Scotland Update on R100 Progress and Broadband Voucher Delays UPDATE

The Scottish Government‘s Connectivity Minister, Paul Wheelhouse, has given a progress update on their £579m Reaching 100% (R100) project, which is extending “superfast broadband” (30Mbps+) to the final 5-6% of poorly served premises (mostly via FTTP). The main focus was on voucher delays and the LOT 1 (Highlands) contract.

Just to recap. BT (Openreach) currently holds all three of the R100 contracts – LOT 1 (North Scotland and the Highlands), LOT 2 (Central Scotland) and LOT 3 (Southern Scotland). Until now, the SG had previously stated that the LOT 2 contract aimed to upgrade at least 47,000 premises, while LOT 3 will do 26,000 – both are due to be completed by the end of 2023 (LOT 3 by summer 2024). Details on LOT 1 are due to follow, but its rollout won’t finish until the end of 2026.

The vast majority of connections being delivered across all three LOTS – to more than 120,000 premises – are being done using gigabit speed Fibre-to-the-Premises (FTTP) technology and that equates to 86% in LOT 1, 95.6% in LOT 2 and 100% in LOT 3 (the rest will be via slower FTTC / VDSL2). However, it’s hoped that the FTTP proportion could rise in LOT 1 if the same approach as seen in LOT 2 is eventually adopted (here).

On top of that the Scottish Broadband Voucher Scheme (SBVS) is being offered as somewhat of a backup, which provides vouchers worth up to £5,000 to connect those properties for which there is no roll-out of superfast broadband planned (rising to £6,500 with a top-up from the UK scheme, but this top-up is on hold right now until the follow-on scheme is confirmed).

Alongside this there’s also the option of smaller “interim vouchers” worth up to £400, which are being made available to premises where 30Mbps+ is planned for, but not until after the end of 2021 – with an additional £250 for those in the hardest-to-reach areas (this is partly intended to help cover for the LOT 1 delays).

So what’s new?

The good news is we did get a few useful R100 updates from the Scottish Government yesterday, which came during a meeting of Scotland’s Rural Economy and Connectivity Committee, although some of what was said produced more questions than answers. We’ve done a simplified summary of the key points below.

Summary of Remarks from Paul Wheelhouse

— Confusingly, the minister states that the “R100 central lot [LOT 2] contract will connect 32,216 premises to superfast broadband, with 95.6 per cent of that contract build being full fibre to the premises.” But the figure of 32K is significantly lower than the 47K they mentioned before (here), which is not something that was stated in last month’s announcement (here).

Getting FTTP up to 95.6% in LOT 2 is distinctly less impressive if, in order to do that, the rollout coverage has also been dramatically reduced rather than simply all being converted to FTTP. We are seeking clarification, but it’s also possible that the reduced coverage may be at least partly attributed to an increase in the reach of commercial plans since LOT 2 was first awarded.

— The total public spend on LOT 2 is now stated to be £87.5 million.

— The LOT 3 (South) contract is now expected to connect 20,740 premises to FTTP by completion, which is down from the 26K mentioned before (probably due to a rise in commercial coverage plans for the area).

— The minister said they “remain on track to complete the contract build in the central and south lots by 2024.”

— The rollout plan for LOT 1 is still being designed and so the completion date is subject to change, but it’s noted that “at the contract signature stage, BT indicated that the build in the north lot would be completed in 2026.” The SG expects “the full picture across the north lot contract area to be built by summer 2021” (i.e. that’s when they’ll be able to publish the rollout plan).

— The minister confirmed that the delay to finalising the LOT 1 rollout was also stalling approvals for their smaller “interim vouchers” in the same region, but this is also subject to the aforementioned plan being confirmed by the summer. “I know that a key gap that is of interest to members relates to customers in the north not being able to say, at this point, whether they will be helped before December 2021 and will therefore not need to take up an interim voucher or whether they will receive a service after 2021 and will therefore be immediately eligible for an interim voucher,” said Wheelhouse.

— Part of the reason why it’s taking time to complete the LOT 1 plan is because the SG has only recently completed another Open Market Review (OMR) to reconfirm which premises remained eligible for public investment via the R100 contracts. “The responses to that consultation are continuing, and we expect the draft actions to be taken as a result of the consultation to be concluded by the end of March, when we will pass the list to BT,” said the minister. This may also impact plans for LOT 2 and 3 as there’s no need to spend taxpayers money if commercial operators plan to do more areas.

— We also got an update on the take-up of the two types of broadband vouchers. “After the first six months of the Scottish broadband voucher scheme, we have a pipeline of 807 vouchers, with 183 installed. That compares with the 394 that were installed in Scotland in the first two years of the UK Government’s rural gigabit voucher scheme, which launched in May 2019.”

In terms of how many of the premises, for which vouchers have been requested to date, have been eligible for the additional £250 for the hardest-to-reach areas – the minister said: “To date, there have been 100 applications for interim vouchers from the Scottish broadband voucher scheme in the category that Mr Finnie has mentioned of the extra £250 for those in the hardest-to-reach areas. Installation has taken place in 45 of those cases. However, in practice, none of those has been above the £400 threshold.” The figures here are low because, up until 12th March, all premises in LOT 1 were still eligible for the bigger £5k vouchers.

— Finally, the minister said he was aware of the UK government’s plans for a new follow-on gigabit voucher scheme. “For our part, we are continuing to offer the full £5,000 Scottish broadband scheme main voucher, which we hope will be of great use to communities. For as long as the rural gigabit connectivity voucher scheme continues, in whatever form it takes if it is relaunched next month, we hope that we will be able to partner up in the way that we have already. It is expected that the new BDUK scheme will be targeted to more rural areas and exclude those premises that are likely to receive commercial roll-out.”

One issue that didn’t really get tackled much was with respect to the question of how Scotland’s share of the UK government’s new £5bn Gigabit Broadband Programme would be apportioned and managed (in England the Gigabit programme is going to be centrally managed by DCMS/BDUK), although we expect to get details on this soon. In any case the UK government has initially only released £1.2bn of that funding.

“We have made an offer to UK ministers to administer any funding on their behalf in Scotland, as we have successfully done with DSSB, which overachieved its targets, as I said earlier. We are happy to work with them,” added Paul Wheelhouse. It remains to be seen if DCMS/BDUK agree to that approach.

UPDATE 19th March 2021

As expected, we’ve had it confirmed that the drop in premises passed observed for the LOT 2 plan is indeed largely down to greater than expected coverage by commercial deployments.