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£3m Reinvestment to Extend Openreach FTTP Over Highlands

Thursday, October 24th, 2019 (11:31 am) - Score 1,507
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The Highlands and Islands Enterprise (HIE) has announced that a reinvestment of £3m from BT will soon enable Openreach to build more “ultrafast broadband” capable Fibre-to-the-Premises (FTTP) ISP networks across the rural region of Scotland, although it’s unclear how many extra premises will benefit.

At present the associated £442m – public and private investment – Digital Scotland (DSSB) project has already helped to extend the availability of “fibre broadband” services (i.e. really a mix of slower hybrid fibre FTTC and a little ultrafast full fibre FTTP) to a total of 940,000 premises. The result is that almost 95% of Scotland now has the ability to order a “superfast broadband” speed of 24Mbps+.

The contract also includes a clawback (gainshare) clause, which essentially means that any take-up by local premises above 20% in the intervention area (i.e. consumer orders of the new service) should result in BT returning some of the public investment (Scotland is now seeing well over 50%). The returned funding can then be reinvested into a further boost of network coverage and faster speeds.

So far the programme for the Highlands and Islands region has produced a take-up of around 60% in the intervention area and as a result some £3 million is being returned early by BT (this can be done over the length of the 10 year contract). The funding is thus set to be reinvested in order to help Openreach extend their full fibre FTTP network until 2020. This is on top of a similar return worth £2.23m for the HIE region in 2015.

Paul Wheelhouse, Minister for Connectivity and the Islands, said:

“With our partners we have invested over £400 million in the Digital Scotland Superfast Broadband programme, taking fibre broadband to areas where the market would not otherwise go. Connectivity in the Highlands and Islands has been transformed by the Digital Scotland programme.

The region as a whole has seen a huge increase in the availability of faster fibre-based services, with thinkbroadband reporting an increase from 18.6% fibre broadband coverage in January 2014 to over 92% today. Access to fast and reliable broadband is also key in boosting our business and public sectors, helping to underpin economic growth and drive productivity.

Grimsay and Great Bernera in the Outer Hebrides recently became our first fully ultrafast capable islands. We’re now set to see similar coverage in other areas that have been challenging to reach, including Waternish and Glendale in Skye. I’m delighted that as a result of great take-up of services in the region even more people across the area will benefit from the full fibre network.”

Overall it’s stated that the DSSB project in HIE has helped to provide a new “fibre” network to cover more than 180,000 premises. In all the project is expected to reach 30,000 more highlands premises than the initial contract target (FTTC and FTTP).

Stuart Robertson, Openreach’s HIE Director of Digital, said:

“We’re delighted to have more funds to reach that little bit further. We placed our final project cabinet in Wester Ross last week, it will mean more coverage for the Dornie community. All of our remaining coverage now will be FTTP. It allows us to bring high speed services direct to the people in more scattered homes and not spots, who may currently face the poorest broadband speeds.”

The announcement doesn’t clarify, although we strongly suspect that this £3m is part of the £17.8m reinvestment that was confirmed by DSSB in August 2019 (here), which promised to reach an additional 6,000 premises (about £2.96K per premises – a huge level of subsidy). If that holds true then the £3m should reach around 1,000 extra premises.

Once the above programme completes then it will be followed by the new £600m R100 (Reaching 100%) project, which has so far assigned two of its three LOTS to BT (here). However the final LOT 1 (North) covers the HIE region and has yet to be awarded. On top of that we don’t yet know how many premises or what technologies will be used, although the decision to go with BT for LOT 2 and 3 suggests that FTTP will be the focus.

UPDATE 1:51pm

The HIE have informed us that their £3m is separate from the £17.8m mentioned a couple of months ago (i.e. the £17.8m was only for the ‘Rest of Scotland’ contract area).

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Mark Jackson
By Mark Jackson
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 Twitter, , Facebook and Linkedin.
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31 Responses
  1. Avatar NGA for all

    It will at least reduce LOT1, but the dickying around with press releases is now harmful to BT and OR. They ought to outline the full upside available rather than this piecemeal nonsense. The BT contribution to allowed costs identified by Audit Scotlands first report was only £4m – half of what was expected and visible in other projects. I hope this gets corrected and the amount spent on FTTC ‘cure’ does not hinder what was possible with full fibre.

    • Avatar Sandra

      I think it’s comical! Remote Scotland areas to get FTTP and I am stuck on 8 meg ADSL in the middle of Barnsley! Virgin to the left of me – BT to the right here I am stuck in the middle!

    • Avatar NGA for all

      Sandra, sorry, the mission was rural, although a great deal was diverted to urban. The magic of the market and a little regulation was supposed to solve urban. But it does prove that most of the upgrades are relatively cheap when compared to other utility services.

    • Avatar New_Londoner

      Mike
      The mission for BDUK never was purely rural as you state, it was intended to benefit the one third of the country not within the scope of any commercial deployment plans when BDUK was announced, although the major urban centres were excluded. In other words, the centres of major centres (and the whole of London) were not covered, plenty of other urban areas across the UK were in scope.

      BDUK was wrongly described by many as a rural programme but that wasn’t in fact the case, although it was of course true that the majority of the land in scope was rural – probably not the majority of premises though. Remember approx. 1 million of the most rural premises were excluded on cost grounds, this was originally about getting to around 90% coverage. To be cynical, politicians weren’t so stupid as to ignore such a large number of potential voters in towns and cities by focusing exclusively on rural areas.

      Anyone interested can see the original vision for BDUK as outlined in this government document from early 2011 – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/78202/BDUK_bidding_guide.pdf.

    • Avatar NGA for all

      New_Londoner, from memory that document does not even reference 90%. It is to go as far as possible, any intermediate targets were invented later. I will have written much of it.

      Rural was removed after Javid wanted Black Countru included, so deleting the rural focus is a bit peculiar. Up to that point it was only ever described as rural and needs to become so again if the project is to claim the success now available to it.

      BT was promising 2/3 which is for the most part translated into 2/3 superfast in urban areas if we are lucky.

      This does not help Sandra in Barnsley – a victim of 2/3 coverage thinking, but may do if the lesson are learned and Openreach fully escapes the clutches of BT Group.

    • Avatar Fastman

      I think it’s comical! Remote Scotland areas to get FTTP and I am stuck on 8 meg ADSL in the middle of Barnsley! Virgin to the left of me – BT to the right here I am stuck in the middle!

      if this correct and it is only 8 mb/bps and there is no VDSL coverage at that address (not that there is VDSL and the current provider does not offer it – which happens more often that you would think) then this would be in scope for USO once it arrives

    • Avatar NGA for all

      Fastman, greater London B-USO is 140k premises, Leeds Manchester all have nice big holes. I can see Voda and City Fibre wanting to funding these BT upgrades in the B-USO fund.

      The monies available within BDUK/LDB will allow 1m FFTP at the edge of the network 460k done, 340k contracted and pending, NI and Scot nearly sorted, only another 400k need to be contracted in rural England and a little in Wales.

      Cool when its done.

    • Avatar New_Londoner

      @NGA
      Mike
      Quote “BT was promising 2/3 which is for the most part translated into 2/3 superfast in urban areas if we are lucky.”

      Let’s not let the facts get in the way of a good story! In reality, for this first phase, coverage went to around 90% across the UK, was of course higher in more urban areas and lower in rural areas due to the requirement of contracts to maximise coverage for the available money. Presumably you’d remember this from your BDUK days?

      As for Sandra, according to TBB 97% of Barnsley premises now have access to download speeds of 30Mbps or higher, so she really is unlucky to be in the last 3%. Fastman is correct that USO will be an option if other routes are not open to her.

      Quote “Fastman, greater London B-USO is 140k premises, Leeds Manchester all have nice big holes. I can see Voda and City Fibre wanting to funding [sic] these BT upgrades in the B-USO fund.”

      If the premises qualify for the USO then individual ISPs don’t have a veto on provision.

      Quote: “The monies available within BDUK/LDB will allow 1m FFTP at the edge of the network….”

      As has been explained to you multiple times, the contracts don’t work that way and it is up to the individual local authorities how to spend any returned monies at the end of the contract term. Many may decide to spend the money on other, non broadband priorities. (Whether your estimates and extrapolations are correct is another matter).

    • Avatar NGA for all

      New-Londoner Noughty noughty, the London B-USO farce will fall out after the funding consultation so let’s puts that aside. Sandra’s case is a function of measure 2/3 connected as opposed to 2/3 within 1200 metres of a cabinet or Sandra being stuck on exchange with ELO. In Scotland BT only funded 3,500 cabinets, 5,100 were subsidised. Is the Openreach only reach measure different for Barnsley? Barnsley exch has c26 subsidised cabinets.
      First – mixing a subsidised intervention area with BT commercial plan where the commercial plan could reduce was created after I left. Going for 90% where 90% included a reducing commercial footprint was just one of the short term cons.
      This was further undermined by the mis-representation of costs (NAO 2015 -38% inflation of costs) which makes a joke of the contracts and needed unpicking.
      Contracts are relationships of trust and if some of the central funds needed to be repointed then they can. Project Stratum took three efforts ending up in an election agreement but it happened.
      Certain aspects of the contracts were contrary to the needs of customers and BT shareholders. They needed challenging at every level and still do.
      It is coming good and can get much better if a little more truth is squeezed through the process. The lack of reporting on BT’s capital remains shocking.
      The 90% was not in that document nor would it be. It was largely a convenience for BT to contract for most of the funds and then deliver within the budget while reducing its own commercial investment. 90% was a defined level of mediocrity where no FTTP was needed and BT could amend its commercial investment, using subsidy to do so, which became even more apparent in phase 2 and the overbuild of VM.
      Despite this the engineers are doing great and they will do more as the fundings are fully reconciled. Some flexibility will be needed to push recovered clawback (50% of which is BDUK) to where it is needed.

    • Avatar The Facts

      @NGA – again you mention overbuild of VF. Can we agree this only occurs where a cabinet footprint includes a number of properties passed by VF? Maybe you have evidence that this is not taken into consideration calculating the financials.

    • Avatar NGA for all

      Facts, we can agree BT benefit from an additional 1.1m premises passed, not counted by BDUK where we have no evidence of BT making a capital contribution.

      It is part of 90% coverage nonsene where BT was free to reduce its commercial footprint and mop up subsidies intended for rural. Scotland is a good example of this, where contracts for 722k premises became 940k (think Glasgow at the expense of the Borders and H&I) while ignoring FTTP in-fill.
      All eventually ok as long as the funds flow back to the Scots and rural is completed. This £3m is part of an ongoing drip feed of funds.

    • Avatar TheFacts

      @NGA – where was the 1.1M shown and how do you know there was not a contribution by BT effectively shown as a reduced cost to BDUK for a cabinet? That would not show as a contribution.

      Please show where ‘we’ find the capital contributions of BT to each individual BDUK cabinet installation.

    • Avatar NGA for all

      Facts – It was reported by Think Broadband I think in autumn 2017.

      The BT contributions would be easily reported upon by BDUK in their quarterly updates.

      Equally BT could have supplied the evidence of any payments to the Select Committees and the Audit functions. Any representations so far have proved wanting. BT could also report it as a line in their capital expenditure in their quarterly reports alongside the capital deferral.

  2. Avatar Archie

    It has to be an absolute mission to get a archipelago of 3000 islands connected in this way.

  3. Avatar Scott R

    The comments around take up of new services at over 50% is testament to the work the Digital Scotland team (part civil service/part Openreach team).

    The role they have played in raising the visibility of network upgrades has been significant (for example the once boring green cabinet now has info on it that draws attention).

    • Avatar NGA for all

      The take-up activity has been good. The transparency on what has been spent and who has contributed what and when is really poor. The latter is not unique to Scotland but would permit an even better outcome.

    • Avatar TheFacts

      @NGA – how would transparency make the outcome better? Just because you do not know?

    • Avatar NGA for all

      Facts .. Each Parliamentary inquiry (7) adds a bit. We know costs were inflated NAO 2015, we know BT capital has not been reconciled (see last weeks report on Wales) and we know BT’s representations on its capital have not been proven reliable when challenged.

      On that basis it is reasonable to make the case that more can be done, and it has proven so since 2015 and counting.

      It is good for Openreach and its engineers.

    • Avatar Gary

      Can we please stop calling 24Mbps ‘superfast’ In reference to Scotland, The Scottish Gov
      adopted the EU definition >30Mbps quite some time ago, and we should hold them and ISPs to it, rather than being party to the ‘Buzzword soup’ culture of UK internet.

    • Avatar NGA for all

      Gary 24Mbps V 30 Mbps. Neither have much meaning. 24Mbps was only used to secure fibre deployment beyond the exchange into the access network. 24Mbps = not exchange based ADSL nothing more. 30Mbps was taken from an EU 3G slide in 2014 and became a target. 1% cell utilisation, lightly used .. you would need to stand on 1 leg and hold your breath if that slideware was used.
      The challenge for Scotland and it is a good one is how quicly can the 5,100 publicly funded fibre paths used to connect the cabinets be used to support full fibre where it is needed.
      The SCottish Government have contributed more than they think 5,100 fibre paths and cabs, several hundred aggregation nodes, 18-19 submarine cables. This is good but sufficient funds were available to begin FTTP deep in rural areas. These dribble of funds back is fine but there is no public record of BT’s capital contributions, and Audit Scotland report number 3 was challenged where the capital is now expected not paid as they initially report.
      Superfast as a term is meaningless, it is profoundly poor proxy for ‘throughput’. But throughput was much too complex to explain to Ministers. If a blue plaque has not been put up for the Rv John Kerr of Ardrossan, then this needs to be planned when FTTP is orderable in Ardrossan. He would surely laugh at the term superfast given his studies and record of the movement of light through glass.

    • Avatar Gadget

      NGA – Scotland has significantly more premises a long distance away from the exchange as a proportion and in exchange areas that are significantly larger than average – each one of these will be very costly to fibre (just look at the size of the monies available to bid for in R100 and remember that a lot of Scotland is on granite), so pro-rata extrapolation is not applicable.

    • Avatar TheFacts

      @NGA – Again, please show how ‘there is no public record of BT’s capital contributions’ would appear down to the level of each path and cabinet which is necessary to fully understand the financials. Otherwise it’s just averages and assumptions from outside the project.

    • Avatar NGA for all

      Gadget Sure but it wears a little thin when your overlay on an existing network where the distances and elements of a known quantity. In NI the same arguement was used but is now being soundly thrashed.

      We have not a proper breakdown or statement as to the contributions to initial croject and how much of these are either now extending the existing footprint or reducing R100 and the budget needed.

      The differentiator in Scotland is the lack of FTTP so far, while so much funding has gone into Glasgow. The first Audit Scotland report was really good. The third was proven to be just wrong, claiming 11 years of operational costs had already been paid.

    • Avatar Gadget

      @NGA – not sure what was the point of your comment about wearing thin was – facts don’t wear thin, and knowing the distances and elements and how to correctly interpret them should support understanding not be construed as making excuses.

    • Avatar NGA for all

      Gadget – wearing thin.. by which I mean both the costs and difficulty have been overstated and found wanting. At a point the costs will grow exponentially but it does not look as if that point has been found. The 460k FTTP in rural (incl c80k in Cornwall) sets the the standard.

      The success so far is a product of going further, much further than the original representations on costs permitted. BT has not been served well by senior management performance of these projects, while the engineering where allowed to has flourished. The level of normalised deviancy sponsored by the seniors has not served the company or its customers well.

  4. Avatar NGA for all

    Facts, answered above, either in BDUK quarterlies by project, or some higher level statement alongside the Capital Deferral in BT’s quarterly statements.

  5. Avatar CarlT

    I can’t believe I’m posting the 26th comment on this press release.

    • Avatar NGA for all

      CarlT The end (99% coverage including 1m FTTP at the edge) justifies some record at the risk of boring you to death.
      H&I was one of the original projects, and it has its place as BT only offered £4m or less than £35 capital contribution to allowable costs, less than half of the established norm.
      It made a mockery of the gap funding model if that number has not been corrected. In forcing the corrections the level of normalised deviancy can be reduced.

    • Avatar CarlT

      I’m sure the comments on an article on ISP Review will really set the movers and shakers into motion and trigger a revolution.

    • Avatar CarlT

      I’m sure the comments on an article on ISPR will be groundbreaking in their impact on decision makers.

  6. Avatar A_Buulder

    Or that I am the 27th……

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