Part of that text comes from http://www.bournemouthecho.co.uk/news/8804956.UPDATE... which states that the streetworks contractor is owed £0.5M. Whoops.

"As Fibrecity is a statutory undertaker we are unable to prevent the work"

Can this really be true? Surely it fails on two grounds: (1) surely there must be a method for withdrawing code powers from an operator whose quality (or whose subcontractor's quality) consistently fails to meet the required standard (2) surely code powers must *automatically* be withdrawn (and reinstated after reapplication) when an operator changes ownership?

Or were Ofcon as incompetent when they drew up these rules as they are at everything else?

if the code powers are granted to X Ltd then it doesn't matter if X is owned by Y and sold to Z.

Cheers for that Phil.

I presume it's also safe to assume there's no mechanism for withdrawing code powers due to poor quality?

It's not good news for Bournemouth then.

How naive can the people have been that set up these rules? I mean even if the re-approval process on change of ownership were to be little more than a nod and a wink and a cheque, at least there'd be *some* opportunity to prevent continued chaos in cases like this. I'm pretty sure that I've seen clauses like that in corporate sales/discount agreements, it's not exactly rocket science.

As for the credit control department who were daft enough to end up with £0,5M owed from i3... whooops. There are other words too but not so polite.

Those that are granted code powers have to put some sort of financial instrument in place to cope with things such as this as far as I understand it.

indeed,

"But there is a
requirement under the code regulations for operators to ensure that sufficient
funds are available to meet any liabilities should any particular operator cease
to trade or have its code powers revoked. This requirement is set out in
Regulation 16 of the conditions and restrictions regulations and is termed
�Funds for Liabilities�. Regulation 16 places a primary duty on operators to
satisfy the Director of Ofcom that arrangements have been put in place to
ensure that sufficient funds are available to Highway Authorities after the
occurrence of a relevant event to meet the liabilities that arise for up to three
years after the event has taken place. Failure to comply with Regulation 16
can potentially lead to the grant of code powers being revoked by Ofcom. "

http://www.bis.gov.uk/files/file13246.pdf

So there's no requirement for funds in an escrow account, or proof of insurance or whatever, only a requirement for "Ofcon to be satisfied that there are funds to meet any liabilities"?

Hypothetical scenario: company1 says to Ofcon "we're financially sound", Ofcon take it at face value, and grant code powers to company1.

Two years and various unfinished works later, company1 "restructures" itself, and selectively transfers its assets and liabilities to company2. Company1 and company2 both deny all responsibility for the unfinished streetworks and point at each other. Company3, the company contracted by company1 to actually do the street works, are also unpaid and left looking somewhat foolish. Whose responsibility is it to make good the unfinished streetworks?

Sounds to me like Ofcon fouled up and they should pay the price to fix it

Sensible people wouldn't buy double glazing (or a package holiday) on this basis let alone grant someone an unlimited non-terminating licence to dig up the streets.

Whose responsibility is it to make good the unfinished streetworks?

Highways Authorities (who have a legal responsibility for ensuring the highway is safe).

http://www.legislation.gov.uk/uksi/2003/2553/regulat... covers the funding of such works

Edited by yarwell (Sun 30-Jan-11 11:42:06)

It's the legislation, if anything that's at fault. Although a newish 2003 Act, I suspect the initial rules came from the time that cable was being installed in an atmosphere where light touch regulation to "encourage" BT competition was the flavour of the day. Working in local government in those days I remember the "fight" to ensure the multiple cable operators did proper reinstatement, and to get them to pay for the employment of a local monitoring officer (by negotiation) as the installers management supervision was so poor.

The privatised water co's south of the border are going to and (as with any commercial company) HAVE to say "what's in it for us?". If nothing then almost always no deal, and if any liability then definitely no deal.

A few points:
1. I'm fairly sure there will be some form of surety, but again from experience it's a prolonged effort and a long time to get them to pick up liability (after all they're usually banks and insurance companies - known for their promptness and sensitivity to the interests of the community, after the interests of their share/policy holders, aren't they?) or it might even be a parent company guarantee!!.
2. A new company in order to be granted powers (as far as I can see a licence can't be transferred) will need to make an application which Ofcom have to advertise and invite responses, so there's an opportunity for you all!
3. It seems to me this is the reason for the delay and why a date for work to restart cannot be given (If apparent to me this should all have been apparent to Bournemouth Council!).
As usual I expect different rules apply in Scotland.

One further thought, anyone interested could try an FOI to access information/correspondence held by Ofcom, though they'd probably try to withold information because of prejudice to the Code Operators business or even prejudice to their own enforcement (if they bothered to respond, which they have a duty to do, so perhaps that wouldn't show much respect for the law), but I'd like to see the argument!

http://www.thinkbroadband.com/news/4574-funders-for-...

Funders for H2O Networks face Serious Fraud Office investigation
Tuesday 15 February 2011 12:19:33 by John Hunt

A new twist has been found in the changes that have occurred at Fibrecity and H2O Networks, with the companies being sold off by the i3 Group early this year. Total Asset Finance, the principal funder of H2O networks who had been working to deploy fibre networks through the sewer systems in the UK, have gone out of business owing £133 million to the Belgian bank KBC from whom it obtained loans. More than £91m of funding from Total Asset Finance had been used by i3 Group who owned H2O networks along with Fibrecity Holdings.

Toward the end of last year, H2O/Fibrecity announced a delay to fibre roll-outs citing a company restructuring which coincided with the freezing of assets belonging to Total Asset Finance. The Serious Fraud Office got involved and in November secured books and records for Total Asset Finance, which is now in administration. Administrators say they will be looking closely to see if there had been any misconduct by the company or its directors.

The i3 Group sold the UK subsidiaries to a new company City Fibre Holdings in January which is headed up by former President and COO of the i3 Group. Administrators said they were in discussions with City Fibre Holdings over money owed to Total Asset Finance by H2O Networks, but City Fibre Holdings confirm they are not part of the investigation.

"City Fibre Holdings and its management team are not the subject of any investigation. The company is focussed entirely on reorganising the companies and the financial structures that it has inherited. This critical restructuring of these newly purchased businesses will ensure that they can continue to be leaders in fibre-based next generation access networks."
Greg Mesch (Chief Executive) City Fibre Holdings

City Fibre Holdings have previously stated that they intend to continue the roll-outs in Bournemouth and Dundee that H2O Networks had started. Whether this will still be possible without the previous funding for the company and with money owed to Total Asset Finance is going to be interesting to see.

"More than £91M" had been used by H2O and related companies.

What on earth could they have spent it on? What has anybody got to show for it? It was clear that H2O's mass market business model was nonsense because of the cost per connection, but how easy is it for a relatively small relatively low tech business to make £91M disappear?