No legislative powers
The Scottish Parliament has no powers to legislate on
telecommunications and Internet access, these are reserved for Westminster (see
schedule 5
of the Scotland Act). At least until
Brexit, Westminster mostly transposes European Union directives.
In practice the Scottish Government (and the Scottish
Executive before it) has adopted policies, made public procurements and channelled
state aid to operators to increase the availability of broadband in rural areas.
S.65 of the Scotland
Act 2016 gave Scottish Ministers the power to nominate one of the directors of
the Office of Communications (OFCOM) and to lay the OFCOM annual reports before
the Scottish Parliament. Given the statutory independence of OFCOM (see Art. 1(3)
of 2009/140/EC)
and the harsh scrutiny of the Competition Appeal Tribunal (CAT), the effect of
these measures is unlikely to be significant.
Total broadband coverage
In its manifesto
for the 2016 Scottish Parliament election campaign, the Scottish National Party
(SNP) promised broadband for all businesses, homes and other premises,
regardless of their remoteness. This was confirmed in a statement
after the SNP formed its minority administration. However, there has been neither
an economic analysis nor an impact assessment, just a political assertion, for
example, it is unrelated to any plans for economic growth or to key sectors
(e.g., finance or food). Audit
Scotland, which has examined expenditure but not policies, notes the lack
of a plan to deliver 100% broadband.
The promise was surprising, firstly because it exceeds the commitments
made by Her Majesty’s Government (HMG), and secondly because the Scottish
Government has almost no powers to achieve its target. All the Scottish
Government can do is to ask HMG and BT Openreach for more broadband and, where
it can find the funds, to provide subsidies within the state aid rules. For
example, it has provided £2.1 million for fifteen community
projects. Consequently, it seems very unlikely that the SNP will be able to
deliver on its promise and that if it does it will be more a matter of luck
than of good policy execution.
HMG has been very cautious about funding universal
broadband, top-slicing £500 million from the Television Licence Fee income for
the current Broadband
Delivery United Kingdom (BDUK) scheme to extend rural coverage, which requires
‘local bodies’ to match this, notably with European Union development monies. This
is a state
aid project approved by the European Commission, a requirement that will
end with Brexit, as will the EU funds used by the Scottish Government to match
HM Treasury spending.
BT is trialling
fast broadband over longer distances at North Tolsta on the Long Isle. This could
enable much cheaper provision of broadband in remote and dispersed communities.
The Digital
Economy Bill, presently before Westminster, contains the potential for a
future Universal Service Order that would include broadband. This is a somewhat
opaque means of requiring households that are cheaper to serve to fund the
provision of broadband to more remote households, a scheme likely to be managed
by BT (see responses
to OFCOM consultation). Since this would be a United Kingdom measure, and since
Scotland has a markedly lower population density, it implies a transfer of
funds from English to Scottish consumers.
Brexit
The surprise vote in favour of Brexit was taken as a casus belli by the SNP to argue for a
second independence plebiscite, though this may not happen very soon. Indeed, the
prospect of a ‘hard’ Brexit creates significant challenges in terms of the
border with England, either requiring customs checks or passport controls, and
conceivably both, if Scotland was in the Schengen Area and the European Customs
Union (EUCU) and England was not.
Consequently, there are a number of scenarios in which
Scotland might, at different times, be in either or both the United Kingdom or
the European Union, perhaps neither. It is likely to have to leave the EU along
with the UK and then apply for membership under Article 49 TEU.
Independence, whether or not in the EU, requires splitting
of the UK telecommunication markets and networks. It would be especially
challenging to split Openreach, both the Agreement and the BT local access
network that supplies retail Internet service providers. The consequential uncertainties can only
reduce investment in networks. Moreover, faced with uncertainties and having to
set up new network operations centres, lobbying groups, and regulatory
compliance units, firms might prefer to spin off their operations in Scotland,
for example, to hedge funds or to groups based in Scotland.
Independence would require a new legal framework, presumably
by replicating the UK Communications Act 2003. However, this is complicated by Brexit,
which necessitates considerable changes to the Act and the related statutory
instruments, notably to remove obsolete references to the European Commission
and the single market. Membership of the EU would require compliance with its acquis, including the telecommunications
directives and creation of the associated institutions. The result could be a
sequence of complex legal and regulatory changes, generating considerable uncertainty,
not helped by the preference of the operators to test laws and rules in court.
Independence would require Scotland to create a ministry
with policies for telecommunications and a host of new bodies, to replicate the
functions of, inter alia, the
following:
- · Competition and Markets Authority (CMA);
- · Competition Appeal Tribunal (CAT);
- · Gambling Commission;
- · Interception of Communications Commissioner's Office (IOCCO);
- · Internet Watch Foundation (IWF);
- · Investigatory Powers Tribunal (IPT);
- · Office of Communications (OFCOM);
- · Office of the Telecommunications Adjudicator (OTA2);
- · Ombudsman Services.
This represents an enormous workload for new ministries in
preparing policies and drafting legislation, for new regulators in drafting,
consulting on, and re-issuing licences, and for the Scottish Parliament in
creating additional committees to scrutinise legislation, then to oversee the new
ministries and agencies.
References
Ewan Sutherland (2013) “Independence and the
regulatory state - Telecommunications in Scotland and the rest of the United
Kingdom” Telecommunications Policy
37 (11) 1046-1059.
Ewan Sutherland (2013) A short note on Scotland's Future – the Internet, broadband
and telecommunications.
Ewan Sutherland (2016) “Broadband and telecommunications markets—policy,
regulation and oversight” Parliamentary
Affairs 69 (2) 387-408.
Ewan Sutherland (2016) A
short note on Brexit: Telecommunications issues after the Referendum. (30
June 2016).
