Original article ISPreview UK:Read More
The Government has modified the Single Supplier Framework agreement that they awarded to Openreach (BT) last year under their Project Gigabit broadband roll-out scheme (here). The deal was originally valued at “up to” £800m and designed to help upgrade 312,000 premises in some of the hardest to reach UK areas to FTTP. But this has just been boosted in value to £1.2bn.
The framework agreement was later followed by the gradual awarding of seven related Cross-Regional (Type C) contracts to Openreach (here, here and here) – covering poorly served parts of Wales, Scotland and England (i.e. often remote rural locations with no prior access to a gigabit-capable broadband network).
The areas covered by these Type C contracts typically reflect those where no or no appropriate market interest had previously been expressed before to the Government’s umbrella Building Digital UK (BDUK) agency, or areas that have been descoped or terminated from a prior plan / contract (usually due to being too expensive for smaller suppliers to reach).
The seven call-off contracts that have so far been awarded under the framework agreement are summarised below, reflecting a total of over £730m in committed public investment and nearly 300,000 premises. In addition, any future fibre build delivered through this framework won’t have to go through another competitive process each time (i.e. later extension projects and infill in these areas will be easier to agree).
- Lancashire, North Wiltshire and South Gloucestershire, West and Mid Surrey, Staffordshire, West Berkshire and Hertfordshire (£149.7 million, 54,300 premises)
- West and North Devon, North West, Mid and South East Wales (£139.1 million, 42,200 premises)
- East and South Shropshire, North Herefordshire, North Wales, and South West Wales (£108 million, 47,000 premises)
- Mid Devon, North Somerset, and South Devon (£77 million, 37,000 premises)
- Essex and North East England (£61 million, 24,000 premises)
- Worcestershire (£41 million, 22,000 premises)
- Scotland (£157 million, 65,000 premises)
Openreach has already begun to extend their new Fibre-to-the-Premises (FTTP) broadband network into many of the above contracted areas. The new service, once live, can be ordered via various ISPs, such as BT, Sky Broadband, TalkTalk, Vodafone and more (Openreach FTTP ISP Choices) – it is not usually an automatic upgrade, although some providers are doing something similar to that.
However, the big development being spotted by ISPreview today is that the government has just made a significant modification to the related framework agreement with the BT Group. In short, the awarded contract value has increased by £400m to total £1.2bn from the original value of £800m.
The Government states that the reason for this modification stems from the following changes: A) The need for additional works, services or supplies by Openreach and, B) Additional scope has been added to the contract in accordance with the UK subsidy control regime.
This suggests that either the aforementioned contracts are going to be extended to cover additional premises or the roll-out is costing more than expected (possibly also a combination of the two). At the time of writting we’re still awaiting some clarification on the impact of this from Openreach, although they may not yet be in a position to provide much detail.
However, it’s also possible that the framework may have needed some adjustment for other reasons, such as to compensate for the fact that a number of smaller alternative networks have recently either withdrawn or scaled-back their own smaller deployment contracts under the Project Gigabit scheme. In theory, the descoped areas could be moved into Openreach’s Type C contracts, particularly if previous market engagement exercises in those areas showed little interest from other suppliers.
For example, Freedom Fibre recently scaled back their £24m Project Gigabit broadband roll-out contract for North Shropshire (here) and “mutually agreed to terminate” their £43m deal for Cheshire (here). Several other network operators similarly dropped out of their contracts, including Voneus’ £12m deal for Mid West Shropshire (here) and FullFibre Limited in the Derbyshire Peak District (£10.7m) and Herefordshire (£23.4m) – here. We suspect that one or two other contracts may also be at risk of going the same way.