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One UK Village’s Roller-Coaster Ride of USO Broadband Costs

Sunday, October 18th, 2020 (12:01 am) - Score 2,736
pandy_village_wales_uk

The long running saga of trying to get a new Fibre-to-the-Premises (FTTP) broadband service installed across the village of Pandy in Wales is one step closer to a solution. But its plight also helps to highlight how difficult it’s been for some areas to harness the new 10Mbps Universal Service Obligation (USO).

Recently the 10Mbps USO has been in the news quite a bit and for all the wrong reasons. In theory it was supposed to make it possible for those in poorly served communities (i.e. those in the final 2% of the UK with sub-10Mbps speeds) to request that a new service be installed via BT (or KCOM in Hull), which could deliver a download speed of at least 10Mbps+ (1Mbps upload).

Most of the USO can be catered for by using 4G (mobile broadband) connectivity, which leaves around 180,000 premises where a fixed line solution may be the only option for now (usually delivered via FTTP since slower FTTC no longer fits with today’s focus on gigabit speeds). However, it’s always been the case that tens of thousands of premises may be too expensive for even the USO to tackle (i.e. costing many times more than the USO’s per property cost threshold of £3,400).

One such community is Pandy in the Ceiriog Valley area of North Wales (note: there are several areas with the same name in Wales), which in March 2020 saw the USO as a potential solution to their plight.

Confusing Quotes for Fibre

Initially the community found that 11 properties were each being quoted figures that ranged from between £11,000 and up to £30,000 (total of around £170K). At the time BT was still being unclear about whether or not everybody had to pay the total of all quotes combined or just the cheapest quote (BT confirmed the latter during our USO investigation in August). Residents also couldn’t understand why two properties, which were 2km closer to the nearest fibre than the others, were conversely being quoted the highest £30K figure.

Locals also sought a quote from Openreach’s separate Community Fibre Partnership (CFP) scheme and this, by comparison, returned a single quote of £205K for 58 properties. Residents noted that many of those 58 properties were miles away up in the hills, on completely different circuits (often also with good 4G), and others did not even exist (i.e. just plots or old sheds).

After some effort they were eventually able to have Openreach correct their data, but at £105K the final quote was still too expensive.

Bob Savage, Pandy Resident, told ISPreview.co.uk:

“Not to be thwarted, and as a result of exposure on BBC Wales news and concerted efforts here in Pandy early on in the first lock down, we got the copper infrastructure rebuilt at the end of July.

[Openreach also] took the opportunity to run fibre through our village, [and] at the same time through to the next village Tregeiriog. They then enabled Tregeiriog and they are now able to get FTTP, even though they did not take part in our efforts, and to our knowledge, not one of them applied for USO and they already had a faster speed!

Back on July 3rd our MP Simon Baynes, along with the agent, Wrexham County communications officer Mike Dugine, and local councillor Trevor Bates, all personally visited … and said that it was all sorted and that we would get FTTP before Christmas. All we would have to do was re-apply for the USO once the infrastructure was in place later in July and the cost would be within the £3,400 threshold.”

By Friday the 10th of July, the work was done, but upon applying for a new USO quote another resident, whose first quote was around £12K, was shocked to find that the cost of delivery had suddenly shot up to over £85K! Heaven help anybody who has to try and make sense of this and BT’s seemingly disjointed approach.

The quote also included a particularly confusing explanation for the change in value, which made precious little sense given the recent deployment of a new fibre spine through the village, and the connection of nearby Tregeiriog.

BT’s USO Quote Statement

“We’re sorry that you’re unhappy with the charge to build or upgrade the network to your premises. I understand that the original quote was given for £11,782.80 Inc. VAT. The increased quotation build costs are due to intervention area changes to the UK Government (BDUK) fibre broadband rollout plans that have occurred since the first quote was provided.

Essentially, the element of the project that Openreach might have expected to be funded by the UK Government now will not be. This has substantially increased the costs that must now, as per the USO rules, be covered by the end user for the relevant network build to go ahead.”

As Bob said, “It seems illogical and really unfair that we, here in Pandy, who have done all the ‘spade work’ both now and back in 2017, have enabled FTTP in the villages either side us (Glyn Ceiriog and Tregeiriog), while we have missed out on both occasions.” Fair point indeed Bob.

After getting nowhere ISPreview.co.uk decided to take another look at Pandy and raised their case through BT’s USO team. The bad news is that, after a review, locals in Pandy still won’t be able to get FTTP via the USO at no extra cost, despite all of their efforts over the past few years, but the good news is that the operator expects to get the total cost down to under £10,000.

A BT Spokesperson told ISPreview.co.uk

“Openreach has reviewed the costs for the area and been able to bring it down to under £10,000 for the whole build connecting 44 premises. This is due to some of the Building Digital UK work being partially built which has a significant impact on reducing the total cost.

We’ll look into next steps for contacting eligible residents in the area about this change. We’re also working through how best to provide the option for communities to split the cost of an USO connection build between them.”

BT does acknowledge that, under the original plan, they expected the local BDUK build to a nearby area would enable these USO-eligible premises to be built at no extra cost to local residents. However, as sometimes does happen, the build plan changed because the costs were higher than expected (this is why one property ended up with a quote for £85K as it failed to properly account for the new fibre).

However, BT has now corrected for the presence of the new spine fibre that runs into the north of the Pandy area, which while only partially complete, can still be used to help bring down the cost to £10K. The result may not be ideal but at that price it is much more affordable than most of the complaints we see about USO quotes with excess costs applied.

Anybody familiar with the quotes from Openreach’s FTTP-on-Demand product will already be familiar with the challenges of securing accurate costings, which have perhaps inevitably found their way into the USO process. The good news is that Ofcom have now launched an investigation into all of this (here), which we hope will result in some improvements and a better way of handling the delivery costs.

On the other hand, and much as we’ve said before, Ofcom’s probe will not produce a magic fix for the fact that it remains far too expensive to connect up some USO eligible communities. Even the Government’s future £5bn investment in gigabit broadband, which is focused on the final 20% of hardest to reach premises, recognises that those in the final 1% may be unviable due to high costs (here).

Meanwhile, if you are one of those who has the misfortune to receive a huge USO quote, then today’s lesson is simple – don’t give up! BT can get these things wrong, but it often takes a lot of effort by the community to check and correct for that.

Leave a Comment
21 Responses
  1. Avatar Dave "Englishman" in the Valleys says:

    Ah, the dreaded USO, the BT Executive team told me that even though we have fibre running to the poles here in Tylorstown, that fibre want available and if I still wanted it to use the voucher scheme with neighbours etc. I’m a registered blind BroadBand user, and the only neighbours I know are my ex-wife (yup, crazy!) And another to my left this wouldn’t even get us past the first post on the scheme.
    I’m just waiting to see what the Openreach engineer says on Tuesday after 11 days of moving to this property and having no internet other than my 4G, and I already know it’s flaky broadband supplied via aluminium not copper, which OR last time said they’ve never seen a run of aluminium this long!
    As for Pandy, here in South Wales, I thought you were talking about Tonypandy is just a few miles away…. Anyway, I’m about to start my fight to get what seems 40 houses fed with a dodgy copper connection (and I actually know where the issue is now, only took me over 12 months to spot it!) To go from a flaky 20 to 30mbps to what the rest of the community have which is 80mbps… Here’s to my fight eh?

    1. Avatar Mike says:

      Why would you move to somewhere without decent Internet?

  2. Avatar NGA for all says:

    The autumn statement has been cancelled so the £5bn is wishful. The NAO report recently referenced £900m clawback using a broad definition for clawback and the report only referenced £111m of this being assigned (Figure 2). So there is much to be re-cycled.

    The Welsh BDUK programme was subject to unit costs of £300 per premise so the reconciliation against actuals should release a great deal of funds on top of the clawback. If the monies owed was understood then BDUK/BT should not be pointing the finger at each other. A standard contribution per new metre could be calculated for the customer contribution.

    These £100-£200 a metre ‘all poles need replacing’ are unnecessary at best, given each piece of work is a step towards the area being readied for transition.

    1. Mark Jackson Mark Jackson says:

      The £111m is only the “early take-up” assignment, which tends to reflect the BT contracts where local authorities re-contracted to use Openreach again via an extension, before the contract itself is finished (special agreement). I understand they’d usually have to wait until the 7-year long contracts had completed before BT pays it out without any strings attached (e.g. for use with different operators or for non-broadband purposes).

      So, what a lot of local authorities seem to have done is pre-assigned the money to recent or future contracts (often with different operators), based on that assumption of what they expect to get back in c.1-2 years’ time from Phase 1, then the same with Phase 2 etc. Some have covered this gap with loans or other mechanisms.

      As such a much larger chunk of that £900m has already been re-assigned, even before BT has actually paid it out. But given the current economic crisis and fact that BDUK seem to be taking a centralised approach for the £5bn programme, then it wouldn’t surprise me if some councils simply re-used the clawback elsewhere (i.e. not on broadband).

    2. Avatar NGA for all says:

      Mark, that is too loose! Re-assigned! the money was to complete broadband, and there is no public record of what you say is happening.

      By captalising these costs which have not been expended on the network, this accounting treatment means BT is doing in the UK what it is getting prosecuted for doing in Italy. This amounts to recovering costs for work which has not occurred.

    3. Mark Jackson Mark Jackson says:

      You’ll find the record in various historic council meeting documents, which sometimes mention upfront loans for broadband contracts (i.e. using the clawback to pay off the loan at a later date once fully released).

      As for the legal position of that funding, any clawback owed to the council itself can of course be spent however the council chooses, that is not for the government to decide. Most will reinvest it on broadband but some, like North Yorkshire, might do other things:

      https://www.ispreview.co.uk/index.php/2020/10/north-yorkshire-uk-targets-97-superfast-broadband-coverage-2.html

      Now lets get back to the topic at hand, the USO problems.. not BDUK problems.

    4. Avatar NGA for all says:

      B-USO funding or lack of arises from the need to complete BDUK works using the Deferral.

      The example you have just provided shows the interaction, while at least 50% of the clawback will be controlled by BDUK.

      The more premises put under contract, the less will be expected from as it stands from a non-existent and thus non-functioning B-USO industry fund. The latter is one reason BT quote so high to avoid doing work they cannot claim for. If there were to make a case then first question will be status of the monies owed, LA or BDUK.

  3. Avatar Fastman says:

    NGA

    Really

    These £100-£200 a metre ‘all poles need replacing’ are unnecessary at best, given each piece of work is a step towards the area being readied for transition.

    I suppose have seen all the poles yourself, checked there all in distance and safe to hang fibre in and all climbable and none need replacing and all safe to climb – no i thought not – you really no idea at all how to build a network or what it takes

    1. Avatar NGA for all says:

      @Fastman – All BT had to do was turn and take £1.7bn in subsidies to complete rural upgrades.
      Your bid strategy was 1 inflate costs (NAO 2015), 2) fail to plan to use your own capital, 3) divert monies to urban areas and now 4) Capitalise monies owed which may never be invested in the rural network.
      While the above nonsense was going on the door opened for lots of altnets who had no network to overlay.
      According to the NAO BT now owes £900m. Statistically you must know all poles do not need replacing.

    2. Avatar NGA for all says:

      @Fastman and why was Community Fibre Broadband not incorporated in the BDUK activity. BT contribution could be checked at some point, the clawback applied.

      That whole effort continues as if fibre is some type of gift that must be rationed out and which folk must appear grateful for you turning up.

  4. Avatar Buggerlugz says:

    Just love how these little remote villages get FTTP yet hundreds (if not thousands) of small towns just outside major ones across the UK are yet to get FTTC.

    1. Avatar AnotherTim says:

      It is usually down to the persistence of one or two individuals, or sometimes pure luck. However, I don’t believe there are many small towns that have no FTTC at all – but most do have some properties that the BDUK roll-outs missed out due to cost (my village included).

    2. Avatar Gary says:

      Looks like an area that didn’t benefit from FTTC and now got FTTP, I don’t care if its smaller or further away from a city or any other town, those other places don’t ‘deserve’ upgrading any more than elsewhere.

    3. Avatar Andrew says:

      Gary we have got FTTC but only low speed

  5. Avatar Andrew says:

    As the warden for the Pandy CMC site this will be a blessing. We have a silver Wifi rating and we struggle with about 21mbps FTTC which does not go very far those who use it. Right now it’s sort of embarrassing charging for slow internet – This will help us immensely and if we can get 1Gbps both ways then that will be amazing. We could then upgrade the status and service to Gold wifi which means we could offer basic free and chargeable ultrafast wifi.

    I am sure it can be sorted. This would be a business symmetrical line naturally.

    1. Avatar Burble says:

      If the CMC did the same as C&CC and had free WiFi then there would be no embarrassment.

  6. Avatar Meadmodj says:

    It is in OR and BT’s interest to provide FTTP as long as it makes commercial sense as they are unlikely to face competition from an Altnet. So you will probably find they are just as frustrated.

    If this shows anything it is that to reach the rural extremes it could be £10,000 per premise a long way from £3,400 + commercial contribution. The costs would reduce if a contiguous approach was taken which is what the BDUK/WG initiatives are supposed to be doing.

    The USO is only good for a certain group of properties on the fringes of urban. It cannot address these remote villages. The answer is simply to increase public funds into BDUK/WG to get them covered. If the cost is too high then they should concentrate on getting capacity to the centre of the community and allow others to pick up the last bit of connectivity with more innovative solutions (eg 60Ghz mesh etc). Also consider the concept of shared service.

    1. Avatar NGA for all says:

      The NAO report points to £900m in clawback.

      This is more about turning up to complete the in-fill using the monies available. BDUK need to contract for another 600k premises in rural England.

  7. Avatar finaldest says:

    I have just been quoted £100k for a USO line upgrade after BT sent a letter out the other month offering to give us a quote under USO.

    I am on a EO line less than a half mile from the exchange in rural Pembrokeshire. I am not in a hard to reach area and the exchange (half mile) and the main local village (Two miles) away have been upgraded to FTTP. The local infrastructure was upgraded a few years ago for a FTTP rollout but this was later cancelled for unknown reasons and no plans are now in place.

    As I live in a small village with just a cluster of houses and 3 farms BT/Openreach are just waiting for big government to foot the bill as we have no other options.

    Anyone hoping for USO to come to the rescue may as well give up now as my area would be a doddle to do. I could do it myself.

  8. Avatar Seer says:

    I have been quoted £5.5k and told that 14 properties are on the “cluster” but not which. So I am unable to get a consortium together to share the costs. Could be worse I suppose……I can pretty well guess half of the cluster so will approach them to share the cost.
    It does seem absurd that I could pay the full amount and all the others could get it free…..not to mantion the other 40 or so properties upstream of me……….one of which belongs to the Minister for Digital!

    1. Avatar freddie says:

      it when you are quoted 40K because you would be taking away the chance for passing properties to have it – knowing they couldn’t afford it and wouldn’t want it anyway as they prefer drugs to connectivity that stings the most.

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