In March 2020, the UK Government stated its plan in the 2020-2021 budget to dedicate £5 billion of government funding to support securing gigabit capable broadband in every home in the UK by the end of 2025.
Last Friday on 19 March, the UK Government announced Project Gigabit, the Government’s plan for nationwide coverage of gigabit-capable Broadband, and an updated target of ensuring at least 85% of the country has gigabit connectivity coverage by 2025.
A Project Gigabit Phase One Delivery Plan has been published by the Government, developed through contribution from a number of local and devolved government bodies, in addition to private telecoms providers.
Why Project Gigabit?
While gigabit networks are being rolled out to a number of areas in the UK with slow speeds, it is estimated that almost half of the UK cannot currently access speeds greater than 30 Mbps. To address this, Project Gigabit will run concurrently with an existing “Superfast Broadband Programme”, and will target the hardest 20% of the country to deliver significantly improved internet speeds.
Through the combination of these two programmes, the UK Government has targeted a minimum of 85% of the UK having gigabit capable coverage by 2025, however the rollout under Project Gigabit will be pushed in order to get as close to nationwide coverage as possible.
Funding and Delivery Approach
The UK government has adopted a procurement model for Project Gigabit, complemented with vouchers, where telecoms providers can bid competitively for subsidies to deliver gigabit capable networks to specific areas across the UK where commercial rollout is unlikely due to high costs.
Procurement of Gigabit Capable Networks
On the procurement side of Project Gigabit:
- “intervention areas” are identified through an Open Market Review and Public Review process, where the market’s plans for an area over the next three years will be surveyed, enabling the Government to identify areas which do not have gigabit capable networks and where commercial rollout is unlikely;
- each area will form a contract, which will be open to competitive bids from certain categories of supplier designated to that area. Successful suppliers will be those who can rollout cost effectively, rapidly and at scale. The different categories of supplier include:
- Regional suppliers – who have the capability, experience and funding to deliver cost effectively, rapidly and at scale across their respective areas. Regional suppliers will be appointed through competition for each area in the UK to lead delivery of between 70,000 and 150,000 uncommercial premises, in areas where there is least likelihood of commercial gigabit investment. These suppliers will deliver services to their respective areas in one or more phases (i.e ‘drawdowns’).
- Cross Regional Suppliers – who have the capacity to deliver in multiple regional areas where there it is unlikely that effective competition from other suitable telecoms bidders in a regional area.
- Local Suppliers – smaller competitions in areas where specialist network providers, are likely to be able to deliver better overall pace, coverage and value than a Regional Supplier. Local Suppliers will be appointed to implement more focused contracts, typically of between 1,000-8,000 uncommercial premises, called off through a competition on a Dynamic Purchasing System.
Procurements are currently planned to be delivered in three phases:
Phase 1 – covering an initial set of procurements as part of a “learning phase”, covering areas where there is accurate market data, known market interest for subsidised rollout, and a clear requirement for subsidised rollout. Procurements in some areas covered by Phase 1 have already started;
Phase 2 – additional procurements will be added to the rollout pipeline over time, with the Government providing quarterly updates on areas to be added to Phase 2 from June 2021; and
“Future Phasing” – covering areas where there is already significant gigabit implementation expected (such as through the existing Superfast Broadband Programme) but will still likely need subsidy to reach full gigabit coverage.
In respect of the procurement rollout, it appears that:
- the Government is encouraging telecom providers to continue with existing commercial builds of gigabit networks. Before any service ‘drawdowns’ in the case of Regional and Cross Regional suppliers, there will be an opportunity for local commercial deployment to occur ahead of any build plans under a procured contract being finalised;
- the Open Market Review process will continue to run and survey relevant intervention areas for developing commercial rollout so as to minimise the risk of any “public subsidised overbuild”; and
- the winner of a procurement will not obtain a legal monopoly to the specific area, but it will make it less likely for others to build in that area later on due to the uncommercial nature of many of the rollouts being procured.
It is currently unclear how much of the £5 billion of committed government funding will be allocated to this procurement side of Project Gigabit.
The UK Government already has a successful Gigabit Broadband Voucher scheme. From April 2021, the UK Government will commit up to £210 million of the £5 billion of committed funding as a top up to the Gigabit Broadband Voucher Scheme.
Under this scheme, individual vouchers worth up to £1,500 for residents and up to £3,500 for businesses are issued in rural areas without access to ultrafast services. This will be supplemented by ongoing top ups from local authorities and devolved administrations.
Public sector hub connectivity
The UK Government has also successfully procured a number of Public Sector Hubs in remote areas and has set up a Dynamic Purchasing System (DPS) to aid in their procurement. Local authorities and administrators can procure services from the DPS and work with suppliers to continue to provide gigabit services in the hardest to reach areas of the UK. It is expected that other government departments and authorities are to participate and the programme remains highly active, with over £50 million of future work scheduled.
Immediate next steps
Telecommunications operators who seek to become involved in these procurements have therefore been encouraged to:
- propose commercial build plans to shape future procurement opportunities in which they wish to participate;
- assess their eligibility for current voucher subsidies to finance projects; and
- register themselves with the Dynamic Purchasing System operated by the UK Government in preparation for their future bidding.
Should providers be successful in their tender, it is anticipated that projects can begin as early as the first half of 2022.