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The UK government has posted a Project Gigabit contract modification that shrinks Gigaclear’s £16.6m contract for rural parts of East Gloucestershire (Lot 18), which originally aimed to expand their gigabit-capable broadband network to 4,400 additional premises. But the change shrinks the value of this contract to £10.81m “due to removal of 899 premises” from its scope.
As we’ve said before. Project Gigabit’s contracts are not static and their scope, as well as committed levels of public funding, can change over time for a number of different reasons (informed by regular ‘Open Market Reviews’ of existing UK deployment plans). For example, commercial operators may expand or reduce their roll-out plans in the same region, which can reduce or grow the scope for public investment within those same contracted areas.
The contracted operator could also find the deployment to be more expensive, or possibly even cheaper, than previously envisaged. Such adjustments may occur due to changes in build costs and interest rates / inflation, as well as any unexpected obstacles to street works or greater efficiencies of build than planned or expected. Suffice to say, there can be various reasons why the contracted scope of related builds and the level of allocated public funding may change over time.
In this case, the government (DSIT) have merely stated that Gigaclear’s “contracted scope” for LOT 18 has been “reduced in accordance with the UK subsidy control regime“. In practice this means that the “value of the contract has decreased by £5,866,944 from £16,682,000 to £10,815,056 due to removal of 899 premises from the original contracted scope of 4,446 to the new of 3,547.”
The most common reasons for something like this to happen are either because Gigaclear found the removed premises to be too expensive to upgrade or, more likely, commercial deployments of full fibre (FTTP) technology by other operators are now expected to reach the same properties.
The provider, which is home to a customer base of 150,000 (i.e. 25% take-up, with a goal of reaching 29% by the end of this financial year) and has already covered 600,000 premises with their new network (mostly in remote rural parts of England), have recently had to cut some jobs (here and here) after re-focusing their deployment strategy on the Project Gigabit contracts they hold.