BT Group Response to Infrastructure Commission for Scotland's Initial Call for Evidence and Contributions May 2019
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BT Group Response to Infrastructure
Commission for Scotland’s Initial Call for
Evidence and Contributions
May 2019
-1-Summary of issues
BT welcomes this opportunity to submit evidence to the Infrastructure Commission for Scotland as it
develops its 30-year strategy for Scotland’s future infrastructure needs.
In 2018 BT, along with partners Scottish Council for Development and Industry, the Royal Society of
Edinburgh and ScotlandIS, published Automatic…for the People: Harnessing the Technologies of the
Fourth Industrial Revolution to Increase Economic and Social Prosperity 1 which was followed this year
by its sister publication Building a World-Leading AI and Data Strategy for an Inclusive Scotland2. Both
publications address the challenges and opportunities represented by the Fourth Industrial
Revolution.
A key pillar for harnessing the technologies of the Fourth Industrial Revolution is the infrastructure
and digital connectivity that underpins it, in which Scotland has made extensive national progress
over the past several years. However, government at all levels and industry need to work together on
the ambition of delivering the world-class digital infrastructure for the Fourth Industrial Revolution
and ensuring that Scotland is able to fully exploit it for both economic and societal gain.
Automatic…for the People? and Building a World-Leading AI and Data Strategy for an Inclusive
Scotland focus on a number of policies relating to future infrastructure. All parts of Scotland will
require a ‘fit for the Fourth’ infrastructure. This means deploying the next generation of digital
networks, but also making the technologies of the Fourth Industrial Revolution integral to all
infrastructure. Smart infrastructure3, including sensors, the Internet of Things, data, and robotics, can
improve the performance of infrastructure, better match supply and demand, and inform the design
of new infrastructure.
Government should also ensure that national and regional policies offer an integrated approach
across all aspects of infrastructure investment including transport, digital and energy connectivity,
e.g. in the ongoing review of the National Transport Strategy to be followed by the Strategic Transport
Projects Review.
Lastly, future infrastructure requirements should continue to embed cyber resilience into critical
infrastructure, working with the National Cyber Resilience Leaders’ Board, Scottish Business Resilience
Centre, public bodies, UK Government, the UK National Cyber Security Centre and the private sector.
Development of fixed broadband services
Fixed broadband coverage in Scotland, taking all providers into account, is now at over 93.5% for
superfast services (>30 Mbps) and over 97.3% for fibre ‘partial/full’ at any speed4.
These coverage figures will continue to grow as the current Digital Scotland programmes from the
Scottish Government and Highlands & Islands Enterprise continue to deploy further fibre. The UK
Government’s USO proposals are also expected to improve the sub-10Mbps coverage issues.
Increasingly these programmes are also delivering full fibre5 solutions as they move into very remote
areas. However, these projects will not deliver 100% coverage of superfast in Scotland.
The Scottish Government’s Reaching for 100% (R100) commitment, delivering 100% superfast
broadband (>30Mps) to all premises by 2021, will help resolve remaining superfast coverage issues. In
addition to helping achieve the premises level coverage target it will also underpin the mobile
ambition through provision of better fibre and backhaul into remote areas to support future mobile
coverage/mast requirements as well as transition to 5G.
1Automatic…for the People? (2018) https://www.scdi.org.uk/wp-content/uploads/2018/03/SCDI-DigitalReport-Automation.pdf
2 Building a World-Leading AI and Data Strategy for an Inclusive Scotland https://www.scdi.org.uk/wp-content/uploads/SCDI_AI-Doc_-
Digital.pdf
3 The emergence of Smart Cities and IoT is a key area that needs to be fully integrated across government policy ensuring integrated smart
technologies play a central role in enabling connected regional and national infrastructure such as transport, energy and water, and linking
these technologies and data sets to deliver improved city, region and central government services.
4 Source: Thinkbroadband.
5 In future-proofing Scotland’s network, we view fibre technology as the core of any solution. Favouring a high proportion of fibre-to-the-
premises (FTTP) connections where possible, we use the very latest in connectorised fibre technologies to deliver a faster deployment,
higher performance and lower build costs.
-2- Key economic and societal benefits come from widespread and universal availability of good speed,
rather than focused delivery of very high speed, although there may be additional benefits to be
derived by specific business users by very high speeds.
Government policy, and the regulatory environment, must complement industry efforts. For example,
the business rates regime for fibre networks means that costs for fibre are higher than for traditional
copper, and even with the recent extension of the relief period by Scottish Government there is still
significant risk/uncertainty in what business rates will be for fibre over the investment period. These
policy and regulatory “mismatches” make a difficult case even harder.
Development of mobile services
Led by EE, 4G mobile coverage in Scotland is improving rapidly. EE now covers more than 80% of
Scottish geography, with 4G now reaching areas that in some cases have never had mobile signal of
any sort.
Extensive investment in nearly 300 new sites - and 4G upgrades to hundreds of existing sites - is
ensuring the more rural parts of Scotland are also benefitting, including substantially wider networks
in the Outer Hebrides, Shetland, Cairngorms, etc.
EE’s major network investment, also supported through additional sites being procured by the Home
Office, will underpin a new Emergency Services Network (ESN).
In more remote areas, it is hard to make a business case for new macro sites and focus on investment
is to address key customer ‘pain points’ such as rail, where deployment costs also remain high.
Although mast sharing, changes to the planning regime and reform of the Electronic Communications
Code all help, the number one focus for the UK and Scottish governments must be to further reduce
barriers to and costs of deployment of new mast sites.
In particular, planning laws and the wayleaves6 necessary to gain access to new sites must be
responsive to new technology delivery, especially given the scale of new build that will be required for
5G. Local authorities must be more strategic in ensuring quality digital communications are
incorporated into new developments and the UK Government must keep the behaviours of third
party infrastructure providers under scrutiny, mindful that they are currently excluded from recent
changes to the Electronic Communications Code.
How effectively these barriers and costs can be tackled will have a direct impact on the ability of
networks to roll out 5G faster.
6Wayleaves are a key issue in new sites and provision of fibre to them. These are often tied up with property ownership rights rather than
planning law so can be difficult to address.
-3-Introduction
A key pillar for delivering the benefits of the Fourth Industrial Revolution and the wider digital economy is the
infrastructure and digital connectivity that underpins it. Whilst it is difficult to predict future demand for digital
services and how end users will choose to access these, widespread availability of good fixed broadband
services in premises with high-quality WiFi in-building, supported by widespread geographic coverage from
mobile broadband is already delivering and will continue to deliver significant economic benefit to Scotland.
Scotland has made considerable progress in recent years in extending high speed fibre broadband nationwide.
This includes the Digital Scotland Superfast Broadband programme, ensuring 95% of all Scottish premises have
access to high speed broadband infrastructure from at least one industry provider 7. BT Group has invested
£146m in fibre broadband under two Digital Scotland partnerships: one in the Highlands and Islands led by
Highlands & Islands Enterprise and the other in the Rest of Scotland led by the Scottish Government, with
Openreach delivering on the ground.
Thanks to the success of the £442 million Digital Scotland partnership 8, nearly 930,000 Scottish homes and
businesses can now connect to fibre broadband. Combined with BT’s commercial rollout, more than 2.5 million
Scottish premises are now able to connect to fibre broadband services, using the service provider of their
choice9.
Reaching for 100%
The Reaching 100% programme (R100) is striving to extend the availability of Next Generation Access
broadband infrastructure to meet the Scottish Government’s commitment to deliver superfast broadband
access to 100% of premises in Scotland by 2021. To achieve this, the Scottish Government is procuring further
coverage of broadband infrastructure, capable of delivering download speeds of at least 30Mbps, in areas
where such broadband is currently unavailable. Geographically, R100 covers the whole of Scotland, including
the islands.
In December 2017, the Scottish Government announced an initial investment of £600m of public money would
be made available for R100, allocated over the next four financial years, with £21m from the UK government
and £579m from the Scottish Government. The accompanying procurement process is split across three
regional lots (North Scotland, Central Scotland and South Scotland). This approach has been designed to
maximise interest from telecommunications suppliers from across the UK and Europe.
Fibre First Programme
Edinburgh is the first Scottish city at the forefront of Openreach’s Fibre First programme, which will see three
million UK homes and businesses upgraded to ultrafast FTTP10 by the end of 2020 and which aims to reach 10
million by the mid-2020s. The capital joins places like Altnaharra in Sutherland and Innerleithen in the Scottish
Borders which already have some FTTP capabilities, alongside more than 15,000 premises which now have
access to FTTP as part of the Digital Scotland Superfast Broadband rollout led by the Scottish Government and
Highlands and Islands Enterprise.
7 Scotland’s 95 per cent target has always been for fibre coverage, not superfast, reflecting the scale of the challenge given Scotland’s
geography and demographics.
8 Research has suggested that every public pound invested in fibre broadband in Scotland is delivering almost £12 of benefits to the
Scottish economy. https://www.scotlandsuperfast.com/media/1757/analysys-mason-final-report-for-dssb-050419.pdf
9
Without the Digital Scotland programme, it is estimated that only 66% of homes and businesses in Scotland would have had fibre
broadband access.
10 BT believes that the best way to ensure full fibre investment occurs as fast as possible across Scotland is by ensuring the commercial
case for investment is as strong as possible coupled with ensuring any barriers to deployment that would increase the cost or risks to the
investment case (e.g. as a result of planning restrictions or wayleaves, etc.) are minimised.
-4-Mobile infrastructure
While Scotland’s geography and population density continue to be a challenge, especially in rural areas, mobile
networks have also made significant progress in recent years, particularly on 4G11. Though predominantly
private investment, the Scottish Government’s Mobile Action Plan12, ensuring the Scottish Government and
the mobile operators are committed to working together on a range of measures aimed at improving mobile
coverage across Scotland, has helped investment conditions to improve coverage further. This includes
ensuring Scotland is “5G-ready” and also seeking to maximise the commercial impact of the Emergency
Services Mobile Communications Programme, a world-leading 4G network for ‘blue light’ services.
In November 2018, EE announced that it was bringing 5G to Edinburgh and Glasgow in 2019. As well as
offering greater capacity and speed for consumers, 5G will provide significant opportunities for businesses and
public sector organisations to innovate new ways of delivering services and experiences. Key to the
deployment of this new infrastructure is ensuring government facilitates a conducive deployment environment
that can support this key investment underpinning Scotland’s digital economy.
Our vision for 5G is based around three themes:
Maintaining mobile network leadership, including an ambition to be first to 5G in the UK, launching in 16
cities in 2019 (including Edinburgh and Glasgow). We’re adopting a demand-led strategy, delivering 5G to
our busiest sites.
Using 5G for delivering convergence, including fixed-like services, with 5G convergence capabilities arriving
with the new 5G core from the early 2020s.
Enabling new revenue opportunities – utilising capabilities such as network slicing, low latency and edge
compute to exploit new use cases and partnerships.
A key focus is facilitating 5G deployment. We are actively engaging with city authorities to improve access to
public sector assets. The Government’s support for barrier busting for 5G deployment – as with 4G – will be key,
including encouraging local authorities to adopt good practice approaches and prioritise connectivity.
Pioneering new technology
In February 2018, EE unveiled its 4G home broadband solution which could connect more than 80,000 homes
across Scotland with faster broadband speeds, especially those in rural areas that are currently only able to
access broadband slower than 10Mbps. The service provides customers with typical download speeds of 30-40
Mbps, using the power of EE’s 4G network. The 4G home broadband solution, which uses a powerful external
antenna to boost signal when required, has been designed as an alternative for those in rural communities
that have yet to be connected through traditional fixed-line broadband access – or where customers can only
receive slower fixed-line speeds.
EE Rural Coverage Pledge
In April 2019, EE proposed a new cross-industry Rural Coverage Pledge13, designed to 1) deliver a unified
approach to fixing not-spots, and 2) address those areas with partial coverage in a fair and equitable way. The
pledge would give local communities in areas of zero coverage a right to request coverage, to work with
11
Led by EE, part of the BT Group, mobile coverage in Scotland has improved rapidly in recent years. EE’s 4G network alone now covers
over 80% of Scotland’s landmass, up from c.40% a little over two years ago, and with further improvements to come. This growth is being
achieved through a combination of constructing over 300 new sites and upgrading thousands of existing sites, in some cases delivering the
first ever mobile signal to isolated, rural communities.
12 In 2016, the Scottish Government published a Mobile Action Plan in partnership with industry. This included a commitment to change
planning rules around mobile telecoms and to ensure they remain reflective of the needs of an evolving mobile industry. Such changes
already made are hugely welcomed and as the equipment for delivering 5G is developed, further changes will be needed to support small
cell technology. Other policy proposals in the plan are also welcome, such as the Scottish Futures Trust-led 4G Infill pilot, and the trial
areas where non-domestic rate relief is applied to new sites. The Mobile Action Plan is a good example of the government and industry
working together for a common goal of greater connectivity.
13
https://www.telegraph.co.uk/business/2019/04/01/back-pledgeto-give-rural-areasmobile-coverage/
-5-mobile operators and their local council to help identify suitable locations and permissions and establish new
signal where it’s needed the most.
The Rural Coverage Pledge will require support from government to unlock funding and overcome planning
challenges, offering better access to rooftops of public buildings, and approval for taller mast usage – but it will
be money well spent, reflecting the social and economic benefits of connecting unserved parts of the
countryside.
We’re keen to develop this Rural Coverage Pledge as a cross-industry solution and we’re in discussions with
the other operators and DCMS on making it a reality. We believe this is a more effective approach to
improving coverage further (and retains the benefits of competition) than, for example, mandating roaming
across networks – not least because roaming would do nothing for those currently without any service at all.
Planning
Many of the issues that affect the speed of broadband deployment or repairs also affect mobile and it is
important to see as much consistency as possible in the ways local authorities and others handle local road
closures and planning applications14. In addition, government and local authorities must commit to improved
access to central and local government-owned property, on appropriate terms and at a reasonable price. The
scale of new sites to deliver 5G will be sizeable, especially in urban areas, and affordable access to more street
furniture and public buildings will be helpful in enabling a more effective roll-out of new technology.
Local authorities must also provide a proactive and strategic approach to supporting digital connectivity for
residents. This means including digital connectivity in local plans and ensuring that developers are aware of the
need to support fixed and mobile infrastructure in new housing and commercial developments.
Major landowners and infrastructure providers must also continue to play their role in connecting the nation,
given the sizeable estates that exist in Scotland. Organisations such as the Forestry Commission Scotland, the
National Trust for Scotland, the Crown Estate, National Parks and even the RSPB collectively own a significant
proportion of land in Scotland.
Stimulating Network Investment
BT has worked with both the Scottish and UK governments in conjunction with its own commercial
deployments to ensure that the vast majority of the country already has access to superfast broadband speeds
and 4G mobile broadband, plus in the remaining areas is actively working on ensuring the delivery of decent
broadband for all. This means that those digital economy benefits can and are already flowing, with the UK
having the highest share of its economy driven by digital of any G20 nation. The next stage, and important for
growing and expanding those benefits for all, is the transition to full fibre and 5G technologies at the heart of
the digital infrastructure.
Getting the conditions right for this transition is therefore key. The UK and Scottish governments recognise this
and that is why the UK has the ambition to achieve full fibre coverage by 2033 and 5G for the majority of the
population by 202715. BT is supportive of this ambition and is keen to play its part in ensuring this gets
delivered; however there are a number of practical steps government and regulators can take to maximise the
chances of delivering on this ambition.
14 Although telecommunications is not a devolved matter, both the Scottish and UK governments have taken recent actions that support
the roll out of mobile infrastructure. The UK Government has reformed the Electronic Communications Code, the legal underpinning to
many site provider relationships. This will help improve the economics and ease of future upgrades and new sites. The UK Government has
also reformed planning laws to grant stronger permitted development rights for new sites. The Scottish Parliament has also recently
changed planning laws to support similar levels of deployment.
15
‘Future Telecoms Infrastructure Review’, DCMS, July 2018.
-6-The National Infrastructure Commission16 highlighted that the cost of delivering full fibre and 5G nationwide is
estimated at around £40bn, approximately the same as original estimates for HS2. However, the vast majority
of this funding is expected to come from the private sector. Investment conditions will therefore need to be
right to attract this level of funding, and although the benefits of digital infrastructure are clear, the ability for
the infrastructure provider to rely on those benefits to underpin an investment case is unclear.
Government recognises these issues and is seeking to take steps to assist with addressing them; for example
through its consultations on potential changes to wayleave agreements and rights of access for tenanted
buildings, and on potential obligations on developers to support deployment of digital infrastructure for new
builds. The recent announcement by the Scottish Government on extending the business rates relief on new
fibre build is also welcome recognition of the importance of making the commercial case work for fibre,
though it is important to recognise these investments are significantly longer term than the relief periods so
significant regulatory uncertainties and risk in the case still remain. Government and Ofcom also recognise that
the regulatory and legal environment needs to create incentives for competition and infrastructure investment
if the required level of private sector investment is to occur.
If the full extent of this shared ambition for full fibre and 5G is to be delivered, there are a number of other
issues that will need to be addressed. These include:
A ‘fair bet’ return on investment in fibre – the extent to which regulation will allow investors to retain
some future ‘upside’ from their investment - in line with the level of risk they take now.
The costs of the legacy copper network – which needs to continue to be used during the transition to
full fibre and which obviously impinge on the business case for fibre investment. This will need to be
addressed if the transition from copper to fibre is to be fast and effective.
The ‘final 10%’ - the most remote parts of the country where commercial investment will never make
sense for full fibre/5G. How will deployment of digital infrastructure be funded and delivered and in
particular how can it build on other initiatives aimed at these areas?
BT Group is committed to pushing ahead with the deployment of full fibre and 5G as far and as rapidly as
possible, and will seek to do this wherever possible using commercial funds and in the full competitive
environment. How far and how fast this deployment can and will go will be dependent on the investment and
build environment investors face. Government at all levels can assist with ensuring that environment is as
benign as possible to ensure the ambition of delivering the world-class digital infrastructure the country needs
becomes a reality.
BT Group plc
May 2019
16National Infrastructure Commission (2018). ‘National Infrastructure Assessment’ www.nic.org.uk/publications/national-infrastructure-
assessment-2018/
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