Ultra Connected Cities SeminarUrban Broadband Fund update30 April 2013 Iain Bennett, BDUK
Department for Culture, Media & SportUrban Broadband Fund updateOrigins and objectivesConsultationState aidRe-scoping the programmeNext stepsProgress to date
Department for Culture, Media & SportSuperconnected Cities - objectivesTo support economic growth in the UK by encouraging theubiquitous provision and take-up of high speed broadband(both wireless and fixed line) in our cities
Department for Culture, Media & SportWhat the cities asked for46%7%31%7%8% 1%White NGAOpen accessNGA grey/blackVouchersWirelessOther
Department for Culture, Media & SportHow the market has respondedState of play• When the programme was announced in 2011, there was no Next GenerationAccess capability available in city areas providing speeds of over 30Mbps.• Virgin Media and BT had not at that point launched any comparable products -VM began rolling out its upgrades to 100Mbps and BT offered ‘up to’ 80Mbps inmid-2012.• Our current modelling suggests that most of the Super Connected Cities areexpected to have reasonable to good NGA coverage through BT and VirginMedia, ranging from 57% in Manchester and 74% in London, up to 92% inPortsmouth.• Ofcom assesses that there are currently about 21m broadband lines in theUK, of which about 3.5m are sold as 30Mbit/s or faster. Of these, VM providesabout 2.25m, and BT (Openreach) provides the other 1.25m
Department for Culture, Media & SportConsultation with suppliers• Consultation sent out to 69 suppliers and posted on the DCMS web site• 15 responses received• INCA asked us to reconsider the gap-funded model• Other suppliers expressed support for vouchers• We received varying expressions of ability to operate within any accessconditions required by State aid• Formal response to follow outcome of discussions on State aid for vouchers
Department for Culture, Media & SportINCA responses• Greater consideration should be given to MEIP – but projects would needto be confident of avoiding challenge in order to progress. Unless a city alreadyhas a well developed business case for MEIP, and confirmed commercialpartners, it is unlikely it could be completed by March 2015.• Demand aggregation: forms an important part of work to develop aconnection voucher scheme and further input welcome.• Anchor tenancy as a way to reduce demand risk for suppliers: a valuableidea, raised by a number of suppliers, and one we are communicating to citiesparticularly in respect of wireless initiatives being considered.
Department for Culture, Media & SportState aid – managing riskPrinciples• All UBF projects need to be delivered by March 2015• DCMS sought to help the cities achieve maximum impact in the time byproposing a State aid ‘umbrella’ for new infrastructure in white NGA areasBarriers• European Commission originally indicated that it would expect a notification for‘urban’ – its distinction, not DCMS’s - to include access conditions transposedfrom the ‘final third’ approval• New guidelines (December 2012) made it clear that EC would require full openaccess to any State aided build• Consultation with suppliers indicates that the market has limited appetite forthose risks – therefore we need a new approach
Department for Culture, Media & SportState aid risk - vouchersState aid riskIf the EU Commission sets ‘access conditions’ for a voucher (in otherwords, introduces an obligation on the supplier to allow access to theirinfrastructure if they accept a voucher), then the scheme could be unattractive tothe market and very few (or no) suppliers may participate.Mitigation• Regular and active engagement with the Commission at Ministerial and seniorofficial level• Work with the market to understand which players would wish to participate inthe scheme and under which conditions
Department for Culture, Media & SportConnection vouchers• Connectivity voucher (value up to £3k) to SMEs (and home-workers) to coverthe cost of connection to high speed broadband• Where infrastructure doesn’t exist, vouchers can be combined to encourageISPs to build out to meet demand• Voucher Working Group set up, comprising industry, trade bodies and cityrepresentatives• Proposal on the design, governance and operating model sent to cities• Cities have said they aim to spend approximately £25m on vouchers, but arereviewing this in light of the changes to the programme (by mid-May)• Primary risk is State aid approval for vouchers – if the EU Commission sets‘access conditions’ for a voucher, then it could be unattractive to the market andsuppliers may not participate
Department for Culture, Media & SportRe-scoping the programmeConnectionvouchersWireless Non-State aidmeasuresSuperconnected City Plan(deliverable in full by March 2015)
Department for Culture, Media & SportUrban Broadband Fund 2.0• Fund connection costs for target groups (based primarily on growth and jobs)through a connection voucher scheme where the market will not deliver orwhere high installation costs prevent take-up• Provide spaces in publicly owned buildings with free high-speed wirelessconnectivity• Remove barriers to rapid private sector deployment through, forexample, upgrading street furniture for wireless services• Fund Local Authority capital projects that will demonstrate the economicbenefits of high-speed connections, and increase skills and demand
Department for Culture, Media & SportDefining success• Contribute to economic growth and jobs by:• Investing up to £150m in 22 cities to deliver high speed connectivity of at least100Mbps where there is demand for it• Wireless connectivity in urban centres• Contribute to the EU Commission’s EU 2020 targets - 100% availability ofservices of at least 30 Mbps; and at least 50% of households taking services of100 Mbps or greater• Measure and track outputs and long term outcomes through the UK BroadbandImpact Study
Department for Culture, Media & SportNext steps• Work with cities to re-scope their plans by mid May• Continue to consult with cities, local and national suppliers and otherrepresentative groups to develop the approach to vouchers (particularly aroundaggregation)• Intensive work with DG COMP to arrive at a State aid notification mid-May thatexpresses a workable position on vouchers (to be implemented by end 2013)• Assist cities in developing plans for wireless (concessions and hotspots)• Begin to roll out demonstrators and other innovative projects that do not requirea State aid approval
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