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CORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 1367 -i
House of COMMONS
TAKEN BEFORE the
Welsh Affairs Committee
Broadband in Wales
Tuesday 5 July 2011
Huw Thomas, Ben Underwood and Abby Hanson
Ann BeyNon OBE, Matt Rogerson and Graham Leach
Evidence heard in Public Questions 1 - 60
USE OF THE TRANSCRIPT
1. This is a corrected transcript of evidence taken in private and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
2. The transcript is an approved formal record of these proceedings. It will be printed in due course.
Taken before the Welsh Affairs Committee
on Tuesday 5 July 2011
David T. C. Davies (Chair)
Mrs Siân C. James
Mr Robin Walker
Mr Mark Williams
Examination of Witnesses
Witnesses: Huw Thomas, Assembly Adviser, National Farmers Union (Wales), Ben Underwood, Regional Director (Wales), Country Land and Business Association, and Abby Hanson, Director, Disconnected Wales, gave evidence.
Q1 Chair: Good morning, gentlemen. It is very nice to meet you. I am David Davies, Chair of the Committee. Perhaps you would like to introduce yourselves and then I will call for questions.
Abby Hanson: Abby Hanson, Disconnected Wales.
Huw Thomas: Huw Thomas, NFU Cymru.
Ben Underwood: Ben Underwood, Country Land and Business Association-CLA.
Chair: Thank you very much. Thank you for coming this morning.
Q2 Karen Lumley: To start off, why do you think access to broadband for Welsh homes and businesses should be a Government priority?
Huw Thomas: From an NFU Cymru perspective, we consider broadband to be crucial to economic and social wellbeing in rural areas. We feel that it allows access to services which people might not otherwise be able to access. The data that we have come across from the Wales Rural Observatory showed that 74% of farmers considered broadband access to be very important to their business. Farmers are being urged to market their businesses online more and more, and to market their products online, perhaps if they have a diversified tourist enterprise. So it is crucial for that sort of thing as well.
Another big driver, of course, has been the way that Government are pushing people down the digital route in terms of communication with Government. We have already seen Her Majesty’s Revenue and Customs insisting that VAT returns are completed online for businesses with a turnover of more than £100,000. For practical purposes, such as reporting cattle movements, farmers are obliged to report cattle movements to British Cattle Movement Service within three calendar days-not three working days.
Q3 Chair: Mr Thomas, what would be the speed necessary, though, to fulfil all those obligations?
Huw Thomas: I am not absolutely sure. To access the Government Gateway, Her Majesty’s Revenue and Customs or CTS-Cattle Tracing System-online, you would need a reasonable speed. I imagine that if you lived in a slowspot, even perhaps on 500 Kbps, it might be difficult. So you are probably looking at 2 Mbps just as an indication.
Abby Hanson: One of our colleagues, Rob Boyns, up in north Wales-in south Clwyd-deals with a lot of farmers. He is providing wireless solutions and a wireless connection to farmers because some of them are in slowspots/notspots. According to Rob, broadband speed is not so much of an issue; it is just that connectivity does not drop out. I think you will agree that, if you are halfway through a form and it drops out and you have to start again, that obviously causes problems.
Ben Underwood: Certainly, from our perspective, 2 Mbps is the minimum to run a business effectively. The most entrepreneurial businesses in Wales are increasingly being set up in rural areas. The CLA at the last count had over 250 different types of rural business in our membership. That is everything from mail order companies to architects in converted farm buildings and so on. All of these cannot continue to run without improved broadband. We estimate from our research that about 20% of rural Wales still does not have that minimum benchmark of 2 Mbps.
Q4 Mrs James: I am surprised about 2 Mbps because I have notspots and slowspots in my constituency, which is an inner city constituency. I get 8 Mbps and I think that is wonderful. The difference between 2 Mbps and 8 Mbps is huge, so is 2 Mbps really enough?
Ben Underwood: I reiterate that that is the very basic, but you have to realise that some do not get anything as things stand and many get 0.5 Mbps or whatever it may be. So, no, 2 Mbps is the minimum, but obviously we do welcome the aspirations of the Welsh Assembly for 30 Mbps by 2016-20 for houses.
Q5 Geraint Davies: We have been doing a study on inward investment in Wales. Further to what you have said about the possibility of small businesses locating in rural Wales and establishing businesses of great value which have a global reach, how important do you think that the failure of Wales to get to where we should be quickly enough is in impeding inward investment and economic growth there?
Ben Underwood: It is absolutely crucial. I say that because I am speaking to these rural businesses day in day out. For my sins, last year at the Royal Welsh show I stood in the middle of a very busy walkway with a map of Wales, asking people if they knew of notspots. I have to say that map became very colourful with spots when I asked people that. It is absolutely crucial. I have seen that because normally planning is the biggest barrier to these businesses setting up in rural areas, but, increasingly now, broadband is the chief barrier to rural businesses setting up. So absolutely crucial is the answer.
Q6 Mr Williams: Mr Underwood, perhaps you could give a bit more detail about that map and, in particular, paint a picture across the whole country in terms of the particular difficulties, notspots and speed. In some of the evidence, we were given a rather gloomy map, which suggested that up to 20% of communities across Carmarthenshire, Ceredigion and Powys had lines that were unable to support a speed of 2 Mbps. Give us the bigger picture across Wales where there are particular problems.
Ben Underwood: This is the thing. Notspots appear in the most unlikely places. I expected, I have to say, when we undertook this process with the map, that it would be central Wales perhaps and the more rural remote areas, but it was fairly uniform across the whole of the country. There were some very surprising notspot areas in the Vale of Glamorgan, south-east Wales and the north-east, where perhaps there are larger conurbations and you would expect it to be better. We are looking at a pan-Wales issue here.
Q7 Mr Williams: But the bigger concentrations obviously are in the farming community. Those are the counties where a large number of small businesses are facing these challenges. I suspect on your map they will be-
Ben Underwood: Yes. It also depended on the people who put the names on the map. They were generally farmers, rural landowners and businesses. Generally speaking, the dots were in rural areas, but yes.
Abby Hanson: Could I add other research on to that as well? Analysys Mason, who are consulting on behalf of the Welsh Government currently, outline an intervention area of 48% of businesses and homes. You will not be able to see this map, but there is a whole lot of white across Wales, which is not covered, which is mainly rural, outside the cities of Cardiff, Swansea and Newport. Also, Point Topic, who researched the issue quite thoroughly, have described nine of the Welsh local authorities as among the worst local authorities for broadband coverage in the country, with the bottom five, beaten only by Isle of Harris in the Outer Hebrides. The bottom five are: Ceredigion, Powys, Pembrokeshire, the Isle of Anglesey, and then Gwynedd just slightly above that.
Q8 Mr Williams: How successful are we at identifying those notspots? I know the Assembly have done some good work and there were two notspots in my patch that have been broadband-enabled now. The county council had a scheme whereby locally we were identifying areas of weakness. But, more generally, do we have a clearer picture? Other than the anecdotal stuff which we as constituency Members can present to you and to the Government, how much clearer are we?
Abby Hanson: It is down to anecdotal evidence to get to the final, final element very often. Do people declare themselves or do they just have inertia with regard to gaining access or never gaining access, or have they gone to other technologies such as mobile to get their access?
Huw Thomas: As NFU, we come across anecdotes from our members. I am afraid I cannot offer you much more than that. However, to give you one example, Ben alluded to the fact that you had some quite strange adjacencies really. You might have an area where there is good broadband available and immediately next door to it there might be an area where there is no broadband. One example is a member of ours who farms near Builth Wells. He lives 200 metres away from his son on adjacent premises. Because they are on different exchanges, the father cannot get broadband but the son can. It is a source of great frustration for our member there.
Q9 Mr Williams: How are people in those notspots dealing with the problems-maybe farmers with a cattle movement issue or small businesses doing their tax returns online? What kind of measures are people taking to respond to those challenges?
Huw Thomas: I suppose there are other ways of reporting cattle movements. It can be done by telephone or through the post, but obviously working to three calendar days, not even three working days, is quite a challenge. Some farmers will use an intermediary; they might use an agent or something, but that incurs a cost then on that business. Similarly, I would imagine for VAT returns they might use an accountant, but that would add cost to their business as well.
Abby Hanson: On that point, Jonathan Edwards will be familiar with Capel Iwan and Brian Lloyd in Capel Iwan. Brian has campaigned for a lot of his village to be enabled. If you look at the top line stats, ADSL Max enabled, his exchange would be Velindre or Newcastle Emlyn. He can get broadband. However, on the ground, they would be getting speeds of less than 512 Kbps, which is how we define broadband. Brian has gone to some extreme lengths and is in correspondence with Jonathan, and totally off his own bat he is pushing that issue forward. So people have taken the issue into their own hands and are campaigning.
Q10 Stuart Andrew: Can I move on and talk about takeup of broadband? Ofcom figures show that Wales has taken up 64% and in some places, they are even lower. Why do you think Wales has such low takeup compared with the rest of the UK?
Ben Underwood: I think there are a number of reasons, but the obvious one is that there needs to be greater awareness, first, of the broadband enabling scheme. Obviously, we welcome the announcement yesterday on expanding that. Again, to refer back to the Royal Welsh, in two weeks’ time we will be meeting a lot of rural businesses there and people who are after broadband who will not have heard of the opportunities for this. It is educating on the opportunities for grants but it is also educating, using case studies, on the opportunities for rural businesses that broadband delivers. There are some very good workthrough examples of that in the scheme.
Q11 Stuart Andrew: Do you think enough is being done in business to make them aware of the benefits of broadband?
Ben Underwood: No, I do not think so. Certainly, I have not had many approaches from the Welsh Government to promote it to our membership.
Q12 Stuart Andrew: Is that the same for the rest of you?
Huw Thomas: There is a feeling that perhaps the scheme that the Welsh Assembly Government announced about a year ago was not as well publicised as it might have been. Consequently, the takeup on that might not be as good, although I note that they have now extended that scheme to places with speeds of less than 2 Mbps as of this week.
Q13 Stuart Andrew: Finally, what do you think the consequences will be of low broadband takeup?
Huw Thomas: For some of our members it is going to create real difficulty. It is also going to create difficulties for the economy of Wales if broadband is not more widely taken up.
Q14 Mrs James: Do you think that the UK and the Welsh Government have been sufficiently ambitious with their targets for broadband?
Ben Underwood: The targets are ambitious, but I have to say I seriously question at the moment whether they are attainable. Having met Edwina Hart last week, I firmly asked her how 30 Mbps was going to be achieved by 2016. I have yet to hear of clear proposals of a public-private partnership where the funds to deliver are going to come forward. The broadband enabling scheme, as much as we welcome the efforts, is not going to deliver 30 Mbps to all households and rural businesses, not least because it is funding a lot of satellite schemes which, to deliver 30 Mbps, means a monthly payment which most rural businesses cannot afford to pay. To a certain extent it is shortterm thinking. We wait for some transparent and clear evidence of a publicprivate partnership to go with these ambitious targets that they keep telling us about.
Q15 Mrs James: Does anybody else want to comment on that?
Huw Thomas: I agree with Ben’s assessment. The significant challenge is getting 30 Mbps by 2016. Whether that is a realistic target I do not know. It remains to be seen.
Q16 Mrs James: With regard to the type of services, I have already expressed some concern that I have these slowspots in my constituency. Despite writing and writing to BT, I have not really sorted it out yet and I have some very cross BT customers in my constituency. But I am getting really fast broadband, and I know businesses in the Llansamlet area of my constituency are really concerned because they are reliant on the Skewen exchange. They are tearing their hair out. They cannot download information, they go off, and that is in an inner city area. What is possible? How would a business rely on these things?
Abby Hanson: I personally think that the Welsh Government are doing a good job with regard to their vision. Their vision and the targets set are to be commended. Not everybody needs 30 Mbps right away. I would love to have 30 Mbps but I do not know what I would do with it. They are working, obviously, on a five-year plan. That is going to take a while to roll through. They are currently in dialogue with providers and they are shortlisting later this year to appoint next year. Alongside dialogue with the providers, they are also conducting an open market review, so they are going to the local authorities to get a bottomup feel. Dylan Griffiths up in Gwynedd has done a lot of work on analysing his area, so that will be bottomup information fed straight into that deployment.
Chair: Some Committee members have had to leave for another Committee. They send their apologies for that.
Q17 Jonathan Edwards: I have a speculative question. Are the targets slightly behind the times, because we know in areas such as Barry they are going to have 100 Mbps? Even if the targets, which are fairly ambitious, are achieved, we will still be in the slow lane because the technology of course is advancing very quickly. We will be using totally different machines in five years’ time from those that we currently use for broadband. Is there not a danger that, even if we do achieve the targets, we are still going to be in the slow lane and we are still going to have the same problem?
Abby Hanson: Somebody possibly referred to Cilcennin, which is heralded as a success for the previous RIBS project, which was a public-private partnership with BT and the Welsh Government. You speak to them at Cilcennin. When that was started, broadband of 2 Mbps would have been great. On the face of it, yes, it has been a success, but not everybody in that scheme can get 2 Mbps. They have had to change some of the technology; they are no longer using wireless. The project was completed only 18 months ago and now they are going to have to upgrade again. That is why I think the Welsh Government’s headline targets are to be commended. However, the pace of change needs to have a sustainable infrastructure.
Q18 Mrs James: Do you think RIBS has been cost-effective? Do you think it has solved problems in as many areas as it could have?
Abby Hanson: Profile is a good thing. Is there such a thing as a bad press? Has FibreSpeed across north Wales been returning the figures that it was expected to return? In one way, it raises the profile. However, you could say, and I would agree with Ben, that, if we deliver infrastructure where there is demand, then you will obviously see a quicker return.
Mrs James: I have one friend who refuses to take photographs. If I send her photographs, she just says, "It takes me so long to download them so don’t bother."
Q19 Mr Walker: I am interested in what you think about the balance of the targets between the top end and providing really high-quality business broadband, and then the bottom end and dealing with notspots, and closing those off. Do you think enough is being done to ensure the basic levels of access that people want?
Abby Hanson: The Broadband Support Scheme is designed to mop that up and give people a universal service of 2 Mbps. It would be interesting to see the takeup of the Broadband Support Scheme following Monday’s announcement. There is one thing I am interested in with regard to the Welsh deployment. How do you define a business? The definition is anybody who pays business rates, but I am sure Ben and Huw would concur that a lot of people would be operating businesses from home and potentially not paying business rates. Saying we are going to deliver X amount of bandwidth for businesses and X amount for nonbusinesses is a bit of a vague spot.
Mr Walker: It is a difficult distinction to make.
Q20 Chair: Mr Hanson, what was your view of the RIBS scheme? Was it successful in your opinion?
Abby Hanson: It was successful up to a point, as I say, raising the profile.
Q21 Chair: Raising the profile is what you said in your answer, but surely there was meant to be a lot more to it. A load of adverts would have raised the profile of broadband.
Abby Hanson: If you spoke to the members at Cilcennin, they would say that a lot of heartache, a lot of time, effort and frustration have gone into that. Some of them are satisfied with the scheme and what it delivered, and they have 2 Mbps. However, there are quite a few who are a part of that Cilcennin project which in our modern definitions are a notspot.
Q22 Geraint Davies: I was going to ask you about the extent of mobile broadband coverage in Wales. First, which areas are particularly poorly served by that?
Ben Underwood: I have to say I think mobile coverage across Wales is terribly poor in a lot of areas, and it is very exciting that 4G may become an opportunity in 2012 when we move from analogue to digital TV. That could go towards solving the mobile phone issue and the broadband issue in one. We understand trials are under way. We have not seen the results, but potentially 4G could be a solution for that. In the meantime, yes, as with complaints about broadband, equally it is about mobile phone coverage.
Q23 Geraint Davies: There is 4G and indeed there is 2G as well, is there not? The view is that this should solve all our problems. By what time frame is that?
Ben Underwood: 2012 is the digital switchover and 2014. It will take two years to do the tests and to implement the change in frequencies over to 4G from 3G, which we currently have. If you sat on a train through central Wales now, your 3G would go in and out of reception the whole time. 4G, so I understand, would improve that situation.
Q24 Geraint Davies: You would get universal coverage across Wales with 4G?
Ben Underwood: If you think about people who can get TV, generally speaking, you can get TV right across Wales. I am not a technical expert, but I understand that 4G would ensure that effectively those who could get TV at their house could also then get 4G mobile broadband coverage.
Abby Hanson: It is well worth managing customers’ expectations with regard to 4G. Professor Steve Lewis at Cardiff university has researched the area quite extensively and he is very cautious about upping our expectations of what 4G can deliver. For example, I have to go outside my house to get a mobile signal, let alone data. The construction of buildings as well is an issue. Modern constructions create an effect whereby you cannot get a broadband signal inside. While mobile is particularly exciting for Wales, 40% of businesses do not have a website in Wales. However, most businesses, given the small or medium micro businesses that they are, would have a mobile phone. They would be the lifeblood of the economy in Wales. Therefore, applications and mobile broadband technology are going to be a key opportunity for Wales, however much investment needs to be done.
Q25 Jonathan Edwards: Can I just come quickly to the Welsh Government’s Broadband Support Scheme that was launched last year? You have already touched on it in terms of the Welsh dimension, but I am in close contact, as Mr Hanson was saying, with the Carmarthenshire Community Broadband Partnership. They seemed to be making some good progress at the beginning of the year but things just seem to have stalled since the May elections. Do you think that is because of a deliberate change in Welsh Government policy or is it because of the elections and change of portfolios?
Abby Hanson: Obviously, there has been a change in Government. The community you refer to has some passionate campaigners who are champing at the bit. It is those people who make things happen. The frustrations are there; they are very real. Part of the problem with the Broadband Support Scheme is that people did not know about it, and, secondly, it is the process you have to go through. I understand that Government are perhaps risk-averse, but perhaps they need to review the barriers and the process through which people can apply for the Broadband Support Scheme. There are a couple of issues with it. The Welsh Government say that it was designed for communities. Part of the issue with Capel Iwan is that it was difficult for the communities to apply and get the money via the Broadband Support Scheme. I am not too sure whether the Welsh Government are addressing these issues.
Q26 Guto Bebb: Just very quickly, Mr Hanson, could you explain what the difficulties were for the communities in applying for the funding? Was it the paperwork or the lack of an individual whom they could talk to?
Abby Hanson: I could forward some of Brian’s stories, if you like, around it. It was the paperwork; having to pay up front-the actual process whereby communities have to pay up front; and then time delays. I do not think there was an official SLA, a standard lead time, but where the return of moneys is expected to be 10 days it has sometimes dragged on into months. It is not really the process; it is the time it has taken as well, for Brian in particular, to get that accepted.
Q27 Chair: What are the likely costs of 4G going to be to the consumer? Is there any way of estimating that? Do you think they will be significantly more than current coverage for 3G?
Ben Underwood: I do not think we are at that stage.
Chair: It is too early to say.
Ben Underwood: I think so, because the tests are ongoing, so I understand, and I do not think there is any conclusion about whether it is the solution or not. It is an exciting proposition at this stage.
Q28 Chair: Do you feel that this is something the Welsh Assembly Government can do alone or is it important that it is working with national Government to get broadband in the rural parts of Wales?
Ben Underwood: I have to say we have an opportunity here with the funds. We have some more flexibility with our funds from the Comprehensive Spending Review. We have more ambitious targets, and a part of devolution is the fact that we can get on and be more constructive and efficient in the way we deliver it. All the tools are there. We need to get on and do it. We have learned from what Cornwall has done, and I suppose that is why I come here today to say that we are waiting for the action.
Abby Hanson: The convergence between mobile and fixed is not to be underappreciated because, given the topography or the geography of Wales, to quote Ann Beynon of BT Wales, if Wales were flat it would be bigger than England. Mobile operators are just coming to the party with regard to this. I went to a broadband event recently and for the first time a representative of O2 was there. The appetite is there, but mobile needs to go back over a fibre network. It will need to backhaul over fibre. Step one: what the Welsh Government is doing with regard to procuring fibre will provide a backbone for future technologies, 3G and 4G.
Q29 Jonathan Edwards: You mentioned Cornwall. What lessons can we learn from their pilot?
Ben Underwood: The key there was the way that the public and private partnership worked together. Obviously, when we get to the crux of the matter here, we are talking about the final third areas where the economic model does not work for a private infrastructure company to deliver to those dwellings. Therefore, we need to have a system where public funds ensure that can be facilitated, and private funds are used in areas where we can determine the demand aggregation and set up an economic model that works for the private companies. That partnership working is what they learned from Cornwall. Having had discussions with BT in Wales, which seems to be champing at the bit, that is something that we need to get on with in Wales.
Q30 Mr Walker: Given the problems of geography and given that we are talking about the final third, do you think there is a role for satellite broadband in providing access to those areas or do you think that is just a technology which is not up there?
Huw Thomas: Satellite might offer some sort of stopgap until something else can be done, but there are of course limitations to what satellite can do. The average speed of satellite broadband is about 3.6 Mbps.
Chair: That is still more than we are getting, though.
Huw Thomas: It is, yes, but as things advance people might be looking to get higher speeds still in years to come. You also have issues such as drop-outs of signal, limits to downloads, latency, which makes it unsuitable for certain applications, the delaying of them, and expensive contracts as well. It is more expensive than conventional broadband.
Q31 Mr Walker: Presumably, part of the cost is the factor of scale and the number of users. Do you have any figures for current usage and the scale of usage in Wales?
Ben Underwood: Of satellite technology?
Mr Walker: Yes.
Ben Underwood: No, I do not. I have to say for a period of time we did a deal for CLA members with a particular contractor installing satellites and it was very popular. I do not know a figure, but there is no doubt that for bigger bandwidths now the monthly costs are a lot higher than fibre technologies and so on.
Q32 Mr Walker: I noticed in written evidence we had from Disconnected Wales it came pretty much at the bottom of the list of solutions. Is that largely related to service or price?
Abby Hanson: Service, I would say. The symmetric and the latency would be a key issue. Price is going to depend on the service provider, but it is very much a plaster, just a quick fix. We need to be aware of that.
Ben Underwood: Where possible, with the broadband enabling scheme, if people can pool funds in a community and deliver a more sustainable technology, a WiFi system or whatever it may be, that is perhaps the way forward, rather than individual satellite projects.
Q33 Chair: Would I be simplifying matters a little if I surmised from this that satellite might be a last ditch option for certain areas but once you have that, the service is not going to improve beyond the 3 Mbps that you have just suggested? So, if at all possible, it would be better to utilise other options. Is that an oversimplification or is it a fair point?
Huw Thomas: The 3.6 Mbps figure I quoted was just an average speed at the moment. I am not sure-
Chair: My point is that it reaches a limit fairly quickly and, beyond that, we are never going to get 50 or 100.
Ben Underwood: It becomes uneconomical at that size. You can, theoretically, but it becomes uneconomical.
Chair: It is reasonable as a last ditch approach for the most remote areas but not something that is ideal for most areas.
Ben Underwood: That is spot on, yes.
Q34 Mrs James: Several of you have mentioned BT during this hearing-I have mentioned them myself-but there are other providers in Wales. Virgin is running out superfast broadband across my constituency, which I really welcome. But is there not room for the other operators as well?
Abby Hanson: The likes of Virgin are very much looking to deepen their customer relationships and not looking to expand their network. Cardiff, Swansea and Newport would be looking at it as a triple play or quad play provider. By that, I mean they would do your calls, your lines, your broadband and potentially your mobile. That is their main strategy. While we have a good old go at BT, BT’s infrastructure does go right the way through Wales.
I would just like to echo what Ben and Huw say about community projects in rural Wales. If you had publicprivate partnerships, they can say, "This is the demand", like the work that Brian has done. "This is how much people can afford to pay", because cost is an issue. Then they can go to the relevant providers to say, "This is how much budget we have. This is how many people we have and they are willing to sign up for X amount of time." That, surely, would be a better business proposition, right from the bottom up.
Chair: Happily enough, BT and Virgin are in the room at the moment. It is shaping up to be quite an interesting verbal duel in a minute. We will leave it there, gentlemen. Thank you very much indeed for coming along and giving us evidence today. Feel free to stay behind and listen to what BT and Virgin have to say in a moment if you wish.
Witnesses: Ann Beynon OBE, Director, BT Wales, Matt Rogerson, Head of Public Affairs and Policy, Virgin Media, and Graham Leach, General Manager, FibreSpeed, gave evidence.
Q35 Chair: Once again, thank you very much indeed all of you for coming along. Feel free to introduce yourselves, although some of us are already quite well known to each other. In fact, I was thinking that perhaps I should have put Graham Leach in the middle.
Ann Beynon: Shall I start as the rose in the middle? My name is Ann Beynon. I am the BT Director for Wales, Cyfarwyddwraig BT yng Nghymru. Diolch am y croeso.
Graham Leach: I am Graham Leach. I am the General Manager of FibreSpeed, the network which runs across north Wales.
Matt Rogerson: My name is Matt Rogerson. I am Head of Public Affairs and Policy at Virgin Media and I have been working very closely on this whole issue.
Chair: Welcome all of you. It is so nice of you to come before the Welsh Affairs Select Committee. We do appreciate your realisation that we might have a role to play in securing broadband across the whole of Wales.
Q36 Geraint Davies: I want to open up by simply asking what the key factors are that currently prevent private sector investment in the final third of the country.
Ann Beynon: In terms of BT’s existing investment in Wales in superfast broadband, we already have 31 exchanges announced, which will be 280,000 or 300,000 Welsh people. That is part of our overall UK rollout, which will get to five million people now with the announced programme. By 2015, 66% of the UK will have superfast broadband. That means speeds delivered over fibre up to 40 Mbps.
With regard to the rest of Wales, we believe we will be lucky to get 30% of Wales covered by commercial deployment. That is because of the social economic situation in Wales. It is the cost as well because of the demographics. Whereas we are investing more in fibre than any other telco in Europe-£2.5 billion in an adverse market, in a very competitive market, and it is our investment that underpins the whole of the industry-we have to be honest and say that, without a publicprivate sector partnership in areas that are hard to reach like Wales, then we are going to get parts that are going to be disadvantaged and that would be a terrible shame.
Graham Leach: Could I just say where we have had some success with private sector investment? Of course, FibreSpeed is partly funded by private money. Also, because FibreSpeed is an open access network, the Welsh Government invested in the backhaul fibre, which the previous witnesses said was a prerequisite for ensuring that there was some further deployment. We have found now that small service providers are coming in and investing off the FibreSpeed network to cover a number of notspots. As an example, one service provider has invested £500,000 of private money to run off the FibreSpeed network to start to cover notspots in north Wales. That was only something that FibreSpeed was asked to look at about six months ago and already we are starting to cover a lot of notspots with wireless connectivity which is privately funded. I believe that having the Welsh Government investing in a substantial open access backhaul network will enable other providers to come in to give that last third of investment.
Ann Beynon: Could I respond on the open access issue? We need to be clear here what we mean by open access. It has been agreed with the UK Government and Ofcom that BT should provide the main access network for the UK industry. We did that by creating Openreach, which is a standalone separate entity within BT, hermetically sealed from the rest of the business. That allows every single commercial retailer to come to BT Openreach and ask for services on an equal basis. That has created competition, which means that when you have a BT open access network it is genuinely open access with published prices and understood technical interfaces that are consistent. That is why we bring with us TalkTalk, Sky, major ISPs, and the little ISPs at a community basis. You are not going to get those major players into the FibreSpeed network, with all due respect.
Q37 Chair: Ms Beynon, you have very cleverly anticipated some future questions. Happily, it was one that I was going to ask. You will obviously know that there has been some suggestion that BT have not been quite as open in providing open access as some of the people wanting the access might hope, and even that BT’s charges for this are around four times their possible costs are. I am not an expert and I imagine there is more to it than this, but I can imagine a man coming along to a duct and going in there and fixing up some wires. I cannot really see how it would have cost BT anything at all. Perhaps you can enlighten me.
Ann Beynon: I think you are referring to the ongoing discussion on access to poles and ducts. We absolutely welcome the concept of opening up our ducts and poles to other providers. That is an ongoing debate between ourselves and Ofcom. We have not agreed the pricing. There is certainly going to be room for manoeuvre on the pricing. We have two trialists working with us at the moment. You must remember that when you do something quite dramatic like using poles and ducts and allowing other people into that infrastructure, which is critical and has to be protected for the customers’ benefit, you have to do proper trials. Those trials are ongoing. The discussions with Ofcom are ongoing and the engagement with the industry is ongoing. It is going to happen. There is a negotiation and we cannot predict what is going to happen.
Q38 Chair: When do you think that negotiation will end?
Ann Beynon: It is currently ongoing. We would hope by the autumn. It is difficult to tell because it is a negotiation. There are trials and we need to see what the results are. But all the pressure is on to get that sorted.
Q39 Chair: Obviously, the engineers who need access to these poles and ducts and things are not going to be able to do that until there is a final agreement in place, so it is going to delay things slightly, perhaps only by a few months, if there is an agreement by the end of October.
Ann Beynon: Yes. But, at the end of the day, even if there is access to poles and ducts, there is still a whole raft of products that BT offers on a wholesale basis, through Openreach and also through BT Wholesale, which is currently there now and can be accessed. It is not limiting the amount of activity. In addition, you should remember that, in terms of the cost of duct and pole, the actual cost we charge is less than 10% of a total business case cost. To say that people cannot build a business case is not correct because our element of that cost is very insignificant.
Q40 Chair: Lastly from me because I was going to ask these questions later on, I see lots of adverts all the time for people advertising superfast broadband speeds, but I know that most of them, apart from the ones on the Virgin network or the ones that are offering wireless, are coming off the BT infrastructure. Is it possible for another provider, using BT infrastructure, to supply faster broadband to a house or business than the broadband that BT is supplying?
Ann Beynon: No. What happens is that we provide a basic infrastructure, and when BT Retail contract with the customer we give that customer an indication of exactly what kind of speed our customers can expect to have. Not all the providers do that and they mistakenly give the impression to the customer that they will get the "up to" speed, which is not correct. We do not do that. We provide a baseline speed. We inform all our customers on a wholesale basis what that speed is. The only way you can make a difference is the contention. How many customers share a particular line could make a difference to the speed. That is a commercial decision-
Chair: But that would be the same no matter which provider was providing.
Ann Beynon: That is a commercial decision of the retailer. Retailers can choose different contention rates. That is their choice. That is the only thing that could make a difference.
Q41 Geraint Davies: I know we have gone down the path some way, but we have already mentioned the main problems in terms of Wales, namely, the rural nature and the geography and this sort of thing. But I was just wondering whether the UK’s broadband strategy adequately addressed these problems, to what extent the Welsh Government can supplement that and what the private contractors are doing. Maybe Matt could come in on this.
Matt Rogerson: Absolutely. If I could just step back in terms of the barriers as well and the problems you have in Wales, clearly you have the geographical challenges. But even if you had the flattest country on earth, you would have the problem of civil engineering, which accounts for about 80% of the cost of building a broadband network. If you want to talk to a company that knows how much it costs to build a broadband network, speak to Cable because we went bankrupt a number of times. What you have to do then is try and negate that 80% as much as possible. We strongly believe that, to do that, you need an infrastructure market in that rural area, in the majority of Wales, to be honest. You need access, for example, to electricity infrastructure, BT infrastructure, and to water and sewage infrastructure.
What you do then is move away from an exchange model, which is good for telephones but not very good for broadband, and you move instead to a point-to-point fibre model, which is the sort of technical architecture that Fujitsu are looking to propose in Wales. In doing that, you can have a much more pragmatic approach in how you get from A to B. You can use the infrastructure along the routes and you can pay infrastructure suppliers like BT or electricity companies, give them a revenue stream and solve the issue of notspots and low broadband speeds for the long term, not just for the next couple of years.
Q42 Guto Bebb: This is a very open question but I am sure the Chairman would be very grateful if you could make your answers brief to the first one. It is a question for all three of you basically. How do you see your company’s role in ensuring that superfast broadband is rolled out throughout Wales?
Ann Beynon: I have to be fairly guarded because of the ongoing procurement that the Welsh Government is undertaking at the moment. But our view, absolutely positively, is that Wales needs as much fibre as possible. It is not good enough to provide wireless. Wireless is not going to provide 30 Mbps on a reasonable basis. Ten to 12 Mbps is more reasonable and there is evidence to that effect. Again, in terms of the European tables, it is the fibre that counts when we are considering where we are in the European league. Our approach would be as much fibre as possible for as much of Wales as possible. There will inevitably be a small element of infill, and, as we mention in our testimony, we are currently trialling with Everything Everywhere a new technology-4G, which was mentioned previously, and will be much better than the current 3G available in Wales. It will allow you to share a network for both mobile and wireless. That is going to be the way forward, because what you do not want in rural Wales is so many masts all over Snowdonia that it looks like a hedgehog, to be honest with you.
Graham Leach: I would disagree slightly with Ann. The main part of the investment where the Welsh Government should put its money is in the backhaul: large fibre networks which connect strategic points to provide an open access network from which service providers can lay both fibre and wireless. We have seen now in the last few months a significant takeup of wireless technology off the FibreSpeed network in north Wales, which is beginning to serve rural communities now. That is important. We heard from the previous witnesses that aiming for 30 Mbps is fine in five or six years’ time, but before all this fibre is rolled out what are those communities going to do? The initiative of the Welsh Government to expand the broadband scheme yesterday was welcomed. If those applications can be processed faster, we can set up more wireless technology, more infrastructure across north Wales, and we could light up, with wireless technology, some of the more rural areas of north Wales in the next 12 months of the Welsh Government’s investment in the high capacity fibre backhaul that they have already made.1
Ann Beynon: There is already BT fibre across the whole of Wales. It is there now; it exists. There is an issue about the end user scheme. It is being awarded under a system called "de minimis." That is the state aid process they are using which is applicable to SMEs. To make it clear, BT would not be able to apply for money under that scheme because of de minimis. There is a limit of €200,000. Any company, whether it is the retail end or the wholesale beneficiary, cannot accept more than €200,000 under that scheme. That is why BT is not participating. I just wanted to make that clear. It is not because we do not think it is a great idea. We think it is a great idea as a stopgap, but this wireless end user thing is a stopgap. It is not going to give you the legacy support you need. It is not going to give you that future path-the legacy you need for Wales. It is not future-proof. You absolutely need fibre and you need to move towards fixed fibre. We know in our labs that that fibre already goes up to 100 Mbps and it will go even further. Fibre will absolutely give you massive bandwidth. It is an investment in the ground for Wales; it is there for perpetuity. It is absolutely what Wales needs.
Graham Leach: Provided it can be done in a reasonable time frame. That is the issue.
Matt Rogerson: I would just pick up and say that Wales should invest in aerial rather than the ground. Going back to what Virgin Media does, we have 300,000 homes on our network in south Wales. We are rolling out a 100 Mbps broadband service to areas like Barry, Cardiff and urban areas across south Wales. Of all the ISPs that are operating at the moment in Wales, Virgin Media has the best incentive to expand our services throughout the rest of Wales. I disagree with the witness in the last session that we want to stay on our network in the south of Wales. We very much see growth through the rest of Wales as a target.
Whether we build that network ourselves or whether we are an anchor tenant on a network that is built through the rest of Wales is a debate. We would prefer to be an anchor tenant rather than build our own network. But to be an anchor tenant and provide the sort of quad play services that we want, at 100 Mbps today, we are trialling a 1.5 Gb connection at Shoreditch in East London. That is the way forward. To provide those sorts of services going forward you do need a fibre-rich network and that does not mean 10% or 20%. It does not mean Fibre To The Cabinet. It means primarily point-to-point fibre. You have to examine how you can reduce the cost of getting that point-to-point fibre to as much of Wales as possible to maximise taxpayer value for money.
Q43 Chair: You are rolling that out at the moment, are you? Are there going to be more people on Virgin in the next 12 or 24 months?
Matt Rogerson: What we have been doing now is proof of concepts. In Crumlin in Caerphilly, we recently undertook a trial where we worked with Surf Telecoms, which is a subsidiary of Western Power. We took a fibre, wrapped it around the infrastructure of Surf Telecoms from our head end, which is where we play out our TV service and our broadband connections, 14 km over to Crumlin. Then across that piece of fibre we were able to provide our cable services using what is called RFoG technology, which basically is two lasers that sit each end of a piece of fibre. We were able to provide that, and on the same piece of fibre another provider such as BT or TalkTalk would also be able to provide a service. We were trying to ascertain how the relationship would work with other electricity companies, how the technology works, and whether it was possible?
Once we had proved that concept, we have been talking to a number of players in the industry about how you can get that fibre-rich point-to-point network out there. As we said earlier, PIA is a crucial element of that, as is access to electricity infrastructure and other infrastructure. That is being worked through at the moment. I do not know whether it is being worked through at the right time. I would argue that the infrastructure element should have been worked through before the procurement process started, but that is another debate.
Ann Beynon: Can I mention the date? There is absolutely no problem as far as BT is concerned in getting this done by 2015.
Q44 Mr Williams: With the Crumlin example, to what extent does that actually prove cost-effective compared with other ways of getting the fibre?
Matt Rogerson: It was less about the cost. Primarily, we did that to make sure there was no disturbance to the services on that piece of cable, that it worked and that customers there were able to get 50 Mbps and a full TV service. In terms of the cost, that would itself rely on the relationship between the network provider and the Distribution Network Operator or the electricity company. On whether they are allowed to make money from doing that sort of activity, that in itself is something the Government are looking at in terms of whether they are allowed to make money or whether it goes back into the general pot, which in turn would mean that you as an electricity consumer would pay less for your electricity. The electricity companies want to work out whether they can gain a revenue stream from adding this service to the suite of services they already provide.
Q45 Jonathan Edwards: We have already had a brief discussion about the importance of BT’s ducts and poles from a BT perspective. Addressing this to the other two witnesses, why is gaining access to that network so important, and, if you were to get access at reasonable prices that were sustainable for your businesses, what would be the outcome in terms of superfast broadband delivery in the final third?
Matt Rogerson: I have already mentioned the 80% figure. I think that holds. It might be even higher in Wales. Physical Infrastructure Access (PIA) forms part of the suite of tools that you have in the rural areas, which, as I say, are the electricity company, sewage and BT PIA. It is not just the challenge of getting a piece of fibre out to your community and then getting it round the houses. It is elements of the PIA price such as pole drops. If you have a street with telegraph poles along it-and we trialled in Crumlin the approach that certainly Fujitsu talked about in the past-if you get a piece of fibre to that pole, you then drop a fibre from that pole to a house, which then connects the house and the broadband connection goes in there.
Under the current BT PIA reference offer, the cost of each pole drop to each house is around £20, and I have seen analysis that suggests it should be more around the scale of £2.50. So there you see the difference between £2.50 and £20. If you add that up across every property in Wales to which this network would go, you see how the economics shift quite quickly.
Graham Leach: The key is access to the BT poles and ducts infrastructure at the right price. One of the big concerns from the Welsh Government perspective, I believe-it should be a concern from the Welsh Government perspective-is that the current procurement is being done before the BT pricing of poles and duct infrastructure has been fixed, which means that it is significantly more expensive for other players bidding against BT in the Digital Wales programme to build the infrastructure than it is for BT. I am not involved, and FibreSpeed is not involved, in the Digital Wales procurement because we are already a Government intervention project so we cannot bid into it. But the industry believes that the Digital Wales procurement cannot be finalised until the final pricing for BT poles and duct infrastructure has been produced, otherwise we believe the Welsh Government may not get full value for money in that competition.
Matt Rogerson: I should say this is not a tension which is unique to Wales. It is a tension throughout all the procurement processes across the UK. Basically, the company that is most likely to benefit from hundreds of millions of pounds is in charge of the product. The absence of a decent product will mean that no player other than BT can enter procurement processes. Until that fundamental tension is resolved, I cannot see how a competitive procurement process will happen.
Chair: I think we had better let Ann Beynon come back on that.
Ann Beynon: I have said earlier, it is 10% of the total cost to any supplier. So if you cannot construct a business case on that basis, that is a bit sad. It is true to say that pricing is not fixed. You are assuming a pricing mechanism that has not been agreed. There is going to be flexibility on pricing. There is a discussion that is live, and that is going to go on. To suggest the Welsh Government should wait until that decision is unfair. You might as well say let’s wait until the spectrum auction; let’s wait for something else. Wales needs to get on with this. We already have Cornwall up and running and we should be finished by 2014. Northern Ireland is done and dusted. Wales needs to get on with it. Wales could be the first fully enabled fibre nation in Europe if it got on with it. So I do not see that argument for keeping Wales back by using spurious delaying tactics, I’m sorry.
Graham Leach: I am not sure that it is a spurious delaying tactic. As my colleague from Virgin Media has said, this is a wider industry tension about whether other players are able to bid on a level playing field for BDUK funding to roll out these next generation access networks, which are vital to Wales and elsewhere in the UK.
Q46 Jonathan Edwards: We know there is a discussion between BT and Ofcom about this whole issue. Are other stakeholders engaged in this process?
Ann Beynon: In the trials, yes, absolutely. We are inviting trialists to join us to work out how this works best.
Q47 Guto Bebb: I am not seeking to continue the argument, but you used the term just now "fully fibre enabled". But the evidence BT presented said that, with public financing, you could extend fibre connections to 85% or 90% of Wales. My concern as an MP representing a fairly rural constituency is where the 10% to 15% of houses or properties or businesses which are not so linked by fibre would be located.
Ann Beynon: The reason why there needs to be one supplier to do the whole of Wales is so that that can be planned. It is almost impossible to predict where those spots would be. It is probably likely they will be very rural areas.
Guto Bebb: It would be rural areas.
Ann Beynon: I would imagine so. Without having done detailed planning, it would be difficult to tell. It is a question of balancing the rollout against the cost. If people had unlimited budgets you could do the whole of Wales, but one has to be realistic. In terms of the available money there, you have to accept there is a small element of what we would call infill. But my point would be that you need to get the fibre to 90% plus. That is the priority. If you look at what is being proposed by FibreSpeed, part of Wales has already been taken out because they are saying that 40% of north Wales can be done by wireless. I do not think 40% of north Wales should be done by wireless because that immediately reduces that percentage you are so concerned about. You need to have fibre out in north Wales on the same basis as in Carmarthenshire. Why should north Wales be worse off?
I agree when you say it a challenge, but the E&E (Everything Everywhere) solution I mentioned earlier on will help. There are other things that will help. Satellite has a small part to play. There is also copper-based technology that can be used in extremis. There is a whole raft of things. There is also the possibility that one could work with the farming unions, for example, and have them help us do some of the digging. That is something we are looking at. We have not decided yet how it would work, but on greenfield sites that is what we’d do. We would give the developer the kit, "This is the spec for that site", and they will put the infrastructure in for us. That could happen. So there are all kinds of things for that last 10% that we should not discount. We should try and be innovative and think of new ways of doing this.
The other thing we need to do is get community ISPs involved. Again, the only way you can get community ISPs involved for people like Disconnected Wales would be to have this competitionready, BT-based infrastructure because that makes it easier for them to intervene and get on board.
Graham Leach: I disagree with some of that.
Matt Rogerson: It would be interesting to know of that 90% what percentage is Fibre To The Home and what percentage is Fibre To The Cabinet, because Fibre To The Cabinet solutions undoubtedly give an incremental improvement in the performance of broadband. Unfortunately, the problem with Wales and a lot of areas across the UK is, to start with, that the nature of the telephone system means that the wire is copper. Copper is not a good conductor of broadband signals. If you have seen a graph of copper signals, it goes down very sharply. Eddie "The Eagle" Edwards would have fun on that. But, also, the issue is, in terms of line lengths, that the further you are away from an exchange, even an exchange that now has fibre going through it, you find that the benefit is tiny. What you need is as much Fibre To The Home as possible-perhaps Ann could confirm what percentage of that 90% will be Fibre To The Home-so that you make sure that the speeds are gig plus from day one and there is an upgrade path not just for the next five or 10 years but the next 20 to 30 years.
Q48 Chair: We are going to have to be a little more concise to get through this. Ms Beynon, in terms of British Telecom’s record of projects with the Government, what is your assessment of the RIBS project? What was the total amount, if I may ask, of public funds that BT received for that and how many people saw an improvement in their broadband speed as a result?
Ann Beynon: We mentioned in our evidence the number that saw a benefit from the scheme.
Chair: Was it 20,000?
Ann Beynon: No, no.
Q49 Chair: That was for the additional scheme. Remind me. Refresh my memory. I saw there were 2,000 on the additional scheme, which has just started and is running in conjunction.
Ann Beynon: That is not the RIBS contract, is it, to which you are referring?
Ann Beynon: Thirty-five exchanges have benefited. The original contract was for 35 exchanges.
Chair: 8,500 people, I am told.
Ann Beynon: There we are.
Q50 Chair: How much public money did you receive?
Ann Beynon: In the end, the amount of public money we received was less than £300,000 for the exchange enablement part of the contract. I cannot really disclose in detail the rest of the contractual information, but we also undertook those 10 notspots. You have to bear in mind that the contract was for only 0.5 Mbps broadband, so we looked at addressing other parts of Wales by providing different technologies, but then that would have meant implicitly speeds above 0.5 Mbps and that was not contractually possible. In terms of keeping to the contract spec, we did extremely well. We did an additional 10 notspots, which was 50/50 funded: 50% of the funding came from BT and 50% from the Welsh Government. The cost per head for the Welsh Government for those people was extremely low, I would suggest. I can see that they are getting basic broadband and now the world has moved on, which is why the RIBS contract came to an end in March and there is therefore a new procurement.
Q51 Mr Williams: What is your assessment of the number of notspots remaining?
Ann Beynon: It is difficult to tell. One has to be careful-until you do actual surveys, you do not know. I would not like to put a number on it, to be fair. It would be wrong to guess. All I would say is that you need to solve them by having a proper rolled-out programme across the whole of Wales, not by addressing them one by one, otherwise you will have a kind of a hotchpotch effect.
Q52 Mr Williams: Do you think that was a miscalculation when the RIBS scheme was initiated?
Ann Beynon: I do not think so. You have to go back quite a long time. When RIBS was created, 0.5 Mbps was deemed to be pretty adequate; what most people talked about as being broadband was 0.5 Mbps. Having done that and given an additional 8,000 people that capability and another 1,000 through the notspot work, that was doing a job that was fit for purpose at the time. We certainly fulfilled more than our obligations because we had no contractual obligation to address the notspots. We chose with Welsh Government to do that as an additional piece of work.
Q53 Mr Williams: I do not denigrate that and we talked before about some communities in my area that have specifically benefited. You mentioned £300,000 on the contract that BT received. Is it a matter of regret that, of a pot of £2 million put forward by the Assembly on this bit onwards, only £600,000 was spent?
Ann Beynon: You are making the assumption that the Welsh Government paid the same amount for the original contract.
Q54 Mr Walker: Just coming back to the Crumlin trial, how big an opportunity do you see that as being to compete effectively, and roll out the existing BT infrastructure, and what sort of time period do you see that being available?
Matt Rogerson: Ann is absolutely right that the Welsh Assembly is approaching this in the right way in terms of a contiguous area of the country being available for a provider to come in there. In proving that it works, we are keen to work with network providers. As I say, we are not necessarily going to build it ourselves, but with that sort of technology of jumping from electricity pylons through to the BT PIA, through to sewage, you could see that providing a transformational network in Wales with a lot of Fibre To The Home-the majority Fibre To The Home. The rest are sub-loop unbundled, wireless or satellite technologies.
Q55 Mr Williams: Is that something which is five years or one year down the line?
Matt Rogerson: Fujitsu are bidding for the funding in Wales. Obviously, I similarly cannot discuss the elements of their bid, but what I have seen from their bid so far is that it is very ambitious, that it would drive a step change in broadband provision across Wales and it is not just doing the same as has been done elsewhere around the country. It is doing something that is very different and world-leading. I agree with Ann that BT has an open access obligation. The open access fibre provides a platform over which providers can provide not just an IP-based technology but also RFoG technology or any other technology they want to provide over that service. What you buy instead of a service is a frequency over which you provide that service so that would be truly transformational in the context of Wales.
Ann Beynon: Can I just mention that, whereas Virgin Media can buy BT network, BT cannot buy Virgin Media network? It is not reciprocal.
Matt Rogerson: I have a couple of points to add there. The first is that we work with a number of large ISPs who are BT’s rivals, providing them with capacity across the country. The second point, which Ann skirted around when she talked about Ofcom asking them to open up their infrastructure, is that the reason for that is because BT is dominant in the wholesale local access market and the obligation on BT to access the infrastructure, just as the obligation on BT to provide services to other providers is because they are dominant and it is competition law and nothing else. It is not through them doing it of their own free will.
Ann Beynon: I do not think that is quite fair. We have welcomed competition all along. The reason why we have the most competitive market in the UK and are continually reducing prices is because we have embraced competition. We have over 400 service providers using the BT network, so that is pretty open. That is quite good business. We should all be celebrating that. But, also, I would just like to mention this on rollout. Our rollout at the moment is significant. It is as much fibre as they have in Singapore now every quarter. We have to industrialise the process, so there is a risk if you do not have an industrialised process that is proven, particularly as we face challenging times towards 2015. My argument would be that we can show in BT we know how to do it. We have the people, we have them trained, and we have the track record to show that it can be done.
Graham Leach: Can I just say that BT and Virgin Media can buy FibreSpeed fibre and products because we are truly open access? We will allow people to buy dark fibre; that is unlit fibre. What that means is that at the moment there are two projects running which are linking Dublin through to north Wales. Those projects will bring the opportunity for data centres and for expansion of business parks in north Wales, particularly on Anglesey where the new nuclear site has been announced. Without FibreSpeed and without the access to FibreSpeed’s dark fibre product, those projects would not have been able to get off the ground.
Q56 Guto Bebb: Just to go back to Matt. If it is possible, in terms of the use of the utility infrastructure and some of the work in south Wales, are there any regulatory or legislative issues that you have to deal with in terms of using that infrastructure?
Matt Rogerson: There are. One of the key elements was making sure that it was safe. There is a technical technique called hot gloving, which sounds like a Seventies record but it is not. Checking that that works with communications providers as well as electricity companies, working out whether the priority is the electricity supplier or the broadband supplier, and then looking at whether electricity companies are allowed to make money from this activity are all clouding this taking off in a big way. To be fair to the electricity companies, they are trying to work out whether this is going to be an industrialised process or a series of trials. If you get to a position such as in Wales where you have a procurement for the whole of Wales, you can see that that is an industrialised process and you see then that there would be an opportunity for the electricity companies to create that revenue stream and work with the network provider to develop that product. So I do not think the barriers are insurmountable, and they are being worked through at the moment, but there are still some there.
Q57 Chair: That brings us quite close to the end of our session today. You have answered a lot of the questions that we had down here. Does anyone else wish to come in on anything or make any closing comments?
Ann Beynon: Can I make an additional comment? I just wanted to try and address this issue of dark fibre, if I may.
Chair: I am not absolutely certain what the difference between dark and light fibre is.
Ann Beynon: I thought so. That is why I wanted to explain. There is a quotation from Ofcom that dark fibre is ‘unworkable and unnecessarily expensive’. The problem you have is that all major providers put a lot of investment in their product set to make sure that it interfaces easily with the BT open access infrastructure. That is quite an expense for any company because you need to build billing systems and make sure the technology fits. It is like having a gauge on a railway where the railway provider agrees with the train companies what that gauge is. They know, therefore, that is the gauge you are running on. If you are asking all those providers I mentioned earlier on-Sky, TalkTalk and so on-to use dark fibre, they would have to reinvent all of those interfaces. It is a massive cost. That is why you do not get those kinds of companies using dark fibre and that is the problem. You have a huge investment in an infrastructure that is extremely difficult to access unless you create bespoke access technologies. That is why we do not think it is a good idea.
It also means that you need to make sure that, if you have a fibre asset, it has to be managed, which is why you have Openreach and Wholesale managing our fibre in that way. So they consult with industry and they talk with industry. If we bring in new products on that network, we talk to them, they know what to expect, and there are no surprises for them. It is an industrywide process, which means dark fibre does not have a role to play.
Graham Leach: Many other network providers provide dark fibre, and, as I say, dark fibre has enabled these two major sub-sea projects, which will benefit the economy of north Wales.
Matt Rogerson: There are two points to be made there. One is that the issue of standards is a big one, but it is not insurmountable. There is a group at the moment looking at how you can come up with an alternative set of standards to use dark fibre. The other is that BT is obliged to provide it as part of its state aid obligations from the European Commission. That is all I would say.
Q58 Chair: Ms Beynon, may I ask something? I have had quite a lot of complaints in Monmouthshire, particularly outside Chepstow, that broadband speeds are not as good as people have been led to believe. I have heard that BT offers some sort of clever gizmo that fits on to the thing that the telephone plugs into. Can you tell me something about that? Should we not be advertising this more widely because I cannot even express candidly what it is that I am talking about here?
Ann Beynon: You are absolutely right. It is called an I-Plate.
Chair: What are they called?
Ann Beynon: They are called an I-Plate, which is the vanilla term for it, but the BT retail version is called BT Accelerator. Any BT Retail customer can ask for a free I-Plate and you simply put it on the socket that comes into the house. It takes away the interference. Things like mobile phones and TV sets can cause interference on the system so it cleans away the interference. It does not always work but in many instances it has worked. There are instances of new technology coming out all the time that create additional signals which cause interference, so it cleans the signal and helps.
Q59 Chair: Mr Rogerson, if I may be a bit parochial, can you tell me when your superfast fibres are coming up to Monmouthshire? I am sure many constituents would be interested to know.
Matt Rogerson: I will take the request away, take it to our planners and see what I come back to the Committee with.
Chair: Thank you very much. Are there any further questions?
Q60 Guto Bebb: In terms of the open access and the FibreSpeed service, did you specify how many people have taken advantage of that to sell on to other businesses in north Wales?
Graham Leach: We have 12 service providers now, many of whom are small businesses which have grown up in north Wales as a result of FibreSpeed being there. This is one of the attractions of an open access network. I would just say, of course, that the FibreSpeed network is owned by the Welsh Government. The Welsh Government have invested a significant amount of money in building FibreSpeed. That asset of fibre, points of presence on the business parks, the tower infrastructure which is now providing wireless notspots, the cable that has been laid down into Pwllheli, and the coverage of Anglesey, is all owned by the Welsh Government, and a challenge for the Welsh Government is what it does with that asset because it is going to be available for the next 40 years. That is the life of the fibre and the infrastructure. The Welsh Government needs to think quite clearly about whether it is going to build another network over the top as part of its Digital Wales programme or how it is going to maximise its current investment in FibreSpeed as part of the overall broadband rollout over the next five or six years.
Chair: Thank you all very much indeed for coming in. I enjoyed refereeing that. Thank you.
 Note by witness: The FibreSpeed backhaul network across north Wales is owned by the Welsh Government. The network is now being used as a ‘backbone’ to enable wireless service providers to extend services to rural areas. Expanding the broadband support scheme and speeding up the approval process for applications, will enable more wireless connectivity to be rolled-out, and will thereby make the most of the Welsh Governments existing investment in the FibreSpeed network.