RURAL COMMUNITY BROADBAND EXPRESSION OF INTEREST GUIDANCE NOTE Introduction and Background The European Council has approved a European Economic Recovery Plan (EERP) to help mitigate the impacts of the current economic downturn across Member States. This includes funding for the support of Rural Community Broadband, to be delivered through the Rural Development Programme for England (RDPE). The UK Government recently published a strategy entitled ‘Digital Britain’ setting out the approach to achieving high speed broadband access. This includes: a) b)
a Universal Service Commitment (USC), with speeds of at least 2 Mbps across the country and a proposal for Next Generation Access (NGA), with potential speeds of up to or over 100 Mbps to 90% of the country.
It is anticipated that the former will be available across the country by 2012 with the latter available across most of the country by 2017. The additional EU funding provides the opportunity to both help aid economic recovery in rural areas and to prove the case for the provision of high speed broadband access to rural communities. The funding is intended to contribute towards developing innovative approaches to deploying NGA solutions in rural areas. Description The Northwest Development Agency (NWDA) has a number of strategic objectives that will be served by an improved access to faster broadband connectivity in the region. Improved connectivity will benefit a number of industries, especially those that are information intensive, by improving links between North West businesses and from the North West to companies across the globe. These links will serve to increase productivity, stimulate activity in rural areas and attract inward investment from UK-based and international companies. Beyond the business benefits, improved Internet access will provide the region’s citizens with a host of new services and applications that will raise the average quality of life. A potential vision for next-generation access (NGA) in the region is summarised below. The Northwest should have ubiquitous access to NGA, as soon as possible, with 90% coverage being exceeded in the medium term and 100% coverage achieved in the long term. NGA will be provided by a range of retail providers in a competitive market to ensure that low prices and service innovation continue. The technology used to deliver NGA must be capable of delivering the connectivity required to support world-class applications to which businesses and consumers need access. The region will lead the rest of the UK in the widespread use of NGA by all sectors of society. Following on from the vision for NGA, it is proposed that the single most important strategic objective should be that:
The region should lead the UK in the widespread use of NGA. Achieving this goal will then lead to the numerous economic and transformational benefits that are associated with NGA. This will put the Northwest in the strongest position to exploit the full benefits that NGA brings. The strategic aim is supported by four strategic priorities as shown below. “Leading the UK in the widespread use of NGA” Ubiquitous availability
Range of competitive suppliers
Without ubiquitous availability the usage of NGA will be limited by the proportion of citizens and businesses that can access NGA
Having a wide range of suppliers in a competitive market will help to drive innovation and lower costs to end users
All of which maximises the attractiveness of NGA
World-class networks
Networks need to be sufficiently advanced to support the applications that deliver the economic and transformational benefits
The highest levels of adoption are key to maximising the economic and transformational benefits that NGA can unlock
Attractive services and applications
Without attractive services and applications for end users, the take-up of NGA will be limited Services need to be attractive to both existing broadband users and those who are currently digitally excluded
Technical Context The term ‘next generation access’, refers to super-fast broadband that is enabled by replacing copper phone lines with fibre-optic cable (fibre). There are three distinct types of NGA: •
fibre to the premises (FTTP) (or FTTH - fibre to the home) where fibre is laid all the way from the telephone exchange to the customer premises, enabling symmetrical broadband services, typically of 100Mbit/s;
•
fibre to the cabinet (FTTC) where fibre is laid from the telephone exchange to street cabinets, enabling faster speeds over the short distance of copper wire that remains (this option is less expensive than FTTP, but performance is slower, particularly for upload speeds) and;
•
cable broadband using DOCSIS3.0, which has the potential to provide download speeds of up to 200Mbit/s. This technology is used by Virgin Media to provide its 50Mbit/s service. However it is worth noting that this network is not open access (i.e. no competitors have access to it) and it would be difficult to implement open access on a cable network.
Each of the technologies (as well as the current ADSL broadband technology) is illustrated on the following page:
FTTC 100 / 10 Mbit/s DOCSIS3.0 200 / 100 Mbit/s FTTH over 1000 / 1000 Mbit/s
NGA technologies
Telephone exchange
ADSL 24 / 1.4 Mbit/s
Key Fibre Copper Active electronics Note: speeds are maximum download / upload
The over-riding objective of the pilot projects is to contribute to ensuring that the North West has the highest rates of NGA usage in the UK. How much is available? The total funding available through the RDPE in the Northwest is £750,000. Northwest Development Agency is anticipating supporting one or two pilot projects under this funding stream. The implementation of these pilot projects will help to demonstrate both the demand for and delivery of NGA 1 in rural communities. The results of these pilots will be expected to contribute to the wider national debate about next generation access and may help to secure private sector investment in the future. Is this support available in all rural areas in the North West? There is no spatial targeting associated with the funding, but the emphasis on rurality, slow broadband speed and market failure(s) 2 indicate that the more remote rural areas will be naturally self selecting. The guidelines on state aid for NGA identify three different types of area: • • •
White areas are not expected to have any NGA availability Black areas are expected to have two or more NGA networks Grey areas are only expected to have a single NGA network
A map detailing the white, black and grey areas of the NW is provided on the following page.
1
Either FTTH or FTTC Known barriers to investment include build costs (£526m for FTTC and c. £3bn for FTTH in the NW), uncertainty over demand, limited competition and regulatory concerns, 2
NGA coverage by 1 operator NGA coverage by 2+ operators No NGA coverage
Estimated ‘black’, ‘grey’ and ‘white’ areas of the Northwest by 2012 [Source: Analysys Mason] When investing in networks it is essential that any intervention is designed to be consistent with European Commission (EC) guidelines for state aid. These guidelines lay out a number of conditions to ensure that interventions limit market distortion, achieve value for money, are open and competitive and do not pre-empt the market. A key feature of these guidelines, to avoid pre-empting the market, is that interventions should be focused on areas with no planned NGA supply (defined as ‘white areas’). Intervention can also be targeted under specific circumstances in areas with a single supplier (defined as ‘grey areas’), and should generally not be carried out in areas with multiple suppliers (defined as ‘black areas’). A preliminary analysis of expected supply of NGA in the region shows that by 2012 around 25% of the Northwest will have no supplier of NGA, with around 40% of the region having two suppliers of NGA.
Specific Objectives and Outputs required from the Pilots • • • • • •
To secure an innovative approach to deploying NGA within the RDPE eligible areas of the North West (in line with state aid compliance). To provide > 500 NGA connections in total, across the range of activity. To achieve > 40% take up of service within 2 years of project commencement. To leave a legacy of a sustainable network operating without further public intervention. To demonstrate a robust partnership with service providers who will deliver compelling content over the NGA infrastructure (anticipate at least five including national actors). To contribute towards the case to be made to other investors in NGA networks, highlighting to them the positive return on investment that can be achieved from deployment in rural areas.
What are the criteria for selection?
Criteria notes Project type Basic Services for the Economy and Rural Population – Measure 321 No Fit with RDPE Measures – (project excluded) Deliverability and sustainability Strength of delivery partnership with, or including, service providers Ability to deliver and deliverability of proposals > 40% investment to business premises, includes homeworkers and farms 20-40% investment to business premises, includes homeworkers and farms < 20% investment to business premises, includes homeworkers and farms Proposals for maximising take-up within businesses and residencies Level of community involvement Clear and costed business plan Strategic Policy Fit in terms of NGA Strong sub-regional, regional and national fit Strong sub-regional, regional Strong sub-regional Fit to regional economic strategy Strong fit to regional economic strategy State Aid White Areas Grey Areas Match Funding and Leverage Grant funding 75% or less Grant funding between 76% and 80% Grant funding > 81% Value for money – economic impact and outputs
0/1/2/3 Score Weight Total 1
5
0
5
1-3
5
1-3 3
5 5
2 1 1-3
5
1-3 1-3
4 5
3 2 1
4 4 4
1
3
3 0
5 5
3 2 1
5 5 5
> 500 individual NGA connections 300 – 499 individual NGA connections < 299 individual NGA connections Exit Strategy Clear robust exit strategy without the need for external funding Level of innovation Level of innovation and contribution to national NGA rural debate Replicability A project with the ability to be replicated Total
3 2 1
5 5 5
1-3
5
1-3
5
1-3
5 Total
Process and Timescales In order to ensure that the pilot projects make the maximum contribution to the economic recovery and to demonstrating the demand for and deliverability of high speed broadband access in rural areas, it is anticipated that projects will be substantially complete by the end of September 2011. In order to meet this timescale the following are the key dates in the application process: 24 March 2010
Call for proposals launched on the Northwest Development Agency Website
30 April 2010
Deadline for Expressions of Interest
24 May 2010
Invite to full application issued
12 July 2010
Deadline for full application – date to be confirmed
2 August 2010
Pilot projects selected – date to be confirmed
Application Process Applicants are invited to: •
Download the guidance for applicants and Expression of Interest Form from http:www.nwda.co.uk
•
Submit an Expression of Interest, to be accompanied by a Business Plan and any associated documents to the NWDA by post, accompanied by an electronic version on disk.
The postal address is: RDPE Northwest Regional Development Agency Unit 1 Enterprise House Gillan Way Penrith Cumbria CA11 9BP