Phil's corner

Labels: broadband, Chattanooga, cost, debt, economics, FTTH

Labels: broadband, community, council, FTTH, municipal

Trying to untangle the loss making assumptions behind the DCF analysis of the "Propel Northants" project I have observed the following questionable assumptions :-

Labels: broadband, fibre, FTTH, Northamptonshire, Propel Northants

Reading an excellent article by Robert Dale I started to reflect on how the likes of Cumbria and Lanacashire County Council are handling their broadband projects with part of the funding coming from Broadband Delivery UK (BDUK) .

Both counties have EU public tenders out, currently viewable online Lancashire and Cumbria.

Robert says that "local authorities should make finance facilities available specifically for these communities to move ahead with their own broadband when and where possible" but I really don't think they are up to that task in the way they currently operate. I say this based on my previous experiences in the private sector where we managed a capital investment programme of £20 - 60 million per year. It may be helpful to compare the approach taken.

I worked in a multi-site manufacturing company where we made investments to increase profitability through cost reduction or new products, invested in replacement works for equipment at the end of its life, upgraded facilities to meet new regulatory or other standards, and so on. There was active competition for the capital funds from the factories and we could have easily spent double what we had allocated by the Board of Directors. The administration involved a handful of people with a larger committee of technical and financial gurus joining senior line managers to argue out which projects were funded, canned or deferred. We'll call this process our "Capital Expenditure Committee" or CEC.

In the Broadband case we could cast BDUK as the Board of Directors, or maybe the County Council or its Chief Exec, setting the size of the budget. The officers of the Council could be equivalent to our CEC. If they were they would probably divide up the money into categories - for example Broadband notspots, Village pump pilots, FTTH pilots, Improved mobile broadband coverage, etc etc - and invite people to make submissions for funding. However they can't work like that, because they don't have any "customers" for the capital projects like we had factories.

In our case when a factory bid for funding and won it then they would procure the engineering and other services to deliver the project. Some of the resources may be their own labour, others would be bought in. The Factory Manager had responsibility for delivering the project on time and on budget, and was also effectively the "customer" of the CEC process in getting access to the money. Their submission for project funds would typically have to include detailed costings and supplier tenders at the later stages, we had 2 - 4 stages of application over 18-24 months depending on size and complexity of project.

The County Councils don't appear to have any customers. There isn't a mechanism in place for a community leader or broadband champion (equivalent to my Factory Manager) to ask for money from one of the pots or to influence what gets delivered in their area.

What we see in practice is the County Council writing a tender that effectively outsources the whole intellectual project of managing the expenditure and delivering the benefits. The large company winning the tender, for example BT, gets to make all the decisions about what to do where. It is responsible for delivering what it says it will at the tender stage which means a massive conflict of interest where the suppliers of goods and services are the same people deciding the best way to deploy those goods and services. The end users and local communities have no voice in the process.

A possible approach to match what Robert calls for, along the lines of my previous experience, might look like this :-

1. BDUK and County Council / Chief Executive define available funds, priorities and goals of expenditure and sets total expenditure budget.
2. County Council decides how to break up the total into parcels of expenditure to cover areas of activity, priorities, geographical areas, etc etc.
3. Community groups, local small companies, 3rd sector bodies, County Council departments, District or Parish Councils bid for appropriate funds to do their project to meet one or more of the objectives. Let's call them project sponsors.
4. County Council officials, BDUK, invited experts form a Capital Expenditure Committee to award funds to the best projects to the Project Sponsors based on the case they present.
5. The Project Sponsors procure necessary goods and services to deliver their project and manage its implementation.

With this approach there is no single large scale tender. There are multiple opportunities for SMEs, local companies etc to be Project Sponsors and get funding to deliver something. There are opportunities for suppliers big and small to tender for supplying goods and services to the Project Sponsors. There are opportunities for the 3rd sector to be a Project Sponsor, and so on. In other words it creates an eco-system of enterprise and empowerment to deliver an overall goal.

Would this deliver a better outcome than a single tender to a company with a turnover of at least £100m pa, as specified in at least one of the tenders ?

Let's try to illustrate the difference :-

Labels: BDUK, broadband, capital expenditure, County Council, FTTH, NGA, procurement

Neelie Kroes, Vice-President of the European Commission responsible for the Digital Agenda, recently called for more action to deliver access to superfast broadband in pursuit of that Agenda.

Labels: BDUK, broadband, fibre, FTTH, NGA, UK

I used to know what an ISP was for. They took your modem signal via the phone network, converted it back into TCP/IP data and passed it onto the internet :-



In the hopefully near future, Next Generation Access (NGA) will give me a TCP/IP connection over fibre optic (or xDSL, WiMAX, LTE, EFM or whatever) from a local network provider. If they provided transit to the internet it would be job done :-



This latter scenario is very similar to Virgin's cable broadband or to LLU ADSL, where vertically integrated providers take data from a local point directly to the internet. The prevailing "wholesale" model and the much talked about (but seldom existing) "open access" network doesn't allow the local network operator to provide internet connectivity but forces them to route traffic via an ISP in order to foster competition. The competition is mainly in price and add-on services as the local connectivity is fixed :-

Notice how in this case we have two entities or networks passing data from the local exchange equipment to the internet. This is purely for regulation and competition reasons. I may be using no services at all from the ISP, other than getting my data out onto the Internet. If the telco were allowed to do this directly I would not need the ISP.

Labels: FTTH, ISP, NGA, OPLAN