Norfolk May Borrow £11m to Take Superfast Broadband Beyond 95%

The Norfolk County Council in England will next Tuesday take a decision on how to fund a future phase of their Better Broadband for Norfolk (BBfN) project, which could see them choosing to borrow £11m in order to help extend “superfast broadband” to 100% of premises “as soon as we can.”

At present the regional BBfN contract with Openreach (BT) has already helped to ensure that 90% of the county can access a “superfast broadband” (24Mbps+) network (mostly via FTTC and a little FTTP technology), while a second extension contract is currently working to reach 95% by March 2020 (here).

Meanwhile the local authority has also been considering how to reach the final 5% and in keeping with that they’ve now proposed a new contract, which would be supported by a combination of funding from the DEFRA Rural Broadband Grant (Norfolk will bid for £2m) and reinvestment of £11.1m in existing funding (i.e. due to strong take-up [gainshare / clawback] and underspend from earlier phases).

The government’s Broadband Delivery UK programme has noted that the £11.1m won’t officially become available to use until 2023 (end of the State Aid protection period) and so the council has suggested that it could borrow the money instead, which would enable them to make use of it sooner (i.e. pay the rest back later because there’s only a small risk of the estimate being lower).

Part of the reason for the rush is because the £2m bid from DEFRA, if successful, must be spent by the end of March 2020 and the council wants to make use of both funding sources. A further £5m could potentially also be added to the current pot of £13m in the near future, although this has yet to be confirmed.

BBfN Phase 3 Proposed Funding

– £11 million raised via borrowing in anticipation of expected rebates that will be due under the terms of current BBfN contracts. There remains a small risk that Take-up levels will recede and therefore the eventual rebate will be less than that predicted.

– Up to £2 million based on a bid to the DEFRA Rural Broadband Grant.

– There is the potential for further contract rebates / underspends, above the expected £11 million. To be able to use these to fund further broadband coverage a maximum sum must be defined during the procurement process. Therefore a further £5 million of potential additional funding will be identified within the procurement. This means if this additional funding becomes available it can be committed via contract change control via the proposed new contract.

We should point out that overall BDUK has estimated that Norfolk’s share of underspend from the initial BDUK contracts and gainshare rebates comes to a total of £28.84 million (£12.4m underspend and £16.44m gainshare), although most of that underspend has already been reinvested into the existing extension contract (95% coverage) and £5.3m in gainshare went the same way.

Timing is clearly a big issue here because any bids for the DEFRA grants must be proposed no later than 31st May 2018, which doesn’t give the council much flexibility. The council notes that Phase 3 will thus aim to award one contract to a single supplier via gap funding in order to “provide a solution for as many properties as possible.”

Much like other areas the new contract will also raise Norfolk’s definition of “superfast broadband” from 24Mbps+ to 30Mbps+. Apparently three out of the four potential suppliers consulted have expressed an interest in bidding for the single contract.

Assuming next week’s meeting goes according to plan (here) then the council hopes it will be ready to commence procurement by the end of April 2018 and the contract could be approved by the end of October 2018.

Take note that this proposal is separate from Norfolk’s other £13m bid to the UK Government’s new £200m Local Full Fibre Network (LFFN) programme, which could help to bring Gigabit class FTTP broadband services to local public sector sites and businesses (here).