Reaching the Last 10% - Matt Agar, BDUK

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Information about Reaching the Last 10% - Matt Agar, BDUK

Published on March 7, 2014

Author: TechUK



Reaching the last 10% - how can Local Government achieve 100% connectivity?

Vision from the Government

Matt Agar, Commercial Lead, BDUK
"Call for Innovative Solutions for reaching remaining unserved areas"

For more information:

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Call for Innovative Solutions for reaching remaining unserved areas Market Test Pilots To register interest, click here For any enquiries, contact: Matt Agar, BDUK Commercial Lead 020 7211 6326 Page 1

Broadband objectives Progress to date 44+ local bodies now have broadband project delivery capability 300k+ premises passed Another 40k each week from Summer 2014 Programmes Estimated £20 benefit for £1 public subsidy by 2024 Market Engagement Superfast Extension Programme • Aims to deliver 95% superfast coverage • Funding of £250m available from BDUK £10m Market Test Pilots • Announced January 2014 • Will fund a range of projects across various parts of the UK • Test different technical, commercial, financial and operational models for extending coverage. • Focus is on learning (as opposed to coverage). Extend Coverage Beyond 95% • Further information would be needed to enable a programme to be designed • Output from the Market Test Pilots will be used to create a business case for such a programme. Market engagement in September 2013 showed that new solutions would be required in order to extend coverage beyond 95%. Further insight is required to establish the feasibility and scalability of potential solutions, as well as more detailed modelling of the likely costs. The government has allocated funding to encourage suppliers to gather this insight. Page 2

Themes and objectives Themes (each theme will be tested via a separate procurement) 1. Technology - test known technologies that are not yet proven to be commercially viable in the hardest to reach areas. 2. Operations - test novel operating models that reduce barriers to investment (potentially through standardisation or aggregation). 3. Funding - test innovative public / private funding models which will be effective at financing investment to allow solutions to be delivered in the areas that do not yet have superfast coverage. 4. Other - solutions which address the challenge through a different approach to those set out in procurements 1-3. Objectives • Variety of solutions - £10m fund will be distributed across an estimated 5 to 10 projects to maximise the range of learning. • Technology - test a range of technologies capable of superfast speeds to identify those that are cost effective at providing coverage • Commercial - test key assumptions and identify limitations of different commercial models • Delivery model – test delivery models for the endto-end value chain • Geography - test deployment in different geotypes (e.g. rurality, density, topography, demographics) • Output – provide insight to both Government and the marketplace on addressing superfast coverage in remaining areas Page 3

Procurement Procurement and Evaluation Roles and Responsibilities • Open tender procedure - to ensure transparency and fairness. • Contracts awarded to the most economically advantageous tenders measured against criteria below. Suppliers • Produce bid for pilot project • Model commercial and technical viability for Government • Produce white papers to be published to Industry • Deploy solution via a field test and reassess viability • Identify preferred geographical deployment locations A. Project Design and Outputs - project is well designed, solution viability will be tested adequately, new learning will be maximised B. Applicability to Unserved Areas - solution is relevant to unserved areas, demonstrated through coverage, scalability and customer considerations. C. Delivery Confidence - evidence that pilots and learning will be delivered quickly and reliably by a supplier with a strong track record D. Price - project provides value for money BDUK • Procurement and contract management • Match bids to geographical locations available • Manage State aid approval • Use pilot learnings to inform the approach to extending superfast coverage beyond 95%. Local Bodies • Provide locations that reflect the challenges within the unserved areas. • Support pilots e.g. through business rate reductions, offering publicly owned sites for locating assets. This will vary by Local Body. Page 4

Draft timeline March Supplier Engagement Publish ITT April May Evaluation and contracting Response Clarification Days Bids Received Jun - August Commercial Modelling Contracts Awarded Sept Review Findings Oct onwards Field Tests and Regular Reporting Latest Date for Initial Learning Start preparing for the tender now Please discuss the tender and your ideas for solutions with us prior to publication of the ITT. The pilots present a low risk opportunity for suppliers to test potential solutions and to help shape the approach used to extend coverage beyond 95%. Page 5

Draft contract Proposed Contractual Principles • Capital - Funding is capital only. Supplier costs must lead to an identifiable asset at the end of the project • IAS 38.54: “technical and commercial feasibility of the asset has been established” • IAS 38.57: “must be able to complete the intangible asset and demonstrate how the asset will generate future economic benefits” • Payments – Payment anticipated to be capped time and materials, payable on the basis of achieving milestones identified by the supplier in the bid. • We are considering whether BDUK could make advance payments in certain circumstances – please let us know if this is valuable • Termination - Supplier and Authority would have termination rights, particularly at the end the of the initial phase (to protect both sides against ongoing liabilities for projects that turn out to be infeasible). • State aid - BDUK intends to approve projects under its umbrella State aid decision, so infrastructure build must be State aid compliant • The contract will contain obligations on wholesale access, clawback, reporting, benchmarking provisions. • BDUK currently considers aid to be present once BDUK commits to the infrastructure build, i.e. after the initial modelling phase • Asset ownership - Suppliers will retain ownership of the infrastructure and intellectual property • The contract will contain IP rights for the Authority. • The supplier will be obliged to develop white papers to share learning from the project (but not the Supplier’s own IP) with the market • The contract will contain obligations should the assets be disposed of Page 6

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