Broadband Report - Final

Report on Broadband Consultation Rob Gibson MSP

"We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together." – President B Obama

“Sutherland is small business country and the sort of small business which can prosper here depends on rapid information transmission.” – Mr H, Lairg

“I feel it is about time that we caught up with the rest of Europe.” – Mr K, Wick

“Although my internet connection is slower than most, because I live at the end of a small copper wire, I do not see why I should be disadvantaged.” – The Smith Family, Invergordon

January 2009

CONTENTS Introduction………………………………………………………………………2 Methodology……………………………………………………………………..3 Consultation Document – Example…………………………………………4-5 Analysis of responses by Consultation question ………………………….6-9 Connection Speeds (Mbps) across sample of areas………………………10 Comments Analysis………………………………………………….…….11-12 Next Steps……………………………………………………………………...12

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Introduction The Scottish broadband market is expanding at an exponential rate, but it is widely acknowledged that asymmetric market growth is occurring between the urban and rural regions of Scotland. Great investment in research and development has led to broadband evolving from its original model to a far more advanced form. In central Scotland, for example, there have been successful trials of Next Generation Broadband (NGB), which offers customers speeds of 22Mbit/s and even up to 50Mbit/s 1 . These provisions are helping to ensure Scotland’s knowledge driven economy remains at the forefront of UK, European and international trade. According to the previous Scottish Executive’s own figures, optimum speed broadband could boost the Scottish economy by £3.4 billion per annum by 2015 2 . In addition to such economic benefits, broadband also provides interactive etechnologies for individuals and communities alike. This highlights the equally important social dynamic that broadband creates. Therefore, it is for these core reasons – economic and social – that the Government must act accordingly to encourage the growth and expansion of broadband provisions across the whole of Scotland, with provisions tailored to each region’s specific needs. Unfortunately, despite the Government’s claim that broadband coverage to communities has reached 100%, there are still large areas of Scotland that suffer from restricted, diminished, or zero-access to broadband service. This is commonly referred to as the “reach issue”. The ever present danger is that, while provisions for broadband surge ahead in central Scotland, the Highlands and Islands will forever have to cope with a second rate service. Following on from a number of requests by my constituents in the Highlands, a consultation was launched in October 2008 to ascertain public opinion on the need for more available and faster internet connections – particularly given recent news of the development of Superfast Broadband (ADSL2+ technology promising speeds of up to 22Mbps). The current state of broadband availability and uptake in the Highlands simply does not meet the needs of residents in the area, as this report will demonstrate. Governments and telecoms companies have confirmed that more needs to be done to ensure rollout of broadband reaches 100 per cent of households, yet the Highlands are still badly underserved in that respect. The consultation and subsequent report were produced to provide a coherent voice for thousands of residents of the Highlands who feel their needs are not being met. -Rob Gibson MSP 30 January 2009 1 2

http://www.scotland.gov.uk/Publications/2007/01/09153006/2 Next Generation Broadband in Scotland – SQW, 2006

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Methodology As it was too costly to communicate with every single household in the Highlands, sample areas were selected based on postcodes. The areas selected were IV18, IV27, KW1 and a sample selection from Orkney between Stromness and Orphir. In total, around 9,400 households received the consultation by post with a complementary freepost return envelope. This meant the consultation reached in excess of 18,000 individuals, including responses from some individuals in other areas who had read the press coverage of this consultation. The subsequent response rate from all postcodes averaged 16%. The response rate varied across areas, from almost 30% in IV27 to 11% in KW1. This could be due to differences in existing provisions and availability, the number and type of internet users, etc. The survey itself consisted of 5 questions with respondents also having the opportunity to make further comments (example follows).

Data from Responses The graphs and information on the following pages all relate to the consultation responses received. The data on which these charts are based is detailed below. This shows precisely the number of responses received.

Responded

Q1Y

Q1N

Q2Y

Q2N

Q3Y

Q3N

Q4Y

Q4N

Personal business

IV27

479

403

76

320

159

392

87

375

104

145

46

244

44

1669

IV18

271

224

47

177

94

220

51

207

64

110

18

124

19

2373

KW1

620

530

89

424

195

533

85

469

150

282

32

265

41

4628

Orkney

158

137

21

93

65

122

36

111

47

66

13

72

7

742

Total

1528

1294

233

1014

513

1267

259

1162

365

603

109

705

111

9412

Responded

Q1Y

Q1N

Q2Y

Q2N

Q3Y

Q3N

Q4Y

Q4N

both

None

IV27

28.70%

84%

16%

67%

33%

82%

18%

78%

22%

30%

10%

51%

9%

IV18

11.42%

83%

17%

65%

35%

81%

19%

76%

24%

41%

7%

46%

7%

KW1

13.40%

85%

14%

68%

31%

86%

14%

76%

24%

45%

5%

43%

7%

Orkney

21.29%

87%

13%

59%

41%

77%

23%

70%

30%

42%

8%

46%

4%

Total

16.23%

85%

15%

66%

34%

83%

17%

76%

24%

39%

7%

46%

7%

Personal business

both

None Total sample

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Consultation Document - Example Rob Gibson Scottish Parliament HQ Edinburgh EH99 1SP 0131 348 5726 [email protected]

_____________________________________________________________________ [CONSTITUENT] [ADDRESS] [DATE]

Consultation on Superfast Broadband In response to numerous enquiries I have received from constituents throughout the Highlands and Islands Region I am putting forward this consultation on the necessity for rollout of 3rd Generation broadband in your area. You may have heard recently that there are proposals for regions throughout the UK to obtain Superfast broadband with speed capabilities of up to 100 megabits a second through the use of fibre optic cables. The current plans do not indicate how much access Scotland will have to this technology and I have asked questions in Parliament to suss out further information on implementation. Telecom companies have stated regional rollout is dependent on enough demand to justify further investment. Your area has the potential to secure investment in Superfast Broadband. I am organising this consultation to ensure your views and needs in the matter are properly represented. I would like your opinion on the necessity for Superfast Broadband in the Highlands so that I may represent your views to the Scottish Parliament. If you agree that this would be of great benefit to yourself and the businesses of the Highlands and Islands then please ensure that you fill out the questionnaire on the back of this letter and return it with your views included– no stamp is needed if you use the enclosed envelope. Yours sincerely,

Rob Gibson MSP 5

CONSULTATION ON THE NECESSITY OF SUPERFAST BROADBAND IN YOUR AREA by Rob

Gibson MSP Yes

1 2 3 4

Is internet a vital tool to your daily life and/or business? Are your current internet provisions inadequate? Do you feel that your area is underserved in this area? Do you want Rob Gibson MSP to keep you informed? Business

5

6

No

Personal

Both

Is your current internet use predominantly: (please check only one) Please add any comments you wish to make:

I will ensure your views are represented if you complete this form and return it in the FREEPOST envelope supplied – no stamp is needed.

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Analysis of responses by Consultation question Question 1: Is internet a vital tool to your daily life and/or business? In response to this question the overall response was an overwhelming 84% “Yes” with 16% “No”. The sheer volume of responses to the question was significant, with over 1500 responses received. As a proportion of the entire sample area of 9,400 households this represents a 16% proportion and a strongly unified voice from a representative sample of the Highlands.

Question 1 responses by area 100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00%

Yes No

30.00% 20.00% 10.00% 0.00% IV27

IV18

KW1

Orkney

Total

As the chart above shows, while there were some small variations across each area, the general consensus is the same in all areas. From this we can see that the internet is very much a vital tool to daily life and business in the Highlands. The UK as a whole, including Scotland, is a world leader on extensiveness of coverage - holding at a 99.6% level. Take-up, however, remains a major challenge, with only a 35% household penetration 3 . The take-up index is a measurement of household broadband penetration, and to qualify as broadband in this measure a service must be capable of delivering ‘always on’ services to each individual at data rates above 128kbps. When considered in this context it becomes evident that more needs to be done by both Government and private ISPs in order to ensure that not only every household in rural and remote communities like the Highlands is delivered access to broadband, but at competitive levels to their counterparts in the more populous capital cities and central belt.

3

International Broadband Market Comparisons Update January 2006, Ovum 2006.

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Question 2: Are your current internet provisions inadequate?

Question 2 responses by area 80.00% 70.00% 60.00% 50.00% Yes No

40.00% 30.00% 20.00% 10.00% 0.00% IV27

IV18

KW1

Orkney

Total

Note the different levels of provision in different geographic areas. Even within each of these areas, comments made by residents highlight a significant inconsistency in provision of broadband service. For example, three individual responses from the postcode KW17 2RE give indications of broadband connection speeds of 2 mbps, 1 mbps and 0.5 mbps respectively, highlighting the problems as distance from the exchange increases. Given the remoteness of many Highland communities, the prevalence of inadequate internet provisions is devastating to communities and one of the main inhibitors to economic growth. This consequence is particularly exacerbated given the current economic climate and confirmation that Scotland is now officially in recession. Again, as confirmed by the previous Scottish Executive’s own economists, optimum speed broadband could boost the Scottish economy by £3.4 billion per annum by 2015 4 . Yet residents of the Highlands are still resigned to using Exchange Activate exchanges that are unable to get any higher bandwidth than 512Kbps as confirmed on the Scottish Government’s Broadband for Scotland website 5 .

4 5

Next Generation Broadband in Scotland – SQW, 2006 http://www.scotland.gov.uk/Topics/People/BroadbandforScotland/Technical-Overview#a4

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Question 3: Do you feel that your area is underserved in this area?

Question 3 responses by area 100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00%

Yes No

30.00% 20.00% 10.00% 0.00% IV27

IV18

KW1

Orkney

Total

Though this question is similar in nature to Question 2 (Are your current internet provisions inadequate?), the term ‘underserved’ is a direct indicator of future potential. In other words, responses from sampled Highland communities indicate disappointment in current provisions and serve as evidence to the hope for future infrastructure and provisions to be created.

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Question 5: Is your current internet use predominantly business, personal or both?

Type of Use

7% 39%

Personal Business Both None

46% 7%

In indicating their purpose and type of use for the internet, respondents have signalled just how important the internet is to businesses in the Highlands – 46% of responses confirmed some form of business use. Only 7% of those responding indicated no internet use. A response rate of 46% of a community utilising the internet for some type of business purpose gives credence to the problem of inadequate provisions. If 46% of Edinburgh internet users did not feel they had adequate internet provisions to go about their daily life the resultant blow to the economy of Scotland’s capital city would be devastating. It is unacceptable that the north of Scotland suffers the same problem yet has not been offered a solution thus far. Residents have suffered for years with inadequate provisions or simply no internet at all. Though attempts are being made by the Scottish Government and ISPs to find a solution, it simply goes against existing business models to invest in lesser populated with lower proportionate demand. This falls back on the principle of economies of scale. The more demand a product receives, the more diluted the overhead costs become therefore increasing the product’s potential for profitability. What must be universally recognised and understood however, are the potential earnings to Highland businesses and communities, and therefore the entire Scottish economy, of uninhibited access to competitive internet provisions. Once this is accepted as true, the business case by the Scottish Government for investment to bring remote and rural provisions up to competitive levels can finally be made.

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Connection Speeds (Mbps) across sample of areas KW17 2RE KW17 2RD KW16 3JG KW16 3HD KW1 4YS KW1 4TT KW1 4RU IV27 4YP IV27 4UL IV27 4RN IV27 4PN IV27 4JB IV27 4EU IV27 4DJ IV27 4BD 0

1

2

3

4

5

6

7

8

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In the responses receive a number of individuals gave an indication of their current connection speed. The chart above shows each of these individual responses and highlights the vast difference in service available to different areas of the highlands. While some areas are in receipt of a reasonable service at around 8 mbps, these are certainly the exception rather than the rule. The vast majority of those indicating their connection speed on the survey indicate that it is around the 0.5 mbps level. When you consider that most of these connections, if not all, are with BT and the same service in other area’s provides 8.0 mbps while those in the highlands pay the same amount for a vastly reduced service. Recent figures published by OFcom indicate that the average speed of a broadband connection in the UK is 3.6 mbps while from the survey conducted and analysis of responses, the evidence suggests that the average connection speed in the highlands (excluding those unable to get a connection) is 1.52mbps. If however we take an average excluding the fastest and slowest 10 connections indicated, the average connection speed drops to 1.11 mbps.

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Comments Analysis From the thousands of responses received, there are some general themes which appear in the written-in responses from a number of residents.

50% Lairg

40%

Invergordon

30%

Wick

20% Stromness

10%

Orkney

0% BT

business necessity

don't get highlanders education what you are ignored pay for

costs

connection speed

Comments made regarding BT raise concerns that the company is operating a virtual monopoly in the Highlands. Unfortunately, due to lack of infrastructure other internet providers do not offer their service. Personal comments also indicate inconsistency in available provisions: “My order was accepted and I received a text confirming the delivery and activation date. A few days ago I received a letter from BT cancelling my order due to existing technology on the line being incompatible” – Mrs M, Wick This point was also mentioned by a number of other respondents regarding connection speeds and not getting what they pay for. In considering these comments, it is unjustifiable that residents in the Highlands are paying the same price for a fraction of the service provided to other areas in the country. “BT has monopoly and charges same cost for service 1/16 speed of rest of UK” – Mr P, Lairg “Providers charge same for poor service in Highlands as they do for good service in the south” – Mr & Mrs B, Wick “Paying more for slower speed. Thanks for trying and keep it up!” – Mr & Mrs D, Stromness “Broadband is so much slower than on the mainland but costs the same” – Mr E, Orkney. As can be seen from the comments analysis chart above, a large number of those responding feel that the Highlands & Islands are ignored in this regard.

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“Lack of internet broadband availability is yet another discrimination in an already greatly disadvantaged area in N.W. Highlands” – Mr & Mrs S, Lairg “I don't see just because we live in a remote part of Scotland we should be penalized and not have the same service as places like Glasgow or Aberdeen or Edinburgh.” – Mrs D, Lairg "All areas of Scotland are entitled to the same broadband service" – Mr A, Invergordon The most common comment made in returned surveys concerned connection speed. This appears to vary widely across the sample areas from no service at all to a fairly reasonable connection speed. The biggest problem again appears to be inconsistency in the speeds available “Sometimes broadband is just slightly faster than dialup” – Mr & Mrs K Orkney “Transfer speeds vary considerably” – Mrs R, Stromness “Current speeds are pretty woeful” – Mr & Mrs F, Wick The responses to the consultation have highlighted the importance of high speed internet access to business in the Highlands and individual users as well. One of the biggest concerns is that the Highlands are being left behind other parts of the UK because access to even the most basic broadband is highly sporadic. There is also a widespread feeling of inequity from those who receive a far slower service that had been advertised by their provider. Indeed, why should the same price be paid by a customer only receiving 10% of the service?!

Next Steps This report will be presented to Jim Mather MSP, the Scottish Government Minister for Enterprise, Energy and Tourism. In addition, it will also be circulated to those individuals who responded to the consultation asking to be kept informed. With regard to internet service providers, a copy will be circulated to each major ISP operating in Scotland seeking to get their views on the content. It is my hope that a meeting can be arranged with a number of these companies to represent the views and concerns of my Highland constituents and discuss the potential for immediate improvement.

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