2016 Audit Reveals Scotland’s Superfast Broadband Roll-out Progress

A new report from Audit Scotland, which works to ensure that public money in Scotland is spent correctly, has found that the £410m Digital Scotland roll-out programme with BT has achieved its initial coverage target. But delivering 95% “fibre broadband” coverage by December 2017 “will be more challenging.”

The contract aims to ensure that “fibre broadband” services are available to 85% of premises by the end of 2015 March 2016 and 95% by the end of 2017 (recent updates have used the March 2018 date), although the coverage target for the Highland and Islands (HIE) region alone is currently just 84% by the end of 2016.

The funding for all this is via a mix of public and private investment, which is split into two regional projects, as also depicted in the opening picture for this article (top left).

Digital Scotland’s Contract 1 Funding

The Highlands and Islands (£145.8m):
• £126.4m from public bodies (Scottish Government, Broadband Delivery UK [£50.83m], Highland and Islands Enterprise and all seven local authorities in the project area)
• £19.4m from BT.

The Rest of Scotland (£264m):
• £157m from public sources (Scottish Government, ERDF, Broadband Delivery UK [£50m], and all 27 local authorities that form part of the Rest of Scotland Project area)
• £106.7m from BT.

According to today’s report, some 2.2 million out of 2.6 million premises across Scotland had gained access to “fibre broadband” (86%) by March 2016, which is 1% more than the Scottish Government’s original target and more than 500,000 of these gained access through the contracts (the most recent data shows that this has since risen to 600,000).

Interestingly the report notes how BT “stated in the contracts” that it expects 77% of premises to achieve “superfast broadband” download speeds of more than 24Mbps (Megabits per second), although it couldn’t guarantee this due to the variable nature of copper cable (longer copper lines deliver slower speeds) and other reasons (both geographic and technical, such as poor home wiring).

Meanwhile the Scottish Government recently stated that 87% of premises with access through the contracts should now be able to receive modelled speeds of 24Mbps+, which equates to 81% in the Highlands and Islands region and 89% in the Rest of Scotland area.

Caroline Gardner, Auditor General for Scotland, said:

“Fast, reliable internet access is increasingly essential for everyday life, so it’s encouraging to see good progress being made in rolling out fibre broadband. However, there is a lot still to be done by the Scottish Government if it is to achieve its vision of a world class digital infrastructure, particularly in improving download speeds in rural areas.

It’s important that it continues to monitor the cost and progress of broadband rollout so that these communities aren’t excluded.”

The headline figures sound good, but the audit notes that some areas are still falling way behind (i.e. 26 of Scotland’s 32 council areas have met contractual targets).

As you’d expect it’s the most remote rural areas, which are usually last on the list to benefit due to taking longer to roll-out and requiring more investment per property, that continue to suffer the most and Scotland has a fair few of those.

Ofcom’s data reports that 14% of premises in Scotland cannot even receive a 10Mbps speed and most of these premises are in rural areas, where this figure rises to 57% of premises. However Ofcom’s data hasn’t been updated for awhile and Thinkbroadband suggests that the 14% figure is now probably closer to 7.5%.

Next we move to the subject of cost. The report confirms that there is a cap of £1,700 on how much BT can spend on each premise, which is not unlike other Broadband Delivery UK linked contracts. BT can still deploy in areas where the costs might be higher, but it depends upon their own “value-for-money considerations” (e.g. levels of existing coverage and the availability of other options).

So far the some £156 million of public funding has been paid to BT for work done up to March 2016, which equates to £76m from the Scottish Government and £80m from the Highlands and Islands Enterprise (HIE). Apparently this leaves £24.5m as “unpaid“, which the HIE said is at least partly because BT has been slow to send out invoices and thus the operator is now reviewing their financial model.

Elsewhere BT has experienced lower than expected costs and higher than expected take-up. Under the clawback clause if take-up goes above 20% in the intervention area then BT has to start returning public investment (26% had connected in the Highlands and Islands and 23% for Rest of Scotland at the end of June 2016), which can be used to further expand coverage.

As a result of the above BT is said to have contributed £23 million more to help extend broadband coverage (£17.8m from clawback). The Scottish Government has also earmarked a further £42 million of public funding for a future contract, although we’re still waiting to see a concrete strategy for how this will be spent.

Part of the reason that the new contract is taking so long to prepare, aside from the known EU State Aid delay, is because BT’s modelling work is said to be “taking longer than anticipated … because competitors are building in areas where there had been no previous indication the market would invest.”

However Scottish ministers did recently (May 2016) commit to deliver 100% coverage of superfast broadband by 2021 and the above investment will play a part in that, although the report confirms that more money will still be required in order to achieve the new goal.

Separately the Scottish Government’s Community Broadband Scotland (CBS) initiative, which focuses on some of the most remote areas where not even BT dares to tread, has approved funding of £2.1 million towards the cost of 15 projects that will provide 3,950 premises with access to superfast broadband (13 of those are live). However “there are more projects in the development pipeline than CBS currently has budget for,” which means they’ll probably also be getting a boost from the aforementioned pot.

Overall the Audit Scotland’s report suggests that the contract is making good progress, but they also call for a “clear plan” to deliver the new 100% coverage goal and boost take-up. On top of that they’ve once again called for there to be “improved public reporting of progress and performance, to measure the benefits achieved from its investment and to allow benchmarking with other countries.” We’ll finish with an interesting map of progress..

Audit Scotland 2016 Report
http://www.audit-scotland.gov.uk/../nr_160818_broadband_update.pdf