Project Gigabit Update
Overview
Project Gigabit is the UK Government’s current mechanism for subsidising broadband connectivity, building on the work of the previous Superfast Programme.
Launched in the Spring of 2021, the programme seeks to raise at least 85% of UK premises to Gigabit-capable speeds (1000Mbs) by Dec 2025 and “as close to 100% as possible” by 2030. Though governed by different subsidy-control mechanisms than the Superfast programme, it holds to the same key principle of avoiding market distortion by only intervening where there is deemed to have been “market failure”.
The programme uses the established principle of gap-funding to contract with network suppliers to provide subsidy to make-up the gap between the commercially viable cost of any given network and its actual cost.
Managed by Building Digital UK (BDUK), this programme differs from the Superfast programme in so far as all contracts will be centrally let and subsequently managed by BDUK, as opposed to Local Bodies (such as Connecting Devon & Somerset – CDS)
Overall, Project Gigabit was launched with an indicative £5 Billion budget allocation, of which £1.2 Billion was made immediately available, the residue to be released as necessary. As of the most recent update, contracts to the value of ca. £2.7 Billion have been awarded or are in live procurement.
Types of intervention
There are four broad types of subsidy intervention;
- The residue of the Superfast programme
- Procurements (the Gigabit Infrastructure Scheme – GIS)
- Vouchers
- Miscellaneous
Since the final phase of the Superfast programme (Phase 3) saw the majority of contracts being let to providers building fibre networks, the premises passed by these contracts meet the criteria of Project Gigabit and are therefore appropriate to count towards it’s achievements.
The bulk of funding allocated to Project Gigabit will be awarded through procurements, using the aforementioned GIS framework. There are three types of procurement under this framework, Type A, Type B and Type C;
- Type A contracts are deemed to be Local procurements and cover contracts to deliver to up to ca. 40,000 premises
- Type B contracts are larger Regional procurements, covering contracts of between 40,000 and 80,000 premises
- Beyond these, there is one Type C Cross-Regional contract, initially envisaged to cover up to 500,000 premises and with a projected value of £800 Million. This is a sole-supplier contract, with tranches of premises added over time up to the max premise target and financial threshold. These tranches are known as Call-Offs.
For premises not covered by either Superfast or GIS contracts, BDUK continues to operate a voucher scheme whereby communities or providers can apply for funding to connect eligible premises in a specific geography, with the current subsidy value set at a maximum of £4,500 per premise. This subsidy is deemed to be provided (in terms of the benefit) to the premise (rather than the provider) and therefore is deemed to be de minimis.
The final miscellaneous element of Project Gigabit wraps up other historical interventions, including the Local Full Fibre Networks (LFFN) initiative which sought to build networks to local authority premises, with a view to them acting as anchor infrastructure points to subsequently extend this network capacity to the local community.
History in the CDS region
In late 2020, the Government published a consultation into the proposed implementation of what was to become Project Gigabit. The CDS response to this consultation can be found here – Planning for Gigabit Delivery consultation response – Connecting Devon and Somerset.
Moving into the programme’s planning phase, BDUK initially undertook Early Market Engagement (EME) in the region. This process was designed to gain a better understanding of appetite from the market, capacity to deliver and use this information to scope out the size and geographies for potential procurements. This part of the process produced indicative intervention areas, with defined geographical boundaries for a number of procurements and a long-list of properties to be covered. A second iteration of consultation with the market was then undertaken, known as Pre-Procurement Market Engagement (PPME) to asses the market’s reaction to and appetite for the proposed suite of procurements. At this stage, these were as follows;
- A Type B contract covering North Somerset and Bath & North East Somerset (B&NES)
- A Type A contract, covering Mid Devon, East Devon and parts of the former Districts of Somerset West & Taunton Deane, Sedgemoor and Mendip
- A cross-border Type B covering Dorset & South Somerset
- A Type A contract covering The South Hams and Teignbridge
- A call-off under the cross-regional Type C contract, covering Dartmoor, West Devon, Torridge, North Devon and Exmoor (BDUK deciding that there had not been sufficiently credible interest shown by the market to run a Type B procurement for this geography). This became the Type C Call-Off 2.
Over time, this picture changed significantly;
- The Type B procurement for North Somerset and B&NES was abandoned due to a downturn in industry build activity and a cooling of interest in this area
- The Type A for the South Hams and Teignbridge was shelved for the same reason
- The Type A procurement for Mid Devon et al did proceed but, despite a number of providers responding positively to the Invitation to Tender (ITT) and participating, the procurement ultimately resulted in a null bid conclusion.
Current Status of Project Gigabit in the CDS region
The picture for the region currently is as follows;
- The Type B contract for Dorset and South Somerset was successfully procured, with Wessex Internet being awarded a contract to build 21,400 premises with a contractual value of £33.5 Million
- Openreach has been awarded a BDUK contract to deliver gigabit capable broadband to homes and businesses in North and West Devon as part of a “cross regional” contract along with North West, Mid and South East Wales. It is intended to cover 42,200 premises with an indicative value of £139.1 million to deliver gigabit capable broadband.
- Openreach has been awarded a BDUK contract to deliver gigabit capable broadband to homes and businesses in South Hams, Teignbridge, Mid Devon, East Devon, the former districts of West Somerset, Sedgemoor, Mendip as well as North Somerset and Bath and North East Somerset and are intended to cover 37,000 premises with an indicative value of £77 million to deliver gigabit capable broadband.
It is important to note that, throughout much of this recent period of market engagement and procurement, eligibility for vouchers has been “paused” across the entirety of the CDS region, to avoid the risk of double subsidy. With the announcement of the award of Call-Offs 2 and 4, this part of the region has now had this pause lifted, allowing those premises not covered by the procured solution to progress voucher projects.
The latest BDUK Project Gigabit update can be found here – Project Gigabit progress update – November 2024 – GOV.UK