Superfast Broadband Pilot Projects: Lessons Learned

What a difference a year makes… Last week BDUK quietly published, via the Department of Culture Media and Sport (DCMS) website, a report about lessons learned from the superfast broadband pilots since they were officially announced just over a year ago.

Plenty has happened in the past year, but not in terms of deployment.  No superfast broadband connections have been enabled by any of the pilot projects; in fact none of the four projects has awarded a contract yet, even though at least one of them was at a fairly advanced stage of planning when originally put forward.

The report concentrates instead on what has happened in the early stages, from initial set-up of the project and preparation for procurement as well as parallel activities around demand and awareness.  There are 83 administrative counties in England, the majority of whom are working out how to spend the money coming their way via BDUK, so any information that helps speed up and streamline the process is valuable.

Here’s my interpretation of the key findings:

Good things come to those that wait work extremely hard: BDUK expects local bodies to develop clear objectives, a funding strategy to deliver them, get concensus on these issues from all local political bodies from parish councils upwards, gather the data needed to ensure state aid approval, create an information pack for potential suppliers, and set up an accountable body to manage the delivery process. Phew! “This has proved to be a challenging process involving a significant and unpredictable time commitment,” the report notes. As a result, all of the pilot projects took longer to commence their procurements than was originally envisaged.  Project mobilisation takes a minimum of 6 months even with adequate resources, says BDUK.

Projects don’t come cheap in terms of resources or salaries: BDUK says that, as a minimum, projects require a dedicated project director, a commercial lead, a technical lead and legal support as well as wider project support, which might include administration, finance, marketing and procurement experts.  Demand stimulation activities are particularly demanding in terms of resources, the report notes.  One way to minimize the financial and administrative burden is to team up with other local bodies, as Herefordshire and Gloucestershire have done (forming the Borders Broadband project).  Local bodies are also expected to establish a project board for governance.

All projects have adopted the competitive dialogue procedure: This is a very time and resource-consuming procurement process reserved for only the most complex projects. The pilot teams adopted this approach, says the report, because “while they could define what they want, they cannot assess the technological viability to deliver it, or the likely ‘gap’ in funding to address market failure without engaging in dialogue with potential suppliers.” The process takes around 12 months minimum, which means that first contracts are likely to be awarded next summer.  Bidders will be selected on the basis of the most economically advantageous proposal, which is likely in practice to mean making trade-offs between the quality and cost of the proposed solutions.

The preferred commercial model is the investment gap-funded model: Three of the pilots have asked bidders to propose solutions under the gap-funded model.  The fourth, North Yorkshire, also gives bidders the option of a special purpose vehicle.  This option was rejected by the other three because it would require them to commit to an ongoing investment risk, which they were not prepared to do when the total cost of the project was still unknown.  In future where local bodies opt for the gap-funded model, they will be expected to take advantage of the procurement framework that BDUK is setting up.  BDUK has already approved broadband plans from four projects expecting to use the procurement framework.

Local broadband projects must have scale: Both project teams and their bidders wanted to make the procurements as large in scale as possible — another reason for local bodies to work together. Suppliers in general were happy with aggregation where it reached between 100,000-300,000 target properties, according to the report.  The Highlands and Islands and Borders Broadband projects considered going for geographically restricted pilot areas initially rather than jumping in with both feet as a county-wide procurement, but rejected this option on the assumption that lack of scale would diminish the bidder’s business case. Both sides like demand aggregation activities because it gives them more confidence in the projected revenues, which could reduce the gap funding required.

BDUK is trying to avoid a procurement bottleneck: “The evidence from procurements currently under way is that suppliers have the capacity to address a relatively small number of procurements at the same time. There is therefore a risk of market overload at a national level if too many procurements take place simultaneously. Consequently BDUK will manage the flow of projects through the procurement process to ensure that the number of procurements at any one time is manageable for interested suppliers.” Nuff said.

Community broadband projects should fit in with county-led plans: Local authorities are also being asked to support and involve community broadband projects. They are expected to take any existing community projects into account as they develop their local broadband plans and share information about whether the projects are in an area that will not recieve superfast broadband (even though they may not know this yet). Ideally, local bodies should set up a framework for community projects to work within. In North Yorkshire, they have set up such a framework that allows communities to bid for funding from the Performance Reward Grant.  In Cumbria, the council has been exploring a “build and benefit” model, but the outcome of this is still uncertain.

There’s a lot more detail in the report itself, from job descriptions of the project team members to a list of potential funding sources that the projects have tapped into. You can access the 49-page report here.