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Welsh Government Update on BT Rollout of Superfast Broadband

Wednesday, May 16th, 2018 (5:08 pm) - Score 1,465
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The Welsh Government has issued a progress update on their existing Superfast Cymru project with Openreach (BT), which suggests that BT has delivered a “significantly larger volume” of premises than either party anticipated at the outset but some areas are still causing problems.

The original contract, which is slowly coming to an end, was supported by a public investment of £225 million and has already helped to spread 30Mbps+ capable fixed line “superfast broadband” (predominantly FTTC / VDSL2 and a little FTTP) services to cover around 95% of homes and businesses across Wales.

Going forward the above scheme is expected to be superseded by a new project to tackle the remaining 80,000+ premises in the final 5% (here), which aspires to make “fast reliable broadband” (defined as 30Mbps+) available to “every property” in Wales (the potential value of this project is up to £200m, of which £62.5m has already been confirmed) but today we’re primarily looking at the original contract.

In keeping with that Thinkbroadband has spotted this update (posted 17:45:38) from Julie James AM, Leader of the House and Chief Whip. Julie confirms that the delivery phase of Superfast Cymru closed in February 2018, and, since then, they’ve been working to resolve “three outstanding issues“.

The Three Outstanding Issues

* Firstly, we have been considering whether the Welsh Government can work with BT to complete structures part-deployed by BT during the Superfast Cymru delivery phase. Such structures have caused frustration for consumers reporting that they can see fibre coiled on poles, yet they have seemingly no realistic prospect of receiving a fibre service. We expect to conclude this process at the end of May.

* Secondly, we have been revisiting with BT all of the claim packs submitted by them over the past five years to cleanse the data and confirm the final premises given access to 30 Mbps services as a result of our market intervention. While I am not in a position to confirm the figure today, I can confirm that, in fulfilling its obligations under the grant agreement, BT has delivered a significantly larger volume of premises than either party anticipated at the outset of this project.

* Finally, we have been establishing the processes and resources required to support the complex defrayment exercise that will confirm the final eligible expenditure under the grant agreement. To date, we have paid BT £300 for every premises, however, the closure of the delivery phase means that we must now work together to balance the books and ensure that all expenditure is eligible and fully evidenced. This process will take several months to conclude, but it is essential to ensure that BT does not benefit from any oversubsidy.

The fact that the project has delivered a much larger volume of premises than expected is good news, albeit something we’ve heard before and seen in a few other Broadband Delivery UK contracts. The additional checking that occurs at the end of related contracts is also somewhat par for the course. But the most interesting bit of news is that all those previously reported problems with unfinished deployments finally look set to be resolved.

Julie James said:

“We’re also revisiting, as I said in my statement, all of the claims packages made over the last five years, and we’re doing that partly as a result of my tour around Wales and meeting with various communities where it’s been obvious to me that places we thought were connected have not actually been connected.

We’re having a complicated conversation with BT around the connection of the stranded assets. There is a complex commercial negotiation — ‘negotiation’ is the only word I can think of — going on about who should pay for them. So, BT have sunk an enormous amount of capital into the ground. They haven’t got a penny from us for that, because they’ve over-bulked the programme. The conversation is: who should pay for the last bit of the connection?

That’s a complex commercial conversation that is ongoing, and, as soon as we’ve reached the end of it, I’m more than happy to report it here in the Chamber. But I make no apology for the fact that, obviously, what I want to get out of it is the maximum number of premises for the least cost. So, quite clearly, where we’re coming from is we want as many of those assets connected as possible for as little part of the gainshare as is humanly possible.”

Julie also reported that the tender exercise for their successor project was ongoing and expected to conclude in June 2018. “I aim to announce the successful bidders before the summer recess, with deployment work commencing as swiftly as possible after that … the premises remaining will be significantly more expensive to address,” said the AM in reference to the increased focus on remote and expensive to tackle rural areas.

On top of that Julie noted that they have “constructed the current procurement to favour full fibre [FTTP/H] services so that we can encourage even greater full fibre penetration where we are investing public funding. Despite a commitment to invest more than £90 million, I am convinced that even this level of funding will not reach all remaining premises.” We’d agree.

Finally, Julie noted that they’re “making steady progress” in delivering the mobile action plan to help improve 4G coverage. The consultation on ‘Planning Policy Wales’ is due to end this week and “this will be followed very shortly by a consultation on new permitted developments rights, including changes to those for mobile phone infrastructure.” Plus they’re currently reviewing feedback from some of their other suggestions (e.g. a reduction on non-domestic rates for new mobile masts).

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he is also the founder of ISPreview since 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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11 Responses
  1. Meadmodj

    I am surprised the handover processes were not defined and clear in the contract. I would have expected a clear plan by DP that capability was provided and “working”. Measures by Cabinet or Post Code would be meaningless. I can see some of the issues but in the case of FTTC infrastructure once its there then all CPs should be informed and normal OR processes kick in. For FTTP then Openreach cannot predict whether an individual customer will wish to migrate from say ADSL to FTTP, to which ISP service they wish to subscribe or that the ISP is able to such provide service. However I would have expected some form of canvassing regarding FTTP “DPs ” to determine the engineering approach and co-ordination of work.
    The driver for OR should be to get the assets being used. Perhaps OR are prevented from doing so?

    • Steve Jones

      I think the contract was for a set number of premises to be enabled rather than to meet a minimum number of premises and then keep going until the available funds are spent. It looks like a lot of the preparatory work had been done for more premises, but as the contract target has been met, OR will not get paid for enabling any more until/unless terms can be agreed. The Welsh government hasn’t paid for any of that preparatory work as payment is only on completion (when SF orders can be placed) and, understandably, they will want to pay the minimum possible for any premises enabled using it. The Welsh government will have the whip-hand in any negotiations given that OR appear to have sunk capital into these already. On the other hands, the Welsh government are coming under pressure from resident who can see a lot of that preparatory work.

      There would have been a bit of uncertainty over the exact number of premises that would have been able to get SF until fairly late on in the deployment process as it depends on line characteristics. It seems probably to me OR went on some fairly conservative assumptions over the FTTC side and had more FTTP planned than turned out to be needed to hit the threshold. It takes time to deploy FTTP, so I suspect all those “stranded assets” were advanced work than turned out not to be essential.

      Hopefully a plan can be agreed to complete those without too much delay.

    • NGA for all

      Steve, the only uncertainty is the extent to which BT substituted its commercial build with subsidy, a big premise count but no corresponding increase in total coverage. I have counted 1,600 BT commercial cabs against what must nearly 3,000 subsidised.
      At least in this case the £80m gainshare looks to be a function of the £536m now owed. Places like Devon and Somerset are stating gainshare as a function of £130m.
      Note there has no reconciliation of unit cost with the actual or indeed BT’s gap funding. I pity any BT person picking up these pieces. All so unnecessary.

    • DevonPaddler

      All BDUK contracts will have overbuild, it would be crazy to plan for only the exact contract total, any single problem site puts delivery of the contract target at risk… its a balance between overbuilding and then not getting paid v under planning and getting caught short as deadline looms.

      Gainshare is only a function of the early release payment BT offered, so £130M based on takeup against prem passed at the time the early offer was made. Clawback is totally different and is calculated at set contract intervals over the lifetime post deployment, the only relationship is that Gainshare is subtracted from Clawback

    • NGA for all

      Devon Paddler – ‘Gainshare is substracted from Clawback’ (Capital Deferral). This forms a direct relationship, it is not totally different.
      Although the new state aid measure does not reference a limit to re-using clawback, there must side letter preventing these funds from being used to extend coverage.
      Establishing the state of the BT Capital Contribution to allowable costs is very important in this Welsh contract.

  2. NGA for all

    Paying a unit cost of £300 a premise passed, is a bit of a scandal of itself. BT confirmed phase 1 build of £26k per cab serving circa 200 homes to CMS select committee in 2016. The Welsh contract was by far the worst in this respect.
    The fact they have yet to reconcile against the allowable actual costs and report on BT’s capital contribution should mean a significant depth of FTTP is possible provided it can be resourced.
    The latest BT Q4 results is reporting BT beginning to hand money back.

    • DevonPaddler

      @NGA

      Once again jumping to wrong conclusions from limited info. There is no such thing as a defined cost per cab built & connected – every site is going to be a unique in terms of civics costs, TM, new duct and remedial duct work, fibre path, PCP ties & power. That’s before you even factor cab type, planned initial provisioning etc etc

      £300 per prem average doesn’t seem scandalous – maybe you should check what the £26k figure you quote includes & excludes before using it for your argument

    • Gadget

      for comparison the NBN costs must be a national disaster using the logic above

      https://www.theregister.co.uk/2018/05/15/nbn_q3_2018/​

      £1 = £1.8 A$

      FTTP Greenfield = 2,263A$/prem

    • NGA for all

      Devon Paddler – £26k is the all in cost used by BT in its representations to the CMS Select Committee 2016 for establishing a fibre path and installing a cabinet, ties cables, power cabinet -phase1. An estimate was also provided for Phase 2. It was written and clarified.
      The £80m is not gainshare then, but BT for the first time is releasing the full amount in some form or it appears so.
      The interesting piece will be the location of BT capital – circa 700k premise(s) x £70. It does not seem possible this has been paid if BT have been collecting £300 a premise and need to reconcile against actuals.

  3. DevonPaddler

    Civils not Civics

  4. Mike

    I’m still in the dark here. We have coiled FTTP cables hanging from poles near Rhewl, Llangollen. Connection to fibre was promised two years ago. We are all (300 plus) still struggling with ridiculous 0.8 MB connections. Could anyone please tell me if there is actually a plan to complete the work and when?

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