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DCMS Grant Roadblocks

The DCMS grant offers to subsidise the role out of rural Full Fibre Broadband with a grant of up to £1,500 per residential property and £3,500 per business. In Hampshire, Hampshire County Council are offering to top up the residential grant to £3,000 (in January 2021).

On the face of it this is great news and offers the chance to substantially raise the prospects for rural areas. it also fulfils a Government manifesto promise. The problem is that when you look at the detail in the DCMS Terms and Conditions, there are three significant roadblocks that lead you to wonder whether this vision will be fulfilled and just how committed the DCMS is to rolling out full fibre broadband.

If you are planning a campaign to get Full Fibre Broadband in your area, then you need to understand these roadblocks and work out how to navigate around them.

The Target Audience

The first thing to understand is that it is not sufficient to demonstrate a need to upgrade an area to full fibre broadband, but those running a campaign need also to convince enough residents in the scheme area to step forward and pledge their voucher. The grant gives a notional voucher to each resident/business and they must individually "give" (i.e. pledge) this voucher to the company installing the fibre optic cables. In most cases, this is BT Openreach and the voucher is pledged by going to the Openreach website and filling in a form - there is no need to first obtain the voucher from the DCMS - Openreach does this for you.

The vouchers appear to apply to both owner occupiers and tenants. If you are the person that orders the internet service and pays for it then you have a voucher to claim,

Generally speaking, residents/businesses fall into four groups:

  1. The Enthusiasts: this group is highly motivated to upgrade. They may have poor internet or just understand the technology and want it. You have no problem motivating this group.

  2. The Waivers: this group is less motivated. They want to hear about full fibre and know that they should take part, but also need to be convinced that they should do so, and that it is right for them.

  3. The Sceptics: this group will probably tell you that their broadband speed is good enough for them. They don't see why they should upgrade or why anyone else wants to. They want you to go away.

  4. The Refuseniks: this group have not even got the internet and probably never will. Typically, older members of the community, they are somewhat scared of the technology and are just used to watching TV on broadcast channels and do not even have a mobile phone let alone want WiFi.

In order to get enough vouchers to make scheme work you need to win over most of the waivers and as many of the sceptics that you can. You are probably wasting your time with the refuseniks. The DCMS roadblocks are what is getting in the way of winning over the waivers and sceptics.

Roadblock No. 1: You must double your internet speed

 Under the terms of the DCMS voucher scheme residents are required to:

  1. commit to upgrading to a 12 month contract with the ISP of your choice for a fibre connection with a download speed of at least 30Mbits/s, and
  2. which is double your current connection speed, or greater than 100Mbits/s, whichever is the lower.

The first requirement is easy to meet - but the second...

The problem is that this requirement was specified without, it appears, thinking about how the market works in providing broadband internet. Taking BT as the benchmark, there are several packages available all the way up to 900Mbits/s. At present, and for most residents, you are talking about the lowest three tiers, which in January 2021 were:

  • BT Fibre 1 delivers up to 50 Mbits/s and currently costs £27.99 per month.
  • BT Fibre 2 delivers up to 67 Mbits/s and currently costs £29.99 per month.
  • BT Fibre 100 delivers a typical 140 MBits/s and current costs £39.99 per month.

The first two apply to both Superfast Broadband (FTTC) and to Ultrafast Broadband (FTTP). The "up to" is a significant qualifier for FTTC, given that the further you are away from the nearest BT Cabinet, the slower is your internet download speed. With FTTP you should get the download speed as advertised. The third tier is really only for FTTP - unless you are pretty well sitting on top of your nearest BT Cabinet where you could get up to 80 MBits/s with FTTC.

There are many service providers competing with BT for the first two tiers and you can often get a better deal (including from BT), but with conditions such as longer contract lifetimes. Competition for the third tier is still very limited with few service providers offering a service - hence the relatively large price differential.

This is where the "double your speed" requirement causes a problem.

  • If a resident has an internet download speed of less that 34 Mbits/s at present, then you are probably on BT Fibre 1 or equivalent and can meet the DCMS condition by upgrading to BT Fibre 2 or equivalent. That's only £2 a month for a big improvement. Indeed, many will be on older contracts and will be able to negotiate a price reduction for a lower speed. With the undoubted benefits of FTTP, you should be able to win over most of the waivers and even a good proportion of the sceptics .

  • However, if a resident has an internet download speed of greater than 34 Mbits/s at present then the DCMS compliant upgrade is to BT Fibre 100 or equivalent. That is they may have to pay another £12 a month if they are currently on BT Fibre 1, or £10 a month if currently on BT Fibre 2. You are going to lose many of the waivers if you are not careful and can probably forget about most of the sceptics.

The problem is that those who set these conditions probably did not think about how they worked with the current packages on offer. What may well have started out as sensible encouragement to get an improved service has ended up as a roadblock that will make many schemes unviable. It would have been so much better if they had looked at what is available commercially and put down a single condition - upgrade to 67 Mbits/s or better.

As a result of this roadblock, most successful schemes will end up excluding areas with internet speeds greater than 34 Mbits/s.

Roadblock No. 2: You must upgrade in 28 days of the work being done

Once the fibre optic cables have been installed, the DCMS will write to everyone who has pledged their voucher. They will be required to complete a declaration that the connection has been delivered and within 28 days. If this condition is not met then the voucher may be cancelled and the supplier (typically Openreach) will not be paid.

The problem here is that internet supply contracts are now often 18 to 24 months long and that cancellation charges may have to be paid by the resident if they cancel the contract in order to meet this requirement by upgrading via a different supplier - made necessary given the small number of suppliers delivering BT Fibre 100 or equivalent.

The period from initially pledging the voucher to the work being done can be as much as one year. Many residents will need to renew their contact during this period and are faced with either:

  • Renewing their current contract with a risk of an upgrade charge or a cancellation fee when the full fibre service is installed, or

  • Moving to a new supplier with a better upgrade path, or

  • Moving to a monthly contract or simply continuing "out of contract" until the full fibre service is installed. Either option can be expensive.

As for those whose contracts will not expire until after the installation date, they may have to take the hit on any upgrade charge or cancellation fee if they are to fulfil the upgrade conditions. The lucky ones will be able to upgrade with the same supplier and the only cost will be an extension of the contract period.

Again, this will result in many of the waivers dropping out and provide yet one more reason for the sceptics to walk away. If only the DCMS had said "upgrade at the end of your current contract" rather than after 28 days.

As a result of this roadblock, you may not even be successful if you keep your scheme limited to areas with internet download speeds less that 34 Mbits/s.

Roadblock No. 3: The Voucher Cancellation Problem

A voucher can be cancelled for several reasons including:

  • The resident fails to go through with the upgrade (see above)
  • The resident (owner occupier or tenant) moves house. Transferring a voucher to a new resident is not easy - and may not even be possible.
  • The resident dies before the installation is performed.

Because of this significant risk, our understanding is that for Demand Led schemes, Openreach are demanding that 30% more vouchers are pledged that would otherwise need to be in order to fund the scheme. This raises the bar considerably and may result in many otherwise viable schemes becoming unviable. It is possible for someone else (e.g. a local council) to underwrite this risk, but unless this happens you may find that even if enough waivers and sceptics have been won over to fund the scheme, risk mitigation means that your scheme still will not go ahead.

If only the DCMS was prepared to underwrite upgrade schemes that met the basic funding requirement but not the more arbitrary excess funding requirement.

The Bottom Line

When you look at the cumulative effect of these roadblocks you do wonder - is this the result of just not thinking enough about the impact of the Terms and Conditions, or is the DCMS more concerned with looking like they are promoting rural broadband rather than actually doing so?

Update March 2021: The DCMS have announced Project Gigabit - which should hopefully start to address some of these concerns.