AAISP Fears Broadband Too Costly for ISPs in an Independent Scotland

The boss of bracknell-based ISP Andrews & Arnold (AAISP), Adrian Kennard, has waded into the heated debate over Scottish independence by warning that some smaller broadband ISPs based in the rest of the United Kingdom might “simply cut off Scotland” because of higher costs. As our Scottish cousins might say, “a nod’s as guid as a wink tae a blind horse“.

After years of rising political division the debate over whether or not Scotland should become independent from the United Kingdom is finally due to be decided in a referendum on 18th September 2014. In the meantime many people, on all sides of the divide, are still unsure about precisely what independence will truly mean.

ISPreview.co.uk has previously explored some of the biggest question marks (here), albeit from the perspective of broadband provision and its related regulatory requirements. Unfortunately we’re still no closer to knowing precisely how an independent Scotland would work on the telecoms front and the Scottish Government’s recent attempts to clarify has done little to help (here).

Now AAISP’s outspoken Managing Director, Adrian Kennard, has warned that smaller ISPs could potentially end up becoming a casualty of the split.

Adrian Kennard said:

We don’t currently offer services to people in other countries. We are simply not set up to do that [and] trading with a different county has a lot of possible implications.

• We may have to be VAT registered in that country, and collect and pay VAT to their VAT office.
• We may have to pay corporation tax to that county.
• We may have to do currency exchange on payments.
• We may have to pay surcharges on international bank payments even if in same currency.
• The legal implications if someone did not pay, and how we would sue them, could get a lot more complex.
• We may have to be part of that countries ADR scheme.
• We may have to deal with their telecoms regulator.
• Shipping routers may cost a lot more and may involve customs.

Broadband is not a high margin business at the best of times, and all of this extra burden is a cost that may mean it is simply not viable for a small ISP to bother.

Kennard admits that, due to a familiar lack of detail, he “can’t say for sure what would happen” in the event of a split. On the upside he does believe that, from a simple engineering point of view, not much would change with regards to the ISPs relationship with infrastructure providers (except maybe for costs).

But Kennard also suggests that the extra admin and costs associated with catering for a separate country could mean that some ISPs based in England “would simply cut off Scotland, just because of simple commercial common sense“. Other ISPs, such as Entanet, have expressed similar fears and warned of the potential for higher prices rather than a cut-off. Optimism for independence is hard to find among ISPs.

On the other hand independence could, if given enough time, result in more ISPs being setup to specifically cater for Scotland (i.e. replacing those that are lost) and there may even be some benefits in other areas like regulation. As usual though, nobody has a firm answer because the issues are so tricky to navigate and many of the decisions may only be properly discussed after next month’s result is known; although we might equally be able to move on from this debate completely.

As the translation of that opening phrase would say, explain yourself properly and make your meaning clear. If only it were possible.