David Cullen NYnet

SLIDES/1111–CNYbroadband 1

The Connecting North Yorkshire Model for Rural NextGen

David Cullen, Chief Executive NYnet Ltd

INCA Seminar

York, 24th November 2011


è  Geography and population distribution mean that telcos will not develop the infrastructure necessary to provide B/B to many NY residents

è  Low number of connections (= users) per kilometre of network = unattractive commercially

è  Large number of no-spots where “proper” B/B is simply not available

What is the Broadband problem in the sub-region?


3,200sq miles and 0.7million people


è  Approx 18% of population receiving below the USC

è  Approx 45,000 residents (7.6% of population) unable to access any usable BB

è  13.7% of working age population self employed (8.4% YH, 9.4% national)

è  Self employed + micro-businesses (1 − 4 people) account for 49% of jobs in Dales and 37% in Moors

Some other relevant statistics


NYnet – long standing objectives 1. Provide an infrastructure capable of delivering advanced

next-generation broadband services to the public sector, citizens and business.

2. Provide ‘faster, better and cheaper’ public sector networks to enable more efficient and effective public and corporate services.

3. Stimulate economic growth through helping the market to deliver next-generation broadband services to business and residential users.


NYnet – bringing the ‘anchor tenants’ Connectivity customers •  WAN 2 - 172 non school sites

- 375 schools •  Districts + Police + Fire + 2 x Parks •  PCT – 130 sites •  1 other public sector organisation •  9 business parks •  7 community schemes covering over 20 communities

Value Added Services •  VPN Services •  DR Framework

Turnover 2011/12 Forecast - £8.3m for NYCC

Over 800 (90%) public sector sites: the largest and most successful PSN in the UK?


High quality B/B = B/B appropriate to people’s needs

Our vision is to bring the advantages of high-quality broadband to 100% of businesses and citizens in York and North Yorkshire by 2017. We want to enable all to participate in the digital world so that they can carry out their business when and how they wish.

The Connecting North Yorkshire Vision


Brief History of CNY June 2009 Government release Digital Britain (DB) report

Sept 2009 NYnet Board considers implications of DB report 2 responses proposed è address not spots @ 2mbs è Market Towns initiative

Jan 2010 NYnet Board approves revised Business Strategy è not spot pilots to test technology etc è Market Towns – identify possible £ streams è submission to extend State Aid so can progress above

June 2010 State Aid approval confirmed – just needed the £ ! F


July 2010 Central Government Ambition for Broadband •  We want communities and local authorities to have a say in

how these networks will be built. •  Community need should drive the process, not Government

decisions made in Whitehall. •  A world class communications network is an essential

element of recovery and will help us to grow the economy. •  The delivery of public services will be more efficient and cost

effective, as well as more inclusive, and this is crucial for local authorities.

•  The strategy brings together the many policy areas that we are working on across Government which will enable this to happen, as well as setting out the Government’s approach to investing the £530m secured as part of the TV Licence Fee settlement to help deliver superfast broadband into more rural and remote locations. F


July 2010 BDUK launched •  2 key strands:

è universal service commitment (USC) @ 2 mbs) è Next Generation Access

•  part of DCMS – staffed by civil servants + consultants •  local authorities to lead •  want to do pilots

Aug/Sept 2010 NYCC/NYnet submit proposal to become a BDUK pilot based on

•  NYnet’s exising track record •  State Aid approval in place •  discussions re ERDF funding already in hand

(= matched funding)

= NYnet’s vision

F


October 2010 Informal advice from BDUK re pilot status for NYCC

10 Dec 2010 Formal BDUK letter – NYCC one of 4 ‘superfast broadband’ pilots

9 Feb 2011 Inaugural meeting of CNY Board, consisting of three main stakeholders:

BDUK, NYCC, NYnet

28 Jan 2011 24 June 2011 Presentations to LGNYY – unanimous support


CNY Board responsible for è  preparing Vision (and Strategy) è  securing funding

BDUK ERDF Performance Reward Grant anything else

è  overseeing the procurement – being undertaken by NYnet as sub contractor to NYCC

è  manage interface of CNY with existing NYnet business è  liaise with stakeholders è  comms/PR è  Go ON project

NYCC is the Accountable Body


Procurement – Key dates

•  OJEU published

•  Expressions of interest received

•  Shortlist agreed by CNY Board

•  Invitation to participate in dialogue - ends Nov 2011

•  Invitation to continue dialogue - ends March 2012

•  Final Tenders submitted - early June 2012

•  Contract Awarded - late June 2012

•  Roll-out begins / ends - Q3 2012 / Q2 2014


As modelled CNY will provide è  Next Generation Access to market towns

(= 45% of population)

è  high-speed hubs to approx 250 communities that will provide backhaul infrastructure for community projects using Partners who provide the Access Network and Internet Services On average 1 hub will support 3 parishes – there are 731 parishes, of which 356 have < 200 residents

è  ultimately ratio of market towns to hubs will depend on £ available relative to outcome (= cost) from procurement process

è  estimate need £50m to complete the Vision


Now

York & Harrogate “Superfast” = >24Mbs +

‘Market Towns’ c. 8Mbs near exchanges

Rural Areas/ small Market Towns

c.2Mbs with high contention (lots of people using the same bandwidth)

‘Deep Rural’ 0.5 – 2Mbs (the ‘poor/ not spots’: 18% of N Yorks- highest in the country)

‘Before Connecting North Yorkshire…’


Now Following CNY

York & Harrogate “Superfast” = >24Mbs + No change

‘Market Towns’ c. 8Mbs near exchanges >= 24Mbs

Rural Areas/ small Market Towns

c.2Mbs with high contention (lots of people using the same bandwidth)

2 - 24Mbs depending on l o c a t i o n , t e c h n o l o g y, investment etc

‘Deep Rural’ 0.5 – 2Mbs (the ‘poor/ not spots’: 18% of N Yorks- highest in the country)

Target of <2% with 2Mbs, rest 2 – 24Mbs as above

‘……..and After’


D: Areas with minimum of 2MBs (satellite etc)

C: Infill areas requiring grant/ fund support to achieve 2-‐24Mbs

B: Infill areas at 2-‐ 24Mbs funded through CNY

Category D Target: <2%

A: Areas receiving >24MBs through CNY

Category A Target: 75-‐ 90%

Categories B&C Target c. 8-‐23%

The Strategy for 100% Coverage


Commercial Models è  State Aid Approval (and common sense) requires procurement

to consider various commercial approaches

è  ‘Traditional’ Gap Funding of a telco’s own network

è  Design, Build and Operate (DBO) an infrastructure for the Authorities (NYnet and NYCC) to run and receive income

è  A DBO+, where the telco partner also invests for share of revenues/ margins

è  Gap Funding will always favour an incumbent or determined entrant with deep pockets comfortable with a long RoI

è  Bidders remain interested in both models


Investment Issues è  Still have a ‘worst case’ of £18m shortfall over 10 yr business

case:

è  Modelled need for £50m

è  £17.8m (BDUK) + £8.5m (ERDF 47% match) = £26.3m

è  Anticipated margins from public sector ‘anchor tenants’ revenue- the key differentiator in N Yorks

è  Good news: plenty of capital on the global investment markets for secure, stable infrastructure initiatives

è  Bad news: UK Broadband not seen as ‘secure and stable’

è  Need to do all we can to change this perception and help suppliers raise investment


Project Speed Installation Cost

Rental Cost

Maximum available

Existing service

NANDS 5-10 mbps £100 £20 - £30 70 mbps 0 Gillamoor Various £0 £12 70 mbps 0 VOM 10 mbps £100 £15 - £25 70 mbps 0 – 1.5 mbps Bradley 5-10 mbps £50 £13 - £19 70 mbps 0 – 1 mbps Barlby 5-10 mbps £50 £13 - £19 70 mbps 0 – 1.5 mbps RHB 10 mbps £0 £12 70 mbps 0 N u n Monkton

2–20 mbps £100 £15 - £25 70 mbps 0 – 1 mbps

An example: rural price sensitivity……


Project Project Start Date Target Actual Planned %

NANDS 04/03/2011 As many as possible

68 141 48

Gillamoor 01/09/2010 As many as possible

120 150 80

VOM 04/03/2011 107 107 150 100 Bradley 04/03/2011 100 047* 200 47 Barlby 04/03/2011 100 027* 150 27 RHB 07/09/2011 100 ** 200 ** Nun Monkton TBA 100 ** 100 **

Key * first quarter figures ** not operational yet

…. vs take-up


è  ‘Think like a telco’….

è  Find a champion/ champions- at every level

è  There isn’t enough money to go around, public sector need to invest all it can

è  Public Sector aggregation plays a major part

è  Engage communities and community level providers

è  Explore alternative models that can bring different investment and enable local communities

Summary


David Cullen Chief Executive, NYnet Ltd

[email protected]

Technology

David Cullen NYnet