Gigaclear Termination FAQs

What has Connecting Devon and Somerset achieved to date?

Nearly 1 million homes and businesses in Devon and Somerset now have access to superfast broadband thanks to the Government supported CDS programme and stimulation of the commercial market which is an important element of CDS’ role.

Over 300,000 homes and businesses have access to superfast broadband as a direct result of investment by CDS.

Superfast coverage funded by CDS is as high as 59% in some rural districts — and 82% in one — compared with the average 33% that Government estimated the public sector would need to fund.

CDS-funded contracts with Airband have delivered superfast access to over 12,000 homes and businesses with a further 3,500 due to be completed on target this quarter.

CDS has successfully piloted a new Community Challenge Fund delivering superfast broadband to communities in Devon and Somerset and intends to launch an expanded scheme this year.

Since the inception of the CDS programme, over a quarter of million miles of optical fibre has been laid to connect rural communities – enough to circle the Earth ten times.

What is the current take up of broadband services?

Take-up of CDS-funded broadband services is nearly 60% compared with a national average of 52.4% and that is generating millions of pounds of new money to invest in expanding the CDS coverage thanks to the Government’s “clawback” agreement with BT.

What steps are CDS taking to replace the coverage lost by the termination of the contracts with Gigaclear?

CDS is working closely with the Government’s Building Digital UK (BDUK) agency on a new procurement process for launch this autumn, commencing a tender process to identify new provider(s) of these services. We are taking all necessary steps to secure alternative gigabit-capable* broadband providers for our residents and businesses. They are our top priority and we are determined to achieve the best possible outcome for them. We welcome the Department for Digital, Culture, Media and Sport’s expressed commitment to ensuring that our residents will benefit from world class broadband infrastructure in line with the ambitions for nationwide full fibre coverage. *1,000 megabits per second

What assurance has the Government given to extend CDS’ funding?

Government officials at the BDUK agency have confirmed that extending the Government’s £18.7 million of funding for the CDS programme is a top priority in the agency’s spending commitments, and this was reaffirmed by the Digital Minister personally when he met with CDS.

The meeting confirmed that BDUK is on a trajectory to put forward its own funding case to Treasury as part of that spending decision process to support both CDS, other programmes that are in delay through the superfast scheme and, looking to the future, the opportunities from the Government’s ‘outside in’ strategy which has been announced as a £5 billion programme to support the roll-out of full fibre, 5G and other gigabit-capable internet networks in the hardest to reach 20% of the country.

Earlier in the year CDS said the Treasury was finalising an agreement with the Department for Digital, Culture, Media and Sport to extend the funding, subject the Comprehensive Spending Review process. What happened?

The reason why the Chancellor did not announce broadband funding on September 4th is because the Government decided to postpone the multi-year Comprehensive Spending Review and replace it with a one-year Spending Round.

BDUK and the Digital Minister are conscious of the timetable to launch the new CDS procurement process. We understand that Government decisions on capital funding for broadband programmes are to be made in November.

Does this mean CDS could not sign new contracts with alternative providers when it terminated the Gigaclear contracts because they did not have funding to run beyond 2020? And remains the case today?

Whether CDS retained Gigaclear’s services or sought alternative providers, extending the Government’s share of funding for the CDS programme has always been a requirement from the moment Gigaclear explained it could not meet its 2020 final contract deadline. So even if CDS and BDUK had accepted Gigaclear’s proposed recovery plan the extension of Government funding would still have been required to allow the company more time to complete its roll-out. CDS has made this point clear repeatedly since last November in public statements and briefings for councillors and MPs.

How confident are you of finding a like for like replacement?

It would be foolish to predict the outcome, but we have already held productive meetings with a number of companies interested in building full fibre networks in Devon and Somerset.

Will CDS consider awarding so many contracts to one company again?

Every bid has to be judged fairly on its merits, so we can’t say it would be impossible for another company to win multiple contracts. That said, there appears to be an appetite from some companies for smaller contracts so it’s possible we may have a mix of different providers building networks for CDS.

How long is all this going to take before people start getting broadband?

Actually, it’s happening right now. CDS is funding new broadband networks and commercial companies are expanding their services. For example, our current review of the market is showing that of the 47,000 premises Gigaclear were contracted to connect, around 15,000 have already been covered by other commercial providers while Gigaclear delayed.

CDS didn’t put all its eggs in one basket with Gigaclear and we’ve also been planning what we would do if Gigaclear failed to deliver on its contracts.

The CDS Community Challenge Fund will be launched later this year, following successful pilots in Devon and Somerset, enabling local communities to have a real hands-on say in new networks for their areas. A capital fund of £295,000 has been set aside to support this extension. Its anticipated 6-8 more community solutions can be supported, and work has begun to identify opportunities working with a range of suppliers.

A new collaboration with BT to extend coverage in rural areas is also nearing conclusion and is going through assurance within BDUK. This represents delivery of full fibre to a further 2,000 rural premises across Devon and Somerset.

Airband is continuing to make good progress with its roll-out of superfast wireless broadband for CDS in northern and west Devon. To date, over 12,000 homes and businesses have been given access to superfast broadband with a further 3,500 due to be completed this quarter.

CDS and BDUK will be working closely together to ensure as many residents and businesses have the opportunity to benefit from the Government’s national broadband voucher schemes. CDS will be stepping up its community engagement to help and advise those interested in taking up these opportunities.

CDS is also working with the Heart of the South West Local Enterprise Partnership and other partners to develop a Digital Strategy and a refreshed Local Broadband Plan. The former will focus on the digital ambitions for the region, supporting productivity growth and prosperity for all. The Local Broadband Plan will specifically focus on the connectivity programme and include fixed and mobile solutions.

How long will a new procurement process take?

Approximately 12 months. To begin with we will formally consult the market this autumn to check who is building broadband commercially in our patch and who is planning to over the next couple of years. It is obviously good news for broadband users and taxpayers that companies are continuing to invest their own money in building new networks in Devon and Somerset. This is very much a moving target. Getting an up to date picture of what is happening means we have a more accurate view of the areas that will continue to need public subsidy. That knowledge will inform the invitation to tender which CDS aims to publish before the end of December, 2019. Companies will respond in the spring and early summer of next year – bidding for these contracts is a complex undertaking – and we will begin the process with BDUK of evaluating the tenders in the summer. We hope to have a preferred bidder or bidders by September, then all parties will complete their due diligence, and we would expect to be in a position to award a contract or contracts by November.

Has CDS paid Gigaclear anything? If so, how much and what for?

CDS paid £537,200 in 28th September 2018. This was in recognition of the Millhayes Cabinet area being built, part of the LOT 5 contract area.

Will CDS be seeking the return of these payments?

This payment is considered valid to support the infrastructure that has been completed and which is serving some homes and businesses. The infrastructure needs to be operated for the purposes originally intended by the supplier to retain the investment from the public purse.

How many premises has Gigaclear actually connected for CDS?

By the end of the first quarter of this year (June 30,2019) Gigaclear had provided 496 properties with access to the new network compared to contract targets totalling 28,689.

How will this affect Gigaclear customers and the company’s plans for Devon and  Somerset?

Following termination of the CDS contracts, Gigaclear has confirmed it will continue to serve existing customers in the Connecting Devon and Somerset area. The company says it is currently evaluating its commercial build plans for the region, while focussing on completing works currently in progress. Residents and businesses in areas previously covered by Gigaclear’s CDS contracts, are advised to contact the company for information about Gigaclear’s current or future commercial network build activity, contact details can be found at https://www.gigaclear.com/devon-and-somerset

Should CDS have terminated the Gigaclear contracts sooner?

CDS awarded five contracts to Gigaclear for completion initially by December 2019 and extended to June 2020 when the Government approved an expansion of the roll-out. The company was contracted to build an underground full fibre network for CDS covering 47,810 homes and businesses.

Gigaclear planned to invest £60.5m of their own resources with CDS contributing £31m public sector subsidy to deliver this coverage. Gigaclear also committed to deliver services to a further 43,000 premises under their own commercial programme and a further investment of £67.3m into their commercial build programme.

The award of contracts was vetted and approved by BDUK on behalf of the Government.

When decisions had to be taken to extend Gigaclear more time, there are two critical events that stand out as having had a significant influence on CDS and BDUK thinking.

The collapse of Carillion had a profound and far-reaching effect on many public and private sector projects. CDS was sympathetic to the impact this had on Gigaclear and although this inevitably meant a knock-on delay to the CDS contract, it was felt reasonable to allow the company time to find alternative contractors.

The second significant event was the take-over of Gigaclear by Infracapital in May, 2018. At a time when CDS was becoming deeply concerned over Gigaclear’s struggles with its civil engineering and design capacity, the arrival of Infracapital was timely and felt to be a golden opportunity to kick start the roll-out backed by considerable resources.

As reported at the time, Infracapital are part of M&G Prudential, with total assets under management of £351 billion. The company has a mandate to invest in highspeed digital infrastructure in the UK after the Government appointed the company to manage a portion of its Digital Infrastructure Investment Fund.

The opening of a regional office dedicated to the CDS programme and the appointment of additional staff were seen as positive indications of the new owners’ determination to get the contracts back on track. Sadly, for reasons already stated, it wasn’t to be, but that is only apparent now with the benefit of 20-20 hindsight. At the time, it did seem to be a new dawn for the company and therefore CDS and BDUK were of the same view that Gigaclear should be allowed additional time to plan and implement a recovery.

Finally, a point acknowledged by the Digital Minister, no one walks away from the potential of £128 million of investment lightly.

Isn’t this the third time CDS has abandoned the procurement of broadband services for phase 2 of its programme in Devon and Somerset?

No. The first Phase 2 procurement involved two tenders:

  • the successful award through open tender of a contract to Airband which has delivered superfast broadband access to around 5,000 homes and businesses in Dartmoor and Exmoor National Parks.
  • and, following an early engagement with the market to assess commercial appetite for potential bids, an invitation to tender through the Government’s National Framework. This led to a bid which was correctly identified as poor value for public money and failing to comply with contract terms. As a result, CDS rejected the bid and did not proceed to contract award.

A second procurement process was successfully completed and led to the award of six contracts;

  • one to Airband which has delivered superfast broadband access to 7,369 homes and businesses with a further 3,500 due in the next quarter
  • five to Gigaclear through competitive tender, vetted and approved by BDUK, which have now been terminated due to a failure to meet contract targets and provide a recovery plan that CDS and BDUK could support with confidence.

In each case the procurement process has been followed correctly and audited, receiving a clean bill of health. At no point did any of these processes fail nor were they abandoned. The only failure that the CDS programme is addressing is the failure of one of its selected contractors to meet contract targets.

Has CDS run out of time for State Aid approval?

No. CDS intends to award a new contract or contracts before the current State Aid notification expires in December 2020.

Has CDS required Gigaclear or Infracapital to sign a non-disclosure agreement?

No.

Has CDS ever instructed Gigaclear to halt network design or construction?

No.

How did the failure of the Gigaclear contracts happen?

The company, under new ownership since last summer, had already incurred significant delays with its broadband roll-out due to previous failings and the collapse of Carillion in early 2018. Those delays, details of which were set out in a joint CDS/Gigaclear briefing in November, meant the company could not meet its original 2019-20 contract deadlines with CDS. The company, backed by its new owners, then made abortive attempts to recover the situation which ultimately led to CDS ending the contracts.

Are CDS or BDUK to blame?

No. By its own well documented admissions, the company is alone responsible for the failure to deliver its contracts with CDS. Gigaclear won those contracts through fair and open tender. It had a successful track record of delivery with smaller contracts and was continuing to win Government-backed contracts, it had the financial backing in place to support a step up to take on bigger contracts, and it was committed to providing future proofed full-fibre broadband in rural areas. At the point that CDS awarded contracts to Gigaclear there was every reason to expect the company would complete a successful delivery.

Has Gigaclear failed elsewhere and are other local broadband programmes experiencing similar problems?

We cannot comment on the company’s record elsewhere.

What is the current superfast broadband coverage in Devon and Somerset?

The combined commercial and CDS subsidised infrastructure has delivered around 90% coverage on average across the CDS area. We contracted against a set number of premises back in 2012 and BT exceeded their contracted target of 276,000. Subsequently there have been new premises built across Devon and Somerset so it is an ever changing baseline. CDS is undertaking a review of current and planned commercial provision which will update the picture and help to target future public investment where it is needed most.