Will the EU’s changes to broadband State Aid matter to you?

May 28, 2014 in Adrian's tech blog by Adrian Wooster

The EU has made a rapid start after the recent European elections by cutting the first bit of red tape – in fairness this has been coming for some time so perhaps its not possible to read too much into the timing.

New “block exemptions” make it easier to provide support to smaller projects without bureaucracy and delay. In particular, broadband projects will not have to be “notified” to or approved by the Commission if they are under €70 million – whether it’s for fast, next-generation networks or just “basic” broadband. That significantly cuts red tape for this essential investment – making it easier to roll out more networks for more people.

These enter into force on 1 July.

Essentially broadband projects up to €70m are now considered de minimis, or at a level where the potential for market distortion is considered too small to be worth reporting to the EU.

Does this make a big difference to UK broadband projects? Possibly not.

As I understand it, it still means the general terms in the EU’s broadband guidelines will need to be applied but, simply, the EU doesn’t need to know unless someone complains that the rules are being broken. Broadly speaking, the same rules apply but there may be a few forms fewer to fill in.

However, it may be worth seeking advice before rushing off to spend your new grant.

If, in the medium terms, your project is likely to need refinancing or there is realistic potential for you to hand-over the reins of your project to another organisation, you may find there are restrictions associated with not securing a formal state aid clearance.

For example, often assets waived under a block exemption can only be passed onto another organisation able to receive the same exemption - if that organisation has already used up its allowance there is a risk that they may be breaching the terms of the block exemption which could have consequences.

With the UK’s umbrella scheme run by BDUK, you may find the process is not as complex as a traditional full-scale state aid application but it may be just safer to seek formal clearance as an assurance to the future of your project.

The biggest danger for many broadband projects lie in assumptions – this is welcome news but its worth just checking how it may affect your project in the longer term. The liability lies with the recipient of the aid, not the grant-giver!

All options on the table

April 2, 2014 in Adrian's tech blog by Adrian Wooster

In my new role at Broadway Partners I was recently asked to show how different technologies provide different outcomes for the same area – the diagram is what transpired.

All Options

I picked the Oxfordshire village Swinbrook because its local and it has a very nice pub.

The three windows suggest which homes might benefit from each of  fibre to the cabinet (FttC), fibre to the premise (FttP) and wireless. Continue reading “All options on the table” »

Reviewing the market – what market?

March 21, 2014 in Adrian's tech blog by Adrian Wooster

The first wave of Open Market Reviews (OMRs) have been published by Local Authorities looking to refresh their maps of which areas remain with no plans for superfast broadband services, looking for operators to come forward with their existing coverage and their future plans for the coming three years.

On the face of it this is very good news – it hopefully means that alternative operators will have an opportunity to protect their footprint from overbuilding by another subsidised operator, and its essentially every operator with plans engages with the process if they are to have any voice later on.

However, the big problem with issuing Open Market Reviews now, before worthwhile data is published detailing which areas have already been subsidised, is that most Local Authorities have appeared closed to investment for the last few years so most OMR processes are likely  to simply confirm that.

That’s not to say that there aren’t organisations out there that would happily invest if they knew where it was safe to do so. A small number of counties may well have a busy time working through the responses but I strongly suspect they will be a small minority. Most are highly likely to get no more than perhaps one or two responses.

If the OMR is to be more than a process step in a chain leading to a procurement to subsidise broadband operators then it needs to be carried out some time after the market has had time to digest which areas can safely be invested in. If not, investment will be lost and the state is likely to be subsidising a market unnecessarily.

Its not just the public sector which needs an open market review – operators need their own, informing them of where the state intends to build.

Inflation touches the cloud – get used to it

March 15, 2014 in Adrian's tech blog by Adrian Wooster

From time to time the basket of stuff used to calculate the official measures of inflation is updated to best reflect a typical spending pattern.

The latest update saw something of a watershed moment. For the first time the Consumer Price Index basket contains items which depend on good, reliable broadband.

Out went DVD players – in came Netflix.

Why is this important?

The CPI is not a predictor of the future, it’s a descriptor of the now. The change says that high quality commercial streaming services are a common item in UK consumers’ shipping basket. That Netflix, Amazon Prime, Sky’s Now.TV, etc are mainstream and not a fringe activity of the gadget generation.

It speaks to those that were critical of the decision to make BBC3 an online-only channel. The reality is that streaming is normal and that the key audience for BBC3 is the demographic most at home online. The BBC didn’t get a little more white, make and middle class, as was claimed by critics; it simply reflected the shift in society that the CPI is now confirming.

This small change in the way we measure inflation in the UK should shout at policy makers and commentators with any doubts about the value society puts on broadband, that fast internet is a key infrastructure that underpins consumer spending today, now.

Why is the UK so different? It just is but that’s an opportunity for operators

February 21, 2014 in Adrian's tech blog by Adrian Wooster

The annual FttH Council Conference in Stockholm published it annual FttH/B league table for Europe which seems to perennially out of scope for having too little fibre connectivity to be counted. The UK is not alone, other major nations like Germany and France also struggle to make the grade. Heavy Reading also continue to predict that the UK won’t achieve what they call “fibre maturity” until after 2020.

This precipitated a number of conversations, as it does every year – why is the UK so different?

So here are some of the conclusions.

UK customers like a bargain

Price is king and other factors are perhaps less important than in some other countries. This has driven our service provider market towards a “pile it high, sell it cheap” model” which relies on scale more than in almost any other market. Internet services are not alone in this – price comparison sites are prospering in finance, insurance, energy and the key and sometimes the only differentiator is price.

This characteristic doesn’t mean we are rational either. Complaints about the biggest ISPs are common but there are alternatives that offer a better customer experience or more consistent performance but they cost a bit more so we suffer albeit not in silence. Again the Internet doesn’t have a special place in our irrationality. We sign petitions to keep our rural post offices and village shops open but do all our shopping online or in a major supermarket because its cheaper.

Continue reading “Why is the UK so different? It just is but that’s an opportunity for operators” »

Local broadband maps – are you open for business?

February 7, 2014 in Adrian's tech blog by Adrian Wooster

Local Broadband MapsIn my first post in far too long, I wanted to look at maps and broadband, more specifically the coverage maps many local authorities and assemblies are publishing in the UK relating to their broadband programmes.

Its a welcome move that some are now publishing maps and deeply frustrating that some are holding out when its clear that no local authority has found itself in court for releasing information about their publicly funded programme.

The inset map is my trawl of local websites for maps of local plans as of 7 February 2014. Some of the red areas have not published a map at all while others have published maps that are of little value to investors. (And its possible I’ve missed some so please let me know)

There is a simple message to those that aren’t publishing maps: The telecoms market considers that you are closed to investment!

And to those that are publishing maps I ask them to consider who the maps is intended for.

In my mind there are two key audiences:

    • Homes and business in your patch that will be affected one way or another by your plans, and
    • The telecoms industry who may be considering an investment in your area.

    Continue reading “Local broadband maps — are you open for business?” »

    Local Enterprise Partnership GIS files

    October 8, 2013 in Adrian's tech blog by Adrian Wooster

    Local Enterprise PartnershipsAfter failing to find a set of current, official GIS-ready boundary files for the English Local Enterprise Partnerships, I’ve created one based on the current Ordnance Survey Opendata BoundaryLine files, and the breakdown of their Local Authority members published on Wikipedia.

    The names of the LEP’s have been matched to those generally used by the ONS so should integrate fairly easily with their published statistics.

    The files can be downloaded by clicking here

    Its a little over 5Mb and contains a set of shape files, and if you need it, they use the same OSGB projection that all OS products use.

    If you plan to use the files, you will need to acknowledge that its based on OS OpenData, and these files are shared under the Creative Commons Attribution 3.0 license.

    The full OS Opendata licensing information is available here.


    Principles of intervening in broadband & digital isolation

    May 10, 2013 in Adrian's tech blog by Adrian Wooster

    Following on from the previous post, “Public or Private“, which looked at the different models of public intervention in markets generally, this post begins to explore the different models for intervention in broadband markets. This is not a practical critique of any particular approach – more a quick look at the theory.

    The basis of this is the same scale of intervention used in the previous post, ranging from light touch loan guarantees through to a state utility model. It begins with the assumption that the market will  invest up to a natural limit; this limit may vary from company to company but will be based on some measure of digital isolation.

    A key complexity for public bodies is how to determine the market’s limit for investment. Broadband markets, as distinct from traditional telecommunications markets, increasingly contain a broader range of companies and capabilities; some of these are emergent trends while some are established niche operators. This trend creates a complexity and often a degree of risk that administrations considering a broadband intervention need to assess.

    Its clear from even a cursory review of international interventions that there is no universal view of this, with some administrations favouring a more traditional telecommunications play, leveraging a small number of larger, established operators, where other administrations are looking to include a wider spectrum of alternative, new and niche operators. Ultimately this will depend on national culture, the appetite for risk within the administration, and the level of stability within the niche and emerging sectors.

    Continue reading “Principles of intervening in broadband & digital isolation” »

    Public or private?

    April 13, 2013 in Adrian's tech blog by Adrian Wooster

    I seem to have found myself in a number of discussions recently where the role of public and private funding has become a hot topic – not specific to any scheme or country but in general – so I decided to write up my own view of this.

    Most parts of the modern world take a position that private enterprise should prosper where it makes sense, and that Government support of some kind should be focussed where its most needed. I haven’t met any fundamentalists recently so no-one questioned this and the focus of debate was primarily on when should the state intervene and what form should the intervention take.

    Personally I like graphs – especially ones with axes that have no clearly identifiable scales – so this is my graph of where and how might a state fund industry.

    The nature of public funding

    On the vertical axis is the expectation of “commercial return” likely to be measured in terms if Internal Rate of Return (IRR), etc. On the horizontal is the expectation of “economic return” measured in terms of Gross Value Add (GVA) or Economic Rate of Return (ERR).

    Continue reading “Public or private?” »

    A market view of the fibre evolution

    February 1, 2013 in Adrian's tech blog by Adrian Wooster

    It can be argued that the telecommunications market is undergoing what may be the single largest transformations in its history as it migrates away from copper-based services towards fibre-based solutions.

    The debate surrounding the shift often focusses on the immediately practical points of the technology choices and the mechanics of who pays for it and how. In this post I try to consider the movements in the market as a whole that are under-way and how these might best be supported.

    I’ve taken as a starting point a model borrowed from work done by Evans and Wurster in their excellent book, “Blown to Bits”, looking into some of the reasons the dot.com bubble burst and some of the survival strategies that helped others prosper. While I’m not suggesting we’re approaching a similarly apocalyptic moment, their view of how organisations align to form a market is pertinent.

    They suggest that all organisations within properly functioning markets have to consider a trade-off between what they call “reach” and “richness” – market reach contrasted against the ability to customise and tailor a service. All businesses sit somewhere along that line with perhaps McDonald’s at one end with a global reach but a low ability to offer you anything other than what’s on their globally fixed menu, and the Roux family restaurants at the other end who find it impossible to become a global restaurant empire but they can offer precisely what their customers want.

    Continue reading “A market view of the fibre evolution” »

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