Cds sep market event pdf

Connecting Devon and Somerset ‘The biggest Digital Infrastructure build opportunity for rural communities in England’ Superfast Extension Programme 04th December 2015

Today’s Agenda 11.00 Welcome Address 11.05 Local Political Perspective 11.20 BDUK Commitment to the Programme 11.35 Update on State Aid 11.50 Coffee 12.20 Current Thinking to move CDS Forward & Supplier’s Perspective 13.10 Panel Q&A & Closing Remarks 13.30 Networking & Lunch followed by Supplier Sessions with CDS Team

Paula Hewitt CDS Board Member

‘The biggest Digital Infrastructure build opportunity for rural communities in England’

Where we are now • 225,000 premises fibre connected • Has averaged delivery of 7,000 premises a month • On track to extend Superfast broadband to around 90% of premises (270,000 in CDS programme)

Where we want to be • • • • •

Phase 2 is all about SuperFast To go to 95% and beyond By the end of 2017 4th utility A robust and comprehensive solution to benefit our communities

Challenges for the next Phase • • • • •

Widespread Intervention area Areas of infill Complex topography Expectations Your input

Introducing the CDS Team • Keri Denton – Programme Director • Phil Roberts – Programme Manager • Matt Ballard – Programme Manager • Ken Singleton- Technical advisor • Martin Gerrish - Finance • Sofie Francis – Communications • Iain Perkins - Procurement and Contracts • Karen Bohan - Officer • Nathaniel Lucas – Officer • Matt Barrow – Officer • Louise Jarman– Officer • Katriona Lovelock Officer • Rem Noormohamed – Legal advisor

Councillor Andrew Leadbetter CDS Board Member

‘The biggest Digital Infrastructure build opportunity for rural communities in England’

Positive impact of broadband • “Superfast broadband is rapidly becoming an absolute necessity” • “ a massive plus” • “I’m delighted with it – it’s given me an extra hour every day” • “We export to over 50 countries …I’m installing the systems I’ve wanted to deploy for ages” • “we can now work remotely”

Importance to business in rural areas • 94% of SME’s think reliable internet connection critical to their business • 67% agree reliance on internet will increase • 14% lack of reliable SFBB the main barrier to growth (FSB research) • Daily contact from businesses asking when they will be connected.

• Experience of strong take up in rural areas.

• 20 Additional Business Parks covered

Councillor David Hall CDS Board Member

‘The biggest Digital Infrastructure build opportunity for rural communities in England’

Important region • CDS Phase 2 an important opportunity • Significant economy • Large population • Good take up

All about Growth • GVA below national average • Local understanding of need for and commitment to growth • Centres of excellence; aerospace, marine, nuclear, big data, agri-tech etc.

• Need for cost effective technologies

Financial and political commitment • Testing economic times • Significant support from authorities across the region • Joint approach with private sector

What we hope to achieve today….

Provide information about the current position • Obtain a clear understanding of – any concerns of potential bidders – What we can do to make bidding attractive for you – Factors which may influence desire to engage in bidding.

– Opportunity for networking within sector to enable collaborative working and innovative solutions

Chris Townsend CEO, BDUK.

‘The biggest Digital Infrastructure build opportunity for rural communities in England’

Delivering superfast broadband to the UK 1. Superfast broadband coverage to 90% of UK by early 2016 2. Universal 2Mbps standard broadband access by end of 2015 3. Superfast broadband to 95% of UK by 2017 4. Developing options to extend superfast broadband coverage beyond 95% 5. Provided over 50,000 connection vouchers to SMEs

Department for Culture, Media & Sport

Extending coverage 2015

Proportion of UK premises able to receive superfast speeds 9%

45%

75%

2017

90.8% 95% 99%

100%

Virgin only

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

BDUK Phase 1 ÂŁ1.2bn public funds

BDUK Phase 2 Up to ÂŁ500m

BT and Virgin premises 28m Number of premises 4.2m

2.7m

12.9m

21.6m

1.1m

25.8m 26.9m Final 0.5-1.0% likely to requireMedia high-speed Department for Culture, & Sport satellite

Current position • Superfast broadband is available to 83 per cent of UK premises – up from 45 per cent in 2010 •

(Ofcom’s Strategic Review of Digital Communications discussion document, July 2015)

• Average broadband speed in the UK has more than quadrupled since 2010 – from 5.2Mbps in May 2010 to 28Mbps in June 2015 (Ofcom Infrastructure Report, 2014)

• 99 per cent of premises are able to access speeds of 2Mbps or above by end of 2015 and USC will offer option for the remaining 1% (Ofcom European Broadband Scorecard, February 2015)

• Superfast broadband coverage (over 83%) and take-up per household (over 27%) in the UK is highest among EU5 countries Department for Culture, Media & Sport

Phase 1 & 2 - 95% of the UK Phase 1 superfast roll-out

Phase 2 superfast roll-out

£1.2bn total public investment with

£250m BDUK funding plus local

£530 million from BDUK to reach 90% of UK premises by 2016

match funding to reach 95% of UK by end of 2017

44 projects across the UK

44 contracts signed

3.3 million premises passed

3 Contracts to be signed

4 million by spring 2016

1 million additional premises by December 2017

4.2 million additional premises

by June 2016 Department for Culture, Media & Sport

Broadband Fund for the South West

• The new Digital Communications Infrastructure Strategy outlines an ambition for Ultrafast Broadband for nearly all of the UK • This fund extends the support already being provided through the superfast programme • The south west has some of the most difficult topography in the UK for fixed broadband rollout • The fund will prioritise bids which provide ultrafast speeds of at least 100Mbps.

• £5m available in each of 16/17 and 17/18 Department for Culture, Media & Sport

Phase 3 superfast roll-out

Phase 3 - the final 5%

ÂŁ8m market test pilots exploring options for going beyond 95% This image cannot currently be display ed.

7 pilots being taken forward into deployment

This image cannot currently be display ed.

Suppliers have now published their feasibility reports live services available over 700 customers connected

Department for Culture, Media & Sport

Market Test Pilots: Initial Findings • Demonstrated the viability of alternative approaches in the Final 5% • Flexibility has created cost savings in deployment.

• Working successfully with local authorities • Exploring the options for community funding models • Ways of overcoming difficulties in relation to planning permission

Department for Culture, Media & Sport

Market Test Pilots Supplier

Location

Technology

Satellite Internet

Exmoor, Devon & Somerset

Superfast capable satellite

Callflow

Hampshire

Hybrid FTTP, FTTC and FWA

Avanti

Scotland & Northern Ireland

Superfast capable satellite

AB Internet

Monmouthshire

Hybrid fibre and wireless

Airwave

North Yorkshire

Fixed Wireless

Quickline

North & North East Lincolnshire

Fixed Wireless

Cybermor

Northumberland

Hybrid fibre and wireless Department for Culture, Media & Sport

Market Test Pilots: Wireless AB Internet Fixed Wireless Superfast

Airwave – Next Generation Wireless

Quickline - Superfast Wireless Network.

Department for Culture, Media & Sport

Market Test Pilots: Hybrid

Cybermoor – FTTP in a Challenging Environment.

Call Flow – Hybrid Approach

Department for Culture, Media & Sport

Market Test Pilots: Satellite

Avanti - Superfast Capable Satellite

Satellite Internet Superfast Capable Satellite

Department for Culture, Media & Sport

Market Test Pilots: What are customers saying?

• 92% of respondents thought there were benefits to the new broadband.

• 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.

BDUK Survey – September 2015 Department for Culture, Media & Sport

Growth in non-BT projects

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

2015 Phase 2 Procurements (£20m) June 2014 Airband 7 x Market Test Pilots Callflow (£8m) Cotswold (ITS) AB Internet Gigaclear x3 Airwave UK Broadband Avanti CallFlow Cybermoor Quickline Satellite Internet Department for Culture, Media & Sport

BDUK Commitment

• BDUK Funding has been ring fenced for delivery of the project • BDUK are committed to supporting CDS with senior management support, project management and value for money advice • BDUK are committed to finding a State Aid solution that will work for the CDS Phase 2 Procurement Department for Culture, Media & Sport

Matt Agar Commercial Lead BDUK

‘The biggest Digital Infrastructure build opportunity for rural communities in England’

What is State aid?

•

Rules designed to regulate the use of public sector resources so as to avoid distortions of competition in EU –

•

Can include Subsidies, Grants, Loans, Guarantees, Benefits in Kind

The specific State aid rules for the deployment of broadband networks are referred to as the Broadband Guidelines.

State aid rules do not generally apply to: •

•

Aid which satisfies the Market Economy Operator principle (formerly “MEIP”) –

The public body must be behaving in the same way as a private investor in similar circumstances.

–

E.g. pari passu loans and equity, appropriately priced guarantees

Aid to compensate for Services of General Economic Interest (SGEI) –

Relates to beneficiaries entrusted with clearly defined public service mission Page 32

BDUK Approach to State aid • BDUK approach to State aid is to progress a twin-track process to a flexible approach for local bodies to either:– –

Pursue an ‘umbrella’ Notification: A process where the Commission examines how the scheme conforms to the 2013 Broadband Guidelines and whether any derogations are necessary; and – as an alternative Support General Block Exemption Regulation II (GBER II) Article 52: For smaller schemes and projects (schemes less than €150 million or projects less than €70 million).

• GBER compliant projects do not require notification, but are subject to strict criteria regarding the deployment of broadband, in particular, requiring the provision of full open access.

• BDUK is aligning the two approaches as much as possible, incorporating recent best practice, as well as reflecting on our conversations with the Commission, to make both options as practicable as possible • E.g. balancing Commission’s expectation for smaller procuring smaller areas with the market’s requirement for a minimum scale of network and expectation of low ‘transaction costs’

Page 33

Use of GBER II • The full requirements of the Broadband Guidelines flow through to any procurements seeking to utilise GBER II as their State aid ‘approval’ route.

• The key requirements for procurements under GBER II is that they will need to provide full open access and where targeted to provide NGA services:– Fibre to the Premise – duct access, dark fibre, physical unbundling and bitstream.

– Fibre to the Cabinet – duct access, dark fibre, sub-loop unbundling and bitstream – Fixed Wireless Access – mast, antennae, backhaul and bitstream

• Key principle is that access is not limited to broadband uses and that other forms of access e.g. mobile has to be provided subject to reasonableness test.

Page 34

Use of GBER II • The Guidelines and GBER II leave some uncertainty upon the requirements for open access and how in the practical terms this can be delivered by operators.

• We have engaged with market to practically define access and will be presenting the outcome of this to the Commission very soon.

• BDUK will have completed engagement and defined open access will be available prior to when bidders need to begin to prepare formal bids

Page 35

State Aid – Role of the National Competence Centre • BDUK’s NCC will provide oversight upon any newly notified scheme or GBER II Pre-Procurement Open Market Review • OMR – Request for Information to broadband operators • Support local Bodies in analysis and assessment responses (coverage and technology) • Considers assessment of alternative delivery model • NCC validates, supplier evaluation and state aid mapping

Procurement and Contracting

Public Consultation •

•

• • •

Ensures transparency as to where aid targeted.

Seeks feedback from stakeholders (residents, businesses, suppliers).

Confirms legal basis of targeted areas Requests infrastructure sharing NCC confirms Local Body intervention area

Sourcing •

• •

•

•

•

Open, transparent, non discriminatory tender.

Technology neutral.

NGA qualifying and target appropriate white areas Makes use of existing assets/ infrastructure.

Step change significant new investment in new infrastructure and doubling speeds.

NCC confirms compliant process and provides confirms state aid compatibility

In Life • Wholesale access available and wholesale access requests.

• Transparency of the deployed infrastructure.

• Clawback implemented • Price benchmarking.

• NCC monitor ongoing compliance

Page 36

State aid – Key Messages for Suppliers • Co-operate with Local Body when they are developing mapping and respond with information requested.

– We don’t want to spend money where it is not required – Similar approach to development of mapping but encourage premise level mapping – Evidence technical capability of networks as qualifying NGA Technology (e.g.

FTTC/P, cable (DOCSIS 3.0), advanced wireless technologies)

• In submitting bids – Understand your financial models and be able to demonstrate financial viability.

– Evidence NGA technology compliance.

– Demonstrate how wholesale access requirements will be met.

• NCC is happy to engage in direct dialogue with Suppliers on how to evidence NGA compliance for State aid approval Page 37

Reference Material • Broadband Guidelines – http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2013:025:0001:0026:E N:PDF)

• General Block Exemption Regulation – http://eur-lex.europa.eu/legalcontent/EN/TXT/PDF/?uri=CELEX:32014R0651&from=EN

• BDUK State aid pages – https://www.gov.uk/government/publications/state-aid-advice

Page 38

THANK YOU • For any questions please contact us: – Matt Agar matt.agar@culture.gov.uk – The National Competence Centre at stateaidforbroadband@culture.gov.uk

Page 39

Phil Roberts & Ken Singleton CDS Programme Team ‘The biggest Digital Infrastructure build opportunity for rural communities in England’

Current thinking on moving CDS forward: Topics to be covered: – EME intelligence – Solution layers and costs – Outline coverage requirements – Areas for further exploration – Possible scenarios – Information to assist Bidders

Current Thinking for CDS to move forward: • Biggest Digital Infrastructure build opportunity for rural communities in England • EME Intelligence has helped CDS to: – Understand Industry ‘s business development cycles & internal business case drivers to bid for an opportunity of this scale – Understand the scope, capabilities and commercial direction of Suppliers through Early Market Engagement – Recognise the solution layers that need to be considered during ITT development – Capture the solution features that need to be considered in the ITT – Recognise the need to offer the catchment area in ways that allow industry to deliver an optimum solution

EME Intelligence • Understanding the scope of Companies in EME the stage , we have engaged in the following Sector: • Fibre Operators & Providers • Wireless Operators & Providers • Main Contractors • Industry OEM’s • And have covered the following range of topics and USP’: • Wholesale Access Network Operator • Delivery contractor / sub contractor experience • Whole Area Level or Smaller Lots • Private funding & Leverage • Alternative Business Models • Technical solution expertise

Illustration of Solution layers and unit costs Technology

vs

£ 200 Best Practice Network Solution

Network Solution

£ 600

vs

£1000

Unit Cost £1700

ULTRAFAST Alt Net Fibre based Rural Ethernet GPON

SUPERFAST Alt Net Sub Loop Unbundling FTTC

Best Practice --------------VDSL------------------> Technology Fit

Alt Net Fixed Wireless Access -----------------Fibre------------> Licensed Spectrum - LTE Unlicensed FWA SUPERFAST

--------------Wireless------------>

<------------------------------Coverage Requirements------------------------------> .

*All figures are indicative estimates only and should not be relied upon to make any decisions

Illustration of Solution layers and costs Unit Costs

Unit costs per premise to LB after varying Leverage examples

£ 100

vs

£ 850

Leverage in order of 50% and above

£ 800

£ 480 Low CAPEX

£ 200

£ 500

£ 300 High CAPEX

£ 160

Funding Leverage

Leverage

in order of 20%

£1000

£ 600

.

*All figures are indicative estimates only and should not be relied upon to make any decisions

£1530

£1700

Coverage requirements • • • •

Very rural; sparsely populated; difficult terrain No large clusters of unserved premises Spread across entire Programme Area Probably the largest number of unserved premises in the UK • BUT significant pent-up demand from poor speed areas

Connecting Devon and Somerset

National Parks

Postcodes with NGA White Premises

Heat Map showing density of NGA White Premises

Average of NGA White Premises per km2 25 7 6 5 0.5

Example of Possible Zones

NGA White Premises (ref Feb 15 OMR currently in revision)

19,000

14,000 15,000 19,000 24,000

19,000

NGA White Premises per km2

25

11 11 7 12

15

Heat Map overlaid with postcode locations

Heat Map of NGA White Premises

Average of NGA White Premises per km2 25 7 6 5 0.5

Heat Map of NGA White Premises

Average of NGA White Premises per km2 25 7 6 5 0.5

Heat Map of NGA White Premises

Average of NGA White Premises per km2 25 7 6 5 0.5

Heat Map of NGA White Premises

Average of NGA White Premises per km2 25 7 6 5 0.5

Heat Map of NGA White Premises

Average of NGA White Premises per km2 25 7 6 5 0.5

Heat Map of NGA White Premises

Average of NGA White Premises per km2 25 7 6 5 0.5

Predicted Geographical Coverage at the end of Phase 1 Contract

Yellow â&#x20AC;&#x201C; one superfast provider Blue - no superfast provision

Phil Roberts CDS Programme Team

â&#x20AC;&#x2DC;The biggest Digital Infrastructure build opportunity for rural communities in Englandâ&#x20AC;&#x2122;

Scope of the Challenge Open Market Review – New OMR issued 9th November – closing date 7 Dec – Requested premise level information in Intervention Area – Review will update on • Current NGA deployment • Anticipated deployment over next 3 year period

– We want to cover what’s left!

Getting a head start Information currently available – Local authority Assets: http://www.connectingdevonandsomerset.co.uk/phase-ii-superfastextension-programme/ ....

– CDS can access Property database of County & District Asset locations for Devon, Somerset, Police, Fire & Rescue, Exeter University – CDS can help identify potential assets in ‘difficult’ locations – CDS can help identify areas of likely future development – Also on CDS website access to OMR data from Feb 2015 (NB Actual Intervention Area will have increased (new sites/postcodes, Multiple Occupancy dwellings)

What we have supplied in the past - What was helpful?

Locations /assets • Building locations & other enabling infrastructure • Mobile and other phone masts & aerial locations • Wind farms

What we have supplied in the past - What was helpful?

Highways • Civil works on roads plans • General restrictions on road access (e.g. no-go periods due to holiday traffic) • Planned Local Authority street lighting works • Street furniture

What we have supplied in the past - What was helpful?

Opportunities/ restrictions • Employment land – current, planned & future areas • Conservation, wildlife and woodland areas owned

by LA’s * NB Backhaul EME suggested some useful alternatives in the SW region

Local Authority/Public Asset Info – What further information would be useful?

– How can CDS help to simplify your planning process with respect to public assets?

Areas to think about: – What can suppliers offer in return for ‘free’ or nominal cost for way leaves?

– What are the arrangements with landowners, farmers etc. for power (if required for deployed solution)?

Areas CDS would like to explore with Suppliers • Business model options?

• Customer take-up assumptions?

• State Aid requirements; e.g. Open Access & Wholesale pricing?

• Coverage capabilities for different technologies?

• Catchment area: one ‘superlot’ and/or sub Lot areas?

• Addition of requirement for ‘Ultrafast’ broadband?

‘The biggest Digital Infrastructure build opportunity for rural communities in England’

Connecting ConnectingDevon Devonand and Somerset Somerset

• Todays Presentation • Q&A Can be found at: www.supplyingthesouthwest.org.uk

Questions & Answer Session