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UPDATE Independent Scotland Could Gain a USO for Broadband Internet

Monday, July 14th, 2014 (10:41 am) - Score 674
scotland map

The Scottish Government has announced that it will set-up a Rural Connectivity Commission as part of their new proposals, which would aim to improve the country’s postal, transport, mobile and broadband Internet access connectivity in the event of a vote in favour of becoming independent from the United Kingdom (i.e. referendum on 18th September 2014).

The commission, which forms part of a new constitutional paper (Connecting Rural Scotland), will be tasked with considering how to deliver a “better deal for our rural communities and businesses“, while also ensuring “clarity for industry and stability for investors“.

At present the £400m+ Digital Scotland initiative, which is partly being funded by investment from the central Government’s Broadband Delivery UK (BDUK) programme, aims to ensure that 85% of premises in Scotland can access BT’s “high-speed fibre broadband” (FTTC/P) network by the end of 2015 and this should rise to around 95% by the end of 2017.

But many questions remain unanswered, such as how both BDUK’s scheme and the country’s future requirements might be impacted in the event that Scotland were to suddenly become independent, especially given that much of Scotland is rural and thus typically more expensive to serve.

Similarly there are questions over how UK businesses (mobile operators and ISPs) might need to re-arrange themselves and how regulation would be handled post-Ofcom. As we found out when first exploring these areas two years ago, none of these questions are currently easy to answer (here).

Naturally these are also some of the questions that the new Connecting Rural Scotland paper could have sought to tackle, although in reality it’s likely that many of the most complicated decisions won’t take place until after the referendum. As usual with all things political, the SNP dominated Scottish Government currently exudes only the positives, just as the central UK government primarily touts the negatives.

Connecting Rural Scotland – Digital Connectivity (Quote)

Improved digital connectivity, including mobile telecoms and broadband. In an independent Scotland, we would have the power to issue future spectrum licences and could include coverage obligations that ensure maximum availability of mobile telecoms throughout Scotland as a whole. We would also be able to consider more flexible approaches for broadband that could extend digital services.

Nicola Sturgeon, Deputy First Minister, said:

Our rural communities make a very valuable contribution to Scotland’s economy and have huge potential to develop even further. Too often people who live outside urban areas poorly served by the market and the UK Government when it comes to services vital in the 21st century.

With independence, we will have the powers to regulate these crucial services and to remove barriers which are holding back rural areas from achieving their full potential. There are opportunities to change so much for the better and that is why we are proposing setting up a Rural Connectivity Commission and taking forward improvements in five key areas for the benefit of rural Scotland.”

So what does the paper actually say? Sadly not a lot for 12 pages. Indeed anybody hoping for some solid answers to the big questions might be left disappointed. But it’s not all vague explanations and the document does moot one potentially very positive change, which states that “Scotland would also consider the case for a broadband USO” (Universal Service Obligation).

At present the UK government only promises a Universal Service Commitment (USC) of at least 2Mbps (internet download speed in Megabits per second) for 100% of the UK’s population by 2012 2015 2017, which is the soft option next to a mandatory and legally binding USO. Naturally any fixed line USO is likely to fall on the dominant operator, which would still be BT, and they’re unlikely to be too pleased with the idea.

On the other hand we are starting to approach a point where having a USO for broadband might finally become viable and indeed we suspect that most in the United Kingdom would welcome it, except that right now only the Scottish government seems enthusiastic for one. On the downside BT might well complain that maintaining a viable USO would increase its costs which, on top of Scotland’s rural geography, could result in higher prices for consumers. As before, more questions than answers.

UPDATE 1:45pm

The Scottish Government has also allocated an additional £2.5 million of funding to support rural broadband connectivity, which should bring the total investment in the related Community Broadband Scotland (CBS) programme to £7.5 million. This investment is in addition to the Digital Scotland deployment with BT.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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3 Responses
  1. Avatar Steve Jones

    The idea of “gaining” a USO might appear attractive but, it’s the “how” that matters. What matters is the “how”. Historically, USOs have been imposed on monopoly (or, at least, dominant supplies). That means any level of cross-subsidisation involves customers in low-cost areas subsidising those in high cost areas (as happens with the Royal Mail, fixed line voice, water supplies etc.). However, there is no such dominance in broadband in that, in the UK, VM and LLU are encouraged to cherry-pick low-cost areas. There is therefore no real mechanism to cross-subsidise things like broadband, hence the state has to pick up the bill (which is what BDUK is doing). The issues in Scotland are just going to be a bit more exaggerated as they have a higher proportion of high-cost areas.

    Of course, (subject to negotiation), Ofcom would have no jurisdiction in an independent Scotland. A Sottish parliament might decide to just sub-contract regulation to Ofcom, but if the former decides that they want different policies to the rest of the UK (and surely that’s what independence means), that implies separate regulatory conditions.

    I’m pretty sure that most utilities, including telecommunications, will already have done impact assessments on the consequences an independent Scotland. I rather think that most will have contingency measures to separate the operating arms so that cost models more accurately reflect local conditions. It might even be that full legal separation would be in order (albeit national operators, like BT, tend to use common internal services so it’s a non-trivial exercise).

  2. Avatar New_Londoner

    Politicians like Nicola Sturgeon make the case for a no vote far more eloquently than I ever thought possible, pretty much every time they speak!

  3. Avatar DTMark

    A USO is precisely the wrong way to go.

    The right way to go most especially for communities with low or non-existent short-term ROI and sometimes, though not necessarily, high build costs is to work to incentivise private investment into those areas with the authority picking up a certain amount of the build costs, like ducting with said ducting remaining in public ownership.

    The legacy of BDUK – by essentially mandating limited private investment and a choice of only one supplier – will come back to bite in England when authorities try to “plug the gaps” and find that those who might have been prepared to invest either will not or cannot do so now.

    Free from BDUK, Scotland could choose to move in an entirely different direction.

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