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In just a few weeks, on 18th September to be exact, Scotland will vote on whether or not to become an independent country from the UK. Now don’t worry – we’re not going to get into a long winded political debate about whether or not this should happen, we’re simply going to discuss the potential impact of a ‘Yes’ vote on our beloved industry and what it might mean for UK ISPs and Scottish customers…

Darren Farnden, Head of Marketing

Darren Farnden, Head of Marketing

Everything will stay the same, right?

Well the simple answer is, we don’t know! Very little has been confirmed so far about the potential impact on broadband in the case of a ‘Yes’ vote. All we do know is that the Scottish Government plan to provide a USO (Universal Service Obligation) and they are expecting to invest a further £2.5million to the CBS (Community Broadband Scotland) fund to help deliver this.

The Scottish Government aim to provide 95% of premises with speeds of at least 24Mbps by 2017, with the remaining 5% receiving at least 2Mbps and they argue that without this ‘intervention’ and additional funding, coverage would have only reached 66%. Interestingly, the UK currently only has a lesser USC (Universal Service Commitment) to provide 100% coverage of at least 2Mbps by 2017. We wonder if a USO north of the border would encourage or maybe even force this commitment to be upgraded to an obligation covering potentially faster speeds?

Unfortunately, we don’t yet know any detail around the promised USO. What type of connectivity will it provide (e.g. standard ADSL, fibre) and at what minimum speed? Who will enforce it, as they reportedly plan to introduce their own regulator to replace Ofcom? Which providers will it apply to – BT as the incumbent? Surely BT won’t be too impressed with that idea, especially considering the diverse geography they will need to contend with. The details are sketchy to say the least.

Similarly, there is no real detail regarding the funding of the USO and its roll out. Currently, two Scottish schemes are in place to deliver superfast access; Digital Scotland and Highlands & Islands which are collectively receiving £410 million in funding. Similarly, Scotland currently receives £100 million of the £530 million UK Rural Broadband Programme fund. However, an independent Scotland will be surely expected to fund its own roll out programmes and set its own targets.

The additional £2.5million they have promised (which brings the CBS funding total to £7.5million) is to cater for areas not currently expected to be covered by either of these schemes or the UK’s BDUK scheme.

One of the criticisms of the UK’s investment and roll out plans by the Scottish Government is that their investment schemes are too fragmented e.g. we have Super Connected Cities, BDUK and the Rural Broadband Fund. They are currently suggesting implementing a more unified approach, supported by the ability to control their own funding.

What about UK based ISPs?

Again, at this stage it’s impossible to say but, as a separate country, there is the potential for the provision of services to Scottish customers to get more expensive. Will they have their own VAT rates or even their own currency? Will ISPs based in England and Wales need to pay additional taxes? How will they be affected by the proposed USO and rollout plans? Will they have to deal with additional regulators and ADR schemes? Will they have to ensure their T&Cs and contracts adhere to slightly different laws and regulations? Presuming Scotland remains an EU member, fundamental regulation is expected to stay predominantly the same, but a new regulator could enforce varying rules and requirements.

The list of potential problems and hassles is extensive but could mean that in the long term, it becomes too problematic and incurs too many additional costs to make it worthwhile for smaller UK based ISPs to provide connectivity services to Scotland. It may also mean increased costs for Scottish residents.

This is obviously bad news for ISPs as their target market could be significantly reduced and bad news for Scottish customers who will arguably have a more restricted choice of supplier and potentially higher costs to pay – unless it creates opportunities for new Scottish based ISPs!

So, what’s going to happen?

It’ll be interesting to see. We don’t know what the outcome of the vote will be and due to the limited information being published, we don’t yet know how a ‘yes’ vote could potentially affect our industry. It’s all very up in the air.

Even once the vote has been cast we’re likely to have a bit of a wait for further information as further elections to install a new Government would need to take place. As with any electoral process they will all be making varying promises and have different objectives, so it will likely depend on who is elected before anything concrete can be identified.

The only answer at this stage is to wait and see what happens. It may be the case that they vote ‘no’ and nothing changes. Alternatively, if they vote ‘yes’ then we need to keep watching carefully as further information emerges. We will of course keep you updated.

Have your say!

Do you have a large Scottish customer base that could be affected by the vote? Are you concerned by potential changes or are you prepared to provide your services regardless? Let us know your thoughts and share your experiences by leaving us a comment below.

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