 Welcome everyone to the 12th meeting in 2016 of the Rural Economy and Connectivity Committee. Everyone present is please reminded to switch off their mobile phones. Apologies have been received from Gail Ross, the deputy convener. There are no other apologies. The first item today is to seek the agreement of the committee to consider the evidence on the forthcoming draft budget 2017-18 at agenda item 5 in private. Are we all agreed? Yes. We are agreed. At agenda item 2 the committee is going to take evidence on the Scottish Government's forthcoming draft budget 2017-18. Today we are focusing on broadband and I would like to welcome Stuart McKinnon, a public affairs adviser to the Federation of Small Businesses. Stuart Robertson, director of digital highlands and islands, Highlands and Islands Enterprise. He led Community Broadband Scotland, director of Community Broadband Scotland, Glenn Preston, director of Ofcom Scotland and Professor Michael Foreman of the Royal Society of Edinburgh. I would like to welcome you all to the meeting. Can I ask each of you if you would briefly give an outline of the respective organisations that you represent? Stuart, if we could start with you, we will work directly along the table. No problem. My name is Stuart McKinnon. I work for the Federation of Small Businesses in Scotland. The FSB is a business membership organisation with approximately 18,000 members in Scotland and about 170,000 members across the UK. We are working for a business environment that helps small businesses thrive. I am Stuart Robertson, representing Highlands and Islands Enterprise. We are at economic development and community development agency for the Highlands and Islands of Scotland. We have been closely involved in all things digital, including the roll-out of Superfast Broadband to date. I am Zoe Laird, director of Community Broadband Scotland, under the governance of Highlands and Islands Enterprise, and operates across the whole of Scotland to work with communities to develop solutions to broadband infrastructure. Glenn Preston, I am the Scotland director for Ofcom. We are the communications sector regulator, focusing specifically on fixed and mobile telecoms, on broadband and broadcasting, as well as some post-issues. I should add that we are about to assume regulatory responsibilities of the BBC from April of next year, as you know, but fortunately that is not the topic of conversation today. Michael Foreman, I am a fellow of the Royal Society of Edinburgh. I chaired a digital Scotland committee that produced two reports, one in 2010 and one in 2015. I am also a professor at the University of Edinburgh with a continued interest in these matters. Thank you very much. I would just like to remind witnesses that we are particularly looking at the financial aspects of the roll-out programme, but the questions that you will receive this morning are quite wide-ranging, which will help informers. If you can always remember if there is an opportunity to illustrate it with costs to inform our decisions, that would be extremely helpful. The first question is from Stuart. Thank you very much, convener. It is a question that I expect all may wish to contribute to. On the 3 November, the Scottish Government launched a consultation, a digital strategy for Scotland 2017 and beyond. It may well be, of course, responsible for becoming from a number of people on the panel, but it would be helpful if we had an indication of the sort of things that perhaps the FSB and the Royal Society in particular might wish to see reflected in the strategy and perhaps OFCOM as well. Stuart, would you like to lead on that? Yes, absolutely. FSB is still formulating a response to the new digital strategy. Broadly, we are going to say that some good progress has been made, apart from being a world-leading digital nation. We need a programme of works across multiple fronts to try and close the gap between Scotland and other leading digital nations. I would say, obviously, infrastructure. We are pleased with the Scottish Government's commitment to universal superfast broadband. We need to see progress across mobile as well. We need extra effort to boost skills and to deliver extensive business support. We are also looking for progress across digital government as well, where I think that Scotland lags other parts of the UK. Professor, do you want to add to that? Briefly, yes. I think that more ambitious targets, more investment and more open access, where there is natural monopoly, as is the case in much of rural Scotland. On the skills issue, we feel that this is a common feeling amongst much of the fellowship that digital needs to be embedded in the curriculum throughout all stages of learning, alongside literacy and numeracy. On exclusion, work that I have done recently looking at OFCOM data, for which I am grateful, shows that, although we are making huge progress in connectivity, those who remain offline are increasingly deprived with respect to those who are online, and that is serving to put them in a place where it is very hard for them to get out of the situation that they are in because they do not have the digital benefits and they cannot even get the digital benefits because of the situation that they are in so that they get a cycle of deprivation. Stuart, do you want to comment up from a Highlands and Islands perspective? Just really to say that we are responding to, particularly connectivity, we are involved in discussions about what comes next. On the economy, skills, participation and security, we have already given some informal feedback to the Scottish Government. We think that those are the correct themes and we will certainly be involved in all parts of the formation of the strategy. Rural areas were mentioned. I am sure that you will have a view there. Obviously connectivity is such a key part. From my point of view, the more people using broadband, the better economic and social impacts we have, just as Michael mentioned. It would be to look at a focus on that but obviously connectivity has to come to enable some of that to happen. Glendial, do you want to add something on that? If I may please. I think that we are making a decision just now but whether we want to feed in formally to the consultation and different parts of Ofcom are considering the key aspects, the key themes that have been identified in the new digital strategy. Probably the critical issue for us is the question of the relationship between the UK Government's proposal for a broadband and the Scottish Government's own commitment to 100 per cent superfast by 2021. The committee is probably aware that we are already providing technical advice to the UK Government by the end of the year on the range of options that are available to them to deliver their commitment to the broadband USO. The question for us is how that might overlap with the Scottish Government's own plans for 100 per cent superfast. We are encouraging dialogue between both of the Administrations to understand how they want to achieve those things, what their timelines and implementation plans are and what technical advice Ofcom as a regulator can offer to both Administrations to allow them to achieve their objectives. Obviously they are thinking of budgets here so I want to go on and talk about what funding might be required but just as part of answering that and the back of what has come up perhaps particularly from Ofcom where we were hearing their involvement with the two Governments and I just wondered if Ofcom had yet got a view on the prospects that 5G might have for delivering superfast broadband speeds to areas that might otherwise be very expensive or difficult to reach and in particular whether consideration is being given to what has happened in Germany where the new technologies are focused on filling the areas that have currently 0G, in other words no coverage, preferentially before upgrading the services of the already digitally rich areas in the centre of our cities and just to complete this round for Professor, I just wanted briefly a reference that was made in your opening remarks to open access and I just wanted greater clarity as to what you meant when you said that I was a little uncertain about that. Okay, I think just because there's some quite meaty bits in there and perhaps if we could get the, I could ask Glenn just to comment on the 5G point that Stuart's raised and then the Professor and then I'm going to come to each of you and ask you on the funding and where you think we need to be as far as funding to achieve Scotland's ambitions. Glenn, could you start please? Yes, absolutely, and I am happy to respond on the funding point as well because it is a feature of the conversation. The chance, if you could do with the 5G first, that would be perfect. Yeah, absolutely. So I mean the short answer to Mr Stevenson's question is we don't yet know what 5G is going to mean in terms of the availability of Superfast but it is absolutely one of the things that we're going to be consulting on and considering over the course of the next few months. We are talking about, I think, years, frankly, before there are clear solutions as to the provision of 5B these links with Superfast but we are confident that it should provide that time and our expectation is that it should provide that type of basis for the provision of Superfast so improved latency and bandwidths and so on and we will consult openly on this over the course of the next probably 12 to 18 months and I'm looking to engage with both the Scottish Government, UK Government and this committee on how this can deliver the sort of objectives that both of the administrations want. Can I just briefly ask if you're also engaged in the issue of early delivery to areas without coverage? Yeah, so when we consult, I think one of the things we will do is look at that German model that you mentioned the kind of inside out rural model where that obligation was placed on the providers to consider making the provision in rural areas come first before they got those urban areas so that is absolutely one of the options that we'll be looking to get views on. So no G will go straight from no G to 5G is that what you were suggesting? No, I don't think we're suggesting that at all but we do think that 5G potentially offers us a significant step towards the Superfast speeds that both Governments are looking for. Before we leave 5G, I think that Jamie has got a question on that for you, Glen. It's very important on that. Is this going to come about via an option of spectrum? In other words, is off-com holding a... Excuse me, I'm still recovering. A spectrum of the frequencies is required to deliver 5G and if so, how far down that process of the parameters of the auction in terms of beds, who can bid for it, how much they can bid for, etc. The short answer to the question is yes. This will feature as part of the spectrum auctions that off-com will bring forward over the course of the next few months and a couple of years. We did bring forward a consultation on 2.3 MHz last week and we've been quite clear about those people who are entitled to bid for certain elements of that spectrum. The process of clearance of 700 MHz, which is one of those areas where we think there is the kind of most scope to get deeper into buildings, for example, is some time away still and we'll be looking to consulting that probably in the next 12 to 18 months or so. Professor, I think there was a... Stuart had asked you a specific question on openness, I think. Open access, right? Yes, the way I would respond to that is to say we've made tremendous progress in the Highlands and Islands with the fibre that's being put in that actually changes the game for Western Scotland. But those publicly funded assets aren't being managed in my opinion and plenty of colleagues' opinions to encourage competition and maximise the benefits. I think that that's largely a regulatory issue in the UK because the commercial... Those now belong to BT, so they're publicly funded, they belong to BT and there's no way that BT, as a commercial decision, would decide to open them up to competition in a way that might maximise those benefits. Very, very briefly, you're suggesting that we should get to a position where the signals on the fibre can be created and managed by other than simply open reach. In other words, there should be multiple carriers directly interfacing with the cable. In many community projects they found that, despite the fact that there is now fibre nearby, they can't access that fibre cost effectively and I think that's slowing down progress. Thank you. Okay, finances and how much does it get to cost us, Gert? You know, the FSB accepts that progress has been made to improve Scotland's broadband capabilities but it's difficult to tally that with the experience we get back from our members on a day-to-day, week-to-week basis. I'm sure that, like MSPs' mailbags, we regularly get contact from businesses who are dissatisfied with their connectivity. We're looking for sustained funding to improve Scotland's connectivity and, on a UK-wide basis, FSB has been pushing for improved local infrastructure, specifically roads, broadband and mobile. We've suggested that any monies coming to Scotland from the autumn statement could be deployed to improve local infrastructure and specifically digital infrastructure. One of the interesting elements of the autumn statement was a new proposed rate relief for digital infrastructure. Is there a precedent for that in Scotland with the rate relief on mobile masks? Could that be deployed in Scotland? Without the resources of Government at my disposal, I can't say how much bringing Scotland up to speed would cost, but we can look at the current £400 million programme to improve digital infrastructure and broadband infrastructure in Scotland. We can compare that to the cost of the new fourth bridge at £1.4 billion. We can say that, while the new bridge is important, we need to see digital infrastructure in the same light as we do physical infrastructure. Sorry, I can understand that. You're saying the £400 million. Are you saying that's not enough? If we're going to achieve 100 per cent coverage, I think it's well recognised that that's not enough money. Just check, of course, that the £400 million is merely the Government investment. There are commercially viable areas that are also receiving investment directly from commercial providers. My information suggests that the £400 million is a combination of the Scottish Government, UK Government, European money and local government money plus a little bit of investment from BT. I'm just checking. I just choose this as a random example. The area around Tareff is not included in the area that's supported by government because it's expected that it will be commercially viable and therefore the investment to make it accessible is coming solely from BT open region. I'm just wondering. I don't know what the number for that is, so I'm merely suggesting that it may be a bigger number. I don't know what it is. To clarify, I would say that there will be additional investment needed for interventions in the marketplace, in places that the market won't service. Stuart, I feel confident that you're going to have a figure to hand. I'll certainly try and come up with a figure. I think that the first thing that we have to remember is that what we've done today is try and address a market failure where the private sector has gone so far and then we're putting public money in to go further. I'm certainly going on the basis that as we get to 100%, that will be almost like a market failure and the top of a market failure, so it will be a very high proportion of that will be public intervention. The public intervention to date is quite different from the rest of Scotland and Highlands and Islands. The public intervention in the Highlands and Islands is somewhere around 95 per cent public intervention. I can only think that that kind of level of intervention will continue, so the £410 million that's been earmarked to date does indeed include contribution from the winning bidder. What I'm saying is going forward, I can't see that there will be a large contribution from the private sector. I think that we need to rely on a very large proportion of that being public money. Highlands and Islands Enterprise has not done any analysis or got any analysis of the budget this time round because we're not in the lead as last time but for our own region. Last time, though, we got independent consultants to look at it and the estimate was to get to the then target, which was 90 per cent coverage in the Highlands and Islands, it would take between £200 million and £300 million to reach that level. As members will know, we have a budget of £146 million and we're getting to around about, by the end of next year, around about 86 per cent coverage. Going forward, I think that it's probably reasonable to think that we may well still need £200 million to £300 million given that we are now going to get to 100 per cent as opposed to 90 per cent and that we need to get everybody to, unlike the target last time, to connect people to the infrastructure. The target this time is superfast speeds for everyone. I won't make any guesses about what the rest of Scotland would take but I would point out that back in 2004, when we were investing in areas L first generation broadband, at the end of the day, the public intervention for the Highlands and Islands was on par with the public intervention for the rest of Scotland. In a way, it would appear that it's the landmass you've got to cover that's going to indicate the cost rather than necessarily the number of premises or people that you have to cover. I understand that that is including the most expensive last two or three per cent that you think will be difficult on fibre or is that using other means as well? I think that we certainly believe that we have to recognise that there may be a number of different solutions to get to 100 per cent. I think that if we were trying to get fibre to everybody, we would have a much, much greater cost. Zoe, have you experienced that? I think that Stewart's right to aim for possibly the ultimate solution of full fibre is considerably expensive but probably should be considered over a longer term than our 2020 target. I think that it would be possible to get an estimate of what that might cost from some of the officials who have been doing some modelling work. I think that there's also experience from other countries to draw from and from what I've seen other countries have tended to spend more to achieve more than we have in Scotland historically. I think that there's a few possibilities for getting a ballpark figure for the ultimate goal. One of the points that I wanted to raise was in relation to something that Michael Forman mentioned earlier when we're working with communities right at the edge of connectivity, the wholesale backhaul costs can be prohibitive. What that does tend to mean is that small projects find it very difficult in terms of economies of scale to cover their annual costs. What I would refer to as operating expenditure on an annual basis can be extremely challenging as we go ahead and we may need to find ways to support that going ahead in the future. Ultimately, that should be negated by a much longer roll-out of fibre and improve backhaul across the country, but there's a stepping stone before we get to that point. It doesn't necessarily answer your question with a number, but it gives you some clues. It gives us an indication that it's an on-going problem once connections by Glenn, sorry. From an off-compo perspective, I think that we would recognise the points that both Zoe and Stuart have made. Our approach is, I guess, slightly different in the sense that we've been tasked with providing technical advice to the UK Government on their broadband USO proposals, and that includes a strand of work looking at costs and technologies. I think that we recognise that, for some of those remote and rural areas, as Zoe and Stuart said, that kind of mix of technologies will be essential to deliver the objectives that the Governments are seeking. In terms of the work that we're doing on the broadband USO, we consulted on it in the summer and we ended up with a couple of distinct visions of how to achieve the objectives of a broadband USO. What we would describe as the kind of safety net giving access to key online services, which is the 10 megabit that the UK Government is talking about, and then a service similar to that provided in commercially competitive areas. You can see where they feature on the spectrum, where you'd have a minimum download speed, maybe up to 30 megabit, which is what the Scottish Government has committed to as well. Our job over the course of the next three or four weeks is to look at all the data that we gathered during the consultation and to finalise that in advice to the UK Government on what those costs and technologies might look like. We haven't got a final figure yet, and that's for the whole of the United Kingdom. I'm not clear yet if it's going to be disaggregated for different bits of the United Kingdom, but we'll check that and come back to the committee. We have also committed to having a conversation with the Scottish Government about how we can support with our own technical advice and consideration their own commitment to do superfast by 2021. We've constantly heard the use of download speeds. We're also looking at improving upload speeds to speeds similar to the download speeds. That's the sort of thing that we'll absolutely feature in the consideration that we're going to give. For many rural industries and design and so on, upload is very important as well as download. Just to be clear, when do you think that piece of work will be finished because you offered it to come back to the committee and let us know that. The end of the calendar year is the deadline that we have from the UK Government, so I think it will be in the kind of last week before Christmas is when we expect to share that with them. When would you be in a position to share that with others? We'll try and do that as quickly as we possibly can, and I'll make a commitment to the committee today to come back to you and give you a specific date to share what we can. That would be perfect. Thank you. Michael, do you want to...? Yes, if I may. I'm not a financial expert, but I can look around the world. Like Zoe, I think that looking at other places is worthwhile. Our targets are set at 24 or 30 megabits a second, and that's called next generation. There's a recognised problem of long lines, but it's not quantified very well, so when we give our targets for coverage, it's not always clear whether we're including the long lines where you won't get those speeds or not. We're a small country, 18 per cent, your rural population. Let's compare us with... Half a billion so far. So France, eight times the area, ten times the population, has recently committed 20 billion, and this is of government money, is my understanding. They have 24 per cent rural population, eight times the area, ten times the population. So we're under investing compared with France, and their target is 100 per cent and 200 megabits per second for 2022. Maybe France is too big, so think of Estonia. Estonia, 31 per cent of the population is rural. They're half the area we have and only a quarter of the population we have, but their target is 98 per cent within 1.5 kilometres of fibre access. And as long as we do the kind of technologies we're using at the moment, you will not have download speeds and upload speeds matching each other because the technology for the last connectivity is that you share the upload effectively between a number of people, even though you're getting better on the download. So there really are problems with the whole strategy and my feeling is that you should up both the funding and the targets in order to compete with the rest of the world. And those are just two examples you can find many more. Okay, I think the next question is coming from Mike. Two parts. Fergus Ewing, our cabinet secretary, whose responsibility is this, has reaffirmed this month that on the 13 November he said that 95 per cent of households should be connected to a superfast broadband by the end of next year. That's just 13 months from today, 13 months time. So my question really is, firstly, do you think that target is going to be achieved in 13 months time? And secondly, since we're focusing on the budget and we're looking at the budgets about to be presented to us, do you think that there's enough money, that is Scottish Government money, in the programmes to ensure that we hit that target? So really, is it going to be a hit? If we don't think it's going to be a hit, is it primarily funding or is it something else? And have we got enough money in the budget? Difficult question. Who would like to go first on that? You're all looking the other way. Stear Robinson. I think that the 95 per cent target, given that it's based on connecting premises to the upgraded infrastructure, is doable by 2017. We're already seeing that, as members will know, the Highlands and Islands project is running slightly ahead of the rest of Scotland, in that we were due to complete the first phase by the end of this calendar year, but we're seeing additional roll-out going to happen through next year, so we're going to go further than the 84 per cent that we originally thought, and that may well be the case. Well, it's already the case in the rest of Scotland that they have gainshare or clawback money to enable to go further. So I think on the basis that the target was set, which was the percentage of premises connected to the new infrastructure, not premises at 24 mega or above, I think that that target is doable, and I think that there is enough money currently. I think that the challenge is to go beyond the 95 per cent. Well, two things. One is to bring everybody within the 95 per cent up to super-fast speeds, and then go beyond the 95 per cent to get super-fast speeds to the last 5 per cent. I noticed a rise smile from Michael. I wonder if you'd like to come back at that stage. It's really this connected to super-fast. Frankly, the moment you're connected to the internet, you're connected to super-fast somewhere, being connected to super-fast really doesn't do you any good if you're just getting super-slow speeds. So it's a target that I think shouldn't be publicised because it sets expectations because people naturally think that I'm connected to super-fast, I should get super-fast speeds. I think that the advertising standards authority should get in here. It just doesn't tell the truth to the public. I give everyone else a question. It's a tiny semantic point, but there is something important in mind. I heard Stuart Robertson saying that 95 per cent people connected to super-fast broadband is in not the case, it's 95 per cent of people connectable because being connected requires you to sign up and pay money. I just wanted to be clear. That is correct. It's 95 per cent of premises on a network and should they choose to sign up they can. I was really just trying to make the point that the targets that were working to a target set some years back, but I think that the world has moved on. BDUK, for example, is now very much looking at the number of premises, percentage of premises connected at 24 megabits or below. We've always seen that that is the objective. I was maybe being a little bit pedantic in answering the earlier question. I was working on the targets that were set previously, but everybody's aspiration is now to get people able to, should they choose to be connected to a true super-fast service. Stuart Robertson, do you want to come in? Michael Furman is absolutely right when he talks about the user experience. It doesn't matter whether you're notionally got super-fast speeds, if your experience is terrible then you're going to end up grumpy. FSB, we've made representations to Ofcom and others that network providers shouldn't be allowed to advertise super-fast speeds up to 10 megabits per second. It doesn't mean anything at all if you're getting a very poor experience. We were pleased to see Ofcom move on that. On Mike's point, I don't think that I would want to second-guess Audit Scotland, who said that they're on track to meet the targets. One point that I would make is that available connections to small and medium-sized businesses lag behind the general population specifically because there's such a high proportion of small businesses in rural areas and in business parks, which are often poorly served by the current intervention. If we're going to develop a new programme of interventions, it would be great to see the business community especially targeted, because that's where we think we'll get the most bang for our buck. Glenn, I'm going to bring you in here to be the adjudicator on what it actually means. In Ofcom, we recognise the point that Michael Forman and Stuart McKinnon just made about the up-to-point, the actual lived experience of residential and business customers. We have developed with industry, broadband speed code of conduct, particularly focused on business services, with all of the main communications providers being signatories to it. That requires them, once they're signed up, to provide transparent information at the point of sale, at that contractual point that you rightly made, to manage any speed-related problems and to allow, importantly, to allow customers to exit when their speeds fall below a minimum threshold. We recognise that it's a voluntary code. Although it would seem that the communications providers are sticking to it, it's a first step for us. It's the thing that we need to think about, what next, to make sure that people are getting the speeds that they think they're signing up to. Would you like to add anything? No, I'm very happy that everybody's answered your question. Jamie's got an additional question on that. I've got lots of digital questions. I'll try to keep them brief in short. On the point that Glenn Preston made there, this is about regulation of how people sell these products. It's all very well having a termination, right, if you're not getting the speeds that you first thought you might get, but the problem for people who are at those speeds is that they probably don't have any choice or any other service providers to go to. If you're in an area where you thought you might get a couple of meg and you're only getting one and a half or two, it's all very well terminating your contract, but then you're left with no internet at all. I wonder if a voluntary code is a nice idea, but how far should you recommend that our Governments could go to make sure that people get the speeds that they were promised when they signed the contracts? You can answer your contract if you're not happy, Mr Customer, but that's not good enough for people if they've got nowhere else to turn to. I think that it's an interesting question and one that all of us will have had in our mailbags, but it's wondering a wee bit away from the budget side of it. Could I ask you to give a succinct answer to that, please? We absolutely recognise the point that you made. One of the provisions of the UK digital economy bill that's currently before the Westminster Parliament will allow us to take enforcement action and remedy the consequences of a breach of the new universal service obligation. We will be able to find communications providers up to 10 per cent of their turnover, and that is a significant new power that we haven't had previously and I think should go some way to allowing the type of remedy that you describe, but we do recognise the point that you make that if you had to have no alternative provider, what next for you? I think that that's the kind of broader question that we're all trying to address. Is there any more questions on that particular line or, Johnny? Given our morning panel, I think the questions I was going to ask have largely been addressed already, but if I may just flesh out a couple of things, please. One of them was whether there's much quoted some 412 million. Do the panel consider that that's been well spent thus far? Professor, I'm going to let you go first on that. From a technical point of view, I think yes in terms of the way that those assets are now in private hands and there seems to be very little control over how they're used, I think no. Stuart Robertson, do you want to make a comment on that? I think that it's certainly in the islands that it has been well spent. I think that while I think it's true, largely what Professor Fulman says, that the ability, for example, of community projects to get affordable connections from the infrastructure is still an issue. The axis is to extend open and the new ducts that have been put in, for example, are open to other users under the normal regime that Ofcom has agreed with BT. So it's not that there is no access to this publicly funded infrastructure. I think maybe what Professor is saying is that the access is still not affordable enough or easy enough to be usable. Stuart Robertson, do you want to comment on that? My experience of it to date is that the money has been well spent to meet the objective that it had been set at the time, which was to connect as many people as possible for the smallest amount of money, which was a very sensible objective. I think things have changed, demand has changed, expectations have changed and technologies are marching on as well. I probably feel that, to disagree with Michael, the fact that the network is in private hands is potentially a good thing because of the pace of change and the ability to create competition. Having said that, there is very little competition for the rural areas of Scotland and that's the challenge that we are continually faced with is how to stimulate that competition. Even if it was competition between internet service providers through wholesale open access ducts that are owned by open reach, that would be much better than the position that we are in now. It would go some way to answering Jamie Greene's point about having competition for internet service providers in areas that are very remote and rural. I am one of those people who tried to move away from my provider and three months later finally got reconnected back to the same one because there was no choice despite advertising. I have a great deal of sympathy with that and I think that competition in internet service provision over technology that is already in place would be a really strong strand to be developing. Stuart McInan, do you want to say anything on that? I would again reflect in the Audit Scotland report suggesting that the contracts are delivering what was asked of them. I would agree with Zoe that demand and expectations are changing amongst both consumers and businesses. Also, if we are going to reap the rewards from the investment that has been made, we need to build upon the infrastructure, we need to develop Scotland's digital skills and digital businesses as well if we are going to get a reap true value from that investment. The direct answer to Mr Finnie's question is that OFCOM does not do the consideration of value of money for the broadband roll-out in Scotland, but we have no reason to second-guess the Audit Scotland report that Stuart McInan just mentioned. Our focus has been on the point that has been made by the other panel members about increasing competition with BT so as to incentivise that investment in the system, recognising how challenging that can be in rural Scotland as well as trying to support the thinking of Governments on public investment in those commercially unviable areas. We did a digital communications review last year where we will feature as part of our strategy over the course of the next couple of years as well around opening up BT's infrastructure, which has already been mentioned, the kind of DUTs and Poles stuff. It probably hasn't escaped anybody's notice that yesterday we announced we were going to proceed with the formal notification to require the legal separation of open reach from BT after we felt that BT had failed to offer voluntary proposals that address the competition concerns that we have. There is lots and lots of information on that available to the committee on the OFCOM website that we published yesterday. For that response, certainly it is the case that large private multinational corporations have done very well from public money. Can I ask—and that may be entirely to do with the contract. I'm not suggesting the contract terms haven't been met, but maybe the wrong contract was drawn if public benefit should be the outcome of public expenditure, not private profit. Can I ask why there is a cap, please, of £1,700 on how much BT can spend in its premises? That just may be illegal. Stuart, yes. I'm just going to point out that all the committee members have questions they want to ask. There's quite a lot of them. I'm conscious of time. So if people would like to give a succinct answer as they could, then I'll give everyone the opportunity to come in without reducing the quality of your answer, because that's a good question. Sorry, Stuart. The £1,700 was something agreed by BDUK at an earlier point to try and speed up the roll-out of the BDUK contracts across the UK. Our understanding is that it's not a cap. It's a requirement that if it's going to cost more than £1,700 per premise in a certain bit of roll-out, that BT are obliged to let the authority in our case, hands on hands enterprise, know that it's going to cost more, and we can then make a decision of whether we want, we see that as value for money. There is no suggestion that we can only spend up to £1,700 on any premise. We can go above that if we believe that it's value for money. Are you able to say that, Mr Robertson, if I'm here with that, I know it would be a supplementary thought. How many instances of that occurred and what constitutes value for money? Well, I don't have all the figures, but I do know that in certain instances we have gone over that at about as we get to the more challenging areas. We're certainly looking at what constitutes value for money, where we would certainly be looking to try and give us a fair coverage as possible over the various local authority areas, for example. So we may, in the Western Isles, where the coverage is lower, perhaps agree to a higher than £1,700 per premise roll-out than we might in Murray, for example. Who adjudicates on that figure of what's going to cost £1,900 or £2,000? Where does that figure come up with that figure? They tell us what it's looking like, and we obviously encourage them to go away and try and find a better, cheaper way to do it, but still the effective coverage. So, yes, the cost information comes from BT. Okay, thank you very much. Right, it's got a small supplementary. It is. As we mentioned about internet service providers, providers have no choice. I can understand that in community roll-out. There is no choice because you are with the community provider. But if BT has reached your premise, what is stopping another service provider using that fibre, that link, so that you get a service from them? I'm picking up the run issue there. It may be that Stuart Robertson is better placed to answer this than me, but my understanding is that that competition is open and ISPs can provide over that network. They may not choose to, because they may not see enough customers in that particular area. I don't know what you want to say. Sorry. In Zoe's case, I know that it's because her exchange is an exchange-activate exchange, which has a very limited number of potential ISPs. I think that that is a very valid point. As we go forward and seek solutions for 100 per cent, it's important that we get solutions that are as close as possible to the wider market delivery and that we don't end up with bespoke niche solutions for rural areas. We want as many people as possible to be part of the full market, the mass market, so that the service that they get and the prices that they're offered and the range of choice that they get from ISPs is as close to urban areas as possible. Glen, do you want to come in on that? It would simply be to reaffirm the two points. There can be both technical limitations and market limitations. We have heard from other providers that they're not willing to go to those places at the moment because they aren't commercially viable. This goes to Ofcom's desire to open up the infrastructure, particularly on the ducks and poles side. The comments that I already made in relation to the legal separation of open reach as well, that we're trying to drive that type of attractive market for the other providers. I'm going to leave that there and move on to the next question, if I may, which actually comes from Roger. Which has been largely covered, to be honest, about the costs of roll-out. If I'm correct in that, what the estimate is to get to the Government's 100 per cent target that we're looking at, £200 million to £300 million for Highlands and Islands and double for Scotland, is that correct? So we're talking about maybe £600 million to reach the 2021 target. The point that I made earlier was really just to say that, looking to history, in the first generation broadband, it took as much public intervention in the Highlands and Islands as the rest of Scotland to get to the same point. So I don't really have any information about how much it might cost on the rest of Scotland. As I said, I'm really basing my estimate on the Highlands and Islands figure on previous work done. We haven't done any analysis at this point because the reaching 100 per cent is being led by the Scottish Government digital directorate and not HIE. How much of that funding would people have estimated would have come from Europe in this Brexit going to affect the levels of funding available? We didn't use any European funding in our previous project because the amount available to us at that time of the total required was a relatively small amount and so it was chosen not to use it. I can't make any estimate of what might be possible in going forward about how much that would be European funding as far as I'm aware. The only European funding available currently to the Highlands and Islands for broadband purposes is around about £20 million from the structural funds. From a community broadband Scotland perspective, £9 million of the £16.5 million budget is from SRDP, so 4.5 million of that is directly from Europe and the rest was matched by the Scottish Government, but we don't believe that it's at risk. There's been an agreement put in place that the funds don't need to be committed until we exit Europe, so we've got plenty of time to spend it, so it shouldn't be at risk. Does anyone else want to add? I'm happy to move on if you feel... The next question, Richard, is from you. Professor Michael Forman, you said about digital deprivation. Many of the areas that are in Scotland, Scotland is a lovely country, but it has a lot of geographic challenging areas to go to, so any of the witnesses, can they provide any examples of pilot projects where we've been helped to boost mobile coverage in those geographic challenging areas? If you know any pilot projects, are you aware of any funding, how the funding was raised? I know of one project where it cost about £130,000 to go to a physically challenging area. Do you know of any other projects, maybe up in the Highlands Islands or in any areas in Scotland? Maybe it would be appropriate for Richard to start with Zoe on that. Would that be all right, Zoe? Can I just clarify? Are you asking about mobile connectivity as opposed to fixed broadband? Well, it could be... At the end of the day, one of you also said that delivering fibre to those physically challenging areas would cost. Wifi could be through satellite, it could be through whatever new technology is coming on? I can talk about community broadband Scotland projects, which are operational around remote and rural parts of Scotland. They have typically used fixed wireless access, so this is what we would call fixed broadband, but it could be through wireless connectors. The average cost of those projects that are active just now has been about £500 a premise. I think that we haven't estimated fibre costs. We've never received any quotes for fibre costs for those particular areas, but it would be significantly more than that, a multiple of many. It gives you a flavour, but there are so many variations in the costings depending on where the backhaul is coming from, depending on how they connect to that, and depending on the detail of the geography that they are within that can affect those costs, both up and down. Does anyone want to particularly pick up on the mobile aspect of it, because I think that was part of Richard's question? The Professor was wondering to come in. I'll... Mobile aspect, but on the delivering through fixed wireless. My colleague Professor Peter Boonaman has been very involved on the west coast, and I've been marginally involved. There are certainly successful projects there, which Zoe knows about. One of the things that's happened recently is to set up an internet exchange there so that the different community networks can pool their backhaul, which is very creative and a good way to do things. The other thing that's happened is that the Scottish Government has put some money into building some fibre, a community-built fibre. There were difficulties with that. I don't know very much of the detail, but there were difficulties in terms of connecting to the BT backhaul to get back to the internet exchange here in Edinburgh, which delayed things. I myself get my broadband here in Edinburgh using those technologies just so I understand what they do. My signal comes to my house from Summerhall about half a mile, and I get 50 megabits a second each way, and it's a community broadband project, and I pay £25 a month, and it's as good as I would get from a commercial provider. I think that there's a lot of scope for doing these things in places where you can get backhaul. The communities can at relatively low cost produce these kinds of connectivity for small numbers of people. You can't do tens of thousands this way, but you can certainly do hundreds of people this way with fixed wireless and deliver very fast speeds by UK standards at least. I'm immediately jealous when you talk about those levels of speed, along with everyone else on the committee in rural areas, at 0.2 megabytes regulated means that I get no speed at all, really, most of the time. Stuart, do you want to talk about phone masks? I would like to talk about mobile phones. It's a pet subject. Just as Scotland lags behind England on every measure of broadband connectivity, Scotland lags behind England on every level of mobile connectivity, including coverage to the premises, but especially geographic coverage. We were pleased to see the Scottish Government's mobile phone action plan, which has four proposed pilots where the Scottish Government is granting special rates relief planning permissions and the like to boost coverage in especially poorly-served areas. I'm aware of other pilot projects. I'm just not sure whether those pilot projects are great. Are they sufficient to close the gap on mobile coverage in Scotland, especially if we want to catch up with England? One of the reports that the FSB recently published was looking at bank branch closures. The areas that are seeing bank branches closing are also the areas that are most poorly served by digital connectivity. How do we ensure that communities aren't left behind? While we've seen quite a lot of intervention into the broadband market, we've just not seen that same level of intervention in the mobile market, but the areas that are very poorly served in Scotland. Len, do you want to come in on that? Specifically on the mobile point, there are two or three things that are worth sharing with the committee. I mentioned earlier the lower frequency spectrum availability for 4G services, which generally helps to extend mobile coverage over longer distances and deeper into buildings. We do it as part of our work, for example, on the upcoming 700 MHz auction, which I mentioned in response to Mr Greene's question. We're looking at how that might be used to deliver those longer range and deeper into buildings solutions. We're also looking at whether we can consider that kind of inside-out model that we discussed with Mr Stevenson as well. One of the other areas of interest that we haven't touched on yet is the Home Office's Emergency Services Network procurement. We're quite keen to understand all the service conditions for that and how they will apply to different sites and whether there would be any constraints on their capacity to supply wider services. We think that there might be scope there, but we're trying to get more information from both the UK Government and have a discussion with the Scottish Government about how that fits with their mobile action plan that Stuart McKinnon just mentioned. The final thing that's probably worth mentioning is that we will do a new version of our annual Connected Nations report, which should be out sometime before Christmas, and we're changing the way that we do the metrics on that, so we're looking at geographic coverage, so landmass and indoor coverage, rather than some of the outdoor premises coverage that's happened before, which I think will give us a truer reflection on the challenge that faces us on mobile coverage. What is the point that Stuart McKinnon was talking about about getting a signal? Many people over the years have been opposed to mass being erected, you know, you go out to work in the morning, you come back and there's a mast sitting outside, and I remember as a councillor, I actually actively got a company to move that mast about 300 yards over a railway and basically hid it away from people. We've also seen innovative ways of, you know, they've designed a mast like a tree, you know, and like a flagpole. Do you think the public now accepts that they need coverage and they need their phone? Do you think people now accept that mass, you know, can be, is there any opposition now to mass being put up? Do you think that also the fear of getting cancer from a mast is dissipated? I wonder if we could direct that, start off with Stuart Robinson, if he's had any views from the Highlander and then to the Professor, and then probably, if that's all right, leave it there, if we get satisfactory answers. Stuart, would you... I think there's a much greater acceptance that if we want the technologies, we have to have the infrastructure to go with it, and I think the fears about mass have receded, but I think it's still the case that many masts in the hands of hands go to the local authority planning people and there are discussions about the best sighting for masts, and often there may be requirements to move the sight of them, but I think there is a much greater recognition that, as I said, we need more masts if we want better coverage. The other thing on mobile sector is to recognise it's in quite a different place than the fixed sector in that the mobile operators are now spending a lot of their own money and rolling out coverage, so there will come a point that I'm sure there will need to be intervention with public funds, but we haven't reached that point yet, so it's not easy to put public money in the mobile sector knowing that you're going to get money, but no doubt that point will come. Do you have a view on mass and acceptability? I was always concerned that schools found it difficult to put masts because schools are very well located with respect to the population, so there will be an ideal place to put masts, but that doesn't happen because of the concerns that you talked about, which I think are all founded. Just on masts and funding, the mobile infrastructure project hasn't been discussed, but when you talk about has money been well spent that bit I think wasn't well spent because we didn't get any masts. That's an aside. I'm going to leave that as an aside if I may, Professor, and Murray, you've got a question I think on challenges. Yes, thank you, convener. I mean, I'm sure you'll all be awaited the report that the Scottish Futures Trust published earlier this year, which obviously outlines some of the challenges that we're going to face. So it was really just to ask you what financial support you think will be needed to try and overcome the need to lead on that. Glen, it looks like you're up first. I'm quite happy to have it first of all. I mean, we've kind of touched on this a little bit already, I think, in that none of us appear to have a A figure. Certainly from an off-com point of view, the technical advice that we will give to the UK Government by the end of the year will allow us to have a sense of what we think the different costs and technologies might be for whatever the broadband USO ends up being. So we know there's the kind of safety net via future-proofing approaches and we will share that analysis with the UK Government and then they will have to make a public policy choice about where they want that broadband USO to come out and what type of public intervention will be necessary to achieve it across the UK including in Scotland. What we don't have yet is just a number that says it's going to cost this much either for the whole of the UK or separately for Scotland. I'm afraid I don't have a number either but I think that one of the most important things for rural Scotland is that whether we're talking fixed or mobile what we require is the foundation stone. That's the greater amount of fibre further out into the more rural parts and infrastructure is there to allow the solutions to be built on top. This is obviously particularly evident when it comes to perhaps island communities where they're served by microwave wireless at the moment but actually need the higher capacity that the fibre brings and if we could get that infrastructure in and it may well be costly given the relatively small population of some of the islands for example. I think that we need to look at the investment not just about counting broadband connections we need to think about delivery of public services we need to think about the stemming depopulation we need to think in the widest terms about the use of that investment and it may well be a large amount of money but it potentially could be money where it very well spent. Mary, have you got a follow-up on that? Yeah, well it was just another question really. I mean that report also pointed out some of the particular issues. I mean it talks about house builders and how they're reluctant to install fibre to the home and new housing developments so I mean when it comes to issues like that what other problems do you see that need to be addressed and need to be tackled? Stuart McKinnon, I'm going to let you go on that one. The SFT's report is the one looking at our ambitions for 2030. I think they would be much better place to say how much all of that is going to cost. I think in terms of costs I think Stuart's absolutely right to point out what's the cost of not doing what's the cost of not doing things. From a small business point of view HMRC are increasingly expecting you to find your accounts online on a quarterly basis if you do not have suitable internet access what impact does that have on your business. While we're looking for Scottish businesses to do much more of their interaction with the state at large online but if you don't have good infrastructure that means that you're going to have more people using old-fashioned services either face-to-face or phone services which will put greater pressure on the state and on costs. In relation to this specific point about housing estates I've heard similar complaints about business estates so out-of-town business estates where fibre has been built as part of the default and that may be the planning system. I understand that it changes to the planning system to try to address that particular issue but I would need to look into that. Does anyone else want to add anything on that? Stuart and then Michael? Just on the point about new housing estates and new business parks to find a way to make sure that these new developments are adequately covered with broadband is essential if we're going to meet the 100 per cent commitment in the near future effectively we'll have an intervention area to go forward with a new procurement to put in place the further roll-out but that intervention area will not change through the contract so that there will be continually new builds that will be outside the project so it's essential that we don't come to the end of 2021 and then find that the new builds have been left outside the roll-out so I know that BT are doing more to ensure that they're going to put fibre into larger estates and we also have to find a solution to make sure that new business parks are also adequately covered. So I can understand that, sorry are you suggesting that all new housing projects over a certain size should have a planning requirement on it to provide to the home? I'm not necessarily saying that but I am saying that we need to find a way of making sure that new developments get the proper of the full infrastructure whether that's through planning whether it's through buyers not buying where the infrastructure's not there the power of the market it's about developers maybe doing more to see the usefulness of having solutions perhaps it might make the houses more easy to sell I'm just saying that we need to find some solution to make sure that going forwards as we build new infrastructure we put in broadband infrastructure at the same time. Michael, I think you're going to have a view on this I feel. In our 2010 report we identified fibre rating which has been already mentioned this morning and the lack of any as an issue that was slowing things down so we require sewage, we require water, we require electricity we should require fibre but there is a problem with requiring fibre because you can't just put a bit of fibre in, you have to connect it to somewhere and so you need to interact with the local providers in order to get a connection back to the internet and that can be difficult in rural places for reasons we've already discussed of a natural monopoly on those things in towns I think most new buildings actually do do this but in rural areas it's difficult because you only have one source of supply and connecting to that may be very difficult to make it prohibitive and the fibre rating may also be playing a role in inhibiting those developments Are you happy and married with this? I just think it would be interesting to find out what dialogue has taken place if any dialogue has taken place with developers and house builders to see how that might be progressed but that can't be answered today I think that's something we can ask the cabinet secretary when he comes in but I think it's a very relevant point to make sure that the costs are identified now and people start building those in rather than relying on the Government post 2021 to fill the gap so I think that we'll make a note of that You've got some questions on community broadband and I look to Zoe to answer these in the main unless anyone else wants to come in so Peter Community Broadband Scotland I want to dig a wee bit deeper into that it's been very useful in the particularly hard to reach areas and we understand that and you are variously funded some of the funding comes from SRDP I just wonder do any of the schemes funded by Community Broadband Scotland provide models of operation for other community-led projects especially in remote areas and also how can value for money be ensured within these community broadband projects I'm interested to see that you can identify that you are producing value for money I think that you are quite right that there are good examples within the projects that we funded to date about how other communities could operate and there's been some really strong projects that we've supported Michael mentioned one earlier which was what we refer to as the West Highland Access Network which helps small communities get economies of scale through backhaul and sharing some of the services around that that's a fantastic example that would be worth replicating again it does rely on having connectivity in somewhere that comes with its own challenges there are other projects for example Badenach Broadband which set out on its own I think started off with leader funding and we've funded a bit of an upgrade recently that's a really nice growing business in the space side area and they're extending their coverage to work with they're hoping to attract up to 300 customers on that network there's other examples I mean Mary Kirk's another one that's been winning awards for a similar kind of model again developing into a small social enterprise and again looking at customer base of two to 300 people premises rather all of those are good examples of what's possible they happen to have fairly strong and business minded people involved in running those networks and that can sometimes be a challenge for people that don't have some of those skills within their community so that's something that we need to support more of and I think in terms of value for money they are great value for money in so far as they reach as I mentioned earlier those average cost of those projects in capital terms is about £200 a premise which is great but I think that we do need to look further ahead and think about how those projects could eventually upgrade potentially to more and more fibre and are they bringing enough revenue in to do that we've done some work on a study which is not complete yet to consider that and it is looking actually quite positive that with the customers that they've attracted they will be able to eventually do some upgrade work with the revenues raised and to pay staff to do that rather than act as volunteers but as I say these are quite exceptional and very strong projects and it's also worth saying that those projects are charging in the region of £25 a month to £30 a month per customer so again not charging excessively so the potential is there but it is a these projects have grown using volunteers in negative cash flow places over their lifetime they've built up over a number of years so they're strong now but they will have relied on a huge amount of personal input to get them to that stage So how sustainable do you feel it is given that you do need a local champion to get the thing up and running I mean is it sustainable long term is that local champion need to be involved with the project in years to come or can he then step back and say it's now in place I think in the case of those projects and there's also a similar one in Loch Heel because they're starting to generate enough revenue to pay staff they become more sustainable and they're training up so that there's more and more people around but that is quite a long and difficult journey I think to be fair and those people have to be commended for the efforts they've put in to getting that far so can it be part of the solution I think it can but it is a pretty unique and challenging solution and I think we do need to take care of the sustainability of those in the long term so that will only really be something that's evident after they've been operating for say 10 years and seeing how those dynamics change there's also potential that other competitors could come in and squeeze the marketplace that these community projects have got at the moment and that would be pretty damaging for them to compete with that in terms of price or service so I'm not saying it's not possible but it remains difficult I mean that you could I'm conscious of the time and what I would like to try and drag you back to is the final question that you indicated you might like to ask The Scottish Government will be considering the future of community broadband Scotland 100% and what action would you and the panel like to see regarding the provision of community broadband provision in the future The Scottish Government had the most enormous challenges in order to get some of its newer projects moving they're not of our making there are things like state aid decision being changed and procurement regulations being changed so I'd like to see that shot at getting some new projects delivered extending the models that I've just described and I think that that will give us a bit more information about the extent to which those kind of projects can be part of the longer term solution so I think it's a testing time in that we need to get some more things done to be able to show the role that these could take but I wouldn't want to impose that solution on any community it's something that you need to want to be involved with and feel quite strongly about I don't think it should be your only choice in terms of the way to get broadband Can I ask as a supplementary to that is your budget and obviously that the last 5% which Peter was indicating is what you want from your budget between now and 2021 to make sure that you play a valuable role that you are playing to deliver to the very last houses The budget that we have is sufficient to connect I think somewhere between 8 and 10,000 premises so I think there's a huge question coming on the back of the open market review which is going to start imminently as to which communities want to get involved in that type of solution and what is the scale of the problem yet to be addressed so our budget will take us to 10,000 roughly beyond that CBS doesn't have a budget to take it further So are you suggesting it's double or treble or quadruple what it should be what do you perceive the need is going to be I mean you must have some idea of what you're going to be asked to do I think because our 100 is still a little bit ambiguous, I'm sorry this is not answering your question very well to get your play across so we can understand that We could do a lot more you're right and we could extend a lot further and I think it would be good value for money to reach that target and to get people involved My view is that empowerment is a really strong part of what Scotland's good at doing and it's a really strong part of increasing demand for broadband so we could we could spend an awful lot more tens of millions more if people wanted to take that approach we're doing a bit of work at the moment to assess the interest in that from the communities that are already expressing interest in what we're offering just to check in with them what's giving me the caveat is that some communities have expressed an interest in just having broadband done to them rather than getting hands-on and we need to offer those communities through the R100 wider programme and it's just helping them to understand those distinctions and their level of involvement that they might want to take I think would help to set the budget Given that the promise is 100% and community broadband Scotland is going to have to be involved in delivering that 100% most of what's left is the hard to reach areas where would you see your budget going to be on track to deliver that with technologies that are sustainable into the future Do you mean in terms of geographic locations or technology types or both? In terms of geographic locations I think we feel our target customer base is the most remote and rural so places that are really quite small and far flung living in what I would call the nicest parts of Scotland but again dispersed or geographically stretched out communities I would like to see the other parts of our 100 extending fibre out to make those viable projects, I think that's a really important thing I do think that the technologies are likely to be wireless but we're working on encouraging communities to get involved in self-dig for fibre because I think that would be a really more future-proofed way of tackling some of the issues so again that depends on community resources and willingness to literally get your hands dirty but we're just adapting the package of support we offer to give people more choices in how they engage with that and helping them understand the difference between getting involved in something like a fibre self-dig versus connecting wireless projects which can be pretty easy to do to be honest in terms of the skills and equipment that people would work with so I think it's about giving people a bit more of a choice in how they choose to get involved in it and giving them flexibility in understanding in how they make that choice but for me the customer base remote areas I can't until I think we know more about the results from the open market review and which premises need to be connected and where they are I think that would be much easier I mean I don't think I can guess What would be very helpful for you to keep this committee informed so that we know where we're going because it's an ongoing issue for everyone so if you could keep us informed on that Now Mike, you want to come in I'm going to let you come in very briefly if I may The scale of the problem is more like 200,000 premises rather than 10,000 premises I think community broadband Scotland has done a fantastic job but Zoe's pointed out some of the issues of scaling it up so one is the know-how and actually funding some training and I think enough activity that it really is possible to build on what you already have and for people to learn you can see if you look at the map that this stuff is infectious in the sense where it's happened nearby it starts happening and we need to find ways of making that happen on a bigger scale and I think funding for that would be well spent I mean one thing worth mentioning the cross-party group on digital participation has just been reconstituted Ofcom acts as the secretariat to that its first meeting since the May election is this evening and there are two strands to the work there's the big infrastructure questions that we've addressed and then the second is the skills piece and training piece and although we don't have as a regulator a kind of direct role in that we're very happy to use that group to explore some of the issues that we have just mentioned There if I may Jamie you've got some questions which I think are going to be in the direction of Stuart McKinnon Skip this question 16 Yes I've skipped my question on the fact that there is shortness of time and I was going to ask the panel members if they'd like to give a written response to it afterwards I have a couple of questions but I'm actually going to shrink it down in the for the benefit of time but also because I'd like to bring up another point about budget specifically so I have one question for Stuart McKinnon what work has been done at the FSB in terms of what if we don't do this what if we get this wrong what is the negative effect of the Scottish economy if we don't get this digital question right within the term of this parliament because I think it'd be really helpful to know when we look at how much we have to spend you know we're just looking at a cost to the purse we're not looking at the upside of it or the ROI on that spend and it's actually more helpful to be able to make a spending decision if you know what the negative outcome is if you don't make that spend so I wonder if you had any views on that I don't have a number to say it would cost this much if we don't do it but what we know is that three quarters of businesses digital is important or essential to their future growth plans so for three and every four businesses they say our plans for growth involve digital technologies and if they don't have good infrastructure then they can use go down those growth plans in addition other work that we did suggest that across a wide range of industries about four in ten of the largest businesses are going to be replaced by new business models powered by digital technologies so the disruption that we've seen in retail for example with the rise of e-commerce is very likely to happen to other industries that we can't even think about at the moment and if those businesses of the future are going to be Scottish then Scotland has to have the infrastructure to be able to cope with those industries I appreciate the very succinct answer one of our majors raised a point about budget in general just before we do that I wondered if anyone else felt they had a I mean Stuart Robinson might have an answer on how much it might cost in the highlands not to deliver this no sorry I don't have an answer on that but I would echo the points I think digital it's not it's essential everywhere and it's not just about the economy it's about the way people live and I don't think there's any disagreement that digital has to be 100% but the one thing that hasn't come up and the one question that I haven't been able to ask which was on skill shortages and delivery of it I assume all the panel except it's not just about business this it's about educating our children and giving them the ability to compete on a worldwide basis by having access to information on the web and taking that as a given but Zoe do you want to come in on not a particularly lengthy answer but I totally agree that digital connectivity would enhance personal skills for young people and adults learning lots of people come back and feedback to us that they want to do online courses and increasingly skills we're trying to do that with some of their more remote people so I think it's a hugely important part of it and just on the back of the previous question we did a little bit of work we did a little bit of written evidence for you on the benefits of broadband it doesn't answer your question about what would we lose out but it does say something about the economic GVA that would come from increased connectivity so I'll send that in, sorry my voice is going there apologies Jamie, if you want a quick follow up that would be very welcome and for the record I probably should have said in terms of interests I'm a member of the cross party group on digital participation if any other committee members are interested in that area it's a fascinating group to be a member of or at least to follow their proceedings they're doing some great work in looking to the negative social economic effects of not being included in digital Scotland I think I have a more general very quick question on how we're going to formulate the scrutiny of the budget on this because it seems to be a very complex funding mechanisms in different parts of the country we know there's already been money spent on the 95% we know there's a tender process coming up for next year that we will have to make recommendations on how we get to that last difficult 130,000 premises we know there's some spending commitments made last week from the UK Government from the autumn statement around 740 million for digital infrastructure so I guess we're already involved in working with the UK Government a lot and advising them both technically and economically on how they can achieve their targets how is that going to fall through to the devolved administrations and how are we going to make sure that there's a proper joined up discussion between money that's being committed from Westminster and money that's being committed in the budget that we're going to scrutinise here I'm going to limit that question to Glenn if I may it's just on a timing basis that everyone else feels that they particularly want to add something later please write to us on that particular thing but I'm going to limit that to Glenn if I may absolutely we absolutely recognise the many different schemes that both have existed and the commitments the different administrations have made and the fact that it will be essential that the two Governments have a dialogue in particular so I think if thinking about your scrutiny session the Cabinet Secretary in December one of the things that we in Ofcom are quite keen to see is that kind of direct engagement between the two administrations to discuss how all of this stuff fits together and certainly from our point of view what it means what it means for us in terms of how we exercise our regulatory functions because there are considerable differences in a broadband USO for example that is about a safety net or floor and the commitments to 100 per cent superfast by 2021 and we are very keen that the administrations have a conversation and a dialogue which we would like to be involved in which I'm sure a number of the other partners represented here and elsewhere would like to be involved in too so that we have a clear sense of when they want to do things and how much they think it's going to cost perfect the last question is from John Lennon I've been told to be very quick so I'll run through it I mean it's in the whole area really of inequalities, digital participation maybe touching on public services because poorer people tend to use public services a bit more I mean some figures we read are quite positive home internet access has increased from 42 per cent in 2003 to 80 per cent in 2014 that's very good but then slightly more negative 98 per cent of households with incomes over 40,000 have home internet access 98 per cent of households with incomes under 15,000 and we're given figures too that 38 per cent of adults reported they had used a local authority website for any purpose only 18 per cent had used a government website I saw the film recently, I Daniel Blake I don't know if you've seen that the guy there who's unemployed doesn't know what to do with the mouse on the computer so my question is what can we do about all of that is it the schools or do we just try and get people a higher income and it's nothing to do with our actual digital side of things or should we put money specifically into this it's a huge question sorry and I am literally going to work from my right, army right Michael if I may and go along the panel Michael I said at the beginning as we get more people online those who are left behind are increasingly in Scotland increasingly in the bottom simdi quintile or whatever you want to look at the further down you go the more likely you are to be offline if you're offline you're likely to be suffering deprivation in other ways I think it's essential that we focus on those areas some of them are rural many of them are in our cities and a large number of them are in Glasgow one can pinpoint with the with the off-com data where people are online, where they're not online and how that links to simdi and it's stark things are getting much better but there's a hard core of deprivation that we're not hitting hard enough at the moment Glenn do you want to follow? Yeah absolutely so a combination of the issues that you mentioned there's quite a fundamental question for off-com as a regulator and traditionally a kind of economic regulator that's focused really on driving competition in the market and whether or not the functions and powers that we have allow us to address some of the issues that you've described so this was an issue that came up last week in the Westminster Culture, Media and Sports Select Committee where our chair and chief exec were asked do you need more powers to address those sorts of issues we don't have a direct answer to it yet I think some of the stuff that's coming with the UK digital economy bill is helpful for us to be able to drive change but it is something that we're quite keen to keep an eye on and if we feel that we need more power to address some of the challenges that you've suggested then we won't be shy in asking for it Sorry I think it's really important that we do something to address that level of inequality and it may not be about home connectivity it may be about using public services like schools and libraries and helping people to engage with digital technologies so I would say in answer to your question I think that we should spend more time and put a bit more effort into that area of work Unfortunately, always I would just agree with what's been said already and I think that digital participation does need continued funding I think that as far as Sands and Anne's Enterprise are concerned I think that our biggest area of focus would be the connectivity side to make sure that people have access to the services but there will be other organisations that will need to look at the digital participation issue So can I just be clear you would not be worried if a poorer person in the village did not have access but all the richer people in the village did have access What I mean is that different agencies will do different parts of the jigsaw It's absolutely important that everybody can get access and I think to cover that situation I think that it would be perhaps a better use of as Zoe said libraries and public buildings to enable Wi-Fi access for example Can I just just one of the issue where it's more difficult nearly all the Highland Council buildings and the libraries have access to broadband and I know from personal experience visiting them to do constituency surgeries there is no public access to computers there Would that be something that you would want to promote? We would certainly be behind the continued focus on digital participation The only point I was trying to make was that I didn't see it because of HIE's core activities we have other parts of the jigsaw that we have to focus on and what I was meaning was that getting the services out into the most rural parts was probably our primary responsibility as opposed to looking at Wi-Fi access Stuart I think that digital participation is a huge issue I would highly recommend the work that the trust has done looking at this particular issue Maybe one of the things that seems to be really improving digital participation is the mobile phone and having more public services available, mobile friendly public services digital government public services would be a good way to go better digital public services generally would allow you to have more money to focus on those most in need and I think that would be in fact to what's the cost of not doing something about this Just to touch on digital skills generally there's been work by Skills Development Scotland looking at the digital skills of the technology industry but I think there's a wider bit of work required to look at the digital skills that the wider workforce will require now and in the future in terms of digital skills which could be expanded to look at the digital skills that we expect of Scottish citizens Which leads neatly if I may on to the one question that wasn't asked on what the government needs to do to invest on making up the skills shortage certainly at school level and during the education process and if you were able post this meeting to say where we think the government is on that and where they need to go on that you would certainly welcome your responses on that in the written format because of the time I haven't been able to ask it Is there anything that any one of you would like to say that you think we should have asked you and you want to give a specific point on or are you happy I mean Stuart is starting army left you're right Yes I mean just briefly touching on the skills point money coming to Scotland from the apprenticeship levy wouldn't it be great to use that as a focus improving the country's digital skills with this money coming to Scotland approximate from memory approximately 200 million coming to Scotland let's pump it into the digital skills I think generally speaking in terms of the budget what we're trying to get is to publish a list of the works that they expect to be done every year so that businesses can make decisions on the basis of firm information about their infrastructure to many businesses simply don't know when their infrastructure is going to be improved I'll leave that there I have nothing further to add The only thing I would add is to look beyond the 2020 target and to consider the budget of our longer period to where we need to go Okay, Glen Yes, just one to ask if I may Ofcom published its draft annual plan yesterday which we do annually for consultation and that crosses our range of strategic priorities and in line with the Smith commission and Scotland Act provisions we are consulting this committee other Scottish Parliament committees and the Scottish Government and we would be very pleased if you could formally come back to that We will certainly be looking at that Michael Thank you very much I think I've had a chance to say quite a lot of what I wanted to say On skills I think we have SCVO is doing a fantastic job addressing some of the skills gap in some of the most deprived areas of Scotland that's one thing that's happening but I think we have to look to the future and our education system is not yet digitally connected I'm not talking about teaching computer science now I'm talking about how we teach every subject so that when people go into the workforce they know how digital can affect what they're doing in whatever they're doing so I think that's something that we should focus on from the teacher training colleges all the way through to primary schools Thank you I think that concludes our session I'd like to thank you all on behalf of the committee to come in it's a huge subject and obviously of huge importance to Scotland and the budget that's going to be considered when it's published in December I would think on behalf of the committee Glen we're looking for some extra additional information from you and Zoe we're looking for information from you but I would ask all of the witnesses if stuff you feel it's important comes to your attention the committee would welcome any input that you would have and I'd like to thank you for your time and I'd now like to suspend the meeting while we reorganise for the next witness Thank you very much Thank you very much At agenda item 3 the committee is going to take evidence on the draft harbour revision order to Aberdeen harbour I welcome the minister of transport in the islands Chris Willcock there you are Head of ports and harbours and Magdalene Boyds who is a solicitor from the Scottish Government the instrument is laid under an affirmative procedure which means that the Parliament must approve it before the provisions can come into force following this evidence session the committee will be invited to write and consider a motion to approve the instrument Can I invite the minister to make a short opening statement Good morning Thank you The expansion of Aberdeen harbour is a nationally significant project as indicated by its inclusion in the third national planning framework It will benefit the economy of both the north-east and indeed of Scotland as a whole as the support for the oil and gas industry moves into a new phase It will allow the harbour to expand out of its city centre constraints and provide state-of-the-art facilities to current and new market customers Aberdeen harbour plant invested £400 million in the project Our environmental advisers have considered the proposal in detail and concluded that with mitigation in place there will not be a significant effect on the environment I will approve the construction environmental management documents which will ensure that mitigation does not lead to any work commencing I am aware that some local objections remain but I am satisfied that the harbour is working with Aberdeen city council to improve local amenities to compensate for any loss of green space in Nig Bay in their mitigation plan The recently signed Aberdeen city deal will also support infrastructure improvements around the new harbour although the full cost of the harbour construction will be met by the harbour board I commend the draft order to you, convener Thank you very much I think that the first question is from John Good morning, minister Minister, my understanding is that this planning permission has been granted for land work and the land works side works and this revision order is for the sea work part to put it that way in layman's terms Is that correct? There is commencing in and around but the main work that has to be conducted cannot commence as you say, within the sea until I give approval as the minister to the construction and environmental management documents that would be correct What is your view on the level of scrutiny that has afforded this compared to the other works? I think the level of scrutiny in terms of the work that is going to be taking place in the sea is great actually The main objections that came from bodies like SNH even from the council themselves SEPA, other environmental organisations and individual objectives were in and around the environmental impacts and they were towards a number of species from salmon to bottomless dolphins and many in between and therefore the level of mitigation, the level of work the level of scrutiny that is going into that piece of work is vast but it is important to be done to give the necessary reassurances Indeed you mentioned those organisations If I can talk about a letter that RSPB sent and it included Marine Scotland and Transport Scotland within your particular remit and it covered species Eiderdocks, Tern, Kittywigs as you said the citations or dolphins as you and I would call them the environmental statement it seems to me that this has worked quite well would you confirm that there has been good engagement between the Yes, I think that the engagement has been very positive in that you are right the organisations that you mentioned many of them including the RSPB initially put in objections colleagues in the Government then worked closely with those organisations to ensure and to give the necessary reassurance is that any mitigation that was put in place would have lessen the environmental impact those objections were then withdrawn after those reassurances now the real test of course will be the detail in the construction and environmental management documents if the member was to go to article 29 I think it is scheduled to part D of the draft order to make sure that I am not getting you the wrong schedule that you know of specific plans that are required 13 of them in total from marine mammal protection to otter protection plans to fish species protection plan habitat management plans so a lot of detail going in to give reassurances I hope to organisations like the RSPB and SNH if I may clearly it has because on the basis of these reassurances about mitigation RSPB for instance with Druther so as a general principle would you commend this approach to major developments yes I think it is certainly one that one that yes I would commend to answer your question I think it is fair to say we have also learnt from previous examples and previous infrastructure projects that have taken place where perhaps the level of engagement was not as thorough as this level of engagement has been so we are always learning and I think there is a good model there it is not to say that everything has been ticked off there are still some documents that I am waiting for to see before that work can absolutely be signed off but most certainly I think it has been a good level of engagement that should be replicated okay thank you my minister you talked about the benefit to the economy and specifically mentioned oil and gas can you comment and appreciate it might be out with your remit but can you comment on the potential that this would have for securing jobs in the renewable sector and also decommissioning which is going to be a decision in a conversation that A, H, B and the Harbour Board would more extensively have but certainly there is potential everybody here is aware members are aware of the difficulties and the challenges facing the North Sea oil and gas sector I think A, H, B are looking to diversify so decommissioning most certainly is part of their plans and part of the discussion or servicing decommissioning I should say certainly looking at other business opportunities like cruise vessels as well which is important there's absolutely no reason why they shouldn't be looking towards renewables I'm sure that it will be part of the plan I couldn't comment directly and say it absolutely is but I'm certain any opportunities that diversify while oil and gas will continue to be important but diversify the opportunity I think they will be looking at and looking at very closely okay thank you very much it's essentially a process point that I think would be useful to get the minister's response on the record in the event that parliament agrees this particular order I take it that the minister can confirm that various parts of government and officials will continue to have oversight of the project as it go forward things like for example there are time constraints on certain operations and the minister in his contributions have talked about documents that are still being waiting for that will need to be signed off so it would just be helpful to know that this is not the end of the process as far as government's concern that will continue to be oversight and in extremis the plug could subsequently be pulled on this although I'm absolutely 99.9% certain we won't reach that particular point yes and I think that's an important point to make there are so many environmental factors that have been considered that have been questioned that have been asked that yes on a project of this size and scale although it is being funded by Aberdeen Harbour Board it's not being government funded and we know there are trust port that reinvest back any profits that are made into the harbours although that's being said the continual engagement, the oversight that has been mentioned in terms of the environmental documentation yes that will continue and should continue should say from the offset the relationship has been very good and very positive and the engagement has been very good and very positive and going back to John Finnie's point I think there's a good model there for others to look at for future projects as well Minister could I just ask I was looking through the papers there were 21 local residents that were still objecting to this could you give me a flavour of what those object on what grounds those objections were you seem to have solved I think it's 7 of the 28 objections but 21 remain yes convener a lot of the objections did overlap and do still overlap with the environmental concerns now as I've already mentioned they're similar to the environmental concerns that were raised by organisations like SNH or RSPB so I'm satisfied that the order should be laid because of the mitigation and the reassurances that we've provided the other very strong theme that came from the objectors and remains from the objectors is the loss of the amenity so the green space at Nig Bay I know that AHB and Aberdeen City Council are having discussions about how other local amenities can be improved so St Fittwick's Park which is near my how can improvements perhaps be made now that's separate to any conversation Government is involved in I should say that's a separate discussion that will be taking place and the local council so those are the two main themes that the loss of the amenity and the green space but also the environmental impacts and I think we've gone as far as we possibly can to give those reassurances I think given very strong reassurances on that and that's why I hope that the order will continue Peter had removed thanks convener and welcome minister I just wondered environmental objections I just want to be sure that SNH which is a very important body they are now content that all the issues that they had identified have now been addressed and they are content that they carry on with this project Yes, I would surmise by the fact that they objected and then withdrew their objection and that's generally the process that we go through the number of objections will come to the number of various infrastructure projects what we then try to do is have that discussion with those organisations and learn from them look what can we do to help to give you the reassurances you need so for example when it comes to one of the main environmental issues it was around the bottlenose dolphins and so the suggestion well what will happen now as a result of the mitigation and the reassurances that we're giving there will be a rock armour place there so any blasting work will be done behind that armour of rock or the environmental impacts now that comes from conversations with the likes of SNH so in particular to your question yes, I would surmise that they're satisfied by the fact that they've withdrawn their objection but we'll also wait to see what is in the construction of environmental management documents and that'll hopefully give even further reassurances to organisations like SNH Thank you Are there any other questions I thank the minister and his officials although they were there contributing but didn't say anything in supporting the minister and for the evidence they've given I'd like to move on to agenda item 4 which is the consideration of motion 02398 calling for the committee to recommend the approval of the draft Aberdeen harbour revision order 2016 I would invite the minister to speak or just move the motion To move the motion and the order and my name Do members have any further comments or questions The question therefore is that motion 02398 in the name of Humzae Eustaf be approved, are we all agreed That is agreed That concludes the consideration of this affirmative instrument and we'll report the outcome of our consideration to the Parliament I thank the minister and his officials for giving evidence That concludes this public part of the meeting today and I'll now suspend the meeting to allow the committee to move into private session Thank you minister