Programme Delivery Model
Broadband Delivery Programme
limited scope for the public sector to share in any financial up-side or to influence investment decisions.
Public private partnership: Under this approach a local body forms a joint venture (JV) or special purpose vehicle (SPV) with a private sector supplier or suppliers. The JV or SPV would invest in, and provide, broadband infrastructure services to end customers (including service providers/retailers wishing to use the infrastructure network) through service
Under such a model the public the risk and cost of delivery,
sector local body will share with its private sector
structure is South Yorkshire the JV or SPV (or the public to the infrastructure contract
Digital sector costs.
Region. BDUK could provide funding through a grant to “parent”) or could take an equity stake as a contribution
Comment: This approach assumes greater risk sharing between the public and private sectors and while there is an opportunity for the public sector to share in any financial upside and potentially influence investment decisions, the public sector is also exposed to financial down-side risk. BDUK would have to undertake some additional due diligence on the public private partnership.
Public sector owned supplier: Under this approach, an arms length company, owned by one or more public sector bodies would invest in, and provide, broadband infrastructure services to end customers through service contracts. An example of such a structure is NYNET which is wholly owned by North Yorkshire County Council. The arms length company (and depending on investment, the public sector “parent”) will be exposed to the risk and cost of delivery, take up and revenue. BDUK could consider the provision of funding through a grant to the “parent” public sector body as a contribution to the infrastructure contract costs or could take an equity stake.
Comment: This approach could allow a “shared service” approach across the public sector, greater public sector influence on investment decisions and an opportunity for any surplus or profit to be re-invested. BDUK would have to undertake some additional due diligence on the public sector owned supplier, and would need to consider the implications for its available Programme budget if more funding where required up-front.
Concession to Build-Operate-Transfer: Under this approach a public sector body lets a concession contract to build, operate and sell wholesale broadband services from a network, which returns to public hands at the end of the contract, .e.g. North Wales Fibrespeed. BDUK could consider the provision of funding, through a grant, to the local body as a contribution to any public sector payments or subsidy made by the local body to the supplier under the contract.
Comment: This approach may allow some public sector share in any financial upside but the downside risks – e.g. solution design and sustainability risks (and public sector exposure to these risks) would need to be assessed. It may be possible to gain a greater public sector influence on investment decisions but the impact of public sector asset ownership would need to be understood. BDUK would need to undertake some additional due diligence on the concession arrangements.
BDUK funding under any model would be conditional on the set of defined Investment Criteria as set out in Section 14.4, as well as the affordability of any local broadband projects within the available Programme budget.
Ultimately a local body is free to choose, and BDUK will be supportive of any commercial model that can be demonstrated to be value for money, and affordable for BDUK. However, examination of the different models and local bodies‟ general appetite for owning different delivery risks would suggest that many will choose the model of a simple subsidy of the private sector‟s investment gap funding for delivery of a project. As such, BDUK will focus its efforts into developing materials to support this model, but should also be able to provide some support for any of the others.