Infracapital-backed UK broadband ISP Fibrus, which is building a 10Gbps capable Fibre-to-the-Premises (FTTP) network across Northern Ireland and North England, has confirmed to ISPreview that they’ve had to pull out of the state aid supported Project Gigabit contract for the North East of England. But existing builds will continue.
Just to recap. The government’s regional Type B Project Gigabit contract for North East England (Lot 4) had been stuck, rather unusually, at the contract award stage for several months. The proposed contract was originally due to be awarded in May 2023 and had been valued at £82.7m to help extend gigabit broadband coverage to 53,200 of the hardest to reach premises, which made it one of the largest build contracts under the scheme.
The last update from the related Building Digital UK (BDUK) agency merely stated that they were still “working on the finalisation of the contract” (i.e. the contract had technically been awarded, but for some reason it was taking longer than usual to sign off the details). Suffice to say that this had become the source of much speculation, which we can now hopefully put to rest.
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ISPreview recently learnt that the contract was in the process of being awarded to Fibrus. But perhaps understandably, given the current state of the market and rising build costs (inflation, leases, suppliers etc.), the operator has now taken the prudent decision to pull out and focus on their existing builds in Northern Ireland and Cumbria (both commercial and state aid supported ones).
Fibrus’ full fibre network currently covers 300,000 premises (273,000 RFS) and is home to 50,000 customers. But they aim to cover 1 million premises over the next 3 years (by Q1 2026) – reflecting around 450,000 in N.Ireland (c. 50% of homes in the region) and the rest from England, and potentially Scotland too. A total of 400,000 UK premises are currently expected to be covered by March 2024 (i.e. 150,000 in a single year).
Dominic Kearns, Chief Executive of Fibrus, said:
“Given the state and cost of the capital markets we have taken the decision to focus our equity and debt funding in our home markets of NI and Cumbria, hence our withdrawal from the NE Gigabit process. Our business remains funded for all our existing programmes and when the markets stabilise again, we will seek out further growth opportunities.
For the moment, we are committed to delivering our network for those most in need across rural Cumbria and Northern Ireland, including our two government subsidised contracts. Pleasingly, our customer take-up and brand continue to grow rapidly across our Cumbria and Northern Ireland, and we plan to focus on accelerating it.”
The situation naturally leaves the related procurement process for the North East in a bit of a bind, since Project Gigabit will now have to either restart the procurement process or take a different approach entirely (much may depend upon how much interest the original procurement received from rival suppliers). In either case, it means more delays until a new supplier can be found and contracted.
A DSIT spokesperson said:
“We are working with other suppliers to identify alternative routes for connecting communities in the North East. Our priority remains rolling out gigabit broadband across the North East as soon as possible.”
One problem for the BDUK agency is that today’s market is much less stable and certain than it was when the procurement process first started. Many network operators and investors from across the sector have this year slowed their builds, cut jobs and switched strategies to focus on take-up or more lucrative deployments, which means a smaller pool of suppliers looking to bid on Project Gigabit.
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UPDATE 2:10pm
We’ve just had it confirmed that the company’s plans to build commercially in the North East have also been paused in line with the decision on the Gigabit programme. This is arguably a much more significant development, since it was only in May 2023 that Fibrus announced they were targeting 125,000 premises across 40 locations in the North East of England for this (here).
The planned deployment mostly reflected towns and villages in Northumberland and Durham, including Blyth, Ashington, Newton Aycliffe and Morpeth.
They had also announced commercial roll out in the north east too right? It sounds like this is also cancelled.
I was only asking about the Project Gigabit contract, but I’ll check on that too.
Thanks for confirming on the commercial rollout.
Ashington/Blyth and nearby towns in Northumberland have all had significant openreach and Nexfibre build over the last year. I don’t really think there was much scope for Fibrus given their slow and very localised rollout.
Expected, but hugely disappointing for us in the North East, particularly in remoter towns and rural areas. More than anything, it’s a failure due to the overcomplexity of the BDUK and Project Gigabit approach, trying to create a competitive market in areas where one can’t be sustained even with state aid. A much simpler approach would have been to simply obligate Openreach to reach everyone, eventually, and supply gap funding on that basis.
Simpler, perhaps, but also raising significant issues of competition and monopoly.
Openreach will not do it because they are too busy overbuilding on the altnets
I would politely suggest that if you can’t get service competition and monopoly aren’t uppermost in your mind.
Interesting model — place cheap bids at procurement, then later choose if you actually want the work…
As they say in the announcement, things have shifted in the capital markets since they made their bid.
Like every contract negotiation, until the signature is on the paper, either side can walk.
There’s many a problem with BDUK, but the process being subject to the normal rules of contract award and negotiation isn’t one of them.
Well, BDUK certainly have a task on their hands now with a large number of procurements waiting for bids to be made, and contracts to be awarded, in a climate of economic turmoil.
The worst of it of course is that thousands of people in Lot 4 now have no reasonable expectation of getting FTTP anytime soon.
In fact, even when contracts are awarded is doesn’t guarantee swift progress as ISPReview has covered on several occasions.
Fibrus seem to have excellent coverage in their home turf of Northern Ireland.
Cumbria is largely a work in progress with the regional procurement contract won in September last year. They had been building there commercially anyway before this announcement though.
Since then, the build seems to have concentrated on the low hanging fruit of the larger towns and Villages – Kendal, Penrith, Workington, Aspatria and Staveley. Whilst this is great news for these communities, there seems a lot left to get through between now and 2026 when Fibrus say the build will be complete.
I’m not criticising Fibrus for maximising profits for shareholders by taking this approach. This is what they are meant to do, after all.
On the other hand, the builds are only going to get more challenging, both technically and financially, as time goes by.
What properties will actually end up being built to out of those included in the contract, particularly under the current financial pressures, remains to be seen.
Here’s hoping that no more procurements suffer the same fate.
Do you really think any of these operators are making profits or will are going to make any profits for many years to come?
I’m struggling to see where the profits are in running all this fibre everywhere.
Well that’s just great – well done .gov, this will add at least 12 – 18 months before anything happens on the ground and even then how will the rollout be prioritised? (rhetorical question). 2030 is looking more and more likely.
Far better to split the regional contract into smaller chunks to give the alt-nets a proper crack at connecting hamlets and villages in a timely manner and incentivise them to fill in any gaps that the big players commercially cherry picked rollouts miss.
Such a shame as I have seen Fibrus working like the clappers over in Cumbria and I’m sure they would have done a great job over here in the North-East.
Interesting to see that the funders are no longer attracted to these investments even with Government support, presents a tough challenge for BDUK model moving forward.
BDUK is a waste of taxpayer money. Not even when offering 80 million makes it worth it
Well you’ve contradicted yourself there. BDUK are basically just topping up build to make the non-viable areas become viable. In this case it doesn’t look like there was any renegotiation, the provider just had their funding pulled from under them. Not a lot BDUK can do about that.
If BDUK offered more money you’d say they were being wasteful, less money and you’d say they were dreamers. Tighter contracts and you’d say it was too much red tape, simpler contracts and you’d say they were being irresponsible. If they expand their subsidy areas people cry about overbuild, if they reduce them communities say they’re being left out.
What would you have had them done differently in this instance?!
This is a concept very hard for many to understand: the government should stay out of it
The government fails to even defend its borders
Same thing goes to local governments: why is the government failing to collect the bins and then wasting tons of money installing cameras or blocking roads
Sam – if the gov stayed out of it then we’d be lucky to get high % fiber coverage across the country in 10 years’ time. The ROI for many areas just isn’t viable, so we’d see a lot less investment for many communities.
This is one of the few areas where government investment is necessary to improve infrastructure availability for everyone.
So useful that BDUK was going to use money to overbuild a commercial build from Netomnia…Openreach, Virgin Media/Nexfibre, and the AltNet (including Netomnia) will get the job done…you can judge us at the end of this decade.
@Jeremy – the OMR process is meant to cover that, but it requires providers to give info to BDUK about their planned builds. And plans change.
@Jeremy. BDUK conducts three national Open Market Reviews each year now, which models what the commercial coverage will be over the next 3 years to ensure it’s de-scoped from Project Gigabit’s plans. This is based on both known coverage and the plans submitted by commercial operators.
If you remember rightly Jeremy (Jeremy Chelot, CEO of Netomnia), the first big delay to residents getting this contract was because it was redrafted to REMOVE Netomnia coverage. Of course that didn’t stop you then blaming BDUK for the delays in your Zen interview. Judge you at the end of the decade?! I think residents want it a bit sooner than that, but thanks for the effort
We just arent going to get it anytime soon are we? Lot 4 newton aycliffe here and i can just tell we are going to be waiting a while. Absolutely fuming if im honest, virtually every town surrounding us has had it for a while now and here we are, muggins using 21mbps its a joke