Devon and Somerset UK Scrap Gigaclear FTTP Broadband Contract

In yet another major upset the Connecting Devon and Somerset (CDS) project has today taken the decision to end their contract with “full fibre” broadband ISP Gigaclear, which last year suffered significant delays that set some parts of their rollout back by around 2 years. Sadly efforts to agree a revised plan were not successful.

The news will no doubt be seen as a huge embarrassment for CDS, which over the years has become known for some questionable decision making. First there was a delay of almost two years following the 2015 collapse of their first attempt to secure a Phase 2 “fibre broadband” (FTTC/P) contract with Openreach (here), which was eventually followed in 2016 and 2017 by a series of new Phase 2 contracts with both Airband and Gigaclear.

Gigaclear’s original Phase 2 contract required them to build an entirely new 1Gbps capable Fibre-to-the-Premises (FTTP) network, which would cover 41,000 rural premises across various parts of the two counties by the end of December 2019 (complementing a separate commercial build). This was later extended to June 2020 following Government approval to expand the network to a further 6,810 premises (total of 47,810).

All seemed to be going well until October 2018, when it was revealed that Gigaclear had fallen “significantly behind schedule” (in some cases by as much as 2 years) due to “fundamental issues,” such as a lack of operational capacity, poor decision making within the ISP, slow deployment by contractors, a lack of detailed planning and a failure to redesign the build methodology (here).

In response the local authorities put Gigaclear on notice of a possible default and withheld further payments, while Gigaclear’s new owner (Infracapital) moved to correct their problems and continued the rollout at their own risk. Unfortunately their revised rollout plan was rejected earlier this year and a second plan was recently submitted, which we now know has also been rejected.

Councillor David Hall, CDS Board Member, said:

“Despite painstaking work by all concerned, it has not been possible to agree a recovery plan that CDS and the Government’s Building Digital UK agency could support with confidence.

CDS is working closely with BDUK on a new procurement process and taking all necessary steps to secure alternative full-fibre broadband providers for our residents and businesses. They are our top priority and we are determined to achieve the best possible outcome for them.

We welcome the Department for Digital, Culture, Media and Sport’s expressed commitment to ensuring that our residents will benefit from world class broadband infrastructure in line with the ambitions for nationwide full fibre coverage.

We have already held productive meetings with a number of companies interested in building full fibre networks in Devon and Somerset.

CDS will also be expanding its Community Challenge Fund later this year, following successful pilots in Devon and Somerset. We are advancing a new collaboration with BT to extend coverage in rural areas, good progress is being made through our contract with Airband to provide 21,000 premises with superfast broadband. We are also now offering broadband vouchers to residents and businesses under the national BDUK Better Broadband scheme and the Rural Gigabit scheme. This is all on top of the more than 300,000 homes and businesses who now have access to superfast broadband through the CDS programme.”

The decision won’t come as a surprise to some, although we had expected CDS to ultimately retain Gigaclear’s contract because, realistically, they may struggle to find any operator that could deliver a comparable coverage commitment via FTTP and within the same level of funding (Gigaclear committed over £43m of its own money for what is quite a challenging rural area).

Equally the move to find a new supplier will not make FTTP any quicker to deploy than it would have been under Gigaclear and indeed the proposed areas may now end up taking even longer to reach than if CDS had retained the existing contract. We won’t know for sure until a new contract is agreed but that would be our bet (assuming FTTP is still the solution of choice).

The CDS team now intend to launch a fresh procurement on the “open market” this autumn, commencing a tender process to identify new provider(s) of these services. Such large contracts cannot be rushed and so we won’t expect to learn the final outcome of that until around spring 2020 (our educated guess).

The one bit of positive news for Gigaclear is that their delays in other BDUK framework contracts have, so far, not resulted in a similar outcome and remain on-going. Nevertheless the CDS decision is likely to be significant for Gigaclear and we’ll be watching closely to see if Infracapital moves to reassure the industry of their future stability.

In the meantime Gigaclear has said that they’re “disappointed” (probably an understatement) by the CDS decision and, perhaps more worryingly, are now “considering our future plans in the region.” We take this to mean that their commercial FTTP deployments in Devon and Somerset are under review and could also be scaled back or scrapped in response.

The situation is possibly another example of a historic problem that can hit any business. Sometimes a smaller business needs to dramatically scale-up its operations to match a new contract(s) and it’s not uncommon for this to create a lot of complicated problems, which is something Gigaclear had to learn the hard way (their new owners came in just as the storm created by previous management hit).