Based on my understanding of EU law rather than specific knowledge of the BDUK process, I suspect that the companies are asked for a declaration of their intentions for commercial roll-out on a specific date, as state aid cannot be used to compete with commercial enterprise.


A company's declaration cannot represent a contractually binding commitment to develop such an area, as there's no consideration (price or promise) flowing to the company in return for their promise. Consideration is a fundamental requirement of a contract.


The doctrine of promissory estoppel is equally inapplicable to a promise to develop superfast broadband. Promissory estoppel arises when detrimental reliance is made on a promise, but is limited to situations where the relying party places reliance in a promise by the other party to give up their legal rights.

For example, if I agreed to cancel a debt you owed me free of charge to you (so there was no consideration) and we did not make this agreement as a deed (which would overcome the lack of consideration), there would be no contract to cancel the debt that you could rely on. However, if you subsequently made financial commitments relying on my cancellation of the debt, a court would likely hold that I was estopped by my promise if I later demanded repayment.

The learning point is that if there is any hint an agreement might not be backed by consideration and might not therefore be a contract, you should either insist the promise is made in return for consideration - which need only be a penny or a peppercorn (consideration must be adequate but need not be sufficient) - or ensure it is made as a deed (which overcomes the requirement for consideration).

A promise by a company to develop superfast broadband in an area is a statement of intent based on the best knowledge available at the time, rather than the company giving up any sort of legal rights it has over the council or anyone else. In any event, estoppel is a matter of equity (roughly speaking, what is most just) rather than a right, and I'm sure any court would accept it as fair, just and reasonable for the company to change its plans for sound commercial reasons.


Accordingly, I expect declarations of rollout plans by the companies are used solely to exclude areas for consideration of state aid during the planning process. If companies later change their plans, there's no legal reason I can think of why the BDUK project cannot revisit its decisions, though there comes a point where the planning is too advanced for changes to be made. Eventually the available money is committed as seems best and contracts are signed.


With any process as complex as the commercial superfast broadband rollout and the BDUK project, there will always be some examples of hopes being raised and dashed. I don't share in Bob's conspiracy theories - I believe BT Openreach are doing their best to roll out a product that many want to buy via the retail providers. Openreach can only expend resources on rolling out where there is reasonable expectation of a commercial return on their investment (otherwise they do not have a viable proposition for potential investors in the project), or where justified by external income such as BDUK and contributions from developers.

So I was right then

They merely said where they planned and those plans can change - how BDUK projects handle those changes is a different matter.

Commercial

I think there is a difference when the commercial operator giving the promise is subsequently awarded the contract for the remaining areas. I believe that part of the conditions for the award of that contract should have been a legally binding commitment to honour their promises. In this case more so because the competing providers that were fllling in some of the gaps in the ADSL network waived their intervention rights for the common good.

In any event wasn't the consideration for the promise that BDUK would not give state funding to a competitor?

Iincidentally I don't think the conspiracy theories are valid, just naive, or incompetent or lazy public servants and ministers unable to tell BT fact from fiction

In which case as others have said there is no penalty if Openreach shrinks its commercial footprint, beyond people complaining.

Trouble is what may be shrinkage in one area, might be an improvement in another.

In any event wasn't the consideration for the promise that BDUK would not give state funding to a competitor?

In which case what about Virgin Media and other operators who will have responded as part of the Open Market Review?

Did Virgin or anybody else give any commitments about increasing their footprint? I suspect not. I also think it unlikely that anyone in a Virgin cabled area cannot get a 2mb service so the minimum commitment is likely to be met.

In reply to a post by gerarda:

Did Virgin or anybody else give any commitments about increasing their footprint? I suspect not. I also think it unlikely that anyone in a Virgin cabled area cannot get a 2mb service so the minimum commitment is likely to be met.

Why do you think they gave a commitment? They provided their plans - where they believed they would be rolling out - but that is subject to change.

And when a BDUK contract is awarded then it is a commitment but individual areas are subject to survey - so they may have said they expect to rollout a specific cabinet but if the survey shows it is prohibitively expensive then either the authority could pay extra, they could switch the plans to another area or they can agree to cancel it completely.

The bidding process does not allow enough time to do full surveys and the cost of doing so pre-contract would stop anyone from bidding. Therefore it is caveated to subject to survey and there are then decisions to be made as to what to do if the surveys are not as expected.

So what legally binding commitments did BT enter into?

AFAIK there is none - i.e. they could just half the commercial roll-out at anytime.

At the end of the day, trying to do state aid, while the commercial programme was underway was always going to be dodgy, as you have NOT proven market failure.

In reply to a post by gerarda:

I think there is a difference when the commercial operator giving the promise is subsequently awarded the contract for the remaining areas.

Morally, perhaps - but as a matter of contract law, the declaration of intention was, as far as I can see, non-binding at the time it was made. If so, it cannot subsequently become binding without the promise being embodied in some sort of contract.

The way I was taught contract law was to put the events on a time line to discover who was bound by what from when. This approach is very helpful for the various contracts involved in a BDUK scheme.

In reply to a post by gerarda:

I believe that part of the conditions for the award of that contract should have been a legally binding commitment to honour their promises.

If a requirement to roll out to the declared plans is written into the contractual terms agreed with the winning operator, it is clearly binding on that operator. Of course, other operators may have declared roll out that would remain non-binding for them.

I would see your proposed term as a good thing - but whether it's commercially realistic for the winning operator (almost certain to be BT) to accept such a term is unclear. I don't know whether such a term would be compatible with BDUK rules.

In any event, it's maybe more likely for the winning operator to change their commercial roll out plans during the detailed planning that takes place between the initial declaration and winning the BDUK bid. If there's sound commercial reasons for the changes, is it likely the winning operator will agree to reinstate plans they know are not commercially viable as a condition of the BDUK contract?

In reply to a post by gerarda:

In this case more so because the competing providers that were fllling in some of the gaps in the ADSL network waived their intervention rights for the common good.

In any event wasn't the consideration for the promise that BDUK would not give state funding to a competitor?

As a matter of EU law, state funding cannot be given to commercially viable roll out. If you engage with the BDUK process you take a commercial risk, knowing you will get no state funding unless your bid succeeds. This seems to leave a promise not to give state funding to a competitor as a nullity.


I'm not quite sure what you mean by competitors 'waiving their intervention rights'. The nature of BDUK is that one operator is given funding towards roll out that would not otherwise be commercial on a risk-sharing basis.

The award of a BDUK contract doesn't affect the rights of any losing bidders and organisations who didn't bid. They are free to roll out anywhere they see a commercial proposition in doing so and will not be competing with BDUK aided roll out in those areas. They know they will not be state aided for non-commercial roll out, as the BDUK contract goes to the winning bidder.

In reply to a post by gerarda:

Iincidentally I don't think the conspiracy theories are valid, just naive, or incompetent or lazy public servants and ministers unable to tell BT fact from fiction

So much of the debate around broadband roll out ignores economics, physics and engineering reality.

Universal FTTP would be great - but is unaffordable at the current state of development unless ministers are willing to cancel a huge project like HS2 and spend many billions on broadband instead.

FTTC leverages the existing cabinets and downstream metallic pairs.

FTTC is an enabling technology for future deeper fibre, as the aggregation nodes deployed for FTTC are used for FTTP (and FTTDP if that becomes a commercial reality rather than a research project). This investment, together with investment in backhaul networks from the handover nodes, will not be lost as technology continues to develop. It's not as if money is being put into a technological dead-end.

However, FTTC is limited by the length and condition of the metallic pairs downstream from the cabinet. This inevitable consequence of using the existing assets is the down side of deploying a solution that is affordable and deliverable with today's technology.


Hopefully future technological developments and economies of scale reduces the viability hurdles for FTTC roll out and makes FTTP deployment a more viable proposition. If BT Openreach finds a way to make FTTPoD more cost-effective for consumers, it might be possible to overlay the existing FTTC network with FTTP on a fairly extensive scale by sharing the cost with the end users.

Unfortunately any sort of civil engineering work is expensive.