The Hidden Impact of CityFibre’s UK Project Gigabit Broadband Contracts Retreat
At the end of last month CityFibre announced that they’d reached an agreement with the Government to significantly cut the roll-out scope of their Project Gigabit broadband contracts. At the time this was expressed as being because commercial builds by rivals would reach further than originally expected. But this overlooked the hidden gap of premises that have been left with no alternative plans.
Just to recap. CityFibre previously held ten Project Gigabit contracts – originally representing over £925m of government funding for a subsidised build to 557,000 premises in “hard-to-reach” rural areas (1.36 million if we included their supporting commercial build). But in May 2026 these were “re-scoped in response to the accelerated rollout of commercially funded full fibre” (here).
In practice, the agreement saw the operator abandon their £58.6m Project Gigabit contract for Nottinghamshire and West Lincolnshire (Lot 10) and significantly reduce the roll-out for most of the nine other contracts that remained. CityFibre now expects to connect a total of 450,000 rural and harder-to-reach premises by 2030, including 226,000 subsidised (costing £504m) through Project Gigabit (c.70k of that 226k has already been completed).
Advertisement
On the surface this sounded like gigabit broadband coverage would not be negatively impacted because those areas descoped by CityFibre would still be reached commercially, except we soon learnt that wasn’t the case.
Explaining the real change
The first thing to understand here is that Project Gigabit contracts do change a bit over time due to various 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, 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’s often a bit of a yo-yo movement as contracts progress (they may expand or even shrink over time), although in this case CityFibre has significantly reduced their plans. The catch is that commercial builds usually have a much more modest impact upon Project Gigabit contracts, which tend to be focused on rural areas where rivals often struggle to build FTTP at pace or scale.
Advertisement
On top of that, ISPreview soon began receiving quite a bit of feedback from those impacted by the change, which strongly indicated that some communities previously covered by these contracts were being left with no future plans for gigabit broadband coverage – either commercially or via subsidised builds. When challenged on this, CityFibre informed us that the “majority” of impacted premises originally due to be upgraded by CityFibre through Project Gigabit will now be connected commercially.
A spokesperson for CityFibre told ISPreview:
“The majority of premises due to be upgraded by CityFibre through Project Gigabit will now be connected commercially, meaning no public funding is required. Given the extent of commercial build in these areas, and the options for alternative delivery to the remaining premises, these changes will not affect BDUK’s ability to achieve the UK government’s target of 99% UK gigabit coverage by 2032. The plan for the premises that CityFibre are no longer building on is a question for BDUK.”
The question that’s harder to answer here is how do they define “majority“, since 51% can be just as much a “majority” as 99% – the gap left with no build by either Project Gigabit or commercial coverage could thus either be a few tens, hundreds or thousands of premises. We simply don’t know, so we asked the Government’s Building Digital UK (BDUK) agency, and they couldn’t give us a completely clear answer either (we assume the final third of premises being referenced below includes those still under contract and those being left in limbo).
A Government (BDUK/DSIT) spokesperson said:
“As commercial gigabit broadband rollout has accelerated across the UK, we’ve agreed changes to CityFibre’s Project Gigabit contracts to ensure we are getting the best deal for taxpayers.
Two thirds of premises that were due to be upgraded by CityFibre through Project Gigabit either already have access to a gigabit capable connection, or will now be connected commercially – meaning public funding is no longer required.
We are already engaging with other suppliers so that the remaining premises are upgraded at pace and communities get the connectivity they deserve. These changes will not affect our ability to hit our target of 99% UK gigabit coverage by 2032.”
In fairness, BDUK do regularly publish detailed datasets setting out which premises are in commercial rollout plans, and which are in Project Gigabit contracts. But we don’t have the resources to be able to process such complex data in order to accurately identify the gap left in limbo by CityFibre for each contract, which in any case is an answer that BDUK should already have and yet the government chose not to share it when asked.
However, the Arundel and South Downs MP, Andrew Griffith, recently asked a similar question about the specific situation in West Sussex. As we noted in our original article, CityFibre’s £100m Project Gigabit contract for East and West Sussex had originally aimed to reach c.52,000 hard-to-reach premises, but after the change they would now only tackle around 13,000 premises for £25.2m.
Advertisement
According to the government’s response to Mr Griffith, of the 6,490 premises in Arundel and South Downs that were included in the original scope of Project Gigabit to be delivered by CityFibre, some 5,890 have now been “de-scoped” from the contract. Out of those, 850 now have access to gigabit broadband, while just 890 are included in future commercial delivery plans, which is said to leave 4,150 premises without either a commercial or subsided build plan.
The above reflects just one area inside one of the contracts, but it’s not unreasonable to expect that the gap now likely to be left in limbo by CityFibre’s change across all contracts may be bigger than they’d like to admit. The good news, if you can call it that, is we have seen similar situations before where contracts have been abandoned or scaled-back, but where alternative solutions were later found.
The most common fix is for such premises to be swapped into one of Openreach’s larger Type C (Cross-Regional) contracts under Project Gigabit (no other suppliers tackle Type C), which is precisely what that framework exists to help tackle (examples here, here, here and here).
According to our sources, a good portion of the premises that have been left in gigabit broadband limbo by CityFibre’s retreat should hopefully soon end up being moved into a Type C contract, assuming there’s no significant interest from other suppliers.
However, the situation will inevitably cause additional delays to delivery, since any new supplier will naturally need to conduct its own work to figure out which premises they can and cannot tackle, as well to plan the necessary resources and to conduct engineering surveys. History suggests that this can add an extra year or so to the roll-out plan for an area vs the original plan.
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.
I wonder if the gaps are because a commercial build is ‘blocking’ the way to speak. Not worth to overbuild and no way to reach the gaps without at least some overbuilding. If that is the case perhaps the commercial builders can be asked to take on the subsidised contracts.
I think that’s exactly what the type c contract will do, eventually.
3 roads in my town – and then they left. Not like it’s a small place either!
Do you think the government is seeing LEO satellite broadband as a longer term solution here? Would be interesting to see Starlink.uptake in hard to reach areas factored in. The government is providing funding for Leonardo, so maybe it’s coming from cutting back this programme.
Project Gigabit contracts require symmetric gigabit speeds as a minimum. No LEO service can or will achieve that at any scale.
The sorts of places for whom LEO might be the most cost effective (eg where the cost per property served is five or six digits) are also the places not covered by Project Gigabit or commercial rollouts.
Most users don’t care about symmetrical speed or need it. Most properties are residential where asymmetric speeds are the norm. I’d even argue most businesses rely on the cloud now and for a small business/remote office higher speed asymmetric speeds would be fine.
Darren, your comment is contradictory. On one hand you say (in your opinion) that symmetric not required. Then you go on to say “higher asymmetric speed”. The assumption is that you meant upload, so why not just go symmetric then and be done with it?
Secondly, the major issue with asymmetric, is that currently, you have to take a 1gbps package tier just to get some sort of acceptable upload speed of 105mbps on average. With symmetric, you can subscribe to, say, 150mbps/200mbps package at a cheaper price and get the same speed in upload. You arent pushed to a faster, more expensive download speed that you may not need…..
If you work in media, faster upload is handy for large transit of files, similarly, if you have a home server (READ, not business public server), or have multiple people in the house online who have cloud storage, or do offsite backups or replication of data. Data can be your downloaded music, video, documents, photos and well as whole machine OS backups of several GBs in size.
When VM finish Project Mustang (or whatever its called now) and bought ALTNET Netomnia/others and Nexfibre have finished deployment, most of the UK will actually be symmetric before BT even get going offering symmetric as wider availibility.
Darren – I’d like to think that we can be more aspirational than what you might think is necessary today. Not that it matters much because LEO can’t (and likely won’t) do gigabit in either direction anyway. I was merely pointing out what PG premises are supposed to receive and forcing them onto LEO would be a tremendous downgrade.
Nothing prevents PG ISPs from offering slower or asymmetric tariffs at lower prices provided that they also offer 1G symmetric (this is why Openreach currently offers that service only in their subsidised areas)
Fanny – the way things are going, Openreach would have switched on XGS long before VM gets anywhere with its non-nexfibre FTTP.
This where ‘Competition’ fails. Paid lots of money to ‘compete’ with the incumbent then when they have stopped doing the easy bit they give a bit of money back and leave the incumbents customers in the ‘Dark Ages’.
Maybe it’s time the incumbents a fairer access to the market.
BDUK only pay money once each premise is complete. So there wasn’t any money paid to then be returned.
I think the bigger issue here is that commercial builders slowed/stopped their commercial builds when Project Gigabit was announced, because why build with private money when you can build with public money.
The result was public funds being used for areas where it would be commercially viable to build without subsidy. BDUK have done a blinder on themselves by saying the OMR process identifies areas of commercial failure while not understanding they caused the commercial failure in the first place. It is not surprising to see the scheme now unravelling as suppliers start to cherry pick their contracted areas. Colossal waste of taxpayer money.
That doesn’t ring true – and seems empirically false. The number of operators taking bduk funds is a tiny subset of all fibre builders. Which business is going to halt a commercial build to allow a rival to run a subsidised build instead?
Do you have evidence to the contrary?
I think one of the major contributors was when interest rates jumped in 2022 due to a certain political event which made borrowing very expensive. That made commercial operators scale back their plans. BDUK then put contracts out for these areas. What commercial builders are now going to go build where BDUK award winners are building?
CityFibre ironically was right in the middle of this – scaling back commercial build and focusing on Project Gigabit: https://www.ispreview.co.uk/index.php/2024/01/delays-as-cityfibre-suspends-more-uk-fttp-broadband-builds.html?utm_source=chatgpt.com
So what does this mean for the partial builds and incomplete infrastructure builds bought from Conexin in Hull , Beverley , Molescroft , Cottingham and some other areas . In some areas there are telegraph poles without any fibre joining them . Yes all these areas have FFTP from KCOM and also some areas had been completed by Comecon and MS3 , others not . So not all areas have alternatives to KCOM which was one of the intentions of project gigabit in our areas . Are we to be left with dead trees that do nothing but restrict access of our footpaths and duplicate or triplicate telegraph poles that give a poor visual amenity of our home environments . Most areas should have been served with alternative ISPs sharing infrastructure with KCOM
Project gigabit was never about providing alternatives to already existing FTTP – it’s intended where there is unlikely to be a commercially funded rollout. If FTTP is already there from one supplier bduk won’t fund another operator to cover the same area.
Would be a clever strategy if one was wanting to block others from winning the deals, wouldn’t it?
Hopefully not too many consumers are impacted.
These contract changes are not as black and white as they may look. What tends to happen is when a supplier bids a contract area they cost it based on the average cost from the ‘easier’ areas (high density, relatively low cost prems) and those costs are balanced against the ‘difficult’ areas (low density, challenging engineering and high build cost per prem) and then the whole area is assessed for likely take up. This allows the bidder and BDUK to agree a realistic bidder investment vs state aid investment contract. When assessing these contracts the bidder has to assume that the BDUK market review was accurate and the other suppliers in the area have told the ‘truth’ about their future plans – otherwise you cannot ever come up with an adequate return on investment especially as there are penalties in the new contracts as well as clawbacks etc. Then what really happens when a supplier is awarded a contract is another operator then builds to the lowest cost/highest density prems within the awarded contract footprint. This not only has the effect of having to remove those prems from the contract, it then destroys the average build cost calculations and the forecast return on investment. Hence you get a different build plan evolving as the average cost to build has increased. Sometimes the subsidy then has to be increased to cover a smaller area, but in some cases the subsidy available cant cover the new build funding gap.
Its not always like this of course, but this happens a surprising number of times in newly awarded contracts sadly and there isnt much that can be done about it unfortunately.
You sound like someone who knows the regional procurement process first hand ?
Anyway, I think is is pretty much how I imagined it works.
The principle that public money shouldn’t be used to subsidise where a purely commercial build is planned (which is a good principle) does make it impossible to ring fence a contract.
However, I still don’t know if any contract re-calculation occurs only after the result of an OMR (which is every 4 months) or if builders are required to inform BDUK as soon as they have plans.
A commercial build needs to be planned within 3 years to remove any properties within a procurement. Of course, that build may never happen or be delayed meaning properties may not get any build.
All the properties local to me have been affected in this way but I’m sure there are plenty of other examples out there.
Every time this happens there is the work of contract re-calculation and re-negotiation which itself affects costs and completion dates.
I agree there isn’t much that can be done (or rather will be done) about it now.
Try outdoor modems, pointed at your nearest mast if you have no indoor 4g, or stump up for Starlink or …
Just wait. FTTP will turn up eventually.
Probably.
I just deleted a massive diatribe about the state of the country and it’s right wing politics, with no left wing compassionate body left to fight for those who aren’t already rich and connected. Sigh. It makes me so angry.
But i do think these cuts to networking the entire country is endemic of an attitude among the rich and connected and the skewed political atmosphere in London that everyone else isn’t worth bothering with. Let them eat cake! Said no one actually, but it’s still so true today. Nothing changes. The elite still feather their own nests whilst destroying the nests of those slaving for them.
Let’s hope the political climate changes sooner than later and those affected by all government cuts get parity with those in London and we all get the network abilities we deserve as equals.
There are no cuts to networking the entire country mentioned here. CityFibre have pulled out of a deal to build FTTP subsidised by Project Gigabit. Those premises that won’t be covered by commercial builds will be contracted to another company, probably BT.
There is delay and frustration but this shouldn’t affect the end result.
So when will “someone” start looking at premises with no alternate plans and move these hard to reach houses on to FTTP.
I ask, as I one of these premises. There is about 30 houses that are not due to be connected to FTTP in the near future. The surrounding streets, houses on the same street, all have FTTP either via Openreach or an alt net.
Is there an answer as to when? I am in Hastings, E Sussex.
One could argue that if a contract is part funded by public (tax payers) money than that should constitue GOCO, pro rated, period, losses to to the public funded ‘opportunistic’ contractor, profits pro rated.
And any overbuild seen as contract refund as ‘overbuild’ is pure waste from a BDUK / taxpayers perspective.
But of course no, the taxpayers money is bluntly given away on completed builds, and no recompense to the taxpayers where ‘contoactors’ effectively do not honour the origional build ( and of course BDUK have checked and preventaed ‘overbuild’…)