BDUK UpdateDavid Hamson, BDUK INCA event - Shrewsbury24 May 2016

1. Superfast broadband coverage available to nearly 90% of UK homes and businesses (up from 45% in 2010); on track to achieve 95% by Dec 2017.

2. BDUK programme added over 3.8 million superfast premises to date and aiming for 4 million by spring/early summer 2016

3. Access to Universal 2Mbps standard broadband now in place.

4. Have piloted options to provide superfast broadband coverage to hardest to reach areas.

5. Issued over 50,000 connection vouchers to SMEs

Delivering superfast broadband to the UK

UK Superfast Broadband Availability

BT superfast coverage only(incl. commercial & non-BDUK)

Proportion of UK premises able to receive superfast speeds

BT and Virgin premises

Virginonly

BDUK Phases 1 & 2£1.7bn public funds

95%76%8% 45%

100%

99%

20172015

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ive

Pro

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Final 0.5-1.0% likely to require high-speed satellite

• Now live UK wide: currently approx. 300,000 premises eligible, reducing to about 200,000 at end of Phase 2

• Allows eligible premises with less than 2Mbps to access a subsidy to provide a satellite broadband connection

• BDUK will work with Local Bodies and suppliers to ensure eligible premises are aware of availability

Universal Service Commitment

UK Superfast Broadband Availability

BT superfast coverage only(incl. commercial & non-BDUK)

Proportion of UK premises able to receive superfast speeds

BT and Virgin premises

Virginonly

BDUK Phases 1 & 2£1.7bn public funds

95%76%8% 45%

100%

99%

20172015

Alte

rnat

ive

Pro

vide

rs

Suppliers extending commercial coverage; Local Bodies re-investing underspend and clawback

• BDUK and Local Bodies need to maintain delivery to reach 90% and 95% superfast targets and push suppliers to accelerate roll-out

• Complete contracting with remaining existing funding

• Use VfM controls with BDUK support to maximise underspend

• Deploy BT early gainshare funding (£129m)

• Promote further take-up to maximise gainshare

• Press BT, Virgin and other suppliers to maximise commercial coverage

• Encourage communities to register demand e.g. with Virgin’s Cable My Street, or to explore community funded projects

Actions to extend coverage

State Aid Clearance

• UK’s previous umbrella State aid scheme ended in June 2015

• UK in negotiation with the Commission on an extension to enable further procurements to gain State aid cover

• We have notified the Commission and are expecting a decision very soon.

Background to the Pilots• Market engagement carried out by BDUK in late 2013

indicated that new models would be needed to take superfast broadband beyond the current target of 95% coverage by 2017.

• In response to this, BDUK launched a £10m Innovation Fund in March 2014 to explore ways to expand superfast broadband coverage in technically and commercially challenging areas across the UK.

• Bids were invited into three lots testing: technology, operating and financial models. 26 suppliers submitted Pilot proposals.

8

Market Test Pilots delivery framework

• Eight Pilots were selected, with seven Pilots continuing on to the deployment phase after an initial feasibility assessment.

• Deployment across all seven Pilots began in February 2015, and installation of the networks was completed in March 2016.

• Each of these Pilots was selected following an assessment of their long term commercial sustainability to continue operating in their target areas after March 2016.

• The first Pilot customer connections were achieved in March 2015; total premises passed/connections from across the seven pilots by March 2016 was less than10,000.

• Avanti: 23,500 premises • Satellite Internet: 420 premises

Seven networks; 0.1% of UK premises

SATELLITE

• AB Internet: 1,600 premises • Airwave: 270 premises • Quickline: 4,211 premises

• Call Flow: 1,670 premises • Cybermoor: 300 premises

WIRELESS

HYBRID – FTTP/FTTC/FWA

All project areas are in the lowest 25 of premises density in the UK, and four projects are in the lowest 1% premises density.

Some are in ‘sparse settings’ – a measure for proximity to towns

0.1% of UK

premises

What we wanted from the pilots

• Generate evidence about the cost, funding options, and sustainability of the networks

• Build capacity and capability in the supplier market and knowledge of broadband State aid requirements by disseminating the Pilot findings

• Generate evidence about expected levels of take-up in hardest to reach areas and how it can be incentivised

• Collect information on performance in the field and user experience for different technologies

Learnings about smaller suppliers

• The smaller supplier market has the capability:• They can design and build networks that maintain superfast

speeds and meet the State aid requirements for NGA and basic interventions

• Smaller suppliers often take advantage of a flexible approach: • Flexibility can add value by delivering greater coverage and

lower costs

• Smaller suppliers can win customers: • They can provide services that customers value, and these are

starting to generate good levels of take-up.

Wider benefits and learnings

• Communities can work together with suppliers to create viable conditions for small projects. Creating a standardised offer such as Cybermoor’s “Broadband in a Box” will make this easier.

• New partnerships have been fostered, including with other network providers such as Janet and Network rail telecoms.

• New commercial relationships have also emerged which are likely to be sustained after the pilots. For example, Call Flow and BT Openreach have worked together to trial the deployment of new cabinets at new locations requested by non-BT suppliers.

Relatively low cost per premises...

...combined with relatively high coverageIn some of the hardest to reach areas of the UK:

• Call Flow will achieve 96%+ coverage for less than £800 public subsidy per premises on average through its hybrid approach that combines FTTP, fixed wireless and FTTC.

• Cybermoor will achieve over 99% coverage of a very sparse and low density area at £1,220 public subsidy per premises using its mix of 55% FTTP and 45% fixed wireless.

• Quickline will achieve 100% coverage of their area at just £475 public subsidy per premises. While Quickline is using only fixed wireless technology, it is displaying flexibility by mixing Line of Sight and Near Line of Sight technology.

• Avanti and Satellite Internet reach 100% coverage at between £330 and £800 per premises.

Innovative approaches have helped to drive down deployment costs

• Call Flow’s hybrid model includes multiple build methods and technologies to suit the challenges of each location – Physical Infrastructure Access (BT’s ducts and poles), new fibre on new poles, direct buried new fibre on private or Highways land, testing a variety of mole ploughing techniques, SLU, wireless

• Quickline’s reuse existing infrastructure and use temporary masts while awaiting planning consent

Innovations driving down costs

 

 

What are customers saying?

• 94% were more satisfied with their Pilot service than their previous broadband – this was consistent across the technologies

• The three most popular benefits of new broadband identified by respondents were speed, reliability and cost.

• Only 2% of respondents do not intend to keep their new broadband at the end of the pilot period, if the price remains the same.

   

Take up so farTake up so far across the Pilots is encouraging, but variable:

• Non-fibre based technology suppliers can deliver reliable, superfast-capable broadband speeds and a high quality of broadband service.

• Suppliers can successfully mix technologies to deliver cost-effective superfast broadband in hard to reach areas.

• Smaller suppliers can bid for, win and deliver open public procurements at competitive costs

➢ Eleven alternative suppliers have been contracted to deliver the 7 Market Test Pilots and nine of the BDUK Superfast Broadband Phase 2 contracts.

• Communities can work together with suppliers to create viable commercial conditions for small projects

• New partnerships have been fostered, including with other network providers.➢ Janet, Network Rail Telecom and water contractors

Market Test Pilots: Interim Findings

Growth in non-BT projects

June 2013Rural Community Broadband Fund (~£1m) Tove Valley Northmoor (Gigaclear)

June 20147 x Market Test Pilots (£8m) AB Internet Airwave Avanti CallFlow Cybermoor Quickline Satellite Internet

2015Phase 2 Procurements (£20m) Airband Callflow Cotswold (ITS) Gigaclear x3 UK Broadband

But…

But…

• Take-up varies and is highly sensitive to awareness (marketing) and demand stimulation

• Successes have not been uniform across all the Pilots

• To what extent can the flexibility be maintained at scale?

Next steps….

• Pull together all new information into a final lessons learned report and share findings with suppliers, local bodies and government policy teams

• Explore how to promote community funding options

• Explore commercial viability of fibre in hard to reach areas – e.g. Janet, Network Rail Telecoms

• Work with suppliers about how to assist commercial rollout in hard to reach areas by understanding barriers and promoting examples of best practice

Questions?