This document summarizes an update on the Ultra Connected Cities Seminar. It discusses the origins and objectives of the Urban Broadband Fund, which aims to encourage ubiquitous high-speed broadband provision and take-up in UK cities. It outlines the responses received during consultations with suppliers on various broadband deployment models. It also discusses the challenges around obtaining state aid approval for connection voucher schemes from the European Commission, and the steps being taken to re-scope city broadband plans and the program to address these challenges.

1. Ultra Connected Cities Seminar
Urban Broadband Fund update
30 April 2013 Iain Bennett, BDUK

2. Department for Culture, Media & Sport
Urban Broadband Fund update
Origins and objectives
Consultation
State aid
Re-scoping the programme
Next steps
Progress to date

3. Department for Culture, Media & Sport
Superconnected Cities - objectives
To support economic growth in the UK by encouraging the
ubiquitous provision and take-up of high speed broadband
(both wireless and fixed line) in our cities

4. Department for Culture, Media & Sport
What the cities asked for
46%
7%
31%
7%
8% 1%
White NGA
Open access
NGA grey/black
Vouchers
Wireless
Other

5. Department for Culture, Media & Sport
How the market has responded
State of play
• When the programme was announced in 2011, there was no Next Generation
Access 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 in
mid-2012.
• Our current modelling suggests that most of the Super Connected Cities are
expected to have reasonable to good NGA coverage through BT and Virgin
Media, ranging from 57% in Manchester and 74% in London, up to 92% in
Portsmouth.
• Ofcom assesses that there are currently about 21m broadband lines in the
UK, of which about 3.5m are sold as 30Mbit/s or faster. Of these, VM provides
about 2.25m, and BT (Openreach) provides the other 1.25m

6. Department for Culture, Media & Sport
Consultation 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 access
conditions required by State aid
• Formal response to follow outcome of discussions on State aid for vouchers

7. Department for Culture, Media & Sport
INCA responses
• Greater consideration should be given to MEIP – but projects would need
to be confident of avoiding challenge in order to progress. Unless a city already
has a well developed business case for MEIP, and confirmed commercial
partners, it is unlikely it could be completed by March 2015.
• Demand aggregation: forms an important part of work to develop a
connection voucher scheme and further input welcome.
• Anchor tenancy as a way to reduce demand risk for suppliers: a valuable
idea, raised by a number of suppliers, and one we are communicating to cities
particularly in respect of wireless initiatives being considered.

8. Department for Culture, Media & Sport
State aid – managing risk
Principles
• All UBF projects need to be delivered by March 2015
• DCMS sought to help the cities achieve maximum impact in the time by
proposing a State aid ‘umbrella’ for new infrastructure in white NGA areas
Barriers
• European Commission originally indicated that it would expect a notification for
‘urban’ – its distinction, not DCMS’s - to include access conditions transposed
from the ‘final third’ approval
• New guidelines (December 2012) made it clear that EC would require full open
access to any State aided build
• Consultation with suppliers indicates that the market has limited appetite for
those risks – therefore we need a new approach

9. Department for Culture, Media & Sport
State aid risk - vouchers
State aid risk
If the EU Commission sets ‘access conditions’ for a voucher (in other
words, introduces an obligation on the supplier to allow access to their
infrastructure if they accept a voucher), then the scheme could be unattractive to
the market and very few (or no) suppliers may participate.
Mitigation
• Regular and active engagement with the Commission at Ministerial and senior
official level
• Work with the market to understand which players would wish to participate in
the scheme and under which conditions

10. Department for Culture, Media & Sport
Connection vouchers
• Connectivity voucher (value up to £3k) to SMEs (and home-workers) to cover
the cost of connection to high speed broadband
• Where infrastructure doesn’t exist, vouchers can be combined to encourage
ISPs to build out to meet demand
• Voucher Working Group set up, comprising industry, trade bodies and city
representatives
• Proposal on the design, governance and operating model sent to cities
• Cities have said they aim to spend approximately £25m on vouchers, but are
reviewing 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 and
suppliers may not participate

11. Department for Culture, Media & Sport
Re-scoping the programme
Connection
vouchers
Wireless Non-State aid
measures
Superconnected City Plan
(deliverable in full by March 2015)

12. Department for Culture, Media & Sport
Urban 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 or
where high installation costs prevent take-up
• Provide spaces in publicly owned buildings with free high-speed wireless
connectivity
• Remove barriers to rapid private sector deployment through, for
example, upgrading street furniture for wireless services
• Fund Local Authority capital projects that will demonstrate the economic
benefits of high-speed connections, and increase skills and demand

13. Department for Culture, Media & Sport
Defining success
• Contribute to economic growth and jobs by:
• Investing up to £150m in 22 cities to deliver high speed connectivity of at least
100Mbps where there is demand for it
• Wireless connectivity in urban centres
• Contribute to the EU Commission’s EU 2020 targets - 100% availability of
services of at least 30 Mbps; and at least 50% of households taking services of
100 Mbps or greater
• Measure and track outputs and long term outcomes through the UK Broadband
Impact Study

14. Department for Culture, Media & Sport
Next steps
• Work with cities to re-scope their plans by mid May
• Continue to consult with cities, local and national suppliers and other
representative groups to develop the approach to vouchers (particularly around
aggregation)
• Intensive work with DG COMP to arrive at a State aid notification mid-May that
expresses 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 require
a State aid approval