Connecting Scotland. Making it Happen. our broadband future. Making it work together

Transcription

1 Connecting Scotland our broadband future Making it Happen Making it work together

2 MINISTERIAL FOREWORD Iain Gray, MSP Minister for Enterprise, Transport and Lifelong Learning Last year we published our broadband strategy, Connecting Scotland: our broadband future. Our objective was a nation with affordable and pervasive access to broadband; a nation which could realise the full benefits of this technology. The benefits of broadband are well known. For businesses, the greater capacity for data transfer increases the potential gains from e-business. The resulting ability to use Internet technologies to operate faster and more efficiently provides companies with a competitive edge. For the public sector, broadband can also enhance the delivery of its online services and for consumers, there is the general benefit of enjoying a better, always-on Internet experience. Indeed, those who have taken up broadband give us the clearest testament to its advantages. Quite simply, those using the technology do not want to give it up. We therefore remain fully committed to our strategy and have been pursuing it through a technology and supplier-neutral approach. Considerable progress has been made in implementing all key elements of our strategy and this update provides further details. Although coverage is still an issue especially in rural areas, about half of the Scottish population now has access to broadband via ADSL and/or cable modem and this figure is increasing steadily. Recent developments in the market such as price cuts for broadband, higher profile broadband marketing campaigns and demand registration websites are very encouraging.

3 MINISTERIAL FOREWORD However, despite these positive developments, we are not satisfied that enough of Scotland's people are gaining access to broadband quickly enough.the population coverage of the technology in Scotland is less than the percentage figure for the UK as a whole and we mean to address this. Our strategy states that we will work to identify areas where direct market intervention is necessary and while this was not appropriate at the time of the strategy's original publication (given the early stage at which the broadband market stood), the case for intervention is now clearer. Intervention is appropriate and indeed, necessary. To this end, we will provide support to upgrade a significant number of telephone exchanges across the country to provide ADSL to more of Scotland's people. In tandem with this, we will assist businesses in those areas gaining new access to the technology to fully harness the potential of broadband.working closely with the private sector we will provide support where it is needed, making training available, raising awareness and explaining the benefits offered by the technology. Plans are being developed which will deliver, in the short term, this step change in Scotland's broadband market. Our actions, taken alongside developments already occurring within the market place will further grow the supply side of the broadband equation. However, what will ultimately deliver pervasive broadband across Scotland is increasing uptake of the service. It is apparent that more needs to be done on demand stimulation if businesses and consumers are to benefit from the provision that already exists and also to encourage rollout to areas where it does not.we are working to kick-start a positive chain of events i.e. the extension of supply permits uptake; uptake allows an experience of the benefits of broadband; the benefits are passed on by word of mouth/case-studies and marketing; marketing generates more demand; demand encourages further commercial supply, and so on. A virtuous circle that will allow more of us across Scotland to experience the benefits that broadband offers. You too can contribute to the broadband revolution if you are already experiencing the advantages of higher bandwidth Internet. Spread the word and be part of the virtuous circle. Help us to make it happen. Iain Gray, MSP Minister for Enterprise,Transport and Lifelong Learning

4 Connecting Scotland: our broadband future making it happen MAKING IT HAPPEN CONTENTS Page Executive Summary and map of activities iv-v Section 1 Introduction 2 Section 2 Broadband for business 4 Section 3 Project ATLAS 6 Section 4 Aggregated Procurement 8 Section 5 UK liaison 9 Section 6 Direct Intervention UK Broadband Fund 11 Other related projects 12 Section 7 The Future 20 APPENDICES Annex A: Connecting Scotland: our broadband future background note 22 Annex B: Broadband coverage map 23 Annex C: Glossary 24 Annex D: Contact details 26

5 EXECUTIVE SUMMARY Both business and the public sector are growing increasingly aware of the possibilities offered by broadband. Since the publication of our strategy we have seen some progress in the commercial deployment of broadband but a major two-fold task remains. We have to stimulate the supply of services and increase demand for and take-up of these services.we have a comprehensive package of measures with short, medium and long-term impacts. In the short term, we will make a major intervention into the broadband market in Scotland to accelerate the deployment and business take up of ADSL services in selected areas.we aim to make broadband available in those areas where the market would take too long to deliver access to the technology, if ever. In addition to this, in these areas we will work to raise awareness of broadband s potential; we will provide the support and training needed to allow more Scottish businesses to grasp the opportunity offered by broadband. In the short term, on the demand side, we are: Rolling out demonstrator centres across the country; Providing seminars and roadshows to drive up interest in broadband; Developing high quality materials to ensure that the best information is available on broadband; and Developing a website to provide advice and information on broadband. In the medium term, on the supply side, we are: Piloting aggregated procurement by the public sector; Intervening in the market to increase competition; Trialling alternative delivery mechanisms in rural areas; and Providing a focus to encourage the development of content and applications. In the longer term, we will continue to take a strategic approach to the development of broadband across Scotland. We believe that strides forward have been taken since the publication of Connecting Scotland: our broadband future. This document details these as well as giving clear direction for the future. iv

6 Connecting Scotland: our broadband future making it happen Broadband Strategy Implementation Broadband Procurement Pathfinder Highlands & Islands Pathfinder South of Scotland Broadband Fund Programme H&I Demo Centres - Hub H&I Demo Centres - Remote Network PLT Trial Rural Area Network FWA Pilot AEC - linked VPN Trial (indicative locations) Sectoral Trial SEN Demo Centres (indicative locations) Scotland Wide Projects - Website - Wireless Excellence Network ATLAS Phase 1 ATLAS Phase 2 HIPP ICT Programme ADSL Telecoms Trading Exchange Backhaul to London Phase 2 Phase 2 links 1st Project (Indicative route only) ADSL Exchange Activate Project Thurso Kirkwall Lerwick Golspie Invergordon Muir of Ord Drumnadrochit Inverness Huntly Fort William Dundee Lochgilphead Crieff Glenrothes Campbeltown Irvine Livingston Peebles Selkirk Edinburgh Hawick Galashiels Sources: Broadband Strategy data: Scottish Executive - Enterprise and Lifelong Learning 2002 Local Authorities - GROS 1996 LECs - GROS 1997 (to London) v

7 INTRODUCTION Our aim is to make affordable and pervasive broadband connections available to citizens and businesses across Scotland Connecting Scotland: our broadband future, published August Key issues in August 2001 were access and cost. Key issues now are access, cost and demand. Need to raise awareness and increase uptake. Our original strategy identified two main issues relating to broadband in Scotland: local access and cost. Scottish Enterprise s project ATLAS focuses on cost along with customer choice and availability, while the Executive s strategy, launched last August, aims to promote affordable access across Scotland for the purpose of economic development and to prevent a digital divide opening up between urban and rural areas. The strategy consists of three strands aggregation of public sector demand, consideration of direct intervention measures, and UK regulatory liaison. (A background note on the original strategy is at Annex A.) Since the publication of the strategy (and despite the global telecoms market recession), there has been some progress on commercial coverage, particularly of ADSL-equivalent services. Nearly 50% of the Scottish population are now in areas covered by ADSL-enabled exchanges and/or cable services (see coverage map at Annex B). Sixty-seven Scottish exchanges are now ADSL-enabled, with the greatest concentration in Lothian, Strathclyde and Grampian (Aberdeen City).What is more, in the past year, satellite telecoms services have become available across Scotland. These give ADSL-equivalent capacity, but with expensive user installation costs (subsidised in some areas) and some technical limitations. Source: BT Scotland Source: BT Scotland With progress on coverage, the urgency of stimulating demand and take-up has increased. Demand stimulation is already being addressed in current public sector, as well as private sector, activities. The price-cuts in ADSL earlier this year, and the introduction of demand registration websites by BT and by local campaign groups are to be welcomed. 2

8 Connecting Scotland: our broadband future making it happen If all the further 105 Scottish exchanges included on BT s trigger-point list were to reach such demand thresholds and be upgraded, about 70% of the Scottish population would have access to ADSL. However, the current rate of pre-registration of interest in ADSL via these exchanges gives rise to some concern that, left to the market, the timescale for such coverage may be very lengthy. The current trial of a more cost-effective method of ADSL-enabling exchanges for a very limited number of ADSL customers in more rural areas is encouraging. Highlands and Islands Enterprise (HIE) is collaborating with BT on the inclusion in the trial of two exchanges near Inverness. 1 Of course coverage is still an issue, especially in remoter areas, but as potential access to ADSL creeps up slowly to 50% of the Scottish population, demand, and its corollary uptake, are vital. Since last year, research has been carried out 2 to analyse the particular problems in Scotland. Like earlier work, 3 this research has highlighted the complexity of the broadband issue. The key issues identified in the Scottish Telecoms environment were: access to basic services, lack of impartial information, choice of supplier/service, last-mile competition and technological obsolescence. We know that a reliance on one or two existing solutions is unlikely to address these problems on a long-term basis. For example, while the current demand-led roll-out of ADSL in Scotland is to be welcomed, it is unclear whether such technology will provide a longer-term solution. We must ensure that we have a portfolio of initiatives aimed at short, medium and longterm impacts. In making our broadband strategy happen, we aim to: Make business better; Make broadband more competitive; Make it value for money for the public sector; Make it count for Scotland; and Make it sustainable. 1 The ADSL Exchange Activate Trial entails the installation of innovative mini D-SLAMs (to enable equipment) in seven exchanges in the UK to enable ADSL access for a very limited number of users per exchange. With HIE, BT is including two H&I exchanges. Muir of Ord and Drumnadrochit, both near Inverness. Up to 16 customers at each exchange have access ADSL for a trial period of 6 months which began in October The solution is being tested both for its commercial viability and its technical success. (See diagram on page 18.) 2 KPMG An evaluation of the infrastructure and virtual market (TTE) options and the development of a robust business case to address market failure in national and international broadband connectivity. PBI Media The study provided comprehensive data set on the cost, quality and availability of telecommunications services in all major centres in Scotland and benchmarked them against equivalent data sets from other international centres. Obligato This study developed a telecoms intensity model that measured the relative demand for telecommunications services throughout Scotland utilising a Geographic Information System and a unique methodology for measuring the level of telecoms usage. Mason This study on Scotland s current telecoms infrastructure was designed to establish benchmarks for Scotland s telecommunication capabilities, provide international comparisons and highlight its strengths. 3 Ovum A comprehensive survey of telecommunications infrastructure and suppliers in Scotland which, based on the findings of the study, recommended that Scottish Enterprise encourage new entrants into the market, assist in demand aggregation and encourage infrastructure improvements or new network builds in areas like business parks. T Soja The study was designed to determine the market opportunity for a direct, competitively-priced submarine fibre link between Scotland and other international centres. 3

9 BROADBAND making business better 1. Broadband is often spoken of in terms of the benefits it offers to business users, but what exactly are these? In straightforward terms, broadband is the best enabler of e-business. 2. E-business doesn t mean simply having a marketing website or offering access to your employees; it means gaining a real competitive advantage through Internet technologies. 3. What are the competitive advantages offered to businesses through the effective employment of e business? To name a few: reducing costs; allowing customers to order online; developing and delivering goods or services in new ways; enhancing after sales service; checking the availability of supplies online; ordering supplies online and gaining fast access to global markets; and enhancing the company s image and credibility. 4. E-business means improved competitiveness and broadband, through its always on capacity and high-speed connectivity, releases the full competitive potential of e-business. In the words of one user participating in the Crieff trial (pages 13-14): It can truly be said that, even in a comparatively short time, the anticipated benefits have been far exceeded. 5. One recent survey 4 found that more than three-quarters of businesses who enjoyed broadband connectivity had seen enhanced productivity as a result. In addition to this, more than half of those businesses responding had seen improvements in their cost base as a result of the benefits arising from broadband connectivity. These results illustrate that however a business might experience broadband via ADSL, cable, Powerline Carrier Technology, wireless, satellite or private circuit efficiency and productivity can be significantly enhanced through e-business conducted over faster, better telecom links. 6. However, providing this connectivity in isolation is not enough. The latest survey of e-business practices across Scotland 5 indicates that becoming an 'e-business' means enhancing staff skills, fully recognising and understanding the relevance of e-business to a company's processes, committing resources and planning seriously. But those businesses that undertake these measures also recognise that broadband underpins the process. 4 Small Businesses in an Electronic Age II, information and communications technology in Scottish small businesses, 2001 compiled by the Federation of Small Businesses in Scotland, published May Scottish E-Business Survey 2002 A report for Scottish Enterprise in partnership with Highlands and Islands Enterprise. 4

10 Connecting Scotland: our broadband future making it happen 7. Across both the Scottish Enterprise and Highlands and Islands Enterprise networks, work is ongoing to accelerate the adoption of e-business practices among Scotland s smalland medium-sized enterprises (SMEs) and to help derive maximum business benefits from its use. And as Scotland's telecommunications infrastructure develops, the difference which broadband can make will become increasingly evident. e-business means effective business and broadband helps to make this happen. If you are using broadband technology, has it made your business more productive? Yes 76% No 24% 0% 20% 40% 60% 80% 100% More than three quarters of those businesses using broadband say that productivity has improved. The productive no respondents were asked if they expected broadband to deliver improved productivity next year 58% expected productivity gains. Source: The Federation of Small Businesses in Scotland 5

11 Project ATLAS: making it more competitive Addressing market failure for large buyers of bandwidth in urban areas. Phase I virtual telecoms trading exchange and backhaul. Phase II aims to spread benefits, and thus contributes to Executive s strategy to increase local access. 1. Scottish Enterprise have analysed the Scottish telecoms market (see notes 2 and 3), and found there was a complex set of issues constraining the market in Scotland including limited wholesale competition, cost of entry and access for ISP and other service retailers, restricted last mile access, and technological limitations and obsolescence. 2. The first phase of Project ATLAS is to set up a virtual telecoms trading exchange (TTE) in Scotland supported by a link (backhaul) to London. The target market for the TTE will be large corporates and specialist high-end users of bandwidth (such as ISPs) in Edinburgh, Glasgow and Aberdeen. They will be able to benefit from increased transparency and quality of service in their purchase of bandwidth, as well as the likelihood of lower prices through a competitive marketplace. 3. Contracts have been awarded and the telecoms trading exchange is expected to be operational by the end of the year. 4. Phase II will spread the benefits of ATLAS more widely, through building remote hubs in some of Scottish Enterprise s business parks, with backhaul links to the main ATLAS hub in Edinburgh.This phase will also implement neutral fibre as local networks in each of the business parks, offering opportunities for all service providers to access customers on the parks.the network will be based on next generation technology with substantial future proofing. 5. By providing competitively-priced backhaul to the trunk network, it could even ultimately help to stimulate competitive local access provision by FWA or mobile operators. An invitation to negotiate has already been issued to preferred suppliers.we know that this represents a sensitive market intervention, and Scottish Enterprise will ensure that it is developed with full cognisance of regulatory requirements. 6

12 Connecting Scotland: our broadband future making it happen Project ATLAS Phase 1 Telecoms Trading Exchange Backhaul to London Edinburgh Source: Broadband Strategy data: Scottish Executive - Enterprise and Lifelong Learning 2002 (to London) Project ATLAS Phase 2 Phase 2 Phase 2 links Edinburgh Source: Broadband Strategy data: Scottish Executive - Enterprise and Lifelong Learning

13 AGGREGATED PROCUREMENT: making it value for money for the public sector Pathfinder procurements 1. Our strategy made a commitment to exploit the potential of the public sector s aggregated demand for higher bandwidth connectivity in order to lever in major investment in infrastructure from the private sector, and thus encourage wider provision of broadband. This new approach to telecoms procurement for the public sector has now been taken up in other parts of the UK under the guidance of the Office of Government Commerce.We are in the lead in the scale and complexity of the challenge we have set ourselves by selecting as Pathfinders, the Highlands & Islands and the South of Scotland to pioneer this approach. 2. The two Pathfinder projects were set up in the Autumn of 2001.While the objectives and the procurement process for each of the Pathfinder areas will be largely the same, the detailed service requirements and local circumstances are distinctive and different. Aggregation of public sector demand will include requirements of schools, other local authority services and health. The Executive has been working closely with local authority and health partners to ensure that the needs of each area are accurately reflected in the documentation that is required to underpin the formal procurement process.the bandwidth requirements of public sector users will, in most cases, range from 2 megabits upwards and will, in any case, require to be scaleable, to meet their projected future needs. They will also require guaranteed service levels. Provision will, therefore, complement the extension of ADSL to exchanges in the Pathfinder areas. 3. Each of the Pathfinder areas will be the subject of a separate procurement process and ultimately a separate Framework Agreement. Prior Information Notices were placed in the Official Journal of the EC and this has been followed up by a series of bilateral meetings with interested providers. 4. The first stage of the formal procurement process is the publication of Contract Notices inviting expressions of interest.these were published in November 2002 and the aim is to issue the Invitation To Negotiate documents to the selected bidders in early 2003.The project remains on course for the Framework Contracts to be awarded by late summer The Pathfinder procurements will also provide access to the proposed new Spark national intranet for Scottish schools in those areas. The Spark intranet will provide a range of services and facilities tailored to the varying needs of pupils, teachers, education managers and others - all within a secure online webbased environment. The Spark intranet will serve a potential user base of some 800,000 individuals, providing them with access to an ever-expanding world of expertise, knowledge, interests and people. Pathfinder Highlands & Islands Pathfinder South of Scotland Sources: Broadband Strategy data: Scottish Executive - Enterprise and Lifelong Learning 2002 Local Authorities - GROS 1996 LECs - GROS 1997 Broadband Procurement 8

14 UK LIAISON: making it count for Scotland Scottish representation within the new regulatory framework UK Broadband Taskforce Liaison with other devolved administrations 1. Our broadband strategy highlighted the importance of liaison on policy developments at a UK level. Although telecoms regulation is a reserved matter, Scottish Ministers have important devolved responsibilities for matters of economic development, and these frequently cut across telecoms activities. Hence on the telecoms regulatory front, we have been actively negotiating the terms of Scottish representation under the new OFCOM structure. OFCOM will bring together the remits of Oftel, the Radiocommunications Agency, the Radio Authority, the Independent Television Commission, and the Broadcasting Standards Commission. Effective representation within the new regulatory structure on telecoms issues will be important for Scotland, given the large rural and remote areas here which do not currently enjoy the benefits of direct competition even for basic telecommunication services. The number of competing telecoms companies, even in the densely populated cities, is smaller than in many areas of England. (This of course is part of the rationale for the ATLAS intervention.) It is arguable that Oftel, although set up to promote competition in the telecoms market, has not fully achieved this in Scotland. We need to ensure that the new converged regulatory structure will be able to take account of and respond to Scottish telecoms needs including access to broadband. 2. At a UK level, we have also maintained contact with the Office of the E-Envoy s Broadband Stakeholder Group (BSG) 6.As well as learning from and inputting to the formation of policy at a UK level, this liaison has helped to raise the profile of Scottish activity. For instance an earlier report from the BSG held up ATLAS as an exemplar of an innovative approach, and the latest report, just published, includes a section on the implementation of Connecting Scotland: our broadband future. 3. We have agreed to work in partnership with DTI s new UK Broadband Taskforce and will have our own Scottish member of the Taskforce to help us both to learn from best practice across the UK, and to raise the profile of Scottish activity. 4. Liaison with the other Devolved Administrations has been important in most of the above work. This Summer s announcement by the National Assembly of Wales of a 5-year plan to increase access to broadband in Wales reflects much of the activity already in hand in Scotland. Indeed, what is at the planning stage in Wales is already being implemented in Scotland. Examples include aggregated procurement, subsidised satellite ADSL, fibre to business parks, and awareness raising/demonstration (the latter will be covered in the next section). 6 This is the largely private sector representative group set up by the Office of the E-Envoy last year to advise the Government on the development and implementation of a strategy to enable the UK to meet the Government s target to have the most extensive and competitive broadband market in the G7 by

15 DIRECT INTERVENTION: it s happening! Why we must act now When we launched our broadband strategy in August 2001, Scotland's broadband market stood at an early stage of development.we acknowledged that the public sector would have a role to play in stimulating the supply of the technology but it was unclear how the broadband landscape of Scotland would develop. However, we stated that where we identified the need for direct intervention to afford Scotland the fullest opportunity to benefit from broadband, we would take such an approach. Just over a year later, the picture is clearer. Around 40% of the Scottish population have access to ADSL services, a figure significantly lower than the UK average. A number of contributory factors are responsible for this; our distinct geographical make-up; a lack of awareness and subsequent demand for broadband itself; the not inconsiderable cost of upgrading telephone exchanges to provide the technology and the wider global context of a telecoms sector suffering heavily in recessionary conditions. In the light of this, the need for intervention on a significant scale is not only justified, but necessary.the challenge then is to best direct the resources we have available to us towards the realisation of our vision of a Scotland with affordable and pervasive broadband access. We are therefore developing plans that will, in the short term, see a significant number of exchanges ADSL 'enabled' across Scotland.These exchanges will be in areas where the real benefit will be felt through the availability of broadband but where, on current demand projections and given market circumstances, the business case will not be made for the necessary infrastructure investment in the near future, if at all. To complement this work, we will ensure that those areas which will benefit from this investment have access to the best possible information about the benefits of Broadband. Where we need to, we will work closely with private sector partners to help numerous communities across Scotland fully realise the potential of the technology - in short, we will give them the ways and the means. We ll be developing these proposals in the near future.this will be a significant market intervention and in keeping with the third element of our strategy, we remain in regular contact with the appropriate regulatory authorities to ensure its validity. 10

16 Connecting Scotland: our broadband future making it happen Scottish Programme under UK Broadband Fund Programme worth over 8 million. 7 Demand stimulation through demo centres and website. Supply stimulation through technology trials, including major wireless network to extend broadband coverage across the Western Isles. Pilot to extend ATLAS to a rural area. Wireless applications Centre for Excellence. Since last year, we have been developing the Scottish programme under the UK Broadband Fund and are now implementing projects to stimulate demand and supply. Broadband Fund Programme H&I Demo Centres - Hub H&I Demo Centres - Remote Network PLT Trial Rural Area Network FWA Pilot AEC - linked VPN Trial (indicative locations) Sectoral Trial SEN Demo Centres (indicative locations) One further SEN Demo Centre location as yet unconfirmed Scotland Wide Projects - Website - Wireless Excellence Network Kirkwall Lerwick Thurso Golspie Invergordon Huntly Inverness Fort William Dundee Lochgilphead Crieff Glenrothes Campbeltown Glasgow Irvine Edinburgh Livingston Galashiels Peebles Selkirk Hawick Sources: Broadband Strategy data: Scottish Executive - Enterprise and Lifelong Learning 2002 LECs - GROS Scottish allocation is 4.4 million, with contributions from enterprise agencies and private sector, making over 8 million in total. 11

17 DEMAND STIMULATION PROJECTS 1. Neutral Website 1.1 As we have seen, stimulating demand for broadband is a vital short-term priority. To raise awareness of the benefits of broadband and provide neutral advice and information on how to get it, we are supporting a website, which went live in November. The main objective of the website is to provide information that raises awareness, educates and demystifies the subject of broadband using simple language and also to help the users who access it to have a better appreciation of what broadband can offer. 1.2 On the website, the use of case studies to highlight the business benefits of broadband and tools to simulate access and download speeds and identify local availability and suppliers will be prominent. The site will be strongly featured in the marketing, delivery and follow-up activity in the Local Demonstration Centres (described below) and will be a hub for promoting and capturing interest from the targeted users. Building knowledge of the users, their priorities, issues and challenges for continued research to improve the site and the other linked programme projects/activities will be a key feature of the value that the site can add. 2. Local Demonstration Centre Network 2.1 Across Scotland, the site will be linked to the work of a team of e-business advisers, working through the enterprise agencies, as well as to a network of broadband demonstration centres. Here we are leading the way in the UK. The network in the Highlands and Islands is already operational, with a central hub in Inverness and local distributed support in Lerwick, Kirkwall,Thurso, Golspie, Invergordon, Fort William and Lochgilphead. Indeed, a first series of local promotional roadshows has already run this Autumn, starting in Orkney and concluding in late November in Ullapool, and taking in locations across the region in between. These events focused on the business benefits of broadband, and the widespread availability of service through satellite. Considerable interest has been generated from local companies, and this is now being followed up in each location with more detailed tailored seminars. Broadband for Business Roadshow on the Isle of Skye 12

18 Connecting Scotland: our broadband future making it happen 2.2 In the Scottish Enterprise area, the current plan is for seven Local Demonstration Centres with the potential for an eighth. The first two centres are in Irvine (SE Ayrshire) and Glenrothes (SE Fife) respectively and pilots have been running since November. A further two centres in Selkirk (SE Borders) and at the Small Business Gateway in SE Tayside will be operational by the end of January 2003, building on the pilot experiences and initial operational seminars in the first two centres. The final phase will deliver Huntly (SE Grampian), Glasgow (Services to Software) and Livingston Council Facility (West Lothian) early in The workshops to be delivered in the centres will be completely integrated with the messages and positioning on the neutral Broadband Website. They will also enhance the work already in delivery by Scottish Enterprise s E-business teams such as 1st Steps seminars, etc., as well as UK Online for Business and local enterprise companies surgeries. In essence, the broadband workshops will promote interactive and functional hands-on demonstrations to help businesses to appreciate the broadband 'art of the possible' with actual business benefit examples. 2.4 As already mentioned, the programme will link into existing E-business advisers in the LECs who have excellent experience and relationships with local companies and are well placed to be a key resource in delivery of the broadband programme. It is also proposed to supplement the Local Demonstration Centre network through the addition of a mobile Broadband Learning Unit. This will deploy a satellite-enabled executive coach to deliver mobile broadband awareness and learning to the wider community using the programme and materials being developed for the fixed centres. 2.5 The message is not: you must get broadband. The enterprise agencies will continue to provide advice and support, largely through the UK online for Business network, on e- business more generally. However, broadband clearly improves the e-business adoption process, and can facilitate lower order processes such as through its always-on fast download convenience. Quite simply, it makes the Internet experience better. 3. Corporate Demonstration Centres 3.1 The demonstration centre network will also be linked to limited corporate demonstration facilities, where host companies, and other corporates who have no commercial barriers to sharing venues, will showcase broadband applications in action and the benefits of broadband within the supply chain. The approach to these sessions will be contiguous with that of the Local Demonstration Centres, and will build strongly on existing and developing case studies. 13

19 SUPPLY STIMULATION PROJECTS In addition to raising awareness and stimulating demand for broadband, we must do all we can to encourage further supply of service. This aim is being pursued through trials of alternative delivery mechanisms such as powerline technology and wireless. In each case, we are testing not just the technology to see if it works but the commercial model. The latter is crucial if we are to see future market deployment. 4. Fixed Wireless Trial in the Western Isles 4.1 The technology trials included within the Scottish programme are exciting and offer a range of challenges. The Western Isles fixed wireless project has the potential to extend broadband access to the public sector and businesses right across this remote region. 4.2 The project is currently at procurement stage and the organisers have recently chosen a preferred bidder. It is planned to have the main network infrastructure in place by March Powerline Carrier Trials in Crieff and Campbeltown 5.1 In June 2002, a pilot scheme to offer high-speed, always-on Internet access for rural communities in the north of Scotland was launched in Crieff. Along with a similar initiative in Campbeltown, these innovative projects are the first in Scotland to use electricity power networks to deliver broadband communications. In Crieff, SSE Telecom (the telecoms arm of Scottish & Southern Energy plc) is in partnership with Perth and Kinross Council with support from Scottish Enterprise Tayside, while in Campbeltown the company is partnering with Highlands and Islands Enterprise. 14

20 Connecting Scotland: our broadband future making it happen 5.2 SSE Telecom s introduction of the broadband trials in Crieff is based on demonstrating that powerline carrier technology (PCT) can be used to deliver broadband services to real customers, and that a market can be developed for this service. PCT offers an opportunity to establish broadband communications using the most widespread, pre-existing infrastructure the electricity network, delivering the service through house and office wiring to any standard power sockets. Basically, the technology differs from more conventional broadband services in its use of existing electrical wires instead of telephone lines or cable. 5.3 The economics of extending cable or fibre telecommunications networks is widely acknowledged as a major hurdle to broadband expansion beyond urban areas. Electricity distribution networks, however, with virtually 100% coverage of the UK population, offer enormous untapped potential for provision of broadband to all areas, and with lower investment costs.with projected access speeds of up to 2 Meg, compared with 56kbs for an ordinary dial-up modem, there could be a great potential to open up a huge range of educational, business and entertainment opportunities via the Internet. 5.4 In technology terms, a PCT network has been built in Crieff to provide broadband Internet Service Provider (ISP) and direct connections. Broadband Internet is being delivered initially to 13 sub-stations via conventional Digital Subscriber Line (DSL) technology. From these sub-stations, powerline carrier technology is used for the last mile to the SME or domestic user s premises. A PCT access box is fitted inside the customer s premises, connected to the incoming power supply by a 13-amp plug and to the network device or PC by a standard RJ45 connector. In other words, the Internet is being brought right to the customer through a normal power socket without the need to tie up an existing phone line or install a new one. The trial is already confirming the business benefits of access to broadband, as one participant has put it: Broadband Internet access, made available at reasonable rates, helps rural businesses to compete on level terms with their urban counterparts. Angus Armstrong ADAC (Engineering Services) Ltd, Crieff 5.5 However, the longer-term commercial future of powerline carrier technology is dependent on the stability of regulation. The European commission has mandated ETSI and CENELEC under mandate M313 to determine a limit for radio frequency emissions. In the UK, enforcement of such regulations lies in the hands of the Radiocommunications Agency (RA). Given that the technology produces radio emissions, the RA have to be sure that such emissions will not interfere unduly with existing radio users. A decision is expected on UK usage by early

21 SUPPLY STIMULATION PROJECTS 6. Smaller Trials Ayrshire 6.1 There are also two smaller technology trials based in Ayrshire one building on the established success of the Ayrshire Electronic Community initiative to supply broadband to the voluntary sector via metro VPN, and the other testing the business case for wireless broadband services to the farming community Other Projects 7.1 The remaining projects are of national significance: There will be a pilot rural extension of ATLAS in order to test whether a commercial case can be constructed for rural areas. For instance, a different design solution will be needed from the rest of ATLAS Phase II, with networked mini-nodes rather than single points at business parks, in order to increase the potential target market. Rather than dark fibre links, this project will utilise wireless technologies in the local loop to deliver services to businesses and communities enabling a sustainable business model to be developed. The final project being supported by the Scottish Executive under the UK Broadband Fund is the Wireless Excellence Network. Most significantly, this will involve the facilitation of trials of new content and applications in the wireless sector, while providing a link to academic expertise. The aim is to educate, develop, enhance and demonstrate Scotland as an innovator in the wireless arena. By capitalising on existing relevant skills within Scotland, and encouraging the involvement of worldwide industry players, the Wireless Excellence Network will allow industries within Scotland to view and benefit from wireless capabilities as well as promoting Scotland externally as a leading forward-thinker and user in this area. To recap, the Scottish Programme under the UK Broadband Fund addresses short- to medium-terms needs by by focusing on raising awareness and demand for services, by stimulating alternative technological means of supply, and by including the important missing link between demand and supply content and applications. The Programme has 2 years funding, ending in March The Executive will be supporting the programme to the value of 4.4 million, levering in an equivalent sum from other sources. 8 Network Trial Using VPN The aim is to develop and demonstrate the application of a broadband model for electronic community networking in a part of Ayrshire not likely to benefit in the short to medium term from the commercial deployment of broadband. The project will test an aggregation model using the demand from the community, voluntary and private sector, and will build onto and extend the successfully established Ayrshire Electronic Community (AEC) programme. Sectoral Application (Agriculture) This is a pilot project to use wireless technology to deliver rural content and applications over broadband to rural/farm businesses, and to test the case for broadband, in terms of applications benefits. The project will be undertaken in rural areas of Ayrshire and involve the participation of Scottish Agricultural College (SAC),Ayrshire Business Technology Centre (ABTC) and Scottish Enterprise Ayrshire. 16

22 RELATED ACTIVITIES 8. Other Enterprise Agency and Related Projects HIPP ICT programme in remoter parts of H&I. HIE and Scottish Enterprise both active in implementing Broadband strategy above. Both agencies piloting satellite and lobbying for ADSL upgrades. Chance to pilot cheaper ADSL upgrades in H&I. FWA community networks model in the Highlands & Islands. Barriers to broadband content development being examined. 8.1 That is not all. Under the Highlands and Islands Transitional status, the Highlands and Islands Partnership Programme (HIPP) has been allocated 9 million for telecoms infrastructure enhancements in remoter areas and 4 million to stimulate the demand side. This latter has already been applied to set up the team of local e-business advisers referred to above. For the infrastructure side of the programme, commissioned research suggested that there was no magic solution to broadband coverage in the Highlands and Islands, and that therefore a range of measures should be considered. Hence funding will be utilised through individual projects which conform to the terms of an Action Plan drawn up by the HIPP ICT Steering Group, chaired by the Executive. The first proposal is the Northern Isles and Caithness Fibre Optic link. The development of the project will depend upon its commercial viability We recognise that the opportunity to make use of European funds to boost infrastructure provision needs to be directed carefully in order to ensure wider strategic fit. Hence we will continue to steer the development of proposals under the HIP Programme with this joined-up overview in mind. 8.3 Highlands and Islands Enterprise is of course key to the success of broadband strategy implementation in the region. The agency has an impressive track record of success in stimulating telecoms investment in the area a series of upgrades in the 1990s totalling 80 million public/private investment, and leading to the creation of over 3,000 contact centre jobs. Currently, not only is HIE actively engaged in the management of the H&I projects under the UK Broadband Fund, and in the development of the HIP Programme, but it is subsidising the delivery of two-way satellite broadband services to selected business users in the area. 9 The Northern Isles cable proposal is to install a 385km telecoms 24-strand fibre-optic cable connecting Shetland to Orkney and then on to a landfall in Caithness. It would upgrade the capacity, reliability and security of telecoms links to the Northern Isles, which currently depend on microwave radio links.the aim would be to lift constraints on existing businesses and open up new inward investment opportunities. 17

23 RELATED ACTIVITIES 8.4 BT s satellite trial commenced in November 2001 in the Highlands & Islands and in Northern Ireland. The service has subsequently been extended across the UK. Installation charges are high 900 and the monthly service is over twice the price of conventional ADSL. HIE is currently offering substantial grant assistance towards the set-up costs to selected businesses in its area. Over 100 businesses are currently taking advantage of this offer. Three Scottish Enterprise LECs have offered similar subsidies, but to more restricted numbers HIE continues to discuss fixed link provision of ADSL with BT, and, as mentioned earlier, the area is included in BT s ADSL Exchange Activate commercial trial of mini D-SLAM upgrades in rural areas. Source: BT Scotland 8.6 Although these initiatives will undoubtedly enlarge the reach of broadband in the Highlands and Islands, they are unlikely to provide a complete solution. Therefore, HIE is investigating a model for establishing community networks using a combination of satellite and wireless systems to provide cost-effective but sustainable broadband services to very small rural settlements. HIE plan to roll out this solution during Borders, Dumfries & Galloway and Forth Valley are trialling the service with approximately 50 companies taking part in all. 18

24 Connecting Scotland: our broadband future making it happen 8.7 Scottish Enterprise is similarly engaged in transforming the environment for the provision and utilisation of broadband services. Besides ATLAS and projects under the UK Broadband Fund as outlined above, the agency is also considering the need for research to identify the barriers to broadband content and applications development throughout Scotland. Scottish Enterprise is also helping to ensure the business community is well placed to utilise broadband through its activities to promote mobile applications, e-learning, greater e-business adoption generally, and the software industry.these include: MX, the association to support the Scottish mobile applications supply sector, was set up and launched by Scottish Enterprise in e-business week It acts as a trade association for businesses that specialise in the creation and delivery of services, applications and solutions through mobile appliances, acting as a voice for their interests and enhancing their knowledge of relevant markets and issues.to date it has recruited members from various sectors including healthcare, local government, retailing, distribution, manufacturing, agriculture, gaming and marketing. E-Learning is a key area of Scottish Enterprise s e-business activities. It is taking forward an approach to e-learning based on policy development, supplier development, demand stimulation, and marketing and promotion. Activity in those four areas will have an effect on both the supply side (content, web, and service developers and managers) and consumer side (consumption and application) of the various parts of the elearning Value Chain in Scotland. Over the past year, Scottish Enterprise s network of 45 independent e-business advisers has run 450 projects to help improve their local SME communities e-business development and performance.to widen its reach into the Scottish business community, the Glasgow and Edinburgh Chambers of Commerce in conjunction with the e-business advisers network have been running e-business clubs for awareness-raising and networking events since early The Winners at the Web competition, to provide recognition and reward for organisations that have demonstrated business success through the most imaginative use of Internet technologies, has been held annually since 1998.The success of the event, in terms of the publicity it receives for e-business generally and for the finalists, has been such that the DTI modelled its UK-wide e-commerce awards on Winners at the Web. For the software industry, another of Scottish Enterprise s e-business priority sectors, a network of 12 Softnet centres has been established to provide incubation facilities for growing applications developers. A programme of national and local networking forums is also underway. Other forms of assistance, in collaboration with ScotlandIS, include sales and marketing, training and support for companies, and a Software Academy to help companies find the right graduate employees. This list provides a flavour of the activities that Scottish Enterprise undertakes at the local and national level assist both the business supply community and the businesses that will take advantage of the products and services they offer. For more information on these activities, please see 19

25 THE FUTURE making it sustainable Broadband matters In 2001, the Scottish Executive published its statement of ambitions for Scotland's future economic growth and development, A Smart, Successful Scotland. This emphasised the importance of global connections to the realisation of a high-earning, fast-learning nation and a vibrant economy. Growing businesses are businesses with a competitive edge running faster and more efficiently. Broadband is not the only factor to e-business success, but it is a key element to more Scottish businesses gaining the competitive edge that Internet technologies can offer. While businesses can enjoy significant advantages from simply being 'on-line' via dial up modem, broadband's speed, 'always on' capability and capacity for data transfer make it a far greater enabler of the benefits of e-business. This year in the market, we shall see the potential of ADSL demand pre-registration tested and we will make a significant market intervention to accelerate and extend ADSL s reach in Scotland. Behind the scenes, Scotland will be involved in trials to test the commercial case for mini-enabling of exchanges, using new technology, and the Highlands and Islands will develop wireless community network models. The success of the satellite trials will also need to be evaluated. In the meantime, the broadband strategy projects and related activities will mature and start to yield benefits. Our vision in Connecting Scotland: our broadband future was to make broadband connections more affordable and pervasive. As this paper has shown, public sector activities have since sought to promote this goal, not only through our power as purchasers of telecoms services (Pathfinders), but through the economic development remit of the enterprise agencies (ATLAS, HIPP, Broadband Fund Programme). 20