The way in which Broadband UK has effectively “postponed” already agreed procurements by a year or more raises questions as to what drives the DCMS broadband agenda: a desire to postpone spend and help cut the short term government borrowing requirement or the need to make best use of the public funds available to help pull through private sector investment and aid economic recovery.
We are likely to find out within the next week or so.
Meanwhile I was struck by the statement released by INCA today (see below). They are clearly embarrassed at being caught between their desire to work constructively with officials and the growing anger of those who wish to see DCMS and DEFRA funding combined with local authority communications budgets and the funding available from property developers and business users.Meanwhile DECC plans to duplicate DCMS spend and increase the cost of smart metering by a £billion or so – manana.
The membership of INCA includes those seeking to organise world-class communications for businesses located in small rural communities like Birmingham, Bristol, Derby and Manchester. One of the most pungent contributions to the discussions on broadband at the Conservative Party conference was from a publisher who resented having to hand-over 70% of his gross to on-line operations based in the United States – because he could not even get the bandwidth to video-conference over Skype from suburban Glasgow. The availability of Broadband is now one of the standard questions on any house purchase and can make a difference of hundreds of thousands of pounds to commercial property values.
INCAStatement on Geo’s withdrawal from the BDUK Process
Whilst not unexpected, GeoUK Ltd’s announcement on 16th November that it is withdrawing from the BDUKFramework and future NGA procurements marks a sad day. Even more so since Cable& Wireless Worldwide have apparently pulled out of the Cumbria procurementand there are rumours that BDUK’s shortlist may be getting shorter by the day.
Geo is a well‐organised and effectively‐ledcompany that is actually delivering fibre networks in both urban and ruralsettings. In fact they are just the sort of company that government should be encouragingin the context of next generation networks. However Geo can’t make its model workunder BDUK’s current approach.
First, having gone down theroute of providing funding through the counties, rather than encouraging a rangeof approaches, all local authorities are being steered towards a gap‐funding model based on BT’s business case for rolling out fibre tothe cabinet. Geo and other operators both large and small ‐ Fujitsu Telecom, Gigaclear, Cybermoor, Fibre Options, IFNL, B4RN -are all working on plans that deliver much more FTTH – but they all require moreinvestment than is currently on the table. If a proportion of that investment isto come from the private sector there has to be a level playing field; the concern is that gap fundingautomatically favours the incumbent. Other approaches are possible and indeed arebeing actively deployed in other countries but they require different partnership‐based approaches recognising the risks and returns between the parties.
Another major concern expressedby Geo and others in the process is access to BT’s existing passive infrastructure(PIA). Negotiations are taking place on how much alternative operators will be charged,but aside from costs they are concerned about the restrictions BT is placing ontheir use of the infrastructure. Making the business case in rural areas is tough.It’s made tougher if BT prevents alternative operators from using PIA to providebackhaul to rural communities, to offer business grade connections (leased lines),or to connect mobile or wireless infrastructure.
Ofcom is looking at these issuesunder its Business Connectivity Market Review but that isn’t expected to reach conclusions until late 2012, well afterthe BDUK procurements should be moving ahead. In the end the big issue for all thealternative operators is to decide whether the BDUK game is worth the candle.
As Keith Vinning from Fujitsupointed out at the Next Gen Conference in Bristol, the costs of engagement are veryhigh ‘many hundreds of thousands of pounds’ and the uncertainties are great. Theknotty challenges to the business case are manifold:
· Uncertain demand;
· No guaranteed anchor tenancy from the public sector;
· PIA restrictions;
· Lack of expertise amongst the primary contractors – county councils- understandable since they aren’t used to engaging in exercises like this; and
· A funding model that likely favours the incumbent.
Add these factors togetherand BDUK could end up with a very short listindeed.
It’s not just the private sectorfeeling unhappy. Some local authorities are looking at the bigger
picture: next generation broadbandas a key underlying infrastructure for their future economic well-being and prosperity.
Investments and technologychoices made now will have ramifications for years to come so it’s important toget it right. A one‐size‐fits‐all approach isn’t necessarily goingto achieve the best outcomes. Even BT isn’t happy. Despite the likelihood that theywill be the largest winners, the balkanisation of the process means that there arescale issues and they too are having to spend large amounts of cash engaging withcouncils up and down the country. BT has a big team but it costs money.
Before we simply plunge on,surely the big question we should be asking is: ‘Are we getting this right?’
The Government’s ambition isfor Britain to have the best superfast broadband network in Europe by 2015. Most in the industrystrongly support this ambition. But at the Internet Service Providers Associationconference on 9th November delegates were asked if they thought it wouldactually be achieved. Only one hand went up, and that was the rep from BT. ISPAmembers are supposed to deliver services over these new networks, so clearly thereis a large credibility gap.
At the same time members ofEURIM, the Information Society Alliance, have been arguing for a linkage to be made between the broadband and ‘smart’ energyagendas. It seems crazy to be investing around £1.5bn to connect smart meters inhomes and businesses without linking this to the next generation broadband plan.As a rep from one of the main industry equipment suppliers said recently, ‘We’rehappy to take the money off the government twice, but we can’t really see the point.
Government needs to do morejoining up of agendas at the national level whilst allowing more freedom to innovateat the local. Ministers have successfully argued for £530m for broadband and broughtin another £150m to support rural mobile coverage. Bringing together the broadbandand energy agendas could pay extra dividends.
BDUK itself has been presentedwith a tough challenge. The 2015 target is hard to meet if your longer-term objectiveis to support the development of a competitive market with sustained investmentand innovation. It would be much easier, quicker and cheaper to simply allocatethe money to BT. However, if the government wants a competitive landscape the inputproblems need fixing and that takes time. Meanwhile the pressure from MPs and communitieswanting better broadband continues. They know money has been allocated and theywant results. None of this is easy. We need to take a hard look at what the 2015target means and get the key players round a table to thrash out the issues.
With local authorities, a positivestep that BDUK could take is to encourage those with the capacity to innovate todevelop creative approaches – and then let them get on with it, rather than insistingeveryone follows the same model. The Community Broadband Fund is an opportunityto support innovation, but is woefully small at £18m.Taking a look at what couldbe achieved by pushing more funding in that direction could really help.
Government needs to move fasteron the release of spectrum for wireless services and more pressure needs to be appliedto Ofcom to fix the PIA problem so we can ensure a level playing field for all operators.It needs a bit of ministerial table thumping. Meanwhile the private sector needsto look at different models that both encourage more investment and organise demand.
This means working top downwith capital markets and government, and bottom up with communities, bringing in more patient capitaland better matching supply to identified demand. There are models available at bothends, it’s not rocket science it just requires more linking between sectors thatdon’t normally talk to each other – e.g. connecting those who help villages raisecommunity investment to save their shops and pubs,with those who build broadband networks or city institutions raising capital throughthe markets working with companies seeking long‐term capitalfor next gen broadband projects.It will work if we get the fundamentals right.
INCA is helping with theseagendas. Following the Next Gen 11 conference in Bristol, an INCA seminar in Yorkon 24th November is bringing together people from Local authorities,the private sector and communities, to learn more about the different approachesthat are starting to show success. They will hear about projects in Manchester,North Yorkshire, York itself and more rural areas.
In addition in 2012:
We will launch a Quality Marquefor local broadband schemes giving confidence to
investors, project developers,service providers and customers that they are standards-based and well organised.
We are setting up a rosterof suppliers and consultants able to support the development of projects build and operate them.
We will publish the secondedition of the popular ‘Beyond Broadband Guide’ that
has proved very effective athelping local authorities, communities and other get to
grips with the issues. We willcontinue to enhance the online Knowledge Base
that extends the guide.
We plan to work withpartners on community engagement and demand stimulation,
Including a visit to theNetherlands to learn from some of the Dutch examples.
We will continue to lobbyfor changes that support more competition, better services and choice for allof us as citizens and consumers.
You can learn more, followthese developments and join us at www.inca.coop
and on twitter@inca_nextgen
This statement has beenprepared on behalf of INCA’s board.
I do not necessarily agreewith everything in that statement but it gives plenty of food for thought and I am grateful to Malcolm for giving me permission to reproduce it in full.