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