Q2 2017 “Fibre Broadband” Take-up Progress for the £1.6bn BDUK Project

Date:

11/09/2017


The Government’s Broadband Delivery UK project has published its latest Q2 2017 take-up data for the state aid supported roll-out of “superfast broadband” (24Mbps+) services across the United Kingdom, which shows that many regions are seeing 40%+ adoption and that will boost clawback.

Just to clarify. The figures reflect % customer take-up of FTTC (plus a tiny number of FTTP and Fixed Wireless) broadband networks in areas that have been upgraded through the BDUK programme (i.e. % subscribed of premises passed by BDUK supported networks). At present the data only reflects the first two phases of this programme and not any recent or future contracts.

All of this complements the Government’s other big announcement today about BDUK progress and clawbac

BDUK Phases 1 (Completed Spring 2016)

Supported by £530m of public money via the Government (mostly extracted from a small slice of the BBC TV Licence fee), as well as significant match funding from local authorities, the EU and BT. Overall it helped to extend “superfast broadband” (24Mbps+) services to cover 90% of homes and businesses in the United Kingdom.

BDUK Phase 2 (Completion by 2017/18)

Supported by £250m of public money via the Government, as well as match funding from local authorities, Local Growth Deals and some from ISPs (e.g. BT, Gigaclear, Airband, Call Flow etc.). The aim is to extend 24Mbps+ capable broadband services to cover 95% of homes and businesses by around the end of 2017.

Phase One was broadly dominated by Openreach (BT) linked contracts and this has now completed. Meanwhile the on-going Phase Two contracts have seen a mix of extension deals with BT and several alternative network providers (Gigaclear, Call Flow etc.), including some use of Fixed Wireless Access technology.

Crucially the BDUK contracts include a clawback (gainshare) clause, which requires the suppliers (e.g. BT) to return part of the public investment when customer adoption of the new service passes beyond the 20% mark in related areas. The funding can then be reinvested to further improve coverage and speeds via future contracts.

So far it looks as if over £645 million could be returned via clawback and efficiency savings, which BDUK has estimated could be enough to boost the UK coverage of fixed line superfast broadband networks from 95% by the end of 2017 to 98% by the end of 2020.

The following table breaks the take-up data down by each BDUK local authority (project area), although for the proper context these percentages should ideally be considered alongside the most recent premises passed (network coverage) data. So far BDUK has helped to expand superfast broadband services to 4.6 million UK premises and rising.

NOTE: Some of the counties have divided their roll-outs into separate projects / contracts. For example, Phase One in Shropshire doesn’t include the ‘Telford and Wrekin‘ area because that is part of a separate Phase Two contract inside the same county.

MPORTANT: Take-up is a dynamically scaled measurement, which means that at certain stages of the scheme it may go up or even down depending upon the pace of deployment (i.e. premises passed in any given time-scale), although over time the take-up should only rise.

Explained another way, early phases of the roll-out are easier and faster to deploy, so you can expect to see a bit of a yo-yo movement with the take-up % sometimes falling if lots of new areas are suddenly covered. Some contracts are also younger than others and will thus take time to catch-up. However BDUK’s roll-out pace is also starting to slow as they reach tricky rural areas (Phase 2), which will give take-up a chance to climb in Phase 1.

A number of other factors can also impact take-up, such as the higher prices for related “fibre” services, as well as customers being locked into long contracts with their existing ISP (they can’t upgrade immediately) and a lack of general availability awareness (locals don’t know it exists) or interest in the new connectivity (if you have a decent ADSL2+ speed then you might feel less inclined to upgrade).

In other cases the new service may run out of capacity (i.e. demand is higher than expected), which means that people who want to upgrade are prevented from doing so until Openreach resolves the problem. However the scale of this issue is very small.

Now, for some context, here’s the latest progress report on related contacts for the same period.