Autumn 2023 BDUK Update on UK Project Gigabit Broadband Rollout

The Building Digital UK agency has released their latest September 2023 progress update on the Government’s £5bn Project Gigabit broadband rollout scheme, which is now running live contracts and procurements worth over £2bn in state aid (up from £1.4bn in July) to help extend coverage to an extra 1.1 million hard to reach premises.

The project aims to extend networks capable of delivering download speeds of at least 1000Mbps (1Gbps) and uploads of at least 200Mbps to 85% or more of UK premises by the end of 2025, before rising to “nationwide” coverage (c.99%) by around 2030 (here). The funding released for this will depend upon how the industry responds, but many more procurements are due to enter the pipeline soon (see below).

The report notes that over 77% of UK premises can now access a gigabit-capable network, which falls to 56% when just looking at FTTP (i.e. the gigabit figure is boosted by Virgin Media’s HFC upgrade – here). But Ofcom currently forecasts gigabit coverage to hit 92% by March 2025 (here), with purely commercial deployments alone being expected to deliver over 80% of that.

At this point it’s worth looking at the rural vs urban divide in gigabit coverage, which helps to illustrate how most of the coverage progress is dominated by commercial urban builds.

Rural vs Urban – UK Gigabit Coverage
(Thinkbroadband Data)

Project Gigabit is thus designed to focus on improving connectivity for those rural and semi-rural areas in some of the final 20% (5-6 million premises). This primarily consists of several support schemes, including gigabit vouchers (£210m), funding to extend Dark Fibre around the public sector (£110m) and gap-funded deployments with suppliers (rest of the funding) – known as the Gigabit Infrastructure Subsidy (GIS) programme.

Today’s article is focused upon the GIS programme and related procurement work, which sees ISPs bidding through a new Dynamic Purchasing System (DPS) to extend their networks across disadvantaged parts of the UK. Project Gigabit in England is centrally managed (by DSIT/BDUK – not local councils), although there may be variations in this for Scotland, Wales and Northern Ireland.

What’s New in the September 2023 Update

Since the last update in July 2023 (here), BDUK has launched another 9 new local and regional procurements – worth a combined £597 million, which are expected to help upgrade up to another 260,000 hard-to-reach homes and businesses. This includes two large cross-regional (Type C) contracts that will target some of the hardest areas that have struggled to attract much interest from suppliers in other procurements.

The combined value of all the contracts signed so far comes to around £589m in public investment and will upgrade 378,450 premises (c.£1,556 per premises passed), but this doesn’t include any private match-funding that may enable some of those contracts to reach many more premises through a complimentary commercial expansion.

Otherwise, the total value of all the 39 live Project Gigabit procurements launched to date (inc. 27 live procurements and 12 live contracts) is around £2bn (up from £1.4bn in July 2023), which could see up to 1.1 million extra premises being passed by a gigabit-capable network. The project has also reached the milestone of the 100,000th voucher used to connect premises to gigabit-capable broadband (rising to 122,000 if prior voucher schemes are included) – they’ve published a related Evaluation Report for this, although the data in that report only goes up to 2021.

Voucher Evaluation Highlights

The report, which examined all vouchers issued and connected by March 2021, has found clear evidence that their use helped boost the average download speed in local areas beyond what the market could have achieved alone. This effect becomes more pronounced for premises in more rural areas. In addition, a survey of 4,000 households who received a voucher in this timeframe found 53% of residents reported that their broadband upgrade had increased their life satisfaction.

As a result of the upgrades to connectivity experienced by small and medium size enterprises that took advantage of gigabit vouchers, an additional 24,000 jobs were also created which, adjusting for inflation, resulted in a productivity boost of over £37 million. Notably, the evaluation also found evidence that vouchers contributed to a net reduction in carbon emissions of 7,600 tonnes CO2e over three years due the decrease in travel to work times as well as energy usage in workplaces.

The Project has now launched all of their currently planned pipeline of local and regional procurements that form part of their delivery in England. The latest procurements added to this list cover North Yorkshire, Cheshire, Lincolnshire and East Riding, West Herefordshire and Forest of Dean, East Gloucestershire, the Peak District, and Mid/East Devon and West Somerset.

However, the devolved countries of Wales, Scotland and Northern Ireland are still in the preparation stage, but we do get an idea of the progress for these areas, which we’ve summarised below.

Status of Devolved Countries

➤ Wales

Areas across North West Wales, Mid Wales and South East Wales are included in a cross-regional procurement launched in July 2023. BDUK still plans to launch a regional procurement in North Wales by the end of the year, while South West Wales will be included within a future contract procured under the cross regional framework. Further proposals for voucher projects will be considered in South West Wales before this process begins.

As of the end of August 2023, BDUK had connected 3,400 homes and businesses in parts of Wales using vouchers. In addition, a further 2,100 vouchers had been issued for connection within the next 12 months.

Meanwhile, the Welsh Government’s Superfast Cymru programme has now completed delivery of gigabit-capable infrastructure in Wales and in total has provided just under 100,000 premises with access to gigabit-capable broadband.

➤ Northern Ireland

Project Stratum (£173 million UK government funding and £24 million from Northern Ireland Department for Economy and Department of Agriculture, Environment and Rural Affairs) is also delivering ahead of target with 67,000 of the 85,000 contracted premises having received full fibre coverage to date.

The Northern Ireland Public Review completed in July 2023 and work is now under way to identify the remaining premises requiring support through Project Gigabit.

➤ Scotland

The Scottish Government’s April 2023 Public Review identified around 410,000 premises that are not currently in suppliers’ commercial or state-funded gigabit-capable broadband coverage plans. BDUK anticipates that a proportion of these will be reached through commercial delivery. The Scottish Government and BDUK are now undertaking pre-procurement market engagement with suppliers, prior to the launch of Project Gigabit procurements.

Highlands and Islands Enterprise have decided not to proceed with a local procurement for the Inverness and Highland City-Region Deal area. Premises in this area will now be incorporated into Scotland-wide plans. In the meantime, voucher-enabled build is still taking place on the North East coast from Inverness.

BDUK Gigabit Broadband Voucher Scheme projects continue to be built in Scotland and to date have delivered 3,900 vouchers.

The Scottish Government’s £600 million Reaching 100% Programme (R100), which has received £49.5 million of UK government funding, has now rolled out gigabit connections to over 31,000 premises across Scotland, as delivery continues.

Otherwise, you can see a summary of the wider contract progress below.

Live GIS Contracts (Signed)

Take note that, once a contract has been signed, it sometimes takes operators several months of engineering surveys before they can begin to build and reveal their rollout plan. Furthermore, the contract values above are only referencing public investment, but in some cases suppliers have also contributed some of their own private funding to help extend beyond the original target (e.g. CityFibre’s Lot 7, 2 and 27 contracts).

On top of the already agreed contracts, Project Gigabit also has a growing number of local, regional and cross-regional deals in the procurement phase for other parts of the UK (see below) and will be awarding contracts for these over the coming months and years. The dates and figures mentioned below are tentative estimates (subject to change) and will remain that way until after the contracts have been awarded.

Bidders on the related LOTS will be required to ensure that their networks and infrastructure are available for use by other ISPs via wholesale (open access). Various operators, both big and small alike (e.g. Openreach, Cityfibre, Fibrus, nexfibre (VMO2), GoFibre, Wildanet etc.), are already taking part and areas with sub-30Mbps speeds are being prioritised, albeit NOT to the exclusion of all else.

Alongside all this, the government and local bodies are also conducting various Public Reviews and Open Market Reviews (OMR), which is the process they use when trying to identify existing commercial coverage of gigabit-capable networks and any planned coverage over the next c.3 years. By doing that, they can more easily target their support toward areas where commercial projects will not go (i.e. the intervention area).

Live GIS Procurements

The North East England (Lot 4) procurement stands out above as its estimated award date is in the past (May 2023). According to BDUK, “The North East procurement remains at contract award stage and we are currently working on the finalisation of the contract” (i.e. the contract has technically been awarded, but for some reason it’s taking longer than usual to finalise the details).

Conclusion

Sadly, it’s taken a long time to get all of these contracts into procurement, let alone award them. The new and more automated DPS system was supposed to make all of this faster and more efficient than just handing the funds to local authorities, but we’re now nearing the end of 2023 and yet some areas still haven’t got any big GIS procurements going.

On top of that, we’re still waiting for BDUK to launch a centralised website for clearly communicating their progress on each contract (this is long overdue). The quarterly updates they issue are useful, but they remain tedious for regular people to find and follow, unless you’re already familiar with the programme. A clean, clear and simple public website would help this.

However, we should remind readers that this rollout is NOT an automatic upgrade, thus you will still need to order the service from a supporting ISP in order to benefit. Similarly, 1Gbps is the target speed, but slower and cheaper options will also exist on the same lines.

The focus on “gigabit” speeds also overlooks the fact that this largely relates to download performance, while BDUK’s technical definition states that this falls to a speed of at least 200Mbps for uploads (here). This is understandable, as not all gigabit networks today are actually setup to deliver true symmetric performance.

Lest we forget that there are a lot of real-world reasons why consumers buying a gigabit package might not actually be able to achieve the top speed, due to certain realities (Why Buying Gigabit Broadband Doesn’t Always Deliver 1Gbps).

Finally, we should add that the Government has previously warned that those in the final 0.3% or so of premises may be “prohibitively expensive to reach” (i.e. under 100,000 premises) – roughly the same gap that the 10Mbps USO has struggled to fix. Solutions for those in the final batch of “Very Hard to Reach” areas are still being tested.

Project Gigabit Winter (September 2023) Update
https://www.gov.uk/../project-gigabit-delivery-plan-september-update-2023