The government is inviting bids from telecoms firms to create competition in wholesale superfast broadband services in rural and hard-to-reach areas of the country, with the incentive of winning contracts worth up to £2bn.
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The Department of Culture, Media and Sport issued a notice on the Official Journal of the European Union, on behalf of Broadband Delivery UK, the broadband roll-out quango.
Broadband Delivery UK (BDUK) aims to deliver local broadband projects in addition to market-driven private investments, it said.
One of the challenges of delivering fibre-based broadband to areas of the country, outside the economically-viable regions supplied by telcos such as BT and Virgin Media, is the lack of competition in wholesale broadband. BT is often the only supplier with infrastructure in place to deliver wholesale services to ISPs for onward sale to consumers and businesses. Critics say that leaves remote areas over-reliant on BT. Creating competition in the wholesale market - such as through so-called community broadband hubs - is a way of stimulating the roll-out of superfast broadband in these areas.
"The topography and demographic characteristics of certain geographies will require investment to deploy broadband infrastructure and this, together with the lack of competitive pressure, means that market-driven private investments alone will not achieve ubiquitous connectivity," said the Official Journal of the European Union (OJEU) notice.
Contractors will be required to provide the design, build, integration and operation of wholesale broadband networks at county, multi-county and regional levels. Areas covered could reach up to 500,000 premises.
The OJEU notice also specified the need for broadband solutions that meet outcomes-based specifications, rather than being tied to specific technologies and platforms. This specification suggests the government is also looking for suppliers capable of offering non-fibre services, such as mobile, microwave or satellite broadband.
The framework agreement is expected to be contracted for two years, with the potential for being extended by one year.
Fujitsu recently announced plans to build a high-speed broadband network to reach five million homes in rural parts of the UK. This is the sort of initiative BDUK hopes will benefit from the new framework agreement.
The Department of Culture, Media and Sport (DCMS) said it expects local bodies to deliver broadband services via the usual procurement routes. However, the DCMS said most of the available funding will be accessed via call-off contracts from this framework agreement. The tender for the framework agreement is due to be issued by the end of June 2011.
Separately, consumers and businesses in Wiltshire, Norfolk, Devon and Somerset will be the next to benefit from the latest phase of the government's drive to roll out superfast broadband connections to rural areas, as part of its commitment to providing the best superfast broadband in Europe by 2015.
The government said this latest phase of the roll-out will be supported by £50m, drawn from the £530m fund earmarked to support the roll-out of superfast broadband to remote areas that are expensive to serve.
The government previously announced, through the Rural Development Programme for England and BDUK, a £20m fund for rural community broadband projects, with the aim of helping end the digital and social divide faced by farmers, especially in upland areas.
Local authorities and their delivery partners were invited to bid for a slice of the £530m funding allocated over the lifetime of the current Parliament by the Chancellor of the Exchequer in last October's Comprehensive Spending Review.