In November 2021 DLA Piper published a report on Project Gigabit‘s (“Project“) ‘Autumn Update‘ detailing the progress made by the Department for Digital, Culture, Media & Sport (“DCMS“) in its push towards nationwide coverage of gigabit-capable broadband. Further detail on the overall Project can be found in DLA Piper’s earlier report, issued in March 2021.
DCMS has now reviewed the progress of the Project and has issued their latest ‘Winter Update‘ (“Update“).
Among other things, this season’s update:
- provides a recent snapshot on commercial investment in gigabit infrastructure;
- highlights the development made in pursuit of the Project delivery plan;
- provides investors new detail on the Gigabit Voucher Scheme and ‘Voucher Priority Areas’;
- describes how procurement options are being developed;
- details DCMS’s plan to prioritise hard-to-reach premises and the impact of the Project across the UK; and
- details DCMS’s decision to make Building Digital UK (“BDUK“) an Executive Agency.
Commercial Investment in UK Gigabit Infrastructure: Where are we now?
Since November, a number of notable developments have occurred:
- Completion of upgrades to a number of suppliers’ networks, has enabled an estimated 65% of premises to now have access to gigabit capable infrastructure;
- over £900 million in additional commercial funding has been made available for investment, with suppliers planning to increase their involvement on a number of levels;
- more suppliers are considering the provision of wholesale provision of internet service, increasing the potential infrastructure and services available throughout the UK; and
- over 21,000 new jobs are set to become available as suppliers increase their workforce and recruit and train new fibre engineers.
As in their Autumn update, DCMS highlight that this continues to demonstrate their 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
Creation of a new searchable procurement resource
To account for the dynamic nature of the information regarding the Gigabit Infrastructure Subsidy procurements, DCMS has created a live, searchable, resource for investors and stakeholders that provides information on all current procurements and procurement opportunities.
Since Autumn, five new procurements have gone live – totalling six overall. These include: Cumbria, Cambridgeshire, North East England, North Northumberland, Teesdale, and North Dorset. All procurement contracts are set to commence in Q4 of 2022 and aim to provide infrastructure to an estimated 187,000 premises.
The list of upcoming procurements continue to grow. At present, 30 proposed procurements have been highlighted, expecting to reach over 2 million non-commercial premises. It should be noted, however, that this pipeline of procurements is fluid and subject to change based on emerging data and feedback, following market reviews, public consultation, and market engagement.
Further detail on the selection of potential upcoming procurements (both local and regional) can be found in DLA Piper’s report on DCMS’ Autumn update.
Gigabit Voucher Scheme and Voucher Priority Areas
The Gigabit Voucher Scheme (“Scheme“) continues to see strong interest from suppliers, with over 1,500 projects being submitted to BDUK for approval. It is of little surprise that DCMS believe that the Scheme remains an essential tool for the Project as it engages the market.
As detailed in their Autumn update, DMCS has now begun to designate particular areas of priority with respect to vouchers. These areas are typically chosen where such subsidies are likely to produce a more operative effect than procurement mechanisms. However, this would not preclude DCMS from intervening with more formal procurements in the event that the Scheme proves insufficient to complete area coverage.
How to solve a problem like procurement: DCMS’ procurement development method
In the Update, DCMS acknowledge that many stakeholders have asked how procurements are developed after open market and public review. In response, DCMS have now set out the four basic steps (as indicated in the diagram below) they follow for each of their lots.
Step 1: Map gigabit plans in the area (2 weeks)
This begins approximately two weeks after the conclusion of open market or public review and includes:
- collating market plans and subsidy control categorisations to make sure they are confident the market will invest in infrastructure;
- checking to see whether interventions, such as voucher schemes or hubs, are already in effect;
- where voucher schemes are involved, confirming with suppliers voucher details and their use; and
- collating local supplier intervention area ideas from councils and telecom providers.
Step 2: Model options for intervention (2 weeks)
Over the following two weeks, DCMS will:
- run algorithms to determine areas for procurement and removing premises from scope where there are existing commercial delivery plans;
- create options for local supplier intervention areas at the individual home/business level using visualisation tools, such as coverage heatmaps;
- design voucher priority areas where vouchers are most likely to deliver best pace, value, and coverage;
- review data with the applicable local authority team; and
- formalise the level of subsidy by estimating engineering difficulty.
Step 3: Soft market testing (roughly 2 weeks)
On completion of step two, DCMS releases the options for intervention to the market for comment. This will allow investors and telecoms providers to formally comment on the range of areas available. Feedback is expected to be high-level and provided within a week where possible.
This stage appears key as the results may lead to discounts or modifications for potential procurements. Review of market feedback and publishing of alterations is expected to be completed within an additional week, subject to feedback received.
Step 4: Confirmation of market interest and pre-procurement market engagement (1-2 months)
DCMS will then push procurements that have been determined to offer best pace, value, and coverage (alongside sufficient bidder interest) to market. Alongside this, DCMS intend to make known areas they believe may be best suited to voucher intervention. During this period of approximately 2 weeks, telecoms suppliers will have the opportunity to provide feedback on these propositions.
While this is to act as a final check with prospective bidders for viability, this stage is to act as confirmatory, rather than exploratory such as in stage three, and no material changes are expected. Should all go accordingly, this stage is anticipated to finalise procurements within a month. The procurement process will then be ready to proceed, subject to approvals from the appropriate governmental departments.
Reaching across the nation: Hard-to-reach areas and a wider UK impact
Now that intervention areas have been identified, the Project can be directed at hard-to-reach-premises. These types of premises typically account for 85% of those DCMS are seeking to prioritise and 82% of those DCMS are monitoring to determine whether infrastructure is delivered sufficiently under commercial funding.
In parallel, DCMS also aim to prioritise implementation of infrastructure to premises that are yet to access ‘superfast’ (>30Mbps) network connections wherever practical.
These procurements cannot reach every area, however, and therefore DCMS has published its response to a call for evidence on methods of improving connectivity to areas missed. This is acknowledged as the first step in increasing connectivity to these areas, with policy proposals to follow in the near future.
Across the Union:
As detailed in the Autumn update, procurements across the hardest to reach areas, typically in Scotland, Northern Ireland, and Wales, continue to progress:
- In Wales, an open market review was concluded, with suppliers assisting to identify commercial plans across the nation to extend coverage. In parallel, additional programmes continue to make substantial progress with 77,000 premises now having access to gigabit-capable connections, including 600 public sector buildings (including GP surgeries and libraries) already connected or set to be connected by March 2022.
- In Scotland, preparatory work to launch a gigabit open market review is anticipated to launch within the coming weeks and engagement has also begun on the potential future use of public sector hubs to further infrastructure reach in Scotland’s rural and island areas.
- In Northern Ireland, connectivity continues to lead the way, with over 80% of premises now covered by gigabit-connectivity, stimulated by over £35 million in government funding. Alongside this, Project Stratum (a £165 million project) is targeted to reach a further 85,000 premises by March 2025.
Public sector hubs:
The DCMS Autumn update detailed a report exploring the anticipated benefits of gigabit connections in schools and public premises. In this most recent Update, DCMS include a case study of a school in England that is already seeing substantial results – staff are increasingly using online resources and pupils are becoming much more confident in their ability to use the web.
These benefits have extended beyond the school to the local area, including a number of business and residential buildings that have now received high-speed internet for the first time.
DCMS views this as a notable success and BDUK now aims to continue to connect public sector hubs and gigabit-capable broadband to even more rural areas.
BDUK now an Executive Agency for DMCS
In December, it was announced that BDUK would become an Executive Agency for DCMS in April 2022. It is anticipated that this will give more operational autonomy to focus on the Project, as well as additional matters, such as the Shared Rural Network.
While BDUK will remain legally within DCMS, a key benefit of their greater autonomy will be a robust new governance structure. Its new management board will incorporate a non-executive chair, executive members, and non-executive members, thereby aiming to provide an additional layer of expert scrutiny and technical oversight.
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.