Strategy for broadband in Shropshire: open letter from Councillor Steve Charmley

Dear All

In order to set expectations and dispel some of the myths perpetrated by detractors of the Connecting Shropshire Programme I thought I would provide an ‘open’ letter update on our progress and aspirations for delivering better broadband to all the communities in the Shropshire Council area. Contrary to reports we are very focused on achieving this and if there remains a need, the council will review investment accordingly, as previously stated.

Introduction

The Connecting Shropshire programme remains a key strategic and priority programme of activity for Shropshire Council. It is fully supported by its funders and Shropshire Council has invested over £9m capital and revenue into the programme up to 2016. It remains a key enabler of service transformation, supports our local and Marches Local Enterprise Partnership (LEP) business economy, and is no longer a luxury but a necessity that all our communities expect. As a reminder Shropshire Council has, through diligent work, secured funding towards broadband infrastructure in Shropshire of:

Phase 1: £26m
Phase 2: £17m

State Aid

State Aid (how we use public money) remains a key constraint within the national government BDUK (Broadband Delivery UK) programme. It is important that the State Aid rules are appreciated as they have a significant impact on the procurement opportunities and method of delivery. Any failure to meet the State Aid conditions can potentially put the authority in breach of European legislation which places a risk that competitor suppliers can challenge our contract and delivery methodology. The key conditions of the scheme place the following obligations upon the council:

• Public funds cannot be used to build infrastructure in areas where commercial providers have plans to build their networks
• The money has to be spent on deploying superfast broadband (at least 24 megabits per second) to as many premises as possible. We can’t spend on deploying to more premises at lower speeds
• The network must be ‘open’ and allow for choice of retail providers to maintain competition in the internet service provider (ISP) market
• The solution must be robust and be scalable to service the speed requirements of network users. Wireless technologies, although now supported, have more technical challenges around resiliency and capacity. Most importantly any solution requires the incumbent supplier to ultimately deploy a fixed fibre solution when it is economically viable to do so. This, for obvious reasons, is financially challenging.

Progress on Phase 1

Delivering fibre broadband is a significant engineering challenge that involves a partnership approach. Fibre cable is taken from ‘head-end’ exchanges, which in most cases are located in market towns, and is ‘rolled out’ to new cabinet locations. This takes time, requires road closures and, in many cases needs new ducts and cables. In addition all fibre cabinets need a power supply which often requires the negotiation of wayleaves. The programme remains ‘on target in its current Phase 1 delivery that started in March 2013 and is due to complete by winter 2016. Phase 1 aims to deliver superfast broadband to 87% of premises, when added to commercial providers obligations. To date we have delivered to over 35k premises (out of 64k) all of which now have access to fibre enabled service. Average speeds across the 180 cabinets already built is on average 50 megabits per second. Contrary to some reports, many cabinets are now delivering superfast broadband to areas where speeds were previously very poor.

Councillor Steve Charmley, Deputy Leader, and councillor responsible for the broadband programme in St Martins, where fibre broadband is now available.

We are anticipating savings within Phase 1 that will contribute to further coverage. This will be assessed as part of any pre Phase 2b procurement being undertaken.

Phase 2

Prior to procuring our Phase 2 delivery the council undertook due diligence with the supplier market to assess potential procurement, delivery and financing opportunities. At that time, and for the reasons outlined in the 10 December 2014 report, Cabinet decided to undertake a further BDUK framework procurement exercise using the secured £11.38m from the Department for Culture, Media and Sport (DCMS).

The purpose of the BDUK grant funding was to take Shropshire to at least 90% SFBB (Superfast Broadband) coverage locally, which remains a Government target by the end of 2017, together with providing SFBB to 95% of the UK within the same timescale. BT’s contract, which was signed and reported earlier this month, will use £4.7m of the total £11.38m funding from BDUK. It will be used to provide another 4,000 premises with access to fibre broadband across a range of areas in Shropshire. We will release a map before the end of this month, showing the areas that will benefit as part of the Phase 2.

Whilst the bid may be perceived as disappointing in not addressing solutions to more premises in the intervention area (15,500 premises), the ‘outcome’ from this procurement process is as expected and outlined in the Cabinet paper of December which remains in the public domain. The supplier’s solution model has utilised the same technologies as in Phase 1.

The majority of technologies proposed are Fibre to the Cabinet (FTTC) and Fibre to the Premises (FTTP) or variants of these technologies. No new technologies have been offered as part of the current solution design in Phase 2 although there will remain opportunities before deployment commences for phase 2 for the supplier to remodel new technological solutions which may improve further coverage opportunities.

It should be noted that throughout Phase 1 technology variants to FTTC have been deployed which are projecting cost savings that should provide additional coverage during the course of the Phase 1 contract. It is worth noting that when the deployment costs are compared to other BDUK bids to date (of which there have been 31), Shropshire has been recognised as having the most challenging geography and network topology. This highlights the unique challenges that Shropshire has and needs to be considered as part of any solution. Too often these unique challenges have not be recognised by those detractors of the programme and perhaps highlights why no commercial provision has been provided in some of our rural communities.

Beyond Phase 2

We now have a balance of BDUK funds of £6.68m that can be used together with the Marches LEP’ Local Growth Fund allocation of £5.02m. We intend to use this funding towards a further procurement exercise. At the same time we will continue to explore options with our partners BT as part of the process, but not under exclusivity and with no obligations on the council. The unallocated funds provide Shropshire Council with a clear opportunity to reassess the wider market as outlined in the December paper.

It is anticipated that the process of ‘soft market’ testing will encourage ‘Procurement competition’ and the use of new technologies which will be essential to providing greater reach to those most impacted by the lack of fibre broadband coverage.

It is important to again refer to the State Aid constraints and the need to meet the obligations outlined above. It is expected that a new umbrella State Aid agreement will be negotiated with the European Commission later this summer which will include similar constraints. This agreement will again be very clear how authorities can spend public money on broadband infrastructure.

Connecting Shropshire has already started having conversations with alternative suppliers and regularly engages with the wider BDUK Programme network to understand what opportunities are available. In particular, we will be engaging directly with those authorities that have undertaken Official Journal of the European Union (OJEU) procurements, which includes Berkshire, Gloucestershire, Swindon and Kent. We already have close working relationships with our neighbour LEP authorities and are already working collectively on utilising European funding streams to support broadband initiatives.

Additional opportunities

We continue to look for further investment opportunities through private and community investments. Our Phase 1 and Phase 2 contracts provide opportunities to extend coverage and these will be explored through work with our Broadband Partnership group, which meets later this month. We are expecting more calls for local LEP opportunities as part of a further local growth funding.

The council remains committed to assessing these options and those from European funding streams prior to committing its own capital funding. This remains a clear and sensible strategy when the authority is faced with significant funding constraints. The Superfast Britain connection voucher scheme has now been available in Shropshire since April.

We formally released information about the scheme and process last week and we are intending holding an event in Shirehall next month with a number of infrastructure providers. We would encourage all local businesses to take up this complimentary project which could provide opportunities to get a superfast broadband connection straight away. Any solution funded by a connection voucher does not preclude the particular business from getting a fibre solution as part of the wider deployment programme.

Connecting Shropshire regularly provides updates to key stakeholders via the website, parish meetings, briefings, press releases and newsletter. We are happy to receive any suggestions and assistance from members in spreading the word about the benefits of fibre broadband to encourage residents and businesses. It remains our aspiration that we maximise the take-up of fibre broadband within the ten-year contract term as anything above 20%, will result in a financial reward to the council via the contract that we have with BT. This can be reinvested in the programme (although not eligible as match funding), to provide more homes and businesses with access to fibre broadband.

Summary

The Connecting Shropshire programme remains in a very positive position with delivery on schedule to cost and timescale. We have procured some additional coverage as part of Phase 2 and are now looking forwards to further coverage opportunities with the support of BDUK. We additionally have secured an interim voucher scheme that can assist local businesses to immediately take up superfast broadband.

Throughout deployment the Connecting Shropshire Team have always provided an open and honest approach to communication. We share the information we have to enable communities to make informed choices. This remains a key element to our communication strategy and hence why we created the Broadband Partnership Group to have a forum to share thoughts and create ‘challenge’. This will continue to be the forum to have conversations about the programme and not via the public media, which appears in some cases to be a tactical ploy by those who do not agree with our strategy. Whilst some may not agree with our strategy this does not mean that our strategy is wrong.

Regards

Steve

Steve Charmley, Shropshire Council’s Deputy Leader, and Cabinet member responsible for broadband.