Universal gigabit connectivity for all is in sight
Report from the latest Market Engagement Event hosted by Building Digital UK, outlining the forthcoming "Outside In" programme.
On 3 February 2020 Building Digital UK (BDUK), part of DCMS, held their latest Market Engagement Event with telecoms providers for the Government’s new rural-first “Outside In” programme, an idea proposed in the 2018 Future Telecoms Infrastructure Review (FTIR), for which BDUK will take on the role of contracting authority.
This procurement is a follow-up to the long-running Superfast Broadband programme, which has facilitated access to a fixed "superfast broadband" service of at least 24Mbps downlink, for some 5 million homes (it doesn't replace Gigabit vouchers, which continue).
This latest procurement is intended to address the hardest to reach premises (note: not just homes) and, consistent with the Government’s revised technology-neutral objective of ensuring “gigabit-capable” (1Gbps) broadband is available to all by 2025 (the previous target was universal Fibre To the Premise (FTTP, or “Full Fibre”) by 2033, premises reached may not get full fibre.
Up to £5bn of new public investment is available for this (the State Aid Notification Process should be finished this year, where the European Commission is currently reviewing its broadband guidelines) and it expected that an additional 5 million premises will be within scope.
The programme will run for up to 9 years, with contracts being awarded from 2021. Contracts are expected to average about 3300 premises, which BDUK believes might constitute a “neighbourhood." In many rural areas 3300 premises could represent a large neighbourhood, and more than one Openreach spine.
BDUK is intending to look at complete neighbourhoods, not seeking to identify individual “rural” premises. It is confident that it will be able to identify areas with a high proportion of hard to reach properties, from which it will then remove those reached, or planned to be reached commercially, by gigabit capable technologies. BDUK aims to avoid splitting up neighbourhoods. Contracts will include a mix of hard, and harder, to reach premises.
Premises covered don’t actually have to subscribe as soon as the selected technology reaches them (many rural households may have a low willingness to pay), so long as a standard installation would be available which could be triggered simply by a phone call to the provider.
It is worth noting that, alongside a technical evaluation, and pricing assessment, 10% of each bid’s points will be derived from an assessment of “social value,” encompassing wider benefits such as safe and secure (and diverse) supply chains, sustainability, skills, and training. Additionally, each bidder will be required to demonstrate that they have a corporate modern slavery policy.
The adoption of technology neutrality allows hybrid fibre coax and 5G (cellular or Fixed Wireless Access [FWA]) to contribute towards achieving the Government’s objective. In theory, the “New Space” developments within the satellite sector, where constellations of small satellites orbiting much closer to the earth hold out the potential of faster, lower latency broadband by satellite than ever before, could also contribute to the target.
While some commentators have been disappointed by the step away from an insistence on providing FTTP, dropping the requirement for full fibre should make the 2025 target date potentially achievable, if still challenging. It will need a quick ramp up, then 1.5m premises per year delivery. Also, there are instances of individual premises (for example, a farmhouse at the end of a 1km road) where it may be hard to justify the level of public subsidy required to provide FTTP when 5G FWA from a nearby fibre POP could provide a gigabit connection.
With these pre-launch market engagements, which Analysys Mason are assisting with, BDUK hope to identify potential problems to such a rapid delivery. Several issues flagged by industry on the day were:
- There is an aggregation risk if the terms bid are predicated on a bidder winning multiple contracts, yet there were no means offered of a bidder to conditionally bid across those contracts (the comparison here would be Ofcom’s combinatorial bidding in spectrum auctions). This could result in stranded assets.
- There is a risk of bids being priced unrealistically low based on expectations of the usefulness to deploying fibre of Physical Infrastructure Access (PIA, or regulated access to Openreach’s ducts and poles). In many rural areas, the quality of these assets may be suboptimal (e.g. ingress from tree roots) but Openreach may be unaware of this.
- Wayleaves (as in urban areas) represent a barrier. Landowners may expect a regional broadband provider to pay the same cost to run fibre over their land as Openreach would pay. Additionally, access to public assets has proved a barrier to prior rural broadband deployments, for example where Network Rail has refused permission for fibre to be deployed over a rail bridge that divides a village.
- Should BDUK target specific regions in series to maximise efficient utilisation of the workforce? How mobile is the workforce? Regional players generally won’t have resources out of their existing region and deploying infrastructure outside of that area starts to run up additional costs such as accommodation.
- Risk of “doughnut developments," where sub-optimal connectivity remains in a town centre while public money provided superfast connections in the rural fringes surrounding that town centre. To address this it would be useful if the providers of the connectivity in the ring of the doughnut were able to flag to BDUK where they were ready to build next; that such stranded town centres wouldn’t be ruled out of scope as being insufficiently hard to reach; and that contracts could be “specced” to take account of existing infrastructure.
One further fact worth considering about publicly subsidised fibre deployment, is that fibre needs to be seen as more than just providing broadband access, fibre should also be an enabler: of 5G (after all, a 5G network is essentially a fibre network with radios at its ends); of smart buildings; of reliable (and water resistant!) connectivity for IOT and much more. Maximising the multiplier effect of this considerable public investment means more than just providing gigabit capable broadband to premises.
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