1. Connecting Devon and Somerset Superfast Extension Programme 04 th December 2015 ‘The biggest Digital Infrastructure build opportunity for rural communities in England’

2. Today’s Agenda 11.00 Welcome Address 11.05 Local Political Perspective 11.20BDUK Commitment to the Programme 11.35 Update on State Aid 11.50Coffee 12.20Current Thinking to move CDS Forward & Supplier’s Perspective 13.10Panel Q&A & Closing Remarks 13.30Networking & Lunch followed by Supplier Sessions with CDS Team

3. Paula Hewitt CDS Board Member ‘The biggest Digital Infrastructure build opportunity for rural communities in England’

4. Where we are now 225,000 premises fibre connected Has averaged delivery of 7,000 premises a month On track to extend Superfast broadband to around 90% of premises (270,000 in CDS programme)

5. Where we want to be Phase 2 is all about SuperFast To go to 95% and beyond By the end of 2017 4 th utility A robust and comprehensive solution to benefit our communities

6. Challenges for the next Phase Widespread Intervention area Areas of infill Complex topography Expectations Your input

7. Introducing the CDS Team Keri Denton – Programme Director Phil Roberts – Programme Manager Matt Ballard – Programme Manager Ken Singleton- Technical advisor Martin Gerrish - Finance Sofie Francis – Communications Iain Perkins - Procurement and Contracts Karen Bohan - Officer Nathaniel Lucas – Officer Matt Barrow – Officer Louise Jarman– Officer Katriona Lovelock Officer Rem Noormohamed – Legal advisor

8. Councillor Andrew Leadbetter CDS Board Member ‘The biggest Digital Infrastructure build opportunity for rural communities in England’

9. Positive impact of broadband “Superfast broadband is rapidly becoming an absolute necessity” “ a massive plus” “I’m delighted with it – it’s given me an extra hour every day” “We export to over 50 countries …I’m installing the systems I’ve wanted to deploy for ages” “we can now work remotely”

10. Importance to business in rural areas 94% of SME’s think reliable internet connection critical to their business 67% agree reliance on internet will increase 14% lack of reliable SFBB the main barrier to growth (FSB research) Daily contact from businesses asking when they will be connected. Experience of strong take up in rural areas. 20 Additional Business Parks covered

11. Councillor David Hall CDS Board Member ‘The biggest Digital Infrastructure build opportunity for rural communities in England’

12. Important region CDS Phase 2 an important opportunity Significant economy Large population Good take up

13. All about Growth GVA below national average Local understanding of need for and commitment to growth Centres of excellence; aerospace, marine, nuclear, big data, agri-tech etc. Need for cost effective technologies

14. Financial and political commitment Testing economic times Significant support from authorities across the region Joint approach with private sector

15. What we hope to achieve today…. Provide information about the current position Obtain a clear understanding of – any concerns of potential bidders – What we can do to make bidding attractive for you – Factors which may influence desire to engage in bidding. – Opportunity for networking within sector to enable collaborative working and innovative solutions

16. Chris Townsend CEO, BDUK. ‘The biggest Digital Infrastructure build opportunity for rural communities in England’

17. Department for Culture, Media & Sport 1. Superfast broadband coverage to 90% of UK by early 2016 2. Universal 2Mbps standard broadband access by end of 2015 3. Superfast broadband to 95% of UK by 2017 4. Developing options to extend superfast broadband coverage beyond 95% 5. Provided over 50,000 connection vouchers to SMEs Delivering superfast broadband to the UK

18. Department for Culture, Media & Sport Final 0.5-1.0% likely to require high-speed satellite BT superfast coverage only (incl. commercial & non-BDUK) Proportion of UK premises able to receive superfast speeds BT and Virgin premises Virgin only BDUK Phase 1 £1.2bn public funds 95% 90.8% 75% 4.2m BDUK Phase 2 Up to £500m 9% 21.6m 12.9m 45% 100% 1.1m 25.8m26.9m 28m 2.7m Number of premises 99% 2017 2015 Extending coverage

19. Department for Culture, Media & Sport Current position Superfast broadband is available to 83 per cent of UK premises – up from 45 per cent in 2010 (Ofcom’s Strategic Review of Digital Communications discussion document, July 2015) Average broadband speed in the UK has more than quadrupled since 2010 – from 5.2Mbps in May 2010 to 28Mbps in June 2015 (Ofcom Infrastructure Report, 2014) 99 per cent of premises are able to access speeds of 2Mbps or above by end of 2015 and USC will offer option for the remaining 1% (Ofcom European Broadband Scorecard, February 2015) Superfast broadband coverage (over 83%) and take-up per household (over 27%) in the UK is highest among EU5 countries

20. Department for Culture, Media & Sport Phase 1 & 2 - 95% of the UK £1.2bn total public investment with £530 million from BDUK to reach 90% of UK premises by 2016 44 projects across the UK 3.3 million premises passed 4 million by spring 2016 4.2 million additional premises by June 2016 £250m BDUK funding plus local match funding to reach 95% of UK by end of 2017 44 contracts signed 3 Contracts to be signed 1 million additional premises by December 2017 Phase 1 superfast roll-out Phase 2 superfast roll-out

21. Department for Culture, Media & Sport Broadband Fund for the South West The new Digital Communications Infrastructure Strategy outlines an ambition for Ultrafast Broadband for nearly all of the UK This fund extends the support already being provided through the superfast programme The south west has some of the most difficult topography in the UK for fixed broadband rollout The fund will prioritise bids which provide ultrafast speeds of at least 100Mbps. £5m available in each of 16/17 and 17/18

22. Department for Culture, Media & Sport £8m market test pilots exploring options for going beyond 95% 7 pilots being taken forward into deployment Suppliers have now published their feasibility reports live services available over 700 customers connected Phase 3 - the final 5% Phase 3 superfast roll-out

23. Department for Culture, Media & Sport Demonstrated the viability of alternative approaches in the Final 5% Flexibility has created cost savings in deployment. Working successfully with local authorities Exploring the options for community funding models Ways of overcoming difficulties in relation to planning permission Market Test Pilots: Initial Findings

24. Department for Culture, Media & Sport Market Test Pilots SupplierLocationTechnology Satellite InternetExmoor, Devon & Somerset Superfast capable satellite CallflowHampshireHybrid FTTP, FTTC and FWA AvantiScotland & Northern Ireland Superfast capable satellite AB InternetMonmouthshireHybrid fibre and wireless AirwaveNorth YorkshireFixed Wireless QuicklineNorth & North East Lincolnshire Fixed Wireless CybermorNorthumberlandHybrid fibre and wireless

25. Department for Culture, Media & Sport Market Test Pilots: Wireless AB Internet - Fixed Wireless Superfast Airwave – Next Generation Wireless Quickline - Superfast Wireless Network.

26. Department for Culture, Media & Sport Market Test Pilots: Hybrid Cybermoor – FTTP in a Challenging Environment. Call Flow – Hybrid Approach

27. Department for Culture, Media & Sport Market Test Pilots: Satellite Satellite Internet - Superfast Capable Satellite Avanti - Superfast Capable Satellite

28. Department for Culture, Media & Sport Market Test Pilots: What are customers saying? 92% of respondents thought there were benefits to the new broadband. The three most popular benefits of new broadband identified by respondents were speed, reliability and cost. Only 2% of respondents do not intend to keep their new broadband at the end of the pilot period, if the price remains the same. BDUK Survey – September 2015

29. Department for Culture, Media & Sport Growth in non-BT projects June 2013 Rural Community Broadband Fund (~£1m)  Fibre Garden (ITS)  Tove Valley  Northmoor (Gigaclear) June 2014 7 x Market Test Pilots (£8m)  AB Internet  Airwave  Avanti  CallFlow  Cybermoor  Quickline  Satellite Internet 2015 Phase 2 Procurements (£20m)  Airband  Callflow  Cotswold (ITS)  Gigaclear x3  UK Broadband

30. Department for Culture, Media & Sport BDUK Commitment BDUK Funding has been ring fenced for delivery of the project BDUK are committed to supporting CDS with senior management support, project management and value for money advice BDUK are committed to finding a State Aid solution that will work for the CDS Phase 2 Procurement

31. Matt Agar Commercial Lead BDUK ‘The biggest Digital Infrastructure build opportunity for rural communities in England’

32. Page 32 Rules designed to regulate the use of public sector resources so as to avoid distortions of competition in EU – Can include Subsidies, Grants, Loans, Guarantees, Benefits in Kind The specific State aid rules for the deployment of broadband networks are referred to as the Broadband Guidelines. State aid rules do not generally apply to: Aid which satisfies the Market Economy Operator principle (formerly “MEIP”) – The public body must be behaving in the same way as a private investor in similar circumstances. – E.g. pari passu loans and equity, appropriately priced guarantees Aid to compensate for Services of General Economic Interest (SGEI) – Relates to beneficiaries entrusted with clearly defined public service mission What is State aid?

33. Page 33 BDUK approach to State aid is to progress a twin-track process to a flexible approach for local bodies to either:- – Pursue an ‘umbrella’ Notification: A process where the Commission examines how the scheme conforms to the 2013 Broadband Guidelines and whether any derogations are necessary; and – as an alternative – Support General Block Exemption Regulation II (GBER II) Article 52: For smaller schemes and projects (schemes less than €150 million or projects less than €70 million). GBER compliant projects do not require notification, but are subject to strict criteria regarding the deployment of broadband, in particular, requiring the provision of full open access. BDUK is aligning the two approaches as much as possible, incorporating recent best practice, as well as reflecting on our conversations with the Commission, to make both options as practicable as possible E.g. balancing Commission’s expectation for smaller procuring smaller areas with the market’s requirement for a minimum scale of network and expectation of low ‘transaction costs’ BDUK Approach to State aid

34. Page 34 The full requirements of the Broadband Guidelines flow through to any procurements seeking to utilise GBER II as their State aid ‘approval’ route. The key requirements for procurements under GBER II is that they will need to provide full open access and where targeted to provide NGA services:- – Fibre to the Premise – duct access, dark fibre, physical unbundling and bitstream. – Fibre to the Cabinet – duct access, dark fibre, sub-loop unbundling and bitstream – Fixed Wireless Access – mast, antennae, backhaul and bitstream Key principle is that access is not limited to broadband uses and that other forms of access e.g. mobile has to be provided subject to reasonableness test. Use of GBER II

35. Page 35 The Guidelines and GBER II leave some uncertainty upon the requirements for open access and how in the practical terms this can be delivered by operators. We have engaged with market to practically define access and will be presenting the outcome of this to the Commission very soon. BDUK will have completed engagement and defined open access will be available prior to when bidders need to begin to prepare formal bids Use of GBER II

36. Page 36 State Aid – Role of the National Competence Centre BDUK’s NCC will provide oversight upon any newly notified scheme or GBER II OMR – Request for Information to broadband operators Support local Bodies in analysis and assessment responses (coverage and technology) Considers assessment of alternative delivery model NCC validates, supplier evaluation and state aid mapping OMR – Request for Information to broadband operators Support local Bodies in analysis and assessment responses (coverage and technology) Considers assessment of alternative delivery model NCC validates, supplier evaluation and state aid mapping Open Market Review Public Consultation Ensures transparency as to where aid targeted. Seeks feedback from stakeholders (residents, businesses, suppliers). Confirms legal basis of targeted areas Requests infrastructure sharing NCC confirms Local Body intervention area Ensures transparency as to where aid targeted. Seeks feedback from stakeholders (residents, businesses, suppliers). Confirms legal basis of targeted areas Requests infrastructure sharing NCC confirms Local Body intervention area Open, transparent, non discriminatory tender. Technology neutral. NGA qualifying and target appropriate white areas Makes use of existing assets/ infrastructure. Step change - significant new investment in new infrastructure and doubling speeds. NCC confirms compliant process and provides confirms state aid compatibility Open, transparent, non discriminatory tender. Technology neutral. NGA qualifying and target appropriate white areas Makes use of existing assets/ infrastructure. Step change - significant new investment in new infrastructure and doubling speeds. NCC confirms compliant process and provides confirms state aid compatibility Sourcing In Life Wholesale access available and wholesale access requests. Transparency of the deployed infrastructure. Clawback implemented Price benchmarking. NCC monitor on- going compliance Wholesale access available and wholesale access requests. Transparency of the deployed infrastructure. Clawback implemented Price benchmarking. NCC monitor on- going compliance Pre-Procurement Procurement and Contracting

37. Page 37 State aid – Key Messages for Suppliers Co-operate with Local Body when they are developing mapping and respond with information requested. – We don’t want to spend money where it is not required – Similar approach to development of mapping but encourage premise level mapping – Evidence technical capability of networks as qualifying NGA Technology (e.g. FTTC/P, cable (DOCSIS 3.0), advanced wireless technologies) In submitting bids – Understand your financial models and be able to demonstrate financial viability. – Evidence NGA technology compliance. – Demonstrate how wholesale access requirements will be met. NCC is happy to engage in direct dialogue with Suppliers on how to evidence NGA compliance for State aid approval

38. Page 38 Reference Material Broadband Guidelines – http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2013:025:0001:0026:E N:PDF) http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2013:025:0001:0026:E N:PDF General Block Exemption Regulation – http://eur-lex.europa.eu/legal- content/EN/TXT/PDF/?uri=CELEX:32014R0651&from=EN http://eur-lex.europa.eu/legal- content/EN/TXT/PDF/?uri=CELEX:32014R0651&from=EN BDUK State aid pages – https://www.gov.uk/government/publications/state-aid-advice https://www.gov.uk/government/publications/state-aid-advice

39. Page 39 THANK YOU For any questions please contact us: – Matt Agar matt.agar@culture.gov.ukmatt.agar@culture.gov.uk – The National Competence Centre at stateaidforbroadband@culture.gov.ukstateaidforbroadband@culture.gov.uk

40. Phil Roberts & Ken Singleton CDS Programme Team ‘The biggest Digital Infrastructure build opportunity for rural communities in England’

41. Current thinking on moving CDS forward: Topics to be covered: – EME intelligence – Solution layers and costs – Outline coverage requirements – Areas for further exploration – Possible scenarios – Information to assist Bidders

42. Current Thinking for CDS to move forward: Biggest Digital Infrastructure build opportunity for rural communities in England EME Intelligence has helped CDS to: – Understand Industry ‘s business development cycles & internal business case drivers to bid for an opportunity of this scale – Understand the scope, capabilities and commercial direction of Suppliers through Early Market Engagement – Recognise the solution layers that need to be considered during ITT development – Capture the solution features that need to be considered in the ITT – Recognise the need to offer the catchment area in ways that allow industry to deliver an optimum solution

43. EME Intelligence Understanding the scope of Companies in EME the stage, we have engaged in the following Sector: Fibre Operators & Providers Wireless Operators & Providers Main Contractors Industry OEM’s And have covered the following range of topics and USP’: Wholesale Access Network Operator Delivery contractor / sub contractor experience Whole Area Level or Smaller Lots Private funding & Leverage Alternative Business Models Technical solution expertise

44. Illustration of Solution layers and unit costs £ 200 £1700 £ 600 £1000 Best Practice Network Solution Technology vs Network Solution vs Unit Cost  -------------- VDSL------------------ > Best Practice Technology Fit  -------------- Wireless------------ >  ----------------- Fibre------------ > SUPERFAST Alt Net Sub Loop Unbundling FTTC Alt Net Fixed Wireless Access Licensed Spectrum - LTE Unlicensed FWA SUPERFAST ULTRAFAST Alt Net Fibre based Rural Ethernet GPON *All figures are indicative estimates only and should not be relied upon to make any decisions.

45. Illustration of Solution layers and costs £ 200 £1700 Unit Costs vs Funding Leverage £ 600 £1000 Unit costs per premise to LB after varying Leverage examples Low CAPEX Leverage in order of 20% £ 480 £ 800 £1530 £ 160 High CAPEX Leverage in order of 50% and above £ 100£ 500£ 850 *All figures are indicative estimates only and should not be relied upon to make any decisions. £ 300

46. Coverage requirements Very rural; sparsely populated; difficult terrain No large clusters of unserved premises Spread across entire Programme Area Probably the largest number of unserved premises in the UK BUT significant pent-up demand from poor speed areas

47. Connecting Devon and Somerset

48. National Parks

49. Postcodes with NGA White Premises

50. Heat Map showing density of NGA White Premises 25 0.5 Average of NGA White Premises per km2 7 6 5

51. Example of Possible Zones

52. 19,000 14,000 24,000 19,000 15,000 19,000 NGA White Premises (ref Feb 15 OMR currently in revision)

53. 7 11 12 15 11 25 NGA White Premises per km 2

54. Heat Map overlaid with postcode locations

55. Heat Map of NGA White Premises 25 0.5 Average of NGA White Premises per km2 7 6 5

56. Heat Map of NGA White Premises 25 0.5 Average of NGA White Premises per km2 7 6 5

57. Heat Map of NGA White Premises 25 0.5 Average of NGA White Premises per km2 7 6 5

58. Heat Map of NGA White Premises 25 0.5 Average of NGA White Premises per km2 7 6 5

59. Heat Map of NGA White Premises 25 0.5 Average of NGA White Premises per km2 7 6 5

60. Heat Map of NGA White Premises 25 0.5 Average of NGA White Premises per km2 7 6 5

61. Predicted Geographical Coverage at the end of Phase 1 Contract Yellow – one superfast provider Blue - no superfast provision

62. Phil Roberts CDS Programme Team ‘The biggest Digital Infrastructure build opportunity for rural communities in England’

63. Scope of the Challenge Open Market Review – New OMR issued 9 th November – closing date 7 Dec – Requested premise level information in Intervention Area – Review will update on Current NGA deployment Anticipated deployment over next 3 year period – We want to cover what’s left!

64. Getting a head start Information currently available – Local authority Assets: http://www.connectingdevonandsomerset.co.uk/phase-ii-superfast- extension-programme/.... http://www.connectingdevonandsomerset.co.uk/phase-ii-superfast- extension-programme/ – CDS can access Property database of County & District Asset locations for Devon, Somerset, Police, Fire & Rescue, Exeter University – CDS can help identify potential assets in ‘difficult’ locations – CDS can help identify areas of likely future development – Also on CDS website access to OMR data from Feb 2015 (NB Actual Intervention Area will have increased (new sites/postcodes, Multiple Occupancy dwellings)

65. What we have supplied in the past - What was helpful? Locations /assets Building locations & other enabling infrastructure Mobile and other phone masts & aerial locations Wind farms

66. What we have supplied in the past - What was helpful? Highways Civil works on roads plans General restrictions on road access (e.g. no-go periods due to holiday traffic) Planned Local Authority street lighting works Street furniture

67. What we have supplied in the past - What was helpful? Opportunities/ restrictions Employment land – current, planned & future areas Conservation, wildlife and woodland areas owned by LA’s * NB Backhaul EME suggested some useful alternatives in the SW region

68. Local Authority/Public Asset Info – What further information would be useful? – How can CDS help to simplify your planning process with respect to public assets? Areas to think about: – What can suppliers offer in return for ‘free’ or nominal cost for way leaves? – What are the arrangements with landowners, farmers etc. for power (if required for deployed solution)?

69. Areas CDS would like to explore with Suppliers Business model options? Customer take-up assumptions? State Aid requirements; e.g. Open Access & Wholesale pricing? Coverage capabilities for different technologies? Catchment area: one ‘superlot’ and/or sub Lot areas? Addition of requirement for ‘Ultrafast’ broadband?

70. ‘The biggest Digital Infrastructure build opportunity for rural communities in England’ Connecting Devon and Somerset ‘The biggest Digital Infrastructure build opportunity for rural communities in England’ Connecting Devon and Somerset Todays Presentation Q&A Can be found at: www.supplyingthesouthwest.org.uk

71. Questions & Answer Session