BT Deal Extend Superfast Broadband to 95% of North Yorkshire UK UPDATE
The Superfast North Yorkshire project in England has awarded its £20.5 million Phase 3 contract to Openreach (BT), which will see their FTTP and FTTC based “superfast broadband” (24Mbps+) network being extended to reach an additional 14,239 homes and businesses (95% of premises).
At present the programme, which is supported by the Government’s Broadband Delivery UK scheme, is already estimated to have extended – via the original Phase 1 and 2 contracts with BT – superfast broadband coverage to 90% of premises in North Yorkshire (note: we’re not entirely sure whether they’ve used the 24Mbps+ or 30Mbps+ definition for this, although the most recent BDUK contracts are all supposed to target 30Mbps+).
Meanwhile planning for Phase 3, which is funded by £12.18m from the council (a big chunk reflects clawback / gainshare from earlier contracts with BT due to high fibre take-up in the intervention area), £7.32m from BDUK and £1m from the European Regional Development Fund, has been going on since early 2016 (here).
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Under the new deal it’s stated that the “majority” of the additional 14,000+ premises should get access to Openreach’s ultrafast 330Mbps capable Fibre-to-the-Premises (FTTP) technology (i.e. about 12,500 premises), as opposed to its slower and less reliable hybrid-fibre FTTC (VDSL2) service.
Councillor Don Mackenzie, Executive Member for Broadband, said:
“The outcome of the phase three contract procurement is remarkable and puts the quality of broadband provision to some of our most remote communities on to a new, much higher level.
It is very good news indeed for those residents who have been waiting patiently for SFNY to get to them and their patience is likely to be rewarded with some of the best broadband quality in the country.”
County Council Leader, Carl Les, said:
“Phase three of SFNY’s broadband expansion programme represents a fantastic boost to the economy of the county and will give many more small rural firms the ability to compete and to grow their businesses.
The provision of high quality broadband has been a major priority for the county council to address the fact that commercial providers would never have delivered it without our intervention. It has been a major multi-million pound investment by the county council to reach as near to 100% of our residents as possible.”
Unfortunately no time-scale has been published alongside the Phase 3 announcement today, although a detailed roll-out plan is expected by April 2018 and we recall from SFNY’s earlier consultation that the original plan was to finish Phase 3 by mid-2019 (we wouldn’t be surprised if this has now slipped into 2020).
The announcement notes that the average cost per premise for phases one and two is expected to come in as £204, which is very good value for money (we note that Phases 1+2 have extended superfast connectivity to an extra 145,798 premises). The announcement actually claims that this represents the “best value for money in the development of superfast broadband in the UK,” although we’ve not been able to verify this claim.
On the other had the update also states that the previous Phase 2 deployment finished in December 2017, although back in 2016 we were told by SFNY that Phase 2 was due to complete by July 2017 and deliver superfast coverage of “around” 91% (i.e. they seem to be running a little bit behind schedule).
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The new target of 94% will also put them well behind the Government’s national UK goal of 95% for BDUK Phase 2, which has already been more or less achieved but this does vary a fair bit between counties (some are closer to 98%+ coverage and others are still sub-90%).
As usual it’s important to point out that the % figures mentioned above are estimates, although real-world experiences can of course vary due to a variety of different reasons (e.g. slow WiFi, poor home wiring [when using FTTC], local network congestion at peak times, street cabinets being full to capacity / unable to take new orders etc.).
Lest we forget that such service upgrades a not automatic, once available you have to order them from an ISP in order to benefit.
UPDATE 13th Feb 2018
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Openreach confirmed they will invest a further £9.2m to deliver the new infrastructure.
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 X (Twitter), Mastodon, Facebook and Linkedin.
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So average cost per premises over Phase 1 and 2 is £204.
Average cost for Phase 3 is to be £1464.
Which is still cheaper than any of the 3 tenders recently announced in Scotland.
But you do wonder at what point does this become classed as uneconomical and the fallback to wireless/satellite occurs.
You could surmise that the 10Mbps USO’s focus on the final 2% of the UK suggests that is the point where the BDUK approach becomes uneconomical, with the final 0.4% or so being where Satellite is needed. But every area is different.
On the other hand it depends how you define uneconomical. BDUK exists because commercial operators decided that beyond around 76% coverage they couldn’t make a purely commercial model work without public support.
The £204 might be even overstated as we are not seeing the reconciliation process. They should do us the honor of showing gross payments, BT capital, the interim clawback released, , and the total clawback by 2023.
The £1,400 is a budget and again is much less than predicted a short time ago and they could just revise the original case and keep the overall average low, or they could state both. The continual phases is reflection of a decision not to resource appropriately, so the marginal costs should be averaged with what has gone before as the original objectives were rural, rather than excluding rural.
The Scottish budget, like the NI budget, and indeed the Welsh funding creates the potential for a great deal of FTTP in very unlikely places, organising for that is a challenge.
£204 is definitely an overstatement as that’s before savings/gainshare. The BT capital contribution is wholly irrelevant if it’s the public contribution that’s being measured. As it is, any gainshare money is, in effect, a retrospective BT capital contribution.
Steve, The BT contribution is wholly relevant to the gap funding process, particularly as the most of the gainshare (£477m-less £130m early release) is not yet available to increase coverage. It could tied down to 2023 unless acted upon.
BT’s net contribution should be reflected in Ofcom’s WLA price control calculations. If BT’s contribution per premise is lower in North Yorkshire than elsewhere, this should be reflected in a lower price in the price control. I hope this is one of three specifics national audit functions will focus on this year.
I hope the net contribution is less than £100 per premise for the work so far. The only thing that might drive that higher is that BT grab all they can on planning costs, programme management fees and other forms of grazing by relationship directors.
@NGA
Ofcom will, of course, make an assessment of the investment made by BT in regulating FTTC/VDSL2 prices (and they’ve already done so to some extent with their proposed pricing form the OR 40Mbps GEA-FTTC product). That’s not the same thing as publishing BT capital investment though.
As for how much of the gainshare money is to be reinvested, then that’s a matter for the local projects and the ball is in their court. It is to be hoped that it is used both efficiently and as rapidly as is feasible. We are seeing a steady stream of new project phases, most recently in Yorkshire, and it’s becoming clear that these later phases have a much higher FTTP content are, as we might expect, more expensive.
Steve; Ofcom’s analysis of BT investment is sadly lacking in the WLA review. The ‘fair bet’ analysis purposesfully avoids BDUK and only models the first £1bn for the first 10m premises. It confirms BT’s investment is no where near £2.5bn, but redacts the actual number. It does in the annexes confirm just under 50,000 commercial cabinets – it ignores the additional cabs for capacity.
It misses the opportunity to agree and include a forecast for FTTP connections costs which demonstrates the call for more fibre remains a bit shallow.
Steve, £347m of the £477m monies owed is not available, and this sum is set to rise further. It is currently in BT’s accounts until 2023, thus, the ball and indeed the funds are under BT’s control. You should already have the exchange which occurred at the EFRA Select Committee last March on this very point. The numbers nor the control is being disputed.
Logically it should be set at the same level that the phone service cost cap kicks in which is >15x the figure you quote.
If anything surprises me its that, given the rural nature of Y’shire, they haven’t gone more down the FTTP route already as other such counties
@NGA “It is currently in BT’s accounts until 2023, thus, the ball and indeed the funds are under BT’s control. ” No it is not….. the contracts are clear about how the money from gainshare is calculated and how it should be held by BT until the end of the contract, BT has offered early release which in many cases has been taken up to extend coverage but it only happens with the approval of the local authority – no approval and the contract runs as signed. So by any definition the release of the money is not triggered by BT but by the local authority and therefore the ball cannot be in BT’s court.
Gadget, BT had the opportunity to make that position clear to the EFRA select committee last March and failed to do so. Your suggesting BT is being allowed to rest on these funds until 2023, while the Gov and Ofcom are calling for more full fibre.
That is strange. Why can’t BT make clear to Parliament the potential available and outline what must be a very frustrating position for BT? Why the voluntary B-USO request for £400-£600m if this option was not first made clear?
@NGA – I don’t think it can be put more clearly (regardless on what may or may not have been said at another completely separate meeting).
The contract says BT must hold on to the money until the end of the term – BT have proposed to convert the money into extra coverage ahead of the end of the contract but some authorities have currently chosen not to take them up on this offer, therefore the existing contractual terms apply – no money until the end of the contract. It is not for BT to unilaterally build more under the existing contractual terms, they can only do so if the local authority agrees the offer and the additional coverage.
Therefore where the authority has not agreed the early gainshare offer it is entirely in the authority’s court, and where they have agreed we can both agree it is a “Good Thing” aka 1066 and all that.
Gadget, to be clear, in addition to the £130m of gainshare, BT has also offered the remainder of the Capital Deferral now standing at £477m.
Are LA’s referring to a state aid issue on gainshare above £130m the monies need to be subject to a further round of competition. This is what EFRA was seeking clarification and information was not forthcoming. The £130m limit is not in the state aid measure so I assume there must be a side letter on the matter.
While Gigaclear may wish to compete selectively, they will not wish to compete everywhere. I do think this nonsense needs airing so the engineering work is not disrupted.
Most of this money can be converted into full fibre.
@NGA, so to clarify on what basis are you claiming the ball is in BT’s court earlier in this thread, when you now seem to imply that a) BT has made offers on how to spend the gainshare which has clearly been taken up by some local authorities and b) AFAIK spending money to improve coverage is possible up to the nominated amount in the OJEU notification, so as long as it is within that envelope and confirms to other EU state aid and OJEU notification documentation it is not an issue.
Gadget, I am trying not to imply anything, but attempting ascertain the true status of the total capital deferral currently standing at £477m minus the early release of £130m gainshare.
Has BT offered LA access to those monies (£477m minus £130m) for build and on what basis?
THe OjEU argument is challengeable, if the net billed is less than the original budget which must the case overall? Some may needed to be competed for, but where there is no competition the work needs to be kept flowing.
If the the £477m less £130m gainshare released so far is stuck for whatever reason, then once that is acknowledged then pressure can be brought to unlock. By stuck I mean, there is no ready means of LA securing more coverage using Capital Deferral above the £130m early release.
This is good to see. The budget per premise for FTTP rural is encouraging and we are not seeing BT’s capital contribution, so there is no reason why there will not be much more re-cycling of funds. Is this the beginning of a BT re-think on copper re-arrangement and the gaps its leaves? The BSG/Plum consulting blended costs (MAy 2017) for copper re-arrangement makes this look a much better option.
Given all the funds to re-cycle BDUK’s best days in terms of FTTP delivery are ahead. It would be great to see the BT unit cost of investment for FTTP to emerge.
It does amuse that as these projects continue the divide between urban areas and the most rural in terms of future proof networks continues to grow in favour of the most rural.
Add BDUK to community schemes and alternative networks and you get a strange situation indeed.
Interventions in markets usually do cause distortion. In this case, there really is no cheap way to do rural. I suppose in a rational market, then those who are more expensive to reach would simply pay more, but as Ofcom’s interventions are designed, among other things, to disguise difference in basic costs by enforcing cross-subsidies, then it’s bound to lead to a situation where market-based provision just won’t work in rural areas (save those little concentrations of affluent rural population which Gigaclear specialise – that’s before they too supped at the public subsidy trough).
As it is, the urban areas are likely to most sort themselves out, albeit leaving some islands and not satisfying fibre or death folk.
On FTTP, I think Openreach might have got their car into second gear, so there is much that can be fought for.
The learning from BDUK, rather than creating a distortion, is that costs are cheaper and demand higher, and the barriers are mostly BT Group imposed opportunity costs for assets that are fully depreciated.
I find this submission from Openreach to Ofcom informative, it shows just hard BT will find to in-fill FTTP where they have invested in VDSL, G.FAST. Para 26 refers to re-dacted table but the impact is clear. https://www.ofcom.org.uk/__data/assets/pdf_file/0020/108713/openreach-additional.pdf
@NGA
You seem to be completely ignoring the obvious fact is that the primary reason that the first phases of BDUK were cheap (and, with increased takeup and gainshare, getting cheaper all the time) is that they were based on cost-effective FTTC roll-outs which covered very large numbers of potential customers relatively quickly. If it had been FTTC from the beginning, then a fraction of the number of premises would have been covered and the gainshare returns much lower. Have you not noticed that the gap funding element is now climbing way over £1k per premises passed, and we’ve even seen figures approaching £2.5k per premises. Of course it’s not all the extra costs of FTTP – some of it is down to greater distances, but the fact remains that if it had all been spent on FTTP in the first place, the number of premises covered would have been a fraction of what it is now.
You might also want to remind yourself of the primary objectives as set out in the BDUK project’s requirements. It was not to maximise the amount of FTTP. It was to maximise the number of premises able to receive at least 24mbps within the budget available and to do so as quickly as possible. That is utterly and entirely incompatible with concentrating it all on FTTP.
You might argue about the political objectives, but company’s can’t provide responses to implicit political objectives and ignore the requirements put out to tender.
Clearly the second sentence should have read
“If it had been FTTP from the beginning, then a fraction of the number of premises would have been covered and the gainshare returns much lower.”
Steve, BT Group spent a great deal of effort talking up the costs of FTTC at the expense of planning and resourcing for in-fill. That needed unpicking. Even the most recent BSG report (May 2017) is wrong to the point of being misleading. It is refreshing you are talking about how cheap it now is. That is a significant change. If scrutiny is continued much more will be possible and these budgets will fall further.
@NGA – ‘there is much that can be fought for.’ – what does this actually mean? Are your words on obscure forums making any difference? What else are you doing in the ‘fight’?
Somerset, ‘fought for’ .. greater coverage in rural areas for communities denied upgrades by the gaming of costs and capital. ..fought for.. the provision of more FTTP which is being artificially constrained by the same practices..
The reviews, inquiries used to counter the mis-use of confidentiality agreements does suggest a ‘fight’ for a better outcome than might otherwise be.
Who is doing the ‘fighting’?
The facts, There are many wishing and fighting for a better outcome.
1m+ yet to benefit from an upgrade and their public representatives.
Those interested in delivering and managing the engineering upgrades.
Anyone trying to ensure the available funds are spent where intended, deep in rural.
The fight might be a mental one, accepting NGA upgrades are cheaper and more affordable than originally portrayed, with greater demand with with fewer reasons not to aim a little higher and be more ambitious.
The latter is apparent and becoming more so, but institutionally that learning has yet to be fully embraced and converted into policy, be it an appropriate B-USO definition, or a WLA price review which includes a volume forecast for FTTP for where copper/VDSL/G.Fast cannot reach.
@NGA – a mental fight. That will sort it.
The Facts; ..mental.. as in mindset.. The basic materials (fibre, copper, radio) and underlying mechanisms of nature we are working with and applying are truly astonishing. The huge upside of the BDUK activity is the proof that the upgrades are significantly cheaper than originally portrayed and the demand is higher.
The mindset of appreciating how much has been achieved and how much more is possible with the resources available is certainly a factor. Have a special day!
“The announcement actually claims that this represents the “best value for money in the development of superfast broadband in the UK,” although we’ve not been able to verify this claim.”
Don’t say that or the Advertising Standards Authority will start some foolish investigation 😉
Unfortunately, or, perhaps otherwise, politicians claims aren’t subject to review by the ASA.
I was having a joke