When IT Meets Politics

Oct 5 2019   5:43PM GMT

Turbocharging Full Fibre/5G Broadband

Philip Virgo Profile: Philip Virgo

Tags:
Aviva
B4RN
Broadband
BT
EIS
Gigaclear
Inca
Skills

Turbocharging is the new post-Boris buzzword. It is apt for the £5 billion pound boost to broadband roll out announced at the Conservative party conference. It does not really matter how much is new money and what the details are. That is likely to emerge during this year’s INCA  conference on the 16th and 17th November . INCA could not have timed it better … it is almost as though they had advance notice!

The INCA sessions on rural broadband, investment, barrier busting and skills are likely to be particularly interesting, given the discussions, one might call them leaks, but it was more like a waterfall, at the Conservative party conference. I am intrigued by what INCA members plan to discuss in the newly added section on Brexit – unless it is the changes they want to see, e.g. to state aid rules, if Brexit does indeed go ahead. I  explain below why I expect it to have little, if any, impact on the availability of skills.

1 Restore EIS status to B4RN Clones and trigger a Rural Broadband Revolution

Before the summer, at a Westminster Forum event Barry Forde pointed out that, but for HMRC removing EIS status (because B4RN investors were not at risk) their approach could fibre up the final 5% at a fraction of the costs quoted by BT and others. He was not offering to scale up B4FRN itself – he said that community enterprise was not inherently scalable because all communities are different. He did however suggest packaging up the way it operated for others to copy, where-ever there was the necessary spirit of self-help.

He summarised the positives behind cloning the B4RN approach as below:

  • Not for Profit community Benefit Society, community owned
  • Parish based
  • 100% coverage (so USO irrelevant)
  • ~120 parishes in build (area ~2,000Km2, area inside M25 ~1,500Km2)
  • Initially 100% Funded by community
  • £6M Community Shares
  • £2M Community loans
  • £3M Community Bonds via Triodos Bank’s Crowdfunding platform
  • Full fibre delivery-average cost below £1500
  • Currently-
  • ~10,000 properties passed (about 95% meet eligibility criteria for USO)
  • ~6,000 properties connected
  • ~12,000 properties in build pipeline (over next 24 months)Additional massive demand from all over UK, but we cannot meet it
  • Need more B4RNs!
  • Now using GBVS & RGC vouchers worth average of ~65% of build costs, community raising remainder.

Then he went on to say what Government should do if it was serious about allowing community enterprise to connect the final 5% at affordable cost:

  • Government has good intentions but fragmented delivery damaging
    HMRC EIS tax relief withdrawn due to perceived low risk
    – Treasury awards funds for LFFN due to perceived high risk
    – Which is it? A stable situation which we can plan for is vital
    – Fibre infrastructure build is challenging and takes time, changing rules mid race is fatal.
  • USO for last few percent of properties that get <10%, £3400 cost cap.
    – B4RN already does 100% coverage in its builds for <£1500 and 95% of our properties are in the USO zone
    – But explicitly excluded from accessing USO funds which only BT can get.
    – USO severely damages fund raising in additional deep rural communities
    Communities will have to raise funds to overbuild whatever BT delivers as little if any of it will be full fibre.
  • OFCOM attitude to rural last 30% where competition doesn’t exist
    Propose to allow BT to lift charges in rural areas to fund more full fibre build
    This is a stealth tax levied on rural customers for the exclusive benefit of BT
    No competitive element in scheme, community projects excluded.
  • OFCOM Dark fibre proposition
    – Rural altnets need access to dark fibre for backhaul.
    OFCOM’s proposal is for exchange to exchange fibre only which benefits retailers of Open Reach products but cripples any organisation trying to build new infrastructure in competition with OR.
  • OFCOM appears too supportive of Open Reach and anti-competitive, every initiative makes the playing field less level.
  • DCMS Vouchers GBVS & RGC
    Excellent idea. Could perhaps graduate the RGC vouchers for degrees of rural reaching the USO £3400 in the most remote areas.
    But scheme only runs to 31st March 2021. That’s an almost impossible timescale to deliver complex infrastructure builds. It needs extending.
    – Also need some sanity checking around local authorities being able to flag post codes as potentially getting FTTP at some point within the next three years and hence locking out the vouchers to Community projects under State Aid Rule.
    – If community project registers a post code for their build then LAs should not be able to barge in later and block things.

It is time to go political

The LibDems and Brexit Party (if we do not “leave” on time) will be competing with the Conservatives for votes in over a hundred rural constituencies where access to on-line services ranks alongside Housing, the NHS and Policing as a priority for voters. The opposition of HMRC to EIS status for community broadband investment therefore appears to be politically unsustainable.

The case is all the stronger because of the priority the Government is giving to using greatly improved on-line access to improve the quality and cut the cost of rural services, including health and welfare.  The terms of reference given to Matt Warman to get broadband roll-out moving also imply a robust attitude towards anything else that gets in the way of community or municipal initiative.

He will, however, need sustained and public political support if he is to succeed in driving those seeking to preserve their sacred cash cows out of the way. Without it the UK will falls even further behind.

2 Opening up private sector investment

I was delighted to see the agenda and participants for the INCA Investor Workshop.

The workshop begins with the investment climate being created by Government and Regulator before giving the perspectives of investors, fund-raisers and advisors.

  • Cameron Barney have probably handled more investments in more UK broadband companies than any other merchant bank. They have also been able to exit profitably from several well known names, like Gigaclear, when these became attractive to major funds,
  • Aviva had been investing in broadband around the world for some years before deciding that Truespeed offered the kind of opportunity that was attractive for its funds.
  • Macquarie Capital had similarly been active on other continents for over a decade before taking over KCOM  and investing in Voneus.
  • The CEB Fund‘s first investment was RUNE. The video on their website is worth watching for a very different view to the Swedish Model.
  • PMP Conseil will provide a French perspective.
  • Abundance organises crowdfunding for Green infrastructures. And infrastructure does not come much greener than broadband.  Then we have the fund-raising perspectives of three very different types of operator: ITS, Voneus and Jurassic .

There are many business models for the provision of broadband. These are evolving as technologies and market change. I welcome the  “discovery” by landlords and developers of  the link between property values  and broadband  provision and by politicians of the link with jobs and economic prosperity.

It is forty years since I became active on telecoms policy. We had realised that the Wellcome research centre at Park Langley would die unless we could get local access to world-class, global  telecommunications. Hence the reason I was allowed time to be politically active on IT and Telecoms policy. I was a lonely user surrounded by the lobbyists of current and would be suppliers (both incumbents and invaders).  I still usually am. They (you) inhabit a different world to we users.

Hence also my comparisons between broadband business models and those behind the building and operation of the canals and railways:

  • build networks to international interoperability standards
  • raise the money from those who will benefit from the uplift in property prices and improved connectivity
  • then sell the networks to operating utilities
  • try to locate where you are served by at least three competing networks using different routings/technologies

Politicians are finally waking up to the linkages … and their reasons and implications. I am not so sure about telecoms community. We had a cacophony of canal operating companies opposing the building of railways. We are now beginning to hear the voices of railway operators opposing the rise of motor transport.

In the mean time, however, I applaud INCA for putting together this workshop.

3 Barriers busting needs rigorous quality control

I was disappointed to see that delegates to the INCA conference will have to choose, on the second day, between workshops on public sector support, barrier busting and skills. The three are at the same time. I hope they will be recorded for those who would like to attend all three.

The obstructionism of local authority highways departments is only partly because many have been outsourced to those who have no interest in expediting approvals. Some of the contractors used by the industry have an atrocious record for quality of service, including failure to meet reinstatement standards. The reluctance of landlords and building managers to give access to contractors of unknown provenance can similarly be based on past experience. Both link back to skills – and the common use of  East Europeans with unknown competence and poor English.

There is, nonetheless, a genuine need to address the problems that arise with absentee land-lords and with intermediaries and free-holders whose prime concern is fee income.  Earlier this year I was at a meeting that brought together freeholders (identified by a search in co-operation with the Council) and current occupants to discuss a redevelopment plan only made commercial sense if it included full fibre connectivity. It transpired that the agents employed by both groups had lied and prevaricated for years, keeping owners and tenants apart, in order to ramp up fees and progress agendas of their own.

I would like to think that most costs and delays are simply because agents and free-holders do not benefit directly from the increase in value when communications are improved but are blamed they allow contractors to cause damage to other networks, utilities or infrastructure.

“Deemed consent” and/or “mandatory” wayleaves and access should be linked to the use of individuals whose competence has been accredited – e.g. by the Highways Electrical Association or a similar body for in-building work. That leads me on to skills.

4 Using network construction skills to build a pipeline to the future

I am very pleased to see the growing co-operation  between the INCA and the Digital Policy Alliance with Carolyn Kimber chairing the session on skills and Graham Smith of the Highways Electrical Association on the panel. It is also good to see the participation of the SCTE . The John Henry Group made invaluable inputs to the round table of skills issues that I announced at INCA’s conference least year.

Most of my summary of the findings of that round table appears to hold good but some things have moved on since.  Graham Smith had already agreed to take charge of the follow up when I did an update in February  At Easter I stood back and handed my contacts, leads and ideas to the Highways Electrical Agency when he formally took over the running of the Digital Infrastructure Skills Group of the Digital Policy Alliance.

My final task was to help identify Local Authorities and FE Colleges with land and planning permission to host short courses in the use of modern network construction techniques, technologies and equipment. The classroom facilities are easy (B4RN ran courses to international standards in village halls using equipment and materials from their suppliers). The issue is practicing with construction equipment on a realistic brownfield/greenfield site.

At the Conservative Party Conference Clive Selly said that BT was now the UK’s largest employer of apprentices and had to recruit and train 12,000 “engineers” over the next two years. The contractors to City Fibre need over 5,000. There were mutterings about the need to import skills. I said that would not help because the individuals would still need to be trained and accredited in the use of modern equipment and techniques. Those already competent earn more in Germany and France. We are also-rans in a race to catch up with Spain and Portugal … let alone Scandinavia.

On Thursday I was delighted to report back to Graham with leads for thousand of trainees for his members. I was also given equally good leads for greenfield and brownfield locations for short modular courses in modern techniques when and where the skills are most likely to be needed.  At the Party Conference I had found enthusiastic support from those in a position to make things happen. Training the natives, instead of importing foreigners, clearly strikes a chord everywhere except London-based lobbyists. [I am a Londoner and I voted Remain – mea culpa]

Those who want to know what I reported to Graham should ask him during the skills session at the INCA Conference and/or join the Digital Policy Alliance and the group he is leading.

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