Update on Herefordshire Broadband Rollout and Gigaclear Delays

The Herefordshire County Council (HCC) in England has issued a new proposal for how they intend to tackle the problems caused by UK ISP Gigaclear last month (here), which warned that 2,324 of the planned premises for their state aid fuelled rollout of a new gigabit broadband (FTTP) network would be too expensive to reach.

The council’s decision, which is due to be voted on next week (17th November), will see Gigaclear use additional investment to complete their commitments in the north of the county, with a break from their planned activity in the south. In other words, the 2,324 premises in the south will be de-scoped so that they can form part of the Government’s new £5bn Project Gigabit rollout programme instead.

The issue of cost was underlined by the local authority, which estimated that to reach the additional 2,324 premises would have cost around £14m (based on an average of £6,000 per premises passed). The money didn’t exist for this. However, as an interim solution for these premises, the HCC are looking to offer related households access to a special “grant” that can help them to get a “temporary network solution” installed (e.g. satellite based broadband).

The “digital household grant“, if approved, would be introduced from February 2022 and be available on a request basis by those in affected areas – except if they’re already able to access the 10Mbps+ broadband USO from BT. The details of all this will also need to be discussed with the Gloucestershire County Council, which forms part of the joint Fastershire broadband project with HCC.

The council could have opted to refuse the extension request from Gigaclear and terminate the contracts instead. However, HCC said that would have required a new procurement, which “would take time and [does] not guarantee an alternative supplier capable of delivering within existing costs and reasonable timescale.”

At the same time, the existing community broadband programme will benefit from an increased value for money threshold of £7k per premise, with allowance of up to £10k to link communities. In addition, a new broadband business programme with a grant allocation of up to £20k per premise, with 20% contribution from the beneficiary, will also be introduced.

Finally, HCC noted that in March 2022 the project is due to receive its first clawback payment from their original BT (Openreach) contract (i.e. public investment that gets returned as take-up of superfast broadband rises). “The amount will not be known until nearer March 2022 when the final calculations on take up are made. The recommendation is to invest those funds in the Stage 5 community and business programmes [grants],” said HCC. Credits to one of our readers, Toby, for spotting this update.

Just for some context. The HCC has a capital allocation for the Fastershire project of £35.738m, which incorporates council borrowing of £13.816m – so far £4.849m has been utilised which leaves £8.967m borrowing remaining. At the end of the 2020/21 financial year, a total of £21.46m had been spent. Of that remaining borrowing, £5.3m is already committed to existing deployments, thus leaving borrowing of £3.667m to meet the new activity (plus however much clawback will be coming their way).