in order to help roll-out “fast reliable broadband” to “every property” in Wales by 2020.

So far the existing contract has already helped Openreach (BT) to make “fibre broadband” (FTTC/P) services available to around 95% of Wales (614,000 extra premises have benefited), although the proportion that can actually access “superfast” line speeds of 30Mbps+ is only around 90%. But this figure should rise because a further 100,000 homes and businesses are already set to be reached by the end of 2017.

On the other hand it’s fair to say that the programme is running someway behind the original 2011 aspiration, which perhaps over optimistically sought to “ensure that all residential premises and all businesses in Wales will have access to Next Generation Broadband [defined as 30Mbps+] by 2015, with the ambition that 50 per cent or more have access to 100Mbps” (here).

As a result the Welsh Government last week came in for some criticism (here) and today their reply has been to tentatively announce the next phase of the strategy. The announcement clarifies that some £162m of public funding has already been committed to broadband infrastructure in Wales and a further £62m will be invested during the final year. On top of that £12.9m is already being returned from BT (clawback / gainshare) for reinvestment due to high take-up.

However the new £80m scheme has found some additional funding and, when combined with extra money from the private sector (BT are likely to be in the frame again), it’s hoped that enough investment will be created to bring better broadband coverage “to the hardest to reach premises across Wales” by 2020 (deployment starting in January 2018).

The New £80m Commitment (Expected Funding Breakdown)

£20m committed in the recent Welsh Government budget over the next four years

£20m from European structural funds, subject to WEFO approval.

£37m from gain-share as a result of take-up of superfast broadband

£2m outstanding commitment from UK government towards new superfast broadband project

We should point out that modelling and forecasting by both the Welsh Government and UK Government indicates that clawback / gain share from the Superfast Cymru project will eventually lead to between £30m – £50m being returned via BT for reinvestment by 2023 (this reflects a forecast fibre take-up of 35% to 50% over that period). At present take-up is sitting at 26.4% (here), which is where the current £12.9m mentioned earlier has come from.

As a result of all this another Open Market Review (OMR) is due to take place this month to establish, premises-by-premises, where superfast broadband is available and thus where it still needs to be rolled out.

Julie James, Welsh Minister for Skills and Science, said:

“Superfast Cymru has been a great success, and the rollout is far from over with more premises being connected every day. It is a challenging and ambitious project, but is delivering.

Nearly 614,000 premises now have access to high speed broadband as result of the project. To be clear, those premises would have no access at all without our intervention.

We know there is more to do. And our commitment in our Programme for Government, Taking Wales Forward, is to offer fast reliable broadband to every property in Wales. That is why we are looking at investing up to £80m in the next stage to bring faster broadband to those final hard to reach areas.

The funding package, once more, includes European funding. We are in the early stages of the application process, but remain confident that the funding will be available, subject to WEFO approval, as a result of the UK Treasury’s guarantee to honour EU bids approved prior to exit from the EU.

The review taking place over the next few months will inform our next steps so that we can begin the next stage in January 2018.”

The Minister also announced that the Access Broadband Cymru scheme (more details) is continuing for a further two years with an investment of £1.5m, in parallel with Superfast Cymru, and the successor project with equivalent funding in place to extend for a further two years beyond 2018.

In fairness it’s perhaps wrong to say that all of the 614,000 premises that have so far been covered “would have no access at all without our intervention“. Certainly that will be true for a sizeable number of premises, although with time it is highly likely that BT and other ISPs would have eventually upgraded a good chunk through commercial investment too (but it would have taken longer).

Otherwise there are a number of big challenges with the new proposal. Firstly, it’s well known that rolling out into more remote rural areas tends to be disproportionately more expensive than earlier phases (smaller and sparser communities often don’t deliver a good return on the investment) and thus it may be unwise to assume that BT will be happy to take the risk.

As such the Welsh Government should ensure that they’re open to alternative network (AltNet) operators too, much like other BDUK projects in England where FTTH/P providers (e.g. Gigaclear) have won contracts. We’ve also seen a few Fixed Wireless Access (FWA) ISPs win contracts too, such as Airband’s roll-out across the Dartmoor and Exmoor National Parks.

The next issue is with the uncertainty around Brexit. The UK Government has guaranteed EU funding up to around 2020 and a bit beyond for some projects, but that’s no guarantee that such money will actually be secured in the first place. It’s risky to bank on such an outcome, especially before a contract has even been signed.

The other issue is that today’s briefing remains chocked full of references to “superfast broadband” (defined in Wales as 30Mbps+), but the Welsh Government are notorious for failing to clarify the target performance of their coverage expectations.

For example, it’s notable that only vague references to “fast reliable broadband” are used alongside the specific 2020 completion date, which allows plenty of political wriggle room. Heck they could potentially meet such a vague aspiration by simply waiting for the new 10Mbps USO to be implemented.

We should learn the final contract details before the end of 2017, but don’t be surprised if the target completion date slips past 2020.

UPDATE 8th Nov 2016

The Welsh Government has informed us that they intend to launch the procurement process for the new contract in February 2017 and that their “fast reliable broadband” wording does indeed reflect 30Mbps+ capable connectivity, but we’ll have to see whether or not that can be delivered once the contract is signed.

“Getting to the final few per cent is going to be challenging and will take time but by starting work now means that we will be in the best possible position when the Superfast Cymru project comes to an end next year,” said the WG.