UK Gov Confirm £442m Reinvestment to Boost Superfast Broadband Cover

The Government’s £1.7bn Broadband Delivery UK project, which has been deploying “superfast broadband” (24Mbps+) to 95% of UK premises by 2017/18 and then 97% by 2020, has confirmed that £442m is being returned by BT (Openreach) for reinvestment to help cover another 600,000 premises.

The above total reflects £292 million of public investment that is being returned by BT through clawback / gainshare due to high take-up of “fibre broadband” (FTTC/P) connections in BDUK upgraded areas and £150 million from contract / efficiency savings across all 44 of the local authority broadband projects. The figure is fairly close to BDUK’s preliminary data from June 2016 (here).

The clawback mechanism in related contracts’ requires BT to return part of the public investment when take-up of the new service passes beyond the 20% mark in related areas (total BDUK linked take-up now stands at 30.62%) and, as BT’s latest financial results have already confirmed (here), we’re already well on the way to achieving a figure of 33%.

We should point out that £133m of clawback has already been allocated back into related projects (see below), which will be used to help reach the new coverage expectation (today’s official update confirms that superfast broadband “coverage is on track to reach 97 per cent by 2020“; BDUK Phase 3). The rest should be allocated as new contracts are signed over the coming months.

Overall 1.5 million premises (homes and businesses) out of the 4.5 million premises covered have now signed-up to the service in areas where the Government and local authorities have subsidised its roll-out via BDUK (note: the 4.5m figure also appears to include sub-24Mbps “fibre broadband” areas upgraded by BDUK – see the last Q3 2016 total for some extra context).

Gainshare Allocation by UK Region (Actual)
East Of England £18,900,000
Midlands £22,543,498
North East England £3,450,000
North West England £15,590,000
Northern Ireland £2,000,000
Scotland £17,843,000
South East England £18,405,000
South West England £8,827,000
Wales £12,780,000
Yorkshire and the Humber £13,559,000

Total: £133,807,498

We ran a detailed report on the Q2 2016 take-up figures by each local authority in October 2016 (here) and a new update for Q3 2016 is due soon, although we are today able to share a more recent / general summary of regional take-up rates from the BT and BDUK linked contracts.

Take up rates by region (September 2016)

Sadly we’re not told precisely what the £150m in “careful contract management [savings] by the Government, local authorities and BT” actually represents, although BT did deploy less of their more expensive FTTP solution in BDUK areas than some had predicted (they preferred cheaper / slower FTTC), which was partly reflected in this 2015 report from the National Audit Office. In other cases it may have simply cost less to upgrade an area than forecast.

Karen Bradley, Culture Secretary, said:

“Our Broadband Delivery UK programme is giving families and businesses in hard-to-reach areas the fast and reliable internet connections which are increasingly at the heart of modern life.

Strong take-up and robust value-for-money measures mean £440 million will be available for reinvestment where it matters – putting more connections in the ground.

This will benefit around 600,000 extra premises and is a further sign of our commitment to build a country that works for everyone.”

At present around 91% of the United Kingdom are estimated to be within reach of a 24Mbps+ capable broadband connection and it’s worth pointing out that BDUK Phase Two, which aims to push the UK coverage to 95% by the end of 2017, may eventually be able to return even more public funding for reinvestment.

In keeping with that Karen Bradley is encouraging more people to sign-up to superfast broadband. “Broadband speeds aren’t boosted automatically – it needs people to sign up. Increasing take-up is a win-win-win: consumers get a better service, it encourages providers to invest, and when more people sign up in BDUK areas, money is clawed back to pay for more connections,” said Karen.

One small thing to note, before today the Government had previously indicated that the 97-98% coverage expectation could be reached by the earlier date of 2019 and they’ve now shifted this to 2020. Mind you it wasn’t really a solid target, until now.

UPDATE 6:59am

We’ve just had a comment from the Independent Networks Cooperative Association (INCA), which represents alternative network providers.

Malcolm Corbett, INCA, said:

“Efficiency savings and clawback of goverment funding due to higher than expected take up levels in the BT rural broadband contracts are to be welcomed, but the extra funding should be put out to competitive tender. Just this week we have seen the announcement that rural fibre provider Gigaclear has been awarded new contracts in Devon and Somerset to deliver full fibre connections to more than 35,000 underserved rural properties. For the local councils, citizens and businesses the deal is fantastic, Gigaclear will contribute more than 2/3 of the £62.25m project costs.

There is a growing range of alternative fibre and wireless broadband providers offering great value for public investment in new digital infrastructure. If the additional £440m of grant funding clawed back from BT could achieve anything like the same level of private sector match investment we will make serious progress towards the government’s goal of a ‘full fibre and 5G’ digital infrastructure.”