Meeting of the Parliament

Meeting date: Tuesday, December 19, 2017

Official Report 772KB pdf

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Superfast Broadband

The next item of business is a statement by Fergus Ewing on the reaching 100 per cent superfast broadband programme. The cabinet secretary will take questions at the end of his statement, so there should be no interventions or interruptions.

14:26  

The announcement in last week’s budget that the Scottish Government is committing £600 million to the first phase of the reaching 100 per cent superfast broadband programme is fantastic news for Scotland. I was keen to share the detail of that announcement with Parliament and to reflect on its significance for Scotland’s economy.

Over the past few weeks, there has been a great deal of conjecture and, quite frankly, disinformation about how Scotland is performing in terms of broadband delivery. This statement is an opportunity, therefore, to set out the facts. Here is the key fact: by the end of 2021, Scotland will be the only part of the United Kingdom where every single home and business can access superfast broadband.

The £600 million that was announced last week is the biggest public investment ever in a UK broadband project, and launches the first universal superfast programme in the UK. To put that fully in context, it is more than double the amount of public funding—£280 million—that has been committed to our current digital Scotland superfast broadband project, and more than three times the £190 million fibre fund that the Chancellor of the Exchequer announced for the whole UK in his recent budget. The programme is entirely unique to Scotland. This is the choice that the Scottish Government has made: superfast broadband for all.

Why is the project so crucial to Scotland and why do we need it now? It is simple, really. If we want a Scotland that delivers inclusive economic growth, that helps businesses in our rural and urban communities to innovate and to grow, that prepares our children for the workplaces of the future, that creates a digitally skilled workforce that is fit for the digital century, and which reforms our public services through digital innovation, we need a future-proofed digital infrastructure. The new procurement will help to deliver that; I will talk more about it in a moment.

First, it will be worth my while to reflect on the truly spectacular progress that has been made in recent years. Our investment, along with that of our partners in the digital Scotland superfast broadband programme, has genuinely transformed the availability of broadband across the country. Commercial investment alone would have delivered coverage to just 66 per cent of premises, largely in urban Scotland. Coverage in the Highlands would have been just 21 per cent, and there was no planned coverage at all for Orkney, Shetland or the Western Isles.

We recognised the unique challenges that Scotland’s geography poses, and concluded that a distinct approach is required. Rather than undertaking 32 small-scale procurements at local authority level, we took the joint decision with our local government partners to aggregate planned public investment into two large regional projects. That has created a project which is at a scale that dwarfs that of any other project in the UK, and which has extended broadband access to more than 800,000 premises across Scotland so far, with further deployment to follow throughout next year.

The success of the approach is demonstrated by the coverage figures. Ofcom figures continue to show that Scotland has made the fastest progress of any of the UK nations in extending superfast broadband access, and we are well on track to meeting our target of 95 per cent coverage by the end of this year.

Therefore, although the programme has had a massive impact, it has not reached everyone. We could have chosen to stop there, as the UK Government has done. We could have taken the decision that its universal service obligation, which is set at just 10 megabits per second, was sufficient for our rural communities—but we did not. We chose a different path. We concluded that the economic damage that would be caused by consigning large parts of rural and island Scotland to the broadband slow lane—and, by extension, to the economic slow lane—was simply unacceptable. That is why, even with broadband being reserved to Westminster, we have launched the reaching 100 per cent programme, and it is why, even although the UK Government was willing to commit only £21 million to R100, the Scottish Government has stepped up to ensure a £600 million investment in a vital piece of Scotland’s national infrastructure.

The procurement that was launched last week will build on the success of the DSSB programme, but it will be different in some key respects. Unlike in the DSSB programme, we plan to make the delivery of new backhaul in particular rural locations a requirement. That will help to create a truly national fibre network and ensure that all parts of Scotland are within reach of accessible fibre.

Allowing for currently planned commercial coverage, about 245,000 homes and businesses in Scotland cannot access superfast broadband. The initial investment will deliver superfast access to a significant proportion of them, but we do not expect it to deliver 100 per cent coverage on its own. There will, therefore, be further phases through which we will ensure that superfast broadband reaches each and every premises. We expect that to involve a wide range of superfast technologies, supported by a national voucher scheme that is to be available to individuals and communities.

However, the initial phase is the key phase. Extending a future-proofed accessible fibre network to remote rural areas will provide the essential platform for delivering superfast broadband for all. We are purposely targeting the funds at where they are needed most, which is in rural Scotland. Therefore, the first phase will not focus on cities. My firm belief is that coverage gaps in urban areas should be filled by commercial suppliers. I am greatly encouraged by emerging plans from the likes of BT, Virgin Media, CityFibre and Vodafone among others that suggest that that is beginning to happen.

The procurement will be split across three regional lots. That is designed to maximise competition, which is vital to driving value and innovation.

I am confident that the scale of our investment and of our ambition will attract interest from a wide range of telecommunications suppliers across the UK and Europe. It is a huge public investment, so it is vital that we get the right deal for Scotland. The procurement will therefore take some time—approximately one year. It is being run as a competitive dialogue, and such procurements generally take between 12 and 18 months to complete. We are confident that we will have suppliers in place—and ready to start building—by early 2019.

Crucially, broadband activity will continue on the ground between now and then. Alongside extensive commercial activity, the DSSB programme will continue to deliver throughout the coming year, with new investment that has been generated by early take-up of the new fibre network. That so-called gainshare funding plans for new deployment in every local authority area across Scotland during next year, thereby avoiding any significant gap between DSSB ending and R100 starting.

Much has been achieved over the past three years. The latest Ofcom figures show that superfast coverage in Scotland has increased by 26 percentage points since 2014, compared to 16 percentage points for the UK as a whole. We now want to finish the job.

Our £600 million investment is fantastic news for Scotland’s rural and island economies, and is a real statement of the Scottish Government’s intent to make Scotland a truly world-class digital nation. The investment will transform the economic prospects of rural Scotland. The fibre network that we will help to build will be the backbone for delivery of our R100 commitment and, beyond that, for the future development of Scotland’s digital economy. It will underpin a wide range of connectivity services long into the future, including 4G and superfast broadband today, and 5G and ultrafast broadband tomorrow. It will also help to drive innovation and growth across the economy by supporting new business models and industries, while ensuring that Scotland is competitive in the next digital age.

We can be a world leader in this digital century—a leader that is inclusive, innovative and outward looking, and one that drives technological and digital innovation and makes Scotland the most attractive place in the UK in which to invest.

Working alongside Highlands and Islands Enterprise and our local government partners, we have developed an enviable delivery track record through the DSSB programme, which has largely bridged the coverage gap between Scotland and the rest of the UK over the past three years. We will build on that success and, through the R100 programme, help to deliver a future-proofed national fibre network that will place rural Scotland among the best-connected places anywhere in Europe and will underpin economic growth.

I am happy to take questions.

I urge members who wish to ask questions to press their request-to-speak buttons. We have only until 2.52, so I am conscious that not everyone might get in.

I thank the cabinet secretary for prior sight of his statement.

The cabinet secretary is big on hyperbole today, but Scotland is behind England in rolling out superfast broadband. Superfast broadband of more than 30 megabits per second has reached 92 per cent of households in England, but only 87 per cent of households in Scotland. Furthermore, 6 per cent of premises in Scotland have broadband speeds that are lower than 10 Mbps, compared with only 3 per cent of premises in the rest of the UK.

Another huge concern is the budget data that show that the spend on digital connectivity for next year is being slashed—from £136 million in 2017-18 to only £58.5 million in 2018-19, of which only £34 million is capital. That will not help to accelerate roll out.

The cabinet secretary has stated that, through procurement for R100, suppliers will be in place only by early 2019. My first question is this: will next year be a wasted year?

There is great confusion about reaching the 95 per cent target. Page 15 of the draft budget 2018-19 states:

“By the end of 2017 we will have achieved our existing commitment to deliver fibre access to at least 95 per cent of premises in Scotland.”

However, page 147 states that

“In 2018-19 we will ... deliver the final phase of”

the DSSB programme,

“which will extend fibre broadband access to at least 95 per cent of premises across Scotland”.

Will the cabinet secretary confirm which is the true statement?

I thought that all members of the Scottish Parliament would welcome the fact that, today, I have announced the biggest-ever investment in enabling people in rural Scotland and our islands to access superfast broadband.

The difference between what we are doing and what Mr Hancock is not doing is that we have a plan. We are investing £600 million to deliver that plan, as we stated, by the end of 2021, so that everybody can access superfast broadband. The difference is that our definition of the speed of superfast broadband is the conventionally accepted one of 30 Mbps. However, the UK has no such ambition; it does not plan to reach everyone and it believes that the correct speed is 10 Mbps—not 30 Mbps. What is it contributing to the Scottish Government, as far as R100 is concerned? It is contributing £21 million, which is 3.5 per cent of the total of £600 million.

Next year will not be “a wasted year”. As I said in my statement—as Mr Chapman would have heard, had he been listening—next year DSSB will continue to deliver to a great many homes, on top of commercial delivery.

Secondly, the two statistics that he quoted are entirely different. One relates to delivery of fibre and the other to delivery of access to superfast broadband: there is a technical distinction. I suggest that he read Ofcom’s “Connected Nations 2017” report.

Finally, the claim that Peter Chapman has repeated today, that Scotland is three years behind the rest of the UK, is simply laughable. The latest Ofcom figures show that the opposite is the truth: superfast coverage in Scotland over the past three years has increased by 26 per cent, compared with 16 per cent for the whole of the UK. Those are not the Scottish Government’s figures: they are those of the independent regulator.

Labour members share the cabinet secretary’s ambition to reach 100 per cent of premises by 2021. However, we are concerned that the Scottish Government will not achieve that target and that people will be let down. It will take the Government at least a year to procure the next phase, so it will be some way into 2019 before a shovel goes into the ground, leaving only 18 months or two years for the most technically difficult areas of Scotland to be reached. Estimates suggest that, for the Highlands and Islands alone, that could cost up to £300 million, which is half of the allocated budget.

Does the cabinet secretary realistically believe that he will achieve his goal? Given that he has more than halved the budget for next year, how much will be invested from gainsharing and added to the budget? Will he also give an assurance that the availability of a voucher scheme will not be seen as discharging the obligation to reach hard-to-reach areas by 2021?

We delivered on the DSSB project. As I am sure would be seen if we were to look back through the Official Report from three years ago, Opposition members challenged us then on whether we would deliver that ambitious project and whether we would enable access to over 800,000 homes and businesses in a matter of simply three years. Well, we have done that, so I am optimistic. Of course, there is lots of hard work to be done. The tender process involves competitive dialogue to ensure the maximum likelihood of competitive bids.

I take heart from Ofcom’s encouraging most recent report, which was published last week. At paragraph 1.7, it states:

“We recognise there have been significant improvements in mobile and broadband connectivity in recent years.”

At paragraph 3.20, it goes on to say:

“Local authorities in the Highlands and Islands ... have seen some of the largest increases in superfast broadband availability in the UK.”

I could read out much more. The independent regulator recognises that we have done a good job. There is therefore no reason, at this early stage, to question whether we will be able to achieve our aim and what we have achieved already with DSSB.

I am acutely conscious of the fact that people who do not have such access at the moment will feel bitterly disappointed and, in many cases, angry. I understand that. It is, therefore, important that we have a credible plan that will devote substantial resources, the lion’s share of which will be devoted to the northern regional block including the Highlands and Islands. I am determined that we shall deliver, working with our local authority colleagues to whom I have sent an invitation to meet fairly early next year to discuss how we will proceed. I do not share the member’s pessimism.

I recognise the push for cover in rural areas and the difficulty that that brings. However, there are still gaps in urban areas such as East Kilbride, which seem to be due to exchange-only lines or TPON—telecommunication over passive optical network—technology. That affects domestic households and industrial estates, which is worrying in an industrial town such as East Kilbride. It seems that the commercial providers are not covering the gaps because it is not commercially viable to do so. Will the cabinet secretary take that on board and have a word with the commercial suppliers so that they meet their obligations in urban areas?

I regularly meet the commercial operators whose obligation it is, primarily, to meet the needs of the commercial market. It is not for the taxpayer to displace the investment that is to be made by commercial operators, with whom we have excellent relations. The Scottish Government has already passed building regulations that require new housing developments of more than 30 units to provide conduits and ducts that provide access for superfast broadband in new houses. I have discussed that with the commercial operators and further work will be done on it. I will be happy to meet Linda Fabiani to talk about the particular challenges that exist for some of her constituents in East Kilbride.

It seems that 2018-19 will be a wasted year. Some households will have to wait until 2022 to get broadband, and that is not good enough. Will the cabinet secretary confirm that the budget for 2018-19 has been slashed and that funding will be provided only from existing money and contractual mechanisms? Where is the £600 million in the budget? It will equate to £200 million a year for three years. How is that £600 million made up? Will the cabinet secretary clarify whether it is Scottish Government money, UK Government money or private money?

Apart from the pittance of £21 million that was provided by Mr Hancock’s UK Government, the rest of the £600 million—nearly £580 million—is provided by the Scottish Government. The UK Government has provided just 3 per cent of the total, yet broadband is a reserved area. We waited for a while—until 2014—for the UK Government to fulfil its obligations in a reserved area, but we waited in vain, which is why we acted and introduced the digital Scotland superfast broadband programme.

In relation to the matters that Finlay Carson raises, he might be interested to know that the deployment in Dumfries and Galloway of access to superfast broadband was 26 per cent as of 2012. However, thanks to the DSSB and the contract that was delivered by the Scottish Government and HIE—in that case, it was the Scottish Government—it is now 82.5 per cent. It was 26 per cent then and, after the Scottish Government’s investment, it is now 82.5 per cent. I would have thought that a thank you from the Tories is in order.

The investment that has been made by the Scottish Government is certainly appreciated by the 94 per cent of people in East Ayrshire who have superfast broadband. Will the cabinet secretary clarify whether the roll-out schedule for the R100 programme will be made available to members and the public, so that people can have an idea of when the service will come their way?

That is a sensible question from Mr Coffey. We have learned from the DSSB programme that people wish to know when the access work is scheduled for their communities. Because of that desire to know, once the procurement process is completed, in 2019, we plan to share that information with people and communities as early as possible.

Next year will not be a year of inactivity. A substantial amount of work will be carried out by commercial operators, using the funds that have been provided by the Scottish Government and other public sector providers, and that gainsharing work will continue. It would not have been possible to proceed earlier with the procurement because, had we done so, the only possible bidder would have been BT. It was possible to determine, describe and define the coverage area—the intervention area—only after the DSSB contracts were substantially completed. We are therefore proceeding in accordance with a plan to invest £600 million in Scotland. I commend that plan to Finlay Carson and his colleagues in London.

What role does the cabinet secretary envisage for Highlands and Islands Enterprise, and is there a need for novel technological solutions for the difficult-to-reach last 5 per cent?

HIE will play a role in continued delivery to those communities that wish to proceed under the community broadband Scotland scheme with their own projects. HIE will be working to deliver that, although I should say that many of the communities that were minded to proceed with their own schemes have recently determined that it would be better to participate in the R100 programme.

In regard to Mr Stewart’s second question, I can confirm that a variety of technologies will be available—not only satellite, but technologies involving wireless and even television white space as well as mobile technology to provide a signal—to reach those whom we cannot reach through fibre. Details of that work will be announced in due course.

Is it not the whole point of the cabinet secretary’s commitment to ensure that every household receives at least 30 Mbps? Is he aware that, according to this week’s Ofcom report, only 87 per cent—not 95 per cent—of premises have that speed and that, by the end of the year, in just 12 days’ time, his own target will be missed?

That is not the case. The aim was to reach 95 per cent via fibre and to provide access to superfast broadband. The speed at which broadband services are available depends, as the member knows, on a number of other factors, including what package people buy and how the system is routed in a particular household or premises. What Mr Rumbles says is simply not the case, and I am heartened by the positive verdict of Ofcom. Opposition members have not mentioned the Ofcom report, but I have a copy here if they want to have a look at it. It confirms that Scotland has made more rapid progress on those matters than anywhere else in the UK.

I remind the chamber that I am the parliamentary liaison officer to the cabinet secretary. Can he confirm that one of the three region lots included in his statement is the south of Scotland? Can he say how many homes and businesses in the south of Scotland will be connected through R100 and how that approach will ensure that areas that are currently far from fibre cabinets, such as those near Borgue and Kirkcudbright, will benefit?

As I mentioned to Mr Carson, the coverage in Dumfries and Galloway has moved from 26 per cent to 82.5 per cent, so there has been a lot of progress. Nevertheless, there remain around 26,000 homes and businesses that will be given access under the R100 programme. We expect that fibre will be central to many of their plans, but new and emerging technologies could also play a role.

I apologise to Stewart Stevenson, Kate Forbes and Rachael Hamilton but we must move on to the next item of business.