Phil's corner

Capital costing is in line with corporate civil engineering costs, as one would expect from a report prepared by Atkins and The University of Northampton. The figure of £1,309 per business and public sector premise passed is perhaps not unreasonable, but escalates to an eye-watering £7,644 per premise connected when the low takeup assumptions are factored in.

"Propel Northants" could represent a good launch platform for further growth of FttH services in Northamptonshire, but its current economics leave it stillborn.

Can the above weaknesses be realistically addressed to make the project an attractive investment ?

As a numbers man I have been digesting the discounted cash flow (DCF) analysis which shows a lot of red ink in Table 33. The project starts with £30m of capital expenditure in Year 0 and then makes a loss every year for 15 years, producing a NPV of (£57m). This says that the project is the same as burning getting on for £60m in a bin outside the council offices.

To be fair the annual loss does decline through the project, and is only a million quid by 2026, but it is still a loss from start to finish.

I will write more on why I believe the DCF produces such a dire result as I get my head around its assumptions. One obvious factor is that Health and Education are assumed to do their own thing and are therefore not included as potential revenue customers of the fibre network. This is a shame as a) these are two of the biggest players in the public sector and b) the model assumes that the fibre network gets 80% of the retail revenue from public sector customers (as opposed to 50% from private sector) with its open access wholesale model.

The Delivery Model has several references to community engagement in broadband provision, with the word "community" featuring 93 times in the 60 page document. Selected highlights are :-

Point 7 of the Executive Summary sates that "Contracts are expected to include provision for Community Broadband Hubs where there is sufficient demand for them" and goes on to suggest they are exploring what the specification of such a thing might be and what demand there is for them.

Section 2.4.1 makes it clear that Community Groups are part of the intended audience of the delivery model document and Section 10 sets out potential roles for and involvement of such groups. Principle 3 (4.2.3) is to "Promote the involvement of local communities" including to "Explore the viability of the provision and use of a Broadband Community Hub at a local level". Principle 11 is to maximise competition " including SMEs and community suppliers as appropriate".

Section 9.2.3 looks to community champions to support demand stimulation, against a background where BDUK see potentially low takeup of superfast broadband in areas that currently have a workable standard broadband service.

In section 10.2.4 the bar is set for a local community to be at least 100 households that are sufficiently concentrated to be connected to a single "point of presence". A target of at least 40% of households signing up for the setup and monthly charges of any proposed community scheme is suggested as a minimum.

BDUK have funded The Rural Broadband Partnership at ruralbroadband.com to act as a focal point for Community Broadband issues, presumably burying the Community Broadband Network's role in this sector for good.

In Section 10.4 we get down to the nitty gritty of delivery, with BDUK stating that "In the majority of cases, community groups will not be involved in the actual delivery of the broadband infrastructure". They see a role in "raising awareness", "stimulating demand" and informing local bodies (Councils) of the community's needs. They go on to say that "In a minority of cases the community may become involved in the delivery of broadband infrastructure. This is expected to happen where the proposed broadband investment will not otherwise meet the community expectations. It may involve the use of a Community Broadband Hub."

Section 10 is fairly inclusive in its approach, while at the same time fairly dismissive - "Demand for this option is uncertain", "Demand for this option is unproven" and so on. The three main options identified for Community Networks are :-

So the document provides hooks for community projects to latch on to, but the money simply isn't there to give them the handouts that most will crave. It does have sufficient references to Community Broadband Hubs to make it difficult for Councils and their large corporate suppliers to totally ignore them, but at the moment the references are so vague they don't cast a lot of light on the subject.

Hopefully subsequent versions will firm up on the Community Broadband Hub concept.