Competition and public Funding of Broadband provision

Bill Lewis made this Rhyddid Gwybodaeth request to Department for Digital, Culture, Media and Sport

This request has been closed to new correspondence. Contact us if you think it should be reopened.

Yn disgwyl am adolygiad mewnol gan Department for Digital, Culture, Media and Sport o'u triniaeth o'r cais hwn.

Dear Department for Culture, Media and Sport,

I am aware that Public funding towards commercial providers with respect to Broadband Infrastructure should only occur if the market is shown to have failed in the location to be funded.

Q1: Could you confirm this is the case?

I have heard Jeremy Hunt MP stating that competition is a good thing in the Broadband industry and yet he has expressed concern that in areas where a single commercial company (Not Openreach / Virgin Media) have made a viable business model to provide a high speed or "Super Fast" Broadband service , at market comparable pricing, that these areas are "lacking in competition" and therefore need to have such competition funded.

Q2: Is it your policy to Publicly fund commercial "competition" in an area that already has a successful business in place?

Q3: Is Public money ok to be used to add competition from another source that had previously declared that it was unviable for them to provide a service using their technology / business model? (Openreach)

There are Three "ADSL" Market 1 "BT" exchanges in West Sussex that Openreach have long declared as unviable for upgrade for their basic ADSL service. These areas all have a commercial alternative to the ADSL Broadband method providing Download Speeds of 2 to 6 times faster (16 to 48 Mbps) and Upload speeds from 4 to 20 times faster (2 , 10 Mbps) than the fastest "Market 1" exchange speeds available and with the same speeds available to all, regardless of distance.

Q4: Knowing that the market has not failed in these areas and that High speed and "super fast" capability is already present, then can you explain how it is Public funds are being used to distort the market on Market 1 Openreach 'monopoly' exchanges? (Plaistow, Sutton and East Marden Exchanges)

Effectively the money is being used to provide an "up to 8 Mbps" competitive service whereby over 70% of one exchange area would receive under "2 Mbps" download from this distortion if they chose to migrate to it. Many would be out of range altogether.

Surely any Public funding is only meant to be targeted at solutions that comfortably provide service speeds that meet or exceed the DCMS / Central Gov minimum service speeds and also be capable of "Super Fast"?

Q5: could you confirm this is the case please?

Q6: Could you also provide detail on what information County Councils are provided with respect to how they are to spend public money allocated to them? Especially with respect to the policy on independent Providers/Tenderers who do not meet the extremely high DCMS value threshold but are otherwise shown as a proven and cost effective solution, especially in rural/low density areas.

Yours faithfully,

Bill Lewis

FOI, Department for Digital, Culture, Media and Sport

Dear Mr Lewis,

Since your queries require an explanation of the competition and public funding of broadband provision rather than asking to see specific information held by the department, we are treating it as general correspondence and you will receive a response from our correspondence team shortly.

Kind regards,

Freedom of Information Team
DCMS

dangos adrannau a ddyfynnir

Dear FOI,

The information was requested via this channel as it was not in the public domain as far as my research has uncovered and when asking county council members/leaders I receive the silent treatment.

so from this I hope you can see why this information needs to be public as it affects homes/businesses and suppliers in this industry alike.

Yours sincerely,

Bill Lewis

FOI, Department for Digital, Culture, Media and Sport

3 Atodiad

Dear Mr Lewis

 

Thank you for your email of 5 January about the funding for broadband
provision. I really must apologise for the delay in replying to your
enquiry.

 

Under the EU state aid guidelines the procuring authority is required to
provide detailed information about its intervention, including about
existing suppliers and NGA coverage. They should therefore, be in a
position to demonstrate that wherever public subsidy is to be used that it
is compliant with the guidelines and not for example to lead to distortion
in the market. To do this they should consult with existing suppliers on
their current and planned operations and include the output along with
detailed mapping of the planned intervention. Local authorities are
required to submit a notification for state aid clearance.

 

You can find a copy of the EU guidelines at the following link:
[1]http://eur-lex.europa.eu/LexUriServ/LexU...
Of particular interest may be paragraphs 39 -44 about the designations of
eligibility for state aid, although these should be read in context of the
whole of the guidance. The Government’s rural broadband programme is
targeted at “White Eligible Areas”, paragraphs 41 & 42.  

 

From a supplier’s perspective it could be required to demonstrate existing
business operations, any roll-out plans and timescale so things like: a
business plan, together with a detailed calendar deployment plan, as well
as proof of adequate financing or any other type of evidence that would
demonstrate the credible and plausible character of the planned investment
by a private network operator.”

 

If no public subsidy is present then no notification is required as that
would be a commercial investment decision.

 

I hope that this provides some clarity around the process the state aid
notification requirements.

 

Kind regards

 

 

 

Ministerial Support Team

Department for Culture, Media and Sport |2-4 Cockspur Street |London |SW1Y
5DH

[2]http://www.culture.gov.uk/contact_us

 

[3]Description: Description:
http://twitter-badges.s3.amazonaws.com/t...
[4]http://twitter.com/dcms

[5]Description: Description:
youtube_logo [6]http://www.youtube.com/user/dcms

[7]Description: Description:
flickr-yahoo-logo_png [8]http://www.flickr.com/photos/thedcms

 

dangos adrannau a ddyfynnir

Dear FOI,

Thank you for your response.

You state that the procuring authority has to declare the need for intervention and detail the existing commercial solutions. West Sussex County council have refused to discuss the service provided by a commercial provider of over 7 years in the county.

Is an authority allowed to intentionally hide the existence of a commercial service provider when applying for funding in order that they can receive maximum funds? Seemingly with the intention of giving this to another commercial provider who otherwise had declared the areas unviable for their technology and commercial business model for over 12 years? . the funding will also be to provide a "2 Mbps" service where a 30 Mbps+ service already exists in the area.

If not then this is the case for the West Sussex County Council who continue to declare broadband "not spots" in areas that have a high speed and super fast service. Officers of the council continue to announce this on radio shows and via other media including their official website.

The net effect is , homes in these areas are being stigmatised without reason, property values will fall. Businesses will not move into these areas.

A county council and its officers should surely not be allowed to do this to communities, just because they do not consider the commercial service provider in the are as existent.

We have it in writing from a WSCC "broadband" officer that although the service in these areas is fast and cost comparable, they still consider these areas as "not spots" as ultimately they do not have a "BT openreach" service.

They refuse to acknowledge the existence of this service based on the "open access" argument. However they do recognise and consider the coverage of Virgin Media, Another closed access provider.

As we see it BDUK and some County Councils are working to destroy genuine commercial markets and competition in favour of the disguised monopoly of "openreach"

From the state aid rules you quote, it seems this particular council may have questions to answer with relation to fraud/deceit and to anti-competitive practices at least.

I requested a clear answer to this situation as it is damaging a long term business, the communities and businesses it serves . It is only a matter of time before legal claims are made for damages and losses by one or more of these parties.

I do not believe I have seen the answer to this from your response. Sending what "should happen" to me is not going to resolve what "is happening" in reality.

The sooner a resolution is found, the sooner the damage can be limited and the uncertainty removed.

Yours sincerely,

Bill Lewis