BT Win £9.25m Wales LOT 2 Full Fibre Broadband Rollout Deal UPDATE2

The Welsh Government has quietly chosen BT (Openreach) to supply the final LOT 2 of their Phase 2 “superfast broadband” (30Mbps+) roll-out contract, which uses £9.256m of public money and aims to bring FTTP “full fibre” coverage to around 10,000 more premises across East Wales (rural areas).

The original Superfast Cymru contract – partly funded by a public investment of £225m (including some from the Broadband Delivery UK programme) – completed earlier this year. Overall this helped to extend the coverage of Fibre-to-the-Cabinet (FTTC / VDSL2) and ultrafast Fibre-to-the-Premises (FTTP) based broadband technologies to an additional 733,000 premises (drops to 717K if only counting 30Mbps+ capable premises).

As it stands today nearly 95% of premises in Wales should now be able to access a 30Mbps+ capable broadband connection (93%+ if using Ofcom’s late 2018 figure), although most of this has been delivered by commercial projects rather than the above scheme (Superfast Cymru was aimed at areas that commercial investment alone would have found too difficult or expensive to reach).

Since last year the Welsh Government has also been busy developing a new follow-on Phase 2 scheme to tackle c.88,000 premises in the final 5%+ (here and here), which originally aspired to make “fast reliable broadband” (defined as 30Mbps+) available to “every property” and aims to focus on “full fibre” (FTTP/H) connectivity. The potential value of this project is up to £200m, with around £62m already confirmed.

As part of all this the WG invited potential suppliers to bid on three regional deployment lots in January 2018, which are as follows.

LOT 1 – North West Wales (Est. value: £14.858m)
Areas: Ceredigion; Conwy; Denbighshire; Gwynedd; Isle of Anglesey
Intervention Area of 23,355 NGA white premises [revised] has been identified with an additional 27,590 premises potentially available pending further info.
Contracted Supplier: BT (£6,583,064 – 5,740 premises out of 23,355)

LOT 2 – East Wales (Est. value: £21.706m)
Areas: Cardiff; Flintshire; Monmouthshire; Newport; Powys; Vale of Glamorgan; Wrexham
Intervention Area of 32,356 NGA white premises has been identified with an additional 19,689 premises potentially available pending further info.
Contracted Supplier: BT (£9,256,012 – 10,098 premises out of 32,356)

LOT 3 – South West Wales (Est. value: £25.436m)
Areas: Blaenau Gwent; Bridgend; Caerphilly; Carmarthenshire; Merthyr Tydfil; Neath Port Talbot; Pembrokeshire; Rhondda Cynon Taf; Swansea; Torfaen
Intervention Area of 37,818 NGA white premises has been identified with an additional 15,900 premises potentially available pending further info.
Contracted Supplier: BT (£6,740,426 – 10,175 premises out of 37,818)

In October 2018 the WG announced that BT had secured the contract for both LOT 1 and LOT 3 (here), although many were more than a little displeased to learn that this would only harness £13 million of the allocated public funding and aimed to deliver just 16,000 extra premises by the end of March 2021 (albeit 90% via FTTP). The same completion date will apply to LOT 2.

Julie James AM had previously admitted that the available funding was “unlikely to deliver fast broadband to every premises that we have identified,” although people had hoped the first deal would be much bigger. Nevertheless the first homes and businesses to benefit under this phase should begin to go live by the end of 2019.

At the time Julie hinted that the WG was effectively holding back making all of their public money available until LOT 2 had been confirmed. “I want to see how much the final lot that’s left actually costs and then all the rest of it will be put into the community pot. So, we are determined to spend all the money on the table on fast broadband connection,” said Julie.

The Final LOT 2 Contract

Curiously the WG have not yet openly announced that the LOT 2 contract has been awarded, although one of our eagle eyed readers (Steve) spotted the related contract notice when it was published this week. Sadly the notice itself doesn’t contain much in the way of new information, except to confirm that the total value of this contract is £9,256,012.00 and was awarded to BT on 11th January 2019.

If the prior contracts are any indication then this will extend coverage of a predominantly FTTP network to around 10,000 premises, which as with LOT 1 and LOT 3 would be well below what the WG originally hoped to achieve. This suggest that the WG will have quite a bit of money left over for the aforementioned “community pot” (it’s still unclear precisely how that will be used).

As before there’s also no mention of how much private investment, if any, BT will contribute to this and the WG have previously refused to say. Today’s deal is unlikely to be the last deployment contract we see being signed in Wales. But so far it seems clear that the WG’s ambition has not been matched by its ability to deliver, which in part reflects the inherently high cost and complexity of expanding such services into remote rural communities.

In fairness Julie James AM has previously gone on record to say she is “convinced that even this level of funding will not reach all remaining premises” and we’d agree. We also applaud the WG’s focus on “full fibre“, not least because it fits with the UK Government’s new aspiration to cover the entire country in Gigabit capable FTTP by the end of 2033 (here and here). On the other hand we saw plenty of delays with Openreach’s FTTP roll-outs during the original contract and it remains to be seen whether some of these will return.

On the other hand some of the changes being proposed by the UK government to help make FTTP available to 100% of premises by 2033 (here), as well as a related commitment from landowners (here), does perhaps suggest that there may be fewer obstructions for operators to worry about in the future.

UPDATE 18th January 2019

The WG has today issued their official press release, which confirms that around 10,000 premises will benefit from the LOT 2 contract. In total, along with the two other lots announced in the Autumn last year, Openreach will provide 26,000 premises with access to “fast reliable broadband” by March 2021 at a cost of nearly £22.5m (to be met by the Welsh Government and EU funding).

Lee Waters, Deputy Minister for Economy and Transport, said:

“These premises would have no access to faster broadband without government intervention.

While our Superfast Cymru programme has transformed the digital landscape in Wales, with over nine out of 10 premises now able to access faster broadband, there remain premises with no access.

There is no one size fits all solution to reach all of these premises and a variety of measures will need to be used, including today’s contract which will reach 10,000 of those without. The other elements are individual support through our ABC and ultrafast connectivity voucher schemes, and support for communities through our vouchers schemes and community led interventions.

It is a challenging and complex process but we are working hard on ensuring the final premises will have access.”

Kim Mears, Openreach MD for Strategic Infrastructure, said:

“We’re delighted to be working once again with the Welsh Government in widening access to superfast fibre broadband across Wales.

Our engineers have already delivered an enormous engineering project that has brought access to fast reliable connectivity to nearly 95 per cent of Welsh homes and businesses which is helping to enable a digital revolution in the country.

But we also appreciate that there are those that didn’t benefit from Superfast Cymru and this latest intervention working alongside the Welsh Government will be one part of a suite of measures to bring faster broadband to those that missed out.”

In terms of the two voucher schemes mentioned above. Wales is home to two native voucher schemes – Access Broadband Cymru and Ultrafast Connectivity Vouchers (UCV is for businesses). The ABC scheme in particular offers vouchers to homes in areas that aren’t currently planned to benefit from the Superfast Cymru project with BT (Openreach) and which don’t currently have access to a 30Mbps+ connection.

New connections delivered via ABC are typically required to deliver a step change in speed (i.e. at least double your current download speeds) and the amount of funding you could receive depends on the speed of the new connection (e.g. £400 for 10Mbps+ or £800 for 30Mbps+).

UPDATE 19th Jan 2019

The WG has confirmed to us that all 10,000 premises in the LOT 2 contract will be delivered with FTTP broadband, with no FTTC in the mix. We also queried what now happens to the rest of the funding, since most of the £62m confirmed (out of £200m possible) has not yet been allocated, and were told the following:

“The funding allocated so far reflects what the contractor outlined initially it can achieve with the remaining premises in the timeframe of the grant agreement. The three lots announced are part of a suite of measures to reach the remaining premises and are only part of the solution. More details on further schemes will follow in due course,” said the WG.