Its all about black and white

September 17, 2011 in Adrian's tech blog

Anyone who has been close to any public sector involvement in broadband is likely to have come across references to Black, White and Grey areas but I get the impression that the meaning is often not well understood; this is perhaps not surprising because there are in fact two models and rarely in my experience is the specific one being used named.

A bit of background. In 2009 the EU laid down some guidelines on where it was reasonable for a state to consider intervening in the broadband market; this introduced the concept of Black, White and Grey areas for classifying market failure in both NGA and basic broadband areas. A black area is generally one with a strong, competitive market; grey with a developing market; and White where the market has essentially failed. White does not necessarily mean there is no broadband, just no functioning market.

Basic Broadband

A Black area is one which has two competing fixed line infrastructures. So in the UK that typically means areas where both BT and Virgin offer services.
A Grey area is one where there is only a single physical infrastructure but it supports a wholesale marketplace. In the UK this covers any unbundled telephone exchange where there is no cable service, for example. Perhaps surprisingly this covers both Ofcom market 2 and 3 areas.
A White area is one where there is no choice of physical infrastructure and no wholesale marketplace. This in the UK means Ofcom Market 1 areas with no other infrastructure.

NGA Broadband

The definition for NGA is broadly the same:

An area with competing NGA broadband infrastructures would be an NGA Black area. In the UK that might mean an area with both Virgin DOCSIS3 and BT Infinity services, for example. Somewhere like Bournemouth with City Fibre and Virgin would also be Black.
An NGA Grey area is where there is only a single NGA provider with a wholesale market. This means an area with only BT Infinity would be classed as Grey – but an area with only Virgin would not as they don’t wholesale access services.
An NGA White area is one where there is currently is no NGA market available and no credible plans to deliver an NGA service within 3 years. This could include areas where Virgin is the only NGA operator and the footprint of many community projects like Alston Cybermoor as they don’t currently wholesale their services.

There are some major caveats in this!!

Only fibre-based fixed-line technologies are currently considered NGA technologies – wireless and satellite are currently considered “complimentary” and an area served by either is not considered as NGA Grey or Black. This means an operator using a Gigabit microwave technology could legitimately face state subsidised competition from a 40 Mbps FttC provider – FiWi is not currently protected! This may (should!) change but its a risk that needs to be born in mind today!

What’s an Area?

The EU guidelines recommend that an “area” isn’t defined as an exchange district as it may benefit the incumbent. So what is an area? At the moment this is something of a grey area, to stay with the theme. The UK government is providing local authorities with some latitude to choose between postcode areas and ONS “super output areas” (LSOA).

For a community thinking of building their own broadband solution, this loose definition may be critical. A postcode may only have 20-40 premises while a LSOA typically has about 400. A small community scheme may be protected from subsidised competition if the local authority decides to use postcodes as their defining area.

BUT if the LA uses super output areas as their measure, then any network which is much less than 400 premises could face a competitor legitimately subsidised by the BDUK framework.

Since BDUK are currently modelling communities as groups of around 100 premises, this seems rather contradictory.

BDUK Ambitions

The three years rule means that BDUK are able to focus their funding on the final third – the bit that BT haven’t formally announced. Their ambition appears to be to increase the NGA Grey and Black coverage from 66% to 90%. In the final 10% they want to ensure its at least Basic Broadband Grey (ie at least a single wholesale infrastructure).

NB: Big things you can’t ignore!

Anyone considering building a network, whatever their motives, needs to make sure both BDUK and the relevant local authority are completely aware, not just of the currently footprint but the credible expansion plans covering the next three years. Failing to be on their radar may mean state subsidised competition and a battle over illegal state aid few smaller operators will be able to afford.
A vague intention to offer wholesale services or simply making an offer to the market that is ignored is not good enough to be classed as “Grey” – you need to demonstrate a functioning wholesale market! Failing to demonstrate real wholesale agreements means your area remains “White” and could be legitimately subsidised. Working with a national franchise model like Broadway Partners and including an existing mediator that can deliver a proven wholesale market will certainly help both whether you’re at the planning or delivery stage!
And communities going it alone need to know what their local authority considers to be an “area” – if its an ONS LSOA, make sure your project covers one!

The more you think about this, the more implications you will stumble across. This a very messy, complex, and shifting space. Whoever you are, don’t do it alone!

Tags: BD-UK, broadband, business models, central government, community strategy, digital britain, eu countries, localism, NGA, politics, procurement exercise

12 Comments »

← Unintended consequences

Steering the QE2 →

Anonymous
One thing I think should be here so I will put it in the comments, is that there is no public funding going into the final 10th. Most councils are happy to hand all their pot over to BT to deliver in the grey, ie the 66% who already have broadband will get their ‘superfast’, up to 90% coverage. I don’t think any community networks working in the final 10th need worry too much, the main concern is that BT are going to use public money to deliver the 2meg usc using ‘alternative technologies’ in the final 10th, which will make many potential customers apathetic about supporting community networks. They will believe (quite wrongly) that 2meg is sufficient for the future needs of their business and family. The will learn too late that it is a patch up solution and they have lost the chance to help their community get a decent futureproof solution. Its a right mess really. BDUK have my sympathy, they have an awful job, especially when the councils don’t understand physics and fall for the hype from the only business who can tender everywhere. Perhaps there is an answer, but they have to ask the right questions of the right people. There is no way to get NGA by patching up the phone lines.
The right solution is to put all the funding into the final 10th, but that won’t happen.
- http://wooster.org.uk Adrian Wooster
  That’s not true. A local broadband plan needs to demonstrate a solution for the whole area. Nationally BDUK are working towards ensuring 90% of UK premises are in an NGA Grey or Black area, and that the final 10% are in at least a Basic Broadband “Grey” area. The working assumption is that the final 10% will get wireless or satellite which is rather unimaginative but some plan for the final 10% absolutely must be in there.
  For example, Devon and Somerset have signed up to 85% FttC, 10% 3 Mbps wireless, and 5% satellite.
  It seems to me that by assuming community networks are the preserve of small tree-hugging groups the ambition is too low and investment opportunities are being missed, and the last 10% will be offered pretty much what they were offered pre-2005 under the Rabbit scheme.
  - PhilT
    Community Networks haven’t really shown themselves to be the sort of a solution that a Councillor would be happy putting public money into.
    Let’s face it the notspots are still notspots 6-8 years after the ADSL1 rollout so the magic of “community” didn’t deliver to those areas.
    The USC is met by satellite, isn’t it ?
  - http://wooster.org.uk Adrian Wooster
    A kind of agree – or at least understand your train of thought.
    In most cases councillors don’t engage with the solution at all, council leaders engage when there is cash by want a simple solution that doesn’t commit the council to a complex solution, and local authority officers have a tendency not to see solutions beyond BT. A pretty sweeping statement and there are of course exceptions but as rule of thumb that’s probably a fair generalisation (if a generalisation is ever fair).
    Motivations for community wireless projects varied. Most I think didn’t expect to be in this game for the long-haul and were happy to shut down when an alternative solution came along. Some had unhelpful public funding constraints which were aimed at economic drivers rather than SME business drivers. And some were just bad businesses, like in any sector.
    While I think communities for the most part have learnt from this experience, and there is evidence that some industry players are also beginning to develop a more nuanced approach largely from their European experiences (again, not all good), the public sector at national and local level hasn’t really moved on – except in some very welcome pockets.
    At the moment communities feeling that their best option is to become part of their own broadband solutions are likely to find their sustainability will be enhanced by working with industry partners and damaged by working with the public sector. I hope this changes.
    The base offer expected by BDUK is that the final 10% will be solved with some mix of wireless and satellite – just like pre-2005.
- Somerset
  What is this ‘physics’ that councils don’t understand? Is there hype coming from Fuji, C&W etc.?
  How do community networks ensure they they have skills and commitment for the next 20 years?
  - http://wooster.org.uk Adrian Wooster
    I don’t think there us any hype, and I don’t see any reason why a community shouldn’t own a telecoms network – Hull Council managed for long enough. Its not about if communities can be owners or stakeholders but how.
  - Somerset
    What’s the realistic size for a community owned network that has to provide 24×7 support? Or we will see support and future installations outsourced and then amalgamation with other areas? It happened with the cable companies. A key reason why an installation has to be 100% secure, thinking cables on fences etc.
  - http://wooster.org.uk Adrian Wooster
    Why does a community need to offer 24×7? Most ISP’s don’t.
    Even at a physical access infrastructure that level of support is typically only offered to key corporate customers who need it and are prepared to pay for it – how many of those exist in a typical rural community?
    I think there is also somehow this sense that a community network is one exclusively run by the community and the community alone. That might have been the approach for early wireless networks and one or two NGA pioneers but it certainly isn’t the model adopted across Europe and its not likely to be the one adopted by sustainable, viable networks in the UK.
    It is critical that this idea that community networks are small and amateurish. Those communities that can’t move on will fail and deserve to. But I see very little evidence of communities rushing to build fibre networks as they might have done early wireless ones. The vast majority recognise the difference in business model, longevity and complexity.
    Its just a shame the public sector hasn’t seen that change, and that parts of the industry are clearly going to lose out while others begin to benefit from higher take-up, better loyalty and more sustainable partnerships.
    Might be worth having a look at this: http://wooster.org.uk/2011/07/community-dead/
PhilT
typo alert – “not just of the currently footprint” in bold point 1 just above
- http://wooster.org.uk Adrian Wooster
  Thank you! You were not alone in spotting them. Hopefully corrected now.
L Annison
Cheers Adrian. About time that was cleared up! Raises some very interesting points and advice for communities which reinforces a point from yesterday’s FibreWalk – just how much a community has to be aware of when dipping a toe into NGA.
When archaeology came up during the Walk, I think it began to dawn on everyone that broadband (deployment) has little to do with technology alone, and what is required is a full list of *everything* that needs to be considered in an increasingly complex issue, and by all size communities, including County. The above is one such item for that list.
- http://wooster.org.uk Adrian Wooster
  Spot on! The technology is not the difficult bit in all this. The more you think about this and the way its being interpreted in the UK, the more unintended consequences you discover. For old hands like us its challenging – for a community starting anew its simply mind bending.
  No-one should be thinking about doing this alone, and I include Councils and most of the industry in this. This is especially true as very little briefing information is available to anyone but public servants – with the BDUK Huddle site a closed area its very hard for anyone to know what can and can’t be done.

The Wooster Blog

Recent Posts