Welsh Government
Written Evidence to the Economy, Infrastructure and Skills Committee Digital Infrastructure Inquiry
Superfast Cymru
Superfast Cymru is an intervention to provide superfast broadband connectivity to those areas in Wales where there has been demonstrable failure by the market to do so. Following an open procurement process an agreement to deploy fibre broadband to homes and businesses in areas of market failure was signed with BT Group in July 2012. Deployment of the subsequent Superfast Cymru project began in January 2013. The project intervention area contained some 727,000 premises.
Our contract requires BT to provide superfast broadband access capable of at least 30Mbps to 90 per cent of the intervention area. It also makes provision for a further five per cent at between 24 Mbps and 30 Mbps.
The project was extended to June 2017 to allow for the inclusion of 40,000 additional premises. The extension followed an Open Market review in 2014 which showed the number of premises that needed to be addressed under the project had increased, for example because of new build premises or where premises due for roll-out under telecommunications companies’ own plans had not materialised.
The build phase of the Superfast Cymru project is due to be completed in June 2017. As with other major contracts of this size there will then be a six month window for Openreach to complete any in build elements ahead of a contract drop dead date of 31 December 2017.
The new premises within the project extension were ‘blended’ into the overall intervention area and an entirely new deployment plan produced to provide access to as many premises in Wales as possible. BT is required to deliver 690,000 premises by the end of June 2017 and reports that it is on track to achieve this. However it remains a very challenging project to deliver and progress is being carefully monitored.
BT is delivering superfast fibre broadband using two technologies, fibre to the cabinet and fibre to the premises. Fibre to the cabinet involves installing a fibre roadside cabinet close to an existing copper cabinet and connecting the two so that the broadband signal then travels to the home or business over the existing copper telephone cable. This is the most straightforward, cost effective and common option as it enables BT to improve the broadband for multiple premises at once
Fibre to the premises is more complicated. It involves extending a fibre cable to the premises itself. In many cases the solution for each premises is bespoke. This adds to the cost, complexity and time taken to deliver.
To date nearly 622,000 homes and businesses in Wales have been given access to fast fibre broadband as a result of the Superfast Cymru project. These are premises that would not have otherwise been covered by commercially driven roll-outs by BT, Virgin Media and others.
A consultation was held in the Autumn with the telecoms industry in relation to an additional £12.9 million to further extend the reach of the Superfast Cymru project this year. This is the amount that BT forecasted last year will be returned to the public purse through a gain-share clause within the current Superfast Cymru contract.
Detailed analysis and dialogue with BT will follow to ascertain whether this additional funding will enable additional premises to be reached through the Superfast Cymru contract by December 2017 and whether it will provide value for money.
In July 2015 the Minister for Skills and Technology announced in an oral statement that she wanted to see at least half of everyone who can connect to superfast broadband doing so. At the end of October take-up within the Superfast Cymru intervention area stood at 29.9 per cent. Independent research conducted on behalf of Welsh Government forecast a figure of 30 per cent by the end of 2016 and stated that 50 per cent is a realistic target for take-up by 2023.
Clearly, the aspirational goal for all stakeholders must be to strive for as much take-up as possible. While the Welsh Government acknowledges that it has both an interest in and a role in driving the successful take-up of superfast broadband services, the role of, interest of and delivery capacity of the wider retail broadband industry must not be overlooked. While the Welsh Government can promote the availability off superfast broadband in an area and can set out to consumers and businesses the benefits of the superfast broadband, it does not have the reach to set retail pricing, offer bundles, offer discounts and promote, advertise and sell attractive deals that drive consumers and businesses to switch between products and take-up services
The large internet service providers including BT, TalkTalk, Sky etc. spend many millions on their advertising and marketing campaigns and are likely to have the biggest influence on take-up of superfast broadband services.
Retail broadband advertising and marketing does, however, focus on specific segments of society, often centring on entertainment services.
In October, the Welsh Government launched a new multi-layered regional communications and engagement programme to raise awarenessof the broader range of benefits of superfast broadband to consumers and to encourage use of the technology available to them. The campaign focuses on specific segments of society less likely to be influenced by mass marketing by ISPs.
It is being delivered in every local authority area in Wales between now and December 2017 through a blended approach of events, public relations, community engagement and advertising. Local authorities have been provided with a toolkit to promote the use of superfast broadband in addition to our own activity in each area. A new web presence on the Welsh Government website includes personalised advice for consumers to help people make more informed choices about their broadband.
This communications and engagement follows and builds on a previous communications and marketing campaign delivered alongside the deployment programme. This campaign focused on the deployment plans for the programme highlighting where and when fibre broadband would be deployed.
A new £12.5m programme to ensure that businesses across Wales maximise the benefits of superfast broadband was announced in September 2015. Funded by the Welsh Government and £7m from the European Regional Development Fund, the project supports primarily small and medium sized businesses to understand, adopt and exploit the superfast infrastructure. The project builds on lessons learned and evidence gathered following pathfinder projects undertaken in Gwynedd, Rhondda Cynon Taf, Swansea and Blaenau Gwent.
The main features of the programme include:
· Direct business support and advice through Business Wales. Superfast business workshops, clinics and one-to-one sessions at a local level
· Research and intelligence, including the tracking and adoption and exploitation of superfast broadband by businesses and providing insight into emerging technologies to ensure new opportunities are included.
· Training and accreditation for business advisors who are delivering support on the ground.
· Champions for each local authority who will help lead engagement with their authority and local business community.
Mobile
Telecommunications policy is not devolved to Wales. Key levers to encourage improvements in mobile coverage rest with the UK Government and with Ofcom.
The UK Government reached a legally binding agreement with the Mobile Network Operators to invest a collective total of £5 billion (privately funded) guaranteeing 90% geographical coverage (including Wales) to provide reliable signal for voice over 2G, 3G or 4G, all by 2017. DCMS has advised these measures will lift the operators’ combined geographical coverage from 69% to 85% across the UK.
The 4G spectrum auction licence which was awarded to Téléfonica O2 carries a coverage obligation of at least 95% of the population in Wales by the end of 2017.
The Welsh Government is working with the mobile industry and Ofcom to examine the levers available to the Welsh Government to create an environment in Wales that attracts further investment in extending mobile coverage.
One of the primary levers available is the planning regime. The Minister for Skills and Science commissioned research to look at changes and proposed changes to planning in England and Scotland on mobile phone infrastructure, their applicability in Wales and alternative approaches appropriate to the topography and population density in Wales.
The Minister also commissioned research into the operating costs of mobile infrastructure including looking at the level of non-domestic rates as well as into the use of public assets to host mobile infrastructure. The findings of all three pieces of research will form part of the discussion at the round table meeting.
The Minister will host a round table meeting later this month, which will include representatives from Ofcom and industry to discuss how mobile connectivity in Wales could be improved. The debate will focus not only on the plans of the industry to expand mobile coverage and capacity but also explore those levers available to the Welsh Government as highlighted above.
Planning is often highlighted by the mobile industry as a key lever. The Minister met with the Cabinet Secretary for Environment and Rural Affairs in the Autumn to discuss planning issues associated with improving mobile telecommunications infrastructure.
Planning officials are currently examining the scope for future changes to the Permitted Development Rights Order which will include examining the need to amend those existing rights for mobile telecommunications apparatus.
The emergency services mobile communications programme (ESMCP) will provide the next generation communication system for the 3 emergency services (police, fire and rescue, and ambulance) and other public safety users. The contract to deliver the infrastructure elements of the programme was awarded to EE. However, in some areas, including in Wales, the Home Office is providing funding to construct masts where it is not viable for EE to do so.
Welsh Government are working in collaboration with programme to look at how new Home Office funded mobile masts could be future proofed, where it is considered that wider benefits could be delivered. This may involve building larger mast basis and masts that can be easily extended over time. This would allow multiple mobile operators to install their transmission equipment to provide coverage in remote areas where building a mast is not commercially viable.
Access Broadband Cymru and Ultrafast Connectivity Voucher schemes
The Access Broadband Cymru scheme funds (or part-funds) the installation costs of new broadband connections for homes and businesses in Wales. There are 2 levels of funding available depending on the needs of the consumer and the speed required, £400 for download speeds between 10 and 20 Mbps, and £800 for download speeds of 30Mbps and above.
Since the changes were made to eligibility criteria at the start of January 2016 there have been 722 applications of which 128 have been approved and the installation completed and a further 302 offers of funding made. Common reasons for not continuing with an application are that superfast broadband has become available or that there has been an uplift in their traditional broadband speed.
The Access Broadband Cymru scheme will continue with a further £1.5 million over the next two years to ensure that this vital lifeline operates in parallel to Superfast Cymru and successor projects with equivalent funding in place to extend for a further two years beyond 2018.
The Ultrafast Connectivity Voucher scheme is available businesses across Wales to help meet the initial capital costs incurred in installing ultrafast broadband services. There are often situations where the cost of installation can include an expensive dig, the cost of which is passed on to the business customer. This scheme seeks to reduce that barrier. For the purpose of the scheme, Ultrafast is defined as greater than 100Mbps downstream, and greater than 30Mbps upstream. We are currently exploring whether these thresholds need to be adjusted. The maximum grant available is £10,000. It will provide 100 per cent funding for the first £3,000 and 50 per cent between £3,000 and £17,000. The business will be expected to match fund the remaining 50% and any further costs over £17,000.
Since the scheme started 50 applications have been received, of which 8 have been approved and completed, and a further 12 offers of funding made.
A review of the Ultrafast Scheme will shortly be undertaken with a view to assessing whether a different level of upload and download speeds could be introduced. Some businesses have indicated that they do not need the speeds stipulated by the scheme, and that the cost of the leased line that accompanies the speeds is prohibitive.
In parallel to these voucher schemes, we are also considering an opportunity to participate in the Broadband Delivery UK voucher scheme alongside Scotland and Northern Ireland. This will give consumers and businesses in Wales maximum flexibility and options to access the voucher scheme that best suits their particular circumstances and needs.
Superfast Cymru Successor Scheme
Any successor scheme will be underpinned by a public sector budget of up to £80 million which in turn, will leverage private sector match funding to further extend broadband coverage to the hardest to reach premises across Wales by 2020. This includes up to £50 million from the Superfast Cymru investment fund based on take-up of 50 per cent and £20 million over the next four years from the Welsh Government budget. Officials are also in the early stages of discussions with the Welsh European Funding Office to secure a further £20 million of Structural Funds to continue the roll-out of superfast broadband.
Alternative Technologies
The Welsh Government has maintained a consistent technology neutral stance throughout its broadband interventions. The Superfast Cymru project delivered by BT has seen an enormous deployment of Fibre to the Cabinet and Fibre to the Premises technologies. The Access Broadband Cymru scheme has funded solutions driven by a range of technologies from Fibre to the Cabinet to fixed wireless, satellite and mobile solutions.
The Business broadband infill project delivered by Airband Community Internet has delivered fixed wireless infrastructure capable of providing 30Mbps and 100 Mbps services to around 2,000 business premises at business parks across Wales.
The industry is also active in Wales trialling and deploying innovative solutions. For example, EE is trialling small cell technology in the Teifi Valley to deliver mobile connectivity to remote communities. Small cell technology is also being used to provide coverage to Llanbedr Airfield.
International examples
Officials routinely keep abreast of developments in the delivery of both mobile and broadband both within other areas of the UK and abroad through attendance at conferences, through industry focused literature and meetings with industry representatives. A review of best practice from other countries will inform the development of the successor project to Superfast Cymru. However, any scheme for broadband or mobile will need to be appropriate for the topography, population density, market and regulatory regime in Wales.