Questions & Answers about the Broadband Investment Fund

1. Where an entity that owns and controls a supported Network has a 100% holding company, can the holding company be named as the Network Entity, and so be the signatory to any BIF funding agreement? 
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2. Is the satellite technology excluded from submitting proposals to this fund? 
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3. Is the purpose of the fund to support service providers or the end customer in rural areas?
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4. Is there any restriction, written or by intent-from Australian companies or overseas companies to participate in the process?
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5. Will MED arrange the  teaming between service providers and backhauling services  or should backhauling be considered a separate service who may ask for subsidy?
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6. How do you avoid multiple tiny  Wimax operations  and allow priority for larger nationwide operations where the economics play in favor of the end customer? 
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7. Is there any way we can come and present latest  satellite technologies to MED and others? 
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8. How can organisations which are spread over NZ and who wish to access broadband have their needs incorporated into BIF applications?
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9. At the EOI stage, and with only the one month to produce it, we have little opportunity to do any sort of proposed Network Design and hence estimate costs and returns. We do expect to do this design as part of the full application, given the funding assistance it will provide. Will our application for the ADA be seriously considered if we do not yet know which parts of the local infrastructure would be most beneficial to supplement, and so do not have a design or costs?
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10. If there is potential duplication between applicants in an area I would expect we should be attempting to amend our approaches so the applicants complement each other, not compete. We would expect any design done for the EOI may change quite significantly based on the new infrastructure being implemented by other applicants. How is it planned to manage the interaction between applicants in a given region?
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11. What is the difference between: open access duct with open access dark fibre, open access ducts with closed access dark fibre, and open access dark fibre without ducts?
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12. What do you mean by open access bearer services or Ethernet services?
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13. In a situation where the application involves a telecommunications company and a local community supporting the telecommunications company in non financial terms who should the applicant be?
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14. How will an applicants  'Existing Infrastructure Contribution'  be valued? For example when the construction  relates to four fibre optic spurs from the network to access poorly served urban areas.  
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15. Can a full application be submitted before a network entity is set up?
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16. How will commercially sensitive information/business cases/shareholder details etc provided in support of applications be treated during and after the funding allocation process to ensure that it is not accessed by possible competitors in the same market?
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17. To establish our eligibility to seek funding under the BIF we have the following questions:
    a) Will the Ministry consider non-localised solutions? 
    b) The note on page 4 of the Rural Criteria states “the government will not be supporting satellite solutions to individual households”. Does this mean a solution which involves providing broadband internet via individual satellite connections to households and where the funding is sought to establish infrastructure common to all services, is ineligible?
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18. If a funding application is for a regional backhaul solution what is the right application to put in? e.g rural or urban. Or for a full application across a region, if it delivers both Rural and Urban infrastructure can we just do 1 application? Some of the investment cannot simply be identified as for one or other, but supports both. If so, how do we decide which application document to fill out? The eligibility criteria are different, can we pick criteria from both?
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19. In earlier submissions there was some discussion of a $500K funding limit per rural region. In the new BIF proposal process is there a $500K funding limit for a rural region or is the funding value set by the respondents proposal and its merits?
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20. Is there any requirement that the network entity be registered as a “network entity”? Is there any such registration?
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21. Is there any requirement that the network entity be registered as a network operator under the Telecommunications Act 2001?
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22. Given that we would not be creating a network entity at this point in time to deliver broadband but will instead be negotiating directly with a network provider. Is this foundation project eligible for funding under the BIF?
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23. a) Can you clarify does the $15 million capital mean this is for funding capital expenditure items only and the $350 million operating is for operational funding allocations? and
    Qb) Can you define operational and capital in the context of these funds available?
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24. Is wireless broadband eligible for funding by the BIF? If so, how do we work out the funding ratios?
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25. In the urban BIF EOI, are you expecting the applicants to provide proposed P&L and cash flow statement for the proposed network entity?
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26. Will the names of applicants and decisions on applications be made public?
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27. Will the applications themselves (EOIs and full applications) be made public?
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28. To what extent will the Ministry and the evaluators communicate with applicants after applications have been submitted?
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29. What can people who are interested in getting broadband do if their local council or operator cannot provide service?
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30. How does an applicant specify the likely speeds that a proposed network will achieve, particularly where there will be a variation in likely speeds across the network?
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31. Rural areas are defined as areas without terrestrial broadband access at a minimum of 1 Mbps (and no commercial plans to provide this).  Is 1 Mbps an absolute requirement?  How does this apply when an area has a range of speeds available, some of which are above and below the 1 Mbps speed?
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32. I am wondering if my company is eligible to apply for the BIF funding. I have just found out about the Broadband Investment Fund and realize from the closing date it may be too late to get an application in.
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33. It is our intention (ie a partnership) to submit an application under the One-Stage Process. We will be in a position to submit an Emailed application by the closing date / time, but doubt that a hard copy will arrive in sufficient time. Will the Emailed copy suffice, pending arrival of the hard copy within a week?
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34. If we are a community that is not applying as an existing entity, what should we write in the part of the application when it asks for a "Business Plan"?
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Q1. Where an entity that owns and controls a supported Network has a 100% holding company, can the holding company be named as the Network Entity, and so be the signatory to any BIF funding agreement?
The Government's intention is to enter into direct contractual relations only with the entity on whose balance sheet the supported Network appears. As a result, a BIF funding agreement can only be concluded with the entity that owns and controls the supported Network. A funding agreement cannot be concluded with the holding company of such an entity, as that company owns and controls the entity, rather than the supported Network itself. 
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Q2.  Is the satellite technology excluded from submitting proposals to this fund?
The use of satellite technology to provide a community based solution is not excluded but individual satellite connections to a residence will not be funded. Such satellite based broadband solutions are likely to be practical where terrestrial based solutions are not viable. Terrestrial based solutions where economic will provide higher speed capability than satellite based solutions.  This is because satellite based broadband service application speeds are limited by the round trip delays inherent with  geostationary satellite solutions.  Nonetheless, the BIF is not excluding innovative use of satellite technology where it provides community based solutions in remote rural areas.
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Q10. If there is potential duplication between applicants in an area I would expect we should be attempting to amend our approaches so the applicants complement each other, not compete. We would expect any design done for the EOI may change quite significantly based on the new infrastructure being implemented by other applicants. How is it planned to manage the interaction between applicants in a given region?
Applicants are encouraged to collaborate and complement each other where possible. Local authorities are a common liaison point for prospective applicants. We would hope there is already good communication within regions and looking for ways to make joint applications where possible.
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Q11. What is the difference between: open access duct with open access dark fibre, open access ducts with closed access dark fibre, and open access dark fibre without ducts?
The government is striving for two or three things - increased competition (so the ability for multiple operators to provide broadband services), future proofing (so the ability in a few years time to add to the infrastructure or have easy access to it in order to extend it for example with FTTH) and efficiency (so where possible avoid unnecessary and inefficient duplication of infrastructure).  These things are not completely compatible with each other and that is recognised - the criteria give emphasis to achieving the optimal balance. 
 
For example a duct that has a fibre cable running through it when an owner of the duct is willing and able to allow further fibre cable to be inserted and the owner of the "incumbent" fibre cable is willing and able to lease dark fibre to other operators is the deepest level of open access. This scenario best meets all three aspirations of the government and therefore attracts the greater level of support from government.
 
A duct that has a closed fibre running through it is less useful because it means that another operator has to insert its own fibre cable in the duct rather than being able to take a dark fibre service of the "incumbent" operator. This type of service would be funded at the lower 33% maximum level.
 
It is possible that ducting is not available (e.g. where a fibre cable is micro-trenched without any duct) or that there is only room for a single fibre cable (e.g. stringing on power poles where a local authority will only give resource consent for a single cable).  While the cable owner may be prepared to lease dark fibre on the single cable there is no opportunity for a competitor to deploy their own cable - this lessens the future proofing potential so again it would be funded at the lower 33% level. 
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Q12.  What do you mean by open access bearer services or Ethernet services?
This is not true open access to broadband infrastructure - it is largely the owner agreeing to provide wholesale bit stream services to a competitor (rather than lease fibre in order for the competitor to develop and provide their own services).  

In addition it is possible that in some circumstances an owner of ducting or fibre cable may wish to apply to extend an existing closed network and claim that the extension is open access at either the 50% or 33% level. However because the only way a competitor can get to that open access component of the network is via a closed part of the network it cannot be regarded as "true open access" and the extension will therefore only be eligible for the 10% level of funding. 
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Q13. In a situation where the application involves a telecommunications company and a local community supporting the telecommunications company in non financial terms who should the applicant be?
The applicant should be the network entity which will be the owner of the network asset (i.e. the telecommunications company).
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Q14. How will an applicants  'Existing Infrastructure Contribution'  be valued? For example when the construction  relates to four fibre optic spurs from the network to access poorly served urban areas.  
In this case the applicant’s contribution will be valued as follows:

1)The value of the applicant’s contribution towards the construction of the proposed extension / spurs.

2)The net present value of the fair rental payments for the parts of the existing network that will used to provide services to customers that will be served by the extended portions of the network.

In addition, it should be noted that the level of the BIF contribution depends on the applicant’s proposed access conditions.  The level of BIF funding contribution will be dependent upon the level of open - access as described in the criteria.
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Q15. Can a full application be submitted before a network entity is set up?
Yes.
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Q16. How will commercially sensitive information/business cases/shareholder details etc provided in support of applications be treated during and after the funding allocation process to ensure that it is not accessed by possible competitors in the same market?
All commercially sensitive information, including business cases, shareholder details and the like submitted to the Ministry as part of an application for BIF funding will be held securely by the Ministry. Such information is official information. If a request is made for such information it will be dealt with in acordance with the process set out in the Official Information Act. On any such request the Ministry would need to balance any such effects against any public interest considerations that favour disclosure and the Ministry has the ability to consult with applicants before any decision is made.
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Q17. To establish our eligibility to seek funding under the BIF we have the following questions:
a) Will the Ministry consider non-localised solutions?
Yes

b) The note on page 4 of the Rural Criteria states “the government will not be supporting satellite solutions to individual households”. Does this mean a solution which involves providing broadband internet via individual satellite connections to households and where the funding is sought to establish infrastructure common to all services, is ineligible?
The note on page four of the Rural Criteria goes on to say “However, this does not preclude the prospect of innovative community solutions that utilise satellite technologies (i.e. as a backhaul link or hub).  If a satellite solution extends beyond a single household funding applications for that solution will be eligible. 

It should be noted however that the other criteria will also be taken into account in any decisions including: size of the community being served and the level of expected community benefit; level of open-access; level and ratio of co-investment.
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Where the project is likely to provide both rural and urban benefits but the benefits are predominantly in say the rural area (i.e. over 75% of benefits are in rural) a single rural application will suffice and rural criteria will be used to assess the application.

Where the benefits are more evenly split between urban and rural a single application will be acceptable but it should be based upon urban criteria – it should however note the rural benefits and they will be taken into account.  If the applicant wishes different criteria to be taken into account it will be necessary to submit two separate applications.
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Q19. In earlier submissions there was some discussion of a $500K funding limit per rural region. In the new BIF proposal process is there a $500K funding limit for a rural region or is the funding value set by the respondents proposal and its merits?
There is no funding limit on applications however there are some limits on the amount of funding that will be available to be distributed in a given round of the BIF which cannot be exceeded.
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Q20. Is there any requirement that the network entity be registered as a “network entity”? Is there any such registration?
There is no requirement to be “registered” as a network entity.  The definition of a network entity is provided in the Criteria and any contract for funding will only be with the network entity.
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Q21. Is there any requirement that the network entity be registered as a network operator under the Telecommunications Act 2001?
There is no requirement to be registered as a network operator to apply for BIF funding however if the network entity is for example intending to bury fibre cable it might be convenient for it to apply for a network operator licence in order to facilitate easier access to the road reserve.
Information on Network Operator Status (e.g. to get the rights of access to the road reserve). Click here for info on MED Website.
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Q22. Given that we would not be creating a network entity at this point in time to deliver broadband but will instead be negotiating directly with a network provider. Is this foundation project eligible for funding under the BIF?
BIF funding will be provided to the network entity however it is acceptable for a network provider to be the network entity.
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Q23. a) Can you clarify does the $15 million capital mean this is for funding capital expenditure items only and the $350 million operating is for operational funding allocations? and
Qb) Can you define operational and capital in the context of these funds available?
There is no reference in the Criteria to capital or operational expenditure. Any funding allocated under the Urban or Rural Criteria will be treated for government accounting purposes as government operational expenditure. How the network entity treats the funding it receives should follow general accounting practice but it is likely that most of the funding will be used by the network entity to build or purchase assets that will depreciate over time and therefore are likely to be treated as capital.
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Q24. Is wireless broadband eligible for funding by the BIF? If so, how do we work out the funding ratios?
Both wireless and satellite-based broadband services may be eligible for funding under the BIF. No particular technology is ruled out. As noted in the answer to questions 2 and 17 above in relation to satellite solutions, the criteria does not preclude the prospect of innovative community solutions that utilise satellite technologies (i.e. as a backhaul link or hub). If a satellite solution extends beyond a single household, funding applications for that solution will be eligible. The same is likely to apply to wireless solutions.

It should be noted however that the other criteria will also be taken into account in any decisions including: size of the community being served and the level of expected community benefit; level of open-access; level and ratio of co-investment and broadband speed requirements - it is likely that in most cases wireless solutions will be more suited to rural applications than to urban applications, however there is no restriction on this point within the criteria.

In terms of the funding ratios, while the criteria discuss the levels of open access in terms of ducting and fibre, the ratios are not limited to fibre applications. The criteria are focussed on whether access will be provided at the passive network/infrastructure level or whether it will be provided at the service level.

Applications of this nature are likely to be treated on a case-by-case basis.  However, we note that wireless solutions, particularly in rural areas, are often likely to be associated with fibre backhaul in rural areas.  In that case, we would most likely look at the totality of the solution.  If the wireless is combined with backhaul then we would assess the project as a whole, and the type of open access to the backhaul aspect would likely be most important.
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Q25. In the urban BIF EOI, are you expecting the applicants to provide proposed P&L and cash flow statement for the proposed network entity?
Not necessarily - the criteria say "an estimate of the likely project costs, revenues, contribution from the applicant and likely level of funding required from the government".  They don't say anything about profit and loss or cash flow statements.  To some extent this will depend on the size and complexity of the proposed project, but there is no expectation that these statements be provided by default.
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Q26. Will the names of applicants and decisions on applications be made public?
The Ministry intends to post the names of applicants (for both EOI and full applications) and the geographic locations of the relevant networks after decisions have been made respectively by the Minister and Cabinet.
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Q27. Will the applications themselves (EOIs and full applications) be made public?
The Ministry will not be making the applications public, unless required by law.
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Q28. To what extent will the Ministry and the evaluators communicate with applicants after applications have been submitted?
The Ministry will only contact an applicant if a document that is stated to be included as part of an application is not included. If the Ministry does notify an applicant that a document is missing, it should be provided within one working day following that notification.  Applicants have been asked to nominate a central point of contact, which the Ministry will use if needed.  The Ministry though is under no obligation to contact applicants to follow up on missing information, or on any other aspect of the applications, during the assessment phase.  The Ministry encourages applicants to be absolutely scrupulous in checking to ensure that all relevant documentation is supplied with applications.  Applicants should also ensure that any cross-referencing from an application to supporting material is specific and relevant. 

If an application is vague, broad and ambiguous the evaluators will have to work with what is in front of them.  The tight timeframe to assess applications means that evaluators will not be able to go back to applicants to clarify or validate any information provided.
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Q29. What can people who are interested in getting broadband do if their local council or operator cannot provide service?
People are encouraged to proactively contact their community in order to aggregate their broadband demand and to then pass on that information to their local authorities and operators.  This assists councils and operators in knowing what the unmet demand is within the geographic region.
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Q30. How does an applicant specify the likely speeds that a proposed network will achieve, particularly where there will be a variation in likely speeds across the network?
A network engineering assessment should be used to assess the expected speeds of a project.  Applicants should, at a minimum, specify the number or percentage of end-users likely to achieve certain speeds on the network.  
 
Rural applications should at least provide an estimate of the likely number capable of receiving >5 Mbps, and >1Mbps.  Estimates of the numbers who would receive higher speeds should be provided where relevant.  The evaluation will mainly be based on the 5 Mbps and 1 Mbps numbers, with some recognition of the benefits of higher speeds.  We would also recommend that applicants indicate the potential for upgrading.  For example, whether a neighbouring area can be readily upgraded in the future by use of some of the new backhaul capacity.
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Q31. Rural areas are defined as areas without terrestrial broadband access at a minimum of 1 Mbps (and no commercial plans to provide this).  Is 1 Mbps an absolute requirement?  How does this apply when an area has a range of speeds available, some of which are above and below the 1 Mbps speed?
1 Mbps is an indicative requirement and is not absolutely necessary across a whole area which an applicant claims is "rural".   The rural criteria are focussed on underserved rural areas, and this will generally be where the existing backhaul link to the area is not capable of providing adequate broadband access.  The rural definition is not hinged solely on the 1 Mbps aspect - the criteria and Q30 discuss this matter further.  In most situations the availability of adequate backhaul is the key to providing reasonable broadband service capability.  It is unlikely that an area will have significant availability of speeds around 1 Mbps or greater where there is not adequate backhaul.
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Q32. I am wondering if my company is eligible to apply for the BIF funding. I have just found out about the Broadband Investment Fund and realize from the closing date it may be too late to get an application in.
As set out in the Guidelines for Applicants, companies as legal entities are entitled to apply for funding.  The Guidelines for Applicants states the eligibility criteria and the timing of the application process.
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Q33. It is our intention (ie a partnership) to submit an application under the One-Stage Process. We will be in a position to submit an Emailed application by the closing date / time, but doubt that a hard copy will arrive in sufficient time. Will the Emailed copy suffice, pending arrival of the hard copy within a week?
Because of the very tight timeframes, we need to ensure that both email and hard copy applications are received by the MED by 5 PM on Tuesday, 30 September.  However, we will allow an extra 15 hour period for hard copy documentation (only) to arrive by 8:00 am on 1 October.  Any applications received beyond this timeline will not be able to be processed.
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Q34. If we are a community that is not applying as an existing entity, what should we write in the part of the application when it asks for a "Business Plan"?
A. If you are applying as a community and not an existing entity, you should attempt to define the community.  For example, is your community a group of houses, are there any businesses that require specific requirements, does it include any government agencies?  What level of support is the Applicant aware of in this community, and to what level of guarantee are members of the community likely to make towards signing up for a broadband service?  As described in the Guidelines for Applicants, it is also important for the Applicant to indicate whether there has been any communication with the local or regional authorities to establish whether they have any plans for broadband in the area, or whether the authorities will support the application that is made on behalf of the community.  Please read the Guidelines for Applicants carefully when considering how to complete the BIF application forms.
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