Fife Community Broadband Project State aid public consultation Document Issued 16 October 2015
Fife Community Broadband Project Public Consultation Table of Contents 1 Introduction 1 1.1 Policy Intervention 1 1.2 Aims and Objectives 1 1.3 Procurement Approach 1 1.4 Programme Area 2 1.5 Programme Partners 4 1.6 Existing Broadband Provision 4 1.7 Next Generation Access Broadband Availability 4 1.8 Market led investment area by end 2017 4 2 State Aid 5 2.1 NGA White, Grey, Black State aid classification 6 3 Feedback and Procurement Process 7 3.1 Procurement 7 3.2 Your Views 7 Appendix 1 Next Generation Broadband Black, Grey, White Classification Map 8 Appendix 2 Basic Broadband Black, Grey, White Classification Map 9 Appendix 3 Guidance Notes 10 1
1. Introduction This document lays out the proposed Fife Community Broadband Project area, which has been defined after consultation with the Scottish Government, Fife Council, and various telecommunications providers. The Fife Community Broadband Project invites comment from telecommunications providers, businesses and residents regarding the scope, aims and objectives detailed in the following report. The purpose of the Fife Community Broadband Project is to deliver Next Generation Access broadband to all parts of our community by June 2016. The programme aims to deliver a Next Generation Solution to 100% of premises in the project footprint. The proposed area has been informed by a Scottish Government Open Market Review (OMR) carried out in December 2014. 1.1 Policy perspective The Scottish Government has set ambitious policy objectives aimed at delivering world class digital infrastructure across Scotland by 2020. As a key first step, over 400m is being invested in the Digital Scotland Superfast Broadband (DSSB) programme that is extending fibre broadband infrastructure into non-commercial areas. Alongside commercial rollout, the DSSB programme will extend access to fibre broadband to 85% of premises by 2015/16 and at least 95% of premises across Scotland by 2017/18. The DSSB programme is being delivered through two regional projects one covering the Highlands and Islands; the other covering the rest of Scotland. Both projects were procured in 2013 by Highlands and Islands Enterprise and the Scottish Government respectively with BT the successful bidder for both. The Scottish Government has also established Community Broadband Scotland (CBS), to support the development of community-led schemes in those areas least likely to have a Next Generation Access solution delivered by the DSSB programme. The Scottish Government has committed 7.5 million to CBS to March 2018. In addition, 9 million has been allocated from the 2014-20 Scottish Rural Development Programme (SRDP) to support broadband delivery in our most rural communities. Community Broadband Scotland is working with a number of communities that are unlikely to benefit from the main programme, and assisting them as they move towards formal procurement of broadband solutions. This is likely to result in a number of new regional procurement opportunities, as the reach of the main DSSB programme becomes clear. These projects will be taken forward, utilising existing CBS resources and the 9 million from the SRDP. The purpose of this public consultation document is to set-out CBS s interpretation of the potential Intervention Areas for superfast and basic broadband within the target area. This is to enable all interested stakeholders to comment on the Intervention Area proposals and in particular, to provide an opportunity for telecommunication providers to review the representation of their commercial plans and ensure these are correct. 1.2 Aims and Objectives The project aims to deliver Next Generation Access broadband to 100% of our community by June 2016. 1.3 Procurement Approach Fife Community Broadband Project will commence an open OJEU procurement process for a service contract once this consultation is complete. Bids will be assessed according to published criteria and metrics. 1
Community Broadband Scotland will provide support through the procurement process with a view to processing a capital grant application of up to 715,000. Fife Community Broadband Project are committed to maximising private sector funding to minimise public sector grant support. 1.4 The Programme Area The Fife Community Broadband Project area is home to over 1,400 people living in 705 properties. There are also over 180 businesses in the area. Information obtained by Fife Community Broadband Project indicates that 0% of households and business properties in the project area will have access to Next Generation Access broadband by the end of 2017. (Source SG Open Market Review December 2014) Table 1 shows the number of premises in each postcode that form part of the intervention area and are considered as Next Generation (Broadband) Access. NGA is defined as 30Mbps by the European Commission. This proposal relates to broadband White premises those without access to NGA broadband. In delivering this project those 35% properties in the area currently not receiving a basic broadband service will be served. Our project will be permitted to apply public subsidy only to White areas to achieve our aim of 100% Next Generation Access broadband coverage across our community. Table 1 - NGA White, area properties by postcode Postcode Population Total Properties NGA White properties DD6 8RF 3 2 2 DD6 8RH 17 8 8 KY15 4NA 37 19 19 KY15 4NQ 27 16 16 KY15 4PY 53 22 22 KY15 4QD 45 28 28 KY15 4QL 20 10 10 KY10 2RD 17 11 11 KY10 2RR 25 12 12 KY16 8NA 35 20 20 KY16 8PE 20 10 10 KY16 8PF 20 12 12 KY16 8QG 7 3 3 KY8 5NN 27 15 15 KY8 5NU 11 5 5 KY8 5PB 17 7 7 KY15 5LE 11 5 5 KY15 5PH 32 17 17 KY15 5PN 17 13 13 KY14 6HL 19 5 5 KY14 6HP 13 5 5 KY14 6HW 6 2 2 KY14 6JA 11 4 4 KY14 6JB 4 2 2 KY14 6JG 14 6 6 KY14 6JH 14 7 7 KY14 6JQ 25 14 14 KY15 4NB 40 21 21 KY15 4NH 22 7 7 KY15 4NJ 13 6 6 KY15 4NL 17 9 9 KY15 4NN 11 4 4 2
KY15 4NP 18 12 12 KY15 4NR 22 10 10 KY15 4NS 20 11 11 KY15 4NT 19 8 8 KY15 4NW 18 7 7 KY15 4NX 15 6 6 KY15 4PA 8 3 3 KY15 4PB 8 5 5 KY15 4PT 66 30 30 KY15 4PU 12 6 6 KY15 4PX 18 7 7 KY15 4QE 9 6 6 KY15 4QF 22 9 9 KY15 4QG 46 22 22 KY15 4QH 17 9 9 KY15 4QJ 19 13 13 KY15 4QW 7 2 2 KY15 4RH 0 0 0 KY10 2PZ 0 0 0 KY10 2RY 3 1 1 KY16 8LR 20 12 12 KY16 8LS 10 6 6 KY16 8PA 28 14 14 KY16 8PD 30 17 17 KY9 1EX 11 7 7 KY9 1HD 18 9 9 KY9 1HL 26 12 14 KY9 1HN 4 1 1 KY9 1HR 15 6 6 KY9 1JY 4 2 2 KY8 5NT 0 0 0 KY8 5PD 11 3 3 KY8 5PF 18 11 11 KY8 5PH 10 5 5 KY8 5PJ 7 3 3 KY8 5PL 4 1 1 KY8 5PQ 11 5 5 KY8 5QB 2 1 1 KY8 5QE 1 1 1 KY8 5QF 16 6 6 KY8 5QH 10 4 4 KY8 5QJ 6 2 2 KY8 5QL 6 3 3 KY8 5QN 11 4 4 KY8 5QP 28 12 12 KY8 5QQ 9 3 3 KY8 5QR 11 3 3 KY8 5QW 4 2 2 KY8 5SD 12 5 5 KY8 5SG 24 14 14 KY8 5SH 15 7 7 KY8 6JF 18 8 8 KY8 6JG 11 5 5 KY15 5LG 13 5 5 KY15 5TY 23 12 12 Grand Total 1444 705 705 3
1.5 Programme Partners The Fife Community Broadband Project is a partnership between the East Neuk and Landward Joint Community Council Forum (East Neuk Forum), which represents 11 community councils in the East Neuk of Fife, and the Howe of Fife which represents the Howe of Fife & Tay coast area of Fife. The East Neuk Forum will be the lead organisation for this project. The project is also supported by Fife Council and Fife Voluntary Action. Demand registration, community and business engagement are important elements in delivering a successful programme. The project team has undertaken detailed on-the-ground scoping work in the project area to identify current broadband speeds and demand for Next Generation Access broadband services. Local survey work in all areas established that at least 35% of properties are unable to obtain a basic broadband service via conventional ADSL (2Mbps, as defined by the European Commission). 1.6 Existing Broadband Provision The project area is served by Openreach infrastructure from 19 BT exchanges with many properties (35%) unable to obtain even basic broadband services. Ofcom classifies BT exchange areas according to the level of competition available to consumers. Market 1 exchanges offer BT Wholesale only, whilst Market 2 and 3 exchanges offer at least one alternative broadband network or LLU service provider. Table 2 - Ofcom Classification of BT exchanges Number of Exchanges Market 1 18 Market 2 0 Market 3 1 Total 19 We are not aware of any services other than basic broadband that serve the project area. 1.7 NGA Broadband Availability There is no NGA provision in the proposed intervention area from any supplier. 1.8 Market led investment in area by end 2017 Using information from the Open Market Review (December 2014), our understanding is that there are no plans for NGA deployment in the project intervention area within this timescale. When it has been confirmed that an NGA solution for the project area is viable, the Scottish Government will seek to descope the postcodes in the project area from the Rest of Scotland contract between the Scottish Government and BT to enable the intervention to proceed in compliance with state aid rules. 4
2 State Aid The Fife Community Broadband Project believes our programme complies with EU State Aid guidance. Any public funding for this project will be awarded under the EU State Aid-approved Highlands and Islands Enterprise General Block Exemption Regulations (GBER II Article 52) scheme for broadband infrastructure delivered through the Community Broadband Scotland programme. The criteria for awards under the GBER scheme are as follows: Eligible activities Investment in broadband networks in areas with no prospect of private sector provision within three years unless State aid is given. Geographic eligibility The investment shall be located in areas where there is no NGA infrastructure and where no such infrastructure is likely to be developed on commercial terms within three years from the moment of publication of the planned aid measure, which shall also be verified through an open public consultation. Eligible Costs The eligible costs shall be the following: (a) investment costs for the deployment of a passive broadband infrastructure; (b) investment costs of broadband-related civil engineering works; ; and (c) investment costs for the deployment of next generation access ('NGA') networks Conditions attaching to the State Aid 1. The aid shall be allocated on the basis of an open, transparent and non-discriminatory competitive selection process respecting the principle of technology neutrality. 2. The network operator shall offer the widest possible active and passive wholesale access, under fair and non-discriminatory conditions, including physical unbundling in the case of NGA networks. Such wholesale access shall be granted for at least seven years and the right of access to ducts or poles shall not be limited in time. In the case of aid for the construction of ducts, the ducts shall be large enough to cater for several cable networks and different network topologies. 3. The wholesale access price shall be based on the pricing principles set by the national regulatory authority and on benchmarks that prevail in other comparable, more competitive areas of the Member State or the Union, taking into account the aid received by the network operator. The national regulatory authority shall be consulted on access conditions, including pricing, and in the event of dispute between access seekers and the subsidised infrastructure operator. Wholesale access will be a contract requirement. 4. A Gap Funding model is being used to make a grant award to the project A claw-back clause will be included in the funding contract to ensure excess profits are reclaimed Selection of suppliers will be made on the most economically advantageous tender The programme promotes use of existing infrastructure 5
2.1 NGA White, Grey, Black state aid classification BDUK requires the following thresholds for NGA classification at postcode level and CBS uses these to guide our proposed project areas: White Grey Black Less than 90% of premises can access NGA. Only premises without NGA can be supported One supplier serves at least 90% of premises with NGA broadband - No intervention is permitted Two suppliers serve at least 90% of premises with NGA broadband - No intervention is permitted The Fife Community Broadband Project area compromises a total of 705 premises that are classified as NGA White and will require intervention to receive Next Generation Access broadband. Table 1 in Section 2 details the project area postcodes under consideration for the public funding element of this project. All postcodes are understood to be classified as NGA White. Maps detailing the target postcodes for intervention (white areas) are detailed in Appendix 1. These maps are based on European Commission s definitions for NGA and Basic broadband. 6
3. Feedback and Procurement Process This document lays out Fife Community Broadband Project s best understanding of broadband provision in our project footprint. If your company delivers broadband services within our area and would like to comment on this document, then please do so using the contact details below. You should respond against the Technology Guidelines found in Appendix 3 and the Broadband Guidelines 2013 (http://ec.europa.eu/competition/state_aid/legislation/specific_rules.html). You should respond by the deadline below. Note specifically that if any supplier intending to bid for qualifying State Aid must inform Highland & Islands Enterprise and Ofcom during this consultation about passive broadband infrastructure that you either own or control (irrespective of whether it is actually used). Residents and businesses based within our community are also invited to comment on this document and the proposed intervention area. 3.1 Procurement The Fife Community Broadband Project is in the process of establishing a legal entity that will run an Open Procurement process. The estimated procurement key milestones are as follows: Activity Date Issue of the Invitation to Tender (ITT) 23 November 2015 ITT Return Deadline 18 December 2015 Evaluate Bidder Response 22. Link January 2016 Contract Award 25 March 2016 3.2 Your views Your views on this consultation are invited, and should be addressed to: Community Broadband Scotland Highlands & Islands Enterprise Fraser House Friar's Lane Inverness IV1 1BA or email: info@communitybroadbandscotland.org This document can be downloaded from: http://www.hie.co.uk/community-support/community-broadband-scotland/updates/stateaid.html This consultation will remain open for one month. The deadline for all comments to be received is: 13 November 2015. 7
Appendix 1 - Next Generation Broadband Black, Grey, White Classification Map 8
Appendix 2 - Basic Broadband Black, Grey, White Classification Map 9
Appendix 3 Please provide details and supporting evidence of any current or planned investment in broadband infrastructure (basic broadband and NGA broadband) in the project area. In the case of planned investment, we are particularly interested in plans for the coming three years (by date). However, any plans for years beyond that would also be of interest. If your broadband investment is planned, we will require the submission of a business plan, along with a detailed timeline and deployment plan as well as proof that the plan is adequately financed. Responses should be provided using the accompanying response template (.csv format) and should indicate the exact number of business and residential premises passed per postcode. Any information provided should include, but need not be limited to: Detailed maps for basic broadband and NGA broadband showing the existing coverage and separately maps detailing the planned investment in the basic broadband and NGA infrastructure networks for at least the next three years; Exact detail of premises passed or covered, i.e. postcodes including information on the number of premises passed (in the case of a fixed network) or covered and able to receive services (in the case of a wireless/satellite network); Details of the technology and where these claim to be NGA, demonstrate how they meet the minimum standards as set out in the BDUK Technology Guidelines and with reference to the UK Broadband Guidelines 2013.. Description of the services/products currently offered and separately those to be offered within the next 3 years; Installation and rental tariffs for those services/products clearly identifying whether they are inclusive or exclusive of VAT; Upload and download speeds typically experienced by end users; Appropriate indicators of quality of the service e.g. contention ratio or bandwidth allocation per end user; Evidence to substantiate actual or planned coverage claims including business cases and evidence of available funding to enable plans to be fulfilled; Details and timing of rollout for future investment; and Confirmation from an authorised signatory that all information provided is of suitable accuracy. Confirmation that Importantly if a supplier is intending to bid for qualifying State aid they must inform the relevant authority and Ofcom during the public consultation about [passive broadband] infrastructure that they either own or control (irrespective of whether it is actually used) within the intervention area. Furthermore, that information will be made available to any other bidder in sufficient time to allow them to include the use of that infrastructure within their bid. This means that participation in the bidding process necessarily requires the bidder to offer passive wholesale access to any of their existing passive assets in the relevant intervention area and that offer holds even if the bidder does not win the contract Please supplement with supporting evidence as you consider appropriate e.g. public websites. 10