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Digital Scotland Broadband Rollout Boosted Economy by £2.76bn

Monday, April 29th, 2019 (11:11 am) - Score 923
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A new Analysys Mason report has estimated that the £442.2m (public and private investment) Digital Scotland project with BT (Openreach), which covered an extra 930,000 premises via a mix of FTTC (VDSL2) and a little FTTP broadband technology, will create a total benefit to the Scottish economy of £2.76bn over 15 years.

So far the DSSB project has helped to ensure that a little over 94% of premises (homes and businesses) in Scotland can access a “superfast broadband” (24Mbps+) ISP network, although this drops by nearly c.1% when using the more modern definition of 30Mbps+ (i.e. as adopted by recent contracts, the EU and Ofcom).

Many of the premises that have benefited from this effort might have otherwise been left to wait years longer for an upgrade via commercial deployments, or could have been completely excluded. We should point out that this project is still on-going and the existing contract(s) are expected to run until September 2019.

A report from Audit Scotland last year (here) further stated that by March 2018 the programme had resulted in some £259m of public investment being paid to BT (£149m from the Scottish Government and £110m from the Highlands & Islands Enterprise), which is £27m less than planned (i.e. the project was more cost efficient than originally planned).

audit scotland dssb funding breakdown

The Scottish Government has today published a new report from Analysys Mason, which finds that the total benefit associated with the DSSB programme estimated by the study is £2.76 billion (over 15 years). The benefit-to-subsidy ratio is 11.60 (i.e. for every £1 of public funding, some £11.60 of economic benefit will be produced, shared among businesses and consumers).

A breakdown of the estimated economic benefits of the DSSB programme (over a 15-year period) is provided below.

dssb economic benefits

As usual we do have to caveat that trying to accurately gauge the economic impact of deploying faster broadband connectivity is notoriously difficult, not least since most businesses and consumers won’t be starting from a point of zero connectivity (the bulk will have upgraded from a slower to faster broadband link). However, many of the homes that benefited from DSSB were in more rural areas, where prior speeds will have been very poor or possibly even non-existent.

Still, any study that claims to show a huge economic boost should be taken with a pinch of salt as they’re often overly optimistic. On the other hand few could disagree that there does tend to be a strong positive relationship between broadband investment and growth, although an earlier Ofcom study (here) dose appear to suggest that faster speeds produce diminishing returns.

Nevertheless it’s hoped that the programme will also help to unlock other longer-term benefits, such as those relating to social inclusion and social cohesion, education and the environment, which are even harder to quantify (in the economic sense).

Paul Wheelhouse, Scottish Minister for Energy and Connectivity, said:

“This research highlights all the ways in which the DSSB programme is benefiting Scotland’s economy and communities.

Thanks to the programme, and combined with commercial coverage, the programme met its target to deliver fibre broadband access to 95% of Scotland premises by December 2017. Deployment has continued since, with around 930,000 premises now capable of accessing fibre broadband. The report reaffirmed that the average broadband speed has tripled between 2014 and 2017 which again is linked to the success of DSSB.

The total benefit associated with the DSSB programme estimated by this study is £2.76 billion (over 15 years) which represents a strong positive return on public funds used for the deployment … That is money well spent and shows what can be delivered for people and businesses in Scotland when government works together with public agencies and private providers on a shared ambition.”

Brendan Dick, Chair of Scotland’s Openreach Board, said:

“The conclusion that public money has been used very effectively shows that Openreach is a trusted partner for Scotland. As well as contributing a third of the total cost of the Digital Scotland project, we have delivered value for money for Scottish taxpayers, who include thousands of our workforce.

From the start the whole team’s focus has been on reaching the most people possible with the funds available, which meant difficult decisions had to be made. There is more to do, and we’ve committed an extra £20 million to the project to help reach even more communities.

Scotland’s reliable and extensive digital connectivity is one of the qualities that makes it appealing as a place to invest and do business. Today’s report reinforces the impact that has on our prospects for economic growth.”

The full report can be Downloaded Here. At this point it’s worth noting that the Scottish Government are still in the process of trying to select a supplier for their £600m R100 (Reaching 100%) programme, which raised the definition of “superfast” to 30Mbps+ and originally aspired to achieve almost universal coverage of that by the end of 2021; or March 2022 as a financial year (here and here).

Unfortunately the procurement and tender process for this seems to be dragging on for rather longer than expected (here) and the longer that takes, the harder it will be to achieve the original ambition.

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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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6 Responses
  1. Avatar Joe

    “Unfortunately the procurement and tender process for this seems to be dragging on for rather longer than expected (here) and the longer that takes, the harder it will be to achieve the original ambition.”

    Though commercial is fixing some of the problems as time passes but the remainder is therefore even less commercial!

  2. Avatar Brian

    This Super fast broadband sounds a good idea, pity it’s hasn’t been delivered to those it was promised to

  3. Avatar Gary HILTON

    If anyone has any links to anything even remotely up to date regarding “We should point out that this project is still on-going and the existing contract(s) are expected to run until September 2019”

    Please let me know, as searching HIE, or any of the Scottish based ‘information’ sites leaves me checking my calendar to make sure I hadn’t slipped through a time warp back to 2017. Everything is so out of date, except Ooh R100. Subscribing to the let me know when something happens near me was a waste of the 30 seconds it took to do

    On the Bright side Searching back through Emails I find this response from….2015

    Until we have completed planning and modelling work we won’t know how far we will be able to get in phase 2, so unfortunately I can’t give you any information on the likelihood of your area being part of this.

    And the reality as of 3 years later my connections worse now than it was then, as the line continues to degrade and seemingly the poor old exchange or fat pipe out of it struggles to cope with the traffic from those who did get FTTC.

    Roll on R100 or 2033

  4. Avatar Gary Hilton

    @NGA,

    I’ll have a read of that, Being at the back of the line is frustrating for sure, But I understand both the financial and logical reasoning for deploying to the denser population areas first, What piles on the frustration is the almost total lack of information on what is and isn’t planned, I personally don’t care if its covered in a huge subject to change clause.

    • Avatar NGA for all

      It is the gaming of the costs and capital, the overbuilding of Virginmedia and the resource planning that assumes you get away with the gaming is a contributing factor to BT’s share price tanking.

      As the scrutiny increased BT would need to pay back all the funds diverted to urban, still leaving big gaps in rural, but with project teams then tiring of the task and the ‘partnership’.

      Rather than this PR, BT could explain just how more could be done if all the monies owed were applied to the remaining challenge. Instead executives are mis-informing national audit functions. BT is not paying 11 years of operational costs in advance which is what the numbers state. That should not be too difficult to spot. It should not be too difficult to report on what direct capital contribution BT has made and when it was made in line with the gap funding model.

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