Written by Philip Magson
In February Danny Alexander announced an additional £40 million had been set aside for four Scottish cities to become part of the ‘SuperConnected Cities Programme’ – a £100 million voucher scheme to help small and medium enterprise businesses access ‘superfast’ broadband services.
Now, SMEs in Glasgow, Inverness, Stirling and Dundee can apply for vouchers worth up to £3000 to cover the costs of broadband installation. Details of the programme are as follows:
SMEs, registered charities, social enterprises and sole traders are eligible.
The £3000 is a grant, which businesses can put towards the cost of installation.
The extension comes into effect from the 1st April, 2015 until March 2016.
Let’s face it, Superfast broadband is a business essential and, according to the government, crucial to Scotland’s aim to be a ‘world class digital nation’ by 2020. Results seem to back up the government’s plan: in 2015, the number of connected homes and businesses reached 1.5 million. Ofcom confirmed the trendacross the UK with 1 in 3 broadband connections rated as ‘superfast’ – up from 1 in 4 in 2013.
Yet the rising connection numbers hide an inconvenient issue in Scotland: despite the fanfare, in our experience, businesses have been encountering considerable difficulties getting connected to superfast speeds – and then being made to pay over the odds when they do.
The issues are especially apparent in Scotland because of the high number of remote locations which need upgrading. Problems start when clients tempted by the £3000 voucher to install superfast find out their area’s exchange hasn’t yet been fitted with the fiber-optic cables needed to handle the higher speeds. In lieu of the delay, the supplier offers to lease the client a dedicated line at around £300 to £400 a month – and waives the £3000 installation costs if they enter into a 3 year contract.
But, since the existing line is still only capable of delivering lower speeds, in order to meet the requirements of the superfast voucher programme (24Mbps and higher), a line upgrade is required – which means charging more than the standard £400 a month for the lease. Leased lines do have advantages: they offer clients quick support and maintenance options and none of the asymmetry of ADSL – in which upload speeds often drop to around 1MB or below. Those advantages tend to benefit larger organisations and, in any case, are hardly a consolation if you thought you’d be getting superfast speeds at lower cost.
One of our clients operating out of a Dundee industrial estate has a 20MB broadband connection running at an average of 9MB. After contacting BT, they were told their exchange hadn’t yet been upgraded and there was no indication when it would be. Their choice now is to stick with their slow, asymmetric connection – or pay much more for a leased line. Under the current situation there’s no reason for SMEs to enter into a superfast contract, whether or not the £3000 connection cost is waived: the financial rewards all go to the supplier. To put this all into perspective, here’s a comparison of the accumulated costs of a BT Infinity Premium connection with a funding-eligible ‘superfast’ leased line, over three years:
Superfast Connection (based on BT Business Infinity Premium)
Connection Cost (covered by voucher)
Subscription Cost Over 3 Years
Connection (waived with 3 year contract)
£300 – £400 (plus extra for line upgrades)
Subscription Cost over 3 Years
£10,800 – £14,000+
And no, that’s not an error: a leased line could end up costing your business in excess of £14,000 over the course of 36 Months.
From where I stand – dealing daily with clients who rely on maintaining IT competitiveness – the government needs to step in, whether that be with financial assistance for SMEs which have to lease before their upgrade, or penalties for suppliers dragging their feet.Our businesses may be small but our ambition isn’t and if Scotland’s going to be at the forefront of international enterprise, with companies in Dundee going toe-to-toe with heavyweights in London, Paris and beyond, our connections need to serve us, not the other way round. I’m certain the innovation and ingenuity our businesses produce will be more than justify the money it takes to get us there.