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Written Statement - Next Generation Broadband for Wales project – Announcement of Contract Award

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Edwina Hart, Minister for Business, Enterprise, Technology and Science

 

The Welsh Government has signed an agreement with British Telecommunications Plc (BT) to deliver the Next Generation Broadband for Wales (NGBW) project, subject to finalising European State Aid and Major Project approvals.

Today’s agreement follows an open and transparent procurement process begun in January 2011. This process commenced with an open day which attracted 130 delegates from the telecommunications industry and underlined the Welsh Government’s commitment to addressing high speed broadband availability across Wales. In February 2011, a contract notice was published in the Official Journal of the European Union inviting expressions of interest from companies across Europe.

The Welsh Government received seven pre-qualification questionnaires from companies interested in participating in the process. Two proposals did not meet the qualifying threshold and in June 2011, five short-listed bidders were invited to participate further:

  • A Balfour Beatty led consortium, with Alcatel-Lucent and Cable & Wireless;
  • British Telecommunications; 
  • Geo Networks; 
  • Fujitsu; 
  • Thales.

The Welsh Government used a process of competitive dialogue to develop and refine the initial proposals received from each of the bidders, who progressed their proposals to various stages of development. Thales left the process in July 2011, Geo Networks in September 2011, the Balfour Beatty led consortium left in December 2011 and Fujitsu left the process in January 2012, leaving BT as the only remaining participant in the competition.

The partnership we have now entered into with BT will bring the benefits of fibre broadband to the vast majority of those areas which are outside the commercial investment plans of the private sector. It is the largest partnership of its kind in the UK and demonstrates our commitment to ensuring that residents and businesses across Wales have access to high speed broadband.

The project, together with BT’s overall investment in Wales will see £425m invested to expand high-speed broadband throughout Wales. This has been achieved through a total public sector investment of £205m. This includes European Structural (ERDF) Funding of £89.5m, UK Government funding of £56.9m and Welsh Government funding of £58.6m. Through this project BT’s committed investment to next generation broadband in Wales rises to £220m.  This announcement represents significant value for money with every £1 invested by the Welsh Government leveraging over £6 to deliver high speed broadband across Wales. The agreement reached with BT is intended to ensure that, when combined with planned commercial investments, 96 per cent of Welsh homes will have access to world class broadband speeds by the end of 2015. In real terms this equates to over 1.3 million premises.

The main technology to be deployed, Fibre to the Cabinet, is capable of delivering download speeds of up to 80Mbps* and upload speeds of up to 20Mbps. This compares with a current average download speed in Wales of around 5-6Mbps, therefore delivering a significant improvement. The agreement also requires BT to commit to delivering ultra-fast speeds of up to 330Mbps1 to certain areas through the use of Fibre to the Premises technology. This will also be made available on demand throughout the whole of the fibre footprint should Welsh businesses want to upgrade to even faster speeds.

The BT solution will provide a platform of wholesale access to its range of next generation broadband services. This means that any retail service provider who wants to provide a service to homes and businesses throughout Wales can do so through BT’s open carrier neutral system. This will result in choice of retail service providers and importantly will mean that the prices for those services will be no different in any part of Wales to any other part of in the UK.

We have also agreed with BT that there should be fairness and equity in the roll-out of the network and that harder-to-reach areas are connected at the same time as those areas that are easier. The precise detail of the roll-out is still under consideration; however, the Enterprise Zones will be one of the first areas to benefit as these are a major economic priority. I would ask Members to appreciate that it will not be possible to connect every property in Wales at the same time. This is major infrastructure investment project that will take over three years to complete, however we will ensure that there is a good spread in our rural, as well as our urban, communities. Where possible, we will be flexible to ensure we meet any new priorities that emerge, but our focus must remain on achieving our target completion date of 2015.

As Welsh Government, we also wanted this project to demonstrate our firm commitment to jobs, training and providing opportunities for people living and working in Wales. I am therefore pleased to announce that as a direct result of this agreement, BT will create 50 new skilled jobs, 100 new apprenticeships and will provide work experience to 900 young people in Wales, as well as protecting over 320 existing jobs across its business. BT has also committed to working with Welsh Government through our Supplier Development Service to leverage supply-chain opportunities for Welsh SMEs.

Today’s agreement exceeds the target of the UK Government to deliver super-fast broadband to 90 per cent of the UK population. The project will transform the broadband landscape across Wales and enable local businesses to become global businesses. It will ensure that firms remain in Wales and it will also attract a more diverse range of high growth, high value companies across all key sectors from tourism to advanced manufacturing. We have estimated that up to 2,500 further full time jobs could be created throughout the Welsh economy over time. This estimate is based on the latest research on the economic impact of superfast broadband projects worldwide, coupled with the cost benefit analysis undertaken on the impact of the next generation broadband project.

Up to four per cent of areas in Wales will remain very hard to reach and are not expected to be able to be served directly by the project. More detailed planning will help us identify those areas, but I have already asked my officials to start work to consider options for addressing high speed broadband availability at those homes and businesses not covered by this project. In the meantime, the Broadband Support Scheme will continue to operate across Wales.

This major investment announced today will be transformational for our country and is set to transform the broadband landscape in Wales and boost the Welsh economy. The detailed work to get this major infrastructure project fully mobilised has already begun and we expect the very first premises to go live by Spring 2013.

I intend to provide a further update for Members in the Autumn as we finalise detailed plans and work towards delivering the key milestones of the project.

* 80Mbps and 330Mbps are wholesale speeds dependent on the services offered by ISPs and network infrastructure