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BBWO Programme Progress Review 2005 Issue 1.0 January - December 2005
 
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The Welsh Assembly Government's Broadband Wales Programme was launched in July 2002. The aim was to improve the availability, affordability and take-up of broadband across Wales.  
 
A strategic review undertaken during 2004 confirmed that of the eight original targets, four had already been met. Others were on schedule to be achieved before 2007 and others were deemed less relevant in view of the advances in the telecommunications market. As a result of these findings, a new broadband strategy for Wales was developed. The strategy for 2005-2007 was launched in January 2005.   
 
At the end of 2005, the Broadband Wales Observatory (BBWO) undertook an independent review of the progress made against seven of the seventeen targets due for completion. The review confirmed that European Commission (EC) State Aid issues continue to impact on the delivery of some of projects. However, the programme is within agreed 'tolerances' and is on schedule to achieve the majority of targets published in the Broadband Wales Programme Strategy 2005-2007.
 
Note:
 
The Broadband Wales Programme (BBW) is managed to the standards outlined by the Office of Government and Commerce (OGC) in Managing Successful Programmes (MSP). All BBW projects comply with the project management principles outlined by OGC in Prince2.
Broadband Definition
For the purposes of the Broadband Wales Programme asymmetric speeds of 512kbps to 2Mbps downstream (i.e. to the customer) and 256kbps to 512kbps upstream (i.e. from the customer) are considered as first generation or mass market broadband.  
 
Bandwidth between 2Mbps and 10Mbps is deemed to be second generation broadband.  This includes asymmetrical speeds between 2Mbps and 10Mbps downstream and 512kbps and 1Mbps upstream as well as symmetrical speeds (where upstream and downstream speeds are equal).   
 
Very high speed broadband (10Mbps and over symmetrical) is defined as fibre speed.
 

 
 
Target
 
By the end of 2005 the Broadband Wales Programme will:
 
1
Ensure that take-up of first generation broadband in Wales is at least equal to the UK average
2
Ensure that everyone in Wales has access to information that allows them to make a decision on what broadband could mean for them 
3
Award a contract to allow homes, businesses and voluntary sector sites in Wales to have access to first generation broadband infrastructure
4
Issue at least a thousand Business Support Scheme Grants to SMEs and voluntary sector organisations in Wales
5
Create a fund to support the provision of broadband to public sector sites in Wales
6
Develop an agreed Welsh policy for the aggregation of public sector demand for broadband infrastructure
7
Demonstrate to the telecommunications industry the level of demand for second generation broadband infrastructure that exists in Wales
 
Ref.
 
During 2006 the Broadband Wales Programme will:
 
8
Fund two Advisers in each Local Authority in Wales to help implement local broadband strategies (until March 2006)
9
Fund a resilient broadband network linking all 22 Local Authorities in Wales, supporting mission critical and value added applications (until July 2006)
10
Announce and implement the agreed policy in respect of the aggregation of public sector demand for broadband infrastructure
11
Ensure that take-up of first generation broadband in Wales is at least equal to the UK average
 
Ref.
 
By March 2007 the Broadband Wales Programme will:
 
12
Aim to support at least 50 local projects throughout Wales
 
13
Ensure the availability of second generation broadband infrastructure to at least 50% of the Welsh business population
14
Aim to secure the provision of fibre speed broadband connectivity at pre-identified business parks / locations at affordable prices
15
Aim to ensure that Wales has extensive geographic access to competitive wholesale infrastructure
16
Implement an agreed strategy in relation to the provision of a direct connection from Wales to the global core internet
17
Increase international awareness of the Broadband Wales Programme benefits to help enhance Wales' reputation as a place for businesses to locate and grow
 
This document aims to provide a succinct review of the progress made towards achieving the first seven of these seventeen strategic targets.

 
The key findings of the progress review undertaken by the Broadband Wales Observatory (BBWO) are outlined below.  
 

Strategic Target 1

 
"Ensure that take-up of first generation broadband in Wales is at least equal to the UK average"
 
 
The broadband market continued to show positive signs of development during the review period; with significant growth reflecting the growing popularity, affordability and widespread availability of broadband across Wales. From the variety of information sources available, BBWO estimates that the 'gap' between take-up levels in Wales and the rest of the UK has narrowed; down from over three percentage points in 2004 to less than two percentage points during the latter half of 2005.  
 
  • Market analysts estimate that there were 9.8 million broadband connections in the UK at the end of 2005; with xDSL broadband accounting for 6.7 million connections and cable modem broadband accounting for the majority of the remainder.
 
  • In terms of take-up, 9.8 million broadband connections in the UK is equal to 39% of UK homes and businesses having access to the internet via a broadband connection or 16 broadband connections per 100 people (i.e. 16% of the UK population).  
 
  • Whilst detailed figures are not available for December 2005, there is likely to be little change in the rankings of individual countries compared with June 2005. At that time, OECD ranked the UK 5th in terms of market size (behind USA, Japan, South Korea and Germany). In terms of broadband penetration, the UK ranked 13th out of the 30 OECD countries.
 
  • BBWO estimates that there were less than 500,000 broadband connections in Wales at the end of 2005; with xDSL broadband accounting for up to 350,000 connections and cable modem broadband accounting for the majority of the remainder.
 
  • In terms of take-up, 500,000 broadband connections in Wales is equal to 35% of the homes and businesses having access to the internet via a broadband connection or 16 broadband connections per 100 people (i.e. 16% of the population of Wales).
·        
  • When compared with published data for the third quarter of 2005, BBWO estimates that there were 15 broadband connections per 100 inhabitants (i.e. 15% of the population) in both Wales[1] and in the UK[2].
 
These calculations place take-up of broadband across Wales in line with the average for the UK. The calculations for Wales are validated by a survey[3] commissioned by the Welsh Assembly Government's Broadband Wales Unit.
 
 
  • 71% of all respondents had a PC at home
  • 63% of all respondents had access to the internet at home
  • 32%[4] of all respondents had access to the internet at home via a broadband connection[5]
 

Take up of PC, Internet and Broadband by Local Authority

 

WAG BBW Commissioned Residential Survey, ORC International, October 2005
 
Figure 1 - WAG BBW Commissioned Residential Survey, ORC International, October 2005
 
The survey revealed the highest proportion of broadband households was in the Vale of Glamorgan; whilst the lowest proportion was in Anglesey.
 
The disparity in take-up levels may be linked to the length of time that mass market broadband has been available within each of the Local Authority (LA) areas. Equally, the disparity may be due to the socio demographic profile – in terms of age, income and employment status - of the LA. Initial analysis of the key findings from the survey suggests that both explanations are too simplistic. Further research may be required to better understand the drivers and barriers to increased take-up of broadband. 
 
Meanwhile, with over 95% of all sites able to access first generation broadband since mid 2005, it will be interesting to continue monitoring broadband penetration levels in Wales and the UK.
 

Strategic Target 2

 
"Ensure that everyone in Wales has access to information which allows them to make a decision on what broadband could mean for them"
 

Progress Review

 
The Broadband Wales Programme implemented a PR and marketing programme throughout 2005 with the aim of helping to achieve strategic targets 1, 2, and 3.  The activities were specifically designed:
 
a)To raise awareness of broadband and of the Welsh Assembly Government's Broadband Wales Programme.
b)To demonstrate to targeted groups the features, advantages and benefits to be gained from the use of broadband.
c)To encourage potential broadband users in 'blackspot areas' to register their requirements via the Broadband Brokerage Scheme (www.bbwo.org.uk).
 
The main activities undertaken by BBW during the year included:
 
  • Media relations - in support of individual BBW Projects.
 
  • Advertising in local and national press - included local radio, street (48 sheet posters) and train station billboards and buses.
 
  • Banner advertising placed on third party websites - included MSN, Hotmail, Google plus Local Authorities, Assembly Sponsored Public Bodies (ASPBs) and other BBW partner' websites.
 
  • Mail-shot - 10,000 households located within reach of the 35 commercially unviable telephone exchange areas in Wales plus a further 650,000 homes and 16,000 businesses located (in 100,000 targeted postcodes areas) across Wales.
 
  • 'Get Smart: Get Broadband' road-show - supported local and regional events across Wales.
 
  • Broadband technology booklets - distributed to target groups across Wales.
 
  • DVDs highlighting the benefits to be gained from broadband (for consumers and businesses) – distributed to partners across Wales.
 
  • School packs developed with National Grid for Learning (NGfL) – distributed to primary schools across Wales
 
  • 'Taskforce' – team of broadband experts offered advice to individuals and communities across Wales. 
 
  • 'Try Before You Buy Scheme' - supported businesses and ICT Centres located in each of the Local Authority areas of Wales 
 
Success was measured against the pre-agreed objectives. For example, 'campaign closure reports' recorded:
 
a)The response rate to advertising and direct marketing activities – including the numbers of 'click throughs' and 'unique visitors' to websites, the number of registrations on Broadband Brokerage Scheme and the number of enquiries managed by the Broadband Wales Observatory.
 
b)The number of media interviews, the number of positive headlines generated and the volume of column inches generated in the targeted press.
 
c)The number of visitor enquiries managed and broadband demonstrations given at each event.

Strategic Target 3

 
"Award a contract to allow homes, businesses and voluntary sector sites in Wales to have access to first generation broadband infrastructure"
 

Progress Review

 
The Regional Innovative Broadband Support (RIBS) project was established to achieve strategic target 3. The project is designed to improve the competitiveness of disadvantaged regions of Wales by increasing access to broadband in 'not-spot areas'.
 
The 'not-spot areas' - where potential users are unable to access a broadband service –  include the 35 telephone exchange areas that the telecommunications providers deem to be commercially unviable. Other 'not-spot areas' have been identified by the RIBS project team through the use of the on-line Broadband Brokerage Scheme (www.bbwo.org.uk); established in partnership with the Broadband Wales Observatory at Cardiff University.    
 
The market was informed of the 'all-Wales' RIBS initiative in April 2005. The Prior Information Notice (PIN) was issued through www.buy4wales.co.uk and the Official Journal of the European Union (OJEU). Requests for further information were received from 39 organisations and the RIBS project team supplied the relevant information to allow potential bidders time to research potential solutions.
 
On 1st June 2005, the RIBS project gained approval from the European Commission (EC) as compatible State Aid. The procurement process began soon after with the placement of the OJEU advertisement on 13th June 2005. The deadline for submission of tenders was 30th September 2005.
 
Due to a complex negotiation process it is anticipated that a contract will be awarded in March 2006.
 
The delays experienced are not expected to impact on the timescale for rolling-out broadband to sites in the un-served areas during 2006.
 

Strategic Target 4

 
"Issue at least a thousand Business Support Scheme Grants to SMEs and voluntary sector organisations in Wales"
 

Progress Review

 
As part of the Broadband Wales Programme, the WDA launched the SME Broadband Satellite Subsidy Scheme in September 2002. The aim was to help businesses take advantage of broadband - as affordable mass market broadband was only available to 36% of the country at that time. The subsidy, which had a ceiling of £1500 per business, was successfully taken up by 250 companies.
 
In March 2004, following a review, an extended and enhanced Broadband Business Support Scheme was launched.
 
The new Scheme included:
 
  • All broadband technologies (ADSL, Wireless, Cable, Leased Lines as well as Satellite).
  • Voluntary sector organisations (as well as small and medium sized businesses).
  • Support of up to £3000 or 50% of first year costs (whichever was the least) to help eligible organisations access broadband.
 
Due to the success of the Scheme, the strategic target published in the Broadband Wales Programme Strategy for 2005-2007 was achieved in July 2005.  By the end of the 2005, over 1200 grant applications had been approved and processed.

In light of the fast changing market conditions – significant growth in the availability of ADSL broadband and the downward pressure on all broadband prices -  it was decided that the Broadband Business Support Scheme would close during the first quarter of 2006; with grant payments being processed up to 31st March 2007.   
 
From a European Commission (EC) State Aid perspective the Scheme was operated on a 'de minimis' basis.
 

Strategic Target 5

 
"Create a fund to support the provision of broadband to public sector sites in Wales"
 

Progress Review

 
The Connectivity Grant Support Scheme (CoGS) to help improve the provison of broadband to public sector sites across Wales was not progressed during 2005.
 
The target was withdrawn because it was not possible to deliver the Scheme within its project funding timeline due to EC State Aid constraints on broadband projects.
 
The Welsh Assembly Government will continue to seek improvements in the effective procurement and use of high bandwidth connectivity within the public sector in Wales through the Public Sector Aggregation (PSBA) project.
 

Strategic Target 6

 
"Develop an agreed Welsh policy for the aggregation of public sector demand for broadband infrastructure"
 

Progress Review

 
The Public Sector Broadband Aggregation (PSBA) project is considered to be a key enabler for delivery of the aims contained within the Welsh Assembly Government's Making Better Connections: Delivering Better Services for Wales document. That document sets out the vision for public services in Wales. The associated Delivering Better Connections: From Vision to Action document sets out the 5 year action plan for driving forward the changes envisaged in how public services are delivered.
 
PSBA is seeking to establish the most effective way of procuring broadband networks. It aims to achieve 'best value' high-bandwidth connectivity and related services through the aggregation of demand across the public sector in Wales. This will facilitate the achievement of more joined-up public services; offering joint commissioning of services, sharing of support services across multiple agencies and the development of innovative delivery models.  
 
The project board has met regularly to review progress and policy and technical working groups have ensured that stakeholder requirements and end-user needs are taken into account throughout the policy development stages. The team has considered strategic, operational and financial benefits; with a particular focus on interoperability and collaborative working.
 
Key milestones achieved during the review period included:
 
  • Stakeholders engaged and cross-sector working groups established.
 
  • Consultants contracted (end June) to help stakeholders determine current needs and future requirements to be incorporated in the PSBA business case.
 
  • Technical options paper circulated and reviewed regularly to ensure requirements addressed.
 
  • Public sector network owners (including health and education) re-aligned key procurement dates to support potential PSBA outputs.

Before the end of 2005, a paper was tabled for approval at the Cabinet meeting on 23rd January 2006. The paper outlined the proposed policy. The minutes and papers of the meeting (complete or otherwise) are due to be published on the Welsh Assembly Government website during the week commencing 6th March 2006.
 

Strategic Target 7

 
"Demonstrate to the telecommunications industry the level of demand for second generation broadband infrastructure that exists in Wales"
 

Progress Review

 
This target was not achieved during the review period. The key findings of a commissioned study, which is due to deliver an Outline Business Case in May 2006, will be used to inform the development of policy in this area.
 
Two factors led to the decision to commission the study:
 
  • Promotional activities undertaken by the marketing team targeted individuals, businesses and voluntary sector organisations in the commercially unviable exchange and other potential 'broadband not-spot' areas i.e. areas where it may not be possible to access first generation broadband. As a result, the Broadband Brokerage Scheme (www.bbwo.org.uk) - established in partnership with the Broadband Wales Observatory (BBWO) - failed to gather robust evidence of the 'un-served' demand for higher speed broadband.
 
  • Second generation broadband was made available in targeted geographical areas of Wales. For example, broadband users were able to access:
 
  • Up to 3Mbps in NTL's South Wales Cable Franchise area i.e. in the Valleys and along the M4 corridor (NTL began to roll-out its 10Mbps service early in 2006 and announced a 100Mbps trial).
  • Up to 8Mbps from targeted telephone exchanges in Cardiff and Wrexham i.e. exchanges 'unbundled' by Bulldog (the local loop unbundler owned by Cable & Wireless).
  • Up to 8Mbps from targeted telephone exchanges in the Cardiff area i.e. exchanges selected by BT for commercial trial (BT Wholesale has confirmed that it will roll-out the service UK-wide in the Spring of 2006).
 
The Outline Business Case will:
 
  • Assess the current provision of and demand for second generation in Wales.
 
  • Assess the expected provison of and likely demand for second generation broadband across Wales, up to an including 2010.
 
  • Demonstrate the benefits of second generation broadband provision to Wales in a qualitative and quantitative sense (using 100% availability of first generation broadband as the counterfactual).
 
  • Based on the above make recommendations about the need for public sector intervention in the second generation broadband market and outline the return on investment for Wales of any interventions proposed.

 
 
Strategic target 3, RIBS, is on schedule to be achieved by the revised deadline date and a study has been commissioned to assist with the achievement of strategic target 7 (demand for second generation broadband). Strategic target 5 was withdrawn during the review period.
[1] Calculation is based on 450,000 broadband connections in Wales, September 2005
[2] Calculation is based on 9 million broadband connections in UK, September 2005
[3] ORC Residential Survey – CATI, 5500 interviews, October 2005
[4]  Broadband defined as connection speeds of 512kbps and above
[5] 39% of all respondents had a broadband connection at home of 128kbps or above, October 2005