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Openreach’s Letter to Northern Ireland Council Draws Criticism

Monday, February 1st, 2021 (8:28 am) - Score 5,616
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Openreach (BT) has faced some criticism after it sent a letter to one or more of Northern Ireland’s (NI) local authorities, which appeared to suggest that the operator would have provided FTTP broadband to more premises than the winner of the £165m Project Stratum contract, had they won it instead.

Last year saw Fibrus beat Openreach to scoop-up the aforementioned contract (here), which will in turn require them to extend their gigabit-capable Fibre-to-the-Premises (FTTP) network to an additional 76,000+ premises. The intervention area reflects some of the hardest to reach premises, which were not previously expected to benefit from such connectivity as part of any commercial plans (i.e. they required state aid support).

NOTE: At present around 60% of NI can access a “full fibre” (FTTP) network and this rises to c.69% for “gigabit-capable” connections, which adds Virgin Media (here).

Despite this, several sources recently informed ISPreview.co.uk that Openreach had sent a letter to a local council in Northern Ireland, which appeared to suggest that they could have built more FTTP had they won the Project Stratum contract instead. But some of the information given appeared to have been conflated with the operator’s separate commercial deployments.

According to our sources, the operator now seems to be indicating that they may commercially deploy their own full fibre network to c.20% of the premises under Stratum, which is despite previously requiring state aid to do them as part of their own contract bid. Suffice to say that some of those affected have expressed concern that such letter(s) may “undermine” the otherwise positive work being done.

A Department for the Economy spokesperson told ISPreview.co.uk:

“The Department for the Economy (DfE) is aware that Openreach has written to a local council, stating that it would have provided a broadband solution to more premises if it had been successful in winning the Project Stratum contract.

The tenders for Project Stratum were evaluated against a broad range of criteria, based on established Invitation to Tender templates developed by Building Digital UK (BDUK), adapted for Northern Ireland under an open procurement using the restricted procedure.

The criteria encompassed multiple aspects of tenders submitted against Financial and Technical specifications, including Financial Model, Commercial Sustainability & Viability, Solution Design Quality, Wholesale Network Design, Wholesale and Retail Pricing, Implementation Plan, and Contract & Stakeholder Management, with scoring principles based on the same BDUK template documentation and aligned to guidance set out in the National Broadband Scheme (2016), with State aid Assurance provided by BDUK.

Both DfE and BDUK remain satisfied with the procurement process, which was also Gateway reviewed and judged to be sound.”

We should say that it’s not uncommon for evolving commercial investments to have an impact on proposed public intervention areas and sometimes vice versa, particularly if a lot of time has passed since the last Open Market Review (these are used to identify future coverage plans and thus which areas may miss out). But at the same time the contract award under Project Stratum only occurred a few short months ago.

Openreach are also known to remove premises from their subsidised build programmes when it becomes clear that they’re going to be upgraded via other commercial investments. Equally we’ve seen some past examples where that doesn’t always happen as effectively as it perhaps could or should (e.g. overbuild in some of B4RN’s planned areas).

Despite this Openreach remains adamant that it never undertakes subsidised work that it could deliver commercially.

Mairead Meyer, Director of Openreach NI, said:

“Whilst we were disappointed with the outcome of the Project Stratum tender, we believe wholeheartedly in the aims of the project to bring better broadband services to Northern Ireland’s hardest to serve areas. Our commercial investment has already made NI the most digitally connected region in the UK, and our Full Fibre network build here is on track to reach 525,000 premises (60% of NI) by March 2021.

As we said at the time, missing out on Project Stratum doesn’t impact our existing build programme or future ambitions for NI, and our priority is still about upgrading as many homes and businesses here as possible. Like other network builders, we regularly share our commercial build plans with public bodies throughout the UK, to help them target funding at the areas’ most in need of public subsidy.

We also publish our plans at least a year ahead of build commencing, on a quarterly basis, via our website. In that context, we’re working closely with the Department for the Economy to deliver the best possible outcomes for people in NI, and we wish them every success with Project Stratum.”

Openreach is currently still building FTTP across N.Ireland at a rate of over 3,500 premises passed per week, but they also don’t intend to stop at 60% in March 2021 (here). As such there is now a question mark over how far they will go and how much of that, if any, might overbuild into the Project Stratum areas. But this is where things can get a bit more complicated.

Such overbuild, if indeed it does occur to a significant degree, may well cause anger among politicians who are busy investing public money to help upgrade some of the most challenging areas (note: limited overbuild at the very edge of a network isn’t always avoidable and that is well understood).

On the other hand, the DfE may also see an opportunity to negotiate a change to the Stratum contract so that their funding can be used to expand coverage elsewhere, while leaving some bits to Openreach. But this would be difficult if any areas being eyed-up by Openreach risk harming the business case put forward by Fibrus and it doesn’t take much to cross that line.

In any case the relevant State Aid rules say you run an Open Market Review, then a Public Consultation and then within 6 months – but typically less than that – any commercial overbuild from a contract placed under that procurement is protected by a line in the sand principle. Openreach have benefited from this in the past when challenged by rivals wanting to do a commercial build, but now the shoe may be on the other foot.

Alternatively, if you’re a consumer, then the idea of having a potentially much greater choice of FTTP networks outside your home is generally a positive thing, even if the prospect of having several different bouts of disruptive civil engineering work going on in the same area – one after the other – probably isn’t.

Leave a Comment
16 Responses
  1. Avatar Buggerlugz says:

    Seems like a touch of sour grapes from BT to me. Probably in hindsight not a wise choice of words.

    1. Avatar Bonjovy says:

      So someone wins a contract that pays them to deliver FTTP. Openreach reassess plans and see that commercially it makes sense to continue to build and that is a negative? surely providing a competitive market for consumers can only be good.

  2. Avatar Bonjovy says:

    Whats to criticise? I am sure they would have.

    1. Avatar Richard III says:

      spotted the OR employee. I’ve noticed they don’t like criticism. Like we’re supposed to think they’ve done a good job. Cough GFAST cough. 35th place on the global internet speed. Openreach are truly pathetic.

    2. Avatar Bonjovy says:

      [admin note: comment removed, please do not post personal abuse towards others]

  3. Avatar NGA for all says:

    IMHO the only possible way BT could lose is if its capital was not transparent in the process, something aided and abetted by the commercially confidential clauses.

    Ex BDUK folk moving to Alt-nets will understand this and thus bids can be structured to show more investment and gain access to a monster budget which can then be billed against. It is playing BT Group at its own game at the expense of Openreach and a consistent data transport infrastructure in rural areas.

    While BT is paying a heavy price for its earlier gambits, very rural customers will have less choice and pay more. This need not be the case if there was a little more transparency in the process.

    1. Avatar Meadmodj says:

      I agree. It is most unusual to include such a statement in the letter accepting gracefully that a contract award has gone to a competitor. Also in the resultant OR comment is the specific statement “We also publish our plans at least a year ahead of build commencing” from which I conclude OR’s bid included the particular commercial investment allowing for more non commercial properties to be covered or at lower cost. Sour grapes perhaps but I reckon that the bid team simply could not understand why they didn’t win and are just making the point that their commercial investment will be continuing as planned.

      “Both DfE and BDUK remain satisfied with the procurement process” may be true but my view is rather than criticise they should seek to fully understand the outcome for future tenders.

    2. Avatar NGA for all says:

      The process becomes an end itself and loses sight of the objective and the facts available to inform the decision.

      We can see this in page 86 of the state aid report from IPSOS Mori, where all phase 1 is being repaid for many of the LA’s, but this is not then reflected in the rest of the report.

      It takes a weird process to prioritise the gaming of the process over the underlying facts which are also available and apparent. The original normalised deviancy is imbedded and accepted as truth therefore this decision is defined by the process as rationale when it may be anything but!

    3. Avatar Meadmodj says:

      I also see that 2500 premises are excluded and the DfE will now work with Fibrus and seek further public funding to cover these.

    4. Avatar NGA for all says:

      That is nonsense really. BT Group has already capitalised all the money it owes (capital owed and profit share owed) and is allowed to recover these costs without it going on the network. This increases the opportunity cost to Openreach and OR are tied to BT Group bid process which in this case has been second guessed by those who know the process intimately.

      Fibrus will now do what BT Group have done and bill all it can against the budget and ask for more, even if none is needed.

      This only happens if the long term normalised deviancy is protected by commercial confidentiality. It may disrupt the delivery of a standard high speed data transport services needed for the delivery of critical services including future health care.

  4. Avatar Rural apparently.... says:

    BT have been appalling in Northern Ireland – the criteria for providing decent speeds is not linked to geography that is easily understood and they refuse to give any reasons to explain which premises will be provided for and which will not. I live 1.5 miles from nearest town and can only get 2MB which remains unchanged for the past decade. There are multiple rural areas with full FTCC coverage with no town within 10 miles which have decent speeds and a lower population density. We tried community partnership to be told it would be £40k plus per household – effectively they don’t want to. Roll on Fibrus and once possible I will leave BT and never have a contract with this company again.

    1. Avatar Altano Rivera says:

      I agree, I’m also in a rural NI area, I can get superfast fibre speeds of up to 2 Mbps. It may be 2mbps but they still class it as fibre. So Openreach NI still include us as being superfast fibre in their books.

    2. Avatar John says:

      No, they don’t.

      Those who get a service from a fibre enabled cabinet but achieve less than 30Mb/s don’t get counted in the SuperFast figures.

      OpenReach also received no subsidy for those properties.

    3. Avatar Rural Fermanagh says:

      @John: They received subsidies to upgrade the green cabinets in the rural areas, and yet these were never fit for purpose in rural locations.
      Looking at the google reviews, Fibrus are not doing much better, but at least they are doing something with the infrastructure, unlike BT Openreach who pretended they would do something, and constantly held out until they get as much government money as they could. BT have treated myself and many other rural households like we dont matter.
      Rural customers have the ability to influence others and I for one take every opportunity to influence friends and family away from the BT. If I can, I will never purchase a service from them again, even if the alternative costs most.

    4. Avatar John says:

      The amount of subsidy is related to the number of properties passed with SuperFast speeds.

      I’m not arguing that money was spent well.

      I’m pointing out the statement I replied to is incorrect.

      They DO NOT count all properties connected to a fibre enabled cabinet as having SuperFast.
      They only count those that achieved (or were estimated to receive) SuperFast speeds.

  5. Avatar Techman says:

    Openreach are a joke. Most incompetent company in the UK, they are having a laugh sending letters like that.

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