Tag: wifi

It’s been brought to my attention that Mr Bluh’s been defending and promoting the efficacy of his not-so-little wifi deal. At a meeting of Swindon Borough Council’s Scrutiny Committee he almost showed a little humility. Almost.

He acknowledged the significant level of debate on the subject of the proposal to deliver a Wi-Fi network across the borough, particularly in relation to the decision-making process in reaching an agreement with Digital City (UK) Ltd

It would be rather shocking if he’d not noticed the very extensive debate.

He welcomed debate on how best to resolve issues of process that will allow the Council to take advantage of similar commercial opportunities that might arise in the future

As the evidence that this will be an opportunity rather than a liability has not been made public, I’d rather processes were in place to ensure secretive deals like this weren’t done in future.

[He] stated his certainty that the Wi-Fi network would prove to be a great success, one that would not only produce a financial return that would underpin service delivery for the benefit of residents, but one which presented an exciting commercial opportunity for private and public sector businesses and organisations in Swindon.

And why should I or anyone else in Swindon trust the business judgement of a politician and has-been lawyer? As it seems this decision was made in secret by no more than five people there’s clearly not a lot of trust around.

It was therefore essential, he felt, that the Council was prepared and able to pursue viable commercial opportunities, such as the Wi-Fi network, as they presented themselves.

A new internet provider in one of the best connected towns in the country doesn’t sound like the most sure-fire winner to me.

[H]e agreed that more openness generally was to be welcomed but he maintained that, if the proposal had been debated in an open forum, the “deal would not have happened”.

One of the purposes of open debate is to ensure that certain deals don’t happen. Nobody beyond a select few has been allowed to scrutinise the information that would allow them to form their own view as to whether this was a deal that should have happened.

He was aware of concerns about the decision making process and assured the Committee that the process would be reviewed.

And what happens if the review shows the process was flawed? Will Mr Bluh personally stump-up the almost £½M that has been gambled on the three start-up companies providing the wifi service?

However, he remained convinced that the proposal, which he was sure would be to the benefit of the council and its residents, could not have been successfully concluded if it had been made public any sooner than it was.

But it’s not really public even now. We have no detail of the basis on which Mr Bluh and associates made this decision — it remains a secret deal.

Councillor Bluh assured the meeting that the Council would not be required to make any further financial commitment to the Wi-Fi scheme beyond the initial £450k loan.

The council had no commitment to make the initial £450k loan, but a select band decided that it should. Why should we believe that if the company came back begging for more money, Mr Bluh wouldn’t choose — in secret — to stump-up yet more of our money?

Many questions have been asked so far about this deal. Some questions about the process by which this decision was made raise serious issues. Mr Bluh’s answer to almost all of them seems to be ‘Trust me, I know best.’ Until he provides more informative answers the scrutiny should continue.

Appearances can be deceiving. I see that, having Swindon Borough Council loaned almost £½M to the company in which it has a 40% stake that is installing wireless internet across Swindon, that company has contracted the installation and maintenance to Swindon Commercial Services. That’s the same Swindon Commercial Services that Swindon Borough Council has recently made into an arm’s length company, and would obviously like it to have a few ‘external’ contracts in its first year of pseudo-independence, to make its finances look rather more rosy. The same Swindon Commercial Services that has amongst its directors one Mr Hunt, who so happens to be chief executive of the wifi company.

Public sector commercial dealings should not only be above board, but should be seen to be above board. The appearance of this deal is rather more incestuous than is seemly.
Hat-tip: magicroundabout.

In the interests of getting some much needed clarity on the extent of Swindon Borough Council’s support for the company planning to provide boroughwide wireless internet to Swindon, I’ve made some enquiries to the Council. This is a summary of their answers to my questions.

• The council’s 40% shareholding was obtained at nil cost, i.e. it did not cost anything in addition to the £450,000 provided as a loan.
• The decision to provide the loan was made by the Director of Finance (Mr McKellar), the Director of Law and Democratic Services (Mr Taylor) and the Group Director Business Transformation (Mr Patel).
• “[R]egarding support of planning applications for transmitters… no special or preferential treatment is being extended to Digital City UK Ltd regarding this matter. They are subject to the same process and regulations as any other company.”
• The offices provided to the company rent free in the David Murray John Tower had been vacant.
• “In terms of making the space fit for use… no additional cost has been incurred as a result of Digital City’s occupation.”

From those answers it appears that £450,000 is the limit of the council’s expenditure, so far, on this speculative venture.

One thing that seems to be absent in Swindon’s free wi-fi fiasco is due diligence. Mr Bluh would have us believe that due diligence occurred before Swindon Borough Council loaned a start-up company £450,000 of our money to provide ‘free’ wireless internet across the borough.

As for whether due diligence was followed, of course we looked at the risks and exposure of the investment. There is absolutely no requirement for us to seek third party independent advice. We have successfully concluded many multi-million deals and transactions and, as a result, have built up a high level of legal, commercial and technical expertise.

Others disagree. Evidence of due diligence is certainly hard to find. The published advice given to Mr Bluh and Mr Edwards is limited. The advice stated that the company was more likely to pay the council’s loan back late than to completely default. It also stated that the likelihood of the council getting a return on its shareholding was strongly dependent on the company’s marketing campaign, yet at the time the company did not have a formal marketing plan. Just how weak would a business proposition have to be for these two councillors not to squander our money on it? This is also the council’s first public/private venture, according to an article in the council’s own newspaper. So the expertise available in the council is more limited than than is being suggested.

Mr Bluh would also have us believe that this £450,000 could not be used for other purposes.

The money invested in Digital City cannot be used to plug a gap in our budget or operating services, it forms part of a sum we would normally invest in order to get a better return for the council.

Just how naïve does he think we are? Transferring money from reserves is commonplace amongst councils when times are tough, as shown in Swindon Borough Council’s own accounts.

Theres also the matter of whether this boroughwide wifi service should have been put out to tender, as a procurement exercise. The Swindon branch of the Federation of Small Businesses believe so, and that the council is disadvantaging local businesses. Once again, Mr Bluh would have us believe differently.

We have been looking at providing free Wi-Fi for the last three years as part of ‘Swindon’s Digital Challenge Proposal’ and it is only recently we have been approached by Digital City UK who had a technical partnership with aQovia. They came to us because they wanted to set up services to sell in Swindon and we invested in them, so we have not disadvantaged any other businesses in Swindon.

But if it was part of the council’s policy to provide such services would they not have eventually offered a contract to supply these services if this offer hadn’t been made? And isn’t Mr Hunt — as chair of one of the council’s bureaucracies, the Swindon Strategic Economic Partnership, and a board member of several others (SSP, TNSC & SCS) — someone with rather better access to the council cabinet than most? This is not some unconnected company coming along with a commercial proposition: Mr Hunt and the council have been closely connected for many years. And as a consequence of that we, the Swindon taxpayers, seem to have been landed with a deal with far less financial security than a properly procured service would provided.

It’s not enough for the process to be, as Mr Bluh regards it, not only above board but robust. It also needs to be seen to be above board. At the moment, all that can be seen is a fog of secrecy and spin, mixed with smoke from taxpayer’s money burning.

It now seems that there’s more than just the marketing plan that’s been forgotten by the company setting up ‘free’ borough-wide wireless internet in Swindon at our expense. From the latest comment by Mr Hunt it’s obvious that even the plans for setting up the wi-fi are vague.

It won’t be fully functional in Highworth until probably about January 15. After that we will have a better idea.

Probably about? Just what sort of commercial delivery plan is as vague as that for a deadline just three working weeks away? This also suggests that last week’s ‘launch’ of the wifi service in Highworth was a sham and nothing more than a publicity stunt.

For a project that’s costing us almost £½M, I expect something far more robustly planned and thought through than this. I expected our council leaders to have demanded such robustness too, before they used our money for this speculative investment.

A document uncovered by kecl over on TalkSwindon shows that Swindon Borough Council’s £450,000 loan to the company installing wifi across the borough is far from secure.

The new company will need to generate sufficient income to repay the loan provided by the Council. Should this not be the case, security is provided through the loan agreement which requires transfer of the ownership of the company’s assets to the Council in the event of default. The physical assets will be purchased at a cost of around £250k

What the cabinet briefing to Mr Bluh and Mr Edwards doesn’t mention is what those physical assets might be worth once installed: no doubt considerably less than £250k. Still, never mind, the council would have a share in an unsuccessful network and a defaulting company.

In addition there will be value in the virtual network that will cover all of the Borough and in the Council’s shareholding in the company.

The document also indicates how woefully unprepared the company was just a couple of months before launching the service.

While providing the loan is not without risk, based on the Business Case it appears that the risk that the loan repayment period may need to be extended is more likely than the risk of complete default…. The success of the company, particularly in the early stages, and consequently the potential for Swindon Borough Council to achieve a return from its shareholding will depend to a large extent on the success of the marketing campaign. A formal marketing plan has not yet been developed, but a Brand Consultant and Marketing Specialist have been informally assisting the project.

So that’s a loan made of the basis of a business plan that lacks a plan for what financially is its most important part.

Over 50% of households in Swindon already had broadband access in 2006. That’s half the potential market for the new company’s paid-for services gone before they even start. Many of the remainder are likely to have neither the interest nor the money to pay for wifi services either. The business case must be very optimistic.

According to the document, the report and its recommendations were approved by the two cabinet members without reference to the rest of the council’s cabinet. The issue has now been referred to the Audit Commission.

It seems that Mr Bluh does not understand what the role of a local council is. Primarily councils exist to provide services, such as social services and education. At their core are services taken over by councils as the Poor Laws were reformed, then abolished and replaced by the welfare state, plus a few other tasks inherited from the courts.

One thing that has never been at the heart of council business is commercial speculation. Mr Bluh seems to be unaware of this.

This is a commercial decision, in the new world in which we all live more and more commercial decisions will be made. An opportunity was put to us, and we were asked if we wanted to invest…. Had we not done it the way we did, the deal would not have gone through.

Had Swindon Borough Council made the decision to invest £450,000 of our money in a wi-fi venture in a more open way, it may well have been found that it was perfectly right and proper for the deal not to go through. Unfortunately, very few seem to have been asked for an opinion.

We don’t do anything without considering the implications. But we would not have done this had it not been in accordance with council policy.

I don’t recall gambling on start-up companies being a council policy.

This is a commercial venture that will bring commercial return. The only affects on capital budgets will be if this loan does not get repaid in full.

Has Mr Bluh not noticed that the economy is in rather a mess? That defaults on loans are much more commonplace than they were a couple of years ago? This is a commercial venture that may bring commercial return, but could equally bring losses. To remind him of something he said very recently.

To get a reasonable level of council tax and to go forward we have been required to find savings and efficiencies. We are doing everything that is humanly possible to keep this ship afloat.

Speculating almost £½M on a commercial venture in an already very crowded and competitive market does not look like ‘doing everything that is humanly possible’ to me.

If I wanted to speculate on commercial ventures, I’d buy some shares. With those shares comes the right to vote to remove the executive. And if others didn’t agree with me I could sell the shares and take my money elsewhere. None of those options are available when it comes to a council. The council takes my money in council tax regardless of whether I agree with what it does: there is no option to sell out.

I expect the council to provide services, not to indulge in commercial speculation. Whatever Mr Bluh may think, the council is not a business, it’s a council, and it is not subject to the commercial rigours that business is. If I want to invest my money, I’ll chose where to invest it myself thank you. I don’t expect some has-been lawyer and a bunch of bureaucrats to speculate with my money without asking first.

Compare and contrast:

Mr Greenhalgh, on moving a bus stop in Penhill;

What part of ‘we don’t have any money’ does Councillor Glaholm not understand?

Mr Edwards on next year’s council budget;

We always strive to deliver the lowest possible rise in council tax but the reality is that we are facing a very difficult situation. We have to look at the rate of council tax or the services we provide. We can’t have both.

From this, you may just get the impression that Swindon Borough Council is exceptionally short of money. Then comes today’s very widely publicised announcement that the council has set up a joint venture with a private company to provide wireless internet access throughout the borough by the coming April. Mr Bluh;

It can’t be about cost-cutting all the time – otherwise there will be nothing left.

Perhaps he should have a word with his cabinet colleagues — particularly Mr Greenhalgh — who appear to have a different opinion. As is often his way, Mr Bluh also seems to have swallowed the company’s publicity spin.

residents in the Borough be able to access the internet for free

Rather than being freee, this could be a costly gamble.

To get through the financial storm, we are going to have to start raising some revenue. We believe this is a good deal for Swindon.

The scheme will cost £1M. The council has a 35% share in the company, so if Mr Bluh’s gamble with our money doesn’t turn out as he expects, the council tax payers of Swindon could end up with a £350,000 bill. And £350,000 is not my understanding of ‘free’.

With the first service beginning in Highworth next month, and completed throughout the borough by the end of April, clearly most of the money will already have been spent. For the sake of everyone in Swindon, we can only hope that Mr Bluh’s commercial speculations are proved correct.