In August DLA Piper published a report on Project Gigabit’s (“Project”) ‘Summer Update’ detailing the progress that the Department for Digital, Culture, Media & Sport (“DCMS”) has made in its push towards nationwide coverage of gigabit-capable broadband throughout the UK. Further detail on the overall Project can be found in DLA Piper’s earlier report, issued in March.
DCMS has continued to progress the Project and has now issued an ‘Autumn Update’ (“Update”).
Among other things, the Update:
- provides detail on growing commercial investments;
- highlights the progress made in pursuit of the Project delivery plan;
- provides investors with details on updates to the Project subsidy procurements; and
- emphasises the benefits of broadband and the impact the Project has made thus far for organisations such as schools, GP surgeries, and community centres.
Update on Commercial Investment in UK Gigabit Infrastructure
Since the update by DCMS in August, several commercial developments have occurred.
- Over £1.5 billion has been raised by commercial telecoms providers to fund the next phase of network rollout, targeting over 8 million premises in both rural and suburban areas.
- Several suppliers have updated their networks and future plans, with over an additional 250,000 premises per month added to the target of Gigabit connectivity.
- Progress in community Gigabit connectivity projects has also been made, such as StrathspeyNow which continues to develop connectivity in rural areas beyond Granton-on-Spey.
- The rapid expansion in connectivity is also cited as creating hundreds of new jobs throughout the UK and is expected to continue this trend.
This progress continues to demonstrate DCMS’ and the market’s commitment to deliver Gigabit capable networks to at least 80% of UK premises by December 2025.
Update on Project Gigabit Delivery Plans
Many telecoms suppliers are now seeking to extend their Gigabit coverage into rural communities, including areas that would typically require public funding. It is noted however that a number of these areas will still require public intervention.
To ensure no region is left behind, DCMS continues to propose several incentives and assistances, such as:
- Giving room for active voucher projects to deliver fully through the extension of commercial plans using voucher schemes;
- Addressing remote areas by providing subsidies to local suppliers for hard-to-reach areas, particularly in extremely remote and rural locations; and
- Appointing the first Regional Suppliers to deliver at scale using two categories of intervention:
- Initial Scope, where building should be commenced as quickly as possible; and
- Deferred Scope, where a ‘wait and see approach’ is taken to whether commercial plans or voucher projects translate to delivery.
Designing the scope of procurements
DCMS continue to work area-by-area to identify coverage gaps and develop a plan for future procurements and voucher schemes. A recent survey of telecoms providers has been used to determine areas of existing or likely planned investment over the next three years.
This has been used to categorise areas into several classifications:
- White: no commercial plans or limited evidence to support commercial plans;
- Under Review: there are commercial plans but a risk they will not be delivered; and
- Grey/Black: one or more telecoms providers has delivered or is expected to deliver gigabit infrastructure in the next three years.
These classifications are then used to determine whether a particular area comes within the scope of the Project as indicated below.
DCMS have stated that, with respect to regional and local supplier contracts, building to premises will only occur if they fall within the white category and intervention will not be authorised until premises are classified as white.
Those classified as deferred scope will have prices sought from suppliers under initial investigation but will not be authorised until their reclassification to white (based on the outcome of pricing and other material discussions).
These classifications are subject to change and the classification of one procurement as out of scope or deferred scope initially does not preclude them from becoming authorised/white at a later stage.
Vouchers continue to act as a helpful aid in the progression of the Project. Over 70 telecoms providers are currently taking advantage of this initiative and many have been so successful that their business models have developed to incorporate their use.
In order to maintain the momentum voucher subsidies have provided, certain regional supplier areas will now be deemed ‘voucher priority areas’. These will take priority over other areas where required and are of a higher likelihood of approval when applications to the subsidy are submitted by providers.
The success of these voucher schemes has led DCMS to consider whether they may in fact replace the need for procurements in certain areas altogether, such as Essex, where larger areas with limited premises may be better suited to more specific subsidy. It was however noted that vouchers are not equivalent to procurements, as vouchers are grants for eligible customers rather than contracts with telecoms providers. DCMS therefore highlight that they stand ready to intervene through a procurement to complete coverage in an area if necessary.
Update on Gigabit Infrastructure Subsidy Procurements
DCMS continue to push forward several infrastructure subsidy procurements at a local, regional, and cross-regional level and in the Update provide details of their developments at each level.
Local Supplier Procurements
Since the Summer Update, DCMS received 10 successful applications to join the Dynamic Purchasing System (“DPS”) (as detailed in DLA Piper’s previous update). Those that were unsuccessful have been assisted by DCMS to understand any shortfalls in their applications and are now permitted to reapply to the DPS alongside the next batch of applicants, now that applications have reopened.
Several new procurements have also released for local suppliers, with values ranging from £3.5-£18 million seeking to target an estimated 20,000 premises. These contracts are anticipated to commence in June 2022.
Regional Supplier Procurements
DCMS have now successfully launched the initial Phase 1A procurement for Cumbria and are in the process of launching pre-procurement supplier engagement for the remaining Phase 1A projects. Phase 1B public reviews have now closed, as have the open market reviews for Phase 2A projects (including locations such as Yorkshire and Oxfordshire), and DCMS is now preparing for the launch of open market reviews of Phase 2B of the Project.
A provisional timeline has now also been released with respect to the next phase (Phase 3) of regional procurements and is set to target areas such as Essex and Dorset, with an estimated value ranging from £25-£337 million reaching around 600,000 premises.
As these procurements move forward, DCMS continues to assess the potential for procurements where commercial delivery is already extensive, such as Greater London, and will evaluate in future updates whether Gigabit intervention is required.
Cross-Regional Supplier Procurements
DCMS continue to focus on local supplier and regional supplier procurements and have not yet proposed any cross-regional supplier procurements are this stage.
Gigabit Procurement across the Union
Procurements across the hardest to reach areas, typically in Scotland, Northern Ireland, and Wales, continues to progress:
- In Wales, the Welsh Government will be working with DCMS on defining several procurement intervention areas that will become part of later stages of the Project.
- In Scotland, Gigabit coverage has now surpassed 54% of premises and continues to grow. The Scottish Government continues to discuss Gigabit connectivity with DCMS, with particular emphasis on the hardest of areas to reach as an item of priority.
- In Northern Ireland, Gigabit connectivity continues to lead with over 77% of premises capable of receiving Gigabit connectivity. DCMS has reiterated their pledge to work closely with the Northern Irish Government to target those premises that do not currently have such capabilities and aim to collaborate on a solution to best tackle these gaps.
Update on the Benefits of Broadband
DCMS reports that the UK Government has now funded full-fibre networks to 1,084 schools and “thousands” of other community buildings that were previously burdened by slow internet speeds. DCMS also note that they are on track to connect a further 6,800 public buildings across the UK by the end of 2021.
Rural Gigabit Connectivity Programme
In tandem, DCMS have published a report that explores the “early and expected benefits of gigabit connections”, with focus on schools. The report surveyed 261 schools connected by the ‘Rural Gigabit Connectivity Programme’ and identified several benefits, including:
- timesaving across the entire school demographic;
- increased confidence and creativity in the classroom when using technology;
- improved pupil experience and opportunity; and
- higher levels staff satisfaction and reduced frustration due to lags and slow speeds.
DCMS have also published their final evaluation of the Superfast Programme, looking into the impact of the accelerating of the rollout of superfast broadband between 2012 and 2019, and whether or not these projects produce tangible results.
Among other items, the evaluation reported:
- a significant benefit to local economies (creating over 17,000 jobs and increasing annual turnover of local businesses by approximately £1.9 billion);
- an increase in productivity gains of an estimated £1.1 billion throughout the UK; and
- a much faster adoption rate of superfast internet by businesses in areas where the Superfast Programme was implemented.
DCMS reports that the benefits of the Superfast Programme are expected to significantly exceed its costs, and therefore sets a strong precedent for similar programmes, such as Project Gigabit to be implemented going forward.
DLA Piper continues to monitor updates and developments to Project Gigabit. For further information or if you have any questions please contact the authors or your usual DLA Piper contact.