When IT Meets Politics

Sep 9 2017   1:30PM GMT

The “Great British Broadband Boost” is ringfenced for BT.

Philip Virgo Profile: Philip Virgo

Tags:
backhaul
Broadband
BT
competition
fttc
Gigaclear
Openreach

The DCMS Press release headlined “The Great British Broadband Boost” needs to be put in context.  The “boost” comprises £465 million clawback from BT (because take-up was greater than that on which the BDUK contracts were based) plus £180 million underspend (the amount below contract actually spent in order to achieve local 90% “access” targets).  According to the press release £200 million of this has already been committed.

The reinvestment criteria for the clawback and underspend were summarised by DCMS in 2014 . Unless these have been changed, it can only be spent via BT to improve access in those areas where take-up was most over contract and/or the spend to achieve the “access” targets was most under budget.  Alternatively Local Authorities can ask for their share to sit on BT’s balance sheet, accumulating interest, before they can reclaim it, in about 2020.

The local authorities concerned and the take-up rates on which the clawback amount are based were summarised by ISPreview this morning. The tables also show how the gap between headline claims of “passed by” and the “take up” numbers vary: from 31% in Merseyside to 55.6% in Rutland (home of the UK’s first FTTC connection). The actual service received by those connected to “Superfast” can however vary wildly. In some cases speeds can actually go down not up. Some of the newly announced FTTP “pilots” are in areas where residents have not received the expected improvements from Phases 1 and/or 2.  Others appear to be adjacent to areas where competitors to BT are already offering faster speeds.

[See footnote for explanation of change to the paragraph as originally posted]

The recent announcements by BT and DMCS and the accompanying radio interviews, imply that BT is expecting local authorities to allow it to spend the claw back on whatever gives it (BT) the best return in retaining existing customers or acquiring new customers while moving towards a 95% “access” target. Matthew Hare’s offer on the Today programme this morning for Gigaclear to fill one of the consequent gaps, without requiring an upfront contribution, helps illustrate the limitations on those who will benefit, as well as the extent to which they will do so. It also illustrates the contrast between what will be on offer from BT (usually extended FTTC and/or alternative technologies offering 10 – 24mbps) and that which Gigaclear is rolling out.

Matthew Hare also made a throwaway comment which illustrates the pressures on BT. Players like City Fibre, Gigaclear, Hyperoptic now have serious backing from pension funds and institutional investors. They see utility fibre communications providers as an attractive long term investment. By contrast BT is seen as a risky hybrid. There is a fear that its content and systems integration operations may contain yet more accounting nasties. In consequence its share price, and ability to attract low cost finance, are in the doldrums.

Perhaps the next big “boost” to British Broadband will be a decision by BT to do its own break-up.

There are signs that Openreach is preparing for this by taking a very much more positive attitude towards infrastructure partnership deals with competitors to BT Retail and BT Wholesale.  Meanwhile BT’s main staff expansion programmes are on maintenance and security, including bringing operations back from India. It would make very good sense, as part of its positioning as a trusted utility, for BT to provide high quality secure services for the UK communications and content industries as whole, not just to sort its own problems, e.g. leaks from Indian call centres,

Meanwhile, however, the growing take-up of local broadband is putting severe strain on the national backhaul infrastructure with its many shared points of vulnerability (to fire, flood, equipment/cable theft not just hardware/software failure). Hence the importance of the work of the DPA  Digital Infrastructure Group on topics like Backhaul and Maintenance Competition and (in co-operation with the DPA 21CN Skills Group) independently certified skills.

FOOTNOTE

I received the following e-mail from the Better Connected Project Team in West Sussex Council:

Your comment: “The tables also show how the gap between headline claims of “passed by” and the “take up” numbers vary: from 23.9% in West Sussex (where a full fibre pilot has been announced because the speeds available over FTTC are so dire)”  has raised some eyebrows here in West Sussex!

The take up figures compiled by DCMS and quoted by ISP review as its source material  were incorrect. The figure of 23.9% was used as the take up total for both the BDUK phase one and phase two totals.

The correct total for BDUK phase one take up is 46.1%. The total for BDUK phase two take up is 23.9%.

DCMS have corrected the source document, a google doc emailed out to accompany the press release. They are also alerting ISP Review to the error.

Last week’s announcement by the Treasury noting that West Sussex has been chosen as a full fibre pilot area has nothing to do with current speeds, which we expect to be a minimum of ‘superfast’ for 95%  of the county by the end of the year. Independent website ThinkBroadband concur that 94.8% of homes and businesses already have access to ‘superfast’ broadband: https://labs.thinkbroadband.com/local/west-sussex,E10000032

I was therefore please to amend the blog to read as above. I should perhaps add that the map of actual broadband speeds published by the Consumer Association indicates an average speed of 15.9 Mbps for Chichester and 19.7 Mbps for Arun. This is consistent with the speeds achieved by relatives who were upgraded to “Superfast” last year (and whose systems I have used while staying with them).

 

3  Comments on this Post

 
There was an error processing your information. Please try again later.
Thanks. We'll let you know when a new response is added.
Send me notifications when other members comment.
  • chris conder
    It's all part of the superfarce. Another year or two for BT to corner the mobile and content markets and OR will be handed to government on a copper platter.
    340 pointsBadges:
    report
  • NGA for ALL

    The £463m BT Capital Deferral is I believe separate money to the Treasury facilitated Digital Infrastructure Investment Fund you refer too. £130m of the BT Capital Deferral has been made available for phase 3 plus activity;  the remainder is resting in BT's accounts and may do so until 2023.    

     

    More relevant I think is an assessment of the possible overlapping USO of 10MBps.  This appears to have crept through without Parliament knowing the status of the underspends, the BT Capital Deferral owed and the balances in LA/DA investment accounts - the capital contribution BT may owe, arising from unambitious phase 1 and over inflated framework costs - £300-£500 a premise or '£100k' a cabinet! 

    The BT resource needed for the B-USO is the same as the resource needed to complete the BDUK work.  BT is already sitting on most of the £463m (£333m of it) and now is asking for an increase in the price control, (in response to Parliaments request)  to finish what could or should be already scheduled through BDUK.

     

    BT is offering to do the B-USO in exchange for a higher price control,  currently under consultation and which Ofcom have obligingly modelled. If the offer is accepted then the remaining capital deferral of £333m (and rising) will remain in BT's accounts for some time.

     

    This is really odd as just under half the remaining USO areas are in urban areas (DCMS consultation data).  This is a good example of Parliament not being informed or in control of the issues being discussed.  There is enough funds to do another 500-700k FTTP in rural,  yet the Parliamentary wash-up has approved a bill asking for 10Mbps to be imposed.  Ofcom need to be told to delay the USO until the BDUK monies and BT capital is spent and reconciled.

    0 pointsBadges:
    report
  • chris conder
    Indeed so. But the politicians and ofcom are under the thumb of the snake oil salesmen who promise instant cures. And digitalbritain is dying.
    340 pointsBadges:
    report

Forgot Password

No problem! Submit your e-mail address below. We'll send you an e-mail containing your password.

Your password has been sent to:

Share this item with your network: