DETI Post Project Evaluation Pro Forma (For expenditure between £50k and £250k)

(It is expected that the level of detail required is proportionate with the level of expenditure)

Division……Strategic Policy Division

Branch…… Telecoms Policy Unit

Project Title……Broadband Fund – North West Electronics Fixed Wireless Network (WEST)

Project Location……Development of extensive fixed wireless network across rural west of Northern Ireland

Date………………20 July 2010

DETI Department of Enterprise Trade and Investment

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1. Scope, Purpose and Objectives of the Evaluation

Outline the scope, purpose and objectives of the evaluation.

The purpose of this Post Project Evaluation is to assess the extent to which the aims and objectives of the North West Electronics “Next Generation Metro Ethernet Microwave Network and WiMAX Fixed Wireless Access West Area” project carried forward under the ERDF Sustainable Development Programme 2007-2013 have been addressed.

The PPE will consider the extent to which the project has progressed in relation to the specific objectives, outputs and impacts as identified in the project application and, summarised in the Letter of Offer. It will also examine how well the project has performed in relation to the aims and objectives of Measure 3 of the ERDF Sustainable Development Programme 2007 -2013 (copied at Annex A).

The project received £237,112.50 of national match/ERDF grant against overall project costs of £474,225 (50% aid intensity level). The remaining funds were supplied direct by North West Electronics.

The development of a PPE is specifically required in respect of projects funded under the ERDF Programme. In addition, the development of a PPE is an essential element of the DETI projects governance protocol, requiring the assessment of initiatives that have been in receipt of public funding.

2. Strategic Context

This section should refer to the underlying policy or strategy indicating how the project has contributed to the relevant strategic aims and objectives.

2 Under Priority 3 of the ERDF Sustainable Development Programme 2007 – 2013 “Improving accessibility and protecting and enhancing the environment”, €19.5m has been allocated for delivery of telecommunications projects. DETI Telecoms Policy unit is identified under the Measure as the Delivery Division for these projects.

Indicative Activities under Measure 3 include the output to support a number of broadband applications and technology projects – the mechanism for delivering such projects is the Northern Ireland Broadband Fund, launched in August 2008 by the Minister. The Fund has 2 specific objectives:

 Supporting delivery of “near to market” trials which seek to demonstrate how particular telecommunications technologies might be used to deliver access to higher specification broadband services; and  Providing financial assistance for the deployment of telecommunications infrastructure to deliver legacy commercial services in rural locations.

The North West Electronics project has progressed under the second objective, extending the company’s existing network across the rural west of Northern Ireland to deliver widespread access to fixed wireless services. The project was specifically scoped to address a number of areas where users were unable to access fixed line services and were otherwise dependent on a satellite service delivered, initially under the Department’s 2004 Local Access Broadband Project with BT and, from January 2009 onwards, on the satellite service delivered by Avanti Communications under the 2009 Remote Broadband Services Contract.

3. Outline the rationale, aims and objectives of the project

Explain the rationale for the original project and indicate the original need it was considered to be meeting. The rationale for government intervention should be detailed.

The project rationale was to support the delivery, by a local SME, of an extended, commercially sustainable fixed wireless network capable of delivering high bandwidth broadband services into some of the most rural parts of Northern Ireland in support of the needs of both business and residential customers.

To understand the rationale for this solution, it is important to understand that while broadband access and coverage in Northern Ireland has been ubiquitous since December 2005, as the UK region with the highest percentage of rural dwellers small pockets of the region were unlikely to be able to access more than a basic fixed line solution. While the 2004 Local Broadband Access Contract and latterly the 2009 Remote Broadband Services Contract had recognised this position, putting into place the satellite “in-fill” service, satellite as a legacy solution was largely unproven. Our rural issues and the associated low population densities in some of the most

3 remote locations also meant that market penetration could not be predicted to any degree of certainty, making any investment by a private sector company unlikely without some form of public sector funding.

The prioritised locations for emergence of commercial services and development of the network schematic were informed by correspondence held by the Department, its existing records of locations of satellite customers and a Broadband Availability Debate raised in the Assembly in February 2008.

Outline the objectives that were identified for the project in the original appraisal and the associated targets (all targets should be SMART).

This project was viewed as important to create an alternative, high-bandwidth, commercially sustainable broadband access solution for rural customers across the west.

The key objectives of the project were to:

 Establish a commercially sustainable, affordable and valued broadband access solution capable of meeting the needs of rural customers across the west;

 Create a range of broadband and telecommunications packages which could be used to meet specific business needs; and

 Through the introduction of competition in the rural west, seek to influence the costs of broadband services

The key targets were:

 By 15 May 2009, commence the construction of 2 backbone high sites;

 By 12 June 2009, commence the construction of access sites;

 By 6 November 2009 commence network and access sites testing; and

 By 20 November 2009, make available services to customers on a commercial basis

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4. Project Management and Control

Provide details of how the project was managed; include details of the arrangements that were put in place for monitoring, quality assurance and project personnel.

The project was managed under the PRINCE2 project management methodology, with core inputs at both DETI and North West Electronics sides. The proprietor of North West Electronics assumed personal responsibility for all company activities, including site identification, selection and acquisition for mast infrastructure, network design, tendering for 3rd party services, oversight of equipment installation and network testing, marketing of the project and services, customer support and formal progress reporting to DETI (including production of project plans and reports).

DETI assigned an experienced Project Manager to the project, supported by administrative support team with responsibility for management and progression of the project verification and inspection visits programme and claims processing and payments. This team also undertook a verification visit to the company premises to establish requirements for the financial management of the project and subsequently applied all claims inspection procedures in line with the ERDF requirements and acted as first line of support for North West Electronics members of staff on administrative matters.

Key deliverables were set out in the company’s application for funding assistance under the Broadband Fund and summarised and timetabled within the Letter of Offer to the company.

The DETI Project Manager reported for part of the project to the TPU Head of Branch and to the Head of Strategic Policy Division who acted as Senior Responsible Owner for the Broadband Fund. Latterly the Project Manager reported direct to the SRO.

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5. Establishment of a Base Case

Estimate what would have happened in the absence of the project.

As part of the application process under the Broadband Fund, applicants are specifically asked to identify what plans they have for the proposed projects should Government funding not be available.

The company indicated that in the absence of Govt. funding it would not proceed with the project, instead limiting its site development and network rollout under its “business as usual” programme to areas of higher population density. In so doing, 2 significant impacts would be noted:

 Opportunities to deliver access to next generation broadband services would be lost to particular locations; and  Organic growth would typically extend the length of time for delivery of the extended network – the impact of this delay would have inevitably led to increasing pressure on DETI to source other options, with existing customers dependent on the satellite solution expressing reservations about the quality and price of the service

Provision of financial assistance for equipment purchase and network development therefore de-risked the project where the extent of possible market penetration or demand was not sufficiently clear to justify industry investment.

6. Assessment of Value for Money

Detail all relevant outputs of the project. Compare these to the planned outputs detailed in the appraisal. Identify and explain any variation between outputs or costs.

The project proceeded as envisaged, with deployment of an extensive fixed wireless network across large parts of the rural west of Northern Ireland. Coverage areas include, but are not limited to: Eskragh; Broughderg; Greencastle; Gortin; Carrickmore; Cloghfin; Dregish; Drumquin; Inishative; Plumbridge; Clady; Aghyarn; Ederney; Drum Manor; Coagh; Ballyronan; Tullyard; Sandholes; Ardboe; Kinturk and Cookstown.

The project was delivered on budget, but has required some variation of the breakdown of costs, with equipment costs delivered under budget and labour costs increasing marginally due to a requirement for a short extension to the agreed timetable for project delivery.

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Identify any wider benefits or costs that have occurred as a result of the project

There are no costs additional to those set out in the Letter of Offer.

The principal objective for this project was to make available commercial fixed wireless broadband services for business and residential customers as an option additional to satellite.

Commercial services are now available, initially with a range of packages from 1Mbps up to a state-of-the-art 100Mbps symmetric service to address high- level and specific business requirements. More recently with delivery of direct international connectivity (another of the DETI commitments under the Programme for Government), North West Electronics has purchased bandwidth from Hibernia Atlantic, owner/operators of the Project Kelvin link. The impact of this transaction has been that the company has increased its base residential and business package from 1Mbps to 2Mbps, with no resulting increase in costs. This is a significant benefit to customers and positions Northern Ireland well in terms of the UK Government’s Digital Britain Strategy and in particular the 2Mbps Universal Service Commitment.

The cost of the base service is £18.99 per month for residential customers and £19.99 for business – this bears very favourable comparison with the service currently available under the Remote Broadband Services Contract with Avanti for delivery of the satellite service. Costs for this service start at £25.00 per month for a 512Kbps service, with a 2Mbps service costing up to £55.23 depending upon package selected. The company has confirmed that in excess of 200 customers have now connected to the network and that it continues to receive significant queries about service availability as knowledge of the network builds through marketing and promotional activities.

The company also offers specialised services for business customers, including:

 “Carrier supporting carrier” services – use of wireless backhaul as an alternative to more costly fibre tails to deliver customer access to core fibre networks – in this respect the company is also understood to be in discussion with H2O Ireland Limited, another successful applicant under the broadband Fund, in respect of provision of wireless backhaul to the fibre-ring network being deployed in Enniskillen town centre;

 Hosted data services;

 Voice over internet services (VOIP);

 Business television services (news/financial/weather etc);

 E-mail and website hosting services; and

7  Wi-fi services

Identify any actions that were required to mitigate any potential risks to delivering the projects

There were no specific actions required to mitigate against potential risks. North West Electronics delivered a comprehensive risk register as part of its initial application and proposed a project delivery plan which was largely robust. One of the more significant risks to the project was that the company as an SME was not at all times geared up to achieving deadlines for delivery of progress reports. In particular, the owner of the company, Scott McClelland, was actively involved in every aspect of the project and while positive in terms of demonstration of commitment to deliver, meant that decisions were unable to be taken at any other level within the company.

Another issue for both DETI and North West Electronics was management of user expectations - .this proved to be resource intensive with DETI officials asked to deliver presentations to or meet with councils and local groups keen to access services. However, such meetings have proven positive and a useful tool in the marketing and promotion of services.

Finally, use of European funds brings an associated requirement to address a significant series of requirements under the Letter of Offer process – this meant significant burden on the company as an SME and required regular DETI support to manage to ensure compliance.

7. Outcome of Evaluation

Provide details of the recommendations regarding the future of the project i.e. project continuation, project modification, or project exit. Note any lessons that should be learnt for similar projects in the future.

This project is now completed and, as envisaged when the application was being evaluated, has led to the delivery of commercial services.

One key lesson has emerged from the trial. Largely as a consequence of the company’s size, promotion of the network has been undertaken on a fairly localised basis with the owner of the company attending local meetings alongside DETI. The DETI role in this project is primarily to ensure that the network is delivered and addressing user questions or, in some instances receiving calls or correspondence about the service is not within its immediate remit.

The company did not propose specific marketing activities in its application which, on reflection, could have been accommodated as eligible expenditure and which would have ensured more widespread awareness of availability of services. There is however a caveat that needs to be recorded – the company’s preferred business model is one of organic growth, ensuring that it can meet user demands within available resource and an acceptable period of time. As a consequence of

8 the interest in this network and the services now available the company is understood to have increased its capacity to meet user demands.

8. Presentation and Dissemination of Results

Details of those who will receive results of the evaluation should be specified.

The Northern Ireland Broadband Fund has been approved by DFP Supply at Fund level – as such the PPE does not require DFP sign-off and will be retained by the branch as evidence of compliance with DETI policy. It will be presented, as required, to support project audit (including European Audit) requirements and to support the annual test drilling exercise carried out by DETI.

DECLARATION

I am satisfied with the recommendations and conclusions of the evaluation.

Signed

Position Director, Strategic Policy Division

Date 26.07.10

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