Invitation to Regional and Unitary Lgas to Co-Fund And/Or Assist to Extend RBI2/MBS

Invitation to Regional and Unitary LGAs to Co-Fund and/or Assist to Extend RBI2/MBS

Rural Broadband and Mobile Black Spots – Invitation to Co-Fund and/or Assist

1.  Introduction

1.1  Crown Fibre Holdings (CFH), on behalf of the New Zealand Government, has released a Request for Proposals (RFP) in the interests of improving rural broadband connectivity and mobile black spot coverage. This is in relation to two funding programmes which have been announced by the Government; $100 million to extend the Rural Broadband Initiative (RBI2) and $50 million to cover mobile network ‘black spots’ (Mobile Black Spots or MBS) to improve safety on state highways and to enhance tourist experiences. The programmes will be funded as grants to successful telecommunications Respondents from the Telecommunications Development Levy (TDL), an industry levy designed to fund telecommunications capabilities which are not available commercially or at a price that is affordable to end users.

1.2  Due to the remoteness of the areas being addressed and the sparse spread of end users within them, it is difficult for commercial operators to make a business case to build in these areas without external contributions. CFH does not believe that there will be sufficient funds available under the RBI2 and MBS programmes to solve all gaps in broadband connectivity and mobile coverage which have been identified in the RFP.

1.3  CFH is inviting local councils, regional councils, territorial authorities and unitary authorities (Local Government Authorities or LGAs) to join central Government in funding enhanced broadband and mobile coverage in rural New Zealand. This is a unique opportunity for LGAs to join with central Government to increase broadband coverage and performance within their districts/regions over and above any coverage funded by the TDL.

1.4  Funding can either be provided by an individual LGA, a consortium of LGAs, or a Regional response.

1.5  Funding applied from the TDL to RBI2/MBS is provided by means of grants and any additional co-funding should be made in this form in order to keep administration costs low and to maximise new coverage.

1.6  CFH is a crown owned company and has significant experience in successfully managing the Government’s $1.3 billion Ultra-Fast Broadband (“UFB1”) initiative to 75% of New Zealand’s population. CFH’s performance has been audited by the Office of the Auditor General who found CFH was conducting its role effectively in achieving the Government Policy with the deployment ahead of target. CFH is also managing the UFB2 initiative to provide ultra-fast broadband to a further 5% of population. CFH has contract management, telecommunication expertise and financial management capability.

1.7  By partnering with CFH, LGAs can take advantage of the RFP prices and terms CFH has received and negotiated. Contract management of suppliers will be conducted by CFH to ensure optimal performance. The LGA can at any time contract with any other providers in its region to provide services, however this would not form part of the Government RBI2/MBS initiative, or be able to take advantage of the scale benefits of the RFP.

2.  Government Policy Objectives for Broadband.

2.1  In October 2015 the Government announced an aspirational target that by 2025, 99% of New Zealanders will have access to broadband at peak download speeds of 50Mbps, and the remaining 1% will have access to 10Mbps[1]. This overall broadband goal is designed to guide the setting of specific objectives for Government programmes such as RBI2 and MBS. However, the aspirational target does not commit the Government to funding any future programmes or projects for reaching the target.

2.2  For RBI2 the policy objectives are: within available funding, to provide high-speed broadband to the greatest number of Eligible End Users in Rural Broadband Regions[2] and to support the achievement of similar access to high-speed broadband by Eligible End Users across all Rural Broadband Regions (excluding UFB areas).

2.3  For MBS the policy objective is: within available funding, to improve the availability of mobile services in as many Mobile Black Spot Zones as possible, to support safety on state highways and to enhance visitor experience at key tourist destinations.

2.4  Government will nominate area preferences based on factors set out in the RFP and will not consider whether or not Councils are also funding in a particular area in making such decisions. It is not predetermined that all Districts will receive TDL grant funding for RBI2/MBS, however Government intends to consider equity spreads across Rural Broadband Regions.

3.  ROI - Support

3.1  The Ministry of Business, Innovation and Employment (MBIE) released a Registration of Interest to LGAs in March 2015 (ROI-Support) asking LGAs to nominate areas of poor coverage that would benefit from inclusion under each of the UFB2, RBI2 and MBS programmes, and what assistance they could make, including co-investment, to make deployment in their district more viable.

3.2  The information supplied by LGAs in response to the ROI-Support was considered by Government in deciding the scope and priorities for the UFB2, RBI2 and MBS programmes. This included the identification of under-served end users for RBI2 and state highways and tourism locations for the MBS programme. At the time the ROI-Support was carried out, the policy for the RBI2 and MBS programmes was in the early stages of its development.

3.3  Through this ROI process and subsequent discussions with LGAs there has been some interest expressed in co-funding with the Government to extend RBI2 and MBS coverage within regions and districts.

3.4  An LGA does not need to have registered any interest under the ROI-Support in order to participate in this invitation to co-fund and/or assist with central Government.

4.  Rural Broadband and Mobile Black Spot RFP

4.1  The RFP is seeking proposals from telecommunications operators (Respondents) for RBI2/MBS coverage as follows:

·  RBI2: Respondents can configure clusters of end users within any of the Rural Broadband Regions listed in the RFP who, within foreseeable planning windows, cannot access broadband services of greater than 20Mbps. This allows Respondents to leverage existing processes and infrastructure such as fibre optic backhaul in the most efficient way in proposing areas for new coverage;

·  MBS: Respondents can propose areas for mobile coverage from any of the Mobile Black Spot Zones listed in the RFP. These comprise 51 black spot zones along State Highways and 167 black spot zones in tourism areas.

4.2  For the purposes of the RBI2 evaluation, Respondents have been asked to provide data detailing the number and location of end users in two categories. Category 1 includes rural broadband End Users who today or after planned market upgrades are not able to access terrestrial broadband service greater than 5Mbps. Category 2 End Users are able to access services between 5Mbps and 20Mbps. These Eligible End Users include businesses, farms and households.

4.3  Respondents have the opportunity to provide feedback on the RBI2 and MBS areas listed in the RFP. CFH will consider the feedback received from Respondents, and may exclude or amend the list of RBI2 and MBS areas in the RFP in response to such feedback, and notify Respondents of any changes to the list of areas (Area Adjustments). The deadline for Respondents to provide feedback on the list of RBI2 and MBS areas included in the RFP is 25 November 2016.

4.4  The deadline for receiving proposals from Respondents is 2 February 2017. Government will nominate area preferences for RBI2 and MBS to be grant funded as the first stage of the evaluation process, and CFH will then evaluate proposals for the purpose of selecting Respondents to negotiate and contract with for the Government nominated areas.

4.5  The full RFP is available at the Government Electronic Tendering System (GETS) website.

5.  LGA Response

5.1  A schedule of the underserved Rural Broadband Regions, and Mobile Black Spot Zones included in the RFP is attached as Attachment 1. In order to guide Respondents, the land parcels in which CFH has identified Category 1 end users are also available, grouped by District on GETS at gets.govt.nz and on crownfibre.govt.nz

5.2  Respondents can propose additional RBI2 End Users or Mobile Black Spots for new or enhanced coverage. For LGAs who propose to provide co-funding and/or assistance, CFH will also advise these LGAs of such proposed areas for funding consideration after the conclusion of negotiations with Respondents and Government announcements.

5.3  LGAs are invited to provide feedback to CFH on the RBI2 End Users and Mobile Black Spot Zones listed in the RFP, in relation to areas listed or not listed in the RFP that meet the Government policy objectives, and that the LGA would be interested in co-funding and/or assisting. Such feedback must be received by 25 November 2016 in order for CFH to consider (in its sole discretion) any additional Area Adjustments to the RFP.

5.4  Prior to the RFP closing date (2 February 2017), CFH invites LGAs to:

·  advise CFH of the amount of any grant co-funding (by fiscal year until the end of fiscal year 2023) the LGA is willing to contribute to fund extended or additional coverage to RBI2 and/or MBS areas nominated by the LGA (this can be in the form of a non-binding commitment if required, and be subject to further LGA approvals); and

·  provide a list of the RBI2/MBS areas (including a geospatial shapefile of the land parcels of the area where possible) that the LGA proposes grant funds to be applied to. Note that the earlier CFH is made aware of these details the better it will be able to include such considerations in its negotiation processes; and;

·  advise CFH of any other financial or non-financial assistance the LGA can provide to assist with the RBI2 and/or MBS programmes such as:

o  the provision of rent free sites; and/or

o  the utilisation of existing LGA assets; and/or

o  facilitating an accelerated RMA consenting process.

5.5  LGAs should note that any funding received is in addition to the TDL grant funding and does not replace it; the intent is to prioritise and increase coverage into areas that LGAs are particularly interested in.

6.  Contracting Process

6.1  After the RFP has closed and the evaluation of Respondents’ proposals has been completed, CFH will negotiate and contract with successful Respondents for the RBI2 and MBS areas awarded to those Respondents. Once CFH has entered into contracts with successful Respondents for their awarded RBI2 and/or MBS areas, and Government announcements have been made, CFH will advise LGAs under confidentiality of the areas that have been awarded and the areas that have not been funded by CFH. CFH will invite LGAs to enter into a binding commitment with CFH to co-fund and/or assist the extended or additional areas (or sub-areas) nominated by those LGAs during the RFP process. Such an agreement will include the costs proposed by the successful Respondent to deploy those areas nominated by the LGA.

6.2  Each successful Respondent’s contract will include an option to increase coverage based on further funding becoming available from LGAs. Each LGA will have up to 6 months from the time CFH advises the LGA of funded/unfunded areas in their district/region to formally confirm a funding commitment based on the prices offered for those areas in the contract and not funded by the TDL. This commitment will be contractual, in the form of a Grant Agreement with CFH and will include the timeframe for deployment, progress reporting, and payment process. Any other offers of assistance from LGAs (e.g. fast-tracking of consents, sites available etc.) can also be contracted, so that CFH and successful Respondents are confident of access to this assistance to ease deployment and reduce costs.

6.3  The timing of the build of new infrastructure will be negotiated with the successful bidder, however CFH expects all builds to be complete by the end of 2022. CFH would require a portion (25% for example) of the LGA grant co-funding for each area be received in advance of the successful Respondent commencing consent/design of that area, then funds should be provided quarterly in advance of agreed build milestones.

6.4  LGAs who do not respond to CFH’s invitation to grant co-fund and/or assist while the RFP is open will still have an opportunity to offer grant co-funding after the RFP has closed and contracts with successful respondents have been publicly announced. However early involvement by the LGAs is advised in order to ensure their priorities are considered and optimised during the negotiation process with Respondents.

6.5  By partnering with the Government through CFH for RBI2 and/or MBS, LGAs can leverage contracted RFP terms and pricing, while obtaining transparent project reporting around implementation timing and use of funds. CFH does not propose to charge any administration fees.

7.  Contract Management

7.1  CFH will be responsible for managing Contracts agreed between CFH and successful Respondents for awarded RBI2/MBS areas, including those funded by LGAs.

7.2  CFH will provide regular reporting on successful Respondent contract performance to LGAs that have provided grant co-funding for those RBI2/MBS areas that they are funding, similar to that provided to central Government.

8.  Form of Response