NBP Coverage doubts.

3.4.4 Highest cost premises

As explained in section 3.7 of the Intervention Strategy, the economics of high speed broadband provision means that there is likely to be a proportion of premises for which the cost of provision will be sharply higher than for the vast majority of other premises. Whilst the aspiration of the Intervention Strategy is ubiquitous availability of the same Minimum Standard NGA Service to all premises in the Intervention Area, the Strategy recognises that the economics of achieving this aspiration may result in an unacceptably high, unaffordable subsidy requirement.

In order to address this affordability risk, the Department is adopting the following approach to addressing the highest cost premises in the Procurement process:
▪ At the Detailed Solutions stage, Bidders will be required to submit details of their subsidy proposals for delivering the Minimum Standard NGA Service to all premises in the Intervention Area, together with a subsidy curve that indicates the amount by which the subsidy requirement would reduce for every 1% (or other specified %) reduction in the number of premises receiving the Minimum Standard NGA Service. 

▪ On the basis of this information, Government (as distinct from the Department) will determine for the Final Tender (See footnote 9 below) stage (taking account, among other things, of the profile of the subsidy curve, the increase in the subsidy amount per premise passed / connected at key points within the curve and other relevant factors such as Government budget and value for money considerations at that time):
–  The minimum percentage of premises in the Intervention Area that are to receive at least the Minimum Standard NGA Service (“Minimum Standard NGA Service Percentage”); and 

–  The minimum service requirements for those premises in the Intervention Area that will not receive at least the Minimum Standard NGA Service but will still represent a “step change” in service to that provided commercially in that area (“Minimum Non-Standard NGA Service Requirements”).

This is referred to as the “NGA Service Determination”. The resulting requirements will be
disclosed to Bidders remaining in the Procurement at that time.
▪ The Final Tenders submitted by Bidders must at least achieve the Minimum Standard NGA Service Percentage and Minimum Non-Standard NGA Service Requirements set by Government for the Final Tender stage. Achievement of these requirements at the Final Tender stage will be a mandatory requirement. If it is not met, the relevant Final Tender will be rejected. 

▪ The Preferred Bidder(s) will be contractually obligated to deliver the commitments made in its Final Tender(s).

The Government’s NGA Service Determination with respect to the Minimum Standard NGA Service Percentage and Minimum Non-Standard NGA Requirements for the Final Tender (or, if applicable, earlier) stage will be made on an independent, non-discriminatory basis. Any individual:
▪ directly involved in the evaluation, dialogue or running of the Procurement on behalf of the Department; or 

▪ who has been provided by the Department with a copy of, or access to, the Detailed Solution (or, if applicable, Refined Detailed Solution) of a Bidder or any other Bidder submissions during the Procurement, 
will not make the NGA Service Determination but may be involved in collating information, conducting analysis, preparing reports and conducting briefings for the individual (or individuals) who will make the NGA Service Determination. The individual (or individuals) who will make the NGA Service Determination will not be given by the Department the subsidy curve submitted by each Bidder, but will instead be provided by the Department with either an anonymised graph that shows all of the subsidy curves together or alternatively anonymised details of the broad profile of the subsidy curves submitted by Bidders on a non-attributable basis (i.e. so that they don’t know what each named Bidder specifically proposed). This is so that it can clearly be shown that the NGA Service Determination was made on an independent, non-discriminatory basis.

At this stage, based on the network cost modelling that has been undertaken for the Department, it is anticipated that the percentage of premises in the Intervention Area that may not receive at least the Minimum Standard NGA Service is between 1% and 3%.(See footnote 10 below)

Footnotes:

9 This could alternatively (or in addition) be adopted at an earlier stage in the Procurement, such as at a Refined Detailed Solution stage if such a stage is introduced. In this case, whether achievement of these requirements is mandatory or not (at the Refined Detailed Solutions stage, as distinct from Final Tender stage) will be made clear at that time. If this introduced prior to the Final Tender stage, the Department reserves the right (but is not obliged to) for the NGA Service Determination to be dialogued with Bidders and revisited and revised by Government for the Final Tender stage in the manner outlined above.

10 These are indicative figures only based upon current available information. They are in no way a limiting factor and the range could be smaller or bigger than this (even by a large amount, though this is not anticipated at this point).