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North Skye Broadband Project Scraps State Aid Application Over Delays

Thursday, July 20th, 2017 (9:00 am) - Score 806
Isle of Skye

The North Skye Broadband (NSB) project, which had been planning to deploy a B4RN-like fibre optic broadband network to 2,000 rural premises on the Northern side of the Isle of Skye in Scotland, has given up its application for significant state aid support after facing repeated delays.

Exact details of the roll-out plan have always been a bit vague but the “not for profit” community organisation, which was setup in 2015, did make progress last year (here) after the Community Broadband Scotland (CBS) initiative offered to support it through the OJEU procurement process with a view to harnessing a capital grant of up to £1,460,000 (max 89% of capital costs). Additional funding would come from the community itself.

The project’s original timetable, which always seemed quite overly optimistic given how long such processes usually take, predicted that a supplier contract could have been awarded by the summer of 2016 and the roll-out phase would then have started before the end of autumn in that same year. None of this happened.

Instead those behind the project claim that the lengthy application process for state aid support has been “dogged by delays due to complex public procurement requirements“, including a nine-month delay waiting for a new State Aid funding scheme to be drawn up and approved by the EU after the Phase 2 scheme expired in June 2015 (this also affected lots of Broadband Delivery UK contracts).

North Skye Broadband (NSB) has also undertaken two separate State Aid Public Consultations – a mandatory requirement on their procurement process – and the decision not to proceed further comes as it was due to undertake a third such consultation, which itself has been delayed for nearly six months awaiting new and more accurate “Open Market Review” data (existing data has been found in many cases to have a 30% to 40% error rate).

Geoff Semler, Chair of NSB, told ISPreview.co.uk:

“NSB has, from the very start, planned for this to be a community-owned network, broadly following the approach taken by Broadband for the Rural North, a very successful community benefit society operating in the North of England. By minimising costs and utilising community resources wherever possible – including, for example, seeking free wayleaves from landowners to lay high-capacity optical fibre across their land to establish the long-distance “backbone” network – NSB is seeking to narrow the “digital divide” caused by operators only offering high-speed broadband in denser urban areas and ignoring the needs of fragile rural communities, where many residents and businesses only have the choice of inferior broadband via obsolete technologies, or (often) no Internet connection at all.

It has been clear to NSB throughout that a wireless-based trunk network is wholly inappropriate for our needs. Not only does the harsh environment on Skye present challenges to the erection of masts and aerials, but HIE’s own figures demonstrate that even if such a scheme can be profitable, the business case simply does not generate sufficient surplus revenue to finance the technology refresh that will inevitably be needed to meet the ever-increasing demand for bandwidth. The existing State Aid schemes are not fit for purpose because they are designed to support the provision of as many wireless networks as possible, as cheaply as possible, and as quickly as possible.

The State Aid rules also require that such networks should be “future-proof”, but in our opinion they are clearly anything but. Ironically, until the Chancellor’s 2016 Autumn Statement and the establishment of the Digital Infrastructure Fund, BDUK would not approve any State Aid application that specified optical fibre as the network medium. Now, they are crying out for commercial providers to build fibre networks, but continue to refuse to fund community-owned networks.

Despite recent urgent discussions with HIE, CBS, and Scottish Government, a joint statement approved by all three bodies was issued to NSB on 22 June 2017 confirming that, in accordance with EU rules, the only funding available to North Skye Broadband in excess of the €200,000 de minimis provision would be via one of the formal State Aid schemes, none of which permit any funding other than for a network that is owned and operated by a commercial provider. Thus the State Aid process actually precludes NSB from adding any value to the implementation or operation of the network, instead it simply uses NSB as a funding conduit to provide a commercial operator (and its benefactors) with a state subsidy. Accordingly, it was agreed that as none of these schemes meet NSB’s requirements, the formal application process should be discontinued.”

In fairness, public funding isn’t usually something that is given out willy-nilly and local authorities, as well as any related schemes run by the central UK and Scottish Governments, tend to be quite risk averse when it comes to investing in such projects (they can be very publicly hauled over the coals if things go wrong).

Generally a network tends to stand a much better chance of gaining approval if it can raise money and establish a working service or become self-sufficient before applying for fresh public investment. We’ve seen plenty of projects run into problems when they attempt to apply from a standing start, although admittedly such checks are no guarantee of financial security (e.g. the recent AB Internet problems and Fibre GarDen before it).

However NSB fear that without a good network many of those within their coverage will be left to suffer the meagre usage allowances, high monthly rentals, slow latency and flaky service speeds of Satellite based broadband connections. As such the team are now considering whether or not they can develop the business case for a small FTTP pilot/demonstrator network with at least 50 local premises, including five business users.

Apparently the planning for this pilot is being undertaken in partnership with a “private sector partner that is fully supportive of what NSB is trying to achieve, one that is cooperating with NSB in the development of a bid for de minimis funding from CBS to demonstrate a new paradigm for providing truly future-proof ultrafast broadband services for the benefit of, and in co-operation with, rural communities across Scotland.”

We wish them luck and hope to see some more positive news from the Northern side of Skye in the future.

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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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11 Responses
  1. Thanks for covering the news re North Skye Broadband in your article it states – “with a view to harnessing a capital grant of up to £1,460,000 (max 89% of capital costs). Additional funding would come from the community itself.” –

    Somewhere along the line and unbeknown to the group this figure changed and the community would only be allowed to procure with a total pot of £1.2m. :There was no longer a requirement to raise the 11% from the community (who in their right mind would invest if 100% of the money is going to a private operator with no control over the investment?). This was another development in the procurement process which forced the group to take the decision published today.

    • Avatar NGA for all

      H&I/BT have got to Uig, Dunvegan, Potree with a quite bit more planned and lots of underspend. How many KM extra are needed to reach the communities not yet in the programme? Is extending BT duct out of the question for this group?

  2. Avatar craski

    There are a lot of ways to look at this one but to me it seems like it could be a disconnect between what the current state aid fund is intended for and the aspirations of the community organisation to build a network that far exceeds that.

    If the state aid is available to help reach people with a “superfast” service then surely any application for a slice of that money would have to pass some sort of value for money “gate” as they do with the BDUK rollout. If the cost at £600 per premises was deemed too high in comparison to other projects seeking funding and the price could have been reduced by utilising an alternative network design such as fixed wireless but still deliver a superfast service then it was fair enough to refuse it in my opinion as spending more money than is necessary in one area will reduce number of people that state aid can help elsewhere.

    • Avatar NGA for all

      Or plan a larger number of premises with a slightly higher average overall which was possible if there was more transparency. The latter would exclude fewer premises. There is much more money to be turned around from funds spent in rural Glasgow. Some should not be excluded only because they were not averaged in the first place.
      The number of km of fibre needed would be good to know. It is once in a generation effort.

    • Community Broadband Scotland had, as of last November, spent £4.3M and had delivered typically 4Mb/s wireless broadband to around 1200 properties, total. That’s >£3500/property, EXCLUDING the value of the resources given by the communities themselves. In most areas, that’s very significantly higher than the cost of community-built FTTH services, something we’re in the process of proving and which B4RN has already comprehensively demonstrated.

    • Avatar Craski

      @Richard
      I’m not sure what project or projects your figures refer to but 4Mb/s is very low and is not the level of service you’d expect from a modern fixed wireless system unless that system was crippled by lack of back haul capacity or some other problem.

  3. Mark, with respect, I don’t think that NSB (or anyone else) would expect public monies to be disbursed ‘willy-nilly’. We (Balquhidder Community Broadband) and NSB have high levels of commercial and technical expertise available locally and had produced very comprehensive designs and business cases. We then had very similar and parallel experiences with a level of idiocratic bureaucracy that simply could not be made up, and which blocked our projects at every turn. In our case, we withdrew from CBS in March, after it became apparent that their prescriptive approach could not be made to work.

  4. Avatar gah789

    I don’t usually defend Community Broadband Scotland but @Richard’s figures are grossly misleading. Our community network received roughly £75K from CBS, currently we have over 200 connections and our coverage extends to over 1,000 premises. We run a network that provides most users with 30-40 Mbps, not 4 Mbps. Most average cost figures focus on coverage because take-up is slow and partly dependent on our capacity to connect people. Our average costs are very low by comparison with what in spent on other superfast projects in similar geographical circumstances. There are other examples of CBS-supported networks with low average costs and similar performance.

    We are all aware of the poor relations between CBS and some community groups, especially those committed to fibre networks. The problems tend to arise when groups want larger sums of money – above the de minimis threshold for State Aid clearance – to support relatively expensive networks. We would not want to go through the hassle but for £1.2 million we could easily extend our network to cover 8,000-10,000 properties using our current model.

    CBS is only the messenger. Blame BDUK or the Scottish Government if you like. But the core message is don’t rely upon public money if you can possibly avoid it. Largely voluntary community organisations don’t have the patience – and are not paid – to deal with multiple layers of bureaucracy when the rules are obscure and change all the time. We prefer to get money from our own cashflow and other sources now, which means that we expand more slowly but it makes better use of scarce management resources.

    • Avatar Craski

      “the core message is don’t rely upon public money if you can possibly avoid it”

      I totally agree. I did engage with CBS but found them not very interested in helping our area and so I set up a small fixed wireless network and through word of mouth we now have a dozen people on that network and all very happy with its performance compared to what we had, a big improvement. We are growing it slow with no reliance on any external funding so our limited resources are focussed on where we need them and not on spending endless hours doing paperwork applications.

    • @gah789 – I’m very pleased to see that at least some of the projects are delivering at a reasonable service level: my comments were made from information I had directly available to me. The issue is not so much with communities who wish to put in a properly futureproof solution (or are in areas where wireless is simply not an option) as with CBS offering to support those projects then appearing to do everything they can to sabotage the procurements.

  5. @Craski – those figures came from CBS themselves (under an FoI request I made) and from discussions with several projects. The nearby CBS Loch Tay project was supposed to be 50Mb/s, delivered by AB Internet, but actual delivered speeds (even before AB went bust) were in the range 0-4 – ask any frustrated local. As an aside, one of the grounds on which we rejected AB’s bid to us under our first CBS procurement was not being technically capable of delivering on the claims that were made.

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