Openreach Expand FTTP Builds for Two Project Gigabit UK Broadband Contracts

The UK government has posted contract modifications for two of Openreach’s Project Gigabit contracts – Call Off 1 (Lancashire, West Berkshire, Staffordshire, Surrey, Hertfordshire, Wiltshire and Gloucestershire) and Call Off 2 (Essex and North East England). The move expands their planned deployments of full fibre broadband ISP networks into rural areas.

Just to recap. The Call Off 1 contract was most recently (here) valued at just under £147m (public subsidy) and aimed to expand their Fibre-to-the-Premises (FTTP) network to a further 51,821 premises (they’ve already built to 14,460 of these – 28% complete). As for Call Off 5, which is more recent, that one was valued at £61.92m (here) and aimed to reach 24,710 premises (they’ve already built to 580 of these – 2% completion).

The contracts both form part of Openreach’s wider Single Supplier Framework deal – now valued at c.£1.2bn, which is focused on Cross-Regional (Type C) procurements (no other suppliers tackle Type C). Type C typically reflects remote areas where no or no appropriate market interest has previously been expressed before to the Government’s Building Digital UK (BDUK) agency, or areas that have been descoped or terminated from a prior procurement (examples here and here).

However, it’s important to remember that such contracts are not static and their scope, as well as committed levels of public funding, can change over time for a number of different reasons – informed by regular ‘Open Market Reviews’ of existing UK deployment plans. For example, commercial operators may expand or reduce their roll-out plans in the same region(s), which can reduce or grow the scope for public investment within those same contracted areas.

The contracted operator could also find the deployment to be more expensive, or possibly even cheaper, than previously envisaged. Such adjustments may occur due to changes in build costs and interest rates / inflation, as well as any unexpected obstacles to street works or greater efficiencies of build than planned or expected. Suffice to say, there can be various reasons why the contracted scope of related builds and the level of allocated public funding may change over time.

The latest change to Call Off 1 raises the contract value to £154m (up by £7.12m) and increases its coverage target to 54,824 premises (up by 3,003), while Call Off 5 sees its value raised to £70.3m (up by £8.38m) and its coverage target rise significantly to 35,296 premises (up by 10,589).

The additional scope is to be welcomed, albeit with the catch that there may be further changes in the future, which could go in a different direction. So, it’s not always easy to tell what the final picture will be until you actually reach the end.