General Discussion
  >> Fibre Broadband


Register (or login) on our website and you will not see this ad.


  Print Thread
Standard User WWWombat
(knowledge is power) Fri 09-Dec-16 13:57:17
Print Post

CDS progress in Phase 2 bids


[link to this post]
 
It seems like CDS have made some progress in their new tendering process for phase 2.

As best I can tell, the CDS programme board has selected their preferred supplier for each of the 6 lots that make of the 2 counties, and were happy to recommend them to the councils.

On November 30th, a Somerset councillor made the key decision to approve this choice for 5 of the 6 lots, but lot 1 (northern Somerset and Bath) appears to have been left in limbo. It doesn't look to be a disagreement from the council, but otherwise it is impossible to tell why.

http://www1.somerset.gov.uk/council/portfolio%2043/C...

Following the decision, there's a 10-day standstill before actual award of contract. If I can count correctly, that would end tomorrow or Sunday ... so perhaps we will hear something next week.
Standard User mrbaba
(newbie) Mon 19-Dec-16 12:43:42
Print Post

Re: CDS progress in Phase 2 bids


[re: WWWombat] [link to this post]
 
Was there ever any follow up to this?
Thanks.
Standard User WWWombat
(knowledge is power) Mon 19-Dec-16 18:06:07
Print Post

Re: CDS progress in Phase 2 bids


[re: mrbaba] [link to this post]
 
CDS tweeted that they'd announce something last week, but there has been no sighting yet.


Register (or login) on our website and you will not see this ad.

Standard User WWWombat
(knowledge is power) Wed 21-Dec-16 10:44:00
Print Post

Re: CDS progress in Phase 2 bids


[re: mrbaba] [link to this post]
 
I guess we now know the fate of some of the areas...

Gigaclear has won lots 2, 3, 5 and 6. A total project of £62m for 35,225 homes by 2019.

Note that those 4 lots had more than 53,000 premises in the intervention area, so the project targets roughly two-thirds of them.

Edit: These 4 lots have 715,000 premises in them, so the project will cover approx 4.9% of them.

The ITT also labels another 51,000 premises in those 4 lots as "Under review NGA white". I guess this relates to premises that might not get completed by BT - either within BDUK, or by remaining commercial work.

Lot 4 is missing ... but was one of those approved a couple of weeks ago. Strange.

No word of lot 1.

Edited by WWWombat (Wed 21-Dec-16 10:52:26)

Standard User WWWombat
(knowledge is power) Wed 21-Dec-16 11:01:35
Print Post

Re: CDS progress in Phase 2 bids


[re: WWWombat] [link to this post]
 
It looks like these 4 lots have been allocated £25m of public subsidy, so roughly £725 per property, leaving just over £1,000 per property from Gigaclear ... the latter matches their previous commercial numbers.

That leaves unused public funds of £7.9m for lot 4, and £2.5m for lot 1.
Standard User WWWombat
(knowledge is power) Wed 21-Dec-16 13:43:50
Print Post

Re: CDS progress in Phase 2 bids


[re: WWWombat] [link to this post]
 
I've been trying to calculate the time to break even on the project, and come up with the following wrong answer:

a) Need to recover £1,000 per home passed.
b) At 30% takeup, this recovery becomes £3,333 per home connected.
c) Most takeup will be from the lowest package. GC offer 50/50 at (ex-vat) £34pm.

d) If all the £34pm can be used towards a break-even, then it will take 98 months, or 8 years.

e) In a BT-oriented wholesale setup, Openreach get around half of the (ex-vat) money paid for a line with GEA broadband service.
f) If only half of the £34 is available for a break-even, then it will taken 196 months, or 16 years.

This calculation is wrong, because it doesn't take account of the "cost of capital" element. That's essentially the "interest" an investor might expect back on his money.

g) The recent talk of splitting Openreach put a "Cost of Capital" rate at 8.5%
h) That means the "CoC" for each £3,333 connected home is nearly £24pm.

i) If all the £34pm can be used towards a break-even, then (via the MSE mortgage repayment calculator) it will take 16 years.

j) If the cost of providing a retail service is around half of the monthly cost (as in step f), then GC wouldn't be earning enough to pay the cost of capital. It will have £17pm but will have a CoC cost of £24.
k) If GC can provide service for just £5, then it has £5 to use towards the break-even. The same mortgage calculator tells us that it would take around 20 years.

Am I calculating that "cost of capital" element in the right way?

And does anyone have a better idea of how much it might cost GC for core interconnect and admin per month?
Standard User kitcat
(experienced) Wed 21-Dec-16 15:07:55
Print Post

Re: CDS progress in Phase 2 bids


[re: WWWombat] [link to this post]
 
WWWombat

Use Andrew's £43.8m figure and a commercial borrowing cost of 4.5%.

Remember prices go up on 1st Jan but website doesn't say what to.

Openreach's cost of capital uses some historic values of existing debt so is higher than capital raised now.

Activation costs £100, so the £80 ex VAT comes off first. Core Interconnect gets cheaper the more traffic you have as peering costs reduce, so buying scale can work. I would suggest that of the £34 around £20 could be used for the first 5 years, as the business is expected to be loss making as it builds scale so Investors will get no return. After that £15, but my intuition says the investors will be looking to sell the firm to make their return so pay back on revenue may not be achieved before new owners take it on.

There may also be some 'hidden' revenue from selling access to sports rights providers and business prices are far higher than consumer so may be predicated on Farms buying the business service.

Edited by kitcat (Wed 21-Dec-16 15:08:38)

Standard User WWWombat
(knowledge is power) Sat 07-Jan-17 21:36:46
Print Post

Re: CDS progress in Phase 2 bids


[re: WWWombat] [link to this post]
 
Latest Update:

CDS has prepared a report for Devon CC, showing current progress.

Of note:
- BT have 1,700 premises left over from phase 1, due in the next 3 months. Seems to be FTTP delivery, with delays caused by wayleaves, etc.
- Airband are somewhat behind in phase 2, but will add infill coverage for an extra 1,000 premises.
- CDS reports that a single supplier was named preferred supplier for 5 lots. Gigaclear has since been awarded the contract for 4 lots, so it makes you wonder what happened to the fifth lot. They are preferred supplier, but didn't sign the contract?
- The sixth lot (Bath and NE Somerset) is subject to a legal challenge.
  Print Thread

Jump to