Superfast Essex Broadband Programme Phase 2

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1 State Aid Public Consultation Superfast Essex Broadband Programme Phase 2 Area Impacted: All parishes in Essex, Southend and Thurrock Consultation period: Thursday 16 th October 2014 to Monday 17 th November 1

2 Contents 1. Introduction Background Superfast Essex Intervention Methodology Description of aid measure Gap Funding Model Delivery Approach and Procurement Process Stakeholder opinions and change control Superfast Essex Communication Programme State Aid Compliance Invitation to respond Internet Service Providers and telecoms companies Public Ways to respond Annex A Open Market Review Information Required Annex B Glossary

3 1. Introduction The purpose of this State Aid Public Consultation document is to inform broadband network operators and the Essex public at large of Essex County Council s plans to carry out a significant broadband infrastructure upgrade paid for in a large part by public subsidy. The subsidy will be targeted at areas where the commercial case for upgrading the network cannot be made and that as a result, market failure is deemed to have occurred. To make best use of public money and to limit disrupting the free market, Essex County Council requires accurate mapping in order to target the areas of greatest need. In order to accurately map these areas, ECC needs to develop a comprehensive understanding of the current and future private sector investment over the next three years. Areas of market failure are classified as White areas, consistent with Broadband Delivery UK (BDUK) and European Commission definitions. A Basic White area is where services at a minimum download speed of 2 Mbps are not available at affordable prices and there are no private sector plans to deliver such services in the next three years; or areas where there is no broadband infrastructure whatsoever. Next Generation Access (NGA) Broadband is defined by BDUK and the European Commission as infrastructure capable of delivering speeds of over 30Mbps [Appendix 2 Glossary] and accordingly an NGA White area is where broadband services with an access (download) speed of over 30Mbps are not available at affordable prices and there are no private sector plans to deliver such services in the next three years. This document contains maps that have been compiled using the most up to date market data available obtained during an Open Market Review (OMR) that took place between the 11 th July and 5 th September This document is published as part of the Superfast Essex Broadband Programme. It provides background on the project, defines the targeted intervention areas and describes both the proposed investment and the procurement approach adopted. The formal consultation questions are posed at the end of the document. 2. Background Superfast Essex Superfast Essex Bridging the digital divide across Essex, Southend and Thurrock was published in June 2012 as the Local Broadband Plan. It was approved by the Secretary of State for Culture Media and Sport and secured 6.46 million of national government investment for broadband infrastructure in Essex. In February 2012, Essex County Council agreed to commit a similar amount of money on broadband infrastructure as part of its capital programme over the next three years. 3

4 The lack of effective broadband in rural areas is a barrier to economic growth and social development in Essex. Essex County Council, with its project partners, is committed to bridging the digital divide, delivering economic growth and social wellbeing by making NGA or much improved broadband available to all and encouraging Essex s citizens and businesses to make more effective use of the internet. Essex County Council s vision is reflected in the following overarching aims of the Superfast Essex Broadband programme; To significantly improve Essex s NGA and Basic Broadband coverage and prioritising areas with the greatest need both economic and social, and ensuring that the solutions are fit for purpose and able to meet demand To encourage people to sign up for better broadband through the Make the Connection campaign. To help residents and businesses understand the benefits of being digitally connected Broadband provision varies widely across the county with urban centres enjoying NGA Broadband while rural areas often have no broadband at all. There is an overwhelming case for public investment to bridge this gap whether it be for economic growth, public service delivery or social inclusion. Following the successful procurement of Phase 1 of the Superfast Essex programme, delivery is now in progress and is on target to expand superfast broadband (download speeds of 24Mb/s or above) connectivity across 87% of premises in Essex by Recognising that more work is required to achieve the national target of 95% superfast coverage, Essex now plans to invest a total of 13m of public sector funding in a second phase of the Superfast Essex programme with the objective of reaching 95% coverage by Intervention Methodology The Project Area includes all of the administrative areas of Essex County Council, Southend-on-Sea and Thurrock Council. The Superfast Essex programme aims to provide access to Basic Broadband (2Mb/s download speed) to all those premises across by 2016 and access to Superfast Broadband (24Mb/s download speed) to at least 95% of those premises by The programme intends to meet these aims by targeting the public subsidy in Basic White and NGA White areas to fund appropriately qualifying technologies as set out within the National Broadband Scheme (NBS) 1 and the European Commission s Broadband Guidelines 2. From within these White areas the Superfast Essex programme will define the Intervention Area which, distinct to the Project Area, will

5 be where the public sector subsidy will be spent, in accordance with relevant European Union State Aid regulations 3. The specific methodologies, technologies and commercial models to be adopted for Phase 2 of the Superfast Essex programme will be developed during the procurement phase. It is Essex County Council s ambition that services to the consumer will be affordable and delivered by a choice of Internet Service and Telecoms Providers in an open, fair and competitive market environment. Key requirements will be reliability of the network and wholesale accessibility of the services in line with industry standards and the relevant requirements of the NBS. The responses to the OMR have been analysed to provide an initial view of the number of premises that are eligible for public subsidy. This analysis covers the whole of the Project Area of Greater Essex which is comprised of 801,403 premises 4. The OMR yielded responses from a number of operators offering Broadband services within Essex, and the Superfast Essex team is currently following up with some of these providers to clarify their response. Coverage data provided under the OMR has been assimilated at post code level and overlaid on a map of Essex to provide the broadband coverage classifications required for State Aid assessment and approval. The analysis and associated maps show three colours associated with these State Aid classifications: White, Grey and Black. In general terms White means there is no infrastructure or no plans for deployment in the next three years; Grey means where there is infrastructure and/or plans but only one provider; and Black means where there is infrastructure and/or plans by two or more providers. Further definitions can be seen in Appendix 2 Glossary. In addition, we have used a further category of Conditional White. This has been applied to premises and post codes where we are working with the supplier operating in these areas to clarify their OMR response and confirm that the coverage provided meets the requirements for NGA services. Our initial analysis shows that the planned intervention for Phase 2 of the Superfast Essex Programme will be targeted at the 62,728 premises that fall within the NGA White areas as shown in the table below. 3 https://www.gov.uk/broadband-delivery-uk#state-aid 4 OS Code-Point data March 14 5

6 Basic broadband statistics: Status Premises % Black 287, Grey 500, NGA broadband statistics: Status Premises % Black 265, Grey 426, Conditional White 4, Conditional White 42, White 4, Total 796, White 62, Total 796, Initial breakdown of Essex premises by State Aid categories Please note that a further 42,864 premises have been classified as NGA Conditional White. If appropriate NGA plans and/or coverage cannot be confirmed for those areas, the planned intervention will focus on these areas also, that is it will include a total of 105,592 premises. Through this State Aid Public Consultation, Essex County Council is seeking to validate this information so that a submission can be made to the National Competency Centre at the Department for Culture Media and Sport (DCMS). Feedback from the consultation will be fed into the information that ECC already holds and revised maps will be produced as appropriate. 6

7 Map 1 - Basic Broadband - white/grey/black areas based on current and announced industry roll out 7

8 Map 2 - NGA Broadband - white/grey/black areas based on current and announced industry roll out 4. Description of aid measure For Phase 2 of the Superfast Essex Programme Essex County Council has secured a grant of 6.5 million from Government for use in the BDUK national rural broadband intervention. Essex County Council has committed a further 5.5 million in its capital programme for the financial years 2015/16 and 2016/17. In addition, a number of Essex district and borough authorities have indicated they will contribute capital funding to the programme. They include Braintree DC, Tendring DC and Epping Forest DC, and discussions continue with Colchester BC, Maldon DC and Uttlesford DC. It is expected that a further 1m in total will be committed from these funding sources. In terms of capital investment for infrastructure, 13 million of public subsidy is currently available for Phase 2. Discussions aimed at securing further capital investment to support the programme continue with Essex districts and regional organisations. Should these result in additional funds becoming available, ECC will take steps to extend the programme accordingly, and an application for further BDUK grant funding will be made. 8

9 An operational budget to cover procurement and project implementation costs has also been committed to the programme by Essex County Council. 5. Gap Funding Model A Gap Funding Model has been adopted for the programme whereby the programme s funds will be used to supplement the investment by the selected private sector partner. This enhances the value of the private partner s investment considerably in a way that least affects the competitiveness of the market environment. The Gap Funding Model also creates the most transparent audit trail for public/private money being spent. 6. Delivery Approach and Procurement Process It is proposed that the Phase 2 investment is split into two distinct projects, a Broadband Extension project (to be procured via the BDUK Framework in the same way as the current project) and a Rural Challenge project (to be procured using a separate competitive European tender process): Broadband Extension: In terms of technology, the current BDUK programme is focused on the deployment of fibre-to-the-cabinet technology. It is clear from the deployment plans and confirmed by independent advice that significant scope remains for a further expansion of this technology without a significant increase in deployment cost per premise reached. It is therefore planned that as part of Phase 2 an investment of at least 10m is made available to expand the current rollout programme further, with the expectation of reaching an additional 40,000 premises. While the expectation is that the key delivery technology for this project will be fibrebased, the requirements specification will be focused around coverage and connection speeds to be achieved. A commercial partner to deliver this project will be procured under the national BDUK Broadband Delivery Framework. Rural Challenge: In order to achieve the highest number of premises reached for the lowest cost, the current Superfast Essex Phase 1 programme tends to build out the network from the existing areas of deployment, making the prioritisation of more remote locations more difficult. For very rural areas fibre technology may not be the most cost-effective option for achieving superfast broadband speeds as well as wide geographical reach. It is therefore planned that as part of Phase 2 up to 3m of the available public funding is invested into a separate project. This project will be specifically designed to focus on areas not covered by and likely to be too expensive for the other projects in the programme. The project will be technology neutral and will seek the use of innovative approaches to achieve an appropriate combination of affordable infrastructure deployment cost and widespread coverage. As part of developing the requirements specification for this element, further analysis will take place with regard to the options for technology, suitable commercial partners and long-term viability. The objective of this element is to provide superfast broadband services to an additional 20,000 rural premises in Essex. A commercial partner or 9

10 partners to deliver this project will be procured via an appropriate procedure as set out in the EU procurement rules. Supplier Engagement for both projects commenced on 11 th July with the invitation to respond to the Open Market Review. This invitation was open to all suppliers, but a specific request to respond was sent to more than 80 broadband or telecommunications providers held on a list by BDUK at a national level and complemented by a local Essex listing, which also included smaller, more local suppliers. Supplier engagement will continue throughout the Public Consultation period, concluding at the end of October. 7. Stakeholder opinions and change control Essex County Council is grateful for all contributions to either the Open Market Review or this State Aid Public Consultation. It is in the programme s interest that as much valid and reliable market information is gathered as is available, so that the public subsidy can be focused in the right areas. It is also in the interest of those stakeholders looking to invest in broadband infrastructure within Greater Essex to provide as much detail about their plans as possible, so as to avoid a duplication of coverage. The Superfast Essex programme is actively trying to avoid causing displacement or creating adverse market conditions and as such is looking forward to receiving, in confidence, further submissions from stakeholders of their plans, including postcode level data for the areas of interest to them. Essex County Council is treating all coverage information and details of deployment plans provided as part of the OMR or Public Consultation in confidence and will use this only to determine the finalised State Aid intervention area. Essex County Council is willing to enter into a non-disclosure agreement with suppliers providing data under this process should this be required. All responses must be received by noon on Monday 17 th November If you have any questions please 8. Superfast Essex Communication Programme The Superfast Essex Programme maintains a comprehensive public engagement and communication plan. The dissemination of up-to-date programme information is driven via the programme website and the associated mailbox. The Make the Connection campaign is recognised as an important element of the programme, and the online demand survey allows the programme to receive on-going feedback from residents and businesses. The Superfast Essex programme carries out demand stimulation activity using a variety of means: 10

11 Online survey to recoding current broadband availability, access speeds, user profile and demand for an enhanced service A postcard campaign whereby residents and businesses can submit their requirements on a postcard A Superfast Essex Twitter feed allows the team to communicate the latest programme updates quickly and to respond promptly to feedback. Parish Council and Community Group briefing sessions where members of the project team get out to outlying groups and explain the Project and its benefits. Many of these presentations take place at meetings that are open to the public A programme website (www.superfastessex.org) which explains in more depth the Project and benefits, allows visitors to fill in the on-line survey as well as showcasing case studies. This public consultation document will be hosted on this website and Essex County Council s website A sustained media campaign throughout the procurement exercise of Phase 1 and continuing during delivery. This promotes Superfast Essex at business and residential events across Essex with the objective of stimulating demand and driving take-up of the new superfast broadband services where they are being enabled. 9. State Aid Compliance The State Aid Public Consultation is a pre-requisite to receiving approval from the European Commission via the National Competency Centre at the Department for Culture, Media and Sport. This approval is necessary where public subsidy may distort the existing market conditions. In order to comply with EU State Aid guidance, this Public Consultation must comply with the following points: The State Aid Public Consultation document must be published on a publicly accessible website with a link to the BDUK national website for at least one calendar month The Consultation will close no earlier than one month from the commencement of the tender process. This is in order to mitigate against changes in the market conditions The results and feedback from the State Aid Public Consultation will update the Greater Essex mapping information and form the basis of the tender exercise The County Council is seeking direct feedback from all stakeholders including suppliers (submissions that have no evidence or lack detail may be disregarded), businesses and the public Independent assessors will be used by the project to judge the technical and commercial viability of existing or proposed methods of broadband delivery that may impact the intervention area. The following further requirements must be adhered to in order to comply with EU State Aid rules and to receive approval from the National Competency Centre within DCMS: 11

12 Detailed mapping must be produced to understand the areas where market failure exists (the White Areas) and validated through this consultation process; The procurement exercise, including the tender process and specification must be technology neutral and focus on outcomes (i.e. at least 95% of premises to gain access to NGA Broadband and all to gain access to Basic Broadband); The contract shall include a benchmarking mechanism to ensure that prices offered by the supplier are controlled in line with the market; The contract shall include a claw-back mechanism and reporting obligations to take into account the levels of take-up of improved services; The supplier will be required to meet the minimum access requirements of the NBS in respect of wholesale access for at least 7 years from when the network becomes operational; The national regulatory authority Ofcom will be consulted and updated as the project develops. 10. Invitation to respond This State Aid Public Consultation is a formal invitation to respond and any information provided will be used to support Essex County Council s State Aid application process. 11. Internet Service Providers and telecoms companies Operators of existing broadband infrastructure (or those with plans to deploy the same in the Project Area over the next three years) are invited to respond to Essex County Council with their deployment plans by postcode and/or premises for NGA Broadband or Basic Broadband services (consistent with the European Commission s Black/Grey/White classification scheme). Essex County Council requests that operators provide an implementation timetable and confirmed evidence including funding to support future planned provision of NGA Broadband and Basic Broadband Services. Additional requirements to support operators claims are shown at Appendix A of this document. These are the same requirements as outlined in the invitation for the Open Market Review. For the avoidance of doubt, Essex County Council does not plan to intervene in areas where it is confident of existing or planned coverage within the next three years. However Essex County Council does not want to rule out of scope any areas at risk of not being covered by commercial operators plans within that period. Please ensure that in your responses you include your name, position and company contact details. Please provide detailed and supported evidence in order to allow Essex County Council to accurately validate its mapping. Responses must be received no later than noon on Monday 17 th November

13 12. Public and Businesses Local stakeholders including businesses, public sector and voluntary groups, communities, and people that live and work within Essex, Southend on Sea and Thurrock, are invited to respond to this document. Your views are important to Essex County Council. Responses to this consultation must be received no later than noon on Friday 14 th November Ways to respond By posting a comment on the consultation online via the Essex Insight portal (where the link to this document is published): (preferred for general comments). By (preferred for suppliers wishing to supply coverage details). By post: Re: State Aid Public Consultation Superfast Essex Programme, B1, County Hall Chelmsford, Essex, CM1 1HQ 13

14 Annex A Open Market Review Information Required As stated in the introduction, Essex County Council will use the information provided here to define the proposed area of market failure where state intervention in the broadband market would be appropriate. In order to support a correct assessment, it is therefore important that the information you provide is complete and all elements are responded to. Please provide details and supporting evidence of any current coverage or planned investment in broadband infrastructure for Next Generation Access (minimum 24Mb/s) in Essex. In the case of planned investment, please include plans for the coming three years, until the end of Plans for years beyond that would also be helpful. The information provided should include the following: Coverage Data Details of your existing broadband coverage and any plans for the next three years. Please provide detail of your plans in tabular form. A template for the provision of this data is available on request from The detail for post codes/premises passed should include for each row: o Postcode (and if possible UPRN/address) and whether coverage is available o o o o Download speeds typically experienced by end users Technology currently used and proposed (for guidance, please refer to the descriptions set out in the European Commission's Broadband Guidelines 5, specifically Section 3, paragraphs 57-60; and the UK National Broadband Scheme guidelines 6 ) Deployment timeframe for planned investment (year) Where available, your organisation s programme name or reference that planned deployment falls within. Coverage Information To complement and underpin the data supplied, please also provide the following additional and explanatory information, which will also be used in our assessment of the market and the need for state intervention: Coverage Map A map of your current and planned coverage, preferably in an electronic format such as a spatial dataset, for example MapInfo TABs. 5 Community Guidelines for the application of State aid rules in relation to rapid deployment of broadband networks 6 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/236341/nga_technology_guidelines_ p df 14

15 Business Plans Evidence to substantiate actual and planned coverage claims, including evidence of premises connected for existing coverage or business cases and evidence of available funding for planned coverage. Technology Description A detailed description of the technology solution(s) deployed (or to be deployed) in your broadband infrastructure and where these claim to be NGA. Please describe each technology and evidence how they meet the minimum standards as set out in the UK National Broadband Scheme guidelines 7. Services Offered Description of the services/products currently offered and separately, those to be offered within the next three years. Pricing Information Where direct broadband services to retail or business customers are offered, please provide details of installation, annual/monthly subscription, and any additional volume or per-service tariffs for those services/products (identifying whether such tariffs are inclusive or exclusive of VAT). Where wholesale access to broadband infrastructure is offered to third-party Communication Providers (CPs), or Internet Service Providers (ISPs), please outline the pricing approach and costs of this service and explain how equivalent access for all CPs/ISPs is managed. Upload Speeds Give an indication of what upload speeds are associated with the download speeds stated in Annex C. Service Quality Provide an assessment to what extent typical upload and download speeds for the services provided vary by factors such as distance, increased take-up or demand (i.e. contention, time of day), or weather. Do you consider your service capable of supporting advanced internet services such as video conferencing or HD video streaming? If yes, please provide appropriate indicators of the quality of services (e.g. contention ratios, bandwidth allocation per user). Executive Sign-off Confirmation from an authorised signatory that all information provided is of suitable accuracy. 7 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/236341/nga_technology_guidelines_ p df 15

16 Annex B Glossary Defined Terms Access line speed Basic Broadband Basic White Area Basic Grey Area Basic Black Area BDUK Broadband Coverage Definition This refers to the maximum speed of the data connection between the broadband modem and the local exchange or cable head end Broadband which delivers download speeds of at least 2Mbps. Examples of basic broadband could include: ADSL (Asynchronous Digital Subscriber Line), ADSL 2+, wireless, mobile and satellite. An area where: basic broadband services at a minimum download speed of 2Mbps are not available at affordable prices and there are no private sector plans to deliver such services in the next three years; or there is no basic broadband infrastructure, nor any investment plans by a private sector network operator to deliver such infrastructure within the next three years An area where one basic broadband network already exists delivering affordable basic broadband services at a minimum download speed of 2Mbps and there are no private sector plans to roll out similar infrastructure in the coming three years. An area where two or more basic broadband networks already exist delivering affordable basic broad Broadband Delivery UK. The Government organisation charged with improving national broadband services An internet service which processes high-speed access The extent to which an area is connected to a network (usually expressed as a percentage or a fraction) DSL Fibre Digital subscriber line - a group of technologies that deliver data services (including broadband) over wires of the telephone network Fibre optic cables used for data communications FTTC Fibre to the cabinet. A network in which the copper line portion of the network is shortened by connecting all street cabinets to the local exchange using fibre FTTP Fibre to the premise, A network in which the end user is directly connected to fibre 16

17 National Broadband Scheme (NBS) NGA Broadband The National Broadband Scheme provides State Aid umbrella approval for UK broadband rollout projects that comply with the conditions of the scheme. It is administered by the National Competency Centre at the Department for Culture Media and Sport. Details of the Scheme are available at this link: NGA networks are understood to have at least the following characteristics: - deliver services reliably at a very high speed per subscriber through optical (or equivalent technology) backhaul sufficiently close to user premises to guarantee the actual delivery of download speeds of at least 30Mbps at affordable prices; - support a variety of advanced digital services including converged all- IP services; and - have substantially higher upload speeds (compared to basic broadband networks). At the current stage of market and technological development, NGA networks are: (i) fibre-based access networks (FTTx); (ii) advanced upgraded cable networks; and (iii) certain advanced wireless access networks capable of delivering reliable high speeds per subscriber. NGA White area NGA Grey area NGA Black area OJEU Project Area Superfast Broadband An area where: - NGA broadband services at an access (download speed) of over 30Mbps are not available at affordable prices and there are no private sector plans to deliver such services in the next three years; or - There is no NGA broadband infrastructure, nor any investment plans by a private sector network operator to deliver such infrastructure within the next three years. An area where one NGA broadband network already exists delivering affordable NGA broadband services at an access (download) speed of over 30Mbps and there are no private sector plans to roll out similar infrastructure in the coming three years. An area where two or more NGA broadband networks already exist delivering affordable NGA broadband services at an access (download) speed of over 30Mbps. Office Journal of the European Union The Project Area includes all of the administrative areas of Essex County Council, Southend-on-Sea and Thurrock Council. Superfast Broadband is a service that is capable of delivering at least 24Mb/s download speed and is in all other respects compliant with the requirements for an NGA Broadband Service 17

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