Gov Boost Value of Openreach’s UK Project Gigabit Broadband Framework by £400m UPDATE
The Government has modified the Single Supplier Framework agreement that they awarded to Openreach (BT) last year under their Project Gigabit broadband roll-out scheme (here). The deal was originally valued at “up to” £800m and designed to help upgrade 312,000 premises in some of the hardest to reach UK areas to FTTP. But this has just been boosted in value to £1.2bn.
The framework agreement was later followed by the gradual awarding of seven related Cross-Regional (Type C) contracts to Openreach (here, here and here) – covering poorly served parts of Wales, Scotland and England (i.e. often remote rural locations with no prior access to a gigabit-capable broadband network).
The areas covered by these Type C contracts typically reflect those where no or no appropriate market interest had previously been expressed before to the Government’s umbrella Building Digital UK (BDUK) agency, or areas that have been descoped or terminated from a prior plan / contract (usually due to being too expensive for smaller suppliers to reach).
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The seven call-off contracts that have so far been awarded under the framework agreement are summarised below, reflecting a total of over £730m in committed public investment and nearly 300,000 premises. In addition, any future fibre build delivered through this framework won’t have to go through another competitive process each time (i.e. later extension projects and infill in these areas will be easier to agree).
- Lancashire, North Wiltshire and South Gloucestershire, West and Mid Surrey, Staffordshire, West Berkshire and Hertfordshire (£149.7 million, 54,300 premises)
- West and North Devon, North West, Mid and South East Wales (£139.1 million, 42,200 premises)
- East and South Shropshire, North Herefordshire, North Wales, and South West Wales (£108 million, 47,000 premises)
- Mid Devon, North Somerset, and South Devon (£77 million, 37,000 premises)
- Essex and North East England (£61 million, 24,000 premises)
- Worcestershire (£41 million, 22,000 premises)
- Scotland (£157 million, 65,000 premises)
Openreach has already begun to extend their new Fibre-to-the-Premises (FTTP) broadband network into many of the above contracted areas. The new service, once live, can be ordered via various ISPs, such as BT, Sky Broadband, TalkTalk, Vodafone and more (Openreach FTTP ISP Choices) – it is not usually an automatic upgrade, although some providers are doing something similar to that.
However, the big development being spotted by ISPreview today is that the government has just made a significant modification to the related framework agreement with the BT Group. In short, the awarded contract value has increased by £400m to total £1.2bn from the original value of £800m.
The Government states that the reason for this modification stems from the following changes: A) The need for additional works, services or supplies by Openreach and, B) Additional scope has been added to the contract in accordance with the UK subsidy control regime.
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This suggests that either the aforementioned contracts are going to be extended to cover additional premises or the roll-out is costing more than expected (possibly also a combination of the two). At the time of writting we’re still awaiting some clarification on the impact of this from Openreach, although they may not yet be in a position to provide much detail.
However, it’s also possible that the framework may have needed some adjustment for other reasons, such as to compensate for the fact that a number of smaller alternative networks have recently either withdrawn or scaled-back their own smaller deployment contracts under the Project Gigabit scheme. In theory, the descoped areas could be moved into Openreach’s Type C contracts, particularly if previous market engagement exercises in those areas showed little interest from other suppliers.
For example, Freedom Fibre recently scaled back their £24m Project Gigabit broadband roll-out contract for North Shropshire (here) and “mutually agreed to terminate” their £43m deal for Cheshire (here). Several other network operators similarly dropped out of their contracts, including Voneus’ £12m deal for Mid West Shropshire (here) and FullFibre Limited in the Derbyshire Peak District (£10.7m) and Herefordshire (£23.4m) – here. We suspect that one or two other contracts may also be at risk of going the same way.
UPDATE 6:32pm
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We’ve had a response from the Government and it should be clarified that no additional funding has yet been awarded to Openreach under these changes. The additional funding will only be committed if Openreach can present BDUK with compliant proposals to connect further hard-to-reach premises.
A DSIT spokesperson told ISPreview:
“We have extended our agreement with Openreach to enable Project Gigabit to connect more hard-to-reach communities, specifically those that have been removed from commercial build plans and where other Project Gigabit suppliers can no longer reach.
The increased value of the framework agreement is not a spending commitment. We continue to engage with the market prior to committing further funding as we boost our plans to deliver gigabit coverage to 99% of premises by 2032.”
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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A 50pc increase in costs; testament to Ofcom’s failures the first time around.
What involvement do you think Ofcom have in this programme?
From my last check Ofcom’edy have no involvement in this, and I’ve got to say it, with some AltNets dropping like flies, of course Openreach are going to take up the reigns of the smaller areas. I am keeping my fingers crossed for the area I used to live in Tylorstown in Ferndale where OR stopped dead with a FTTP build and left a large number of houses with very flaky FTTC, there’s something happening here with yellow writing by each manhole cover and by a few poles. It’s like a game of Bruce’s Price is Right!
I’m lucky now the street I’m now living in has FTTP rolled out by OR, here’s hoping the extra influx of cash helps with the build?
@125us: A failure of the regulatory regime that has left us with a large number of zombie businesses.
I’m struggling with how any of this is Ofcom’s fault. What regulatory regime do you believe would have prevented this?
@125us:
Why do you think Ofcom has not failed?
I think Ofcom has not failed because there has been a rapid rollout of high-speed connectivity all across the country, with a mix of large and small businesses offering services. A decent outcome has been arrived at.
I’m not sure how a localised failure of a scheme Ofcom weren’t involved in is evidence of Ofcom failing.
@ 125us:
The broadband market is broken because there are too many competitors, with only two businesses that are likely to be making a sustainable profit. Most players will never attain sustainable profitability and thus their continued participation is undermining the healthier players. Ofcom allowed Blitzscaling of the sector without ensuring that the entrants had sustainable models.
Further, Ofcom focused its regulation on BT, but it had no impact in getting the other majors to build their own competing national networks. On top of this, Ofcom made no effort to correct the flaws in its regulation of the market in the span of twenty years or so. We thus have an excessively fragmented market that is unsustainable. The longer this persists, the longer it will take to deploy modernised networks in the UK.
Another aspect you might want to consider. BT was once a major player, but that is no longer the case. Once it falls into foreign ownership, the UK will trend towards being a side-show in the networking world.
Sounds good to me. I was somewhat relieved when Openreach announced they would be building in my home area – about the same time as Freedom Fibre announced they were pulling out of the Cheshire lot.
I prefer the choice and reliability of Openreach over an altnet, despite the asynchronous speeds.
It is naff that you had an Altnet pulled out, but Openreach have done that in places as well and Virgin with their nexfibre.
i can kind of understand about the choice of providers with Openreach, I must admit I did think about before I changed to an alt net, but then looked at it that I was with Plusnet for 9 years, I could have changed to different providers in those 9 years, but I did not, because Plusnet did the job, most of the time, and they gave me new offers when my contract came up.
As for reliability, my connection with my alt net is fine and apart from the first couple of weeks have been fine for over 2 years and I pay less than what I would with most providers on an Openreach network, even if I dropped in speed on most openreach network providers, I would still be paying more, at some point in the long 24-month contract, they push these days.
I agree, asynchronous speeds are not the end of the world.
I was happy on FTTC, I had no reason to change, 36Mb/s did what I need and I saw no reason to move to FTTP. Plusnet kept pushing towards the end of my contract, they put the price of FTTC up pretty high, plus a 24-month contract, I told them I would not sign up for a 24-month contract, where the prices would go up twice in. I was locking at the alt net, iffing and affing, they stuck a card though the door, offering me 500Mb/s, which was not really important, but they offered that for £24 a month for 12 months. No price rises.
So after a think, and looking at other options, I went for them and been with them for over 2 years now and happy with the service. Their own router could be better, but you can’t have everything.
What I am saying is, if you can get a Altnet at some point, don’t rule them out, unless you are one of the Openreach fanboys that are on here.
I am glad I realised pretty quickly and not waited for years, while I don’t need the speed, it has come in useful, both ways.
As long as they keep the service going for a decent price, I will stay with them, and now they have merged with another provider, people on the network may at some point get a choice of ISPs on the network.
Asymmetric. Not asynchronous.