Broadband Report

THE FUTURE OF BROADBANDTELECOMS PROVISION INTHE WESTERN ISLES AND

ASSOCIATED SKILLSDEVELOPMENT REQUIREMENTS

Rural Broadband Telecoms & Skills Research March 2001_____________________________________________________________________________________

A DESK BASED RESEARCH REPORT ONBROADBAND TELECOMS IN RURAL AREAS

AND RURAL ICT SKILLS NEEDS

(WESTERN ISLES OF SCOTLAND)

MARCH 2001

Report and Research conducted by Michael M Smith, MA MSc,Course Director, BA Rural Development Studies, UHI.

Commissioned by The Western Isles ICT Advisory Service.

WHAT IS BROADBAND?

In layman’s terms, broadband can be equated to a roadway network.

The wider and better the road the more traffic it can carry efficiently.

The wider and better the communications pipe for 'data' traffic between theWestern Isles and the rest of the world, the less the effects of remotenessare and the increased potential for integration into the global InformationSociety.

TECHNOLOGY TRAFFIC56K Modem

ISDN2ADSL/Cable

Broadband (2Mbps+)

Single track roadDouble track roadM25 around LondonLos Angeles 7 lane freeways



TABLE OF CONTENTS

Management Summary ...................................................................................................... 7-9

Research Summary . ..................................................................................................... 10–12

Introduction ...................................................................................................................... 13-16

Part 1

Broadband Telecoms in the UK & OFTEL: An Analysis ................................................ 17-23

ADSL ................................................................................................................................ 24-45

Satellite Broadband ......................................................................................................... 46-70

Line-of-Site – NNDS / LMDS . Unlicensed / UMTS ........................................................ 71-95

Fibre to the Home .......................................................................................................... 96-104

Broadband Telecoms: Conclusions & Recommendations .................................. 105-108

Part 2

The Information Age: Trends and Opportunities ........................................................ 109-110

Teleworking & Outsourcing ......................................................................................... 111-128

E-Commerce & The Digital Economy ......................................................................... 129-138

Up-Skilling And Human Resource Development in the Information Age .......................... 139

Teaching & Learning ................................................................................................... 140-150

A Policy Overview ........................................................................................................ 151-161

Skills Development: Conclusions & Recommendations ............................................. 162-164

Appendix 1 – xDSL Technologies ...................................................................................... 165Appendix 2 – MVL: A Broadband DSL Technology .......................................................... 170Appendix 3 – UXD5 & System X Exchange Information ................................................... 176Appendix 4 – Additional Telephone Exchange Information .............................................. 177Appendix 5 – Applications for Broadband Satellite ........................................................... 180Appendix 6 – The Development of Teleworking ................................................................ 182Appendix 7 – ICT Skills Proposals ..................................................................................... 183



Management Summary

IntroductionAs evidenced by a multitude of developments, society is now rapidly progressing into a new era - theInformation Age. It is becoming widely recognised that for participating in this new age a broadbandtelecommunications infrastructure is the essential enabling technology. For the Western Isles thisprovides a unique opportunity to capitalise on these advances in a way that can provide for futureeconomic needs.

This report was commissioned to facilitate early adoption of the most appropriate infrastructureinvestments, which will ensure that the early foothold which the Western Isles have gained in theInformation Age continues and increases apace to the benefit of future generations. We need to beable to both anticipate and capitalise on ICT developments in terms of creating jobs and a higherstandard of living for residents of the Western Isles.

Situation in the Western Isles todayThe Western Isles are currently served by one dominant telecoms supplier, BT. Throughout theislands there are 35 telephone exchanges, of which 28 are an older technology1 with limited ability tobe upgraded to meet future demands. A second supplier, Thus, has installed a fibre network tostrategic points in Stornoway but this does not link to any other locations in the Western Isles.

Another issue is the fact that the Western Isles are currently served by microwave links to the trunknetwork and no undersea fibre link exists. The study revealed that the current trend lies in opticalfibres and this may therefore limit the islands’ ability to implement broadband technologies of thefuture, particularly if growth in the ICT sector continues at the rapid rate experienced in recent years,demanding ever higher bandwidth.

Findings and recommendations

The report looked at the currently available broadband technologies and some that are justbeyond the horizon but may come to the fore soon. It concludes that early adoption of fibretechnology could deliver lasting and radical social and economic change in the Western Isles. Thereport recommends to implement a strategy to deliver "fibre to the home" and “fibre to thebusiness”.

“Fibre to client” strategy

To achieve this goal the Western Isles should link into the main trunk services in mainlandScotland via undersea fibre links.

Undersea fibre links

Broadband Wireless Access was identified as being a cost effective solution with a relatively shortrollout timescale. This was seen as complementary to fibre and a possible interim or transnationalsolution. Further research needs to be done in this field.

Broadbandwireless access

A public-private partnership between the local stakeholders could form the basis of a phased andcost effective rollout of a broadband network into the rural areas. Main locations such as schools,health centres, etc. could form the hubs, which would enable broadband services to eventuallyextend to households and community focused centres (e.g. Iomairt Nis) throughout the WesternIsles.

Public-privatepartnership

The report further recommends consideration of the strategy adopted in other rural areaswhere any upgrading and repairs of roadworks or relaying of sewers, water services, power orgas, include the laying of suitable ducts to distribute fibre cables. The laying of ducting as a matterof course when digging up roads, pavements, new business and housing sites is recommendedas a strategy to speed up connectivity of homes and offices with minimal cost implications. Rollout strategyAn opportunity exists to focus on in-demand ICT skills to plug the developing skills gap andencourage specialist teleworking and outsourcing teams to become established. Such specificICT skills outlined within the report combined with the appropriate generic skills will potentiallyprovide the catalyst to enable a transition in the Western Isles workforce to one compatible and in-demand within the new ‘Digital’ economy. A pilot project targeted at those individuals on the ICTskills register and school leavers could be progressed.

ICT skillsstrategy


TimescaleWith recent changes at both regional and national levels there is a genuine willingness tostimulate radical change in the islands and to transform the economic outlook. With animmediate adoption of a broadband strategy the various stages of implementation should becarried out over the next 5 years.

Recommended stages:

The most laborious and time-consuming aspect of the proposal is the laying of undergroundducting and fibre. Once fibre is in place, termination equipment can be upgraded as needcommands. The study undertaken predicts that the infrastructure proposed would continue todeliver gains for 20 to 30 years.

Stakeholders and Beneficiaries

Adoption of the above recommendations would elevate the Western Isles to be recognised as alocation where two of the most important advantages of the Information Age could be combined:

Φ "quality of life" locationΦ "high bandwidth" connection to the international community

Being a highly marketable branding for "connected communities" these factors would enable usto attract inward migration and inward investment, by removing geographic boundaries.

The stakeholders and beneficiaries in this development would in the first instance be the mainemployers and service providers on the island, such as the Council, health board, education andlocal businesses. The local community will at this initial stage be a passive beneficiary, yetincreased access to better and faster services will be developing. Following the successfulcompletion of the programme the whole of the community will benefit actively from the proposeddevelopments, with new opportunities e.g. in teleworking opening up.

Skills in the Information Age

It is equally important that the skills requirements that come with the Information Age areunderstood and met. Great time and expense has been devoted to giving people basic ICT skillsto participate in the Information Age. However the report found that more specialised and refinedskills need to be developed in potential employees of an IT-based economy.

The report has identified the following core skills as being of relevance to the requirements of theemerging new marketplace. Apart from their generic application as key transferable skills, they

Adoption of strategy

Fibre to the home/office

Undersea fibre connectionto mainland

Rollout strategy(ongoing)

Wireless access

Immediately

2002

-

2005

2006


• Written & oral communication (e-communication)• Team working (e.g. online collaboration)• Problem solving• Business awareness (e.g. Web presence of companies)• Creativity & innovation (e.g. possibilities of emerging software)• Inter-personal skills (e.g. online team building)• Attitude & enthusiasm (e.g. overcoming technophobia)• Technology skills (e.g. emerging new technology)

Within the next 3 years there is estimated to be an ICT skills gap within the EU of approximately1.7M persons. In terms of scheduling developments, specific training on the above topics isexpected to show results within a very short timescale and can run in parallel with infrastructuredevelopment. Early embedding in the education structure, however, is essential.

It is not unreasonable to suggest that everyone gains from acquiring the recommended skills.Employers will find a high quality and productive workforce and potential employees will haveacquired the skills which will ensure they are more marketable and have the capacity to increasetheir earning potential.

Monitoring & Review PolicyThe fast rate of change in the technology sector means that a constant review of policy andchanges to meet new requirements are an essential element of continued success. This is asmuch the case with telecommunications bandwidth as it is with skills requirements. It is thereforerecommended that monitoring developments on an regional, national and international basis, aswell as reviewing the adopted policy is conducted on an regular basis.


The Future of Broadband Telecoms Provision in the Western Isles

A Desk Based StudyBroadband Telecoms Research Summary

The following section summarises the result of desk-based research and monitoring in the Broadband sector,assessing developing technology, understanding trendsand relating them back to the context of the ruralWestern Isles. Some key areas of research into factorssuch as demand for broadband were out-with the scopeof the study due to limited resources.

A desk based studyassessing developingtechnology and trends inthe Broadband sector andrelating them back to thecontext of the WesternIsles.

The report reviews the role of OFTEL and its policyframework in relation to the rollout of broadbandprovision to peripheral areas such as the Western Isles,noting the approach and policy applied in the US andcomparing their approach with ours. It would appear thatthe US is several years ahead in its approach torecognising the need for broadband provision in theirprinciple of Universal Service in rural areas. In the UK thecurrent OFTEL regulations do not provide for theprovision of Broadband services to rural areas.

The report considers the key broadband technologiespotentially applicable to an Island area such as theWestern Isles.

In view of the costs, cable was considered to be anunrealistic option in relation to its level of service,compared to competing technologies. DSL, the newgeneration of broadband satellite, broadband wireless(licensed/unlicensed), 3G (Third Generation) mobile andfibre optic cable were ultimately settled upon forconsideration, with the latter being the seemingly ‘dream’solution. ISDN received only a fleeting mention, as agood example of a seemingly advanced interimtechnology, which never achieved full marketpenetration. ISDN will however, remain a useful,although limited, service option for some time.

3G mobile and broadband satellite will inevitably berolled out in our broadband future. All-inclusive coverageremains an issue in sparsely populated areas,particularly with regard to 3G mobile services. Thenature of the level of service and its applicability to ourbroadband future remains unanswered at present.

The US is several yearsahead in its approach torecognising the need forbroadband provision intheir principle ofUniversal Service in ruralareas.

In the UK the currentOFTEL regulations do notprovide for the provisionof Broadband services torural areas

DSL, the new generationof broadband satellite,broadband wireless, 3Gmobile and fibre opticcable were ultimatelysettled upon forconsideration, with thelatter being the seemingly‘dream’ solution.

ISDN received a fleetingmention; it was a goodexample of an advancedinterim technology thatnever achieved full marketpenetration.

ISDN will however, remaina useful, although limited,service option for sometime.


Consideration of (A)DSL raised many issues which wouldneed to be dealt with regarding the capacity and ability ofthe existing exchange and copper infrastructure networkin the Islands to enable its rollout. While ADSLtechnology was considered to be less than optimal, as itwould not be able to achieve radical and lasting changein the development of the islands, innovativepartnerships utilising variant xDSL technology could stillprovide potential.

Broadband Wireless Access was identified as being acost effective solution with a relatively short rollouttimescale. Examples of successes elsewhere in bothurban and rural areas across the globe were highlightedand several differing models in the licensed andunlicensed bands examined. The current licensingsituation in the UK was reviewed as was the developingtechnology. An innovative build-out through public/privateand even community partnerships was consideredpossible. There appeared to be some mileage as an areaof further research and testing, although it was concludedthat an all-inclusive service would be an interim solutionin the longer term in our digital future.

The early adoption of a fibre optic network was identifiedas being the key to deliver lasting and radical, social andeconomic change in the Western Isles for the 21st

century.

As the study progressed, the increasing magnitude of theeconomic and social development attainable by therollout of the appropriate broadband solution for a remoterural area such as the Western Isles became increasinglyapparent. In addition, the potential development gainsfrom the early adoption of a long-term InformationSociety enabling infrastructure, became increasinglyclear. In this respect, fibre-to-the-home/fibre-to-the-business was shown to be the ‘killer’ broadband solutioncapable of instigating lasting and radical social andeconomic change in the Western Isles of Scotland. Withcosts falling to being on par with replacement copper orADSL rollout a key development opportunity appears tohave presented itself. Other telecoms operators in theUS faced with similarly ageing telecoms infrastructure notable to provide broadband services without upgrading,have instead migrated direct to replacement fibre. Anopportunity for an innovative fibre-developmentpartnership, with initial costs perhaps being borne by thepublic sector to key locations Islands-wide appears tohave much scope.

ADSL was consideredless than optimal, as itwould not be able toachieve radical andlasting change in thedevelopment of theIslands.

Innovative partnershipsutilising variant xDSLtechnology could stillprovide potential.

Broadband WirelessAccess - a cost effectivesolution with a relativelyshort rollout timescale.

An innovative build-outthrough public/privatepartnerships wasconsidered possible.There appeared to besome mileage as an areaof further research andtesting.

The potentialdevelopment gains fromthe early adoption of along-term InformationSociety enablinginfrastructure, becameincreasingly clear. In thisrespect, fibre-to-the-home/ fibre-to-the-business was shown tobe the ‘killer’ broadbandsolution capable of socialand economic change inthe Western Isles.

Telecoms operators in theUS faced with similarlyageing telecomsinfrastructure not able toprovide broadbandservices withoutupgrading have insteadmigrated direct toreplacement fibre.


The early adoption of a fibre optic network was identifiedas being the key to deliver lasting and radical, social andeconomic change in the Western Isles for the 21st

century.

Additionally, the Western Isles should link into the maintrunk services in mainland Scotland via undersea fibreoptic cable.

At least one other local authority has already made sucha policy decision relating to the laying of ducting in allnew developments and upgrading/repair worksundertaken throughout their Islands. As stated above,investigations into existing infrastructure and theopportunities it presents are recommended and a seriesof pilot projects to strategic points in the Islands presentsan obvious opportunity for progress. Iomairt Nis, GareninVillage, Uig Community Centre, The National GaelicResource Centre in Lochs, The Harris GenealogyCentre, The FE Centre in the Uists, Barra LearningCentre and a range of other key public sector serviceprovision sites, in addition to Stornoway could all befeasibly targeted for broadband fibre. A second phasecould then enable a build out into surroundingcommunities and ensure equitable access to all residentsand businesses in the Western Isles. Digital inclusion is akey aim of any broadband rollout.

Undersea fibre optic cable to the mainland and betweenthe islands was considered an essential progressiontowards long-term connectivity requirements of futuregenerations.

There can be little doubt that such a radical andinnovative approach to economic and social developmentvia broadband provision would provide enormousmarketing opportunities upon which to attract inwardinvestment and stimulate re-population and newenterprise. Taken together with a series of opportunitiesthat the writer termed ‘the holy grail’ of ruraldevelopment, with the Islands achieving a profile in thebroadband sector similar to that of Skye in the Tourismsector, would be achievable. Finally, it was noted thatthe timing of the report was opportune, given recentdiscussions and encouragement at the regional level fora radical approach to rural development to be pursuedwithin the Western Isles.

The early adoption of afibre optic network wasidentified as being the keyto deliver lasting andradical, social andeconomic change in theWestern Isles for the 21st

century.

The Western Isles shouldlink into the main trunkservices in mainlandScotland via underseafibre optic cable.

Undersea fibre optic cableto the mainland andbetween the islands wasconsidered an essentialprogression towardslong-term connectivityrequirements of futuregenerations.

Radical and innovativeapproach to economicand social developmentvia broadband provisionwould provide enormousmarketing opportunitiesto attract inwardinvestment and stimulatere-population and newenterprise.

The timing of thereport is opportunewith encouragementat the regional levelfor a radicalapproach to ruraldevelopment to bepursued within theWestern Isles.


Introduction

New work practices involving networked and convergence technologies are predicted toaffect every working person in the EU over the next 5-10 years. The development of theInformation Society (IS) is increasingly becoming the single biggest instigator of socialand economic change not only within Europe, but also worldwide. Indeed, InformationSociety developments are considered to be very much part of the solution to Europe's on-going unemployment and competitiveness problems in the next 5-10 years. In the US (ourmain competitor in the Information Society) it is estimated that within 2 years 50% (130M)of the population will be connected to ‘the Net’ bringing a whole host of new mass-marketopportunities requiring new ways of working, changing the way both businesses operatewith their customers and suppliers.

Such new ways of working and operating will require new skills and competencies and anincreasingly adaptable workforce. As a result, the key to enabling a competitive Europe isincreasingly focusing the provision of future skills requirements and also on the technology(e.g. broadband) used to enable it. Such a Europe-wide focus is also applicable at theregional level as we move towards a way of working which will increasingly gravitatetowards people rather than place, providing the appropriate ICT infrastructure is secured atthe regional level. Given such background, the rationale for this study becomesimmediately apparent to the reader.

In terms of rural development, it is the presupposition of this report that an area such as theWestern Isles can get a ‘jump’ on the regional, national and indeed internationalcompetition. There is a clear opportunity to transform the existing stagnant rural economyof the Islands into a key development zone for the developing Information Society. Aconcentrated focus on related IS ‘development’policies targeted at developing broadbandcommunications and enabling associated skills development can, it is assumed, provide thebasis for the Western Isles to become one of the ‘leading lights’ in rural Europe for thecreation of new ICT related enterprise development and job creation. The UK has overallbeen slow, along with a number of other European counterparts, at adopting newbroadband technologies and addressing predicted IS skills shortages. It follows that in sucha context the ‘early adopters’ / ‘early market entrants’ will be able to establish a growthbase, by which future development momentum can be driven.

In relation to methodology this report will set the Information Society in context toestablish the economic and social dimensions of the change which one might anticipateover the next 5-10 years. Developing on this context, in part 1 of this report an all-important focus on the competing broadband technologies will be undertaken withcomment on their relevance to the rural and Western Isles context.

Ultimately, targeting and rolling out this provision will be the main enabler upon whichskills development can be encouraged and targeted to further optimise the ‘development’environment. Then, in part 2 a consideration of the new opportunities broadband willbring and associated new ways of working will be progressed, followed up by a discussionon the much publicised e-commerce revolution and the development of the digitaleconomy.


A consideration of teaching and learning opportunities will then be reviewed and a finalfocus of health telematics as a further practical example of where early progress can beachieved in the rural context will be discussed. To close out this part of the report anoverview of developing policy for the IS will be reviewed, followed by a contextualanalysis of skills development in consideration of the opportunities and findings identifiedin part 1 of the report.

The securing of an appropriate broadband rollout, whatever form this may take, incombination with an associated human resource development strategy will arguablyprovide the key base infrastructure to enable a maximisation of economic and socialbenefit in the study area. It is the presumption of this report that a significant rise inaverage incomes associated with increasing economic and social opportunity, a resultingreversing of population decline and a significantly increased rate of inward investment, areall achievable through concentrated development policies in the Western Isles in advanceof the developing IS, in line with the focus outlined.

What is the Information Society?

In the latter years of the 20th century it became obvious to many agencies, researchers andacademics across the globe that the West was increasingly moving towards what wascommonly termed the post-industrial society. This term was used to convey the level ofstructural change that was taking place in Western economies right across Europe andNorth America in particular. An increasing focus into the service based industries has beenapparent with a significantly less reliance on heavy industry and manufacturing. TheHighlands & Islands economy for example became increasingly service based as the 1990sdrew to a close, an excess of 70% of activity being attributed to this sector!

The generality of the term ‘post-industrial’ was used, as there has been some debate as towhere such economies will focus their future activity, to enable sustainability in the longerterm. In recent years the focus of this change has become increasingly apparent and verymuch centered on the development of the so called Information Society or as others referto it, the Information Age.

The main premise of this report is that this is a real and currently occurring change insociety within which ‘early adopters’ will have a distinct advantage. For thosecommunities and regions that recognise the future the specific development needs andrequirements, one might argue that there will be significant dividends to be accrued. In thecontext of this report we are talking about job creation, rises in average income, populationgrowth, inward investment, improvements in leisure & recreation and social possibilities,increased enterprise formation and opportunity growth. Overall, what one might refer tothis as the achievement of significant and lasting rural development, a goal as yet not ableto be achieved in the Western Isles context in living memory.

What specific evidence can we refer to, to support the concept of our increasing movetowards the Information Society?

A number of trends quite clearly illustrate the factor which are combining to rapidly leadus towards the impending Information Society. It needs to be recognised that this change isrecent, only really gathering momentum in the second half of the 1990s. In identifying this


Society has changed in so far that during the second half of the 1990s the public began tochange from being ‘passive users’ of PCs and telecommunications to become ‘activechoosers’ of PC and ICT technologies.

By 1999, on average, 1 in 4 of European households owned at least one PC, whilst in someof the Nordic countries this figure was closer to 1 in 2 on average. PCs by the late 1990shad, and continue to be, an everyday tool of both the home and workplace, used forbusiness, personal home services (e.g. home banking, travel booking services...etc)entertainment, education...etc Attitudes towards technology have changed significantlyduring this period, with another shining example being the growth in mobile telephone usewhich the public has embraced to the extent that by Christmas 1999 it was estimated that40% of the UK population possessed such technology, with approximately 500M

worldwide. This phenomenal growth occurred justseveral years after the liberalisation of thetelecommunications markets, which increasedchoice and reduced prices for consumers.

Utilising this technology, customers are increasinglybeing involved in the ‘work to be done’, as moreflexible access to key services become apparent. The

banking sector is a good example where first the ‘hole in the wall’ increased both theinvolvement and access to services and now the Internet allows on-line banking enablingthe customer to both monitor and manage their own accounts directly.

From the business perspective: "There is now little doubt that new technologies in general,and ITs in particular, are having a deep-seated and largely beneficial effect on economicproductivity, competitiveness and overall business performance." [Botterman & Johnston] Nolonger will small businesses need just to focus their activities locally, as global marketknowledge and low costs of entry into the marketplace enable a much wider ‘net to be cast’in searching for new customers.

The Information Society is about new ways of working, with impacts on (a subject to bediscussed in detail in chapter 8) employees, businesses, customers/clients, suppliers…etc,with the concept of e-commerce being of growing importance. Clearly, there areincreasingly few instances where businesses and homes are not at the very least employingsome new element of the developing ICT revolution. Within this context there is anincreasing level of (wireless) convergence between elements of this new society, betweenbroadband telecommunications, the internet, PCs, TVs, CD/music players, mobilecommunications devices, cameras, personal organisers/pocket PCs, video-cameras…etcwhich are all increasingly ‘talking’ to each other. The development of ‘Bluetooth’ and‘HomeRF’ standards both steering us towards an increasingly ‘wired’ or more literally‘wireless’ future, which requires being inclusive for all.

In unison with such developments we have an increasing move towards a 24-hour society,where flexibility is a requirement and the around-the-clock provision of services auniversal expectation, to fulfil work related, learning and leisure demands. As such, newconcepts of time & space, work & leisure and family & community. [Botterman & Johnston -

1999] will need to be addressed, issues characteristic of societal change.


According to the DTI there are several driving forces that are integrating together whichare leading us towards what they term the Information Society. Firstly the DTI identifiesgrowing overall income levels that in turn has translated into an increasing demand forgoods and services. Secondly, increased access to an advanced ICT infrastructure that isable to support and deliver a wide range of services and thirdly a strong local and regionalsupply of ICT services and access to electronic content.

In addition, it is also noted that a community's culture and attitude will also be of note,including language, education and willingness to innovate…etc. In this sense the messageis clear and the focus and rationale for the following study self-explanatory. One of BT’spolicy advisors at an industry conference also highlighted the choice ahead, in this instancefor Wales (which already has a more advanced infrastructure than in many other parts ofthe Highlands & Islands) in consideration of recent trends i.e.- European internet revenues:$1bn in 1998 to $64bn by 2001, with the US estimating over $200bn by 2001. In addition arecent MORI poll in the UK revealed 15M home PC users (of which 1/3 have purchasedgoods/services on-line and a further 1/3 undertaken banking transactions) and 14M mobilephone users (now in excess of 20M), with a further 17M people planning to use a newtechnology product for the first time in the next six months!

“Such global trends promote a stark message for European nations such as Wales, who possesssophisticated telecommunications infrastructures but have limited success in utilising them. Themessage is join the information society or become a peripheral player.”

The need to access broadband and develop the ICT skills based is thus clear for rural areassuch as the Western Isles and it is the potential route to both we will examine in thefollowing chapters.


PART 1

Chapter 1 Broadband Telecom Services

1 OFTEL and the Universal Service Obligation

OFTEL can be thought of as being the regulator of the UK telecoms industry. Part of itsremit also includes Broadcast services. Given this dual role, it has a key role in thedevelopment of convergence technologies in the UK. OFTEL describes itself as being agovernment department that is independent of ministerial control and in this respect, inmany characteristics a unique entity. It is headed by the Director General ofTelecommunications, who is appointed by the Secretary of State for Trade and Industry. Itdescribes its main objective as being for: "…customers to get the best possible deal in terms ofquality, choice and value for money."

1.1 OFTEL's Universal Service Obligation (USO) is a common feature of other telecomsregulators around the world and is ultimately present to ensure social and economicinclusion within the new developing Information Society. In the past, universal access atan equitable price to the existing and developing telephone network was considered to beessential for all taxpayers so they could communicate with others in society no matter whattheir location, social status or age and/or disability.

In addition to basic access guarantees, it has also been a common feature of OFTEL'soperations to work with the telecom service provider(s), predominantly BT, to formulate'special schemes' for particular elements of the population who for one reason or anotherare having difficulties remaining connected (e.g. low-user schemes) perhaps, mostcommonly, due to issues of affordability.

In July 1999, a consultative document was issued by the Director General ofTelecommunications in OFTEL entitled 'Universal Telecommunication Services'. It is thisdocument that will be the focus of comment throughout this section, as it raises manyissues for rural areas and provides an up-to-date view on current policies, or lack of them,aimed at ensuring the rollout of Broadband services to those persons living in rural areas.The results of this analysis and associated comments will determine the approach to latersections in this chapter.

OFTEL, in effect, issues a license to the telecoms operators with USO (and other scheme)safeguards built-in, to ensure a 'universal' service within the UK. According to OFTELthere is a real cost in providing such safeguards (i.e. the USO) in the license and theoperator (BT) must pass such costs on to the consumer. However, according to OFTEL'sown forecasts in 1998/9, there was in actual fact only a minimal, if existent at all, cost toBT in the USO (refer to Box 1).

Indeed as OFTEL itself states: "It could also be argued that OFTEL should be examining thecost of universal service to an efficient operator, rather than the cost BT incurs in deliveringuniversal service."


BOX 1 Universal Service Costs/benefits

Source: www.oftel.gov.uk

It qualifies such a statement by indicating that BT has a significant resource of 'fixed radioaccess' for which it has even been awarded spectrum. If introduced in the local loop, inrural areas, in situations where it was 'the least cost technology' then significant efficiencysavings could be realised in servicing both 'uneconomic' areas and customers. Thus theapparent costs of the USO to BT could be reduced significantly according to OFTELprojections.

BT has made only minimal use of its spectrum resources to date, perhaps indicating acommonly held underlying viewpoint i.e. that the USO is not in actual fact a burden,contrary to what OFTEL appears to state: "Although universal service provides an importantsafety net, it is important to remember that it comes at a price." In context, BT is quoted asmaking a profit of £105 every second*, offering its telecom services at a 233% mark-up.**

Universal Service Costs / Benefits 1998/9 £MsUneconomic Areas 5-10Uneconomic Customers 38-48Uneconomic Public Call Boxes 10-15Total Costs 53-73Benefit (Life Cycle, Ubiquity, Brand Image) 61

1.2 Regardless of such issues, a number of which were clearly raised by its own staff, toqualify its analysis, OFTEL does not believe that it is necessary to re-evaluate the costs andbenefits of the USO at this point in time. Yet, on the other hand, contends that if the USOwere to be extended to cover broadband services, the key argument against this would berelated to the escalating costs that would require cross-subsidisation from existing services,and therefore ultimately be to the wider detriment of society. The US has for some timebeen investigating this very issue to ensure 'digital inclusion'.

There is without doubt a valid issue here related to the subsidisation of higher costbroadband services by those people who cannot afford them (i.e. standard telephony low-income consumers) to the benefit of those with higher disposable incomes. This may evenapparently require an increase in basic charges for all. With regard to cross-subsidisationwithin existing broadband users (e.g. of ADSL) with future revenue streams beinguncertain at a time of developing and competing technologies then once again the problemof cost and subsidisation of 'uneconomic' locations becomes further complicated. This,combined with an anticipated increased need because of a higher basic subscription costfor broadband services does not easily lend itself to a clear cut solution utilising theUniversal Service model to address inclusion issues.

Yet on the other hand, as the development paradigm in our society moves increasinglytowards sustainability, then one could argue a private company (with an effectivemonopoly) providing a basic (utility) service to potential members of a new InformationSociety should be expected to forego an element of short-term profit for the benefit ofsociety and longer term gain.


A long-term consideration of the business-cycle would view such potential USOobligations as an investment rather than a cost. Cross-subsidisation in such an instancewould not be necessary, hence negating OFTEL's key argument against extending the USOto broadband services.

On the other hand, as broadband communications develop via a range of differenttechnologies (wireless, cable, satellite...etc) then the justification for a Universal Service onexisting copper wire based solutions (i.e. ADSL) on a limited number of telecomsproviders would be in itself become untenable without a wider extension to otherbroadband technologies. This could act as an inhibitor of new technology solutions and a'barrier to entry' into the marketplace for new telecom operators.

Although, determined not to intervene, the Labour chancellor Gordon Brown (March2000) has also been publicly applying pressure to BT/OFTEL about the UK government'sfrustration regarding the lack of development in the UK telecoms (broadband) sector ingeneral, the related lack of competition in the 'local loop', be it urban or rural and thedevelopment of a two-tier Information Society of 'haves' and have-nots'. The rolling out ofcopper-based solutions to even commercially attractive locations has been slow to showprogress.

1.3 In summary then, the key questions that OFTEL recognise as needing to be addressed inthe report relate to several key issues. Firstly, as discussed above, the cost and fairnessimplications on existing telecoms suppliers, and secondly the appropriateness in policyterms of extending the USO to broadband technologies in advance of future changes insociety.

In policy terms the report quite clearly indicates that the USO is not likely to change inadvance of societal change:

"Universal service is about finding ways of meeting the needs of those remaining few whom theunregulated market might choose not to serve. It is not about predicting what will be required inthe future and requiring it advance. Neither is it about prescribing what is required for futureeconomic growth and prosperity. That would not be "universal service" as currently understoodand funded."

A key issue then relates to the interpretation of the objectives of the Universal Service. Inthis sense the OFTEL/(BT) interpretation is without doubt valid, but hardly progressive innature, being deliberately reactive to change. It is only in instances when certain"telecommunications services that are used by the majority" become prevalent that there will bean obligation, to ensure wider social and economic inclusion, via the USO. In other words,the USO's application and extension on BT cannot be viewed as a potential developmentalopportunity for communities currently excluded from access to broadband services whichare not yet used by the majority in society. In such a situation, one could argue that as aresult of the interpretation of the current objectives of the Universal Service 'non-commercial' locations will always be caught in a 'catch-up' loop and hence be of little valuein practice to excluded communities.


Universal access for consumers to the broadband information society is also desirable toenable the UK to expand at the forefront of technology based development and to makecommercially viable an increased range of products and services to such consumers.Indeed, arguably it is the rural or traditionally excluded consumer who proportionately isgoing to consume such products and services at a higher level i.e. video on demand asthere are few rural cinema and video hire shops. This 'critical-mass' effect as it is referredto in the report however is not one OFTEL considers relevant within the scope and remit ofthe USO as it stands and therefore not grounds for further intervention in the telecomsmarketplace. This is a convenient interpretation once again, in the view of the writer, withnegative implications for the development of an inclusive rural society in the UK, wiredinto future mainstream product and service provision.

1.4 Rural areas are without doubt more costly to service, populations are more spread out, thephysical distance from the local exchange (3.5 – 4.5km depending on line quality is thequoted current limit of ADSL) and cost constraints associated with infrastructuredevelopment in 'wilderness' areas are high and the number of consumers low as are thesubsequent revenue streams. Business usage is also limited, further affecting the revenuestream. In the 'free-market' model such uneconomic areas would be left to their owndevices. But this is not an acceptable political reality in a post-industrial 21st century'developed' UK society increasingly embracing the principles of sustainable developmentand consequently being committed to conserving regional distinctiveness, rural society andoverall ensuring social and economic inclusion for all in the wider UK context. Marketintervention to achieve such goals it can be argued, is therefore not interference to thedetriment of all in the long term, but actually quite the reverse. The European Union'sRegional Policy operates on just such principles, actively working towards a society whereeach and every citizen has an equal opportunity to participate in the economic and sociallife within the '21st century' society in Europe.

Currently the parameters of the Universal Service on BT are unlikely to change to ensureaccess to new copper-based broadband services for the reasons discussed above, despitethe perceived need in uneconomic (rural) areas. Access to new interactive products andservices via ADSL is not a short-term reality for 'uneconomic' areas. Innovations in theprovision of Video on Demand, Video e-mails, Video Conferencing, On-line Banking, On-line Shopping, On-Line Gaming, On-line Education, Home-based working and interactiveaccess to other local services related to health (Medical Imaging and Consultation), socialservices and local authority functions together with high speed access to the Internet andWorld Wide Web, will by-pass such areas who will get no input to their optimumdevelopment path due to lack of initial access and hence influence.

Even if one accepts that the USO is not the most appropriate means to achieve suchintervention with OFTEL's current interpretation of its objectives, this report willnevertheless argue strongly that intervention in the telecoms sector to achieve wider socialand economic goals will be essential to avoid the current impasse, whereby rural telecomsinfrastructure is caught in a perpetual cycle of catch-up with that in urban areas. This is notonly an uncompetitive situation but also given the rapid level of change in the currentsector one which is arguably not sustainable, due to the increasing timescales required justto access yesterday's technology.


This latter fundamental issue is the basis upon which an increased level of public assistedprojects must be secured. The risks associated with a continuing non-proactive stancecould be significant, yet the potential gains realisable in a potentially location-independenteconomy for those 'included' could be a massive boost to the rural economy as traditionalindustries continue to decline.

1.6 In the short term, OFTEL is convinced that the main route to broadband access in the UKwill be via DSL technology utilising existing copper-based telephony structure. OFTELhas also noted that as BT supplies 85% of such lines in the UK, the unbundling of the localloop to promote competition could achieve real competitive gains and therefore negate anypotential bottleneck holding back the development broadband technology over the existingcopper line network. At the time of writing there has been little progress with co-locationspace-related issues in the popular urban exchanges and high costs (approx. £30K per userbased on seven sharing) in single-supplier rural exchanges. BT has also in practice‘dragged its feet’ in the words of one potential ADSL entrant (RSL Communications)which along with several others have now pulled-out of the market altogether. BT has notresponded to demand from potential entrants for exchange space in key areas, but hasinstead opened up, arguably, less viable exchanges first in many instances. It remains to beseen whether co-location as its terms and conditions exist at present will be the catalyst forcompetitive broadband provision of the nature envisaged by OFTEL.

"On Friday 10 March 2000 OFTEL began a statutory consultation on a proposed modification toBT’s licence. The purpose of the proposed modification is to require BT to allow operators to leaseits local access lines, a process known as local loop unbundling. Operators would then be able touse their own DSL technology to provide broadband services to customers, including services likehigh-speed always-on Internet access and video-on-demand." – www.oftel.gov.uk

The development of 'affordable' broadband in the UK will be the catalyst for the growth ofe-commerce and the electronic economy, to which the present government is so committed(http://www.dti.gov.uk/infoage/index.htm). In addition, "OFTEL is committed to ensuringthat UK consumers and businesses are well placed to make use of new Information Agetechnologies that will deliver these services."

1.7 Finally, it is interesting to note however, that the American government has been much moreforward thinking in its consideration of 'Universal Service' and as far back as 1995 prioritised anew and advanced USO including provisions for the socially excluded. According to LarryIrving, Assistant Secretary for Communications and Information, U.S. Department ofCommerce (1995): "We believe the following four goals are essential to promote universaland equitable access to the National Information Infrastructure:"

1. Preservation and advancement of the concept of universal service,

2. Promotion of community partnerships,

3. Continued support for universities and research institutions, and

4. Outreach to under-served communities...We need to ensure that inner city and ruralresidents are informed about the opportunities that exist and the best ways ofharnessing them for their communities. These communities need to know whattechnologies and applications are available, what existing infrastructure they haveand need, and what has worked for similar communities.

http://www.dti.gov.uk/infoage/index.htm


The US government's report from which the above originated in 1995 began with thefollowing key quotation and the situation it describes across the Atlantic in 1991 isreminiscent of many areas in the Highlands & Islands today :

“Many of America’s rural areas show signs that raise concern for their future: loss ofeconomic vitality, a relative decline in income, high unemployment, low workforceparticipation, and an exodus of talent. Advances in communication and informationtechnologies, however, can reduce the barriers of distance and space that disadvantagerural areas" (Office of Technology Assessment, U.S. Congress, 1991).

and concluded: "Government regulations and policies will also play an essential role in thedevelopment of the Rural Information Infrastructure. Different regulations and policieswill likely be required in rural areas than in urban areas."

Nevertheless, even with this recognition, a further report in July 1999 has concluded thatrural areas in the US are contributing significantly to their 'digital divide' – "At every incomelevel, households in rural areas are significantly less likely - sometimes half as likely - to havehome Internet access than those in urban or central city areas." One wonders if the UK iswilling to take action now to avoid this inevitable scenario being replicated this side of theAtlantic in our rural areas, some might argue it is already happening.

Both the opening quotation and conclusion of the original report discuss key areas that theUK government are still reluctant to address, despite the occasional comment on socialinclusion and increased access to the communications network. One might easily concludethat OFTEL requires to be much more flexible in its interpretation of its Universal Serviceobligations. Indeed the Countryside Agency in England has requested that OFTEL widenits USO to include broadband provision to rural areas. At the time of writing there has beenno response to this request.

The momentum of the so called Information Age or Society is clear and there will be manyopportunities for UK business and consumers alike that will have economic and socialconsequences in all walks of life. The commitment is real, but the question of inclusivenessremains for 'uneconomic communities' in the UK (at least 5 years after the US governmentbegan to address such impending issues) be they in low income urban housing schemes orscattered remote communities in the Western Isles of Scotland. For this reason it isessential that we now consider the options for such areas to enable them to become wiredinto the impending Information Age. A similar process on a national scale has just beencompleted in the US with the subsequent report 'Advanced Telecommunications in RuralAmerica: The Challenge of Bringing broadband Service to All Americans' being publishedin April 2000. The next chapter will begin by assessing the services available by firstlyconsidering the competing DSL broadband technologies relevant to the rural context. Thisreport also considers many of the issues outlined in this report.


Chapter 1 - References:

OFTEL, Access to Bandwidth: Delivering Competition for the Information Age,(November 1999) http://www.oftel.gov.uk/competition/a2b1199.htm

OFTEL, Universal Telecommunication Services: A consultative document (July 1999)http://www.oftel.gov.uk/consumer/uts799.htm

OFTEL, Access to Bandwidth Consumer Workshop (March 1999)http://www.oftel.gov.uk/isp/a2bwshp.htm

OFTEL, Universal Telecoms Services, (1997) http://www.oftel.gov.uk/consumer/uniserv2/chap1.htm

US Dept. of Commerce, Rural Areas Magnify 'Digital Divide' (July 1999)http://www.ntia.doc.gov/ntiahome/digitaldivide/factsheets/rural.htm

US Dept. of Commerce, Survey of Rural Information Infrastructure Technologies, (1995),http://www.its.bldrdoc.gov/pub/rural/

US Commerce Department's National Telecommunications and InformationAdministration / Rural Utilities Service Advanced Telecommunications in Rural America:The Challenge of Bringing broadband Service to All Americans (April 2000)http://www.digitaldivide.gov/

http://www.oftel.gov.uk/competition/a2b1199.htm

http://www.oftel.gov.uk/consumer/uts799.htm

http://www.oftel.gov.uk/isp/a2bwshp.htm

http://www.oftel.gov.uk/consumer/uniserv2/chap1.htm

http://www.ntia.doc.gov/ntiahome/digitaldivide/factsheets/rural.htm

http://www.its.bldrdoc.gov/pub/rural/

http://www.digitaldivide.gov/


2 Competing DSL Technologies

POTS, the Plain Old Telephone System is the basis for the majority of xDSL (DigitalSubscriber Line) services on the market today. xDSL refers to an increasing number ofdigital transmission technologies utilising POTS to provide high bandwidth informationservices to small businesses and increasingly consumers’ homes, as the service becomesmore affordable and widespread in both Europe and particularly North America. Asindicated in the last chapter, BT is only now in 2000 beginning to roll out ADSL servicesthroughout selected sites in the UK after much delay. Refer to Appendix 1 for details onthe full range of developing DSL technology worldwide. The availability of such servicesis not as straightforward as it might first seem and we will consider specifically in thischapter the kind of issues that need to be addressed if the most appropriate DSL service inthe Western Isles context is to be achieved.

2.1 DSL: An Overview

At its most basic level a DSL can transmit and receive both data and voice signals on thesame line. The element of the line concerned with data download and upload is describedas being 'always on' i.e. the DSL modem used to connect to the data service is permanentlyconnected to your local exchange. Indeed, technically, DSL refers to the modem pair (atthe consumer and exchange ends) rather than the lines used. Connecting to on-line servicestherefore becomes that much quicker without the experience of a 'dial-up' process, engagedtones, dropped lines...etc. The local exchange is then able to switch a request forinformation (from your DSL modem) down the telecom suppliers 'backbone'communications infrastructure to your ISP, via its high bandwidth link 'pipe' and then oninto the Internet through its own 'backbone' communications infrastructure on into theInternet to access your desired location.

ISP Server

The Internet Box 2 ADSL

Existing Copper Pair Line

1.5Mbps to 7Mbps16kbps to 640kbps

Local TelephoneExchange with

DSLAM

User's ADSL Modem ADSL ModemRack

PSTN – Public SwitchedTelephone Network

Voice Calls

ATM


ADSL is able to work in unison with existing telephony services due to the presence of aDigital Subscriber Line Access Multiplexer (DSLAM) at the telephone exchange thatseparate voice traffic to the Public Switched Telephone Network (PSTN). In someinstances (e.g. with ADSL) a splitter is also required at the customer's premises toundertake a similar separation at the user end.

Voice signals are sent on the basic copper pair network by analogue wave transmission forwhich our current telecoms system was designed in the Victorian era. A Modem(modulator/demodulator) is a good example of a technology with which the reader will befamiliar. Modems demodulate analogue signals into a string of values of 0s and 1s (i.e.digital data) that can then be interpreted on a PC. On the other hand, when a PC sends datavia a standard modem, the modem modulates the digital signal and sends it as an analoguesignal. This latter process is considered to be a 'bandwidth bottleneck'. In the ADSLcontext, modulation refers to the key method of putting data into a high frequency carriersignal for transmission and receipt on the twisted copper-pair wires.

With DSL: "Digital data is transmitted to your computer directly as digital data and thisallows the telephone company to use a much wider bandwidth for transmitting it to you."[http://whatis.com/]

The resultant high frequency signal makes possible the separating of some of thatbandwidth to enable voice-band telephony to work in tandem with such digital data codingtechnology (see above). This is an important feature of ADSL that will be discussed furtherin this chapter. This can be achieved by using a splitter at the home/business user end or ifadhering to G.Lite ADSL standards, can be set up from the telecom supplier's localexchange.

DSL services (such as ADSL) are ultimately expected to replace slower and older ISDNtechnology on both cost and speed grounds.

In the UK, the supply of ISDN services has proved a lucrative market for BT and in theview of many industry commentators e.g. Freeserve's Chief Executive (John Pluthero), BThas deliberately delayed the introduction of DSL technology, indeed BT even claimed thatthis delay was due to a lack of demand for the service in its trials: "It's a disgrace. Thereason BT is deliberately slowing down the rollout of ADSL, and let's be clear, it isdeliberate, is because it is protecting its Highway [ISDN] business."

Gartner Group analyst Adam Daum has also commented on the loss of ISDN 'HomeHighway' revenue. "BT has dropped the price of Home Highway to make it attractive tothe mass market and has promoted it actively. It has created the embryo of a good marketand ADSL will undermine that."

The main advantage of DSL based 'always-on' will be the growth of the internetmarketplace in the UK, as for a fixed price (in the future) of between £20-£50 per monthUK internet users will be able to connect to the internet without worrying about theirquarterly phone bill or indeed missed calls and therefore increase their overall average timeon-line and hence increase significantly e-commerce based opportunities for UK business.BT will also without doubt experience a reduced demand in its 2nd line market, whichhome users in the UK have been purchasing at an ever growing rate to address their


ADSL is currently nevertheless being rolled-out by BT to over 400 exchanges (Spring2000) throughout the UK with plans for a further 100 in a second round of up-grades."Combined, this investment in ADSL technology will cover 35 per cent of Britain'spopulation, enabling 8.5 million homes and businesses to join the broadband revolution."[www.theregister.co.uk]

In the US the number of DSL subscribers doubled in each quarter during 1999 and by theend of 2000 it is expected that over 2 million households in the US will have active DSLaccounts and that every major US city will have DSLAMs installed at their telephoneexchanges.

Meanwhile rural areas in the UK face an uncertain future with regard to access to (A)DSLbased broadband services, as has been outlined in ch.1.

2.2 ADSL: An Introduction

In the US and Europe the backbone of the telecoms network is now comprised of mainlyoptical fibre cables connecting the numerous switching centres. However, connectionsbetween these switching centres (exchanges) and consumers of telecom services are stilldominated by the original twisted copper pair lines, of Victorian origin. Such lines (ofwhich there are 600 million worldwide (Scientific American Oct. '99) were originallydesigned for voice-band signals in the frequency range 300Hz to 3.4KHz, a 'narrowband'service. It is also important to note that such lines are often unshielded and are of differinggauges.

The information carrying capacity of such lines is ultimately limited and determined bysources of noise and interference. In a well specified and designed digital transmissionsystem, such effects will be minimised. ADSL is one such digital technology –Asymmetric Digital Subscriber Line. ADSL is a relatively new 'broadband' technologywhich enables existing copper pair lines to be utilised for the transmission and receipt ofbroadband telecom services, in some instances at up to 7Mbps, although 1-2Mbps beingmore typical. Even this latter figure is a significant improvement than that of 56Kbpsstandard that modern day modems achieve. ADSL, in common with other DSLtechnologies outlined in Appendix 1, is an 'always-on' technology (unlike ISDN andanalogue modems), hence for a set amount of money per month the customer can haveunlimited access to the internet.

BOX 3 The 'twisted pair' is the ordinary copper wire that connects homecomputer and indeed many business computers to the telephone company. Toreduce crosstalk or electromagnetic induction between pairs of wires, the twoinsulated copper wires are twisted around each other. Each connection ontwisted pair lines requires both wires to be functional. [http://whatis.com]


[Source: Scientific American Oct. '99] BOX 4 - ADSL OVERVIEW

"By employing a passband modulation method an ADSL transceiver can operate atfrequencies above those of standard telephony, allowing the ADSL system to coexist withthe telephony system on the same pair…ADSL can be seen as a frequency divisionmultiplexed system in which the available bandwidth of a single copper loop is divided intothree parts…" [SAS: White Paper – ADSL]

The three parts of the system referred to above consist of the existing voice-bandtelephony service, the Upstream channel and the Downstream channel. The Asymmetricelement is related to the fact that the Downstream channel in the digital system is theprimary channel to which most of the bandwidth in the system is devoted (i.e. the flow ofinformation towards the consumer), whilst the Upstream channel (from the consumer tothe service) is normally allocated significantly less resources, due to reduced need (e.g.voice telephony and internet based services) and other transmission advantages related tocross-talk interference (refer to section 2.3).

ADSL modem technology then, transforms existing standard analogue telephony lines intohigh speed digital lines, via digital coding techniques giving potentially up to 99% morecapacity for internet based data transfers without affecting one’s existing telephonyservices. The existing voice-band service is normally separated at the customers home oroffice by a splitter, a device which forks the line into two branches, one which goes to thetelephone and the other to the customers DSL modem. Such splitters also act as ‘low-pass’filters separating out the frequency signals that are above a current point i.e. 0-4kHzfrequencies only being transmitted towards the telephone for termination.

According to the ADSL Forum, 33.6Kbps modems (which require quality lines with ahigh signal-to-noise-ratio) are already at the limits of capacity (35Kbps) of the twistedcopper pair according to Shannon’s theorem* and although 56Kbps modems can extendthis speed by utilising digital connections in the downstream direction in thecommunications network, they are still limited to 33.6Kbps in the upstream direction. Thiswould seem to be the limit for analogue modems.


ISDN technology remains expensive (e.g. BT Home Highway) in the UK and although itcan increase connection speeds to 128Kbps using two standard telephone lines (costingtwice as much in calls) to provide a dual channel 64kbps x2 connection, it remains sloweven compared with the anticipated G.Lite 1.5Mbps ADSL standard.

Current developments in the ADSL field include the adopting of an industry-wide globalstandard for the technology, named G.Lite. This standard if adopted will reduce the overallspeed performance of ADSL (down to 1Mbps to 1.5Mbps Downstream and 0.384kbps to0.5Mbps Upstream), but make it more able to be delivered to a wider range of locations(6.6Km – 7.5Km from the exchange) more reliably and enable a reduction in overall costsand power consumption. Furthermore, higher speed standards will require shorter linelengths and thus either less customers or higher infrastructure costs. G.Lite is thus viewedby many within the industry as being a sensible balance for the industry, although withoutdoubt being to the detriment of some consumers who are already (or were expecting to),benefit(ing) from higher speed ADSL services.

On the other hand, G.Lite ADSL does not require a filter for digital data and analoguetelephony, known technically as a splitter, thus saving on the requirement of engineer visitsto customer premises. It can thus be considered as a plug-and-play technology. In addition,G.Lite addresses the problems related to getting the modem of one manufacturer to talk to aDSLAM of another manufacturer and this interoperability is also one of its key advantages.However: “..high-bandwidth telephony-based services such as multimedia gaming, video-conferencing, and video-on-demand (VoD) still demand full-rate ADSL” [EDN on-line Journal]

ADSL is targeted at the mass domestic market for the most part, with more synchronousservices (e.g. SDSL) being more applicable to LANs, web-hosting services and remoteworking. “SDSL is the most popular with businesses and teleworkers. SDSL meets therequirements of these segments because symmetric bandwidths of up to 1.5Mbps mimicsLAN connectivity. This enables workers to send and receive large files from corporateservers with high speed in both directions.” [www.iec.org/]

This is an important difference and will determine the priority version of DSL that isappropriate to perceived needs in rural areas such as the Western Isles. The key constraintthough with SDSL is its service reach of 3.0km. This would tend to significantly limit theavailability of SDSL to home-based rural teleworkers in the Western Isles, a keyanticipated market for demand in broadband services in the islands in the next severalyears.

Rate Adaptive DSL (RADSL) is another form of DSL that has gained increasing ground inthe US. Such technology is able to adapt its connection speed to that achievable on anygiven line and so operates at lower speeds over longer lines and higher speeds in instanceswhere line conditions are more favourable i.e. when there is only a short loop between thecustomer and his/her exchange. From the service provider’s perspective it is also desirableas a range of different speed services can be offered and charged accordingly.


2.3 Cross-Talk Interference and resultant Digital Coding Techniques

Asymmetric data paths such as those utilised ADSL are basically a compromisetechnology that increases bandwidth and extends the reach of digital line technology, as inmany instances one's phone line will not come directly from the telephone exchange butwill be spliced at least several times during the journey. It has been estimated (by Bellcore– a US phone company) that the typical consumer line in the US goes through 22 splicesprior to reaching the customer. Therefore if high-speed signals were attempted to be sentin both directions, the effects of cross-talk and line noise/interference would besignificantly increased.

So what is cross-talk interference? It has been described in the DSL Sourcebook asfollows: "The electrical energy transmitted across the copper wire line, as a modulatedsignal also radiates energy onto adjacent copper wire loops which are located in the samecable bundle. This cross coupling of electromagnetic energy is called crosstalk. In thetelephone network, multiple insulated copper pairs are bundled together into a cablecalled a cable binder. Adjacent systems within a cable binder that transmit or receiveinformation in the same range of frequencies can create significant crosstalkinterference…The result is a slightly different shaped waveform than was originallytransmitted."

Crosstalk interference (refer to box 5) will be greater in cables nearer the exchange wheremany cables come together and hence a high speed digital signal sent from the end user tothe exchange (Upstream channel) cannot achieve the same performance as one sent fromthe exchange (Downstream channel). This is because as a signal sent from the exchangenaturally attenuates over distance, it is more susceptible to cross-talk interference whichgets less as one goes further away from the exchange, as an increasing amount of linesreach their termination destination and as any interfering signals also attenuate.

In the opposite scenario, as a signal sent from the user to the exchange naturallyattenuates, it comes up against increasing sources of interference the closer it gets to theexchange due to the increasing number of lines and other signals it comes into closeproximity to.

BOX 5 Information carrying capacity in digital systems is limited by the accesschannel itself and external sources of noise [SAS: White Paper – ADSL]:

Near-end crosstalk – arises due to signals which interfere with the input of a collocatedtransceiver at the same end. The transmitted signal leaks into the receiver via capacitiveand inductive coupling paths.

Far-end crosstalk – occurs when signals from transmitters on other pairs in the samecable leak into the input of the wrong transceiver at the other end.

Radio frequency interference

Impulse noise – caused by a variety of sources producing short electrical transients.


Asynchronous DSL therefore has significant design advantage that is adapted towardsmaximum performance and service reach over existing copper local loops.

The third part of the system (i.e. the normal voice-band frequency range) is not affected bythe other two, as data transfers in the Upstream and Downstream channels can betransmitted at frequencies above that of the voice frequency band, hence all three arecompatible, this being one of the key advantages of ADSL technology using standardtwisted copper pair lines.

The two main digital coding techniques used in ADSL, namely Carrierless Amplitude andPhase (CAP) modulation and Discrete MutiTone (DMT) modulation are both (asmentioned earlier) passband modulation techniques which means that they can be designedto be used over any specified range of frequencies. In essence, the main technique used byDSL technology is referred to as multiplexing, the process of amalgamating numeroussignals into one, more complex signal version, which is then transmitted and separated outagain at its destination.

Discrete Multitone Technology (DMT), is one of the main modulation (digital coding)methods used to transmit and receive information on existing copper pairs to provideADSL based services. "The technique divides an overall bandwidth of about 1 MHz into256 subchannels of about 4 kHz each. In essence, it creates 256 virtual modems operatingsimultaneously over the same line." [Scientific American Oct. '99]

In contrast to this method, Carrierless Amplitude and Phase (CAP) modulation digitalcoding techniques use a single carrier channel and can be considered a variant ofQuadrature Amplitude Modulation (QAM) that is used in V.34 (28.8/33.6kbps) modems tooptimise performance on standard twisted copper pairs. CAP: " describes a version ofQAM in which incoming data modulates a single carrier that is then transmitted down atelephone line. The carrier itself is suppressed before transmission (it contains noinformation, and can be reconstructed at the receiver), hence the adjective "carrier-less".[www.adsl.com]

Obviously then, for a technology designed (ADSL) to operate in tandem with POTS, onecould argue that such specific coding techniques (assigning an additional but separate bandto POTS based copper lines for upstream data and another for downstream data) were aprerequisite for success, separating frequencies using what is termed Frequency DivisionMultiplexing (FDM).

FDM also has a further advantage in so far as it enables Downstream and Upstreamchannels to operate at differing frequencies (the lower frequency in the Upstreamdirection, for reasons already discussed) hence reducing 'near-end' interference because ittransmits on a different frequency than any directly adjacent service receives, thusreducing cross-talk.

With regard to the future of such technologies, they are expected to develop into 'rateadaptive' and symmetrical forms, which are expected to go some way towards extendingthe current ADSL service, reach from its current 3-5Km


A more symmetrical service (e.g. SDSL as described earlier) will also be of increasinginterest to larger SMEs who foresee a future which includes extended in-house web-basedservices (e.g. web hosting), videoconferencing...etc

A third and newer DSL technology that is synchronous in nature is also worthconsideration. It provides 768Kbps connections and can be delivered out to 9Km and iscalled Multiple Virtual Line (MVL). This newer technology has no need for a POTSsplitter and needs no configuration at the user-end. In addition, as it only emits a lowpower level per modem card (between 1.5 and 0.5 watts) and it can be used in the samebundles as other services without any noticeable adverse effects and can even be deliveredover non-twisted pairs.

The synchronous nature of MVL, its plug and play installation and length of reach, allindicate a product of potential significant relevance to the Western Isles context, for bothbusiness and domestic usage. Refer to Appendix 2 for further details.

The current form of coding technique being rolled out in the UK to provide ADSLservices is DMT. "During initialisation, DMT monitors the line conditions and works outthe capacity of each sub-channel in the ADSL frequency band based on it's Signal to NoiseRatio. If one channel is experiencing noise due to say RF interference, it will not be usedin favour of the other sub-channels. CAP does not have this flexibility."[Andrew Muir, Mason

Communications]

2.4 ADSL Capacity Constraints

The ultimate capacity of a line (excluding line quality factors) is also determined by itslength, as this ultimately determines bandwidth. This is a key issue for rural areas. As asignal is passed down a line, it experiences attenuation the further it goes, and the higherfrequencies (such as those used by ADSL technology upwards of 3,400Hz) are affected to

BOX 6 Demands on MVL DSL Source: www.paradyne.com


"One might compare the transmission of an electric signal to driving a car. The faster yougo, the more energy you burn over a given distance and the sooner you have to refuel.With electrical signals transmitted over a copper wire line, the use of higher frequencies tosupport higher speed services also results in shorter loop reach. This is because highfrequency signals transmitted over metallic loops attenuate energy faster than the lowerfrequency signals." [The DSL Sourcebook]

The diameter of the copper wires in the loop also affects performance and an increaseddiameter will reduce attenuation effects as thicker wires carry more current further becausethey have less electrical resistance over a given length. Thicker wire is therefore better forlonger distances and its occurrence will enable the radius of ADSL provision to be greater.An ADSL signal can overcome electrical resistance of approximately 1500 ohms, at levelsgreater than this the signal attenuates significantly.

The main problem with regard to the above is that existing copper-based line systems werenot designed for digital transmissions and so were provided using the thinnest copper-pairline that could support the voice-band demands of the day. Obviously the thinner the wirethe less copper used and less cost per metre of line provided. The average line gauge in theUS is between 0.4 and 0.5mm. Typically, 0.4mm gauge line can provide services only 2/3of the distance of 0.5mm line. In the US the split in gauges is approximately 60% in the0.5mm or greater range and 40% in the 0.4mm range. In the UK it is between….

The distance from the exchange is thus going to be a severe limiting factor in providingbroadband ADSL services to outlying rural areas. As stated in section 3.5 at a distance ofapproximately 3.5km to 4.5km from the 'base station' delivery of ADSL becomesproblematic for the above reasons. Although such problems may be experienced atconsiderably less distances depending on the quality of the lines e.g., the presence ofbridged taps, loading coils, differences in line gauge...etc

2.5 Line Quality Issues and ADSL provision

The pre-testing of loops is a key requirement in the development of ADSL services andcan be a costly process, particularly if engineers have to be despatched to both exchangesand customer premises in advance. Current moves in the industry in North America aretowards the automated testing of loops, reducing both time and associated costimplications of developing a new service.

Apart from overly long local loops in rural areas which attenuate signals due to a loss ofresistance on the thin copper pairs and cross-coupled (cross talk) interference issues, thereare several other main issues which affect the quality and availability of ADSL and otherdigital services on POTS.

Firstly, one has to consider the presence of loading coils, which are in effect a bottleneckin the supply of digital services over existing copper pairs. Loading coils have been auniversally utilised tool by telecoms companies throughout Europe and North Americaand are used to minimise noise interference on traditional voice-band services on longlocal loops. They have been traditionally used on local loops of more than 5.5km in length


They act as filters and cut-off sources of interference at frequency levels of above 4kHz.However, ADSL is supplied utilising frequencies at >3.4kHz and therefore such loadingcoils act as a severe limitation to the provision of not only ADSL, but all other digitalservices (e.g. ISDN) as well. "It has also been reported that load coils impair theoperation of 56kbps and 33.6kbps modems for similar reasons." [www.iec.org] However,loaded lines tend to be straightforward to diagnose by measuring 'frequency response' withthe appropriate testing instrument. However, in instances where there is old plant that hasbeen up-graded over the years, perhaps by the introduction of new exchanges…etc someold loading coils that are no longer necessary can nevertheless still be present.

Secondly, the occurrence of 'bridged taps’ that are also referred to as non-terminated(open circuit) pairs, has a significant effect on the reliability of digital services such asADSL. In an ideal situation a telephone line goes from the exchange to the user directlyi.e. point-to-point. A bridged tap occurs in a situation where a new service is provided to acustomer at some point along an already existing pair that perhaps previously supplied aformer customer. As a result, some of the signals passing down such a line will continuealong the old line and not be terminated (i.e. as there in not a telephone, modem, faxmachine any longer at the old location), but instead reflected back towards the originalsignal. As a rule of thumb:

"If the length of the tap is small, when compared to the signal wavelength, the reflectedsignal rejoins the original signal after a minimal phase shift and there is little attenuationof the original signal. When the bridge tap length approaches one fourth of the signalwavelength, the reflected signal rejoins with a phase difference nearing 180 degrees andcauses significant attenuation." (University of Saskatchewan)

Such bridged taps also often occurred during repair work, as well as when providing newservices (adding some flexibility and cost savings to telecoms suppliers) and tend(ed) tohave little effect on standard voice telephony services due to the long wavelength of voiceband services in comparison to the length of such taps.

However, with higher frequency digital services possessing a much smaller wavelengthand rural areas tending to possess higher than average bridge tap lengths, digital serviceprovision in rural areas will be very sensitive to such bridged taps.

In summary, bridged taps are sections of line that are not on the direct path between auser's location and the exchange and which can consequently result in signal loss in digitalsystems via the reflection from the non-terminated pair of wires (refer to Box 7).


BOX 7 A BRIDGED TAP

In lower specification ADSL services up to 1.5Mbps such bridged taps will not normallyhave a significant effect other than restricting the bandwidth and speed of the service ableto be provided, unless of course the length of tap is extremely long, a phenomena morelikely in the rural context, due to the varied geography of consumers.

A third possible problem with POTS is related to differing gauge sizes and the resultantdifferent characteristic impedances present in a local loop: "..variation in wire gauge addsto the challenge of determining a particular DSL system's performance over a particularloop." (DSL Sourcebook)

Other line defects and weaknesses also need to be thoroughly assessed in advance ofrolling out high frequency digital services on existing local loops. These assessmentsmight include metallic tests ("..standard tip-to-ring, tip-to-ground and ring-to-groundparameters including DC voltage and resistance, along with AC voltage, resistance andcapacitance") longitudinal balance, the presence of water in cables or cable jackets, linemix-ups in a cable (split-pairs), poor contact junctions, injections of electromagnetic noiseand even seasonal temperature fluctuations in the copper.

It should also be noted that the performance attainable from ADSL can vary significantlydepending on the presence of other digital services already been supplied in the consumerlocal loop (e.g. particularly T1/E1 leased lines). Other digital services can significantlydegrade the ability of ADSL to perform effectively in a local loop, as interferenceincreases significantly in loops where bundled lines are transmitting and receiving digitalinformation at similar frequencies.

In North America when ADSL is planned for an area, a range of tests are undertaken toevaluate the necessary loops. "The impact of electronic devices, load coils, bridge taps andgauge changes are all evaluated." [America's Network Dec. '98]. BT has just completed a

TelephoneExchange

Old Locatione.g. old croft house

New Location

Bridged Tap

Working copper pair

Non-terminated pair


2.6 ADSL Provision in the Western Isles Context

The need for broadband telecoms links in the Western Isles based on such technology hasalready been outlined in chpt 1. According to BT's on-line information the provision ofADSL services at any given location in the UK: "… is subject to technical limitations andsurvey. Service availability in an area is constrained geographically and is subject tochange."

The full rollout of ADSL services to rural areas such as the Western Isles is as yetunannounced although is commonly thought within the industry to be a number of yearsdistant to such non-profitable areas, even although the official BT position (see abovequote) does not qualify such a view. BT it seems, continues to promote its leased line andISDN (Home Highway) sectors (www.zdnet.co.uk) and maintains that unmeteredbroadband access via ADSL will 'increase the load and stretch an already creakingnetwork'. This latter view appears to be the shared by BT engineers locally, after severalrecent discussions.

The consensus view appears in line with the following: "Even when DSL rollout actuallybegins, it will only be in the more populous (and therefore profitable) areas." (Internet

Magazine, May 2000). The key questions for the Western Isles must thus revolve several keyfields.

It appears clear that even if rollout costs could be minimised and the number of customerspassed maximised e.g. by using G.Lite ADSL and issues related to line quality assessed, itnevertheless appears that at the present at least, BT does not consider such issues, unlikeits rivals in the US. Its sole indicators of an area's ADSL's readiness is instead based on itsdemand, making ADSL as it stands at present in the UK a very much urban phenomenon.

Prior to any unbundling of the local loop in the UK progress will depend on thecommitment of BT to its rural customers, in the absence of any USO by OFTEL and thelong-term strategic thinking of the local and regional development agencies. Certainly inthe US, new forms of the DSL technology are being piloted and demonstrated specificallydue to their appropriateness to the rural market e.g. MVL, the so called low power, highreach DSL alternative.

It may be that if progress is to be made in the rural context, different DSL developmentmodels to that appropriate to urban areas will need to be investigated and progressed, MVLbeing just one in addition to RADSL and G.Lite ADSL. However, as we shall see insection 2.8, the absence of SDH (and the non-availability of DSLAMs for UXD5bexchanges) is a potential constraint that is unlikely to be addressed within this currentmarket ethos.


With regard to the digital exchanges present in the Western Isles there are 35 in total (referto Appendices 3 and 4 for location and background). 6 of which are BT's System X, 26UXD5B, 1 older UXD5 and 1 L/Conc. Of these, the System X are TXD03 RemoteConcentrator Units (RCU) parented on a DCCE (Digital Cell Centre Exchange) and theUXD5B are TXD05 units.

Their type and its appropriateness for (A)DSL provision is not yet clear, but with theDSLAM scalable base units (for System X exchanges) required in this instance it wouldappear that such infrastructure appears to be less important than it was when trying tosupply ISDN services to as wide a customer base as possible in the Highlands & Islands, asthere is no need to replace or up-grade existing exchange infrastructure, but instead justadd to it.

However, a key consideration may relate to their bandwidth connections to the Island'sbackbone, which if limited may constrain the uptake of broadband services in many ruralareas in the Western Isles. However, recent discussions with an ICT consultant in the area,familiar with such exchanges have negated such worries, as it appears upgrading the radiolinks of such exchanges is a low cost and straightforward procedure.

In the short term, it must be recommended that in the Western Isles context if DSLbecomes a priority, a cost effective automated line-testing method should be investigatedto minimise any potential initial 'market-entry' costs, as such pre-testing is a prerequisite tothe development of such DSL based services.

It would appear unlikely that in the rural context where market demand is going to beinitially low for broadband services (due to the low number of overall consumers and theirreduced exposure to similar services) in the short to medium term, that BT will undertakesuch testing in advance of any local loop unbundling. In rural areas there would appear tobe only a marginal market for one or two telecoms suppliers and content providers, BT isunlikely to do the 'groundwork' on such local loops in advance, because this may justprime already marginal loops for low-entry-cost competition in July 2001.

On the other hand, in urban markets where there is significant demand it is worth BT'swhile bearing such costs to establish their service(s) in advance of the unbundling of thelocal loop (currently scheduled for July 2001) and any associated competition that that islikely to unleash.

In addition, an appropriate scaleable DSLAM solution will also require investigation fromvarious suppliers, catering for low-demand rural areas in the first instance but having theflexibility to be scaled-up at some future date. Such a solution is likely to be quite differentthan that currently being rolled-out in the UK's mass-market urban locations. Indeed BThas indicated that it is not likely to develop/install DSLAM capable of servicing the smalltype of exchanges such as the UXD5B present in the Western Isles.

Lastly, the piloting of several already proven North American (A)DSL-based technologies(in the absence of any UK based technology solution) in rural areas such as the WesternIsles may be considered appropriate to assess in practice the claims of their suppliers.


Obviously, at present, this would depend on whether BT has tied itself into a supplier dealwith particular manufacturers or not. ADSL G.Lite and/or MVL would appear to be frontrunners in this respect.

In summary then, it appears that there is potential scope for innovative technologysolutions based on high speed DSL broadband solutions in rural areas such as the WesternIsles, although not necessarily ADSL.

However, it is important to recognise that at present, this depends on the willingness of aUK-wide private telecoms supplier with a responsibility to its shareholders and one whichis in the process of coming under increasing competition in many of its former coremarkets. In such a context, such rural market issues, although important to residents andbusinesses in the Highlands & Islands, will likely only be considered as a peripheralconsideration for such a company.

A partnership-agency approach based on an initial area of need, is thus stronglyrecommended with BT and any other potential market entrants, to encourage anassessment and implementation of the types of solutions most appropriate to the ruralcontext, should DSL be a chosen priority for the Western Isles. In the absence of such aninitiative it seems unlikely that any DSL-based solution for rural areas will be forthcomingfor many years to come, as any future rollout in 2001 is still going to be dependent ondemand in the first instance. Hence, in the absence of any change to the USO (refer tochapter 1) in the interim that appears unlikely (until such services becomes consideredmainstream elsewhere in the country) a clear path to the development of such broadbandtechnology in rural areas does not exist. Hence, the immediate need for the proactivesolution suggested above to investigate cost-effective rural solutions. The development ofsuch an innovative partnership venture will be discussed further in chapter 5.

In this sense, until such a process has been instigated and completed one cannot rule outthe use of the twisted copper-pair as being a potential supplier of broadband telecoms tobusinesses and consumers in the Highlands & Islands.

2.7 (A)DSL and the Future

There can be little doubt that (A)DSL is going to be one of the key broadband technologiesof the ‘Information Age’ throughout the world and as such has an important positionwithin the overall broadband sector. Ovum, a UK based consultancy firm, has recentlypredicted that DSL line installations will increase from 800,000 worldwide to a staggering45M within 5 years (by 2005), 10.5M of these being in Western Europe. As yet, rollout isbeing constrained by a lack of competition among existing telecoms suppliers leading tohigh prices and the protection of existing services such as ISDN and T1/E1 leased lines.

Indeed in instances where competition in the local loop is restricted as in the UK, one canrelate this to the above scenario, refer to Box 8. Even in the US, there have been numerouscourt cases by new market entrants experiencing a lack of co-operation and access to localloop and exchange facilities from the incumbent telecoms supplier, during DSL rolloutprogrammes. It remains to be seen how smoothly the transition to the competitive localloop will be in the UK, after unbundling in July 2001.


In addition, the newest variant of DSL currently being piloted in the US, namely ‘Voiceover DSL’ or VoDSL will without doubt impact on existing telecom supplier’s businessaccounts, by enabling, for example, the additional provision of reportedly between 16 and24 additional voice lines being deliverable over the existing copper pairs, with obvioussavings to SMEs and larger firms & industries as well. Such technology is without doubtgoing to shake up the existing telecoms sector as it exists in the UK today. According tomany critics, BT’s delayed and speed-restricted rollout of ADSL in the UK, (as mentionedearlier), can be viewed as being protectionist towards the business-end and as a result hasalso been considered to be overpriced for the ‘mass’ consumer market in the UK.

(A)DSL then, for both the business and consumer market would appear to have an ever-increasing future roll to play in both the so-called ‘new economy’ and the new broadbandhome-leisure market in the UK and abroad. The key competitive factor being its ability toutilise existing communications infrastructure and increasingly on a global scale notrequire, what the Americans would call ‘truck-roll’, or on-site set-up (to the rest of us)visits (each engineer visit has been estimated to cost between $100 and $200), thusreducing installation bottlenecks and associated costs – e.g. plug & play G.Lite and MVL(A)DSL solutions. Indeed plug & play installation is being one of the increasingly sought-after features of DSL based solutions in the US for time and cost reasons. In marginalmarkets such as the rural areas of the UK such features will without doubt even moreimportant.

Nevertheless, it is also worth noting that Bell Atlantic in North America has reportedlyadmitted that it may never be able to provide broadband DSL services over 40% of itsexisting lines due to technical and reach limitations. One suspects that the majority of theselines are located in rural/suburban localities. In our rural locality there are still furtherissues to be considered.

Box 8 Telecom Costs for ADSL

Country Carrier Rental /Month (£)

DownstreamData Rate

Cost per 1kbpssupplied (£)

US Bell Atlantic 26.36 640kbps 0.04US US West 13.17 256kbps 0.05

Belgium Belgacom 28.50 up to 1Mbps 0.03France France Telecom 20.87 500kbps 0.04

Germany Deutsche Telecom 31.58 768kbps 0.04UK BT 39.99 512kbps 0.08

Singapore Sing Tel Magix 13.44 512kbps 0.03Information Source: Telecommunications On-Line

It should be noted that the BT example does include a modem, VAT and no usage or ISP charges, but not the £150 installationcharge. Most of the others do charge extra for a modem although their installation fee is less, but also have added usage charges.


2.8 ADSL & PDH/SDH Issues

During the research associated with this section and discussion with several parties it wasbrought to the writer's attention that SDH transmission was not available throughout theHighlands & Islands apart from in the Inverness area. This issue has therefore beenindicated as being a key constraint on the introduction of DSL services outside of theInverness area. As a result of this, an investigation was undertaken to help understand thereal issues.

The growing demand for high-bandwidth services has meant that there has been anincreasing need for broadband networks across the globe and this in turn has increased thedemand for more stages of multiplexing in digital signalling technology and integration oftechnology as convergence continues apace. Initially, in recognition of early trends,Plesiochronous Digital Hierarchy (PDH) was introduced in the 1960s and this can bedescribed as 'almost synchronous'. By means of explanation, in a digital telephone system,the term 'synchronous' means that the 'bits' of information are carried from point to point ina single transmission frame. PDH based transmission can be considered, in effect, not asefficient, as it requires more than one transmission frame to carry the 'bits' of informationand suffer(s)ed from compatibility issues. In terms of basic transmission systems installedworldwide, PDH remains the most common.

The 1980s saw the introduction of Synchronous Digital Hierarchy (SDH) systemsmaking their first appearance. These had the obvious advantage of being more efficient,faster and cheaper, in so far as they needed less costly network interconnectiontechnologies. PDH systems were often incompatible with each other and different systemsfrom different manufacturers, in for example the US and Europe, were complicated tointerconnect with each other. In so far, as SDH became an internationally recognisedsystem of digital transmission (1990), this standard enabled the interconnectivity of highbandwidth networks across the world that is apparent today. In terms of equipment costs,SDH transmission networks also have an advantage due to the compatibility achieved insetting up gateways between different network providers using compatible systems oftransmission protocol.

In short, SDH allows the provision of added-value revenue earning services for telecomssuppliers, whilst PDH requires 'very expensive equipment' at each and every exchange tomultiplex and demultiplex high speed lines. SDH has no such requirement for multiplexingand demultiplexing at exchanges in the network, 'an often costly and complex requirementin the PDH system'.

The SDH standard has resulted in increasingly economic and highly adaptable networks,these being required in an ever changing telecoms sector where flexibility is key, inresponse to ever changing demands in traffic on the network (e.g. video-on-demand,distance learning, videoconferencing...etc) as opposed to the PDH systems which usedproprietary (and often incompatible) technology to enable high-bandwidth links. In termsof reliability, SDH systems are also superior, incorporating automatic backup and repairmechanisms to address system faults as when they occur.


According to Queens University, Belfast, SDH has a number of advantages over PDH:

♦ Improves on previous 'DS-3' multiplexing standard♦ Provide a non-proprietary solution♦ Establish a hierarchy of digital standards compatible with European and US systems♦ Give economic access to low volume traffic♦ Supports more sophisticated services such as broadband ATM

"SDH allows operators to build networks with the capacity and flexibility that are neededto transport the new services that users want…Operators want to be able to providefeatures from one end of their network to the other so that they can offer a wide range ofrevenue generating services, thus realising a vital competitive edge. " - Alcatel

Table 1 summarises the set of signals and relates them to the T-carrier and E-carriersystems. The SDH standard in Europe and its equivalent in the US, SONNET, enables theefficient translation of these differing carrier systems.

Digital Signal Designator Data Rate DS0 Multiple T-Carrier E-CarrierDS0 64 Kbps 0 - -DS1 1.544 Mbps 24 T-1 -- 2.048 Mbps 32 - E1DS1C 3.152 Mbps 48 - -DS2 6.312 Mbps 96 T-2 -- 8.448 Mbps 128 - E2- 34.368 Mbps 512 - E3DS3 44.736 Mbps 672 T-3 -- 139.264 Mbps 2048 - E4DS4/NA 139.264 Mbps 2176 - -DS4 274.176 Mbps 4032 - -- 565.148 Mbps 4 E4 channels - E5

Box 9 Digital Signal X (DS0, DS1....DS4)

Digital signal X is a term for the series of standard digital transmission rates or levels based on DS0, atransmission rate of 64 Kbps, the bandwidth normally used for one telephone voice channel. Both the NorthAmerican T-carrier system and the European E-carrier systems of transmission operate using the DS seriesas a base multiple. The digital signal is what is carried inside the carrier system.

DS0 is the base for the digital signal X series. DS1, used as the signal in the T-1 carrier, is 24 DS0 (64 Kbps)signals transmitted using pulse-code modulation (PCM) and time-division multiplexing (TDM). DS-2 isfour DS1 signals multiplexed together to produce a rate of 6.312 Mbps. DS-3, the signal in the T-3 carrier,carries a multiple of 28 DS1 signals or 672 DS0s or 44.736 Mbps.

Digital signal X is based on the ANSI T1.107 guidelines. The ITU guidelines differ somewhat.


In context, a leased line for an SME in the US might be described as a T-1, 1.5Mbps line,on the other hand in Europe, a similar SME in Europe may purchase a leased line from itstelecoms supplier (Kilostream/Megastream lines from BT) and receive a 64kbps or an E-1,2Mbps leased line.

Different terminology and different levels of multiplexing, being the main differentials inthe characteristics of the leased line. ADSL and other broadband technologies are forecastto impact on such traditionally expensive leased lines.

With regard to SDH, STM-1* (Synchronous Transport Module) is a frame with a bit rate of155Mbps and is the basic element of the SDH network. However it is also capable oftransporting any PDH signal at <140Mbps. This performance is achieved by a proceduretermed 'mapping' which packs PDH signals into SDH transport modules. [*STM-4 622Mbps;

STM-16 2488Mbps]

"Synchronous networks must be able to transmit plesiochronous signals and at the sametime be capable of handling future services such as ATM…Terminal multiplexers are usedto combine plesiochronous and synchronous input signals into higher bit rate STMsignals…Plesiochronous and lower bit rate synchronous signals can be extracted from orinserted into high speed SDH bit streams by means of ADMs*" [*Add/Drop Multiplexers] – SDHPocket Guide, Wandel & Goltermann Communications

For the technically minded, the process by which the above transmission of PDH and lowbit rate signals are transported in 'containers' via SDH is described in Box 10.

How are PDH and ATM signals transported by SDH? Box 10

A special container (C-n) is provided for each PDH tributary signal. These containers are alwaysmuch larger than the payload to be transported. The remaining capacity is used partly forjustification (stuffing) in order to equalise out timing inaccuracies in the PDH signals. Wheresynchronous tributaries are mapped, fixed fill bytes are inserted instead of justification bytes. Avirtual container (VC-n) is made up from the container thus formed, together with the pathoverhead (POH). This is transmitted unchanged over a path through the network.

The next step of the formation of a complete STM n signal is the addition of a pointer indicatingthe start of the POH. The unit formed by the pointer and the virtual container is called anadministrative unit (AU-n) or a tributary unit (TU-n).

Several TUs taken together form a tributary unit group (TUG-n); these in turn are collected intoa VC. One or more AUs form an administrative unit group (AUG-n).

Finally, the AUG plus the section overhead (SOH) form the STM-n.

[SDH Pocket Guide, Wandel & Goltermann Communications, 1998]


In summary then, although PDH transmission is compatible with the main SDHtransmission network via the mapping and packing of STM-1 signals and although there issome loss of speed, this in practice is largely negligible on the current communicationssystem operating in the Highlands & Islands today. So although the PDH/SDH issue hasnot been a factor to date in the Highlands & Islands, it needs to be recognised that PDH isnot practically able to support newer digital services* such as ADSL which requires SDHinfrastructure to enable its rollout. [*Jimmy Duncan, IT Consultant, Shetland & Dr Andrew Muir, Mason

Communications]

The real issue for the Western Isles and many other parts of the Highlands is therefore theavailability of SDH in the trunk route infrastructure according to the above-namedconsultants that are xDSL compliant. THUS, formerly Scottish Telecom, have alreadyprovided an SDH network into the Western Isles as part of the UHI project and an155Mbps STM-1 capable microwave radio link, has allocated approx. 40Mbps bandwidthto Lews Castle College, with other customers being Iomart, InES and the Air TrafficControl service. It has also been indicated that the provision of On-Digital broadcastservices will also require an SDH architecture, hence providing possible furtheropportunities for investigation outside the scope of this report. This is already available inthe Western Isles and will thus provide an opportunity for further research,

It should be noted however, that the writer has found no evidence to suggest PDH is anabsolute constraint on ADSL services, after much background research on just such thistopic, and indeed on this very topic there has been conflicting viewpoints. So, in theabsence evidence in the literature read, one could conclude that PDH as a transmissionsystem is less optimal than SDH for broadband services but not necessarily prohibitive ofsuch services, but instead particularly expensive to implement and increasingly tricky tomanage as demand for new services increase. This is ultimately an upgrade problem for theincumbent. Although saying this, the replacement for SDH appears close to beingapproved after recent tests in Europe and the US. Dynamic Synchronous Transfer Mode(DTM) is the next generation bandwidth management technology designed to provide“everything over IP”.

"For broadband services typically based on ATM*, a number of techniques exist for high-quality routing over PDH networks. The characteristics of SDH, however, make it muchmore suitable for this application, because it offers better transmission quality, enormousrouting flexibility, and support for facilities such as path self-healing" [WebPro Forum 08/08/00- www.iec.org/]

*ATM (Asynchronous transfer mode) is a transport protocol technology. Technically, it is considered as being anadvancement of 'packet switching'. Similar to the packet switching used in data transmission (e.g. frame relay, TCP/IP),ATM integrates multiplexing and switching functions, and as a result is ideally suited to 'bursty' traffic in contrast tocircuit switching. Unlike packet switching, ATM cells are designed for high-performance multimedia networking e.g.integrated voice, video and data functions. ATM itself is not a physical layer. The ATM layer runs always above thephysical layer that can be anything like SDH, PDH, or xDSL.

Given the above background theory it is difficult to pinpoint any network specific problemin the Highlands & Islands that cannot be potentially overcome with appropriate funds,should DSL be the key recommended strategic broadband technology. As we shallconsider later in this report there are other options for which, arguably, much strongercases can be made given the present network condition and information gleaned to date.


At the base level, PDH lacks the flexibility of more modern networks in so far as it is by nomeans a straightforward process to provided new high speed services to customers. Themost common example used on the Internet by several commentators both academic andcommercial was that of one providing a theoretical client a 2Mbps leased line servicehalfway between two major services centres. In practice, on a plesiochronous network thiswould require the 140Mbps channel to be demultiplexed down to its constituent 64primary multiplexed signals to enable the 2Mbps channel to be identified and extracted andthen the channels would need be remultiplexed back up again to reconstruct a 140Mbpssignal. So where previously there might have been just a simple repeater between the twomajor service centres, there is now an expensive and complex mulitplexing/demultiplexinginfrastructure to meet the needs of a single customer.

"Obviously this problem with the "drop and insert" of channels does not make for veryflexible connection patterns or rapid provisioning of services, while the "multiplexermountains" required are extremely expensive." [www.businessakademie.com]

In summary then, "The PDH is based on asynchronous operation, i.e. there is no masternetwork clock. This makes it expensive to ‘drop and insert channels’. The SDH issynchronous so it is possible to extract and insert individual channels." [engineering.it-tallaght.ie] and in practice this latter feature means that it is a much more straightforwardtask to allocate bandwidth on demand to customers requiring new digital broadbandservices. In terms of cost there are also significant saving also to be made.

In view of the above then, the case for an SDH network in the present climate of changeand increasing demand for dynamically allocated network capacity over a PDH network isclear and if the Highlands & Islands are to advance via terrestrial based broadband servicesthen the case for such new investment is no less essential than it was in 1989 when HIEand BT invested over £20M in digitising the exchange network in the region. AlthoughPDH equipment is still widely available it must only be a matter of time until it starts tobecome obsolete, making finding spares and replacements difficult as well as costly.

If the unbundling of the local loop in July 2001 is to make any impact in the study regionthen a basic infrastructure capable of easily accommodating new broadband business andconsumer services at a minimal cost to encourage competition can be considered essential,particularly in rural areas where the subscriber base is sub-optimal in the first place.(However, it may be that instead of upgrading ageing infrastructure, there may be anopportunity for a fibre-based replacement programme, this being an issue to be consideredin the last chapter of this section.)

"The more efficient "drop and insert" of channels offered by an SDH network, togetherwith its powerful network management capabilities, will lead to greater ease inprovisioning of high bandwidth lines for new multimedia services, as well as ubiquitousaccess to those services. Thus, the simplification of the network, and the new flexibility thisbrings, opens up the potential for the network operator to generate new revenues."[www.rad.com]


In the interest of stimulating competition in marginal telecoms markets for new services ithas been suggested to the writer (in consultations undertaken to date) that this (PDH-SDHtransition) might be an issue for OFTEL to consider and action upon, to ensure theattainment of its goals related to local loop unbundling. Yet with the arrival of DTMappearing imminent it may be more appropriate to by-pass SDH network transmissionarchitecture and aim to ‘jump a generation’ and embrace the new IP-based DTM in linewith a total re-evaluation of the Western Isles’ telecommunications infrastructure regardingits suitability for broadband. This may be an issue to be picked-up again in a futurechapter.

Finally then, as intimated on the previous page, although xDSL as a technology providesmany potential benefits, it is by no means a straightforward solution to build a broadbandfuture upon in the Highlands & Islands in the present telecoms climate. As a fixed linesolution it may be initially considered more realistic than cable/fibre in the short termbecause of the geography of the area, lack of competing telecoms providers and lack ofpresent infrastructure, combined with a low and scattered subscriber base of hugely non-economic proportions for this particular technology. However, there may even be longterm options (e.g. innovative partnerships) here as well, which will be expanded upon in alater section. Nevertheless, as an overall solution providing ubiquitous access services, thismust surely be more likely from the wireless services of the near future and it is them wewill go on to discuss in the next section.


2Wire Inc. - DSL: What is it?- 2000 - www.2wire.com

ADSL Forum – ADSL FAQs – June '99 – www.adsl.com/

America's Network on-line Journal – Testing ADSL: The easier, the better – Dec. '98www.americasnetwork.com

Byte Magazine On-Line – Break the Bandwidth Barrier – Sept. '96 http://www.byte.com/

EDN on-line Journal - ADSL trims down with G.lite – Aug.'98 – www.ednmag.com/

Ericsson - Fast Lane Access Industry Magazine – 1998 - www.fastlane-mag.com/

International Engineering Consortium – ADSL – 1999 – www.iec.org/

International Engineering Consortium – DSL Testing – 1999 – www.iec.org/

International Engineering Consortium – DSLAM – 1999 – www.iec.org/

International Engineering Consortium – Internet Access – 1999 – www.iec.org/

Internet Magazine – Getting started with DSL – May 2000 – www.internet-magazine.com

Netspeed Inc. – Introduction to Copper Access Technologies – 1998 – www.netspeed.com

Paradyne Corporation – The DSL Sourcebook 2nd Edition – 1999 – http://www.paradyne.com/

SAS: White Paper – ADSL – Feb. 2000 www.sasi.com

Scientific American Journal – High Speed Data Races Home – Oct. '99 www.sciam.com/

Telecommunications Magazine On-Line – Taps and Coils: The xDSL Challenge – Aug. '98 –www.telecoms-mag.com

Telecommunications On Line – Rolling Along the DSL Trial – March 2000–http://www.telecoms-mag.com/

TTC – Solving SDH/PDH Network Timing Problems – 1997 – www.ttc.com

TTC – PDH Frequently Asked Questions – 1999 – www.ttc.com

University of Saskatchewan – Communication Systems & Digital Systems: Bridged Taps andBridge Lifters – 1998 - http://128.233.12.252/

Wandell & Goltermann – SDH Pocket Guide Vol. 1 – 1998 - http://www.wwgsolutions.com/

ZDNET – Enter DSL – 1998 – www.zdnet.com

+ Numerous WWW resources www.xdsl.com …etc

http://www.byte.com/

http://www.paradyne.com/

http://128.233.12.252/

http://www.wwgsolutions.com/


Chapter 3 Wireless Broadband: Satellite

3 An Overview of the Technology

Wireless Broadband solutions are perhaps the most obvious form of delivery for ruralareas in the Highlands & Islands currently on the market. Indeed just last year severalcommercial providers begun to offer consumer services to the home both in Europe andNorth America. A recent demonstration in Islay by BT also generated much interest in thearea, as has the more recent High-Ways Ltd offering in Inverness that promises to providean Internet via Satellite solution within the Highlands & Islands within the next severalmonths. These services, as we shall see, are very much a first generation of internet-over-satellite services that are experiencing only low but steady growth and are not evenconsidered by the industry as being a product/service with much growth potential.

As far back as 1945 science fiction writer Arthur C Clarke in an article 'The Future ofWorld Communications' described geostationary orbiting relay satellites on an equatorialplane, theorising their stationary appearance and noting that only three would be requiredto provide communications the length and breadth of the inhabited countries on earth.

In this article he also forecast the broadcast of TV services via this medium, at a time whenTV itself was in its infancy and when it was not even known whether radio signals couldpenetrate such a distance through the atmosphere. Clarke also accurately discusseddownlink frequencies, antenna receivers and theorised about 'photoelectric cells' to providethe required power. Arthur C Clarke then was the first person credited with the firsttechnical explanation of how future geostationary communication satellites would evolve.In 1964, the first geostationary satellite, Syncom 3 was launched, after being predicted byClarke 19 years earlier.

Broadband satellite receives only minor attention in its potential place as part of the'broadband Britain' of the future, even although services do already exist and existingcopper and cable networks have struggled to deal with subscriber capacity at such an earlystage in the UK's transition to a broadband 'Information Age'. Certainly for rural areas andideas related to social inclusion this is one particular technology that could address two ofthe main concerns raised throughout this report. Questions still remain however on thereliability and standards of service available at present and as with many new technologiesthere have been 'teething problems'. Nevertheless, according to the Scientific American on-line: "For up to one third of the population in the US and an even greater portionworldwide, satellite technology will not simply be a choice, it will be the choice."

Indeed, Microsoft in the US has recently (February 2000) announced an investment of$50M in partnership with Gilat Satellite Networks to provide the first consumer broadbandsatellite high-speed internet access service to its MSN subscriber service. In Europe asimilar service is already available via Europe Online providing both content and highspeed internet access across Europe via the Astra satellite at 19.2 degrees east.


However, this latter service is of a similar nature to the DirecPC service in the US whichstill relies on terrestrial copper connections for the uplink, a model which even the industryrecognises is never likely to generate anything more than 'niche' demand and is not amodel being replicated in the new ka-band broadband services being developed.

The very characteristics of rural areas transfer specific advantages to satellite basedbroadband solutions. Rural areas tend to be scattered with often very low subscriberdensities and as a result are not an attractive proposition to commercial communicationsoperators, yet such areas also suffer because USOs worldwide fail to incorporatebroadband as a basic requirement., as discussed in chapter 1. Such a situation will thereforemake any investment in, what the Americans would call, rural information infrastructure(RII), prohibitive.

All other broadband communication solutions for rural areas require not only requireinvestment at the client end but also in the delivery infrastructure (e.g. towers and basestations for the supply of microwave and cellular options) to and from the backbone (BT)network. Satellite options however are able to supply services to both rural and urban areasat a comparable price and this is the key advantage of this technology as the price ofsatellite broadband internet consumer services plummet as competition across thebroadband sector intensifies. Certainly, then from the providers point of view, which mustinclude consideration of a "…balance between cost, capacity and grade of service.." theimplementation of satellite-based subscription services would appear to be the most costeffective route to broadband internet access in rural areas.

Indeed, according to STM Wireless Inc. there are several key applications for whichbroadband satellite internet access can provide effective communications (refer toAppendix 5) these being mutlicast, distance learning, corporate applications, telemedicineand even web browsing. STM Wireless itself is rolling out three separate internetbroadband satellite services for SMEs, SOHO users and ISPs.

So what exactly are the options for rural consumers who live further than 5km from theirlocal exchange and are not served by a cable provider and are not able to attain 'line ofsite' delivery from alternative wireless services? Satellite has this unique niche in themarket and furthermore appears increasingly in sync with developing broadband internetcontent.

"Satellites have a certain unique advantage. They are unequalled for broadcastapplications such as the delivery of the same information to a large group of users. Amajority of the Internet applications in the future will be streaming, broad- and multicastservices such as playing audio or video." [STM Wireless Inc.]

3.1 The Geostationary (GEO) Satellite

There are two main variants of this technology that are worth further examination. Firstly,there are what is called Geostationary (GEO) satellites. This variant orbits the earthapprox. 36,000km above the equator and travels at the same speed as the earth's rotation.Because they travel at the same speed as the Earth's rotation they appear stationary to thenaked-eye. The service footprint of these satellites is impressive, each individual being


Box 11 Internet-over-Satellite To cover longer distancesinter-linked systems canrelay date prior to re-transmission.

"Bent pipe" satellites receive the data, amplify the signal and send back to the ground.

An ISP sends a message to a A rooftop dish receivessatellite operator's ground station the signal and processesvia a fibre-optic network. only data that is encoded with

The message is encoded the correct IP address.into a radio wave and beamedto satellites overhead.

In-home cabling then carries the signal to a PC. Return

transmissions are beamed back in a similar manner.

A total of just 3 satellites in this orbital plane can thus serve the vast majority of the Earth'ssurface, making such a solution attractive to service providers. In practice, a serviceprovider needs 8 satellites in orbit to provide a reliable service.

At the same time such satellites tend to require larger and bulkier antenna and are thusmore costly to manufacture and launch into orbit. They tend to have a lifespan of 10 years.

However, there remains one great challenge to geostationary satellite communicationsnetworks regarding their performance with internet based applications and content and thisis the latency effect, or time delay, between upload requests and download transfers ofinformation.

The delay effect between two so called 'earth stations' or communication access hubs is putat up to 250+ milliseconds on each leg of the journey. These requests for information(communication signals), for example, are sent to the satellite and then reflected back tothe other station(s) and on to the client. Refer to Box 11.

[Source: Scientific American]

In effect, such communication satellites can be thought of as being distant signal repeatersin the sky. For large downloads and streaming audio and video casts this is not much of aproblem, but for standard TCP/IP based internet browsing or on-line gaming which requirea significant amount of 'handshaking' between the client PC and remote server, then moreof a problem is experienced with the time delay or latency experienced.

However, as increasingly advanced signal processing has developed, this has gone someway to counter the enormous distances involved and delays encountered. There wouldappear to be a realistic prospect of such advances in radio signal transmission andprocessing leading to a much more usable service with only negligible delays in servicerequests. A further discussion on the technical limitations real and perceived will bediscussed later in this section, with several reference documents being contained in the


GEO Latency: Box 12

GEO round-trip latency can approach the half-second mark-about 10 times the latencyof a typical New York to California fibre hop. Round-trip delay already seenterrestrially as packets are sent, received and acknowledged. This is magnified in thejourney TCP packets must make to and from satellites orbiting at about 22,300 miles.This therefore limits the type of applications for which GEOs are suited. Joel Helpern,director of internetworking architecture for Newbridge Networks, says: "voice cannotlive with more than a quarter-second delay and prefers under 100 milliseconds."[Networking in the 21st Century: The Sky's The Limit]

3.2 Low-Earth Orbit (LEO) Satellites

Low-earth orbit (LEO) satellites orbit the earth at distances normally between 500-1500km. Due to their closeness to the earth they must travel very fast to defy gravitational-pull and travel at 27,500km per hour (17,000 miles per hour) orbiting the earth in between90-120 minutes. The footprint of such satellites is obviously significantly smaller thanGEOs and may be in the range of only 3000 to 4000km. As a result any communicationssolution using such satellites requires a large number of satellite units in a range ofinclined orbits. LEOs require 48+ satellites in orbit to enable the commencement of areliable service

Indeed, as they only remain visible for a period of 20 minutes before moving below thehorizon, they need to be able to switch their work over to another satellite in the same oradjacent orbit. Such satellites also suffer from the effects of ‘atmospheric drag’ that acts togradually degrade their orbit planes. They only tend to have a lifespan of 5 years.

Obviously, there are advantages with data transmission due to the shorter distancesinvolved and resultant reduced delay in service requests (approaching that of fibre), but totrack and communicate with such fast moving objects, requires sophisticated antennas andconsequently adds to costs. In addition, with regard to LEO constellations, it is not knowfor certain how well they will be able to handle 'jitter' (refer to Box 13). In a low orbitsatellite constellation any given transmission will be received and then transmitted on byseveral satellites. However, as this transfer of the information is not a foregone conclusionwith 'jitter' entering the equation, such a scenario could potentially lead to the TCPmanagement issues outlined later in this chapter with particular reference to GEO clusters.

LEO Jitter: Box 13

One of the great unknowns about LEO constellations is how well they will be ableto handle variations in delay, otherwise known as variable latency or jitter. A low-orbit satellite may spend only tens of seconds over a certain geographical area,which means a given transmission may be picked up and passed on by multiplesatellites. And because satellite orbits are typically maintained within a range oflocations, rather than one precise location, the pieces of a single transmission canbe subjected to varied delays and subsequent packet reordering. [Networking in the21st Century: The Sky's The Limit]


3.3 Medium Earth Orbit (MEO) Satellites

Medium Earth Orbit (MEO) satellites lie somewhere between the previous two forms andorbit at height of approx. 10,000km above the earth. MEOs literally occupy the middleground, requiring 20 satellites, are 'in-sight' for 2-4 hours, but tend to suffer from higheramounts of radiation from the 'Van Allen belt'. They go some way to both addressing thelatency problems of the GEO clusters and 'jitter' problems of the LEO clusters, staying 'in-sight' for several hours.

There are two other factors of note with regard to orbiting satellites and this relates to their'inclination' and 'eccentricity', the former being carefully calculated to maximised the levelof coverage provided by multiple satellites and the latter designed to maximise availabilityover a particular region of the world.

Ultimately though, the GEO network of satellite communications is the most sought afterin terms of planned developments over the next several years and perhaps the main reasonrelates to cost and market uncertainty. Teledesic's (backed in part by Bill Gates) LEO plansfor example are to cost in the region of $9bn.

"Typically the GSO environment may require initial investment (and therefore marketexposure) of under $200 million whereas the LEO or MEO environment involves initialexposure well in excess of $1 billion." [www.spotbeam.com]

3.4 Frequency and Spectrum

With regard to providing user access to such communication networks, there are threeprimary methods:

1. Frequency Division Multiple Access (FDMA)2. Time Division Multiple Access (TDMA)3. Code Division Multiple Access (CDMA)

FDMA divides the available spectrum among all users of the service by dedicating aparticular portion of the spectrum to each user. FDMA can be used for either analogue ordigital signals. TDMA on the other hand, assigns each user a particular time frame withhis/her data bits stored in a buffer and burst to the satellite using all of the 'transponderbandwidth' during a repetitive time slot. TDMA is normally digital in nature. Finally,CDMA modulates the signal to be transmitted via what is termed a 'pseudo random noise'(PRN) code, which spreads the signals over the full bandwidth available, with all userseffectively using the same spectrum. CDMA is sometimes referred to as 'spread spectrum'.At the receiving end 'autocorrelation' reformats the signals from all users simultaneously.CDMA offers the potential for a high capacity communications network.


BOX 14 SATELLITE COMMUNICATION SPECTRUM

In practice, some of the existing suppliers of satellite communications such as the nowdefunct Iridium corporation used a combination of both FDMA and TDMA. Alternatively,others such as 'Globalstar' use an advanced combination of FDMA and CDMA. In thislatter scenario the available spectrum is split into a series of 1.25MHz sub-bands. Thisallows all users of the services to simultaneously utilise each sub-band via CDMA.

Frequency is another key consideration when considering the effectiveness andappropriateness of satellite communications systems, particularly when looking forwardsto future broadband services. A list of the main licensed satellite frequencies is listed inBox 14:

L-band = 350 MHz to 1.55 GHz

S-band = 1.55 GHz to 5.2 GHz

C-band = 4.2 GHz to 6.2 GHz


K-band = 10.7 GHz to 36 GHz

Ku-band = 10.7 GHz to 15.7 GHz

Ka-band = 17.7 GHz to 33 GHz


Q-band = 36 GHz to 46 GHz

V-band = 46 GHz to 56 GHz

W-band = 56 GHz to 100 GHz


Box 15 Analogue Vs Digital

The frequency of new services are chosen on the basis of performance and increasingly, onthe availability of spectrum. Many of the new broadband services in development andplanning are proposing to use Ka-band and V-band frequencies. This without doubt raisesissues for areas such as the Western Isles of Scotland. At high frequencies rain attenuationbecomes a significant factor in the provision of reliable services.

As frequency increases, the wavelength of signals decrease near to the size of actualraindrops i.e. approx. 1.5mm and this results in such signals (electromagnetic waves)becoming susceptible to the effects of scattering and absorption – attenuation of the signalresults. In addition, a further effect can occur as a result of rain at the 'earth terminal' andthese can provoke a further degradation of the signal of a similar magnitude. The groundantenna can experience increased 'system noise temperature' because 'the antenna seewarm rain at room temperature instead of the cold sky'.

Combined, these effects did not initially inspire much confidence in the reliability of suchbroadband services in the study region, due to the level of rainfall experienced annually.An availability rate of 98%, new broadband services may appear satisfactory but in actualfact translates to between 7.3 days (175.2 hours per annum) lost communications, whichfor many businesses in particular, if falling within the working day, may proveunacceptable.

It will "…not be possible to achieve the same availability at Ka-band and V-band as weare accustomed to achieving at C-band or even Ku-band." [www.satellitetoday.com]

"A sinusoidal electromagnetic wave has three properties: amplitude, frequency and phase.Any one of these parameters can be modulated to convey information. The modulationmay be either analogue or digital. In analogue signals, the range of values of a modulatedparameter is continuous. In terrestrial radio systems, for example, AM and FM channelsrepresent amplitude and frequency modulation respectively. In digital signals, themodulated parameter takes on a finite number of discrete values to represent digitalsymbols. The advantage of digital transmission is that signals can be regenerated withoutany loss or distortion to the baseband information. A fundamental parameter in digitalcommunication is the ratio of bit energy to noise density Eb/N0. This parameter dependson three characteristics: the bit error ratio (BER); the method of modulation; and themethod of coding…" [www.satellitetoday.com]

The ultimate design of satellite systems varies in almost every instance to be discussed andwill inevitably result in a wide variety of alternatives and tradeoffs. It may be that aparticular set of choices will reflect a particular design philosophy or experience in someother field of communication e.g. Teledesic and Craig McCaw.

As far back as 1993 NASA demonstrated Ka band satellite communications success atpenetrating through heavy rain clouds using its Advanced Communications TechnologySatellite (ACTS). This 'powerful' satellite utilised: "..on-board processing and spot beams"


to enable effective communications under such climatic conditions. Previously this wasconsidered to be a significant constraint on such high frequency services.

These new more powerful Ka band satellites will allow high frequency narrow radiobeams to be transmitted to ever smaller customer receiving dishes (although positioningwill require to be increasingly more accurate), although the LEO antennas will need to besignificantly more sophisticated to be able to track these fast flying satellites, and as aresult be more costly.

Over the next 10 years it is estimated that over 500 dedicated broadband internet satelliteswill be operational in the Ka band. Fully operating Ka band systems will not be availableto the broadband consumer until 2002. Until then (and possibly longer outside the US),hybrid services using a mixture of technologies will prevail.

According to the Gartner Group Consultants, 7% of broadband business's bandwidth inthe US will be supplied by the new breed of broadband satellite systems by 2005,approaching 15% of market share several years later.

In terms of performance, it is important to remember that apart from costly fibre-to-the-home, satellite networks can provide the highest throughput speed of all its competitors.

In an age where speed is becoming increasingly important to the consumer/client, then acompetitive advantage is apparent, if not now in the near future. Indeed, speed demandsover the internet are widely quoted as doubling every year. To date, this demand remainsfor the most part unsatisfied.

In the global sense, any telecommunications company looking for a universal globalpresence without having to rely of foreign or competitor's ground-based infrastructure toprovide high speed communications bandwidth is investing in satellite solutions.Obviously this does not apply to the first generation Europeonline DVB-based (Eurosky)and DirecPC hybrid satellite internet services present today. These cannot be considered tobe true broadband delivery systems and do still rely on user's terrestrial copper-wireconnections for upload requests, as mentioned earlier.

Box 16: Case Study

SSI Micro is the largest ISP in the Northwest Territories in Canada and provides a frame relaysatellite network. "IP over satellite is not the issue. It works…end of story. The issue is what kind ofdata service do you need for your application." In communities in areas such as Baffin Island morethan 25% of the population are now on-line through such IP over satellite connections. The networkprovided uses shared outbound transmission and independent 'return paths' to the hub. Their remote'earth stations' use 2.4M antennas with 10W transmitters and ACT frame relay equipment. SSI Microhas just invested in an extended network covering a much greater range in the Artic. This newernetwork is designed around multiple transmit hubs which are in the C-band. At each access site thereare between 2 and 10 demodulators and these as a result make up what is known as a full meshnetwork capable of download speeds of up to 2Mbps.


In any case there is a shortage of spectrum available. A UK venture EasySat InternetService was reported as being unable to expand in December 1999, due to a shortage ofspectrum available from Eutelsat's 13o East 'Hotbird' orbit. In the US, users of the HughesCorporation's DirecPC (now available in Europe) have been reported as leaving the servicedue to bandwidth constraints. In short there is a clear requirement for additional Ka-bandspectrum in the next several years if broadband internet services in Europe and elsewhereare going to be realised. The US, as we shall see in the next section is without doubt in thelead in this area of telecoms activity. Although, for example, in 2002 Eutelsat's nextsatellite (Hotbird #6) will be able to provide a combination of Ku and Ka-band spectrum:

"The Ka-band payload will deliver fully interactive IP and DVB services to homes andsmall businesses equipped with transmit/receive antennas as small as 60 cm in diameter.When combined with SKYPLEX, broadcasting from small transmitting terminals, or"micro-broadcasting", becomes possible for the first time. This underlines EUTELSAT'sstrategy of addressing the multimedia market and facilitating the development ofinnovative interactive digital applications." [www.eutelsat.org]

Similarly, in the US, such combinations are going to be used to provide the firstfunctioning broadband services in an ever increasing competitive market:

"The $1.6 billion CyberStar program will use both Ku-band and next-generation Ka-bandsatellites, pushing its service date ahead of rival systems such as Teledesic LLC, LockheedMartin’s Astrolink system, the Alcatel-led SkyBridge and Hughes Communications’Spaceway project." [www.satellitenews.com]

It appears that almost all current satellite service providers and indeed telecom suppliersare now planning new Ka-band spectrum satellites over the next 5 years, with a predictedorder book of 1,300 worldwide during this time period. The recent bankruptcy however ofthe Iridium satellite phone network initiative which had a share price of $61 in 1998,falling to only $6 in July 1999, has without doubt set back many of the plannedconstellations as investors have become nervous of the large amounts involved and thepotential for disaster if their target market fails to materialise.

The vast majority of the new generation systems (when launched) will also include someform of on-board processing and switching (in effect a network management system) toimprove and enhance current broadband data transmissions, enabling full two-way servicesfrom antenna of a comparable size to those used today for Sky TV.

Such new satellite networks will also used 'pencil' spot beams: "The prime method ofusing the available spectrum efficiently is to use multiple "pencil" spot beams, eachcovering only a small area of the earth. This allows frequency re-use in much the sameway as a cellular phone network re-uses spectrum." [www.spotbeam.com]. This use of multiplespot beams requires both the switching and on-board processing of data requests betweenthe downlink and the uplink to make such high capacity data communications possible.

Finally, another key advantage of the Ka-band spectrum broadband satellite network is thatbecause of the above-mentioned technology advances, users will be able to pay per usage,


satellite service users had to lease permanent segments of bandwidth, making such servicescostly for consumers and only really viable for large businesses and broadcasterstransferring regular and large amounts of information.

This new high frequency spectrum is seen as the new convergence opportunity in thetelecoms, computing and broadcasting industries. According to DTT Consulting(www.spotbeam.com):

"The Ka-band satellites offer fundamentally different services from conventional communicationssatellites. Each Ka-band satellite will carry what is, in effect, a form of telephone "switchboard-in-the-sky". This will allow the satellite to operate like a telephone network - offering point to pointcircuits to both business and individual users at a cost far lower than available via satellitetoday…However, unlike a normal telephone network, such satellites will be able to offer all endusers a wide variety of services from simple narrowband through to broadband applications."

From the European perspective however, such Ka-band advancements are notapparently being embraced in the revolutionary way they are across the Atlantic andthe DTT Consulting report (1999-2000) concludes: "Europe remains way behind theUnited States in developing the appropriate satellite technology (on-board processing, switching,antennas) and ground stations (phased array antennas) needed for the Ka-band environment."

As we will see in the next section this has worrying implications given the extent ofinvestment ($bns) and competition occurring in the US market where it seems inevitablethat there will be a period of amalgamations and mergers in a bid to survive, as access tocontinuing finance becomes an increasingly important criteria in advance of infrastructurecompletion and service revenues commencing. It is accepted even within the US industrythat by 2002 there is little realistic chance of more than 3 or 4 of the main players survivingthe competition to bring global broadband satellite internet services to the masses.

Finally, in terms of industry rollout, it seems clear that the developing Ka-band LEO andmaybe MEO networks will have a distinct advantage in terms of the delivery of high speedinternet based services, although hybrid services which also use GEO satellites and the Ku-band will be initially competitive.

It is interesting to note that although no one 'killer' application is foreseen at presentoutside of providing 'convergent' interactive services. High speed internet access to themasses is without doubt the perceived starting point. This being the case, then theimplications for rural areas are of particular interest.

3.5 The Development of Satellite Broadband in Europe & North America

In the European context, there are 3/4 main players all with plans for Ka-band servicesscheduled for between 2000 and 2002.

Soci‚t‚ Europ‚ene des Satellites (SES), the operator of the Astra satellite system will fromthis year (Astra satellite 1H) and next year (Astra satellite 1K) have satellites in orbit withthe new generation of Ka-band transponders on board. A typical GEO satellite will carrytwo transponders for one or two 'broad' frequency bands (29.5-30 GHz/18.3-18.8 GHz in


responding to signals automatically. This basic signal relay function at the core of suchcommunications satellites is now to change as the new generation of broadband satelliteswill, as stated earlier perform new signal processing functions, switching and redirectingamongst a large number of spot beams in most instances. These new satellite transponderswill almost certainly allow new two-way interactive broadband services via satellite.

BOX 17 SATELLITE TRANSPONDERS

A typical transponder consists of various components that perform four basic functions:

• amplify the incoming broadband signal and filter out noise• separate the channels contained within the broadband signal• amplify each channel• recombine the channels into one broadband signal for retransmission

Source: http://www.hughespace.com/uplink.html

"A typical on-board processing system will implement some or all of the functions that areperformed by the ground-based transmitter and/or receiver in a transparent satellite system. Thesefunctions may include recovery of the original information on-board the satellite and processing ofthis information into a different carrier format for transmission to the ground. Any transponderthat recreates the carrier in this way is usually referred to as a regenerative transponder.”

"SES has for some time operated an Astra-NET service, similar to Eutelsat’s Easynet usinga terrestrial return link, but the new service marks the introduction of genuine two-wayinteractivity via satellite…The new Astra Return Channel System (ARCS), set to becomeoperational this year (2000). The system will use DVB/MPEG-2 for the forward path,while the return path uses multiple-frequency TDMA. Initially IP will be employed, butlater ATM will be introduced to provide bandwidth on demand...

SES is now working towards a next generation system; this will combine regional GEOsatellites with a global GEO/LEO constellation."

Eutelsat, - The 'Hotbird' network or constellation presently contains 5 GEO satelliteswhich broadcast analogue and digital TV as well as radio and 'multimedia services'throughout Europe, North Africa and the Middle East. In 2002 however this is due to becomplemented by a sixth satellite (Hotbird 6) which will include 4 next generation Ka-band transponders with on-board processing form Eutelsat's own Skyplex technology.These new Ka-band transponders will have a Western European footprint. These Ka-bandtransponders will also be complemented by Ku-band transponders to address developingcapacity problems of the current digital broadcasting industry on the European continent.Eutelsat has been reported as having plans to have as many as 23 Ka-band satellites in orbitin the future as demand for interactive broadband bandwidth increases.

"The Ka-band service will deliver fully interactive IP and DVB services to homes andsmall businesses equipped with transmit/receive antennas as small as 60 cm in diameter.When combined with SKYPLEX, broadcasting from small transmitting terminals, or"micro-broadcasting", becomes possible for the first time. This underlines EUTELSAT'sstrategy of addressing the multimedia market and facilitating the development ofinnovative interactive digital applications."

Source: www.eutelsat.org/

http://www.hughespace.com/uplink.html


Euroskyway, is backed by Alenia Aerospazio and two dozen partners, and will eventuallycomprise five dedicated GEO satellites, the first of which should be launched this year(2000) – The related services from this constellation are due to be rolled-out during 2001in Western Europe. The five key satellites will operate in the Ka-band and the transponderswill incorporate next generation digital on-board processing. The Uplink and Downlink areexpected to operate in the 20-30GHz frequency band and customer bandwidths areexpected to be offered at 144Kbps, 512Kbps and 2Mbps on new micro-antennas in the 0.5-0.7M range. The completed constellation is expected to provide services to a footprintcovering Africa, Eastern Europe and Asia, as well as Western Europe.

"With EuroSkyWay, high-speed Internet connections, video conferencing with the office,and even shopping will be possible via simple satellite terminals using small antennas. Inaddition to fixed applications, the small EuroSkyWay terminals can be installed in carsand aboard aircraft. EuroSkyWay will offer "bandwidth on demand" to service providerssuch as telecommunications operators, TV broadcasters and Internet access providers whowant to expand their infrastructure and reach new customers."

Matra Marconi Space initiative called WEST (Wideband European SatelliteTelecommunications) has unveiled proposals to invest $2bn in a new generation Ka-bandconstellation comprising of two GEO satellites and nine MEO satellites with near globalcoverage.

Services are anticipated to be rolled out in the first instance in Europe in 2001, beingextended worldwide by 2003. Advanced bi-directional services to the home are to beprovided offering a 2Mbps uplink and a 10Mbps downlink. Antenna will be in the 0.6-1.5M range and support 99.7% availability for consumers and businesses alike.

"Matra Marconi sees WEST as a terrestrial alternative for serving areas lacking interrestrial infrastructure as well as a way to quickly create corporate or otherinfrastructures. Matra Marconi envisions its GEOs as best suited for data broadcasting,electronic com merce, home shopping and its MEOs as best suited for distance learning,collaborative working, teleworking, LAN-to-LAN interconnection, and telemedicine.Online services fall somewhere between the GEO and MEO offerings."

As yet only limited information exists on the finalised nature of these developing Europeaninitiatives in the Ka-band frequency and the timescale for the introduction of consumerbroadband two-way multimedia convergent services, with the lack of recent pressindicating some potential slippage in the timescales mentioned above. Initial serviceshowever, will not likely be the full satellite broadband product, although being in manyways comparable. Time to market has resulted in many trade-offs in the technologyemployed. For example most use existing (tried & tested) GEO technology with added on-board processing for Ka-band services, rather than more complex low latency LEOclusters, although plans to upgrade service on an on-going basis in response to demand arearticulated. Many of the planned US systems are more ambitious in initial deployment,


with the possible exception of the latter example above, which plans new and innovativelaser links for intersatellite communications.

On the North American front there are also 3 or 4 main initiatives aimed at bringtrue multimedia broadband convergent services to the high speed internet market.

Teledesic, with backing from Bill Gates (Microsoft), US cellular phone pioneer CraigMacCaw, a Saudi prince and Boeing and Motorola, it is claimed that their network will bethe first truly global broadband internet service delivering both voice and data services ableto fully serve rural areas and developing countries. The telecoms market has a place forthis product according to Teledesic in a market worth $730 billion in 1998 growing tomore than $2 trillion by 2010. Certainly, one of the key advantages of the Teledesicproduct will be its ability to bypass local network bottlenecks in remote and rural areaswhere existing terrestrial suppliers have skimped on bandwidth availability due toinvestment considerations (i.e. return to shareholders) related to the low user ratio andrelated revenue streams available in relation to the cost of upgrading the network

“Telemedicine, distance learning, electronic commerce and videoconferencing are just afew of the new, bandwidth-dependent applications that are changing the way businessesand individuals interact. Teledesic will facilitate these and other applications with highlevels of quality, security and reliability.”

Teledesic's plans include a 288 LEO-satellite system to operate in low earth orbit, using theKa-band frequency for both uplink and downlink segments as well as for its intersatellitelinks. Initial plans incorporated an 840 strong network of LEO satellites, although this hassince been reduced significantly. Cost estimates (as mentioned earlier) are in the range of$9 billion. Quoted data rates are given as up to 64 Mbps on the downlink and up to 2 Mbpson the uplink.

Spaceway, is backed by the Hughes Space and Communications Company Corporation(current backers of the DirecPC internet satellite service in the US and Europe) and hasrecently secured $1.4bn form parent company General Motors. Its full operational capacityis scheduled for 2002 and it will operate in the high frequency Ka band. The satellitecluster itself will include 8 GEO satellite with an anticipated uplink speed of 6Mbps and108Mbps on the downlink: The system will employ innovative on-board digital processors,packet switching and spot beam technology to offer point-to-point (or full-mesh)communications, which will offer direct connectivity without routing through a hub, aswell as broadcast capability throughout the service area.

"With Spaceway, large businesses, telecommuters, small office / home office (SOHO) usersand consumers will have access to two-way, high-data-rate applications such as desktopvideoconferencing, interactive distance learning and Internet services operating at speedsfaster and at costs less expensive than those provided by such current land-based systemsas frame relay... The satellite system will employ innovative, on-board digital processing,packet switching and spot beam technology to offer single-hop connectivity throughout theservice area regardless of location. This connectivity, for example, will allow customers tocommunicate directly via satellite with other customers without having to go through aretransmission service or hub. It also permits direct, full broadcast capability throughoutthe service are." [www.hns.com/news]


SkyBridge LP is backed by Alcatel and its partners and shareholders are: Boeing, LoralSpace & Communication, Litton and EMS Technologies of the United States; COM DEVof Canada; Mitsubishi Electric, Sharp and Toshiba of Japan; THOMSON multimedia,CNES and SNECMA of France; SRIW of Belgium; Starsem of France and CIS.

The SkyBridge system is a LEO satellite network that provides end users access to highdata rate multimedia services. It is composed of two main subsystems:

1. The Space Segment which is owned and operated by SkyBridge LP,

2. The Terrestrial Segment composed of gateway earth stations, which will be owned andoperated by the Regional Service Providers, and SkyBridge user antennae/terminals,which will be owned or leased by customers.

SkyBridge will use a constellation of 80 satellites in a "bent-pipe" architecture in the lowerKu band, orbiting at an altitude of 913 miles (1,469 km) with an inclination of 53°. Thelow earth orbit utilised allows the minimal latency times – possibly as low as 30milliseconds, this being required for the provision of real-time interactive services.Approximately 200 gateway stations are planned for worldwide coverage. Each gatewaywill have a 234 miles radius (350 km) coverage.

The 200 'Gateway' stations planned will interface with the existing terrestrial networkthrough an ATM switch, ensuring seamless integration into these networks. Users - eitherbusiness or private individuals, companies, factories, hospitals or schools - will beequipped with low cost terminals ($700 for a residential terminal).

"Seen from a user terminal, several satellites are always visible in the sky, and dependingon the geographic location of the terminal one or several satellites can be used to connectthe terminal with the corresponding gateway. To achieve this connection over a gateway,each satellite forms a spot beam. This spot beam covers a fixed area on the earth, which iscalled a "gateway cell."

Astrolink The Astrolink satellite cluster will consist of up to nine GEO satellitesdistributed among five separate orbital positions. Astrolink will initially begin service with4 satellites and later expand as demand increases. Operating in the Ka-band frequency (20GHz to 30 GHz), each satellite will have a powerful telecom switch onboard with acapacity of more than 6 Gbps. Each satellite will also include 44 "spot beams," with eachone capable of delivering service to a large defined area on the surface of the earth.

Together, these spot beams will cover 92 percent of the world's telecommunicationsmarket. Each Astrolink satellite will also have up to 12 point-of-presence (POP) beams,which provide large-scale interconnection with terrestrial facilities.

The Astrolink system will be able to provide:• data, video and voice services that support business applications;• interactive or two-way high-speed connections• point-to-point service, as well as multicasting service


"Using the asynchronous transfer mode (ATM) protocol, the Astrolink network will be ableto accommodate multiple types of data, video or voice traffic. ATM's ability to guaranteequality-of-service levels has led to its widespread adoption by the telecommunicationsindustry. In addition, ATM makes it possible to bill customers for their actual networkusage if they so desire. By paying only for the bandwidth they use, when they use it,Astrolink customers will achieve significant cost savings."

In summary, the next generation of Ka-band broadband satellite services in both NorthAmerica and Europe are advancing with investments of 10s of billions of dollars, in viewof the belief that next generation satellite services will secure 10-15% of the broadbandmarket between now and 2010. For rural areas the provision of two-way interactivesatellite broadband services that negate requirements for terrestrial 'local loop'infrastructure, is anticipated to be a significant advancement.

Indeed looking to the future, the bandwidth of such networks will be unsurpassed withinthe broadband market, with the exception of Fibre-To-The-Home solutions and there canbe little doubt that future demand for bandwidth will continue to grow at exponential ratesand in this respect broadband satellite will be a true future competitor.

The billions being currently invested in such systems by some of the world's largest andmost successful companies is testament to this belief, as are the terms used to describe suchnew technology - "multimedia satellites", "ATM satellites", "broadband switched" and"broadband interactive satellites".

Presently such new communication networks are on course to be available at the same timeor in advance of the new 3G UMTS wireless solutions based around broadband radio2Mbps communications which are due to become active in 2003. Competition isanticipated to be fierce to entice the rural consumer/business not served by Cable or ADSLand this will undoubtedly ensure competitively priced subscriber services.

TCP/IP Issues related to Geo Latency & Broadband Internet via Satellite

There appears to be several problems inherent within TCP/IP networks which limit theperformance of high latency broadband satellite applications and numerous research taskforces and forums were set up during the last decade in advance of predicted internet basedsatellite networks. Again, as with so much within this dynamically changing industry thereare presently varying views on how successful the eventual services to be provided will beable to perform. It is clear however that several key modifications to the standard TCPprotocol look likely as being adapted in advance of such services commencing. Thesemodifications being specifically aimed in most instances at addressing high latencyperformance issues with TCP.

For some applications (e.g. interactive gaming), it would appear that irrespective of suchmodifications to the TCP standard, latency issues will not be overcome and for others (e.g.


Nevertheless, many of the large scale investors in the satellite broadband networks of thefuture are confident that by the rollout date predicted for such new services, the majority ofthe technical issues will be addressed. The range of these issues and limitations “IP-over-satellite is subject to a number of adverse conditions that can have a detrimental impact oneffective throughput rates and satellite network efficiency. Bit error rates, congestion,queue management, Window size and buffer status can all have a serious impact on theoverall IP-over-satellite performance curve.” [www.mentat.com] are the subject of an on-going research effort that is outlined below. In addition, companies such as Mentat Inc.have been developing alternatives to TCP/IP such as its high performance Sky X Protocol.

In general terms the main problem relates to TCP interpreting noise and latency on thesatellite transmission network as congestion and as a result slowing data packettransmission in instances where it is not optimal to do so, re-transmitting data packets at aslower pace. In addition, the adaptation to change in the conditions in the network by TCPis limited itself by the round trip time in the system (i.e. the latency involved in sending apacket of data and receiving back its acknowledge). Furthermore, once these problemshave been overcome there is also much delay in increasing transmit rates back up to theoptimal level. On low latency, low noise terrestrial fibre, coaxial and copper basednetworks for which the standard TCP was designed, its adaptations to congestion work fastand effectively, not so on satellite based transmission networks.

One of the main culprits within the TCP standard is an algorithm used to addresscongestion issues and this is called ‘slow start’. In opening a connection TCP tests thenetwork for the optimal transmission speed available by sending an initially small amountof data through the network, which when acknowledged generates the next burst which is50% larger than the previous. This process slowly increases the TCP ‘Window’ size asdata sent is received successfully and related acknowledgements received in return. Thisprocess continues until congestion is encountered whereupon the window size (usuallyinitially about 512 bytes) decreases by 50%. If no further congestion (i.e. packet loss) isexperienced the process of window size adaptation upwards begins again to the maximumsize.

Obviously then if satellite networks with high bandwidth require large windows, but thesewindows keep reducing due to noise and latency then network bandwidth efficiency willremain low.

In instances where data transfers are small or bursty on high bandwidth terrestrial networksor high latency satellite networks then it is clear that TCP will only on very rare occasionsenable full bandwidth speed to be utilised. Hence, in many instances ‘slow start’ willrestrict optimal traffic flows on a WAN.

Any loss of packets results in the downsizing of the TCP ‘Congestion Window’ whichresults in less amounts of unacknowledged data being able to be handled in the networkconnection.

This smaller TCP window then, limits the bandwidth of the data stream and initiates the re-


Recent research has thus been aimed at increasing the initial size of the congestion windowused by TCP and a new format of TCP called TCP-LW has become increasingly utilised toincrease performance over satellite networks. Standard TCP operates with a maximum‘Window’ size of 64Kb, but more normally 32Kb. Yet:

“To maximise bandwidth utilisation in a satellite network TCP needs a much largerwindow size…on a satellite link with a round trip of 0.8 seconds and bandwidth of1.54Mbps, the theoretical optimal window size is 154Kb…” [www.iif.hu/]

A recent study has found that at SDH (OC-3) speeds of 155 Mbps it takes about 11seconds to get up to speed on a GEO link with large windows, 4 seconds on a LEO, and 2seconds on a LAN. In the first 11 seconds only 20Mb was found to have been transferredvia the GEO satellite link, a significant initial performance loss, particularly when relatedto short, ‘bursty’ type data traffic.

TCP-SACK has been another response to satellite latency and noise issues that aremisinterpreted by standard TCP/IP networks as congestion. In higher bandwidth highlatency networks, a packet loss may be followed up by further successful datatransmissions.

Irrespective of this, standard TCP will timeout and all later data will also be discarded andre-transmitted through a smaller ‘window’ at a lower rate, as the timeout error will havebeen interpreted as congestion in the system. TCP-SACK (SACK= SelectiveAcknowledgement) however is more explicit in its approach and generation ofacknowledgements and as a result enables the retransmission of the corrupt segment onlyvia the network, hence helping to maintain overall system bandwidth.

Other variants of TCP such as T (Transaction)/TCP, which is designed to reduce the initiallatency inherent to TCP by bypassing three-way handshaking conventions and TCP‘Slowstart’ by using cached information from previous connections on the condition of thenetwork. This may enable a rapid initial gains in speed. TCP Vegas is a method by whichthe round trip time of data is monitored and as performance in the network reduces, areduction in the congestion window is stimulated in advance. Similarly, as the round triptime decreases again the window size can be again increased in advance of the standardversion protocols and algorithms.

This monitoring of the network reduces packet loss significantly and as a result keeps incheck the time consuming congestion adaptation processes in the standard version.

Lastly, there is also a method referred to as TCP Spoofing whereby prematureacknowledgements are made by higher latency networks such as GEO satellite networks inadvance of the real acknowledgement from the receiver and this deceives TCP intoincreasing window size via the ‘Slowstart’ algorithm by making in think it is operatingover a very low latency network.


BOX 18 MOTOROLA'S APPROACH TO GEO LATENCY AND TCP/IP ISSUES

When the real acknowledgement is receive it is suppressed to avoid duplication, if it doesnot arrive at all, then an eventual timeout stimulates a retransmission of the missing datasegment.

Such research and modifications are still maturing and in February 2000 the InternetEngineering Task Force’s TCP Over Satellite Working Group reported the next generationof TCP modifications to enhance TCP/IP traffic for satellite communication networks “..tobetter utilise the bandwidth provided by long-delay satellite environments.”

The combination of the above enhancements to TCP/IP to address high latency and highnoise broadband satellite communications has also been recently complemented bymodifications to the HTTP standard called HTTP 1.1 which is optimised for high latency,high bandwidth networks and reduces web page loading times to a level comparable withterrestrial broadband connection networks. Nevertheless, whether the combination of suchtechnology advancements can be achieved to a sufficient level to enable videoconferencing applications remains to be seen, although some within the industry wouldcontend that this already possible.

Nevertheless, it should be noted that many providers on the other side of the Atlantic havealready staked and continued to stake billions of dollars of next generation broadbandsatellite solutions that widely incorporate GEO constellations. These new systems are alsoforecast to have reduced noise and use error correction systems, giving them furtheradvantages over existing solutions.

Motorola…plans to provide dual-use terminals reportedly costing $750 on the low end that let the userchoose whether a given application is to be sent to a LEO or GEO satellite. The traffic will be subsequentlysorted at the NOC (network operations centre) using a specific algorithm for that purpose, with latency-sensitive applications sent to LEOs and broadcast and multicast applications targeted to GEOs. In the air, thetraffic will move from LEO to LEO or up to a GEO and back down again.

Motorola is planning a hybrid system, says Barry Bertiger, corporate vice president and general manager ofMotorola’s Satellite Communications Group, since GEOs tend to limit the speed at which TCP/IP can be run.“Those applications that will be Internet types of applications, or quasi real-time or real-time applications,will always run on the LEO portion of the network, where time of flight is equivalent to fibre delay,” he says.“There, we can run at 155 Mbps. GEO s will never be able to run at those rates.”

On the other hand, Bertiger notes that when a business wants “one-to-many transmission for entertainmentand instructional videos, LEOs don’t efficiently utilise bandwidth because they have to regenerate thesignal.” He envisions a scenario in which an Internet user might order a video via LEO and have that orderfilled via GEO.

Source: http://telecomindustry.about.com

3.7 An Summary of Existing Internet Via Satellite Services in the UK

In the UK there are at least two Internet satellite services that are in effect just distributorsand suppliers for larger EU-wide initiatives.


This service provides a quoted high speed internet DVB (Digital Video Broadcasting) -based access service capability of "2 Megabits per second" and has set-up costs of £199 fora Telemann 200 PCI DVB/MPEG plug & play card. This card connects to a satellite dishthat costs in the region of £60-80. This service uses spare capacity on the Astra satellite.The average browsing speed is quoted at 300kbps with videostream capabilities of 1Mbps.Downloads of up to 2Mbps are also quoted. There are two services on offer now acrossthe UK.

Firstly, there is the 'Alternet' service for a subscription of £9.99 permonth, and this provides high speed internet access via a proxy serverservice using one's existing ISP. A modem is required as per usual to log-on and send requests for web sites that are then downloaded to one's PC

via satellite. Existing call cost access to your existing ISP still apply e.g. local call chargesfor being on-line. Upload speed is also obviously restricted to 56Kbps with the appropriatemodem..The 'Ultranet' service provides a direct dial-in service at up to 2Mbps providing up to 5 e-mail addresses, 10Mb of server space and FTP facilities, as well as multicast services fromEuropeonline.

These 'multicast' services do not require an internet connection to necessary be live and aremade up, for example, of these multicasts to the PC would be financial news, sports news,weather, software and games distribution, films...etc An example of the 'broadbandinternet' experience can be seen from the following service pages:


The Ultranet service was launched in October 1999 and by February only 7,000 of ananticipated 130,000 users had subscribed to the service. Partly as a response to this, theAlternet service was launched, which then meant that the one of the perceived constraintsof sign-up i.e. the changing of one's ISP and e-mail address was negated.

According to Phil Sabin, Eurosky's director, satellite will become the mass marketalternative to ADSL and cable. "For people who do not live in an area served by DSL orcable, satellite is the only alternative…." he said (February 2000). "….I should imaginesatellite will account for about a quarter of the mass market."

At its launch it was indicated that should sufficient numbers of users join up then freetelephone costs for modem upload requests will be on offer. The system also has anotheradvantage in so far as once an upload direction request for a service has been made i.e. astreaming video film, then the modem can be disconnected, thus saving on on-line costs.This appears to be a service of significant potential for the Highlands & Islands.

A second service has also become available in the UK and is named DirecPC(http://www.europeaninfopoint.co.uk/DirecPC.htm) and mirrors a service alreadyavailable across North America. It is predominately targeted at the business sector andenables speeds of between 400kbps to 3Mbps. This service uses the Eutelsat satellitenetwork, which although providing services and bandwidth to ISP and telecoms providersdoes not directly provide consumer services. DirecPC is a service supplied throughout

http://www.europeaninfopoint.co.uk/DirecPC.htm


For £399-00 + VAT and delivery, DirecPC will supply the appropriate satellite dish, PCIDVB card and software to enable the set up of the service. A subscription charge of £13.50per month then entitles the user to 30Mb of bandwidth per month, with a further charge of£0.45 per additional Mb units used. A further range of services are also available forbusiness customers for up to 1000Mb per month of bandwidth costing up to £320-00 permonth in subscription charges and £0.32 for each additional Mb used over the 1000Mblimit in this instance.

Finally, it is worth briefly considering the latest addition to the options currently on offerbased in Inverness and only announced in May 2000 by Hi-Ways Ltd. A locally basedservice distributor within the Highlands & Islands is surely the optimal wireless solutionfor those resident in the area and one that could generate knock-on employmentopportunities in the area. In effect this business is a reseller for Eurosky with the standardsubscription costs as quoted above and a range of installation options and related costsranging from £300 to £700 for the full package of equipment and installation along withdata, free satellite TV access and 'Viaccess' Decryption. For the average home userwithout a satellite dish at present and looking for data and satellite multicast services thecost equates to £460 with self-installation. A further range of services direct to the TV is indevelopment.

3.8 Summary & Analysis

An explicit aim of the next generation of satellite networks, predominantly in the Ka bandis to service currently under-served areas i.e. rural areas and areas where local loopconditions or geography mitigate against other terrestrial based broadband services. A 10-15% share of the overall market is anticipated with new services being rolled out at acompetitive rate to that of DSL, cable, (3G) wireless...etc. Certainly none of the othercompeting broadband systems have articulated their intention to specifically serve ruralcustomers currently under-served by early roll-outs of broadband services.

Apart from' fibre-to-the-home' or 'fibre-to-the-curb’ that may remain a 'pipedream' in ruralareas in the medium term (unless some forward-thinking policy decisions are made),satellite promises the highest speed and greatest bandwidth of all its competitors (30-40Mbps downlink and 1-8Mbps uplink). In the long run this must surely be another verypositive aspect in its favour, given current exponential demands for bandwidth year onyear, which one could anticipate well into the future. Indeed, one would have to suggestthat any strategy on future broadband requirements must consider such a factor as being ofsignificant importance. Consumer ADSL is largely limited to 512kbps in the UK and2Mbps for businesses. Theoretical maximum throughput is estimated in the 8Mbps rangegiven optimum line conditions and a location only a short distance from the localexchange. Consumer cable services in N. America are theoretically capable of 30Mbpsthroughput, but in practice customers’ bandwidth is limited by the teleco and by otherusers on the same cable loop. In any case cable is not a robust business solution for ruralareas, as confirmed by a recent survey of small scale cable suppliers in the US by the NTIS


The main competitor to such satellite broadband services in rural areas, which has actuallybeen identified by the industry is the third generation mobile telecom suppliers providingUMTS (Universal Mobile Telecommunications Service) to consumers in all areas at up to2Mbps, considerably faster than today's WAP internet phones which connect a 9.6kbps.Other line-of-sight radio and mircowave links are also an articulated potential competitoroffering even higher bandwidth comparable with predicted consumer satellite services andit is the combination of these technologies that we will consider in the next chapter, someof which are available in a limited form now and others which will not mature until 2003+.

BOX 19

The by-passing of ageing terrestrial local loop infrastructure, as with those competitorsmentioned above, must make the next generation of broadband satellite one of the keycontenders to reduce the increasing urban-rural 'digital divide' mentioned in chapter 1.

"Ka-band satellite systems will propel the IP-over-satellite market to $30billion by theyear 2007." – Scott Clavenna, Senior Analyst, Pioneer Consulting, Cambridge, MA

New services rolled-out in this year (2000) in North America, such as the Gilat-To-Homeand a new DirecPC service negate many of the traditional problems associated withsatellite services up until now, by also using satellite for the uplink as well as thedownlink. Certainly up until very recently VSAT solutions (providing dedicated up anddown bandwidth) for remote or mobile businesses were pricey, but with the type of recentdevelopment above, then satellite options become increasingly affordable and the newbroadband services will ultimately phase out the expensive traditional VSAT market.Indeed it has been suggested that even in areas where terrestrial broadband services are onoffer, price competitiveness with even this sector is anticipated in the longer term frombroadband satellite solutions.

“Affordable broadband satellite access to the internet is just around the corner. And not aminute too soon for people who live and work in remote and rural areas under served byland based service providers.” [www.about.com]

It should also be noted that with experience to date, satellite customers tend to remainsatellite customers once signed up and the new convergence of existing services with moreinteractive broadband multi-cast services will be an enticing prospect for many users


conferencing, web browsing, interactive gaming, teleworking/telecommuting, video-on-demand, interactive shopping and e-commerce, newscasts-on-demand and many othermultimedia opportunities will be able to be provided to consumers and businesses alike ona truly global scale through one integrated convergent service – i.e. broadband via satellite.

LEO, MEO and GEO satellites all have specific advantages i.e. GEOs providing multicastservices to many users at once, whilst LEOs will enable more interactive services such ason-line gaming and perhaps MEOs being used for web browsing. As mentioned earliermany of the new constellations will include a mixture of orbits and hence will be able toprovide the widest range of next generation convergence services to both customers andbusinesses alike in both urban and rural areas at equal cost. In short then, the keyadvantage of broadband satellite will not just be the high speed internet access and someother additional services, but a product that offers a full range of convergent mediaservices within 5 years. Other wireless options simply do not promise such a package andothers intend to offer similar services, but as yet require much technological development.

On the other hand, the failure/bankruptcy of the Iridium satellite phone project last year(mentioned previously) combined with the recent rescue of the ICO GlobalCommunications satellite network project from bankruptcy, by Craig McCaw of Teledeisc,has set back many of the US and indeed European planned broadband satellite networks,as investors became nervous.

Indeed, this year (2000) the Federal Aviation Administration in the US reduced its forecastof per annum commercial launches in the US from 51 to 41 between now and 2010 alsostating that problems remaining with non-geo satellites have pushed back timescales. Itmay be then that service commencement of global broadband satellite systems will benearer 24 months+ away, rather than the more widely anticipated 12-24 months earlierenvisaged. It remains to be seen if initial European services can rollout on their anticipatedtimescale.

Finally, one also has to consider Ka-band rain interference issues discussed earlierparticularly when considering our study area, although one would have to speculate thatthe $bns of research and development funds have addressed this issue. Nevertheless, thisremains a key unknown factor with this technology in a high precipitation climate, similarto the 'leafy tree' issues related to other line-of-sight wireless solutions.

In summary, the vast sums of money being invested in the next generation satellitebroadband market leads almost all analysts to agree the networks planned and anticipatedwill be developed, enabling the satellite market to become a main contender in the globalbroadband market. Views are mixed on the ability of the technology to deliver all theservices anticipated e.g. high speed TCP/IP based internet access, videoconferencing,interactive gaming…etc – will jitter in the new LEO constellations affect latency to asignificant degree or not? – will high latency GEO Ka-band constellations be able to beadapted for internet based TCP/IP communications? What is sure however, whatever thefinal mix of services and content provided by the remaining providers, we, in areas such asthe Highlands & Islands of Scotland are part of their initial target market. One, whereincreasing competition in the broadband market as a whole will result in broadbandservices being delivered to rural areas which the consumer will be able to afford.


Given the above context, the writer is confident in articulating that there is likely to be akey future role for satellite broadband services in rural areas, this perhaps being a findingwill that will surprise many. Particularly those with experience of the large antennaeexpensive existing VSAT services for business or those familiar with the first generationof internet-over-satellite services where numerous problems relating to bandwidth havebeen experienced and where the uplink relies on terrestrial lines via a modem. These arelimited services separated by billions of dollars & euros of investment by theconstellations currently being deployed with new on-board functions and abilities. Thenew generation will be much more than just signal repeaters in the sky.

Indeed it is recommended that for assessment purposes, early entry into any trials beingheld by the new Ka-band interactive satellite service operators for which we will be in theEuropean footprint will be extremely beneficial in assessing the area's eventual broadbandfuture. Satellite has the bandwidth to be a future proof solution if it proves able to providea reliable and cost effective service to rural areas such as ours. Indeed in convergenceterms is also optimal. Such potential broadband services will most likely be those that pavethe way for later competitors, aside from cable and ADSL which appear to be likely toremain urban phenomena at the time of writing.

Chapter 3 References:

Alcatel, Europe*Star System - www.alcatel.com

Analysys, UK based telecoms information service -http://www.analysys.com/

Andrews Space & Technology, Space & Tech Digest, (2000) http://www.spaceandtech.com/

Brown Peter J., IP Over Satellite: A Global Solution Now (1998) www.satellitetoday.com

DTT Consulting, Internet Via Satellite 2000: Management Summary, (April 2000)http://www.spotbeam.com/index.htm

DTT Consulting, Web Sites Covering Internet via Satellite, (July 2000)http://www.spotbeam.com/index.htm

European Space Agency, Broadband Communications by Satellite (1996) http://www.esa.int/esa/

Europeonline, Europeonline broadband internet satellite service homepage -http://www.europeonline.com/gbr/index.htm

Eurosky, UK based consumer broadband internet service - http://www.eurosky.net/

Eutelsat - Eutelsat in the Home – Internet via Satellite - http://www.eutelsat.org/

Eutelsat, Multimedia via Satellite Services in the DVB era (1998), http://www.eutelsat.org/

http://www.analysys.com/

http://www.spaceandtech.com/

http://www.spotbeam.com/index.htm

http://www.spotbeam.com/index.htm

http://www.esa.int/esa/

http://www.europeonline.com/gbr/index.htm

http://www.eurosky.net/

http://www.eutelsat.org/

http://www.eutelsat.org/


Federal Aviation Administration, LEO Commercial Market Projections, (May 2000),http://ast.faa.gov/

Hudgins-Bonafield, Christy - Network Computing, Networking in the 21st Century: The Sky's TheLimit (1998) http://www.techweb.com/March1998

High-Ways, Internet Via Satellite, (June 2000) http://www.high-ways.com/High-Ways_Home/IVS/ivs.html

Hot Telecommunications home page, Europe's leading provider of satellite services…http://www.hot-tele.com/html/mainmenu/_frms/index.htm

Hughes Communications, European consumer orientated satellite internet to the home service viaHOT Telecom - http://www.direcpceu.com/

Hughes Communications, UK SME/SoHo orientated Internet Satellite service providerhttp://www.europeaninfopoint.co.uk/DirecPC.htm

Hughes Communications, US Internet Satellite service to the home -http://www.direcpc.com/

Hughes Research Labs, Y. Zhang, D De Lucia, B. Ryu and S.K. Dao, Satellite Communicationsin the Global Internet: Issues, Pitfalls and Potential (1997) www.iif.hu

Intelsat, A 'wholesaler of satellite communications' - http://www.intelsat.int/

Intersat, The Global Internet Provider - http://www.intersatcom.net/

Loral - Business at the speed of thought - http://www.cyberstar.com/

Loral – Worldcast Case Study (March 2000) - http://www.cyberstar.com/

Loral – TCP/IP Performance over Satellite Links (March 2000) - http://www.cyberstar.com/

Mentat Inc. - Sky X Technology Gateway White Paper (2000) http://www.mentat.com/skyx/whitepaper.html

Microcomsystems, Broadband Satellite, (2000)http://www.microcomsystems.co.uk/satonthenet/white/bband.html

Montgomery, John, The Orbiting Internet: Fibre in the Sky (Nov. 1997) www.byte.com/

MSN and Gilat, Satellite Networks Introduce First Consumer Two-Way Satellite High-SpeedInternet Access (May 2000) http://www.gilateurope.com/

MSN and Gilat, US Satellite High Speed Internet Trial for Consumers -http://www.gilat2home.com/

Robert A Nelson, The Art of Communication Via Satellite (1998) www.satellitetoday.com

Rohde, Laura, IDG News Service, (Feb. 2000) Microsoft teams on satellite broadband: Softwaregiant teams with Gilat to push high-speed Internet access via two-way satellite this yearhttp://www.nwfusion.com/news/2000/0218softsatellite.html

http://ast.faa.gov/

http://www.techweb.com/March1998

http://www.high-ways.com/High-Ways_Home/IVS/ivs.html

http://www.hot-tele.com/html/mainmenu/_frms/index.htm

http://www.direcpceu.com/

http://www.europeaninfopoint.co.uk/DirecPC.htm

http://www.direcpc.com/

http://www.intelsat.int/

http://www.intersatcom.net/

http://www.cyberstar.com/



http://www.mentat.com/skyx/whitepaper.html

http://www.microcomsystems.co.uk/satonthenet/white/bband.html

http://www.gilateurope.com/

http://www.gilat2home.com/

http://www.nwfusion.com/news/2000/0218softsatellite.html


Satnews Magazine, Glossary of Satellite Terms - www.satnews.com/GLOSSARY.HTML

Scientific American Journal – Satellites: The Strategic High Ground – (Oct. '99) www.sciam.com/

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Technology Feature, Internet Fuels Satellite Growth (July 2000)http://telecomindustry.about.com/industry/telecomindustry/

Technology Feature, Two Way Satellite Delivered Internet, -http://telecomindustry.about.com/industry/telecomindustry/

Teledisc, A global, broadband Internet-in-the-SkyTM network - www.teledisc.com

University of Maryland, Satellite Communications General Information / Publications- www.isr.umd.edu/

Via On-Line, Satellite Internet Survey, (March 2000) http://www.satellitetoday.com/viaonline/survey/#article5

Chapter 4 Wireless Broadband: Line-of-site Solutions / UMTS

4 An Overview of the Technology and Market

In the developing world of wireless broadband solutions, the main competitor forbroadband satellite in 'non-commercial' regions is that originating from radio/microwave(radio waves with a frequency >1GHz) based telecoms technology and the soon to beintroduced 3G UMTS. The Gartner Group in the US have recently estimated that by 2004,outside North America, 40% of all e-commerce transactions between consumers andbusinesses will originate from wireless devices.

In terms of definition it is important that we first clearly define the competing technologiesas they exist at present. There are three basic competing/complementary technologiesreferred to in the literature reviewed (MMDS Unlicensed and LMDS) and a fourth, 3Gmobile, which holds much promise for the future, not only for broadband mobile telecoms,but also for wider broadband wireless solutions for both home user and business (mobile)user alike.

4.1 Multichannel Multipoint Distribution Services (MMDS)

Firstly, we need to consider radio-frequency technology, known as MultichannelMultipoint Distribution Services (MMDS) which is an already existing technology that hasbeen used to provide analogue TV programming during the past several decades. It hasrecently been adapted to enable two-way (synchronous) internet connections, mostly in the

http://www.skystation.com/

http://www.stmi.com/

http://www.ee.surrey.ac.uk/Personal/L.Wood/constellations/index.html

http://fiddle.ee.vt.edu/

http://telecomindustry.about.com/industry/telecomindustry/

http://telecomindustry.about.com/industry/telecomindustry/

http://www.satellitetoday.com/viaonline/survey/#article5


This technology is being held in some areas of activity as being the key enabler of the mixof services related to audio, broadband data and video services to the masses. Sprint andMCI WorldCom are two examples of fixed wireless operators in the US implementing this'last-mile' bypassing technology. In recent years, particularly with the success of cellulartelephony, much more confidence has also been placed in radio as a broadband accesstechnology, as technical limitations have increasingly been overcome: "…digital technologyhas greatly improved the signal quality of broadband wireless systems, and permits operators togreatly increase the amount of data that can be sent across a particular amount of spectrum."

[http://www.insight-corp.com/]

MMDS is already a commercialreality in the broadband marketin the US. For example inPhoenix, Arizona the SprintBroadband Direct service[http://www.sprintbroadband.com/](refer to diagram on left) offerssynchronous 10Mb/s internetconnections to both homes andbusinesses within a 50km radius.

It incorporates a 'low cost'transmission tower at thesupplier end and a 13.5" x 13.5"

digital transceiver and wireless broadband modem at the user end.

Indeed the company has specifically mentioned its ability to bypass the existing 'duopoly's'last mile infrastructure in its region and enter the broadband user market at a much reducedentry cost, in a recent article in PC Magazine on-line. Sprint has recently announced a dealwith Lucent 's ORiNOCO wireless networking system for use in the home and smallbusiness interface -environment. This is a product which will be considered in a lattersection.

This type of product would without doubt have much relevance to the Western Isles andHighlands & Islands context, given its 'last-mile' bypassing ability, potentially enabling afast-track route to rural broadband service provision, irrespective of the condition of theexisting local loop infrastructure.

Indeed in the US during 1999, MMDS frequencies became sought after commodities intargeting the demand for internet broadband bandwidth along with digital TV direct to thegrowing home market. MCI and Sprint spent close to $2 billion in 1999 buying up MMDSspectrum licenses in the US. On the other hand, LMDS spectrum based systems havelargely targeted the urban business market in the US with specific line of sightrequirements and a reach of only 4 to 5km. MMDS channels have been traditionallytransmitted from both omni-directional and directional antenna to provide extensive line ofsight in all directions.

MMDS has also been recognised for its simplicity and low cost rollout. It involves


Box 20 - A Broadband Wireless Solution

small receiving antenna at the customer end, plus wireless modem. It also has anapproximate quoted range for service delivery of 45-50km and is therefore a veryinteresting technology for the rural context. For example, the US company WinStarCommunications Inc, quoted as being the world's largest spectrum holder, has beeninvesting in rural Venezuelan state of Merida in a government supported partnershipscheme in the 2.5Ghz spectrum at the above quoted distances with a reported synchronousconnectivity of 10Mb/s in both directions. In terms of hardware, Spike Technologiesinstalled their wireless local loop solution in this region – see box 20.

Spike's core product and technology is called the PRIZM Broadband Delivery Service (BDS).Essentially, this service consists of a PRIZM base station with a proprietary narrow-beam, compact-sectored antenna that communicates with wireless subscriber units that are in line of sight contact withthe base station antenna. A single base station can cover up to 2,800 square miles and can beconfigured to give each user a 10 Mbps upstream and downstream connection while handling apotential of up to 33,000 users (assuming the frequencies are available).

http://www.spiketechnologies.com/index2.html

http://www.spiketechnologies.com/index2.html


Box 21 MMDS 'Shadow'

Source: http://www.cableaml.com/50Kmyth.html

The illustration above highlights the service 'shadow' cast by a tall building or natural feature of topography which affect thetransmitter's LOS efficiency. It is essential that any 'shadow' areas do not incorporate any of the initial main commercial serviceconcentrations.

Such examples of MMDS technology potentially enable the realisation of a vast range ofbroadband services in rural areas. Indeed, Spike Technologies specifically refer to theirtechnology's ability to address and overcome the issue of 'digital haves and have nots in thenew information society in both rural areas with a low population density and urban areaswith older telecoms infrastructure or that outwith the range of Cable/DSL services.

The Spike HighPointTM family enables high speed local loop connectivity to the internet inboth the MMDS 2.1-2.7 GHz and 3.1-3.7 GHz frequencies. For example, their 'Rural-PoP'product offers a cut-down and scalable version of their standard 'Super-Cell' architecture.Each 'Rural Cell' uses one 'base station' with a quoted service-reach radius of 8 to 48kilometres.

However, in terms of practical implementation in the real world, MMDS has not lived upto its quoted potential, although is still a worthy technology nevertheless. It does need to betaken into account that in any area within a given 50km radius of the high power MMDStransmitter, potential service connection is by no means guaranteed. Both geographicalobstruction ' service shadows' and building shadows combined with the natural curvatureof the earth have meant that often in practice a reliable service radius of nearer 20-30km isachievable. Thus a single basic array implementation of MMDS is likely to yield a lowerreturn than perhaps initially anticipated by service providers.

In an ideal situation the terrain needs to be both flat and gently sloping up towards thetransmitter which will be located on a hilltop, with supporting infrastructure already inplace e.g. the Eitshal transmitter location in Achmore in Lewis? – however this may not bean electromagnetically 'quiet' area – often another prerequisite with digital wireless .

"Experience has demonstrated, unless the transmitter is located in a site meeting most ofthe ideal conditions, it is practically impossible to achieve a reasonable percentage of LOShomes beyond a 30 kilometre-radius service area (in many cases 20 kilometres). Once anMMDS design is implemented, it is not economically feasible to make changes due to thedisruption and cost of re-orienting the antennas for thousands of subscribers."[http://www.cableaml.com/50Kmyth.html]

http://www.cableaml.com/50Kmyth.html


It is clear then that to maximise MMDS performance not only does a thoroughgeographical survey require to be undertaken but also a wide ranging market survey, toenable initial coverage to at least target the largest commercial markets in its rollout – e.g.atop the War Memorial in the Stornoway area may provide such a site in our local area.

Areas in the 'shadow' of the service (refer to Box 21) can carefully be incorporated by lowpower signal repeaters, although the risk here is that some of the periphery areas of the'shadow' area may incur interference from the residue of the main service-signal resultingin distortion and overall signal degradation.

4.2 MMDS: Implementation & Requirements

The lesson quoted from the '50Km Myth' authors is that a well designed small service cellmay in fact prove to be more financially viable than a blanket coverage option on a largerscale. Initial planning is therefore of the utmost importance, with the minimisation of'shadow' non-customers being the key and in this sense the 'small cell' approach is often themost viable solution for the potential service provider (refer to Box 22).

"Broadband MMDS transmitters and repeaters make it possible to implement a "cellular" or"distributed power" approach. Such cellular topology allows operators to accomplish severalimportant goals: The elimination of the outrageously large and expensive towers and infrastructure

required by most centralised transmitter systems. The reduction in number and size of shadowed areas with significant improvements in LOScoverage increasing the revenues per square kilometre of coverage.


BOX 22 MMDS System

A significant rationalisation in the operator'sinitial investment: an MMDS operator can implement a system design in consecutive phases,making it possible to concentrate first in the most profitable markets for a faster return oninvestment and a more manageable impact on cash flow." [http://www.cableaml.com/50Kmyth.html]

An effective multi-cell architecture with a limited number of broadband transmitters andsupporting high-powered (e.g. 'linearized on-frequency') repeaters is one suggested designthat potentially is able to service initially key areas and latterly (depending on the qualityof initial planning), with the introduction of repeaters, other 'shadow' areas. 'Linearizationtechniques' have been suggested* as being able to increase the power output to be utilisedin repeaters (and transmitters) to increase their service range efficiency and this in turnenables the network infrastructure costs to be minimised. "With systems available now up

Base Station Broadband MMDSTransmitter & System 'Headend'

Broadband MMDS Transmitter

Broadband MMDS Repeater



Fibre or Microwave link

MMDS Signal

MMDS Signal

MMDS Signal

Radius of service areas: Typically 10-30 kms


to 2 kilowatts in linear-equivalent power output, it is possible to capitalise on theadvantages of a distributed MMDS topology at a fraction of the cost of a centralisedarchitecture using channelized transmitters." [http://www.cableaml.com/50Kmyth.html]

However, for rural areas with a low populations density, such as much of the WesternIsles, the large cell architecture may have benefits, being the most cost effective situation,although obviously the small, multi-cell architecture provides higher capacity and highercoverage benefits, but is more costly to rollout.

Other architectures on the market such as Cable AML's 'BWA-2000' range, are designed tooperate within the standard MMDS 'channelisation scheme'. In this instance the availablebandwidth is divided into 31 channels of 6MHz of spectrum, giving a quoted 30Mbpsdownstream and 2.56Mbps upstream. The architecture of this solution is outlined in Box23.

The several key elements of the MMDS system of which some may be physically separateor part of the same array - The Headend and Base Station, the Transceiver & Repeaterelements and the Customer Premises Equipment (CPE), are shown above.

The pace of development in the wireless broadband sector is growing at a exponential rateand new more efficient equipment is coming to market each quarter with increasingly moresophisticated functions and user orientated interfaces. The NextNet plug-and-play CPEshown in the photo below is typical of such developments.

BOX 23 : Outline Architecture of MMDS Broadband System

Source: http://www.cableaml.com/bwa2000.html

http://www.cableaml.com/bwa2000.html


The unit above allows SOHO users, via an Ethernet connection, single or multiple useraccess through a single subscriber connection. Such flexibility will also be of direct interestto the home of the future where internet access will be a family affair and multipleconnection nodes within the home will be a distinct advantage.

There can be little doubt that MMDS technology is maturing to the point where it is goingto become a significant component of the US broadband market. In the UK, the situation isnot so clear as the recent focus of license auctions has been in the 3G frequency ofspectrum. Most recently during September / October 2000 recent license activities havebeen focused in the LMDS band at 28GHz, with a latter auction specified in the higherfrequency 40GHz band. However, it has also been indicated that that spectrum formerlyemployed by Ionica in the 3.4GHz band is also likely to be up for auction before the end of2000. But, it is not yet clear whether such spectrum is to be offered on a national orregional basis. It is also interesting to note that BT has had an allocation in the 2GHzspectrum for some years for "serving primarily remote areas of the UK with FWA services"[www.radio.gov.uk], but have decided not to implement any pilot rollout projects. Thisspectrum may be reallocated in the near future.

The focus in the higher band frequency spectrum is understandable given developments inLMDS elsewhere, however this spectrum is likely to be focused in the mass market urbanlocations, due to its similar reach restrictions to that of ADSL. There are however otheroptions in the unlicensed bands at 2.4GHz in particular and certainly in the US, where anumber of manufacturers have developed broadband wireless technology in line with theISM (Industrial, Scientific & Medical) restrictions of this band.A recent report in the UK: "Compatibility between Radiocommunication & ISM systems inthe 2.4 GHz frequency band" by the Radiocommunications Agency investigated quality ofservice issues involving operations in this band and these will be further discussed in alater section. In short, in rural areas, where interference is likely to be significantly lessthan that from urban areas, then there would appear to be some potential here worth furtherinvestigation with reach, in the absence of such interference, being quoted in the 30kmrange. Atlantic Telecom is one of the few operators with experience in the 2.4GHz band,currently providing 'wideband' FHSS (up to 2Mbps) wireless telephony/internet access

"NextNet's unique customer premise equipment integrates the data transceiver and antenna into a single compactunit that is completely customer-installable" - http://www.nextnetworks.com/products_prod_bottom.html

http://www.nextnetworks.com/products_prod_bottom.html


quoted as being due to the power level limits in the ISM 2.4GHz band which has beenquoted as being a key determinant in access provision. This is an area that will be furtherconsidered in section 6.4.

Clearly, the provision of MMDS wireless architectures are of significant relevance to thisstudy. However, at the same time, spectrum availability is of key importance in the overallequation and recent focus in the UK has not prioritised the longer reach broadband 2.1GHz– 3.7GHz spectrum. Nevertheless, the next six months may change this situationsignificantly and in any case some alternative potential based on similar technology doesexist in the unlicensed bands.

4.3 Local Multipoint Distribution Services (LMDS)

"LMDS is a broadband wireless point-to-multipoint communication system operatingabove 20Ghz (depending on the country of licensing) that can be used to provide digitaltwo-way voice, data, Internet and video services." [www.wcai.com]

The service coverage of a single cell LMDS network is quoted as being within 5-8km fromthe base station in direct line of sight. A wider area based rollout will require many(repeater) antennas due to the limited reach of the high frequency microwave cells. Thishas resultant cost implications and also raises potential planning related issues in both theurban and rural context, as the public grows increasingly intolerant of such structures andtheir unknown long term effects on human health.

The service itself incorporates a broadcast like down channel: point to multipoint, with theup channel (from the service subscriber to the base station) being a point-to-pointcommunications link. LMDS supports both ATM and IP transport methodologies within itsnetwork interface, the key elements required to build a broadband internet access networkaround. A typical downstream data rate for LMDS is 38Mbps and this can be configured tobe symmetrical in design.

A 'base station' in such a network (refer to Box 24) will normally comprise several keycomponents including obviously the microwave transmission and reception equipment, butalso modulation and demodulation functions and the 'network interface for fibretermination', whilst also in some instances including a local switching element. Theadvantage of this latter element means that service subscribers can communicate with eachother without actually entering the fibre network at all. This has potential advantages (i.e.cost savings) for both subscriber and service provider alike. On the initial cost side, theCustomer Premises Equipment (CPE) (refer to Box 25) adds up to a quoted investment ofanywhere between £85-£450 per household [http://nwest.nist.gov/lmds.html], with a total cost ofnearer £700 per subscriber.


Box 24b: Background System

Source: http://www.cableaml.com/madridtrialsystem.html

The system's single Base Station is located in Faro de Moncloa (Madrid). It is connected to the Headend by a two-waypoint-to-point microwave link. The downstream carriers from the Headend are translated to the 28.25 - 28.75 GHzband, amplified, and transmitted through two 180° antennas, for a complete 360° coverage at a power level of 5Watts/carrier. The upstream signals from the subscribers in the 30.85 - 31.15 GHz band are received through the samesector antennas, processed, and transmitted to the Headend through the upstream point-to-point microwave link. Aredundancy Unit provides automatic back-up of both the transmit and receive Base Station functions.

The System's Headend, located at Madrid's Polytechnic University Campus, houses all the Network Accessinfrastructure as well as the Network Management Center. The Headend includes all the Network Access equipment,the receiving and processing equipment for multimedia services, the equipment required to package data in a formatcompatible with the Access Systems, and the equipment required for inter-connections between subscribers. Alsoincluded is the carrier modulation and de-modulation equipment (at IF frequencies) and the RF up and downconversion equipment for both the downstream & upstream carriers.

Costs of setting up an initial 5-8km LMDS cell are quoted in the US as ranging from£350K to £1.4M, with latter repeater-based cells being significantly reduced in price.According to HP the key entry price for CPE needs to be in the £100 per subscriber range,which to date has not been achieved across the Atlantic, although as such services growthis magic figure becomes more realistic. However, any model would require to bebusiness-based in the first instance to enable a commercial service to become established.

BOX 24a: The Madrid LMDS System Architecture

BOX 25: The Customer Premises Equipment Configuration

http://www.cableaml.com/madridtrialsystem.html


Its high capacity and range of resultant tiered service may mean that LMDS certainlybecomes a major contender in the top end of the market, providing spectrum costs do notinflate to the levels of the recently auction 3G spectrum in the UK.

In terms of rollout, urban centres are the ideal locations for LMDS spectrum services withtheir high rooftops and dense subscriber market. However, provision to residentiallocations remains problematic due to problems related to foliage and hills in particular,along with the lack of high enough sites in which to place repeaters. In addition, manyresidential neighbourhoods are not keen to be in the vicinity of microwave propagationtechnologies, due to concerns over health. This will without doubt increase costs of rolloutand add to uncertainty regarding the level of service penetration achievable. LMDS has theultimate cost advantage though, in a world of increasing bandwidth demands and that is anunsurpassed value of service, given the bandwidth available – in competition terms therewill be many opportunities to charge much lower monthly costs for comparable bandwidthbeing accessed from elsewhere e.g. ADSL

However, although LMDS provides high bandwidth services, in comparison to the lowerfrequency MMDS spectrum, there is a significant service range and resultant cost penaltyrelated to the additional unit cost of infrastructure per subscriber. LMDS transmissions inthe millimetre wave band are highly susceptible to rain fading (as well as foliage andterrain) and this is obviously an important consideration in the current study region.

"At a 30 mm/Hr. rainfall rate (about one inch per hour, which is not uncommon) LMDSfrequencies are attenuated by 4.5 dB/km, so that a small cell of 3 km radius suffers a 13.5dB fade at its outer edge. In contrast, MMDS frequencies are affected negligibly; about0.01 dB/km for the same rainfall rate." [http://www.wirelessdesignmag.com/]

Rain-fade will therefore tend to reduce the range and reliability of the LMDS service inhigh precipitation environments, hence presumably giving fixed terrestrial infrastructurethe edge in such instances. In practice then LMDS appears less appropriate to the ruralWestern Isles situation than the MMDS solutions considered previously.

In addition, in the US context one of the main constraints has been the lack of standardswithin this industry. For example, some providers base their architecture around 'TimeDivision Duplexing' (TDD) whilst others prefer and promote 'Frequency DivisionDuplexing' (FDD) as being the most optimal method of dividing and sharing frequencyamongst subscribers. Various differences in each approaches characteristics will make onemore appropriate than the other depending on issues such as the location of the maincustomer base and the 'burstiness' of the communications which prevail over time.However, this variance in approach in the industry to date has affected bothinteroperability and costs.

Two years on, after the issuing the LMDS spectrum licenses in the US, there has only beena limited penetration in a select number of urban locations. "Less than 5% of U.S.businesses are covered by LMDS systems and by 2003 LMDS network coverage will beclose to 20% of businesses, according to the Strategis Group Inc., of Washington DC."[www.totaltele.com/]


Yet the original US rollout scenario promised license holders being able to offer: "…. localexchange telephone service, internet access, and other broadband services. It is expectedthat this assortment of services will benefit not only residential and business consumers butcan also assist in fulfilling the telecommunications and information technology needs ofschools, libraries, health care providers, and rural communities"[http://nwest.nist.gov/lmds.html]. Nevertheless, again one has to recognise the level ofinvestment spent on the licenses purchased, this being justified by expectations of LMDSservice revenues estimated in the $1billion range in the coming decade, as the technologyand operators mature as an industry sector.

On the other hand, one has to question the relevance and practicality of this particulartechnology for rural locations, even although the latest rounds of spectrum bidding andactivity in Europe have been in this particular area – refer to section 6.2 for details in theUK. Nonetheless, it is the promise of 155Mbps connectivity 'through the air' that is themain attraction to service providers and according to industry commentators andpromoters, LMDS has several key advantages over other broadband technologies:

• Lower entry and deployment costs• Ease and speed of deployment (systems can be deployed rapidly with minimal

disruption to the community and the environment)• Fast realisation of revenue (as a result of rapid deployment)• Demand-based build-out (scalable architecture employing open industry standards ensuring

services and coverage areas can be easily expanded as customer demand warrants)• Cost shift from fixed to variable components (with traditional wireline systems, most

of the capital investment is in the infrastructure, while with LMDS a greaterpercentage of the investment is shifted to customer-premise equipment [CPE], whichmeans an operator spends dollars only when a revenue paying customer signs on)

• No stranded capital when customers churn• Cost-effective network maintenance, management, and operating costs.[Source: www.wcai.com]

Two of the first key services for LMDS anticipated according to 'whatis.com' include 1.High-speed data transmission for businesses and, 2. Interactive television and streamingmultimedia from Web sites.

In recognition of this potential, the first wave of broadband wireless access networkactivity in the UK has been in this area of spectrum, as there appears much competitivepotential to other developing technologies. A diversified and competitive access market isa key aim of the UK government and such a focus will lead one step closer to this reality.The initial 28GHz band spectrum will be focused primarily at business use according to theRA, as will the soon to be auctioned 40GHz spectrum which are in many respectscompetition to traditional fibre solutions at the top end of the access market for largebusinesses.Alcatel, in Europe, is an example of one of the global-level suppliers of such products andclaims to have over 100 LMDS customers installed with over 3000 base stations in servicethroughout Europe and beyond. In Spain, for example, Retevision, Spain's second-largestfixed-line operator, is currently deploying Alcatel's LMDS solution in Barcelona andPalma de Mallorca, with further extensions planned in Valencia and Zaragoza later thisyear. The target market of such solutions are small to medium-sized urban-based


European country to develop LMDS pilot projects in this telecoms area (refer to Boxes 24& 25), as far back as March 1998 and by December of that year applications for acommercial service in the Madrid region had been lodged.

It is no coincidence that this initial service was also in an urban area where it was to:"…provide Private Networks and User Multimedia Services to institutional customers,large businesses, and Small Office / Home Office Users (SOHO's) located in highpopulation density areas ." A clear business focus, but also a clear urban focus too, for theLMDS services. The service itself is reported as having symmetric data rates, of initially2Mbps and 10Mbps with QPSK and 16-QAM modulation. Further increases in data speedsare apparently a straightforward process with higher forms of modulation e.g. 64-QAM.

QPSK: Quaternary Phase Shift Keying – An efficiency increasing spectrum modulation technique. The term quaternary(or 4-angle modulation) alludes to the fact that the phase is shifted in 90° increments. The theoretical limit of QPSK is toprovide 2-bits for every Hertz of frequency. The throughput in QPSK systems is thus twice the baud, where the baud canbe considered to be the basic measure for the data transmission speed. 'One baud is one electronic state change persecond', but, as this can now involve the transmission of more than one bit of data, as increasingly more advancedmodulation techniques have been introduced, transmission speeds are now increasingly measure by bits per second ratherthan baud.

16-QAM: 16-Point Quadrature Amplitude Modulation, is a more advanced again, spectrum efficiency technique, whichtransmits 4-bits for every Hertz of frequency. In this instance the measured transmission rate in bits per second will be 4times the basic baud rate of the signal.

However, it could be argued that LMDS broadband wireless systems have limitedrequirements for increasingly higher order modulation techniques which are both moreexpensive and complex to implement, "As the modulation formats become more complex,including multiple amplitude and phase states such as QAM, then the amplifier mustexhibit a more linear gain and phase response in order to preserve the integrity of themodulating signals and minimise spectral pollution caused by intermodulation products"[http://www.avren.com/main_frame.htm] as there is arguably sufficiently large availability ofbandwidth within the LMDS architecture already. It is commonly stated (e.g. WebProForum) that LMDS will be constrained on distance (and the propagation environment)rather than capacity. It is also worth noting that the introduction of more complexmodulation techniques results in a lower customer service area, with 64-QAM solutionslimited perhaps only to 2.5km, due to the increased signal strength required for its effectiveimplementation.

In addition, quality of service issues regarding the availability of the service will furtherrestrict the range of the product. This is of particular note in the UK, where the RA'sconsultation paper on 28GHz spectrum has indicated that it is unlikely to feed consumerdemand services, but rather that of specific business locations such as industrial andbusiness parks. As stated earlier range for a 99.99% availability service is likely only to beup to 5km at maximum, in an average propagation environment.

It is hoped within the industry that the development of the so-called third generation ofwireless telecoms will pave the way for the adopting of industry standards in the LMDSsector, enabling a resultant increased competitive route to broadband provision. However,it needs to be recognised that LMDS is not a competitor to 3G technology, due in part to itshigher cost and indeed larger size of transceiver, ruling out its present mobile potential. In


due to its higher frequency and wider bandwidth, with perhaps the trade-off being its lackof mobility, because of the increased complexity of signalling.

There can be little doubt that investors in LMDS spectrum licenses (28GHz) will do so inthe hope that in the long run they will be able to provide digital two-way voice, data,Internet, interactive-gaming, videoconferencing and video services, similar to the Madridexample. In the US, 'Touch America' provide a portfolio of 'last mile' telecoms in whichLMDS plays a significant role and is providing the range of added-value services outlinedabove. Another examples from the US gives a possible indication of a potential route toadd LMDS broadband services to a Highlands & Islands portfolio. Virginia Tech.:

"Believing many regions of Southwest Virginia would be left behind by this technology,Virginia Tech chose to take an active role in helping to ensure that LMDS technology ismade available, regardless of geography."

Virginia Tech specifically targeted LMDS due to the very fact that it has been viewed as anurban based technology and that it would be able to bid for spectrum in its own andsurrounding rural areas without competition. With a 3 month rollout, implemented byWavTrace, this technology has been provided to rural communities and businesses at avery early stage in this technology's development, to traditionally non-commercial areas.By forming a 'research consortium' to progress its vision, distance learning, telemedicineand videoconferencing have become widely available in its cell coverage areas. Thisappears to be a very interesting model aimed at levering in new telecoms technology torural non-commercial areas and hence potentially applicable to the Highlands & Islands.

There certainly does seem to be many instances in other countries where the traditionallythought-of public sector has been instrumental in levering in new technology which havebeen poorly served by incumbents with little vision or impetus towards serving upbroadband to the non-commercial sector. Without such initiative then, LMDS or other highfrequency microwave services will not be an economic proposition within the Highlands &Islands in the near future, due to the limited range of LMDS and low subscriber densitypresent. That is not to say that such an initiative could not be implemented, with the rightcombination of partnership resources, targeting multiple outcomes incorporating the widercommunity both residential and business alike.

4.4 Unlicensed Broadband Wireless

This area of the spectrum in the UK has much potential in enabling the speedy rollout ofmicrowave broadband radio services in rural areas. As we shall see, there are particularproblems in urban areas related to the 'noisy' environment present, which do not exist inmany rural areas. Obviously, although there is no need for the purchase of specific


overcome. Of most potential appears to be the 2.4GHz ISM (Industrial, Scientific andMedical) referred to in section 4.2, this being a common standard at this frequency range inmany parts of the world. There are many examples of the utilisation of this band forbroadband communications in both this country and further afield, sometimes tosupplement existing broadband services in rural areas and sometimes, with the aid of aburgeoning supplier industry, aimed at providing a cost effective broadband alternativeservice to that offered by the incumbent telecoms supplier. Comment will also be made onthe viability of the higher 5GHz unlicensed band.

"For those areas of a given geographic region that do not meet the minimum number ofpotential subscribers to justify the expense of an MMDS base station, using license exemptsolutions in the ISM bands offers an attractive solution to the coverage problem." [ADCTelecommunications]

In numerous instances in the US, the unlicensed bands have been used to complementMMDS core networks, by extending reach to shadow and other non-economic areas,without increasing initial deployment costs significantly. Wireless routers operatingoutdoors in the ISM bands are a mature technology and as such, a relatively reliablesolution and most importantly a cost-effective solution as well. Indeed many suppliers ofthe ISM equipment also manufacture core MMDS technology in conjunction with RLANproducts. Indeed, there are at least a _ dozen competing manufacturers in this field who arecurrently in intense competition in this rapidly developing 11Mbps interconnect market.Some of the companies and their unlicensed band products include:

Cisco Systems 'Aironet 340' http://www.cisco.com/Breezecom 'Breezenet' or 'BreezeACCESS 2.4' http://www.breezecom.com/Lucent Technologies 'ORiNOCO' http://www.wavelan.comProxim 'RangeLAN' http://www.proxim.comRadioLAN 'Bridgelink' http://www.radiolan.comWestern Multiplex 'Tsunami' or 'Lynx' http://www.wmux.com/Wireless, Inc. 'WaveNet' http://www.wire-less-inc.com/

The range of unlicensed band wireless products varies depending often on themanufacturer. Recently completed tests* showed that the Breezecom products showedstrongly in the range of service achievable, easily attaining services out to 24km in testing.On the other hand, real-world throughput tests, as for most of the products reviewed, weredisappointing at only 4-6Mbps, (on average) as opposed to the 11Mbps advertised.[*Network Computing Online]

The international standard IEEE 802.11b has been the key which has encouragedcompatibility and competition in this sector. This is not the full story however, as radiosystems in the ISM unlicensed bands must comply with particular specifications. "In theUK, RFA systems using the 2.4 GHz frequency band must comply with ETS 300 328 andCEPT Recommendation 70-03, which stipulates a maximum EIRP of -10 dBW." [RA & AegisSystems Ltd]

So what does this mean in practice and how limiting are operations in the 2.4GHzunlicensed band as a result?

The main interference which limits operations in this band come from several main sourcesaccording to the Radiocommunications Agency (RA) in the UK. Included in this list are

http://www.cisco.com/

http://www.breezecom.com/

http://www.wavelan.com

http://www.proxim.com

http://www.radiolan.com

http://www.wmux.com/

http://www.wire-less-inc.com/


and the increasing growth of Radio (wireless) LANs. Indeed looking to the near future,new 'Bluetooth' and 'HomeRF' wireless standards being developed for the integration andinter-operability of PCs, mobile phones and numerous peripherals (e.g. stereo systems,digital cameras, TVs...etc) will without doubt have a further impact on service reliability inthe ISM unlicensed band.

Certainly in the US, and one would parallel the UK situation, wireless radio access in theunlicensed bands has been much more feasible and indeed successful in the low densityand resultant low noise rural areas. The concentration of interference sources will besignificantly less for service operations in the ISM bands outside of urban areas andquotations of service- reach of 32km+ are not uncommon for broadband equivalent radiobased services. For example Western Multiplex's 2.4GHz ISM product quotes serviceprovision out to 60km+.

There are certainly good examples in the UK where various organisations have taken theinitiative and supported the wireless broadband route. Perhaps of most note in our studycontext is the occurrence of Local Authorities and Universities in England, who haveinvested in such wireless technology. Lancaster University Schools Network hasnetworked sites up to 24km apart using a mix of both 2.4GHz and 13GHz spectrum,providing capacity of up to 11Mbps in the unlicensed bands, using several supplier'sequipment, including 3 of the main manufacturers mentioned on the previous page. In theLocal Authority sector Stevenage Borough Council has networked LANs in 9 separateoffices over a 25km2 radius via rooftop- mounted 'wireless bridges'. Their network alsoincludes 3 repeater stations to overcome specific topographical difficulties. Operationalsince 1998, the network connections have enabled 3Mbps sustained transfer rates betweensites and over 20Mbps in aggregate throughput. The antennas used have been eitherdirectional (18 or 24dBi) or Omni-directional (10dBi), with the core infrastructure beingsupplied by Breezecom. Cost savings in both instances would appear substantial, wherepreviously leased lines dominated communications.

In the private sector there has also been much interest in high capacity wireless networks inthe UK, with Littlewoods recently having 130 of its UK stores inter-connected via Lucent'sWaveLAN product. Their decision to go wireless was related to both cost and a simplifiedrollout/installation of the network. In addition, configuration flexibility and interface withexisting stock control systems were also considered as being factors of importance.

It is clear then that limited service availability due to other interference sources in the sameISM frequency band must largely have been overcome. Spread Spectrum techniques havebeen the key method employed to overcome interference problems (real or potential) inbroadband radio solutions. There are actually two separate techniques employed – DirectSequence Spread Spectrum (DSSS) and Frequency Hopping Spread Spectrum (FHSS).

"Conceptually the technique is relatively straightforward, involving the multiplication ofthe wanted information signal by another wide band signal called a spreading code…Thecoded signal typically has a bandwidth many times that of the original information signal(the actual ratio is referred to as the coding gain and provides an indication of theresilience of the signal to other co-channel interference). Decoding of the transmittedsignal is achieved by applying a replica of the spreading code at the receiver." [RA & Aegis


Of the two types of Spread Spectrum technology being applied, DSSS is considered toachieve the highest levels of data throughput. On the other hand FHSS is generallyconsidered to provide a lower BER (Bit Error Rate) thus giving more protection againstinterference. The only downside of Spread Spectrum technology is the high signalprocessing overhead which makes it difficult to attain a high level service solution withinthe ISM band whilst staying within the standards and guidelines for operations set by theETSI standard (ETS 300 328) and the IEEE interoperability standard (802.11b) forRLANS.

Atlantic Telecom operating its fixed wireless access FHSS services in Glasgow, Dundee,Aberdeen, Glasgow and now Manchester in the 2.4GHz ISM band provides access speedsat up to 2Mbps for under £50 per month including all UK-based voice calls and a freesecond line, to residential and small business users. However, to do this it is quoted asoperating at the very limits of the EIRP (Effective Isotropically Radiated Power from thenetwork base station) –10dBW, in these 'noisy' urban environments, electromagneticallyspeaking.

"Generally, FHSS is considered better at supporting a dense population in a small area,because it has more independent RF channels, whilst DSSS Provides greater operatingrange and coverage area (because it can operate with a lower carrier to noise ratio) andenables greater data throughput…" [RA & Aegis Systems Ltd]

In short then, there would appear to be some real potential in rolling out some form ofbroadband wireless access systems in rural areas across the Highlands & Islands, given thematuration of the technology (in response at least in part to industry standards) the low costrollout (without the need to enter an expensive purchasing of frequency) and the relativelyquite electromagnetic background, providing existing line of sight knowledge can be builtupon and used to minimise associated infrastructure costs. There is clear scope for theeducation and public sectors to become the catalysts for rollout into rural communities, as

BOX 26 A Broadband Wireless and combined RLAN Solution from Western Multiplex


An ideal system in the Highlands & Islands could have a licensed MMDS (regionalallocation) spectrum core system, with the use of the unlicensed bands to incorporate 'shadow'areas, similar to what has been implemented by ADC Telecommunications in severalinstances in the US. But what about the current state of spectrum allocations and auctioning inthe UK?

As stated in section 4.2, recent focus in the UK has been on 28GHz and 40GHz spectrum,with only limited focus on lower GHz bands with higher reach of service. These bands willonly be of limited interest, as stated earlier, to rural areas due to their limited reach. 2GHzspectrum, on the other hand, which is currently geographically limited in its coverage (i.e. it isnot a national license) looks likely to be released soon by BT, as it has never been utilised inrural areas in the UK and may provide a commercial opportunity if released on a regionalrather than national basis. In the 2.4GHz ISM range Atlantic Telecom (as mentioned above)dominate, along with Kingston Communications who have also secured a regional licensewhich was offered, due to Atlantic's success at operating a low power spread spectrumwireless service. Ionica's former 3.4GHz and 10GHz spectrum also looks set to enter aprocess termed 'comparative selection' before the end of 2000, according to theRadiocommunications Agency. Again, if offered on a regional basis, such spectrum may alsopresent a commercial opportunity to bring broadband to the Highlands & Islands of Scotland,although some innovative venture to become 'selected' may be required in the shorter term.

In the 3.6GHz to 4.2GHz band Tele2 are in the process of establishing and developingwireless data and telephony services in the Thames Valley region initially, with expectationsof rollout to as much as 60% coverage of the UK by 2003. Synchronous data rates of between256Kbps and 1Mbps are offered as part of the Tele2 service, which is now increasinglyavailable throughout many of the regions in England.

There has also been recent interest in the 5.8GHz ISM band and the 5GHz band in generaland a recent consultation process by the RA (January 2000) has been completed. "Currentplans for these bands are based on the assumption that all services deployed will be privatesystems operating on the same or a similar basis to fixed local area network facilities. Hencea regime of licence exemption has been proposed. No assumption has been made of thepresence in these bands of any type of third party or public access services. With thisconsultation document the Agency is seeking to verify whether this is still an accuratereflection of the potential uses to which this part of the radio spectrum may be put…"

"RLAN technology will certainly support access to and interconnection with the internet either on thebasis of distribution throughout a private network or as third party distribution for public access.While a private system providing internet access would be permissible under current policy, localarea provision to third parties would be forbidden. The Agency is aware that at present there is nospectrum provision for local area public access to the internet. This consultation seeks to establishwhether it would be advisable and desirable to permit public access to this service in these bands."

Certainly the proposed extension of license exemptions in the 5.0-5.8GHz bands and itsresultant opening up for 'local area public access' could have positive benefits to rural areasin proximity to a main node of high speed entry into the internet. For example a companysuch as Iomart based in Stornoway could provide wireless bridge broadband access tocommunities up to 25 miles away at connections between 45Mbps and 100Mbps. WesternMultiplex's Tsunami 5.8GHz 100BaseT has a tested throughput of 38Mbps under 'real'conditions, whilst Proxim's Stratum 100 has a tested throughput of 98Mbps under 'real'


link, with the former costing a more manageable £7K per link in April this year. Bothoperate in the currently proposed unlicensed 5.0-5.8GHz bands.

Certainly, these network extension products designed to operate in the ISM and USdesignated U-NII bands provide much potential for rural areas, should a decision from theRadiocommunications Agency in the UK allow 'local area public access' via the 5.0-5.8GHz unlicensed bands. At present however within the existing ISM 5.725-5.875 GHzband "Recommendation 70-03 permits it to be used for non-specific short rangecommunications at EIRPs up to 25 mW". Thus at present: "It is not envisaged that thisband is suitable for anything other than private, self-provided, low power systems". Withinthe 5.8 GHz ISM band the relevant equipment specification relates to conforming to I-ETS300 440. It should be noted that current proposals envisage the extension of the unlicensedelements within this band to the 5.150 to 5.350 GHz, 5.470 to 5.725 GHz HIPERLANbands.

The responses to the RA consultation are available for viewing (March 2000) although nofinal decision has been made for the future potential of this band as yet. Although, again asoutlined above there is mature technologies available to exploit originating from the US,which could potentially exploit the rolling out of broadband internet to rural communities.For example the Proxim Stratum 100 for example has recently been approved for operationwithin the newly established 5GHz public bands in Canada, with proven operations alreadyout initially to 11km, which have been shown to be impervious to snow, rain and fog,unlike some other higher frequency broadband wireless solutions. Performance has beenquoted as being comparable to fibre optic based networks, being suitable for internetbackhaul services.

In summary, unlicensed band services would appear to provide much potential to extendcore broadband services to rural customers and further investigations outwith the scope ofthis study would seem warranted on the practicability and cost of such provision.

4.5 Universal Mobile Telecommunications System (UMTS) – 3G

UMTS is the term used to describe the third generation of mobile telecommunicationswhich will be available to consumers and businesses alike in 2002/3. The first generationof GSM mobile phones have been a true revolution in the European and UK context withover 34 million estimated users in the UK alone, signing up / connecting mostly over thelast two years. An indication of future use can also be guessed at when realising that 70%of teenagers in the UK now possess a mobile phone.

Ericsson fully expects the majority of internet use to be via mobile devices by 2003 and isitself expecting to be servicing 1 billion internet subscribers worldwide at this time. In thissense, 3G, when it comes, may provide a significant internet access revolution, whichtraditional telecom service suppliers must compete with. [Statistics from BBC Online]

Within the generation of mobile telephony products, we are currently (autumn 2000) at1


mobile phones. However, the first 'internet' generation of mobile telephones, referred to asWAP (Wireless Application Protocol) phones are available in the market. However, themarket for this generation of phones has been slow to take-off in Europe with reportedlyfew companies making any money from this 1st generation of internet mobile phones. It isgenerally considered that the UK consumer is awaiting the next generation technologybefore discarding their newly purchased standard mobile phones. WAP enabled WWWsites are not widespread, the connection speed of 9.6kbps only allows a very basic versionof any site to be uploaded and the Japanese experience has shown this 1st generation to benon-user friendly in terms of browsing. The phones themselves have been also beenreported to suffer from the small screen size, a short battery life and limited memory andprocessing capabilities. Nevertheless, it will apparently be difficult to purchase a non-WAPenabled phone during 2001, with 420million existing mobile users worldwide byDecember 2000. [http://www.theregister.co.uk/content/archive/13307.html]. Basically the WAPenabled phones have failed to catch the public's imagination, not offering sufficient value-added to entice existing user to ditch their current generation of phones.

The second generation of mobile phone technology is eagerly awaited with possible speedsfor internet browsing between 115kbps and 171kbps. It is called GPRS (General PacketRadio Service). As its name implies, GPRS is a packet-based technology, which usesbandwidth more efficiently by breaking up voice and data traffic into small chunks andonly then sending them on across the GPRS enabled network. This clearly will make the'internet' mobile phone an enticing piece of equipment for the vast majority of UK internetusers today who are used to 56kbps connections to the internet, which in reality averagebetween 45-52kbps.

However, recent industry (Nokia, BT, Motorolla…etc) revisions in performance nowindicate a more likely connection speed for GPRS as being in the 27-43kbps range, thisbeing quite a revision downwards by the industry. It is now anticipated that it will not be atleast until 2003 that consumers access high data rate connections to the internet via 3G.And if considering the Highlands & Islands consumer, then most likely even later than this,maybe 2004. BT Cellnet's stated strategy for GPRS is to deploy it in the first instance tobusinesses in the South of England and subsequently a phased rollout to the rest of thecountry. Consumer products will come later in the build-out programme. Lastly, along theevolutionary highway of interim 3G technology is EDGE (Enhanced Data GSM

Environment) based GSM technology which can deliver 384kbpsand with Ericsson stating recently that its base- stationinfrastructure can be software upgraded to enable EDGE services,then this technology would appear to be realisable in theHighlands & Islands area in the not too distant future.

It is though the so-called third generation product UMTS(Universal Mobile Telecommunications System) that is of realinterest within the realms of this study.

Although it is obvious that the developing 'interim' technology (WAP and GPRS) is ofhigher profile at present. However, 3G is the universal broadband packet basedcommunication system which is likely to be the main competitor to any and all of thebroadband solutions assessed to date, enabling a 2Mbps (in stationary mode / 384kbps onthe move) direct connection into the internet, which in itself will open up a whole host ofmarket opportunities related to broadband connections, but with the additional mobility


component. With 3G, high speed voice, data and multimedia traffic become a reality andthe obvious merging of them to make videoconferencing a key application appears likely.

The universality of the service, based on the 'Global System of Mobile Communication'(agreed by manufacturers, service providers and standards organisations worldwide) willmean that mobile users of laptop PCs and phones will be able to connect to a roamingservice wherever they are in the world and access a consistency of broadband serviceaccess. This will be a true revolution in global access to internet content, with usersconnecting-in via a combination of terrestrial wireless and satellite links.

In line with the International Telecommunications Union's IMT-2000 vision, UMTS willutilise spectrum in the frequency range 1980-2010 MHz with a 2170-2200 MHz portionreserved for the satellite element of the UMTS systems.

The process of licensing 3G spectrum is in the process of being progressed worldwidethrough a process of auctions and 'beauty contests'. The UK government chose the auctionroute for licensing the 3G spectrum and anticipated a windfall of £1bn for the exchequer.In their bidding for, in effect, on-line real estate the demand for such spectrum amongst thebidders surpassed even the most optimistic estimates. A total of £22.5bn was raised in theUK auction, highlighting the future predicted dominance of 3G technology. The tablebelow outlines the bidders, the money spent and the resulting blocks of spectrum bought.

UK 3G (UMTS)MOBILE SPECTRUM AUCTIONTIW Licence A – 2x15MHz paired spectrum +

5MHz unpaired spectrum£4.3847bn

Vodafone/Airtouch

Licence B – 2x15MHz paired £5.964bn

BT Licence C – 2x10MHz paired + 5MHz unpaired £4.03bn

One2One Licence D – 2x10MHz paired + 5MHz unpaired £4.003bn

Orange Licence E – 2x10MHz paired + 5MHz unpaired £4.095bnThe one area of concern from the rural perspective from this 3G auction/purchase is thatthe 'minimum coverage requirement' for the 3G licenses at auction was 80% of thepopulation by 31 December 2007. Considering past experience in the Highlands & Islands,particularly the Western Isles, there appears to be very little in the way of a guarantee thatour area will not be in the 20% excluded from the mainstream due to the 'uneconomic'conditions present in the area. There are still consumers in the rural areas of the Highlands

Source: BBC On Line


& Islands that are not yet connected to a digital telephone exchange, some 10 years afterthe main upgrading programme. Perhaps at the very best we may achieve broadband 3Gservices towards the end of the anticipated 2002-2007 build-out.

In short, there would appear to be no guarantee (as with the case with ADSL) of animpending rollout programme, without once again significant public sector incentives, toeither speed up the 3G broadband rollout to our area or to entice it here at all.

If we are looking up to 7 years 'down the road' as it were for 3G in our area then it is clearwe should be focusing our efforts elsewhere, as no doubt a 2Mbps link in 2007 will be theequivalent to a 56kbps connection today – i.e. far from the optimum solution. On thepositive side: "..users can have multi-mode devices that switch to the currently availabletechnology (such as GSM 900 and 1800) where UMTS is not yet available." [whatis.com]

Hence, at least an interim service which will automatically upgrade the service available,via network roaming, to 3G should be available in the next several years.

Examining the existing GSM services in detail from the various suppliers such as One2One, Vodaphone, BT Cellnet and Orange, shows that in the Western Isles context the basic service is far from universal. One2One has a largely non- existent service, whilst the other 3 main providers have significant service shadows apparent throughout the Islands, in North Lewis Harris and the Southern Isles in particular. Refer to Box 28.

A main concern then, particularly given the context of this study must be the coverage of UMTS broadband services in the rural and remote areas outside the main towns and centres of population in the Highlands & Islands.

As things stand at present it seems unlikely that the core and peripheral areas already targeted for GSM services will be extended further, thus making UMTS services in current 'shadow' communities unlikely.

UMTS will thus only likely become part of any solution for rural areas in the Highlands& Islands. Even so the variance in service currently experienced should certainly beimproved upon, due to the ability of users to link up to any available interim service fromany operator as the convergence towards 3G continues.

BOX 28 Orange GSM 1800 Servicehttp://www.gsmcoverage.co.uk/gsm_coverage_maps.html

http://www.gsmcoverage.co.uk/gsm_coverage_maps.html


There can be little doubt that enhanced GSM services (2.5G) such EDGE originally due forcommercial rollout in Europe in 2001 (although now apparently delayed until 2002 due toequipment and testing delays) will enable enhanced 384kbps internet connections over thatwhich is currently available in many rural areas. However, concerns have been expressedwithin the industry on the true real time speeds that will be achievable. Non-shadow GSMareas that currently do not have access to ADSL or Cable will benefit and a new host ofservices will be possible. However, there is uncertainty in the market and service providersin Europe in particular are already considering skipping EDGE to move directly to anotherstandard called W-CDMA, this being the final upgrade path to 3G for GSM carriers, whilstalso offering comparable connections speeds. However, even here some commentators arepredicting that 3G may never actually be implemented in its current envisaged form due tothe time to market and the inevitable changes likely to take place.

So what are the services that have enticed £24.5bn being spent on the 'big five' licenses inthe UK? "By 2003, it is forecast that there will be nearly 1 billion mobile devices in usethroughout the world. As a result of this penetration , more people will access the Internetvia mobile devices than through a PC within four to five years…The stakes are high – end-user spending on mobile commerce is expected to reach $200 billion by 2005 and thedemand for infrastructure to support and manage new wireless applications is forecast toreach $25 billion within 5 years". [www.commonwealthassociates.com]

If we look East to the Japaneseexperience then some indication of thepotential becomes apparent. In Japan inearly 1999 there was a lack of cheaphigh speed internet access (i.e. dial-upinternet access was billed by the minute),so when DoCoMo Net launched its newmobile 28.8kbps wireless service 'I-mode' in February 1999, within 12months it had 4 million registered usersand now has 8 million subscribers,making it the fastest growing internetservice provider in the world. As well asweb browsing the mobile serviceportfolio includes e-mail, interactivegaming, multimedia content and instantmessaging. However, perhaps the most

interesting statistic is that 90% of the I-mode service subscribers are first time internetusers, thus the I-mode interface being the only one with which they are familiar.

Looking West to the US, it has not been so much the consumer that has been driving thetechnology but rather the business sector, where there has been a marked growth in theremote and mobile elements of the workforce.Infometrics Research in the US has predicted an increase of this component of theworkforce by 30% between now and 2003, with each user costing an average of $10,000 toservice. The US consumer market appears to be quite different however with a ForesterResearch survey showing that 75% of households did not value services such as receivingnews, sports and weather on their mobile phones.


In the US as in the UK, it is the under 25 market that will most likely lead the mobileinternet revolution. Indeed a recent survey in the UK has shown that young people areincreasingly giving up cigarettes to run instead the ultimate fashion and communicationsaccessory – the mobile phone. This market will be without doubt be a key area for theindustry to convert, by offering cheap high speed internet access, inter-active gaming...etc

Hence, one could foresee a 'Japanesque' revolution in this sector in the UK by the youngadults of tomorrow who already have a grounding in mobile communication devices. Inthis context the major investment by UK providers in 3G frequency spectrum becomessomewhat more justifiable, although not without risk.

4.6 Summary & Analysis

MMDS is as yet an area of untapped potential in the UK, described on the RA's website as:"an analogue service similar to MVDS operating in lower frequency bands around 2GHzchiefly for the distribution of broadcast material." As a BWA technology it has begun tobe exploited for the delivery of commercial broadband services in the US and other partsof the rural Americas and beyond. In this sense it has become a maturing technology withmuch apparent potential, although the question of accessing appropriate regional spectrumstill remains. LMDS as a separate technology is where most spectrum licensing activity isin the UK at present in the BWA sector. However, due to its reach capabilities it is oflimited potential to non-built up areas such as the Western Isles and Highlands & Islands ingeneral, although again appears to be an under-exploited robust technology. Ofcomplementary and/or alternative interest to MMDS spectrum is the unlicensed band2.4GHz and 5.8GHz products and solutions, which have the obvious advantage of notrequiring investment in operating licenses and can therefore be piloted quite easily and in ashort time frame, although having to operate within specific levels to avoid interferencewithin and with other spectrum. In addition, there may also be restrictions on third partyservices or the provision of public access services.

With regard to mobile wireless access via ultimately UMTS services or their equivalent,there is without doubt a massive potential subscriber base, as yet probably untapped.Broadband 3G and the interim technologies have been delayed however, and may still besome years away (2003 at the earliest) for rural areas such as the Highlands & Islands, withan expensive overhaul of GSM equipment ultimately required to provide full mobile 3Gservices. Indeed, the upgrade requirements will, it has been stated, lead to a morestreamlined route to the mobile broadband goal envisaged, whatever 3G form this willeventually take. Investors in the UK 3G licenses have however expressed some concern inrecent months regarding the technology’s ability to live up its hype in view of recentexperiences by I-mode in Japan. It appear the technology’s performance will not now beable to handle true broadband services such as video on demand, but rather moreconservative 10-15 second video clips and this has obvious repercussions for anticipatedrevenue streams and its eventual worth as a broadband alternative for rural areas.

With regard to the potential of wireless terrestrial and mobile to provide a broadbandsolution in line with the Western Isles' needs there are several areas which need to beprogressed and researched further.


Firstly, with regard to mobile wireless broadband which will it appears be at least acontributory component in our broadband future it will be important that the infrastructurein the area is at least enabled to provide blanket GSM mobile coverage even in the mostremote communities, to ensure that the Islands are part of the mobile (upgrade) broadbandrevolution which is without doubt on its way when considering the advancements incountries such as Finland and Japan. Significant investment has been made in the spectrumand we need to ensure that the service operators are committed to 100% coverage ratherthan just the 80% of the population to which they are obliged under their current 3Glicenses. Government funding to avoid any digital divide developing in the next generationwould not seem unreasonable given policies for social inclusion and the acceptanceelsewhere, in the Americas for example, for intervention in the market to assist ruraltelecoms infrastructure provision. There is not shortage of evidence worldwide to supportthis opinion.

Given the state of flux in the mobile wireless broadband marketplace there may also bemileage in entering into a research and development partnership at the Highlands & Islandslevel with one or more of the current 3G license holders to pilot cutting edge mobilebroadband and ascertain its true performance abilities.

Likewise, in the Broadband Wireless Access sector, a model of establishing public-privatepartnerships to lever advanced broadband infrastructure into rural communities has alreadybeen tried and test in the rural United States. The provision of BWA links for localauthority, health sector, economic development or education services/purposes mayprovide opportunities for innovative 'piggy-back' community broadband wireless networks,with the key base station infrastructure being funded for initially core public sectorfunctions, but with spare capacity. An obvious private sector partner would be Ciscosystems given their presence already on the Islands. Again, these are technology solutionsthat have been used by other large businesses and local authorities, educationalestablishments and health boards in other parts of the country. Even if the Unlicensedspectrum is not to be made available for ‘public’ access, there may still be opportunities forcommunity organisation based access to homes.

In the short-term such initiative could bring real broadband opportunities for localcommunities in the Western Isles now, in a short space of time, targeting key communitiessuch as Ness, Lochs, Tarbert, Balivanich and Barra, where a range of multi-functions areprovided already by the public sector. The development of a wireless Western Isles On-Line broadband community, must surely be a key economic and social development goal.

In summary, BWA is a specific area in which an innovative local approach to telecomsdevelopment can be envisaged, to provide a broadband solution for key communities, withmobile solutions addressing and indeed targeting any 'shadow' communities at a latterstage.



ADC Telecommunications & Wireless, Inc Use of License Exempt Bands to Enhance BroadbandServices in an MMDS Network (2000) http://www.wire-less-inc.com/solutions/license-exempt.html

Bateman, A., An Introduction to Transmitter and Receiver Architectures (1999) Archive Library -http://www.avren.com/main_frame.htm

Donegan, Michelle, LMDS Lessons for Europe, (August 2000) http://www.totaltele.com/

Ericsson, UMTS and 3G ,(Sept. 1999)http://www.ericsson.se/wireless/products/mobsys/gsm/subpages/umts_and_3g/umts_and_3g.shtml

Greiper, Scott L. & Ellingsworth, Craighton D. @ Commonwealth Associates, The WirelessInternet and Mobile E-Commerce (October 2000) http://www.commonwealthassociates.com

Hadar Rami - Ensemble Communications Inc. Broadband Wireless Access , (Apr 2000)http://www.wirelessdesignmag.com/

Kalia, Manu @ Commonwealth Associates Wireless Infrastructure: In the Eye of the Storm(1999) http://www.commonwealthassociates.com

Kelly, Frank - ADC Telecommunications Transitioning to Two-Way Data (Feb. 2000),http://www.wirelessdesignmag.com/

Kreig, Andrew, Broadband Wireless: It's Already "Fixed" (May 2000)http://www.nab.org/conventions/nab2000/daily/wca1.asp

Martínez, Jorge Peréz (English Translation), [Reprinted from BIT No. 115 May-June 1999] The MadridMulti-Access LMDS (28-31 GHz) Trial System , ( June 1999),http://www.cableaml.com/madridtrialsystem.html

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New York University, Anon. LMDS, Cable Modems, and xDSL: A Comparative Study(November 1997) http://fargo.itp.tsoa.nyu.edu/~rosner/LastMile.html

Perelman, Robert - Times Microwave Systems The Wireless Internet Connection ,(April 2000)http://www.wirelessdesignmag.com/

Phone.com, White Paper:Enabling the Wireless Internet, (February 2000) http://www.phone.com

Radiocommunications Agency, Compatibility between radiocommunication & ISM systems inthe 2.4 GHz frequency band (June 1999) http://www.radio.gov.uk/rahome.htm

Radiocommunications Agency, Consultation on 3.4 GHz Fixed Wireless Access Spectrum(November 1999) http://www.radio.gov.uk/rahome.htm

Radiocommunications Agency, Wireless in the Information Age Delivering Interactive Multimedia toWorkplace and Home (July 1999) http://www.radio.gov.uk/rahome.htm

Restrepo, Jorge E. & Woods, Norman F. [Reprinted from Wireless Pay-TV International] The 50 Kilometer Myth:Realising Practical System Coverage ,(July 1997)

http://www.wire-less-inc.com/solutions/license-exempt.html

http://www.avren.com/main_frame.htm

http://www.totaltele.com/

http://www.ericsson.se/wireless/products/mobsys/gsm/subpages/umts_and_3g/umts_and_3g.shtml

http://www.commonwealthassociates.com

http://www.wirelessdesignmag.com/

http://www.commonwealthassociates.com


http://www.nab.org/conventions/nab2000/daily/wca1.asp

http://www.cableaml.com/madridtrialsystem.html

http://www.wire-less-inc.com/solutions/license-exempt.html

http://fargo.itp.tsoa.nyu.edu/~rosner/LastMile.html


http://www.phone.com

http://www.radio.gov.uk/rahome.htm




Scourias, John Overview of the Global System for Mobile Communications (October 1997)http://ccnga.uwaterloo.ca/~jscouria/GSM/gsmreport.html#6

Skoro, John LMDS: Broadband Wireless Access (Oct. 1999) Scientific American:http://www.sciam.com/1999/1099issue/1099skoro.html

Smith, Brad, Welcome to the Wireless Internet (January 2000), http://www.wcai.com

UK Government (2000) http://www.spectrumauctions.gov.uk/3gindex.htm

US Department of Commerce, What is LMDS? (1999) http://nwest.nist.gov/lmds.html

Utell, Michael J. & Irshad, Asad, Wireless Bridges Span the Divide, (May 2000)http://www.networkcomputing.com

Virginia Tech. WWW Pages LMDS at Virginia Tech. (November 1999) http://www.lmds.vt.edu/

WebPro Forum Tutorial, Local Multipoint Distribution System (LMDS) Tutorial (August 2000)http://www.iec.org/tutorials/lmds/index.html

Chapter 5 Fibre To The Home (FTTH) / Fibre To The Curb (FTTC)

http://ccnga.uwaterloo.ca/~jscouria/GSM/gsmreport.html#6

http://www.sciam.com/1999/1099issue/1099skoro.html

http://www.wcai.com

http://www.spectrumauctions.gov.uk/3gindex.htm

http://nwest.nist.gov/lmds.html

http://www.networkcomputing.com

http://www.lmds.vt.edu/

http://www.iec.org/tutorials/lmds/index.html


5 An Overview of the Potential

FTTH and FTTC are the 'holy grail' of broadband communications and, particularly theformer, the main high bandwidth level of service to which foreseeable broadband networkswill aspire and compare themselves to. FTTH is the surest way to future proof anybroadband telecoms network today in the year 2000. It may be, that communities such asthe Western Isles of Scotland where investment in broadband interim solutions has beenlargely non-existent, that a direct investment path to Fibre provides the best value formoney option in the long term, particularly if innovative rollout solutions can be identified.The cost of optical fibre technology has also reduced significantly:

"Fibre on the backbone, copper to the desktop. For years, that’s been the book on premises wiringmanagement. That book has now been rewritten due to the dramatic cut in cost of installing fibre to thedesktop. The continued price reductions for fibre cabling and components have brought the overall cost offibre installation close to that of Category 5 unshielded twisted pair (UTP) copper wiring…No longer shouldfibre optics be considered an alternative to copper used only for applications with special requirements.Fibre optic technology is clearly superior in performance and is now competitive in price with the high-endtwisted-pair cable required for today’s high-speed networks." [www.networkcomputing.com]

In addition, new methods to provide FTTH avoiding the main costs associated withdigging up the road and pavement, are being discussed. One example is the provision offibre to homes via the existing sewage duct infrastructure. Given this background then, oneneeds to carefully consider this 'ultimate solution' in the context of the broadbanddiscussion to date. The long term argument for fibre via passive optical networking (PON)technology or via Gigabyte Ethernet technology is unequivocal, when one regards the nearunlimited speed achievable and the bandwidth attainable. It truly appears to be the 'holygrail' particularly for currently under-developed rural regions. Bandwidth will not bedetermined by the constraints of the technology, but rather the consumer's needs. Refer toBoxes 29 and 30.

If our past experience and continuing knowledge of demand for bandwidth tells usanything, it is that future demands will continue to increase at a pace faster than the rolloutof the interim broadband technologies, currently promising/offering between 1-10Mbps,can address. Any 5-10 year rollout of such technologies may not prove cost effective dueto their limited operational life as cutting edge telecoms technology. Just 10 years agomajor investment in bringing ISDN capabilities to rural areas in our region was seen as amajor infrastructure provision of lasting effect. However, such technology has now beenovertaken before even significant market penetration has been realised and we areassessing where our next key investment should be focused.

Unlike other broadband solutions such as Cable and ADSL which often tend to excluderural and even suburban locations, in the US some of the best early examples of FTTHhave been in just such areas on an initial small scale. For example Bell South in state ofGeorgia installed its first FTTH network to 400 homes in the Atlanta suburbs, and as weshall discuss in the next section there are also other examples of early rollout in the USwhich pertain to even more rural areas.

5.1 An Outline of the Competing Fibre Technologies

Even although the Passive Optical Networking systems appear to be getting much support


AC power, hence the designation as being 'passive'), they do contain constraints whichmake them less ideal than the new Gigabit Ethernet based fibre systems. in terms ofservice provision they are limited in the true bandwidth available to customer, typicallybeing 10Mbps and are also more complex to roll-out, given recent experiences in the US.In this respect they also tended to be significantly more costly with regard to the networkequipment required. On the other hand, Ethernet is a proven technology with a muchsimplified interface which saves on cost, enables higher throughput (in comparison toPON) and allows greater flexibility of service. in seconds rather than perhaps days orweeks. In addition, in so far as an Ethernet based infrastructure can enable multi-serviceprovision down the 'pipe' consumer choice is expanded and the overall quality of servicewhich can be achieved, arguably higher.

" Ethernet's performance, scalability, acceptance and support, together with advances inhardware, make it a very viable community networking technology. Concerns about cost,interoperability, scalability, and ease of management simply aren't warranted in the Ethernet-everywhere scenario."

In summary, and without going into the technology in any depth, there are concerns thatthe PON FTTH networks currently being rolled-out 'en-masse' in the US may not be asfuture proof as the newer Gigabit Ethernet infrastructures, although from the limitedinformation available it is difficult to make an informed decision.The latter have the apparent advantage of low cost installation and maintenance,widespread availability, scalability, speed of response and basic simplicity.

PON systems on the other hand, as can be seen in Box 29, are less straightforward andcontain several key elements.

♦ OLT Optical Line Terminal♦ A passive splitter that direct wavelengths at the network interface point.♦ ONUs Optical Network Units♦ NID Network Interface Device

The OLT or 'headend' may be located in the service provider's nearest office or at the headnode of the overall system. ONUs may be located on street locations or in the userspremises and NIDs, when necessary, will be located on user premises. The terminationpoint of the overall system will also determine whether we have a FTTC or FTTH system.

Fibre optics would not even be considered if it did not offer distinct advantages overtraditional copper media. These advantages translate into the following:

• Information-carrying capacity.• Low loss.• Electromagnetic immunity.• Light weight.• Smaller size.• Safety.• Security.

In response to such positive attributes fibre has traditionally considered to be fragile,difficult to work with, expensive and of little relevance to all but the most large scale


businesses. In actual fact optical fibre has a greater tensile value than copper or steel fibresof the same diameter, advances in the technology has made installation significantly morestraightforward, its cost is now on a par (maybe even less) with that of 'category 5' copperand its high capacity and bandwidth make it the essential future-proofing technology.

5.2 An Overview of the Technology & Developing Market

A single optical fibre cable can provide a quoted 100Mbps link to individual servicesubscribers. Clearly, the 'interim' technology outlined to date (for all its potential) isequivalent to no more than the 2400bps connection of 1992 in comparison to the 2MbpsDSL connection of today, in terms of quality of service. In the 90s for example there hasbeen a commonly quoted 20 times growth in bandwidth demand, with no let up predicted.

"Transmission speeds in commercial fibre systems had increased by more than a factor of 50 by the early1990s, but the fundamental architecture remained the same. Fibres ran from one electronic box to another. Alaser transmitter pumped pulses down fibres made of exquisitely pure glass. On the other end, a receiverconverted the light signals back into electrical form, and electronics processed or amplified the signals.

Electronics do the combining, called multiplexing, in a series of steps. For standard telephone service, theydigitise voice signals from 24 phone lines and merge them into one signal at 1.55 million bits per second.Typically, the next step interleaves 28 of these 1.55-megabit signals to make a 45-megabit signal. Furthersteps make faster signals and send them through fibres.

At the fibre output, other electronics process each signal. They typically demultiplex it, breaking it intocomponent parts for redirection, and often combine these parts with pieces of other signals and send themthrough another fibre. Sometimes they amplify and regenerate the signal, allowing it to pass essentiallyunchanged through another length of fibre." [www.techreview.com]

It is interesting to note however that fibre optical cable in the communications network isstill a relatively new provision, only being introduced nationally to the backbone whenderegulation opened up competition in the long-distance phone network in the 1980s.

Indeed in 1984 British Telecom achieved an important first by laying the first submarinefibre optic cable to meet the telecoms needs of the Isle of Wight. Then later in 1986 thefirst fibre optic cable across the English Channel came into service. Two years later in1988, the first submarine fibre cables became operational across the Atlantic and then ayear later across the Pacific between North America and Asia.

Only an average 15-25% increase in costs in laying fibre as opposed to copper is oftenquoted within the telecoms industry, so given future bandwidth requirements, one couldeasily anticipate the revenue benefits associated with the plethora of new broadbandservices to outweigh costs significantly, in the long term business cycle. FTTH trials overthe last several decades have generally not proved a success due to a lack of any 'killer'service applications able to utilise the technology.

This situation is quite different today in broadband world in which we are beginning toenter, with the convergence of the internet and other consumer devices, being increasinglyintegrated via 'bluetooth' wireless standards. On the business front, a fibre enabled regionbecomes a significant potential inward investment site, and a potential major growth centrefor existing businesses migrating to the e-commerce, on-line revolution. As outlined inSection 1, new ways of working are already beginning to shape our economic future and


continues to 'lag behind' for the foreseeable future, or instead turns itself around andbecomes one of the most significant growth centres in rural Europe.

Telecom suppliers can already make a cost effective case for supplying fibre to areas withjust 100s or even just 10s of homes, but full FTTH has remained expensive until recentlydue to the terminal equipment required. However recent announcements relating to newequipment coming to market (e.g. Marconi) price the installation of FTTH on a par withDSL. The implementation of standards across the board will also help.

Full Service Access Network (FSAN) is currently a fibre standard approved by the ITUand subscribed to by many of the major telecoms suppliers worldwide such as BritishTelecom, Bell South, France Telecom, Nippon Telegraph & Telephone...etc. Suchstandardisation of fibre access technology to homes and businesses will surely only serveto drive down prices further of (e.g. terminal equipment) installation and supply tobusinesses and homes alike.

Verizon Communications (October 2000) have identified that the key components toenable FTTH i.e. 'aerial fusion splicing', 'self-supporting fibre cable and fibre drops', theprice of fibre itself and one-fibre 'PON architecture', have all combined to make the priceof installing fibre on a par with that of copper. In some instances a quoted price of $1200(£850) per home.

Coming back to reality, one might argue, it is just now that the US telecom industry isbeginning to focus on FTTH in new build situations, with FTTC being the norm in upgradesituations to date. However, of major interest is that one of the key initial customers foroptical fibre suppliers in the US (e.g. Optical Solutions Inc.) has been small local telecomssuppliers using fibre to supply broadband services to rural homes outwith the reach ofADSL and Cable e.g. Rye Telephone of Colorado City is installing fibre "to 500 homes ina sprawling 80-square-kilometer community called Hatchet Ranch."

British Telecom's current focus on fibre rollout in the UK is focused on supplying fibre tothe main commercial centres in the UK, supplying a branch rollout between buildings,similar to the branched rollout among homes as seen in the US in a number of high profileinstances. It is worth noting however, that the focus of fibre rollout in the US haspredominantly been in regions experiencing economic and population growth, where newbuild opportunities have presented themselves, rather than in regions where fibre has beensupplied as a direct replacement for existing copper networks. In addition, FTTH, FTTCand FTTB (Fibre To The Building) are in many instances in the US being rolled-out toresidential customers in the first instance. "While most optical access bandwidth providerspedal the benefits of fibre-optic technology to business centre customers, En-Touch Systems Inc.(Houston) is targeting the emerging market of the residential consumer. …delivering bundledservices to customers being overlooked by most of today's business-oriented providers."

The general trend has been that fibre is coming closer and closer to the customer and in theUS this has, as we have seen, even included rural customers. This initiative has been


the existing copper infrastructure of such telecoms suppliers is not easily written-off. Inrealisation of the potential lead being taken by competitors, to the incumbents, insupplying fully fibre solutions to customers, venture capitalists have literally been fallingover themselves to invest in this next generation broadband technology.

5.3 The Case for Fibre Infrastructure

Incumbent suppliers such as BT in the UK appear to cling to the idea that fibre remains acostly alternative, yet on the other hand continue to roll out ADSL, to utilise existingcopper infrastructure. Yet there can be little doubt of the interim nature of such investment,as an ever emerging array of broadband services continues to bring ever increasingbandwidth-demand requirements onto such networks. As Joe Dooley of Optical SolutionsInc. puts it: "…those who still believe FTTH is too expensive on a per-subscriber basis areeither ill-informed or operating from dated information." Certainly for the 60-70% ofhouseholds that can get ADSL in 'enabled' areas it is a major advance on a 56Kbps modemconnection. Its rollout in the UK remains constrained, held back by BT's resistance togiving open access to its full local exchange infrastructure.

Even then the exchange infrastructure is proving costly for competitors at approx. £150Kper site, in addition to on-going line rental and equipment and line testing costs with only alimited number of customers available due to the high pricing required of in excess of £40per month for the basic 512Kbps service. Recent research for the Gartner Group suggestsconsumers are not willing to pay more than £25 per month for such a service.

However there is not even a commitment to supplying this interim technology in ruralareas such as the Western Isles, though as indicated earlier, this may present anopportunity to jump a generation in the development of broadband infrastructure in areassuch as the Western Isles. One of the main criticisms that might be directed at such interimtechnology is that although it appears to provide value for money for suppliers inconventional terms, they fail to take into account residual values. In considering FTTH onecan confidently make the case that its value will actually appreciate over time, as morebroadband services emerge to utilise the potential bandwidth available.

One would expect a high level of customer loyalty in the long term, as when newbandwidth demands become apparent, the fibre customer's pipe can simply be opened a bitfurther to enable any new bandwidth-hungry services.

Subscribers to DSL, cable, wireless, satellite…etc in this future will likely need to changesupplier and technology to meet their needs. This loss of potential revenue for alternativesuppliers in year X is not likely to be shown in conventional accounting assessments, andas new higher value services come on line (with their associated revenues) the opportunitycost foregone is likely to be even higher.

"For those with a vision of offering all of the services subscribers want today and theservices they will want tomorrow, an FTTH infrastructure is really a business necessity. Itis the only infrastructure that has the bandwidth and flexibility to address the large,growing, and ever changing bandwidth demands of residential subscribers." [Optical Solutions


In short, what investment decisions in other technology over FTTH will miss is theopportunity cost of lost customers and the loss of revenue from as yet unrealised futurebroadband services. To counter this potential loss, interim technology will have to beupgrade at further cost to ? – FTTH! Hence, there must even be a case for incumbents likeBT, to, instead of maintaining an ageing copper infrastructure (in rural areas such as theWestern Isles), upgrade direct to fibre at an earlier rather than later stage in the businesscycle. Due to the additional revenue which can be attained by upgrading now, instead ofinevitably at some later stage 'down the line', after more costs have been incurred tomaintain a decreasingly reliable infrastructure and satisfy some interim broadband needs inthe short term to stave off criticism from OFTEL and others. Replacement fibre is alreadyas cheap as replacement copper, with costs of fibre solutions set to fall even further.

Alternatively, as has been the case in the US, there may be opportunities for new entrantsinto the local loop interested in building-out a long-term appreciating infrastructure, ratherthan a depreciating alternative. With such a long-term perspective there can be little doubtthat fibre is the first choice investment for today, for an area such as the Western Isles."For carriers and their customers, it’s a no-brainer: Those that get FTTH first win."[Optical Solutions Inc]

If one subscribes to this view, then a clear development path for the advancement ofbroadband in the Western Isles becomes clear, providing some innovative solutions toaddress initial rollout costs can be identified. There are without doubt issues relating torobustness which have to be considered and related maintenance (management) issues,which are not always immediately able to be addressed and in some instances may even beweather dependent. In Denmark such concerns have not hindered investment. The Danishgovernment’s ‘Info Society 2000’ programme has already stated its intention to lay downin the first instance a country-wide optical fibre network to all the nation’s municipalities.In Ireland a similar broadband initiative is now underway utilising fibre optics in the firstinstance between key sites in the country’s network not presently ‘future-proofed’ withfibre, but which is committed to bring broadband to the whole country.

The technology is improving rapidly however to address such remaining issues/concernsand some estimates predict FTTH being available universally throughout the United Stateswithin 10 years, on the basis of present trends. The Rye Telephone Co in Coloradoprovides an example how forward–thinking telecoms carriers are already addressing fibreissues. Posing the question of whether to reinvest in their ageing copper infrastructure,much of which was requiring constant upgrades, repair and extensions, a clear economicjustification for the replacement of the old copper with new fibre was apparent. This willbecome an increasingly imminent decision faced by (a) carrier(s) in the UK and therewould appear to be one clear answer – now rather than later!

5.4 Summary, Analysis & Comment

Many still view FTTH as overkill since immediate needs are being increasingly catered forby DSL, Cable, Wireless...etc It should be noted however that initial ducting cables lain bythe main telecom suppliers in the US in the last 10 years contained 'dark' fibres, sparecapacity for future demand. However, the onset of internet based demand was not foreseenon such a wide scale and a study in 1999 showed that some carriers such as Sprint in the


US for example have already lit up to 85% of its reserve and AT&T 50%. The demand forbandwidth is unrelenting, with internet traffic said to be doubling every six months, hencethe extension of fibre networks worldwide is inevitable and the surest way to build infuture-proofing to any technology investment. "These days, telecommunications companiescan be categorised into 2 groups - the quick and the dead. The 'dead' may kick themselves for notembracing FTTH when they had a chance. " [www.about.com]

Certainly in business terms there are huge revenue rewards to be achieved for thosebusinesses or indeed areas arriving first in a market with an existing and a futuristic rangeof products and services able to be developed. An ever growing customer base and anappreciating infrastructure are two clear economic reasons for FTTH. Given that ADSLcosts £40 per month for a very limited broadband service on top of existing voice calls,then one could easily foresee FTTH being able to provide a range of added value servicesfor carriers of over £100 per month (Forrester Research–Beyond Broadband). In terms ofopportunity for rural residents such services would really be the much talked about'distance shrinking' technology.

Capturing an opportunity such as that presented by fibre to the home requires adetermination of will and vision to invest heavily today in infrastructure which willappreciate and pay dividends for communities at some time in the future.

The spending of tens of millions of pounds to provide key infrastructure for remotecommunities in the Western Isles is not a radically new concept, but it is rather the natureof the development that is different this time around. And, although perhaps more costly,one could argue its impact will be significantly more than any bridge, road or causewayhas ever managed to achieve to date.

Community based broadband projects, similar to those by tenants associations in Sweden,one of the leaders (in Europe), in broadband rollout, might be a way to secure newinfrastructure or perhaps on the back of public sector upgrades, as suggested in sections 6for Wireless or in partnerships with private sector telecoms/content providers. Either way,in development terms the impact of FTTH or FTTB for that matter, on the future economyof the Islands, would be unlikely to be surpassed by any other single developmentcommitment and investment.

The jumping of a generation from narrowband to the 'holy grail' of broadband can actuallybe considered to make economic sense for carriers, consumers, service providers andbusinesses alike. It is potentially a 'win-win' situation if recognised. Ideally, an underseafibre link to the mainland would be the ultimate solution, but the extension of currentmicrowave backbone links could without doubt be achieved cost effectively to support anFTTH rollout in the Western Isles. In this respect it may be worth investigating if any ofthe Utilities possess any spare undersea ducting from the mainland to the Islands. CertainlyScottish Hydro Electric possess undersea cables for the national grid infrastructure, andalthough no new undersea cabling is anticipated within the next 10 year timeframe, futureinvestment may be brought forward to achieve economies, should another proposaltargeted at laying an undersea link be tabled.

This aside, one must consider the economic development potential of entering such anadvance broadband market so early. Inward Investment and new business opportunitieswould be significant, as would the ability to provide add values social (development)


internet/e-mail videoconferencing, HDTV, teleworking, education & health services, on-line gaming, banking, video-on-demand would be easily incorporated down the same 'pipe'as well as a host of as yet unknown services, perhaps Virtual Reality, or HolographicTV/Video, because of the almost unlimited capacity available.

As one Californian community working with their local council on a pilot FTTH projectstated – the new infrastructure will provide an invaluable asset for our children and ourcommunity and provide a lasting legacy. In 5-10 years as the lifespan of other broadbandtechnologies comes to an end after being superseded by bandwidth demands, FTTHnetworks installed now will continue to be appreciating in value, rather than coming to theend of their lifecycle. Although, give the time lag in rural areas will still be only in themiddle of their lifespan in areas such as the Western Isles. In such a fast moving industryof increasing importance it would be folly to invest heavily in a rural area in anything otherthan the most future-proof technology on the market. hence, we have the main case andjustification for investment in fibre optic infrastructure.


Bates, Devon, Marketing & Comm.s Manager, KMI Corporation, Fibre-To-The-Home Approaches: CostParity with Copper (October 2000) http://www.kmicorp.com/

Communications Industry Researchers: http://www.cir-inc.com/reports/default.htm

Dooley, Joe, FTTH: How much does it cost? vs. How much is it worth? (September, 2000)http://lw.pennwellnet.com/home/home.cfm

Fibre Optics On-Line Web Resources: http://www.eoenabled.com/fibreopticsonline/default.asp

Gall, Don & Shapiro, Mitch, The Trouble with Fibre-To-The-Home (September, 2000)http://lw.pennwellnet.com/home/home.cfm

Hecht, Jeff, Fibre Optics to the Home (May 2000) http://www.techreview.com/articles/ma00/hecht.htm

Hecht, Jeff, New Pipelines Promise Unprecedented Speed (August 2000) http://www.upside.com/Ebiz/

McDonald, Mark, VP of Access Network Marketing, Marconi Communications (Irving, TX) Creating an IdealInfrastructure for 'Futuristic' Services and Applications (September, 2000) http://lw.pennwellnet.com/home/home.cfm

Morales, Octavio & Setty, Chris, World Wide Packets, Sky's the Limit with Ethernet over Fibre (November2000) http://lw.pennwellnet.com/home/home.cfm

Oakes, Chris, New Push for Fibre To The Home (June 1998) http://www.wired.com/

O'Mara, George & McCreary, Scott, Scott Sumitomo Electric Lightwave, FTTH Architectures faceInterconnect Issues inside the Final Mile (October 2000) http://lw.pennwellnet.com/home/home.cfm

http://www.kmicorp.com/

http://www.cir-inc.com/reports/default.htm

http://lw.pennwellnet.com/home/home.cfm

http://www.eoenabled.com/fibreopticsonline/default.asp


http://www.techreview.com/articles/ma00/hecht.htm

http://www.upside.com/Ebiz/



http://www.wired.com/



Optical Solutions Inc. http://www.opticalsolutions.com/index1.htm

Ovum Research, There's more to local Access than DSL (September, 2000) http://www.ovum.com/

Pease, Robert, Rural Areas Present Better Business Case for Fibre-To-The-Home (June 2000)http://lw.pennwellnet.com/home/home.cfm

Wolinsky, Howard, Optical Boom Spurs Visions of Grandeur (August 2000) http://www.upside.com/Ebiz/

ZDNet, Broadband Access Guide (April 2000) http://www.zdnet.co.uk/news/specials/2000/04/broadband/

Chapter 6 Broadband Telecoms: Conclusions

To many at this time, the importance of establishing this visionmight not be clear. However, what is clear from the research,which has cumulated in the formulation of this report, is theimmense development potential looming just over the horizon inboth economic and social/community terms.

Continued economic stagnation and population decline areissues which the author discusses everyday with people from alldiffering backgrounds throughout the Highlands & Islands. Indoing so the writer is aware of, arguably, the currentdevelopment paradigm of conservatism and consolidation andthe conventional wisdom of diversification. It requires a strongvision and a belief in the future to bring about change, bothsocial and economic. Development is about long term quality oflife gains and sustainability rather than short term materialisticgain and it is the former that a realisable broadband future forthe Western Isles could without doubt bring, although this maynot be immediately obvious to many.

Children from an earlier age are becoming part of the digitalinformation society, often before their parents. What will retainchildren in years to come in remote Islands like ours? – not justthe quality of life, but also the opportunity to earn income in linewith their aspirations and attain services from this futurebroadband society in their home area. A key policy decisionnow could reverse youthful out-migration within 5 years, lead tore-population and attract significant publicity, awareness and

It requires a strong visionand a belief in the futureto bring about change,both social and economic.

Development is aboutlong-term quality of lifegains and sustainability.

Children from an earlierage are becoming part ofthe digital informationsociety, often before theirparents.

Our children will need theopportunity to earnincome in line with theiraspirations and attainservices from this futurebroadband society in their

http://www.opticalsolutions.com/index1.htm

http://www.ovum.com/


http://www.upside.com/Ebiz/

http://www.zdnet.co.uk/news/specials/2000/04/broadband/


also been shown to raise average incomes significantly, as newopportunities are realised

Broadband will be the new enabling communicationsinfrastructure for economic development in rural areas, just asroads, bridges, ferry and air services were in the last century.Upon this realisation, the significance of our route to ourinevitable broadband future becomes realised. In market termsthe Western Isles are always going to be at a competitivedisadvantage in our current development paradigm. If we canbreak free from this harness, and combine the potential newopportunities realisable from broadband with the unique qualityof Island life on offer, then we could conceivably become a hightechnology rural development zone.

The increasing pace of development is unrelenting in thetechnology and communications field, meaning that any interiminvestments made will never become available mass market,before being abandoned - e.g. ISDN. Such a cycle of catch-upmay even prove to be depressingly unrelenting in the years tocome and do nothing to address economic stagnation, as newadopter sites increasingly take a higher share of the spoils. Asthe soon to be published Ovum ‘Broadband NetworkInfrastructure in the Highlands & Islands’ report states: “In thelong-term (10 years+) fibre to the building will become the mainaccess technology. This change will take longest in rural areaswhere the distances and hence cost of laying new fibre will bethe greatest.” No doubt the ‘change’ will take even longer inremote island communities off the North Coast of Scotland if wedo not grasp the current opportunity now.

The conclusions from such analysis are surprisingly clear andwere certainly not anticipated. A synthesis of the informationgathered to date, points directly at fibre optic cable as being thekey enabling technology.

It is paramount for the Western Isles to future-proof anyinvestment undertaken. Investment in leading edge technologynow will give us an economic advantage for the first time indecades. We need to jump a generation, just like many of theWAP-3G telecoms suppliers are already doing, cutting out thecost of interim solutions, which will never prove economic orreach mass-market status, because of the next generationarriving so quickly.

Contrary to popular belief, it is rural customers (because of theageing infrastructure faced by telcos and its need to beupgraded) in the US that have been named as being the drivingforce behind many fibre deployments by telecom suppliers.

A decision now couldreverse out-migration,lead to re-population andattract publicity,awareness and inwardinvestment.

Broadband will be thenew enablingcommunicationsinfrastructure foreconomic development inrural areas, just as roads,bridges, ferry and airservices were in the lastcentury…. we couldbecome a hightechnology ruraldevelopment zone.

The increasing pace ofdevelopment isunrelenting in thetechnology andcommunications field.

The Ovum ‘BroadbandNetwork Infrastructure’report states:“In the long-term (10yrs+)fibre to the building willbecome the main accesstechnology. This changewill take longest in ruralareas where the distancesof laying new fibre will bethe greatest”

A synthesis of theinformation gathered todate, points directly atfibre optic cable as beingthe key enablingtechnology for a numberof reasons.

We need to jump ageneration.

It is rural customers in the


Evidence from case studies suggests that one could make thecase that fibre is the most cost effective solution in the longterm. Not only because it has come down in price to the cost ofcopper installations, but because of the added social andeconomic value which could be realised. Conversely, any of theother solutions would need to account from the opportunity costof not providing cutting-edge fibre services.

It would be very easy to conclude, that a 'diversified' range ofthe interim broadband solutions will be the best, most suitableand most likely for the Islands. To achieve this in a reasonabletimeframe, one could envisage the need for numerous publicsector incentives for various suppliers and operators of varyingdescriptions. In such a scenario, the chance of realising aradical and lasting shift in the Islands fortunes will be gone.

The conclusions and vision outlined above however, areunambiguous. Accepting the analysis provided then, begs thequestion how do we get where we want to be going?

as being the driving forcebehind many fibredeployments by telecomsuppliers.

One could make the casethat fibre is the most costeffective solution in thelong term.

A 'diversified' range of theinterim broadbandsolutions will not be idealfor the Islands. In such ascenario, the chance ofrealising a radical andlasting shift in the islandsfortunes will be gone.

Broadband Telecoms Recommendations

• There needs to be a subscription to the principle of thevision outlined above by the development agencies at the locallevel, right up to the national level. The recommendation is thatany further works related to digging up roads, pavements, newbuilds…etc in communities around the Western Isles, willincorporate the laying of ducting cable as a matter ofprocedure. This level of commitment from the developmentagencies will be an early way in which any future vision can beworked towards. Assessments of existing opportunities (e.g.via the sewage pipe infrastructure) and potential for costeffective rollout would also need to be examined.

• A full cost/benefit analysis would need to be commissionedto provide the basis on which to build the vision for a‘connected community’ strategy, this in effect, being thecatalyst for the ensuing development process.

• There needs to be a multi-agency development partnershipset up at the highest level, including local, regional and nationaland perhaps even international interests from both the privateand public sectors. A commitment from the public sector toupgrade its links throughout the Islands may be the necessarycatalyst for the private sector to build-out broadband intoadjoining communities e.g. CnES making a policy decision tolink its offices throughout the Islands by broadband fibre, or

This will mean that anyfurther works related todigging up roads,pavements, new builds…etc in communitiesaround the Western Isles,will incorporate the layingof ducting cable as amatter of procedure.

A full cost/benefitanalysis would need to becommissioned to buildthe vision and identifyclearly the goalsachievable.

There needs to be a multi-agency developmentpartnership set up at thehighest level - local,regional and national andeven internationalinterests from both theprivate and publicsectors.


• The opportunities of an undersea fibre link requiresconsideration.

• A wide ranging financial assessment would need to beundertaken to assess the level of incentive required, andconsequently assess the timeframe under which developmentcould take place.

• Broadband wireless could without doubt be rolled-out on amuch shorter timescale and is the most 'suitable' interimtechnology and appears to be an additional area worthy ofadditional consideration.

undersea fibre link alsorequires consideration.

Wide ranging financialassessment would needto be undertaken toassess the level ofincentive required, andassess the timeframeunder which developmentcould take place.

Broadband wireless couldwithout doubt be rolled-out on a much shortertimescale and is the most'suitable' interimtechnology.

A Final Overview

There now appears to be a genuine willingness at regional andnational levels to stimulate long-term sustainable economicdevelopment in the Western Isles.

As one Californian community put it, ‘broadband fibre willprovide a lasting legacy for our children’. Sustainability requiresthat we consider not just this generation, but also the next. Ifone accepts that the ICT revolution currently happening is on apar with the agricultural and industrial ones of our past then wemust, with this single key opportunity, invest in the correctnetwork infrastructure which will not only look after our presentneeds, but also that of the next generation. Time andcommunity concepts also become a factor and if we are to buildout a broadband infrastructure now it must also serve the needsof the future - 20-30 years from now. Fibre-based infrastructureis thus the clear choice.

It is surely time that a long imagined visualisation of a‘connected community' in the Western Isles was established,benefiting the whole community, having long lasting significanteconomic and social impacts, thus achieving and indeed goingbeyond the present government's aim of rural social andeconomic inclusion in the digital broadband information age. Indevelopment terms there is surely no competing opportunityawaiting to be exploited. The current internet revolution andassociated convergence technology and the resulting effect onsociety is surely of a magnitude never again to be experiencedby our current generation.

It is time that a longimagined visualisation ofa 'connected community'in the Western Isles wasestablished benefiting thewhole community, andhaving long lastingsignificant economic andsocial impacts.

The current internetrevolution and associatedconvergence technologyand the resulting effecton society is surely of amagnitude never again tobe experienced by ourcurrent generation.


states:"Arriving first to market with an assortment of current and

futuristic multitechnology services is a business strategy that offerswhopping revenue potential. The attraction for service providers tooffer a mix of video, voice, and data services to an ever-growingcustomer base is that they can double or triple their revenues within avery short period of time…To be poised for the future and sustainsuccess, the reality is that service providers may need to upgradetheir networks sooner rather than later. Deploying a powerful, highlyscalable technology platform capable of supporting unlimited amountsof bandwidth will give those willing to make the investment to meetdemand, a rich selection of next-generation services and applications.

Whether it's fibre-to-the-curb (FTTC), fibre-to-the-home (FTTH),or fibre-to-the-office, this long-awaited technology is clearly builtfor the needs of the 21st century. A fibre-based solution enablesservice providers to deliver in-demand, bandwidth-intensivecommunications services and add these services to a growinglist of offerings at breakneck speed."

providers to offer a mix ofvideo, voice, and dataservices to an ever-growing customer base isthat they can double ortriple their revenueswithin a very short periodof time… the reality is thatservice providers mayneed to upgrade theirnetworks sooner ratherthan later.

Whether it's fibre-to-the-curb, fibre-to-the-home, orfibre-to-the-office, thislong-awaited technologyis clearly built for theneeds of the 21st century.


PART 2Chapter 7 The Information Society/Age: Trends & Opportunities

7 The Development of the Information Society: An Introduction

The identified need for broadband communications, as identified in Part 1 of this reportwas based clearly on the notion that our society is going through a rapid and lasting changewhich will present new opportunities for rural areas such as the Western Isles of Scotland.The first part of this report concentrated on the ‘hard’ infrastructure required to enablefuture-proof access to the Information Society for residents and businesses in the WesternIsles. Such access being considered of immediate need, to enable access to the new‘development cycle’ associated with the formation of the Information Society. However itis not difficult to argue that such infrastructure alone, will not necessarily maximiseopportunity, unless there is an associated concentration on the ‘soft’ infrastructure. In thisinstance we are talking about the ‘people’ factor. The targeted development of the capacityand competencies of the local resident and business population, one can argue, will be asimportant a focus as the provision of the ‘hard’ infrastructure, if value for money fromsuch major investment is to be achieved.

Such a viewpoint provides the rationale for this part of the document which will show thatsuch a complementary initiative on skills development will be essential from the ruraldevelopment perspective. An overview of several key and relevant aspects of thedeveloping Information Society will be considered to help target and focus resources in themost value-added areas/sectors. Consideration will be given to both the current anddeveloping jobs market in the ICT sector, identifying areas of opportunity for out-sourcedwork from the Islands, as well areas of potential where new business start-ups couldconceivably be progressed (to target developing opportunities), given an appropriatelyskilled workforce. Case studies and overviews from other experiences in Europe andbeyond will also be considered.

It is interesting to note the complementary nature of such a given initiative in view of thedeveloping skills shortages in this sector across Europe. Figures gleaned from studiesundertaken by Datamonitor, IDC and Goldman Sachs point to a shortfall of 1.7M workersin the ICT sector across Europe between now and 2003. The associated loss to the EUeconomy as a result will be in the region of £37bn if such shortages remain. Although ifaddressed, it has been estimated that productivity gains from this sector alone couldincrease GDP by 1.5%. IDC estimate that employment demand from the ICT sector by2003 will be above 13m, with current supply only contributing 11.3m trained persons.Being clearly in line with developing EU policy, a specific ICT skills developmentinitiative in the Western Isles has the potential to ‘pay dividends’ in terms of employmentcreation and GDP gains given the current market outlook. Indeed, the UK has recentlybegun to relax its immigration laws for non-EU residents with ICT skills to plug theanticipated gap. In this context an under-utilised workforce in the Western Isles is less thanan acceptable position to be in.

Furthermore, a recent EU summit on Technology, Innovation and Skills Training (March2000) concluded that with average wages in the ICT sector averaging £29,341 and rising


such staff their proportional effects on increasing GDP were significant. In the WesternIsles context this makes a strategy aimed at concentrating on ICT skills development all themore attractive. Again, what is to be considered in this part of the report was proposed atthis summit as being the possible solution to such developing problems – i.e. thedevelopment of public/private training partnerships and a reform of the education systemin member states, along with various tax incentives.

If this supply-side friction can be negated then (b2b – business to business) e-commercealone has the potential to increase EU GDP by 5% over two decades. EU DevelopmentProgrammes such as the Highlands & Islands Special Programme must therefore be highlyfocused on such targets, in view of such context. According to Forrester Research(http://www.forrester.com) an increasing number of companies in Europe are focusing onexternal assistance via out-sourcing to address the skills gap. “Two-thirds of the companiesForrester interviewed experience project delays or problems as a result of staffingstruggles, 27% of which are experiencing delays lasting a year or more. Precious time andmoney are spent recruiting, and even then significant numbers of vacancies remainunfilled.”

As a result of ad-hoc out-sourcing contracts much productivity is being lost and Forresterpredicts and recommends a much more retention orientated out-sourcing environmentdeveloping. In the Western Isles context this market situation must present a hugeopportunity, given experience to date in developing and managing such out-sourcedcontracts. Existing out-sourcing concerns have always related to the reliability of the work,but now it seems that if more centrally located businesses find an outsourced solution thatmeets their quality standards and targets, they will be very much interested in retaining anon-going relationship, due to growing skills shortages. Therefore one can argue that if theIslands can develop a value-added ICT workforce, in conjunction with the appropriatetelecoms infrastructure, the development potential would appear to be only constrained bythe number of people available for work within the Islands.

Such projections may at first appear grandiose, until one realises that numerous companiesin the EU already have been offering £1000 bonuses to staff who recommend a potentialemployee who is then taken on by the company. In other instances internet technologycompanies (e.g. Ridgeway based in Reading, England - http://www.ridgeway-sys.com/)have offered a ‘£1000 bounty’ for any member of the public who recommends a potentialemployee who is later employed. The internet itself is also providing direct opportunitiesfor freelance and distance contracting work spanning the globe. A recent survey by theinternational recruitment consultants Robert Walters (http://www.robertwalters.com) foundthat even junior web designers are able to earn between £20-£35 per hour rising to £50-£70per hour for senior Java programmers. New websites have been targeted directly at thissector – http://www.elance.com and http://www.freelanceinformer.co.uk being just tworecent examples.

In summary, given the current market conditions and development of the appropriate‘hard’ and ‘soft’ infrastructure within the Islands, there is clearly a major ruraldevelopment opportunity awaiting to be potentially exploited. This section of the reportwill now go on to look in more detail at the developing market opportunities, examiningcase studies and relating them to the Western Isles’ development context.

http://www.forrester.com

http://www.ridgeway-sys.com/

http://www.robertwalters.com

http://www.elance.com

http://www.freelanceinformer.co.uk


7.1 Teleworking & Outsourcing: An Overview of New Ways of Working

Teleworking and Outsourcing (T&O) are now seen as one of the leading examples ofinnovative new ways of working. T&O is typical of the new work perspective of those EUcitizens included in the new Information Society. E-commerce, knowledge management,globalisation of trade and markets, virtual learning and skills development, smartorganisations, organisational teams...etc are all concepts with which such persons arefamiliar with, if not active within. The changing roles of the worker in the Information Ageare already becoming well understood: doing work/managing work/selling work/buyingwork….etc For a further insight into the development of teleworking refer to Appendix 6.

Whole new approaches to improving and indeed re-engineering the way work is done arebeing pursued. New questions related to: Do particular aspects of work necessarily need tobe done in-house?, or can they be out-sourced to specialists? are being asked, whilst justseveral years ago the very concept of out-sourcing work was one to instil universalnervousness at the management level in particular. A changing market where demand forlabour has outstripped supply in the ICT sector has now made the asking of such questionsa necessity rather than being questions for the large corporate, only being acted upon toachieve some profile raising PR.

The potential for such activity has also increased, as the customer or client in theInformation Society requires reducing levels of direct face-to-face contact e.g. bank tellers,travel agents, bookshop staff...etc, as they take on an increasing role themselves, enabledby flexible technologies. In this context the potential for location-independent out-sourcingdevelopment and teleworking increases further, providing the key infrastructure is present.

In this case where the potential opportunities for the key infrastructure recommended arealready identifiable, the opportunity cost in economic terms of not proceeding arecalculable and likely to be high. This is a far removed scenario when ISDN-enabledexchange infrastructure was rolled-out across the Highlands & Islands, where minimalthought, arguably, was given as to how we might use it. The question: How can we use thenew broadband technology and skills to improve the way we work and create newopportunity? is already being asked and considered within this document and by severalother initiatives within the wider Highlands & Islands context.

Technological developments (e.g. broadband communications) opens up new opportunitiesfor work in 3 main ways according to Botterman & Johnston, 1999:

1. Technology enables existing activities to be done more quickly, more consistentlyand at a lower cost this means we can achieve more for the same expenditure intime, effort and cost, or we can achieve the same result for lower effort and cost.

2. Technology enables activities to be undertaken at a distance, which previously hadto be performed in a particular place.

3. Technology enables new activities to be undertaken, which previously wereimpractical because of either cost or the effort required.

New ways of working can be made possible from any combination of the above effects,expanding business opportunities due to perhaps: increasing the viability of additional


transaction efficiency / business response time to customers and by providing access tospecialist skills on a flexible basis. In short, one can make a direct correlation to the arrivalof the Information Society and the availability of the appropriate technology, combinedwith the availability of the principal skills and knowledge required. The former can beutilised by applying the latter to enable enterprise and opportunity to generate the activityrequired to stimulate the changes, characteristic of the original term.

7.2 Teleworking & Outsourcing in Europe’s New Economy

It is important to distinguish in the first instance one’s definition of teleworking, in so faras the term is used in several differing contexts. Teleworking in the context of this reportwill be taken to mean a new way of working for people in rural areas which is line with thefirst definition given below, with maybe some commonalties with definitions 3 and 4.

1. The remotely based teleworker who will normally be self-employed and possess specificskills which are utilised by distant businesses on a contract basis. This is the type of newopportunity for remotely based rural populations which has been secured in the WesternIsles of Scotland in recent years and which will be discussed further in the focus on theWestern Isles experience during the last three years.

2. The telecommuter who remains employed by a centrally located employer, but who maywork from home several days per week. This is perhaps the most commonly perceivedidea of how to define a teleworker. It is this concept which generates most enthusiasmamong urban-based decision-makers wishing to reduce urban congestion andenvironmental (air) pollution.

3. The term encompassing people who work from of a non-central (i.e. rural) telecentre ortelecottage, who perhaps previously needed to commute and are largely involved in workfor urban businesses. This form of teleworking received much publicity in the UK duringthe rail strikes of the early 1990s when commuters had repeated problems travelling toLondon from the large rural commuter belt of South East England and began to turn totheir locally based telecottages which previously had been largely non-commercialcommunity based entities.

4. The term used to describe the relocation of work (both 'front' and 'back' office functions)and employees to cheaper locations , usually on a contract basis. Accounting, Sales,Customer Support and Data Processing are characteristic of services provided from adistance, increasingly via Call Centres in the UK. One such example in Forres in theHighlands of Scotland employs several hundred people largely for the processing ofparking fines in the London Metropolitan area of South East England. BT, the majortelecoms provider in the UK has also sited a UK national helpdesk facility employingsimilar numbers in the remote town of Thurso in the Highlands of Scotland.

There can be little doubt that as teleworking expands across Europe in response to skillsshortages, such work will only find its way to ‘location independent’ rural areas if the rightinfrastructure is complemented by the appropriate skills base. This is without doubt thechallenge for the Western Isles in the next phase of the Information Society developmentcycle. So what are the opportunities in the ‘new economy’ for teleworking & outsourcing?


There are numerous case studies of teleworking development across Europe which we canexamine and analyse in the context of the Western Isles. One can consider some of the keyelements and projects originating from each country which is or has aided the developmentof this sector.

The Ötztal Telecentre, in Umhausen (Tyrol - Austria), is a good example of a rural ICTinitiative originated in 1996 which was aimed at up-skilling the rural population (mostlythe farming sector originally – ‘IT for farmers’) to encourage new teleworkingopportunities by providing a core of broadly skilled ICT residents. By 1999, 100 farmershad completed the courses developed. The success of this project led to it being availablethroughout Austria by 1999 and a further 250 people throughout the country wereundertaking the course in that year. The project was a success in that it took the skillstraining to the rural dweller via investment in telecentres and included a wide range ofbasic application training. Since the project started a core of 10 teleworkers gainedemployment on an e-commerce initiative being progressed by a large Austrian recorddealer.

Other notable contributions from the Austrian experience include the development of‘model contracts’ for teleworking/outsourcing, a factor which in some instances has helpedto ease the traditional concerns of business/industry relating to security, confidentiality,quality, deadlines…etc Such traditional concerns still remain in the UK and it may be thatthere is a promotional effort required here in the Western Isles instance given the uniqueexperience to date. Making available on-line, examples of past successful contractagreements/specifications or alternatively entering into the consultancy market in this area,are but two opportunities of relevance from the Austrian experience, which may addresstraditional industry’s concerns in teleworking.

Of additional note in the development of the future skills resource required by a successfuleconomy in the Information Age, Austria was one of the first countries to offer freeinternet access for all schools in the country. The next generation will truly be the ‘net’generation.

An examination of the progress being made in Belgium also points us to some interestingexamples of projects with applicability to the Western Isles situation. EVO-Soft(http://www.evosoft.be/) is an example of a ‘virtual’ company which pulls together groupsof skilled teleworkers in particular areas of expertise i.e. C++, Java, Delphi, SQL, VisualBasic, HTML, DHTML, Cobol, Assembler, WAP…etc and does business with distantclients. Such a model appears clearly focused on addressing and exploiting the currentopportunities opening up in the EU ICT market, where shortages of skills are leading tooutsourcing to by core urban businesses to external companies, be they ‘virtual’teleworkers or otherwise. Such a model is of enormous relevance to the Western Isles andprovides the potential business development model for highly skilled groups ofteleworkers, operating in a future island context where broadband is available.

Like Austria, Belgium has been doing much to lay the foundations for the next generationof the ICT literate and aware population. By 1999 95% of the population had access to2Mbps+ broadband internet connections, predominantly via Cable. Such high specificationcore infrastructure allows a potential level of internet literacy much higher than many ofBelgium’s rivals and will generate new broadband-based services in advance of other EU

http://www.evosoft.be/


In Denmark there have also been notable contributions to the development of location-independent working. For example - Excel Data (http://www.exceldata.dk/) an informationsystems and e-commerce consultancy has recently been involved in a successful satelliteoffice initiative. Such initiative is very much in line with the innovative presence thebusiness wishes to portray to its customers. It is such pilot initiatives by high profile ICTsector businesses in the UK that the Western Isles must be in a position to exploit. As ‘newways of working’ projects (e.g. teleworking) are increasingly ‘fashionable’ image buildingevents for innovative ICT companies and consultancies.

Denmark as a whole is often described as being one of the best placed EU countries toexploit the developing information society. As such, its Ministry of IT & Research recentlyproduced the document ‘Realigning to a Network Society’ which states:

“Denmark has commenced its conversion to the society which is going to take over fromthe industrial society: the network society. In all aspects of life - work, training andeducation, leisure time, culture and trade and commerce - this will offer a large number ofnew technologies and possibilities…The challenge will be to exploit the future possibilitiesby realignment in all areas of our economy and society. In short, the challenge is to makeDenmark a leading IT nation, while still preserving the best values of our welfare society.”

As such the Danish government has identified a priority list of 37 key areas of potential forthe year (2000) and interestingly its number 1 priorities is the development of a country-wide broadband Fixed Wireless Access network to enable competition with the existingincumbent. The second priority also relates to broadband, in the form of the developmentof UMTS networks. The promotion of broadband provider-based competition on a nationwide basis including Denmark’s many rural areas and island communities to include all itscitizens is an area in which the UK would do well to emulate. The Danes were also one ofthe first countries to adopt ECDL, having developed several earlier version on a similartheme. Most recently the Danish Ministry of Education have developed the ‘EducationalComputer Driving License’ an initiative of much relevance to the UK context.A recent survey by the EU has found that Finland is the leading Teleworking country inEurope with 16.8% of its workforce being involved, with Sweden, The Netherlands andDenmark being not far behind.

Not surprisingly Finland has been one of the key countries in the EU which is keen toaddress flexible and teleworking via the use of ICT. Indeed the use of ICT has been quotedas being the driving force behind the transformation in traditional work practices inFinland. The Finnish ‘Telework Theme Group’ (http://www.uta.fi/telework/english/),a multi-agency initiative aimed at progressing a national ‘telework developmentprogramme’ is also targeted at aiding the establishment of ‘practical action’.

At the regional level in the UK www.work-global.com is undertaking a similar role in theWestern Isles of Scotland. Finland itself is considered to be several years ahead of the restof Europe in the ICT sector with, for example, very high rates of mobile telecomconnections – 70.4% of the population compared to just 31.8% of the population in the USand 46.4% of the population in the UK (http://www.cnn.com/SPECIALS/2000/e.europe/).Such synergy in development focus is encouraging from the Western Isles perspective.

http://www.exceldata.dk/

http://www.uta.fi/telework/english/

http://www.cnn.com/SPECIALS/2000/e.europe/


With regard to preparing for the Information Society, Finns have had free access to theInternet via their public libraries for some time now. Such initiative could be considereddesirable in the Western Isles regional context via both centrally located facilities andmobile facilities for rural areas. Such integration of public services with ICT services couldbe considered as part of the preparation for an island context in which teleworking basedon out-sourced employment contracts across broadband networks to/from the islands hasbeen realised.

What is particularly interesting in the Finnish example is that: “…the typical teleworker inFinland is male, is well paid and is working in a professional or a managerial capacity.His pay and conditions of work are acceptable and teleworking has not been forced uponhim.” [http://www.sak.fi/].

Right across Europe much progress is being made in the teleworking field. In France forexample, the French Telework Association has been in extended talks with FranceTelecom regarding future opportunities. In Germany the Ministry for Education andScience has teamed up with three of the country's trade unions to develop an ‘employeeorientated telework consultancy’ service (http://www.onforte.de/English/english.htm).Amongst other things the site and associated service give advice and legal guidance forteleworkers, provide examples of best practice and give access to examples of previouscontract agreements which have been undertaken successfully. Furthermore, an indicatorof momentum relates to the number of major German ICT consultancy firms increasinglylist teleworking as one of their ‘specialisms’ e.g. TA Telearbeit -(http://www.ta-telearbeit.de/tahtml/we_english/indexengl.html). Such initiatives haverelevance to the UK.

Ireland has a population of 3.8 million and over the last several years has been referred toas the ‘Celtic Tiger’ because of its booming economy. The Call Centre industry has playedan important part in its growth. Skills shortages have already become apparent in thissector, with great demand for persons able to speak a second European language.

Previous issues of poor working conditions and 'burnout' among staff have improved asskills shortages have led to an improvements in conditions with starting salaries now beingin the region of £IR10-14K. Ireland has already demonstrated that the Call Centre industrycan be a valuable contributor to employment geared around out-sourced activities. This isof special note within this study context as the Call Centre industry is the fastest growingsector in the Highlands & Islands of Scotland employing over 2500 at the end of 2000. Itis interesting to note the demand for language skills in this industry as such centres expandto the European level. A second language appears to be an increasingly in-demand skillwhich will complement the core ICT skills of persons in this sector and expand theEuropean level portfolio of opportunities for ICT employment based initiatives.

Teleworking as a specific opportunity has also been promoted at several levels in Ireland.A national free phone helpdesk for teleworking enquiries (an opportunity for the WesternIsles?) has also been recently been complemented by the organising of business breakfastsfor corporates related to the opportunities in teleworking in Ireland. In addition, on theinfrastructure side the rollout of broadband nationally has become an increasing focus,with the recent addition of £18M of EU structural funds to aid such universal connectivity.

http://www.onforte.de/English/english.htm

http://www.ta-telearbeit.de/tahtml/we_english/indexengl.html


Finally, Ireland has also taken a major step forward for such members of the workforce bysigning up and ratifying (only second country to do so) the International LabourOrganisation's (ILO) Convention on Homeworking. This gives such workers the samerights as other workers – maternity leave, sick leave, holiday pay, minimum notice…etc

Of the other EU countries that have been particularly innovative in the teleworking /out-sourcing / ‘new ways of working’ sector, the Netherlands (14.5% of the workingpopulation involved in teleworking) and Sweden (15.2% % of the working populationinvolved in teleworking) are also worth mentioning, in so far as they have spawned severalprojects worth noting in the context of this study.

In the Netherlands in recent years one of the most impressive examples of new ways ofworking is related to the idea surrounding the functional office, designing office space tobe more compatible with the home environment. Oracle, in attempting to boost companyproductivity, loyalty, morale...etc has been one of the leading lights providing cafes,brightly coloured ‘jazzy’ work spaces in a network of 700 small-scale decentralised datacentres, all achieved in a period of seven months.

With estimates of approximately 80,000 to replace a member of staff in an everincreasingly competitive ICT market, Oracle accrued significant annual savings andmeasurable increases in staff productivity. This particular project won the Dutch Teleworkaward in 1998. Indeed the Dutch are being increasingly proactive in the teleworking /telecommuting field. A recent feasibility study for a 4 year pilot project costing 200Mand funded over 50% from government sources, is aimed at encouraging teleworkingamong between 10,000-25,000 persons living in the Hague-Amsterdam-Utrecht triangleduring its lifespan.

This state and private sector sponsored move towards flexible working at a reduced scale,if proved successful could have longer lasting implications for rural areas, as a paradigmshift in big businesses’ obsession with scale towards a more humanistic workplace ofsmaller scale (with a sense of community, company loyalty…etc) units /centres will haveobvious benefits for outsourcing initiatives to rural areas such as the Western Isles. In thisinstance one must hope that this socio-economic experiment by the Dutch proves asworthy as several others piloted by the Dutch years before being introduced in the rest ofEurope. As the ICT based jobs market becomes increasingly competitive from theemployer perspective, models of working based on employee retention and productivitymust surely gain ground, hence potentially providing increased opportunity in areas suchas the Western Isles

According to the Netherlands Telewerk Forum:

“Teleworking has become part of the culture in certain companies, and advertisements withteleworking as a secondary term of employment are also appearing. It is also in line with steadilyincreasing educational levels, independence and personal responsibility. For the companiesthemselves, the argument that teleworking needs to be introduced not only in order to keep goodpeople, but also to attract new personnel if certain expertise is becoming scarce in the immediatevicinity is becoming stronger.”


An anticipated replication of such a scenario and thought processes across Europe alsoshows promise for key areas which can provide key skills from a distance.

In Sweden the link between the need for broadband and the future demand for teleworkingin the internet economy has been made.

For example Bredbandsbolaget (http://www.bredbandsbolaget.com/eng/node85.asp) hasarticulated the importance of broadband to enabling increased teleworking in Sweden andhas also set out to wire every household in Sweden with at least a 10Mbps Ethernet fibrebroadband link. Telia, the main telecoms player in Sweden is also keen to extol the virtuesof broadband and the opportunities in provides for teleworking and videoconferencing.Sweden as a whole has committed itself to high-speed broadband internet access foreveryone in the country and this has been backed up by government legislation and aresulting public-private partnership to implement ‘the world’s best information technologyinfrastructure’.

The government sponsored report which initiated this drive, further stated that suchinfrastructure would lead to significant growth everywhere in the country, whilstincreasing global competitiveness significantly and therefore resultant employmentgrowth. In the Western Isles context this report is in effect making a similar case on themicro scale in the absence of any similar national scheme in the UK. It is clear thatbroadband and new opportunities related to new ways of working in the new economy areinter-related and some areas will grow and flourish and others will continue to lag behindat perhaps an ever increasing rate. The Western Isles in effect must find the commitmentthat the Swedes have shown on a national scale, to reposition their economy in advance offuture changes in society. By doing this they will be perfectly placed to exploit newopportunities in the new global digital economy of the 21st century. In short, it appears thatSweden as a nation is already undertaking many of the proposed preparatory worksrequired to ensure that it will be a major 21st century economic power and the quality oflife of all of its citizens in the Information Society will be secured.

The concept of living in an Information Society without having access is not only aneconomic issue, but a major issue which will face policy makers in many uneconomicareas (e.g. the Western Isles) unless early adoption of the appropriate developmentstrategies are implemented in advance.

So what about the UK then? It has been estimated by the EITO that by 2004, 10% of theUK’s total workforce will be involved in teleworking. This situation places us far behindthe more technology progressive European countries whose early adoption of new ways ofworking may very well give them a competitive edge. Nevertheless, there is a growingcommitment in the UK to the concept of teleworking, particularly in recent times formgovernment sources, as witnessed by this selection of reports recently published:

Teleworking and Local Government: Assessing the costs and benefits – Ursula HuwsWorking Anywhere - DTIManagers Guide to Teleworking - Dept. of EmploymentMoving into the Information Age – an International benchmarking study - DTIThe British and Technology – Motorola ReportTeleworking Britain – MITEL ReportPay and Conditions in Call Centres – Incomes Data Services

http://www.bredbandsbolaget.com/eng/node85.asp


In short, there is a cultural change taking place in the UK, albeit at a slower pace thanmany of our European counterparts where more progressive workplace legislation andgovernment policies are making an impact . Teleworking, Outsourcing and ‘new ways ofworking’ are being given increasing status by both government and business alike. Areasand organisations with past experience and a work history in the sector must surely beincreasingly strongly placed, providing infrastructure develops in such areas at anequivalent pace. It should be remembered that the rate of adoption of new technologies e.g.PC, broadband, mobile phone…etc penetration, has often been in the past correlated withthe rate of the development of teleworking. In some instances even the size of the averagehouse in a particular country has been shown to be correlated with teleworking penetrationat the national and regional levels. In summary, an increased commitment to theInformation Age at national and regional levels in even a generic sense will, one couldconfidently speculate, lead to an increase in new ways of working and doing business overthe next decade.

At present some watershed developments have happened in the UK over the last 12months in particular. Specifically, the type of projects required for out-sourced teleworkingto become a reality in a location independent industry. The development of new e-lanceand free-lance sites on the internet have developed, at least in part by necessity to addressincreasing skills shortages throughout Europe. Such developments were going to bepredicted by this report and their related opportunities highlighted. However, 12 months isa long time in the Information Age! Nevertheless, the development of such specific siteslooking to contract out work to highly qualified, highly paid, skilled teleworkers in the ICTindustry, be they located in Lewis & Harris or London, does surely a major opportunity.

This sector is still in its infancy, and may well grow significantly to be the way that theEuropean ICT skills gap is addressed over the next decade. Indeed, some of the jobs stilladvertise potential candidates to be based in certain areas of the country, but it is notdifficult to predict a much more geographically flexible scenario, particularly withbroadband video conference communications just around the corner.In this sense the development of a highly skilled workforce in the Western Isles will notnecessarily lead to out-migration, as has been the case in the past, providing we focus ourfuture efforts on the areas of most opportunity. It is such specifics we will address in thenext section on e-commerce and the digital economy.


Indeed, other sites such as www.elance.com and http://www.robertwalters.com/whichare predominantly US based, in most instances have no geographical preconceptions and

http://www.robertwalters.com/which


Such sites have complemented the already booming recruitment sites spring up all overEurope and North America. Such employment opportunity information and activerecruitment drives will help any strategist focus on areas of skills need. Given the demand,it is not inconceivable that any particular rural area could build up a self-reinforcing trackrecord in the provision of skilled employees in the first instance, giving such individualsthe industry experience required to return and develop new business ventures be theyvirtual or ‘bricks and mortar’ targeted at the new information society. As Marya Zamindar,Finnish Ministry of Labour stated:

"In one sense, telework is dependent on post-industrialism. A greater need today forgeographically-dispersed specialists, for example, makes telework more desirable forbusinesses now than in the past. Telework in turn, forwards the evolution of post-industrialism by facilitating decentralised production, integration of geographicallydispersed companies and labour flexibility."

So what are we saying with relevance to this study? The post-industrial society in the UK(late 1980's onwards) and the associated structural changes in the labour force during the1990's to increase the flexibility of employment (to reduce supply-side friction) andincreasingly focus on project orientated (time-limited) tasks often involving team-basedapproaches would appear to have created a labour market situation which should be readyto embrace out-sourced teleworking on a significant scale. To date, such outsourcing hasnot been a common phenomena to teleworking initiatives, although as indicated above thisis beginning to change. A clear opportunity is thus apparent for an area such as theWestern isles which already possess a track record in teleworking.

In this sense it is also worth mentioning outsourcing to Call Centres – now one of thefastest growing employment sectors in the Scottish economy. In so far as these CallCentres can be location-independent they are also of interest within the context of thisstudy. Indeed in the Highlands & Islands of Scotland, as stated earlier, there are now over2,500 people reliant on this industry, one of the fastest growing in recent memory. Addedvalue opportunities will bring their own demands in the Call Centre industry, many morerelated to inter-personal and communications (written & oral) in both English and anotherEU language rather than just technical.

Productivity gains (40-60%), cost savings (reduced staff turnover), available technology(broadband), appropriate processes (for monitoring and control), set-up costs, issuesrelated to distance and its potential impairment to teamwork are all of consequence whenconsidering new ways of working. On the wider level we must also consider marketcompetition, instability and societal change.

In this sense teleworking/outsourcing can be thought of as not only a technologicalinnovation but also a sociological evolution of the linkages between managers andemployees resulting in new organisational structures and new and innovative businessprocesses both between businesses (b2b) and between businesses and the end consumer oftheir goods and services.


7.3 Teleworking & Outsourcing, Europe’s New Economy & the Western Isles

Given the preceding discussion and overview, what are the keyopportunities related to teleworking, outsourcing and new waysof working developing in Europe and the UK of relevance to theWestern Isles?

It is essential that we understand the areas of developingopportunity within the EU economy (in the first instance) whichcan be exploited using ICT, in order to be able to identify thetypes of skills that are going to be in high demand several yearsfrom now.

In summary, drawing on the European experience to date wecan immediately identify several areas of opportunity ofrelevance to the Western Isles:

• The development of virtual teams of skilled teleworkers, with aweb presence and a track record appears to be a clearopportunity for development. The local public sector could beutilised to help establish credible and relevant track records forsuch teams.

• The parallel development of on-line course and moduledelivery (via UHI) in the core skills demanded, has been shownto be of significant benefit to other rural areas. eg EuropeanComputer Driving License (ECDL)

• The provision and availability of past contractsspecifications/agreements for scrutiny by potential businessproviders needs to be progressed, to convince and satisfymiddle-management that such out-sourcing contracts havebeen shown to work successfully in the past. The availability ofreal examples which can be quoted and from whichtestimonies can be secured is also of key importance.

• The provision of a commercial consultancy service to aidstructural change in urban areas, with set targets for thesecuring of outsourced contracts to rural areas (i.e. theWestern Isles) would also appear to have some potential toassist teleworking development.

• Opportunity for a parallel service to provide national free phoneadvisory service for teleworking enquiries for both businessand teleworkers and website. Also initiative based on businessbreakfast for key businesses has already been pilotedsuccessfully elsewhere.

• Promotional campaign to highlight the ‘cool’ of rural satelliteoffices within new economy sector – A statement of progress –‘we have the technology know-how to even run an integratedoffice from the Outer Hebrides of Scotland’ . Opportunity for

The development ofvirtual teams of skilledteleworkers, with a webpresence and a trackrecord appears to be aclear opportunity fordevelopment.

The availability of realexamples which can bequoted and from whichtestimonies can besecured is also of keyimportance.

Promotional campaign tohighlight the ‘cool’ ofrural satellite officeswithin new economysector.


unique team building events in rural context from beachbarbecues to orienteering events. New ways of working pilotprojects, projection of positive image to customers…etc

• Parallel campaign to promote Islands as a perfect location forre-locating teleworkers, to bring new skills into the area alongwith new contacts and possibly employment.

• Highlight Swedish & Danish examples to The ScottishParliament - of forward thinking in action which is as committedto broadband in rural areas as in urban centres.

• Opportunities for skills development to mature in-line withgrowth in outsourced customer service centres (call centres) toprovide new level of communication, inter-personal and foreignlanguage skills, in addition to key ICT skills.

• Teleworking initiatives in areas such as the Western Islesrequire to capitalise on both public sector and marketmomentum to lever in both investment and jobs. In the view ofthe author, it may take a proactive decision by the public sectorin the Western Isles in the first instance to give newteleworking initiatives a track record and therefore acompetitive foothold in a burgeoning growth sector.

As already stated, it is going to take a proactive public/privatepartnership to be the catalyst for the types of development discussedto date. An idea of possible funding priorities in this sector wasprovided in 1998 when the EU allocated funding to ‘TeleworkConversion Projects’ throughout Europe, with the following fundingbreakdown: 50% of funding for equipment and infrastructure 30% tobusiness process re-engineering and 20% to education.

In conclusion, it is very much the view of the writer, given theabove case studies and their relevance to development in theWestern Isles teleworking context that a real opportunity existsin this sector. In the new economy, outsourcing - be it to callcentres or individual teleworkers or indeed teleworker teams -will generate significant new activities in non-traditional non-urban locations for business and commerce. The rural WesternIsles may have an opportunity to secure such business, giventhe appropriate skills base and key infrastructure discussed inSection 1. The specific skills demanded are already becomingapparent as one browses the emergent number of freelanceand e-lance websites being rapidly developed.

It is no surprise that the most heavily subscribed FE and HEcourses in the Western Isles are in the computing field. Thechange is taking place in education, as demanded by thepublic, but there is a worrying lack of realisation of how we willbegin to meet the economic development needs of future, now.

Parallel campaign topromote Islands as aperfect location for re-locating teleworkers, tobring new skills into thearea along with newcontacts and possiblyemployment.

Opportunities for skills tomature in line with growthin outsourced customerservice centres to providenew level ofcommunication, inter-personal and languageskills, in addition to keyICT skills.

It is going to take aproactive public/privatepartnership to be thecatalyst for the types ofdevelopment discussed todate.

A real opportunity existsin outsourcing, - be it tocall centres or individualteleworkers or indeedteleworker teams - willgenerate significant newactivities in non-traditional non-urbanlocations for businessand commerce.


7.4 Outsourcing: A Consideration of Customer Service Centres (CSCs)

In the 1980s and early 1990s the corporate philosophy was related to doing everything 'in-house'. During the late 1990s this philosophy changed to concentrating in-house on thebusiness's core competencies and out-sourcing non-core functions, such as customersupport, to specialist companies under contract. Early successes in teleworking in theWestern Isles in the late 1990s benefited from this ethos e.g. the Scottish Law Times multi-media processing contract. Now in the year 2000, a new hybrid sector has becomeestablished – Call Centres or CSCs as they are now increasingly being called.

The fastest growing industry in living memory? – What exactly is the relevance of the CSCto this study? Well, as mentioned previously this is a key growth sector with specificopportunities for development to enable an increasingly competitive future for rurallocations. As we identified in the Irish example, as the industry grew so did the demand forbi-lingual staff to service European-wide demands. In context, this is no surprise. Most ofthis demand was said to have been fulfilled by immigrant workers. It is thus clear that inthe Scottish/UK context there is a clear opportunity to plug such a gap and gain acompetitive locational advantage in advance.

If one subscribes to the idea of an ever closer integration of the UK and Europe, then anincreasing amount of opportunities will present themselves. As the personal computer haspenetrated widely into both homes (over 50% in several of the Scandinavian countries) andoffices during the last decade it has increasingly changed the way business is done andtransactions completed (e.g. online purchasing). The knock-on effects have been thatbusiness, (particularly ICT companies) has also had to modify how it operates. Forexample home PC users (and more recently internet TV users) are increasingly requiringboth telephone and e-mail feedback and assistance 24/7.

Why? – because they are utilising an increasing range of on-line services and haveincreasingly high expectations of e-commerce demanding instant service and solutions.

As Europe increasingly integrates then the advantage will increasingly go to areas that canprovide either bi-lingual or multi-lingual staff able to service the wider European marketwhere similar customer demands are present. Indeed, one could foresee a situation wherethe SME sector in the UK is going to increasingly require cost effective multi-lingualcustomer services, as they increasingly embrace business opportunities, e-commerce-ledor otherwise with their European neighbours. In terms of skills development this wouldappear to an area of significant future potential. Recruiting bi- or multi-lingual staff withthe appropriate experience and skills is not an easy task for the UK SME sector. “Therehas been a particular increase in demand for multilingual staff. Multilingual candidatesare hard to attract and as a result they can command premium salaries.” [Robert Walters

Salary Survey, August 2000]

Currently the University of Paisley has identified these very future needs and hasdeveloped a specific qualification integrating both ICT and EU language skills. This wouldappear to be an area UHI could also legitimately develop and integrate perhaps rightthrough its new degrees. Such graduates one might argue would be very much sought aftercommodities in the new economy.


Already in the ICT sector, according to Locate in Scotland: "Throughout Europe,customers expect a technical help line to be answered quickly by an IT expert, who canresolve their problem in their native tongue."

Other location factors mentioned by LiS in Call Centre location relate to the presence of avibrant community, with an excellent choice of affordable housing and a safe environmentfor young families. The Western Isles could thus be expected to compete strongly in thissector for these reasons and a host of others already well documented – availableworkforce, low staff turnover, increased productivity, low costs of development (assistedarea status)…etc. The development of broadband and appropriate skills developmentwould surely lead to a highly competitive situation for inward investment, as mentioned inthe introduction to this document.

It is not entirely inconceivable that the potential to provide everything from pre-salesenquiries to aftersales support across Europe, for specific SME ‘niche’ products/servicesbeing sold increasingly on the web to our EU neighbours, could be provided from a value-added centre in a rural area such as the Western Isles.

The proviso being the appropriate skills base being present. In terms of future opportunityin the new economy such added-value CSC functions are real and early entrants will beable to establish a track-record in advance of the limited competition. An area such theWestern Isles with a bi-lingual culture already would appear ideal for such an initiative.

A similar type model to the above, but concentrating on UK business functions with thepotential to be outsourced is that of Cap Gemini. Cap Gemini is the largest Europeanprovider of consulting and information technology services. Its Business ProcessManagement has been developed to address the needs of businesses considering theoutsourcing of some of their non-core current functions. As such this appears to be adevelopment model with some potential on a smaller more focused scale.

Cap Gemini has concentrated on generic 'back-office' functions such as payroll,recruitment, accounting procedures, IT, order processing, customer care…etc

Early clients included GRC outsourcing the processing of 20,000 council tax and housingbenefit applications. Three London burghs also outsourced the annual processing andpayment collection of 300,000 parking tickets. Scottish Hydro-Electric outsourced callcentre services to cover enquiries, emergency and complaint calls.

The Cap Gemini Call Centre is referred to by the company as a business processmanagement facility. Interestingly the company initially sought the following attributes inits location decision:

• a pool of educated, committed and enthusiastic people• people with a combination of customer care, computer, keyboard and telephone skills• a flexible workforce• availability of skills training to sustain growth• excellent communication links with clients throughout the UK


• a relaxed environment with a high quality of life

Cap Gemini specifically located to Forres for the following reasons:

• positive findings from skills audit by GRC• Scottish education system – quality of qualified staff in North of Scotland• Quality of life aspirations for company executives and staff met• BT's availability of ISDN• Close proximity to Inverness airport• Property costs...etc are low• Flexibility and quality of staff available

In summary, the above example along with Iomart’s outsourced Net Centre in Stornoway,which located to a specific advance ‘office’ location in a technology-designated businesspark, for many of the same reasons as those quoted above demonstrate the growth potentialof this sector in the rural Highlands & Islands context. Appropriate focus on skillsdevelopment and the associated infrastructure required in the Western Isles can lead one toconfidently predict future success in this sector, if targeted.

Such facilities can also provide invaluable ‘first’ job experience for school leavers and thushelp retain an increasing number of our youth. For example such facilities could provide aninvaluable opportunity for school leavers to earn some money prior to entering highereducation, whilst also giving them key transferable skills. Sponsored employeeprogrammes could also be on offer for top performers, to enable the retention of links withthe company and islands.

In short the CSC sector is an area of outsourcing which can potentially provide newopportunities in an otherwise stagnant Islands economy. It utilises the opportunitiesdeveloping in the new economy and has the potential to establish a wide range of positionspertaining to a range of jobs of differing skills and pay levels. It is the type of 24/7 serviceorientated industry demanded by 21st century consumers and purchasers of key services.Moreover the market is estimated to be growing at 40% per annum

7.5 E-Commerce & the Digital Economy: Opportunities & Threats

Finally, and in advance of addressing the real focus of this section of the report, one mustconsider the true buzz-words and their meaning and relevance to development in theWestern Isles. In many respects they are fundamental to future economic and indeed socialdevelopment. In this sense they are more than just buzzwords. They are the driving forcebehind all the recommendations and analysis provided in this report. Exploiting themeffectively is arguably, to be the measure of success of any area within the EU within atleast the first half of this new century.

With telecommunications going digital and even wireless, an expectation of high speedbroadband internet access being universally available anywhere, anytime is becomingpersistent – the very nature of the market place is therefore changing, for better or worse.On-line commerce still accounts for only a fraction of our annual outgoings, but annualexpansion of such spend continues growing at a phenomenal rate. Only 5 years ago the


internet was a cult communications technology used by ‘geeks’ or ‘nerds’. Now in the UKit is available in close to 50% of all households.

Deregulation of telecoms markets has resulted in the increasing globalisation andhorizontal and vertical integration within the industry, stock market flotations…etcNational boundaries and associated laws are becoming increasingly blurred astechnological convergence occurs and barriers to trade are reduced. The sheer volume ofinternational trade occurring has increasingly made the collection of import taxes andduties more difficult for nation states within this global system.

Although one might consider the growth of the ICT industry to be one of the main drivingforces behind globalisation of the market place it is increasingly becoming the enabler formany industries as they recognise that both their competition and customer base isbecoming increasingly global, and therefore need to act appropriately and expand/diversifytheir operations to compete. ICT is hence certainly central to such development.

The globalisation of markets, e-commerce and the development of an inclusive informationsociety has the potential to increasingly shift the current global economic system to that ofone approaching perfect competition.

Full access to product and service information will become increasingly the norm andcomparisons on cost, quality and added-value will all be available at the touch of a button.Already web sites such as www.cheapflights.co.uk are providing such a service for thebooking of air tickets. In other instances generic price comparison sites have developedhttp://uk.pricerunner.com/ which enable consumers to get the best prices in the UK orindeed abroad on a wide range of ‘white’ goods in particular.

In such a global market place there must still be a premium for local products and serviceswhich possess particular value-added attributes. Indeed, on the type of price-listingwebsites referred to above ‘value-added’ sections in the product categories are alreadydeveloping in response to the near perfect competition on price increasingly beingexperienced. In this sense the unique distinctiveness of the ‘Hebridean’ product willprovide many potential opportunities in the global market. Although it needs to berecognised that we need to be part of it to benefit from it.

This is actually one of the threats that one can foresee to rural areas in particular which donot enter the global market at an early enough stage. It is imperative that the Western Islesbecomes a central player in the move towards the new economy, for if it is not, the threatof further marginalisation within the Scottish/UK economy, nevermind the globaleconomy, appears to be a real prospect. There can be little doubt that our better connectedurban counterparts will compete directly for ‘scraps’ in the digital economy, as locationindependent work becomes available. The Western Isles cannot afford to become aperipheral player, as further losses to the economy will ensue, as well as much potentialnew activity being foregone. A standard economic cost-benefit analysis will demonstratethe need for investment in this sector now.

However it is worth noting the other side of the argument with regard to advance provisionenabling participation in the digital economy. There is a particular school of thought thatwill argue that unless demand-side activity can justify investment in broadband and skills

http://uk.pricerunner.com/


ISDN provision supplied to the Highlands & Islands economy is an obvious example,where the supply-side investment was by many considered to be a failure, because of alack of demand for the added-value services which could be provided by such technology.

In response, one could point to the pricing of the product and its related services, a lack ofpromotion by BT and a lack of development impetus on the side of the agencies toencourage and foster new business opportunities utilising the technology. In addition,access to venture capital has been a key driving force in the development of the ICT SMEsector in technology hot-spots around the world – one method of stimulating the demand-side in rural areas which we do not have to.

It can be argued though that in this instance there is a clear justification for putting thehorse before the cart. We are talking about requiring the key infrastructure to enableparticipation in a major economic and social opportunity, where nobody really knows whatthe end use of such broadband technology will be. Increasingly innovative methods will beemployed requiring an ever changing set of optimum skills. Hence, awaiting demand tolead to the supply of infrastructure will in this instance be self-defeating approach, asinnovation effectively develops where the conditions are right.

Whilst one can argue that the availability of optical fibre and maybe even wirelessbroadband telecoms is likely to be a prerequisite for attracting inward investment, it shouldbe remembered that such strategies by development agencies will only lead to limited localmultiplier effects in themselves. The key to the regional development of the informationsociety must concentrate on the developing of indigenous SMEs and relatedentrepreneurial activity, whilst enabling social inclusion.

In this context there can be little doubt that in areas of current 'market failure' such thesparsely populated (low demand) areas of the Scottish Highlands & Islands, the absenceof the appropriate ICT broadband/mobile infrastructure and associated convergenteconomic activity & skills development, is likely to prove a future inhibitor ofinvestment and economic growth.

Yet, on the other hand, such areas in the new location-independent information societypotentially have the greatest attraction to the new breed of ICT business with their highquality of life perception. However, without early recognition of these opportunitiesexclusion will be an inevitable consequence.

The UK government and its telecoms watchdog OFTEL have articulated their aim for theUK to become a centre for e-commerce, but unlike Sweden and Denmark and several otherEU countries, there is no apparent commitment for all its citizens to be central players inthe new e-commerce revolution. The problem seems clear within the current policycontext, which we will discuss further in the next chapter. A widening gap with regard todigital infrastructure provision is a real concern as demand for information society added-values goods and services remains low. The high price of initial rollout broadband productsin combination with their limited bandwidth (e.g. ADSL, Cable) and initial apparentreliability problems does not augur well for future rural rollout timescales. "Given that themarket for broadband is in its infancy, current data usage will become increasingly criticalas patterns of demand determine the roll out of future technologies. " [Owen Evans, Policy


A resulting lack of revenue streams from the urban environment (a by no meansunexpected phenomena) will lead to further reduced revenue estimates from rural areas.New investment will inevitably slip until at some point in the distant future urban revenuestreams pick up as demand increases and prices drop through increased competition.

An immediate need for rural areas to embrace the information age and bypass this currentsituation would seem to be an overbearing priority. Access to the Digital Economy and E-Commerce opportunities is not guaranteed at an early enough stage for rural areas such asthe Western Isles. So what exactly are these opportunities?


7.6 E-Commerce & the Digital Economy: A Definition of the Opportunity

"Companies and countries which fail to adapt to the new exigencies of the digital economy will bemarginalised from it. To paraphrase the wisdom of the experts 'in five years time there won’t beany Internet companies because they will all be Internet companies or the won’t be companies atall’" [John P Kelly, Department of Enterprise, Trade and Employment, Dublin, Ireland - 1999 ]

Arguably, over the last 9 months with the shake-out within the dot.com industry, thisquotation increasingly rings true. The ‘bandwagon jumpers’ without any solid businessacumen have been found out and cast aside ruthlessly by the market, hence the wellpublicised demise of the dot.coms. Nevertheless, in business circles there was littlesurprise at the failure rate which is often as high as 90% in the ‘old economy’.

E-commerce or e-business and more recently m-business come in two distinct flavoursbusiness to consumer (b2c) and business to business (b2b). The economics are simple.

For example in the banking sector costs can be reduced significantly:

(Source: Booz-Allen & Hamilton)

The introduction of the Euro, will herald a new transparency in pricing among Europeancountries and may very well prove to be a stimulus for the growth of EU e-commerce.Goods and services across national boundaries will be able to be directly compared forboth the consumers and potential e-businesses alike. Furthermore, for the banking sectorthe potential of attracting a pan-European customer based will become a reality. Onewonders about the potential financial sector developments still to be realised in relation to

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BOX 31 THE COSTS OF BANKING

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It may be that the UK's reluctance, to date, to embrace the Euro may give futurecompetitive advantages to continental banks in the new networked Europe. “Support forthe euro among leading UK executives was confirmed today with the release of a B2B e-business survey showing more than 50% back entry to the single currency to aid UKparticipation in pan-European electronic trading exchanges.” [Microsoft UK Press Centre –Nov. 2000]

The barriers to growth of e-commerce to date and which in some cases remain for thepresent include technical (encryption/security), legal (regulations), economic (short-termcapital costs), user-friendliness (ease of access through PC, TV, mobile phone), cultural(mistrust of technology), and quality (of products & services available)…etc Many suchissues are being actively addressed by government and industry.

However, getting back to the economics, for the first several years of 21st century businessto business commerce is predicted to be the driving before behind the development of e-commerce.

The result should be lower business/production costs as cheaper and more reliablesuppliers are found. This will inevitably lead to intense competition and ultimately asignificantly better deal potentially for SMEs.

With regard to rural locations this will mean an enlargement of market opportunitiescombined with more competitive input costs. The increasing focus on b2b from b2c byrecent high profile examples such as Urban Fetch and LetsBuyIt are characteristic of sucha movement.

Nevertheless, there is a core of goods and services that are already commonly tradedbetween consumers and suppliers on-line e.g. books, CDs, PC games, holidays and anincreasing range of ‘white’ goods and consumer electronics. This range is continuing toexperience a dramatic increase in quantity, choice and diversity. The successful internetentrepreneurs of the last several years and without doubt the next several years will bethose individuals who can recognise the on-line commercial opportunities in advance ofthe masses, for particular goods and services and have access to the appropriate skills andtechnology to exploit them. Location independence is once again a feature.

At the most fundamental level:

"For the commercial exchange of goods to take place there are a number of prerequisiteswell-known in economic theory. Specialised infrastructures for the organisation ofcommercial transactions are obviously needed as they have existed since the Middle Ages,such as market places or trade fairs, particular trade sub-areas in towns (one may think ofShinjuku in Tokyo with respect to electronics), and more recently malls of various sorts insuburbs of cities…..Another essential cost feature associated with commercial transactionsis of course the information search cost preceding a possible transaction. In transactiontheory these are called the ex ante transaction costs…. On both accounts, informationhighways are likely to significantly reduce costs. The emergence of virtual malls is likely toreplace the physical infrastructure; the information search costs are similarly likely to


become significantly reduced due to the ease of electronic access and the availabledatabases on products and suppliers. " [Luc Soete, Maastricht Economic Research Institute 1999].

Again, this highlights the economic fundamentals which will drive the digital economy. Solets be very clear in recognising this current move towards the digital economy. It is not apassing fad, it is a global economic revolution, a new way of doing business, which is aspotentially relevant to the Western Isles as it is to London. However, the process is morecomplex than it appears on the surface.

A significant element of this commerce seems likely to be derived not from the simplesubstitution of physical/traditional commerce with e-commerce or indeed m-commerce,but instead centred around new forms and methods of trade and exchange. In the UK forexample PC/Internet banking has been a new, increasingly widespread and innovativedevelopment in the banking sector which has even spawned new businesses (andcompetition) in a sector where traditional barriers to entry have been high. Such servicesare now even becoming increasingly available through consumer television sets.

Other new and innovative forms of exchange related to on-line auction sites(www.qxl.com or www.ebay.com ) and even on-line swapping sites demonstrating at thebasic level the new ways people are finding to trade on-line. A recent high profile exampleof this method relates to the recent energy crisis which led to blackouts in California. Inresponse the state announced it was going to hold an Internet auction to secure long-term,low-cost electricity contracts. “I expect these bids on long-term energy contracts shouldstabilise the market and drive the price of electricity down…This is a key step in our effortskeep the lights on in California at a reasonable price." [California State Governor]" Others such as Napster ( www.napster.com) are fundamentally changing traditionalbusiness models related to the distribution of music, despite vast commercial interests inthe traditional model.

In other instances price comparison sites such as http://www.toobo.co.uk/ andhttp://uk.pricerunner.com/ are redefining the art of sales and marketing by providingno-nonsense bottom-line information to consumers on price alone, from a vast range ofcompeting sources. New forms of ‘adding value’ to more expensive products are thusbeing pursued by suppliers in an increasingly dynamic and growing marketplace.

A whole host of new financial services related to on-line share dealing, betting, mortgageapplications, insurance comparison and arrangement sites, investment opportunitysites…etc are all challenging the traditional way that businesses interact with theircustomers and each other. Business information portals for UK SMEshttp://www.is4profit.com/business_directory.asp and www.b2byellowpages.com arealso already widely established. Other b2b innovations include specific company andbusiness research tools downloadable to the desktop such as that available fromhttp://www.1jump.com/ .

“Microsoft questioned key executives from 400 major UK organisations on the progressand future impact of B2B e-business initiatives in the UK….B2B e-business is a priorityissue for these UK organisations with almost two-thirds having an e-business director,74% having B2B e-business on the board agenda and 42% having a company-wide

http://www.toobo.co.uk/

http://uk.pricerunner.com/

http://www.is4profit.com/business_directory.asp

http://www.1jump.com/


B

Forrester research estimated in December 1999 that b2b e-commerce was set to grow inthe US from $108 billion in 1999 to $1.3 trillion by 2003, a level approximately ten timesthat of b2c. Indeed, it was estimated that during the year 2000 more than 50% of USbusinesses begun selling goods and services on-line. Theoretically, there is no aspect of abusiness’s activities that fall outwith the e-commerce b2b sector. From the purchasing ofraw materials for the production process, to office supplies & electronic banking services,travel bookings, staff development..etc are all possible via on-line b2b. “The extent towhich B2B E-commerce represents the largest productivity tool for the economy over thecoming 5-10 years cannot be underestimated.” [Sands Brothers & Co Ltd, Investment Bankers] Again,from the US a research study on purchasing staff in US companies found that 25%purchased on-line during 1999, rising to a predicted 90% by 2002. Such figures need noexplanation, a revolution is happening.

B2B is not limited by the number of consumers with PCs and the number of them that areon-line, the number that are on-line with unmetered access, the bandwidth of theirconnection and then the number of them that feel confident enough to purchase over theinternet. B2B’s growth in comparison to b2c growth is thus going to be significantlyhigher.

The following diagram highlights this situation in the US context:

The digital economy is thus a well acknowledged business trend, so much so that it wouldbe accurate to describe it as a structural change in business and commerce. With asometimes quoted 1-2 year lead-in time for e-commerce enabled businesses, there is adanger that traditional economy businesses which have been slow to invest may see theirmarket share disappear, by the time they get geared-up for the new economy. Referringback to the very first quotation in the opening lines of this section, it thus seems clear thatthe areas that are both most appropriately geared-up and switched-on to the new digitaleconomy will be the ones that reap the benefits in the long run. The business case for the

BOX 32


Western Isles to invest heavily now to become part of this evolution to business revolutionis hence self explanatory. For example:

"Electronic exchange is likely to lead to a substantial reorganisation of markets with thevalue chain shifting across business. The phenomenon of outsourcing is typical of suchreorganisation. As witnessed in the rapid growth of business services, activities that arenot part of the core manufacturing or service production of the firm can now be carriedout more efficiently outside of the firm, in specialised companies." [Luc Soete, MaastrichtEconomic Research Institute 1999

The Western Isles’ economy must be able to up-skill and up-grade its communicationsnetwork to be in the right position at the right time to exploit such opportunities. A radicaland focused approach to future development initiatives is therefore recommended, squarelycentred on the structural and cultural change necessary to attain success for the present andmore importantly for the future generation.

One does not have to look far for an example of such forward thinking. The ‘Celtic Tiger’i.e. Ireland, has just announced funding of 98M from government and EU sources,matched by 220M from private sources to promote increased internet penetration for bothsocial and commercial use and also to overcome particular region’s ‘communicationdeficit’.

The project includes funding for a nationwide broadband telecoms network proposed bythe Electricity Supply Board (ESB), numerous e-commerce projects and initiatives, andalso the deployment of innovative broadband solutions such as WLL and DSL in manyrural areas with an inherently poor communications infrastructure.

Interestingly, the ESB’s choice for its new network is 2.5Gbits/sec fibre which isapparently already being rolled out on the ESB’s electricity infrastructure between Dublinand Limerick. A strong emphasis has been placed on public-private partnerships, as hasbeen recommended within this study and initially 13 such projects were approved. There islittle doubt in Europe’s fastest growing economy, where their future opportunities reside.Scotland, the Highlands & Islands and the Western Isles need to make equally bold movesif we are to compete and succeed in the Information Age. There would appear to be aunique opportunity for Europe's periphery to become more economically and indeedsocially integrated into the new EU internal market and beyond.

The expanding EU internal market would appear to be an ideal breeding ground forinclusive e-commerce development, particularly when combined with a common Europeancurrency. Many of the traditional barriers to entry into the wider market (i.e. costs of entry,the gaining of market knowledge, distribution costs/export licenses, information oncompetitors…etc) will be negated and the opportunities for the periphery-based SME willbe significantly increased.

According to Romano Prodi, president of the European Commission, e-commerce and e-business are: “…the most significant changes since the Industrial revolution, are far-reaching and global. They are not just about technology. They will affect everyone,everywhere. Managing this transformation represents one of the central economic andsocial challenges facing Europe today... "


The eEurope Initiative (to be discussed further in chapter 8) currently being promoted bythe European Commission’s Information Society Directorate is thus aimed at:

∫ Bringing every citizen, home, school,business and administration on-line

∫ Creating a digitally literate andentrepreneurial Europe


∫ Ensuring a socially inclusiveInformation Society

As a microcosm of Europe the Western Isles could do a lot worse than subscribing fully tosuch themes which will bring about not only a population integrated into the InformationAge, but also one which will be well placed to exploit new business and socialopportunities. Sweden and Ireland are two examples in which such themes and targets arebeing embraced. Scotland, the Highlands & Islands and the Western Isles all appear to beunclear in their future direction, yet the clear indicator are there for all to see.

Again referring back to the opening paragraph of this section, it is clear that the scepticswho question the demise of the dot.coms as being anything other than a blip are the oneswho will lose their competitive advantage as we move incessantly towards the digitaleconomy.

Some good examples of the growth of e-business can be reviewed via the following portalswhich focus on growing SMEs online:

http://www.isss-awareness.cenorm.be/Home/ecommerce_awareness.htmhttp://www.ecommercetimes.com/http://www.eubusiness.com/http://www.e-centre.org.uk/http://www.better-business.co.uk/http://www.bizmove.com/http://www.isi.gov.uk/http://www.interforum.org/http://www.quicken.com/small_business/http://www.toolkit.cch.com/

As we shall ascertain in the next chapter, it is within the SME sector that UK efforts in thee-business/e-commerce are currently focused. SMEs are going to need assistance torestructure their operations and realign themselves within the new economy. New ways ofworking will have to be adopted, as key Information Age skills are not necessarily going tobe present and therefore they must be able to adapt to survive.

http://www.isss-awareness.cenorm.be/Home/ecommerce_awareness.htm

http://www.ecommercetimes.com/

http://www.eubusiness.com/

http://www.e-centre.org.uk/

http://www.better-business.co.uk/

http://www.bizmove.com/

http://www.isi.gov.uk/

http://www.interforum.org/

http://www.quicken.com/small_business/

http://www.toolkit.cch.com/


The Spectrum Business and Consumer Surveys (1997) in support of the ISI ‘Moving intothe Information Society’ publication showed that there was a large gap between the usageof ICT between large and small companies. It was identified that SMEs in the UK inparticular should be a key target sector – "These companies need to be the focus ofgovernment, trade association and large company efforts to stimulate UK developmenttowards the Information Society…As SMEs are so pivotal to the UK economy, it may bethat the route to achieving the Information Society will be through winning the hearts andminds of SME management."

As a result of this analysis the ISI has been squarely focused on the SME sector in the UKand this is an area we will also consider in the following and final chapter of this report.The adoption of new ways of working by both the SME and large business sector in notjust the UK, but Europe also, will provide a range of potential key opportunities for theWestern Isles economy.

In summary then, e-commerce is not being progressed for any other reason thaneconomics, as indicated at the start of this section. The incentives related to gaining acompetitive advantage by reducing operational costs, streamlining business processes andimproving communications with customers has led to the current e-commerce revolution.

E-commerce: “…cuts across geographic boundaries and time zones to save time andcosts, to open up new market opportunities and enable even the smallest of companies tocompete on a globally. Electronic commerce spans established processes such as bar codescanning and electronic data interchange (EDI) as well as newer arrivals, like e-mail, theInternet, the World Wide Web and mobile electronic commerce.” [http://www.e-centre.org.uk/]

In short, the outlined e-commerce revolution and move towards a digital economy has thepotential to offer key opportunities which will be location independent. Given theanticipated and indeed required move towards new ways of working in the new economy,new business practices adopted by both SMEs and large business will both presentoutsourcing opportunities and enable new business models and entrepreneurial start-ups tooperate as effectively, in many instances, from a Western Isles location as from a Londonlocation. Availability of the appropriate broadband technology has already been discussedas being one of the key pre-requisites. An appropriate skills base along with the supportingpolicy environment are also of key importance. So, now that we have established themagnitude of demand and opportunities related to the digital economy we now need tomore clearly focus on such issues to help aid the anticipated development process. This iswhat the final chapter of this report will focus upon.



ANDERSON CONSULTING, (2000), European eCommerce, for DG Information Society.

BINMORE, Ken, ESRC Centre for Economic Learning and Social Evolution (ELSE) University CollegeLondon, New Rules of the Digital Economy - Who are the Winners? IST Conference Helsinki 1999.

BIRCH, Dave, © Hyperion Systems Limited http://www.hyperion.co.uk, The Generation Game: 3rdGeneration Mobile is Coming: Time to Think About the 4th, IST Conference Helsinki 1999.

BOTTERMAN, MAARTEN & JOHNSTON, Peter., (August 1999), Status Report on European Telework –New Methods of Work 1999, Office for Official Publications of the European Communities, Luxembourg,ISBN 92-828-7960-7

CALTA, Carol A., Arthur Andersen SA, Amoreiras Torre 1, 15º, 1070-101 Lisboa, Portugal, The InternetRevolution: Telemedicine and Co-operative Environments, IST Conference Helsinki 1999.

CLARKE, Les, Director, BT UK, Business Services, Think Activity, Not Place - Flexible Working in Practice,IST Conference Helsinki 1999.

DEPARTMENT FOR EDUCATION & EMPLOYMENT, (January 2000), Skills for the Information Age,UK Information Technology, Communications and Electronics Skills Strategy Group

EURO – MED NET 98 Conference, (March 1998), Role of Internet and the World Wide Web inDeveloping the Euro-Mediterranean Information Society, Summary Proceedings.

EU Publication, DG Information Society, IST 2000, Office for Official Publications of the EuropeanCommunities, Luxembourg, ISBN 92-894-0042-0

EVANS, Owen, Policy Officer, BT Parkgate, Cardiff, Wales, Building the Welsh Economy on GlobalDigital Infrastructures ,IST Conference Helsinki 1999.

FOLIAS, Christos, MEP, Trade and Technology as Global Drivers of Local Economies, IST ConferenceHelsinki 1999.

GATTI, Barbara, CEN/ISSS, 36, Rue de Stassart 1050 Brussels, Belgium, How to Reap the Benefits of E-Commerce ,IST Conference Helsinki 1999.

HAMBRECHT, W.R. & Co (2000), eNetwork Infrastructure: Enabler of the Networked Economy, EquityResearch.

HEIKKILÄ ,Pauli, Managing Director, Digita Oy, Value and Value Creation in the Digital Economy, IST

http://www.hyperion.co.uk


HIE, (June 2000), Call Centres in the HIE Area, On-Line Network Economic Information.

HMSO, DTI, (August 2000), Working Anywhere: Exploring Telework for Individuals and Organisations,UK OnLine for Business, 2nd Edition.

INFORMATION SOCIETY INITIATIVE, (1997), Moving into the Information Society, DTI Publication.

KELLY, John P, Department of Enterprise, Trade and Employment, Dublin, Ireland , Change of Mindsetstowards flexibility and entrepreneurship in the Information Society, Presentation of the Irish Initiative, ISTConference Helsinki 1999.

LOCATE IN SCOTLAND, (1998), Call Centres in Scotland – Where the Accent is on Success, ScottishEnterprise Publication.

MARSHALL, Ian W. and ROADKNIGHT, Chris, BT Labs, Adastral Park, Martlesham Heath Ipswich IP53RE, A New Approach to Active Network Management, IST Conference Helsinki 1999.

MORGAN, JP. (Sept. 2000), Online Finance Europe: Invasion of the Customer Snatchers, Equity Research

POKKA, Hannele, Governor , Global versus local, IST Conference Helsinki 1999.

SACHS, GOLDMAN, (May 2000), B2B – Just How Big is the Opportunity?, Technology:InternetCommerce Report

SHAPIRO, Hanne, Danish Technological Institute, Centre for Competence and IT, 29 Kongsvang Allé,8000 Aarhus C, Denmark, The Floating Islands Revisited - Living and Learning in the Digital Archipelago,IST Conference Helsinki 1999.

SOETE, Luc, MERIT Maastricht Economic Research Institute on Innovation and Technology, University ofMaastricht Website: http://meritbbs.unimaas.nl/soete Towards the Digital Economy: Scenarios forBusiness IST Conference Helsinki 1999.

TRISTRAM, Clive CHKS Ltd., 1 Arden Court, Arden Road, Alcester, B49 6HN, England Ethical Issues inHealthcare Telematics, IST Conference Helsinki 1999.

US DEPT. OF COMMERCE, (Oct. 2000) Falling Through the Net: Towards Digital Inclusion, Economicsand Statistics Administration.

WAGGONER, James & Mlinar, Gavin (January 2000), The Vertical B2B Sector, Sands BrothersInvestment Research.

WALTERS, ROBERT (Aug. 2000), Salary Survey: UK and Ireland, On-Line Report:www.robertwalters.com

YLÄ-JÄÄSKI, Juha, Nokia Research Center, P.O. Box 407, 00045 NOKIA GROUP, Finland, Towards aMobile Information Society, IST Conference Helsinki 1999.

ZALE, David & Waggoner, James., (July 2000), The Business-To-Consumer E-Commerce Sector, SandBrothers & Co Ltd, Investment Bankers.

ZAMINDAR, Marya, (1995), Telework in Finland – Factors Behind Telework Use as Seen From anEmployer Perspective, Ministry of Labour, ISSN 0787-9393

http://meritbbs.unimaas.nl/soete


INTERNET SITES ACCESSED FOR RESEARCH PURPOSES:

http://www.e-centre.org.uk/http://www.isss-awareness.cenorm.be/Home/ecommerce_awareness.htmhttp://www.ecommercetimes.com/http://www.eubusiness.com/http://www.e-centre.org.uk/http://www.better-business.co.uk/http://www.bizmove.com/http://www.isi.gov.uk/http://www.interforum.org/http://www.quicken.com/small_business/http://www.toolkit.cch.com/www.b2byellowpages.comhttp://www.is4profit.com/business_directory.asphttp://www.1jump.com/www.elance.comhttp://www.robertwalters.com/http://www.freelancers.nethttp://www.freelanceinformer.co.uk/http://www.bredbandsbolaget.com/eng/node85.asphttp://www.forrester.comhttp://www.ridgeway-sys.com/http://www.uta.fi/telework/english/http://www.cnn.com/SPECIALS/2000/e.europe/http://www.sak.fi/http://www.onforte.de/English/english.htm).http://www.ta-telearbeit.de/tahtml/we_english/indexengl.htmlhttp://www.work-global.comhttp://www.evosoft.be/en/frames.htmlhttp://www.eto.org.uk/index.htmhttp://www.teleport-brussels.be/en/index.htmlhttp://www.ispo.cec.be/ecommerce/Welcome.htmlhttp://www.isi.gov.uk/isi/http://www.bta.be/index.htmlhttp://www.fsk.dk/fsk/div/hearing/draft.htmlhttp://europa.eu.int/comm/dg13/index.htmhttp://www.sitra.fi/tietoyhteiskunta/english/st5/eng01.htmhttp://www.tkk.utu.fi/telework/kirjall.htmlhttp://www.av-edge.com/http://www.e-skillsnto.org.uk/http://www.researcha.com/http://www.ilrt.bris.ac.uk/mirrors/scout/http://virtualsociety.sbs.ox.ac.uk/


http://www.isss-awareness.cenorm.be/Home/ecommerce_awareness.htm

http://www.ecommercetimes.com/

http://www.eubusiness.com/


http://www.better-business.co.uk/

http://www.bizmove.com/


http://www.interforum.org/

http://www.quicken.com/small_business/

http://www.toolkit.cch.com/

http://www.is4profit.com/business_directory.asp

http://www.1jump.com/

http://www.robertwalters.com/

http://www.freelancers.net

http://www.freelanceinformer.co.uk/

http://www.bredbandsbolaget.com/eng/node85.asp

http://www.forrester.com

http://www.ridgeway-sys.com/

http://www.uta.fi/telework/english/

http://www.cnn.com/SPECIALS/2000/e.europe/

http://www.sak.fi/

http://www.onforte.de/English/english.htm

http://www.ta-telearbeit.de/tahtml/we_english/indexengl.html

http://www.work-global.com

http://www.evosoft.be/en/frames.html

http://www.eto.org.uk/index.htm

http://www.teleport-brussels.be/en/index.html

http://www.ispo.cec.be/ecommerce/Welcome.html

http://www.isi.gov.uk/isi/

http://www.bta.be/index.html

http://www.fsk.dk/fsk/div/hearing/draft.html

http://europa.eu.int/comm/dg13/index.htm

http://www.sitra.fi/tietoyhteiskunta/english/st5/eng01.htm

http://www.tkk.utu.fi/telework/kirjall.html

http://www.av-edge.com/

http://www.e-skillsnto.org.uk/

http://www.researcha.com/

http://www.ilrt.bris.ac.uk/mirrors/scout/

http://virtualsociety.sbs.ox.ac.uk/


http://www.gs.com/hightech/research.htmlhttp://firstmonday.org/

Chapter 8 Skills Development / HRD in the Information Age

8 Skills Development: An Introduction

"Creativity combined with understanding the possibilities of ICTs and the ability to dream theunimaginable in new forms of partnerships, seem to be the sacred blessing when we look atqualifications and types of employees in demand." [Hanne Shapiro, Danish Technological Institute - 1999]

The above quotation summarises the extent of the problem when one tries to identify withany authority the key skills and human resource requirements of the digital economy. Whatis clear is that there is going to be a deficit of 1.7 million of employees across Europe by2003, as mentioned earlier in this report, which if not addressed will seriously underminethe EU economy. This deficit is already apparent. As such this deficit presents a keyopportunity for rural areas in so far that it is this deficit that will force key businessesthroughout the UK and Europe to investigate and adopt ‘new ways of working’ to addresssuch problems. Areas such as the Western Isles must be ready with the appropriate ‘hard’and ‘soft’ infrastructure required to meet such future needs.

It is therefore the aim of this section to focus-in on the types of key skills that are beingdemanded. Again, it needs to be reiterated that unless such skills and human resourcedevelopment is undertaken across the board, the rollout of broadband will neither makesense nor be justified, unless such supporting development is secured and widely availableto be accessed by the Western Isle’s population. If one gives the population first classcommunication links in the information age, coupled with the skills to utilise it to generatenew activity and wealth, then in development terms the area could ask for little more.

The presumption made in this chapter will be that an all-encompassing vision of theIsland’s future place in the Information Society will be shared throughout the communityand that there is at some time in the not too distant future a clear commitment made to re-aligning our economy and associated resources e.g. people. In this context one can begin toidentify the types of opportunity and the specific skills required by such an area as theWestern Isles. One is also then able to begin to identify how we might achieve the desiredoutcomes thought to be fundamental to survival and integration into the new economy.

Again, co-operation at all levels in the local area will be required to ensure access on the‘learning ladder’ at the various points suited to our population. As the importance of thisparallel initiative is recognised then key targets and milestones will need to be set acrossall sectors of the community, if we are to ensure that universal social and economicinclusion is achieved. In theory, the new technology aspects of the Information Age willoften be as relevant to the pre-school child as to the OAP. It may be the move towards

http://www.gs.com/hightech/research.html

http://firstmonday.org/


already developing opportunities for persons with the right skills in the new economy, evenif they are located at the other side of the Atlantic from their paymasters.

8.1 Sector Specific ICT Up-Skilling Opportunities: A Discussion

There are several key sectors that have continued to experience solid growth, even throughlast year’s downturn in confidence in the ICT sector as a whole. Although some shareprices may have fallen, this has had little to do with performance and more to do with aninitial over-valuation of stocks and subsequent adjustment. Recruitment demand is stillhigh as intimated above and forecast to significantly outstrip supply. Although manyefforts are being made in a number of areas to address such issues, a local response to theopportunities identified is essential if the area is to develop along the appropriatedevelopment path.

"…although the flow of people from the education system with IT qualifications is rising, this willnot in itself be enough to ensure that employers are able to recruit people with the combination ofskills and aptitudes which they seek…Some skills mismatch is inevitable given the rapidity oftechnical change particularly in IT." [DfEE (January 2000), Skills for the Information Age]

The ICT & Electronics sector represents one of the most dynamic components of the UKeconomy and hence is a good place to start. Unlike many other UK industries a significantnumber of businesses in this sector have been, and continue to, experience double figuregrowth rates on an annual basis:

Source: Office for National Statistics (1998 Est. for S&S sector)

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

-202468

1012141618

BOX 33 GDP AND SOFTWARE & SERVICES COMPARED

Software & Services

GDP

Year

% Growth


This sector has been characterised by market expansion, increasing global competition,technological development and innovation. People are the key to the current and futureprosperity of this sector. During the 1990s in the UK, the supply of such skilled personnelfailed to keep pace with strong jobs growth in this sector and the result was high turnover,vacancies and a resultant pressure on salaries. Although this supply issue has now evenedout, the overall trend in demand remains upwards.

One of the key points highlighted by the DfEE’s ‘Skills for the Information Age’ reportwas that: "…many roles in IT services are suitable for people without deep technical skills at thepoint of recruitment, with many employers often most interested in transferable, interpersonalskills on the basis that technical skills will be developed in employment."

This is a similar experience to what has been found in practice as the Western Isles ICTAdvisory Service has sought out new teleworking jobs. Likewise, at the Iomart InternetService Centre in Stornoway it has been found that employees need not have a wide-ranging IT&Telecoms knowledge, in many instances, prior to employment. There wouldappear to be an opportunity to develop an IT Services+ qualification to address such issues.

But a solid range of 'other life' skills has also proved important (i.e. inter-personal skills) ashas attitude and enthusiasm. With regard to the latter, the school leaver market wouldappear to be a largely untapped market in that particular instance.

If the area is to progress, then a more proactive approach to enticing school leavers throughtime into the local ICT sector would be desirable. A collaborative approach by thepublic/private sector to employ this target market whilst sponsoring them to gain officialqualifications could be a win-win situation. In theory, one could ‘snag’ school leavers bythe enticement of earning money to go towards the ever increasing cost of studying on themainland, then offer an alternative day-release route through UHI or other provider and/orsponsor the most able after a two year period, tying them in to return to the Island orcompany for a certain amount of time after graduation.

Ultimately, the future of the Island’s development capability depends on achieving successin retaining potential youthful out-migrators and their associated ICT skills. Futureentrepreneurial activity and ICT business start-ups are essential in the new economy. Theassociated development of a new business start-up venture capital fund by the publicauthorities may also help drive such development.

However, as outlined above, excluding the software and systems development (andmanagement) functions, it would appear that the ideal employee in the high growthsoftware & services sector in the 21st century will need quite a different range of skills thatwhat one might first have imagined.

In the IT Services sector _ of employees are likely to be managerial, professional andtechnician-level employees, many being accepted from other occupational groups. In thetelecoms and electronic manufacturing sectors a significantly smaller number of employeesfit into the above categories, being replaced by electrical and electronic engineers andproduction operator and assembly staff. It is the former sector that is likely to be of mostrelevance to development in the Western Isle's context. The Information Technology,Communications and Electronics Skills Strategy Group (ITCESSG) findings show that


recruitment problems in the ICT sector in the UK with associated salary inflation. Thiswould appear to be a ripe market for teleworked outsourcing, particularly given that thesupply of appropriately qualified staff is going to be in increasingly short supply in urbanareas in particular.

The ITCESSG's findings also state that there is a specific demand for: "…people whocombine up-to-date technical knowledge and problem solving ability with good communicationskills and the capacity to 'understand other people's businesses'. " Such a finding is entirelyconsistent with the more widespread convergence of numerous business sectors in theInformation Society.

Capacity building in the technical field is still an opportunity nevertheless, as recentresearch by IBM Global Services has estimated (taking into account Y2K demand, thepossible entry of the UK into the Single European Currency and growth in the widereconomy) that future employment growth rates in outsourcing and internet-related activityby/to IT technical specialists is likely to increase by over 40% (348,000) between 1998-2006.

Similar exercises by the Institute of Employment Research (IER - Warwick University)and Cambridge Econometrics predict similar demand. A further report by the InternationalData Corporation (IDC) in 1998 on a Europe-wide basis calculated that there was a 3.5%(320,000) shortfall in supply of IT specialists and further calculated that if current (1998)levels of training investment remained static then this shortfall in supply Europe-widewould rise to 12% of total demand by 2002. Again this confirms previously quotedstatistics and as a result there would appear to be a clear opportunity here for outsourcingto a highly skilled Western Isles labour force.

Recent estimates by the Labour Force Survey (LFS) still conclude that: "…insufficientnumbers of students with the skills and knowledge required to work in the ITCE industries areemerging."

Other findings from the ITCESSG study are also of note. IT businesses gravitate towardsgraduates, even with non-technical specific degrees, due to their perceived analytical andconceptual skills. On the other hand although the electronic sector is much more discerningon the technical content of the degree, it has been concerned about the problem-solving,team-working, communication and management abilities of its graduates. Again it wouldappear that there is an opportunity to develop an ICT+ qualification to address such issues.

In summary then, on the supply-side the ITCESSG state that they "…do not expect thenumbers of people with technical skills coming through the higher and further education routes toincrease sufficiently over the next few years to meet the growth in demand, unless more able youngpeople – and particularly women – can be encouraged to take up ITCE courses."

There appears to be a perception that ICT industry jobs are too technical, insular andimpersonal and this does not appeal to either many young people or women. Such anassertion is illustrated by the low numbers of each entering the industry. As a consequence


if up-skilling is to be achieved within these two key groups then a parallel campaign ofawareness-raising and education about the sector needs to take place.

A parallel and on-going effort to attract more people into the industry via skillsdevelopment may be necessary to add-value to a parallel development of broadband over aminimum of 5 years. Perhaps initially targeted at those persons available on the skillsregister. A complementary campaign to encourage business outsourcing to the Islandsskills base of teleworkers could then be a logical next step.

The DfEE’s ‘Skills for the Information Age’ also recommended the on-going importancerelated to the gathering and forecasting of demand and supply within the ICT industry,although this being clearly a national initiative. The report also recognises the need for a toNational Information Systems Skills Framework – which describes the skills and keycompetencies required for different IT jobs, the ladder for career progression and thequalifications and training required this forming the basis of their second recommendation.

In compiling the report six main skills were mentioned by the ICT sector as beingcritical:

1. Oral Communication2. Problem Solving3. Team-Working4. Improving your own Learning5. Business Awareness6. Creativity & Innovation

There would appear to be a clear opportunity to link UHI degrees into such keycompetencies and a range of new tailor-made courses designed specifically for the ICTsector. A recently developed website http://www.career-space.com/ demonstrates howseriously the industry is addressing the projected skills shortage. Sponsors apart from theEuropean Commission include IBM Europe, Nokia Telecommunications, PhilipsSemiconductors, Thomson CSF, Siemens AG, Microsoft Europe, and BritishTelecommunications Plc. The on-line presence itself is aimed at a: “…project is to put inplace a clear framework for students, education and training institutions and Governments, thatdescribes the skills and competencies required by the ICT industry in Europe.”

A range of generic job profiles have been developed to both attract potential students andto: “..provide higher education ICT curriculum designers with clear up-to-date and easilyaccessible information on the skills needed by the industry, and assist Governments in developingpolicies to foster the growth of ICT skills in Europe.” As such, this initiative in addition to theabove report, provides important pointers as to where investment in skills develop shouldbe focused at the Western Isles level to specifically address the looming skills crisis.

The main competencies mentioned in this instance are as follows:

1. People who are Creative and artistic2. People who are excited by technology3. People who have a liking for science and mathematics4. People who good communications skills5. People who like dealing with people

http://www.career-space.com/


To date there have been 13 generic job profiles in various sub-sectors with a full range ofsupporting information provided, aimed squarely at filling the skills gap. A comprehensiveset of recommendations has been formulated which require careful consideration if keyopportunities are to be exploited. These recommendations are included in Appendix 7.

This new strategy “…requires quick cost-effective responses. The 'ICT Consortium' callstherefore for immediate, effective and concerted action by the European Commission, the MemberStates, industry and the educational institutions to address the skills shortage and to establish: ANew Partnership to Close Europe's Information and Communications Technology Skills Gap.”

A recent amalgamation of the ‘e-business’ National Training Organisation (NTO) with the‘Information Technology’ NTO to make the ‘e-skills’ NTO demonstrates the increasedconvergence related to doing business and being integrated into the ICT sector. NTOs areaccredited by government as being the ‘voice’ of the industries for which they represent.

Prior to amalgamation, the e-business NTO undertook an initiative called Project Geminithat brought Higher Education and industry together to consider and promote careeropportunities in the ‘IT Services’ industry. The project was completed in March 2000 andis of direct relevance to this study. Project Gemini had the following aims:

• Improve the availability of graduates to the IT Services and related industries• To bridge the gap between the skills needs of industry and undergraduate skills development• Improve linkages between employers and educationalists

At the time of writing, the report identified a skills gap of 40,000 persons within the UKalone and targeted its initiative at not only attracting more students and young people intothe industry, but also targeting graduates with non-IT specific skills into the sector,recognising many of the transferable skills available. Much of the project was based onlooking at employability skills now and in the future and involving employers, educatorsand students to help the changing of perceptions on all sides with regard to what each otherwas/is doing. This lack of communications/understanding is arguably, apparent in theHighlands & Islands context and again arguably, at the local Western Isles level. Theredoes not appear to be an overall visionary strategy that each ‘segment’ of the market hasenthusiastically signed up to.

Interestingly, the study found that businesses in the ICT sector identified problem-solving,oral communications and business awareness as being the keys skills they were lookingfor in graduates, rather then just IT skills. Indeed, the significant majority of respondentsfrom the SME and large business sector stated that they are quite happy to recruit non-ITgraduates, as they did not necessarily require ICT skills at the point of entry. Both studentsand employers identified skills awareness and work experience as being two of the mostvaluable activities that could be undertaken. The project itself and resulting advisorybooklet: “Have you got what IT takes?” won the top prize in the category ‘Best HigherEducation Careers Literature’ and as such is also a credible piece of work, The six keyskills required by any graduate were identified by the three main interest groupsinvolved in producing the report:


• Teamworking• Problem Solving• Improved Learning• Business Awareness• Creativity and innovation

As Box 34 demonstrates, the awareness-raising effect among groups of students from the‘arts & humanities’ faculties broadens their employability significantly. Where previouslythe IT Services sector was considered to be a career path closed to such students for arange of reasons which were largely misconceptions, once recognised, it is a legitimateaspiration from a whole range of disciplines.

As can be quite clearly explicated from the three separate skills development initiativesdiscussed above, there are core skills that must be developed to support the development ofe-commerce and ICT related industries. A common misconception among students andeducators is that such industries are looking to employ ‘techies’ but this is not necessarilythe case as there other more important skills of the nature mentioned in the abovediscussions. One would have to look to UHI in such a context to increasingly work andconsult with the IT sector within and beyond the Highlands & Islands to build andintegrate such core competencies into its new degree programmes. Other key areasidentified in this research relate to the importance of work experience and a second EUlanguage, if we are clear about looking to and addressing the future skills requirements ofindustry in the Highlands & Islands and beyond.

Ultimately, UHI degrees need to offer something more to employers in the Highland’s andUK’s fastest growing industry (which is suffering from an increasing skills shortage), thanstandard degrees from traditional Universities. Such degrees need to be ‘21st century’enabled and address key developing market requirements. UHI arguably, therefore needsto work closely with the IT sector along the lines of the Gemini project in South EastEngland and market itself and build its reputation upon producing such graduates. It isafter all marketing itself as being a technically innovative educational deliveryestablishment and has an opportunity to produce graduates that will be sought after by anindustry that has been involved in agreeing and approving the key competency strands

BOX 34


problem solving, team working, work experience…etc. The UHI initiative at introducingPPCs linked to degree programmes is very much compatible with such thinking, but needsto be developed further via on-going consultations with industry.

8.2 ICT Skills Development Opportunities

In addition to addressing core generic competencies there are also key technical skills areasthat are relatively straightforward to identify by considering industry trends and morespecifically developing industry demand. There is a clear parallel opportunity here to buildup key technical skills within the community of the Western Isles for example which willprovide opportunities for new business start-ups to address developing market skillsshortages in the UK and Europe, given the location independence of much of this work. Asoutlined in the introduction to section 6, by 2003 there is going to be an anticipated 1million e-business related positions shortfall [Internet Magazine, Dec. 2000]. One couldanticipate that this unsatisfied demand will lend itself, particularly in the technical skillscontext, to an increased level of outsourcing – refer to sections 6.3 and 6.4. Existingstructures in the Western Isles such as the Lasair teleworking model may directly benefit orsuch workflows may also target the call centre model at varying scales.

Could there be an opportunity to complement the Highlands & Islands Learning Gridproposal with broadband telecoms being delivered to rural ‘outreach’ centres to that of oneproviding key advanced rural ICT workspace infrastructure to address future potentialdemand? Obviously such an initiative would include a certain amount of risk, as alladvance infrastructure does. On the other hand such key infrastructure may open up amultitude of opportunities to plug at least a small part of Europe’s developing skills gap.Such advance e-business centres integrated with UHI outreach centres may be totallycomplementary and potentially an innovative added-value development model. It may alsobe the catalyst to ‘kickstart’ the proposed H&I’s Learning Grid. In rural developmenttheory ‘best practice’ relates to the integration of skills development with that ofdeveloping industry opportunities in rural areas.

Returning to the key areas of developing demand for technical skills there are several areasof obvious demand. Richard Bowery, MD of internet recruitment site CareerPlus hasidentified one of the key opportunities in his experience: “The demand for web skills hasnever been higher and there’s simply not enough trained technical staff to go around…themessage is clear – get a smattering of Internet knowledge under your belt, and you’llbecome a very valuable commodity over the next few years.” [Dec. 2000]

Again, within UHI and its degree delivery there is an additional opportunity here to ensurethat even students on non-ICT degrees have (and this is already happening to some extent,although not marketed) core internet skills of the nature demand by industry. On actualICT degrees evidence of work experience in the web development field is consideredessential by many within the industry. “For web developers…for the commercial side,experience matters more than qualifications, so evidence of work placements is highlyregarded.” [Richard Jones, AS Manager, Sourcethatjob.com, Dec. 2000]


Overall, and somewhat surprisingly, skilled ‘web developers’ are said to be one of therarest commodities in the market, presently commanding major salaries and bonuses acrossUK industry. An outsourcing business opportunity must surely reside here and therefore apotential drive towards plugging such a skills gap via new skills training has the potentialto create new employment in an area such as the Western Isles.

However, even such a clearly technically focused area of skills development (web-based)requires an added value element too. According to Adam Gunnell, founder of recruitmentsite Boldly-go.com: “The single most valuable skill a techie could learn to augment theirvalue in the market place would be customer-facing skills and commercial acumen. Theseare the skills that will outlive any development tool of the day. A lack of theseinterpersonal skills is the most common reason for companies not proceeding to offer.”

As with the generic skills mentioned in section 7.1, there is even a need for similar skillson the technical skills development course. This is an important point and one that if actedupon appropriately could give ICT-sector graduates from the UHI a competitive advantagein the IT-services supply market.

This sector is also an increasing focus of the UK government as well as the EuropeanCommission, as mentioned earlier. Employment Minister Tessa Jowell has recently statedthat the UK government will be increasingly focusing on improving IT skills, The UKgovernment’s Skills Task Force estimates that at least half a million further IT workers willbe needed over the next ten years. In this sense it will be imperative to raise the profile ofoutsourcing to rural areas as a key policy not only in practical terms but also in regionaldevelopment terms. Given the focus, a clearly targeted strategy should be able to attractsubstantial development funding, in light of the wide range of indicators which identify theclear needs with the developing e-business sector.

So where might an IT skills development focus concentrate? When we are talking aboutweb development / programming skills we are talking about Java and C++ the objectorientated programming languages, these two in particular being considered to be ‘themost sought after’ according to the Robert Walters Salary Survey report in August 2000. Inaddition, the need for ‘good’ database skills was also stated as being an increasingrequirement within the industry. Additional key skills requirements, according to the samesurvey, for web development include Flash, Dreamweaver, Javascript, Cold Fusion andActive Server Pages in particular. The outlook for such skills is considered to be strong ascompetition in the e-business market across the UK and Europe intensifies.

On the networking side the recent CISCO academy based at the LCC UHI campus shouldbe a key opportunity to increase the level of Information Age networking skills in the area.Demand within the e-business sector for individuals with ‘security’ skills is anticipated tobe increasingly strong as is that for individuals able to support ‘routers, gateways and hubs.

Other key skills in demand from a survey of the ‘e-lance’ and other recruitment sitesinclude Photoshop, SQL Server Programming skills, Perl Programmers, HTML andOracle. According to the most recent labour force survey by NTC Research: “.. Java,


designers are still in short supply. Permanent skills most advertised for included Java andC++ programmers, software design engineers and telecoms engineers.”

In summary, there is a clearly identifiable range of skills demanded in UK industry andcommerce in particular aspects of IT and Communications. Perhaps the most significantchallenge is in identifying the key areas of future demand. There is always the concern thatby the time any strategy up-skills potential employees in the industry, that the industry willhave moved-on to the next generation of products, requiring new specific skills. However,in this particular area, one can be relatively confident that such a skills base built up willlead to the type of employees who in their particular industry will have to continuallyupdate their skills in any case, as skills in programming languages make the transition toother a relatively painless experience. Some UK firms for example have been employingC++ programmers instead of Java programmers, on the basis that for such persons,learning Java should only take several weeks, given that Java programmers are so difficultto employ at present.

There is clearly a bottleneck within the supply of the UK and European IT & Telecomsworkforce which is predicted to continue and thus presents, as mentioned in section 6.4and 7, a real opportunity for rural economies to integrate into the Information Society byproviding out-sourcing services to the fastest growing sector in the UK economy.

“The IT skills shortage is at its highest ever level and shows no sign of abating despite therecent staff cuts at tech firms, according to research out today. The news comes from UKbank LloydsTSB, who has been conducting a survey into staffing levels for the last eightyears. The findings show 56 per cent of firms have difficulty recruiting skilled business andIT services staff. This compares to just one in five companies reporting recruitmentdifficulties in the early nineties.” [http://www.computerpeople.co.uk/]

BOX 35 Source: UK Employers Skills Survey / Skills Taskforce Publication, DfEE 2000

As Box 35 clearly shows, previous research has demonstrated the negative consequencesfor the economy should skills constraints remain. Decreasing output and resulting


addressed, with periods of boom and bust as continual readjustments are made in responseto supply-side friction – i.e. skills related issues.

8.3 Western Isles Skills Development in the Information Age: Summary

What has been discussed in both chapters 6 and 7 of this report has been the move towardswhat is termed the Information Age, the opportunities this presents and areas of demandfor specific teaching and learning strategies.

As indicated in the introduction to chapter 7 the achievement of broadband will require acomplementary and indeed advance up-skilling of the Western Isles skills base. If achievedand the clear opportunities for employment and income targeted, then the development andintegration of the area’s economy into the Information Age will be secured. To achieve thisit seems clear that there is a need for at least two separate up-skilling initiatives, onefocused on generic ‘graduate’ skills of relevance to the IT industry and the other focusedon the appropriate mix of IT skills for industry. It will need to be accepted that this laterinitiative will require to be on-going and adaptive to the needs of the sector.

There is clearly a yet largely unrealised remit for the University of the Highlands & Islandsin particular. At the same time there needs to be an increasing involvement by industry andcommerce in the up-skilling process, both advisory and financial. The latter in recognitionof the new key role in the development process that the teaching & learning sector canaddress in the future – i.e. the supply of appropriately skilled staff. If not realised, thenindustry will ultimately be the one that suffer the consequences as chronic skills shortagesoccur.

According to ‘Skills in the Information Age’ – DfEE, there are too few examples of HigherEducation and industry colluding within the UK, although there are numerous examples inthe US where such practice has developed and shown to be very much mutually beneficial.The University of East London and its collaboration with a local company, Logica, washighlighted as an example of best practice in the UK where response times to the needs ofthe company are short via the delivery of innovative ‘just in time’ course run on demand.In addition, the University of Sheffield and its usage of students to address real ‘business-need’ projects have benefited both students and local industry alike.

There are elements of both of the above that could be transferable to the rural Scotlandsituation.

"Some businesses pointed out that the willingness of education institutions to work withthem varied enormously. It was reported that the newer universities and colleges werelikely to be more receptive." [Skills in the Information Age’ – DfEE, 2000]

Such collaborations are of significant importance for both industry and education sectors –the students get the insight and the employers get students that are 'work-ready' – The


Dearing report "Higher Education in the Learning Society" strongly supports suchdevelopments in its recommendations:

• Integrated Internet/Video on Demand – Education Opportunities.

• Higher Education Reach Out to Business and Communities Fund.

• Business involvement in Course Content.

• Increased collaboration between IT suppliers and HE institutions sought to enable access toequipment and practices.

For the ‘development’ agencies, similar to industry and commerce, there needs to be aclear recognition of the role in our economy’s structural change of the teaching, learningand training efforts by both UHI and other existing or potential private sector marketentrants. A teaching & learning sector in the Western Isles that is adaptive to the dynamismof the ICT sector and able to supply the skills demands of industry will need on-goingdevelopment assistance both advisory and financial.

In effect, if such a partnership can be formed with all the stakeholders i.e.education/training sector, the business sector and the public agencies, on-board, thedevelopment need required to progress the skills initiatives outlined can be achieved. As inthe Broadband section, there is no escaping the need to pull the area’s resources byforming an inclusive partnership with local, regional and even national interestsrepresented.

If not achieved a key opportunity will be lost. The private sector by its very nature is notable to invest heavily in taking staff on without the key skills and training them, for fear oflosing them to competitors after investing much. The education sector does not receivedevelopment funding per say, but rather consolidatory funding to maintain what it has,whilst public sector agencies with a development remit have only limited funds to make adifference. So, if a responsive and continually developing skills sector is to be achieved inthe Western Isles, then clearly some new innovative partnership initiative is going to berequired to aid the area’s transition into the Information Age.

The dual goals of both hard (broadband) and soft (skills development) infrastructuredevelopment in the Western Isles context are achievable, but will take a ‘leap of faith’ bysome and perhaps never sit comfortably with others.

Innovation, a paradigm shift, new ways of thinking, new concepts of the workplace andorganisational structures are all potentially achievements requiring to happen in a veryshort space of time, if the Western Isles area is to take its chance and be an early entrantinto the new digital economy. The evidence for the magnitude of change in society and theeconomy brought about by the ICT revolution is comparable to anything experienced sincethe beginning of the 20th century. As such, it requires bold steps and new sense of purposeto turn around the fortunes of the Islands, as this current opportunity presents itself. Failure


with lasting implications for economic and social inclusion in the new information societyof the 21st century for both the current and future generation.

“The combination of digital information with communications technology will be as powerful aforce of transformation in our society as the invention of the wheel or the industrial revolution intheir time…At this time, there is a need for Scotland to embrace with enthusiasm the opportunitiesand possibilities that arise from the digital communications technologies. ” [Extract from minister’sspeech on Digital Scotland, Scottish Parliament]

8.4 ICT Skills Development: A Policy Overview

The policy context for the type of developments identified throughout this report has asolid foundation in existing UK national, regional and local strategies. In this respect thereis a multi-level strategic framework being developed working towards the developmentgoal of integrating Scotland and the Highlands & Islands (and the Western Isles) fully intothe Information Society. How such policies will eventually manifest themselves in theWestern Isles context is not yet clear, hence the rationale for this particular study. Ratherthan sitting back and seeing what happens, there is a clear feeling that we, as a remote areaon the periphery of Europe develop a sense of purpose with key development goals. Onemust be clear though that what is being suggested is not the imposition of a ‘top-down’approach, but rather that of an enabling approach so as to allow and encourage innovationand enterprise to flourish by priming the key infrastructural conditions necessary forbottom-up private sector development to become established – i.e. the optimisation ofskills and telecommunications at the local level. As we will see in the following sectioncontemporary development policy is totally attuned to the finding and recommendationsexpressed in this report, validating, in effect its findings.

8.4.1 EU Policy for the Information Society

Firstly, then, it is worth considering EU policy on development issues related to theinformation age. It was the ‘Bangemann’ report of 1994 that really provided the catalystfor the modern day European policy context. This report identified the challengespresented by the impending ‘European ICT revolution’ [Smith, 1997], whilst also elaboratingon the potential opportunities and consequentially recommended, for the first time, specificEU policy measures for ICT and the Information Society.

In the current European context the European Commission has been driving the policies ofthe new Europe, particularly through the recently formed Information Society DirectorateGeneral (DG). More recently at the highest level, the Council of Ministers, comprised ofthe heads of state from the member countries, in Lisbon in March 2000 formulated a morefocused policy direction. It is also a stated aim of Sweden in its Presidency role in the firsthalf of 2001 to drive the policies aimed at IS convergence throughout the Community.

Under the IS DG’s eEurope initiative the focus of the move towards the InformationSociety is clear: “These changes, the most significant since the Industrial revolution, arefar-reaching and global. They are not just about technology. They will affect everyone,everywhere. Managing this transformation represents one of the central economic andsocial challenges facing Europe today...” [Romano Prodi, President of the European Commission]


The initiative itself is said to be of major importance to aid the decision-makers and policymakers of the early 21st century rise to the challenges they must face and seize theopportunities presented. A view very much shared by the writer in considering the WesternIsles context. Within the eEurope initiative there are stated to be three guiding objectives:

• Bringing every citizen, home, school, business and administration on-line• Creating a digitally literate and entrepreneurial Europe• Ensuring a socially inclusive Information Society

Clearly the adoption of such objectives has far reaching consequences for remote ruralareas such as the Western Isles. It must be remembered that our baseline is that muchlower than many other communities in Scotland and indeed Europe and therefore adisproportionate level of investment is likely to be required. Yet, if the opportunity is to beseized there can be no shying away from the high profile initiative required.

Within the context of teaching and learning, the focus of this particular section of thereport the above strategy prioritises education and skills development: “Education is vitalfor the economic and social progress and for guaranteeing equal opportunities in our society. In thedigital age, it is key to ensure life-long learning for new generations of creators, researchers andentrepreneurs. All citizens must be able to play an active role in the Information Society.” Themessage here is as clear for the Western Isles as it is for elsewhere. A new, on-going andinclusive IS skills development is required for all members of society whatever their age,circumstance or location. It needs to include potential entry at all ‘rungs’ on the ladder, inmany ways being compatible with the recent University for Industry’s ‘learndirect’initiative in the UK context.

This generic level strategy has also been converted into clear actions via the Council ofEurope at the Lisbon Summit. The term eLearning specifically came into being andreferred directly to actions aimed at intensifying and mobilising the education and industrysectors in Europe, adding to that being formulated throughout the member states. Theactions themselves specified that all schools in Europe must have an internet connection bythe end of 2001 and by the end of 2002 to have gone a stage further and provided ‘fast’internet connections and multi-media enabled classrooms at pre-specified user to PC ratios.

Going further, such actions also incorporate higher education and research, vocationaltraining organisations, learning centres, public libraries…etc. To achieve such veritablegoals and actions Member states have been directly encouraged to utilise EU StructuralFunds, Community Programmes and even collaborate closely with the EuropeanInvestment Bank where necessary.

eLearning then, is the term used for the Council of Ministers’ strategic directions andassociated actions. It presents a major opportunity for the Western Isles to access theresources required by it, to thrive and prosper in the Information Society. In summary, it isabout:

• Substantially increasing investment per capita in human resources• Providing each and every member of society with the skills necessary to work and live in the

Information Society• Training teachers and educators in the use of the internet society and its associated tools• Decentralising training in key areas of knowledge, languages and technical skills


• Providing school leavers ‘broad digital literacy’ by the end of 2003

The adoption of such guiding principles and objectives requires the level of infrastructuralchanges discussed throughout this report. Moreover, the EU’s Fifth FrameworkProgramme (FP5) has identified complementary priorities for the European Union'sresearch, technological development and demonstration (RTD) activities for the period1998-2002 to aid the transition into the Information Society.

The Information Society Technologies (IST) Programme is part of this research anddevelopment programme and the recent reports (available from: http://istevent.cec.eu.int/en/) fromHelsinki and Nice have been invaluable reading in convincing oneself of the major effortsbeing undertaken at the European level to guide and mobilise our society’s transition byaddressing such key issues as broadband and e-skills or eLearning.

In summary, there can be no doubting the level of commitment within EU policy andfunding to support initiatives of the types mentioned briefly within this report. We havealready looked at examples of best practice from the Member States and case studies suchas that recently invested in by the European Commission and European industry atwww.career-space.com. One cannot help be concerned about the lack of strategic direction atthe Islands’ level given the strength, legitimacy and all-encompassing nature of the policyand action context outlined above.

8.4.2 UK National Policy for the Information Society

So what particular initiatives can we point to at the UK level to justify a Western Islesinitiative aimed at both broadband and e-skills? Similar to the European level context theUK national policy context is both supportive from the highest levels of government andquite specific with its message. As a nation, the UK must move quickly to enable itscitizens, businesses and education sector to become part of the ‘on-line’ InformationSociety. A particular focus has been given to the promotion of e-commerce and assistanceto the SME sector, in recognition of both the opportunities available and the costsassociated with being a ‘follower’ rather than a ‘leader’. At the micro-scale (i.e. theWestern Isles) similar arguments apply and require to be voiced equally loud.

From the Government’s ‘Our Information Age’ policy statement on its vision for futuredevelopment, to the DTI’s ‘Competitiveness in the Knowledge Driven Economy’ to its‘Approaching Convergence in the Information Age’ policy paper on the changingregulatory framework, to its ‘A New Future for Communications’, to its ‘CommunicationsWhite Paper’ which outlines its intention to:

• make the UK home to the most dynamic and competitive communications and media market in the world.• ensure universal access to a choice of diverse services of the highest quality.• ensure that citizens and consumers are safeguarded.

…this latter paper even, encouragingly, includes an objective aiming to promote “…theavailability of widespread access to higher bandwidth services and bring together publicand private sector stakeholders to develop a practical broadband strategy” thus being ofdirect relevance to the earlier chapters in this report…the policy framework and

http://istevent.cec.eu.int/en/


Other equally important policy and strategy related initiatives relate to the ‘UK On-Line’initiative funded and driven by government in recognition of the vast changes taking placein the way that work, communicate and lead our lives. The related e-Envoy websitespecifically addresses the need for skills development in its ‘Confident People’ policycontext outlining 5 key priorities and principles for adoption in the UK:

• Access for Everyone (£35M) – 6000 UK On-Line Centres, Community ICT Learning Centres,Libraries, Internet Learning Access Points

• Developing People’s Skills to Exploit new Technologies (£700M for infrastructure + £230Mfor improving ICT Skills Levels – CLCs, NGfL, Ufi’s Learndirect, Life Long Learning andIndividual Learning Accounts)

• Reducing Barriers to Use – Consumer/Security Issues, Safety/Standards Issues• Driving Up the Quality of Social Content – Local Content• Successful Business - ‘UK On-Line for Business’ initiative, ‘Technology Means Business’

scheme, ‘Supply Chain’ promotional initiative, Free Publications on-line for SMEs, on-line ‘e-Commerce Resource Centre’ and a ‘Showcasing Programme’.

This level and range of actions demonstrates a clear commitment at the national level tosee through expensive transitional strategies for the Information Age, right through societyin the UK. All in all, in browsing the above content, one gets the clear message originatingfrom the highest levels of government – i.e. join and converge or wait and becomeperipheral.

Already referred to in several instances throughout the report is the Department forEducation and Employment’s ‘Skills for Information Age’ report by the ITCE SkillsStrategy Group which quite provides a framework upon which to base ‘new economy’skills strategy, although recognising the pace of changing requirements within the sector.The report recognising the immediacy of skills needs is about how to “…translate wordsinto action and quickly.” The report itself addresses how to meet current and future ICTskills needs, it considers how to attract more people into the industry (includingelectronics) and retain the more able in face of EU-wide skills shortages, it considers howto expand and develop industry and education liaisons regarding current and future skillsissues and it also finally attempts to strengthen the sectoral skills/training bodies such asthe NTOs in the up-skilling process. Again, the consistent themes running through thisreport have been recognised and are clearly in line with the strategies and policies outlinedin this report with regard to the Western Isles context e.g. partnership initiatives betweeneducation, other agency and private sector aimed at both ‘generic’ skills demanded withinindustry and specific ICT areas of demand.

Yet another element of specific policy interest is the NGfL. In 1998 the UK governmentcommitted itself to providing a National Grid for Learning (NGfL), now incorporatedwithin its ‘UK On-Line’ initiative. This particular element of policy is itself consistent withthe EU proposals mentioned earlier on eLearning strategies. The strategy is based aroundthe provision of a national learning resource available universally on the internet. It isaimed at schools, further education, higher education and targets the access of ‘life longlearning’ and ‘career development’ via on-line content. The NGfL is also targeted atproviders from community organisations and libraries, right through the spectrum ofproviders to the private sector.


Approved centres are to be set-up and connected via ‘high-speed’ internet access to thisnational grid and substantial funding is available to meet the requirements of accessing thegrid from infrastructure to teaching and learning development projects and initiatives. “TheNGfL includes extra funding for hardware, software and networks, as well as for trainingin the use of information and communications technology (ICT) in the educational context.“ [http://www.ngfl.gov.uk/about/detail.html#ngfl] The ‘Grid’ itself will integrate the publiclibrary network and the UfI’s ‘learndirect’ needs and requirements.

In the planning of the provision of ‘Grid’ access to schools there is recognition of extendedneeds of community, access, social inclusion and sustainability and the need to controlcosts for contributors to the ‘Grid’. One can therefore conclude that not only is the NGfLan important national initiative for the rural as well as urban context, but that it also mayprovide an opportunity for the added-value skills provision outlined as being of immediatestrategic need for the Western Isles in this report, whilst also being a contributor to thefunding of targeted ‘broadband’ infrastructure for both schools and communities in ruralareas such as the Western Isles. The recent Highlands & Islands Learning Grid proposals,to be discussed below, are an example of such ‘opportunistic’ and integrated strategyformulation.

Finally, in the national policy context with regard to skills development in the InformationAge one can look at the policy of the National Training Organisations. Of recent andnotable interest was the recent amalgamation of the e-business-NTO with the IT-NTO,demonstrating the firm belief that future skills training for business in ICT will be firmlyrouted in e-commerce and related activities, as business processes and the internet becomeincreasingly integrated and possibly indistinguishable.

The national e-skills NTO, referred to earlier in the text, have been the result and as wehave already seen much of its policy findings/proposals are of relevance to the futurepolicies of ICT skills development in the Western Isles. The three main area’s of the e-skills NTO remit are as follows:

• to represent the IT industry sector• to address cross-sectoral IT professionals skills needs• to improve the general IT user skills of the entire workforce.

The NTO is recognised by government “..as the voice of employers with regards toeducation, training, qualifications and competitiveness issues for IT users andprofessionals….” and is currently in the process of producing a national strategy for e-skills development in the UK. This strategy and its rationale is entirely consistent with theskills development projects and strategies outlined for the Western Isles in this report:

“The UK’s prosperity depends as never before on IT skills. Constraint in the growth of theUK’s IT industry is almost entirely due to professional skills shortages. The winners andlosers in e-business will be determined by access to skills… IT literacy is rapidly becomingas fundamental to employability as reading and writing. For the UK to remain a worldpower in the information age, pervasive, structural change is essential in the supply of IT-related skills.”

To conclude this section on National policies, one must also recognise the complementary


to respond to broadband demand by releasing broadband fixed wireless spectrum andauctioning 3G spectrum. On the other hand, as indicated at the start of this report, one hasto be less than enthusiastic by the level of response from OFTEL in response togovernment, business sand consumer demands and aspirations.

Furthermore the National Inventory Project (http://www.information-society.org.uk/)run by the Government’s ‘Cabinet Office’ and the Central Computer andTelecommunications Agency (CCTA) in the UK provides an on-line database of projectsand initiatives related to how the UK is responding to the Information Society and as suchaims to provide a quality information resource for knowledge, information and learningwith regard to aiding the UK’s efforts in areas such as teaching and learning and theprovision of broadband.

8.4.3 Scottish and Regional Policy for Information Society

Firstly, at the Scottish level, there are several main initiatives of high profile that provideone with much of the information relevant to Scotland’s response to the InformationSociety. Of most importance, arguably, is the ‘Digital Scotland’ Task Force report andrelated policy recommendations. Again this strategy’s framework is consistent with theaims and objectives of the actions outlined in this paper, with key themes being amongstothers being collaboration and speed.

The report displays very clearly the belief in the coming of the ‘Digital Age’ andScotland’s immediate need to be included at all levels and in all locations. The current‘revolution’ in our society and economy is said to be comparable with the agricultural andindustrial revolutions that have proceeded it. This, being in line with the view taken withinthis current report.

Specifically, the report highlights the need for SMEs to the potential economic advantageof the opportunities presented by ICT. Secondly it highlights the need for new strategiesfor teaching and learning and new modes of delivery to ensure that Scotland is notconstrained by skills shortages in its transition and integration into being a key player inthe ‘Digital Age’ within Europe. Encouragingly, the report also highlights the need forsuch technology to enable social and economic inclusion, the implication being that therewill not be a ‘fast-track’ for urban Scotland to the disadvantage of rural Scotland, butrather a single and all-encompassing ‘Digital-Age’ development effort, irrespective oflocation or circumstance. Action at both the Scottish and local level is identified as beingan essential pre-requisite for Scotland as a nation.

With regard to the vision identified there is once more an unequivocal belief that ICTdevelopment needs to become a much more significant element of the traditionaldevelopment process within Scotland:

“Our vision is for a prosperous, inclusive, open and modern Scotland where fullemployment is achieved. A Scotland which achieves economic growth rates ahead of the

http://www.information-society.org.uk/


which are at home in the e-economy; and a well-educated, well-trained, highly-skilledworkforce…A vision also of a Scotland where many people choose to work in rural areaswhere they can combine an excellent physical environment with opportunities forknowledge work. A Scotland where no-one is excluded from education and trainingopportunities or from access to public services because of where they live, or their socialor ethical backgrounds.”

At the micro-level such policy and vision is of the nature of that already outlined withinthis report and indeed was behind the rationale of the commissioning of this report inDecember 1999. Again the policy context at the Scottish level can be seen to be entirelyconsistent with the findings and actions outlined within this report and indeed supportivegiven already defined commitments on providing the ‘right skills’ and a ‘world-classtelecommunications infrastructure’ with ‘pervasive and affordable access for all to theweb and other digital technologies.’ This surely translates into a combined regionalbroadband and ICT skills development initiative in the Western Isles.

As mentioned at the national policy level, Scottish regional versions of the University forIndustry (SufI) and Learndirect, Scotland are also complementary and of direct relevanceand other discussions and debate (‘Skills for Scotland’) in the Scottish Parliament e.g. viathe Enterprise & Lifelong Learning Committee are also of consequence.

If we examine development policy for the Highlands & Islands specifically one can alsoidentify numerous policies that actively encourage and support the range of actionsoutlined within this report.

Firstly, in examining the Highlands & Islands Special Programme across all three‘Priorities’ and within the related ‘Measures’ and their objectives and scope, there appearsto be widespread synergy with the related actions and vision outlined within this report.Broadband provision to the Information Society (a fundamental requirement) and relatedskills development are aimed at maximising rather than just improving regionalcompetitiveness, whilst also dealing directly with social & economic inclusion issues onEurope and Scotland’s periphery. Essentially, any development strategy or initiativewhich will not just stem population decline but most likely reverse it must surely maximisethe priority for the funding available, as no other such strategy in recent memory hasachieved the outcomes achievable by the implementation of the policies and actions in thisreport.

Secondly, from the Highlands & Islands Enterprise (and WIE) perspective a focus onbroadband telecoms and ICT skills development are already clearly articulated goals.Recent initiatives have seen the contracting of a major UK ICT consultancy firm toexamine the demand for broadband in the Highlands & Islands. This report should provecomplementary to this report, providing it takes a long-term perspective on thedevelopment process to achieve sustainability. HIE and it's LECs are committedto the development of e-commerce and now have a dedicated websitehttp://www.hiecommerce.com/ which is targeted at the development of SMEs throughoutthe region.

Fundamentally, it is recognised that there is an enormous potential opportunity for the useof ICT to open up new market and opportunities for existing businesses in the Highlands &Islands and this will require both ‘soft’ and ‘hard’ infrastructure. It is recognised though,

http://www.hiecommerce.com/


in the region as alternative suppliers to those already within the region become as easy,and, indeed perhaps via 24/7 availability, indeed perhaps more convenient to deal with.

The achievement of social & economic inclusion is again a clearly stated priority and keybusiness strategies aimed at improving competitiveness (businesses and localities),encouraging new-starts and attracting inward investment are all central to the aims of thestrategy and actions outlined in this report.

In addition, the recently published HIE Skills Strategy states: “Special focus will be givento developing ICT and management and leadership skills thus enabling individuals andbusinesses of the Highlands and Islands to gain a competitive advantage.” This focusbeing aimed at targeting opportunities related to inward investment, e-commerce andnetworking and programming amongst others.

Thirdly, from the UHI perspective there is an on-going commitment to the area to provideand develop out-reaching distance learning centres via broadband telecoms (e.g. Highlands& Islands Learning Grid proposals) for VC delivery. Ultimately, the UHI project has theaim of being the key facilitator of Higher education opportunities for communities rightacross the region of a nature and level appropriate to that demanded by the private, publicand voluntary sectors. It has already spent £22m on technology to overcome the distancebarriers within the region, with a further rollout/upgrade of outreach centres off the mainlearning grid being increasingly prioritised, given higher than expected demands. Forexample at the LCC campus the dual VC suites have increasingly been booked up for VCteaching from 9am-5pm every day of the week, with demand particularly high from smalloutreach centres throughout the region. Unfortunately such centres have only 128kbpsbandwidth, making then less than ideal for VC teaching.

“The amount of bandwidth required for video conferencing will depend on the quality required aswell as the number of streams. The workable minimum for around 128Kbps, moving up to the384Kbps to 512Kbps range will deliver good quality video in window, while for near TV quality,full screen video suitable for large room based video systems bandwidth up to 1.5Mbps is required.For example three people engaged in a good quality video conference with each able to see eachother would require each user to be able to send at ~400Kbps and receive at ~800Kbps.” [NGfL –Broadband Networking, Cisco Systems 2000]

UHI describes itself as an organisation “founded by the community for the community” andas such is committed to expanding its reach. Clearly for teaching purposes in response todemand for bandwidth, next generation IP/VC systems which reduce costs and offerimproved quality will require 2Mbps and upwards for the near TV quality systems requiredfor VC teaching. In short, UHI development is likely to be totally supportive of broadbandnetworking in remote areas such as the Western Isles and will via the LCC campus, play akey role in ICT skills development within the area, if the goal of broadband can beachieved.

Finally, at the Western Isles level in examination of the Western Isles Transitional Strategy2000-2006 stated policy areas relate to increasing business competitiveness, creatingemployment and increasing incomes, creating the conditions for regional competitivenessand developing human resources, whilst achieving rural development. In short, suchpriorities are the potential outcomes of focusing on a broadband telecommunicationsupgrade, combined with a complementary skills development strategy. At the local levelthere are also initiatives such as Iomairt aig an Oir which may be an avenue for channelling


additional resources to achieve ICCT-based rural development in some of the Island’s mostoutlying areas.

From the local authority perspective between 1999-2002, the Western Isles council hasarticulated the ICT industries upon which it is to prioritise resources to achieve ruraldevelopment. Amongst other such priorities there is the on-going commitment to developan enterprise culture and to create an even spread of opportunities throughout the Islands,whilst encouraging inward investment. Such policies are tied-in with key actions outlinedwithin this report.

At the Local Enterprise Company level there are the following clearly articulated policiesfor the ICT sector:

• Encourage exploitation of latent skills• Develop appropriate skills training and expertise• Encourage inward investment• Develop appropriate infrastructure

Such key objectives are without doubt totally integrated to the development impetus beingsuggested by this report.

In summary, in consideration of the EU, national and regional level policy and strategiclevel framework for the Information Age, one must conclude that the focus of this report isboth timely and completely relevant to the required incorporation of the Western Isles intothe Information Society at an early stage.

The policy context is uniquely placed to enable the area to seize the types of opportunitiesbrought to the fore in this report, to focus efforts to realise our place in the ‘new economy’creating not only digitally connected but also a digitally aware proliferation of ruralcommunities where enterprise and opportunity are primed and populations have stabilisedas incomes rise in response to the exploitation of new ways of working.



CISCO SYSTEMS, (March 2000), NGfL – Broadband Networking, On-Line Publication

DEPARTMENT FOR EDUCATION & EMPLOYMENT, (January 2000), Skills for the Information Age,UK Information Technology, Communications and Electronics Skills Strategy Group

DEPARTMENT FOR EDUCATION & EMPLOYMENT & E-BUSINESS NTO, (2000), Have You GotWhat It Takes?, Project Gemini

DIGITAL DENMARK, (February 2000), Digital Denmark: Conversion to the Network Society, On-LinePublication

DIGITAL SCOTLAND TASK FORCE, (May 2000), Digital Scotland Task Force Report, On-LinePublication.

EU Publication, (June 2000), eEurope Action Plan, Brussels, 14-06-00

EU Publication, DG Information Society, IST 2000, Office for Official Publications of the EuropeanCommunities, Luxembourg, ISBN 92-894-0042-0

HIE, (June 2000), Realising Potential: A Strategic Plan for Developing Sectoral Skills in the HighlandsIslands, On-Line Publication

HMSO, (Dec. 1998), Our Competitive Future: Building the Knowledge Driven Economy, On-LinePublication

HMSO, (Jan. 1999), Competitive Advantage in the Digital Economy, On-Line Publication

HMSO, (Dec. 2000), A New Future for Communications, DTI, On Line Publication

NATIONAL SKILLS TASK FORCE, (1998), Towards A National Skills Agenda, First Report

SCOTTISH EXECUTIVE, (Sept. 2000), Digital Scotland: The Scottish Executive’s Response, On-LinePublication

SCOTTISH EXECUTIVE, (1999), Skills for Scotland: A Skills Strategy for A Competitive Scotland,ISBN 0 7480 7289 6

UK ONLINE, (September 2000), Annual Report, On-Line Government Publication

WESTERN ISLES TRANSITIONAL STRATEGY GROUP, (2000), Western Isles Transitional


INTERNET SITES ACCESSED FOR RESEARCH PURPOSES:

http://www.learndirectscotland.com/


http://www.ngfl.gov.uk/regional/scotland.html

http://www.tft.co.uk/


http://www.e-envoy.gov.uk/


http://www.scotland.gov.uk/digitalscotland/

http://www.scottish.parliament.uk/

http://www.skillsbase.dfee.gov.uk/Reference/Reference.asp?sect=5

http://www.wie.co.uk/priorities/priorities.htm#knowledge

http://www.uhi.ac.uk/


http://europa.eu.int/comm/dgs/information_society/index_en.htm

http://www.cordis.lu/fp5/home.html

http://europa.eu.int/ISPO/promotion/i_promise.html

http://www.w-isles.gov.uk

http://www.learndirectscotland.com/


http://www.ngfl.gov.uk/regional/scotland.html

http://www.tft.co.uk/


http://www.e-envoy.gov.uk/


http://www.scotland.gov.uk/digitalscotland/

http://www.scottish.parliament.uk/

http://www.skillsbase.dfee.gov.uk/Reference/Reference.asp?sect=5

http://www.wie.co.uk/priorities/priorities.htm#knowledge

http://www.uhi.ac.uk/


http://europa.eu.int/comm/dgs/information_society/index_en.htm

http://www.cordis.lu/fp5/home.html

http://europa.eu.int/ISPO/promotion/i_promise.html

http://www.w-isles.gov.uk


Chapter 9 The Information Society & ICT Skill Requirements

Summary, Conclusions & Recommendations

It is clear that as the EU ICT skills gap develops, outsourcing isincreasingly becoming a necessity for many firms andindustries in the UK and beyond. Recruitment is becomingdifficult and staff turnover and wages high as firms compete forkey members of staff, with many posts remaining unfilled formany months. As suggested by EU policy makers thedevelopment of public/private training partnerships to targetresources at key areas of current and advance need wouldappear to be key requirement for ‘best practice’ initiatives.Public sector investment can be maximised and SMEopportunities realised as ICT-related staffing constraints arenegated and new distance learning opportunities becomedeliverable via broadband to rural Island communities.

More fibre-connected people-centred workspaces (customerservice centres) need to be created as new ways of workingare adopted to meet the needs of all flexible workers in the neweconomy for which our Islands need to be renowned. Futuristicthinking which our European counterparts are alreadyadopting. What is termed functional offices with a different feelfrom that of the conventional workplace need to be developedto cater for all e.g. including crèches, cafes, jazzy colourschemes, casual dress codes…etc to attract (young)employees and increase productivity. Experience in Irelandpoints to the need for multi-lingual employees as being a majorselling point in itself and an area of increasing demand. Itneeds to be recognised that only 10% of UK workforce isinvolved in telework at present, whilst this number is close to20% in Finland.

There is much anticipated scope for development in this sector,as witnessed by the recent development of e-lance websiteswith literally 1000s of jobs for teleworkers with the right mix ofskills. The Western Isles already has a recognised track recordin this area and needs to exploit it, providing we can get thisskill mix correct. Initially the local public sector may assistgiving newly trained workers the all-important track record.

With the Customer Service Centre market growing at 40% perannum, there needs to be an increasing recruitment drivetargeted at school leavers offering desirable working conditionsand incentives to earn money and advance their education viasponsored employee schemes for example.

With regard to the Island’s move toward the new economy, it

As the EU ICT skills gapdevelops, outsourcing isincreasingly becoming anecessity for many firmsand industries in the UK.Recruitment is becomingdifficult and staffturnover and wages highwith many postsremaining unfilled formany months.

More fibre-connectedpeople-centredworkspaces need to becreated.

Experience in Irelandpoints to the need formulti-lingual employeesas being a major sellingpoint. It needs to berecognised that only 10%of UK workforce isinvolved in telework atpresent, this number isclose to 20% in Finland.

It will not be acceptableto wait for demand-ledinitiatives to triggerinvestment … thosemost appropriatelygeared-up will attractmost of the demand-sideactivity and investmentat the expense of theareas that opt to ‘wait


trigger investment. The more progressive areas in Europe havealready considered the folly of this in the new Information Age,where it has been recognised that those most appropriatelygeared-up will attract most of the demand-side activity andinvestment at the expense of the areas which opt to ‘wait andsee’.

As no one can confidently predict where this new revolution isgoing, the postponement of investment until the market settlesis not a legitimate development policy. One must be part of therevolution if one is to gain the advantage and opportunityassociated with it.

As Business to Business (b2b) competition increases via e-commerce enabled transactions that will be distanceindependent and reduce supply cost significantly for e-commerce enabled SMEs in the Islands there are both threatsand opportunities. Non-e-commerce SMEs in the region willfind their products and services being replaced by those thatare, by an efficiency-seeking commercial market. Yet for thosethat take the leap of faith, an increasingly global marketplace(b2b and b2c – Business to Consumer) will be on theirdoorstep and new opportunities abundant. Obviously ICT skillsand appropriate telecoms will require to be developedthroughout the Islands area, to enable this transformation. Inthe view of the writer this is therefore not an option but ratheran immediate necessity.

With regard to the specific skills necessary in the InformationAge, a number of sources have been quoted within the textwhich largely agree on the generic content required:

• Written & oral communications• Team working• Problem solving• Business awareness• Creativity & Innovation• Inter-personal skills• Attitude & Enthusiasm• Technology skills

The relatively low priority given to technology skills should benoted, which in many instances were viewed as being lessimportant to the ICT sector. There appears to be a pervasiveview within the sector that if the key generic skills can beattained then the ICT skills can be developed in-house. In allbut the most technical of posts, such feedback appeared to becommonplace.

Specific skills necessary– a number of sourceshave been quoted withinthe text which largelyagree on the genericcontent required:

Low priority given totechnology skills –viewed as being lessimportant to the ICTsector than business andcustomer service skills.


Language, Science and mathematics along with specific ICTskills were viewed as being important, although the range ofthe above generic skills was still sought after. In almost allinstances previous work experience was a stated preferenceand again there may be a role for the local public sector to aidthis transition initially.

Appreciation of such findings need to be incorporated into anIslands-wide Information Age Skills Development strategy,incorporating an awareness-raising initiative for non-ICTgraduates and employees within the area, similar to that ofproject Gemini in South-East England.

An opportunity to deliver core skills online via outreach centrescombined with added-value SME integrated workspace wouldappear a real prospect with linkages to other national initiativessuch as the NGfL and SufI’s ‘Learndirect’ initiative.

An opportunity exists to focus on in-demand ICT skills to plugthe developing skills gap and encourage specialist teleworkingand outsourcing teams to become established. Such specificICT skills outlined within the report combined with theappropriate generic skills will potentially provide the catalyst toenable a transition in the Western Isles workforce to onecompatible and in-demand within the new ‘Digital’ economy. Apilot project targeted at those individuals on the ICT skillsregister and school leavers could be progressed.

Again, it is here that an ICT skills/training partnership betweenthe education sector, industry and the public sector will identifyclearly the needs, opportunities and delivery options tointegrate the Island’s population into the Information Age andrespond dynamically to future trends. Such initiative hasalready been shown to be profitable in the examples outlinedwithin the main text.

There is a clear policy framework in which to develop theWestern Isles’ skills development response to the InformationAge. This policy is integral to the advancement of thebroadband telecommunications recommendations madeearlier. There is an obvious synergy between the two key areasconsidered in this report. The commitment at the EU, nationaland regional policy levels which focus on ‘skills for theinformation age’ recognise some of the infrastructuralrequirements for delivery and have associated funding for suchdevelopment. A dual development approach can thereforeachieve cost savings by combining the financial allocations forboth skills and broadband rollout by encouraging the facilitationof an all-encompassing partnership approach at the local level

Language, science &mathematics along withspecific ICT skills wereviewed as beingimportant.

Findings need to beincorporated into anIslands-wide InformationAge Skills Developmentstrategy.

Focus on in-demand ICTskills to plug thedeveloping skills gap andencourage specialistteleworking andoutsourcing teams tobecome established.


APPENDIX 1: xDSL TECHNOLOGY

Technology Speed DistanceLimitation(24-gauge wire)

Applications

56 Kbps analogmodems

56 Kbps downstream None28.8 or 33.6 Kbpsupstream

E-mail, remote LANaccess,Internet/intranet access

ISDN Up to 128 Kbps(uncompressed) Full duplex

18,000 feet(additionalequipment canextend thedistance)

Video conferencing,disaster recovery,leased line backup,transaction processing,call centre services,Internet/intranet access

Cable modem10–30 Mbps downstream128 Kbps–10 Mbpsupstream (shared, notdedicated, bandwidth)

30 miles overcoaxial (additionalequipment canextend thedistance to 200miles)

Internet access

ADSL Lite Up to 1 Mbps downstreamUp to 512 Kbps upstream

18,000 feet Internet/intranetaccess, Web browsing,IP telephony, videotelephony

ADSL/R-ADSL 1.5–8 Mbps downstream Upto 1.544 Mbps upstream

18,000 feet (12,000feet for fastestspeeds)

Internet/intranetaccess, video-on-demand, remote LANaccess, VPNs, VoIP

IDSL Up to 144 Kbps full duplex 18,000 feet(additionalequipment canextend thedistance)

Internet/intranetaccess, Web browsing,IP telephony, videotelephony

HDSL 1.544 Mbps full duplex (T1)2.048 Mbps full duplex (E1)(uses 2–3 wire pairs)

12,000–15,000 feet Local, repeateredT1/E1 trunkreplacement, PBXinterconnection, FrameRelay trafficaggregator, LANinterconnect

SDSL 1.544 Mbps full duplex (T1)2.048 Mbps full duplex (E1)(uses 1 wire pair)

10,000 feet Local, repeateredT1/E1 trunkreplacement,collaborativecomputing, LANinterconnect

VDSL 13–52 Mbps downstream1.5–2.3 Mbps upstream(up to 34 Mbps ifsymmetric)

1,000–4,500 feet(depending onspeed)

Multimedia Internetaccess, high-definitiontelevision programdelivery


Asymmetric Digital Subscriber Line (ADSL) ADSL technology is asymmetric. It allowsmore bandwidth downstream—from an NSP’s central office to the customer site—thanupstream from the subscriber to the central office. This asymmetry, combined with“always on” access (which eliminates call setup), makes ADSL ideal for Internet/intranetsurfing, video-on-demand, and remote local area network (LAN) access. Users of theseapplications typically download much more information than they send. Downstream,ADSL supports speeds between 1.5 and 8 Mbps; upstream, the rate is between 640 Kbpsand 1.54 Mbps. ADSL can provide 1.54 Mbps transmission rates at distances of up to18,000 feet over one wire pair. Optimal speeds of 6 to 8 Mbps can be achieved at distancesof 10,000 to 12,000 feet using standard 24-gauge wire.

Rate-Adaptive Digital Subscriber Line (R-ADSL) R-ADSL operates within the sametransmission rates as ADSL, but adjusts dynamically to varying lengths and qualities oftwisted-pair local access lines. With R-ADSL, it is possible to connect over different linesat varying speeds. Connection speed can be selected when the line synchs up, during aconnection, or as the result of a signal from the central office.

ADSL Lite ADSL Lite is a lower-speed version of ADSL that will eliminate the need forthe telco to install and maintain a premises-based POTS splitter. Elimination of the POTSsplitter is intended to simplify DSL installation and reduce the costs of DSL for NSPs.ADSL Lite is also supposed to work over longer distances than full-rate ADSL, making itmore widely available to mass market consumers. It will support both data and voice andprovide an evolution path to full-rate ADSL.

The effort to introduce ADSL Lite has been spearheaded by the Universal ADSL WorkingGroup, an industry group that worked to develop a worldwide G.Lite standard within theInternational Telecommunications Union (ITU) Study Group 15. An ITU standard(G.992.2) was approved in October, 1998. Additional standards work can be expected inANSI TIE1.4, the ATM Forum, and the ADSL Forum to address issues such ascompatibility with home wiring and network interfaces. 3Com is an active participant inthese standards bodies working on the development of ADSL Lite.

ISDN Digital Subscriber Line (IDSL) IDSL provides full duplex throughput at speeds upto 144 Kbps. Unlike ADSL, IDSL is restricted to carrying data only. While IDSL uses thesame 2B1Q modulation code as ISDN to deliver service without special line conditioning,it differs from ISDN in a number of ways. Unlike ISDN, IDSL is a non-switched service, soit does not cause switch congestion at the service provider’s CO. ISDN also requires callsetup, while IDSL does not (DSL is an “always on” service).


High Bit-Rate Digital Subscriber Line (HDSL) HDSL technology is symmetric,providing the same amount of bandwidth upstream as downstream. HDSL is the mostmature of the xDSL technologies, and has already been implemented in telco feeder plants(lines that extend from central offices to remote nodes) and also in campus environments.Due to its speed—1.544 Mbps over two copper pairs and 2.048 Mbps over threepairs—telcos commonly deploy HDSL as an alternative to repeatered T1/E1. (T1 lines,used in North America, have a data rate of 1.544 Mbps; E1 lines, used in Europe, have adata rate of 2.048 Mbps.) Although HDSL’s 12,000 to 15,000-foot operating distance isshorter than ADSL’s, phone companies can install signal repeaters to cost-effectivelyextend its useful range. HDSL’s reliance on two and three twisted-pair wires makes itideal for connecting PBX systems, digital local loops, IEC points of presence (POPs),Internet servers, and campus-based networks. HDSL II is pro-posed as the next-generation HDSL within ANSI and ETSI. It will offer the same performance as HDSL, butover a single pair.

Single-Line Digital Subscriber Line (SDSL) Like HDSL, SDSL supports symmetricalTI/E1 transmissions, but SDSL differs from HDSL in two important ways: it uses a singlecopper-pair wire, and it has a maximum operating range of 10,000 feet. Within its distancelimitation, SDSL is capable of accommodating applications that require identical down-stream and upstream speeds, such as video conferencing or collaborative computing.SDSL is a precursor to HDSL II.

Very High Bit-Rate Digital Subscriber Line (VDSL) VDSL technology is the fastest xDSLtechnology, supporting a downstream rate of 13 to 52 Mbps and an upstream rate of 1.5 to2.3 Mbps over a single copper-pair wire. VDSL can be viewed as a cost-effectivealternative to fibre to the home. However, the maximum operating distance for thisasymmetric technology is only 1,000 to 4,500 feet from the central office; this distance canbe extended by running fibre optic cable from the CO to an optical network unit andcopper from that point to the user location up to 4,500 feet away. In addition tosupporting the same applications as ADSL, VDSL’s additional bandwidth couldpotentially enable NSPs to deliver high-definition television (HDTV), video-on-demand,and switched digital video, as well as legacy LAN extension symmetrical services. VDSLis in the requirements and standards definition stage.

Source: http://www.3com.com/technology/tech_net/white_papers/500624.html

A More Recent Attempt at Definitions:

ADSL Asymmetric Digital Subscriber Line (ADSL) is the most popular form of xDSLtechnology. The key to ADSL is that the upstream and downstream bandwidth isasymmetric, or uneven. In practice, the bandwidth from the provider to the user(downstream) will be the higher speed path. This is in part due to the limitation of thetelephone cabling system and the desire to accommodate the typical Internet usagepattern where the majority of data is being sent to the user (programs, graphics, soundsand video) with minimal upload capacity required (keystrokes and mouse clicks).Downstream speeds typically range from 768 Kb/s to 9 Mb/s Upstream speeds typicallyrange from 64Kb/s to 1.5Mb/s.

http://www.3com.com/technology/tech_net/white_papers/500624.html


ADSL Lite (see G.lite)

CDSL Consumer Digital Subscriber Line (CDSL) is a proprietary technologytrademarked by Rockwell International. CiDSL Globespan's proprietary, splitterlessConsumer-installable Digital Subscriber Line (CiDSL).

EtherLoop EtherLoop is currently a proprietary technology from Nortel, short forEthernet Local Loop. EtherLoop uses the advanced signal modulation techniques of DSLand combines them with the half-duplex "burst" packet nature of Ethernet. EtherLoopmodems will only generate hi-frequency signals when there is something to send. The restof the time, they will use only a low-frequency (ISDN-speed) management signal.EtherLoop can measure the ambient noise between packets. This will allow the ability toavoid interference on a packet-by-packet basis by shifting frequencies as necessary. SinceEtherLoop will be half-duplex, it is capable of generating the same bandwidth rate ineither the upstream or downstream direction, but not simultaneously. Nortel is initiallyplanning for speeds ranging between 1.5Mb/s and 10Mb/s depending on line quality anddistance limitations.

G.lite A lower data rate version of Asymmetric Digital Subscriber Line (ADSL) was beenproposed as an extension to ANSI standard T1.413 by the UAWG (Universal ADSLWorking Group) led by Microsoft, Intel, and Compaq. This is known as G.992.2 in the ITUstandards committee. It uses the same modulation scheme as ADSL (DMT), but eliminatesthe POTS splitter at the customer premises. As a result, the ADSL signal is carried over allof the house wiring which results in lower available bandwidth due to greater noiseimpairments. Often a misnomer, this technology is not splitterless per se. Instead ofrequiring a splitter at customer premises, the splitting of the signal is done at the local CO.

G.shdsl G.shdsl is a ITU standard which offers a rich set of features (e.g. rate adaptive)and offers greater reach than many current standards. G.shdsl also allows for thenegotiation of a number of framing protocols including ATM, T1, E1, ISDN and IP.G.shdsl is touted as being able to replace T1, E1, HDSL, SDSL HDSL2, ISDN and IDSLtechnologies.

HDSL High Bit-rate Digital Subscriber Line (HDSL) is generally used as a substitute forT1/E1. HDSL is becoming popular as a way to provide full-duplex symmetric datacommunication at rates up to 1.544 Mb/s (2.048 Mb/s in Europe) over moderate distancesvia conventional telephone twisted-pair wires. Traditional T1 (E1 in Europe) requiresrepeaters every 6000 ft. to boost the signal strength. HDSL has a longer range than T1/E1without the use of repeaters to allow transmission over distances up to 12,000 feet. It usespulse amplitude modulation (PAM) on a 4-wire loop. HDSL2 High Bit-rate DigitalSubscriber Line 2 was designed to transport T1 signalling at 1.544 Mb/s over a singlecopper pair. HDSL2 uses overlapped phase Trellis-code interlocked spectrum (OPTIS).

IDSL ISDN based DSL developed originally by Ascend Communications. IDSL uses2B1Q line coding and typically supports data transfer rates of 128 Kb/s. Many end usershave had to suffice with IDSL service when full speed ADSL was not available in theirarea. This technology is similar to ISDN, but uses the full bandwidth of two 64 Kb/sbearer channels plus one 16 Kb/s delta channel.

MDSL Usually this stands for multi-rate Digital Subscriber Line (MDSL). It depends onthe context of the acronym as to its meaning. It is either a proprietary scheme for SDSL or


see the acronym MSDSL. There is also another proprietary scheme which stands formedium-bit-rate DSL. Confused yet?

RADSL Rate Adaptive Digital Subscriber Line (RADSL) is any rate adaptive xDSLmodem, but may specifically refer to a proprietary modulation standard designed byGlobespan Semiconductor. It uses carrierless amplitude and phase modulation (CAP).T1.413 standard DMT modems are also technically RADSL, but generally not referred toas such. The uplink rate depends on the downlink rate, which is a function of lineconditions and signal to noise ratio (SNR).

SDSL Symmetric Digital Subscriber Line (SDSL) is a 2-wire implementation of HDSL.Supports T1/E1 on a single pair to a distance of 11,000 ft. The name has become moregeneric over time to refer to symmetric service at a variety of rates over a single loop.UDSL Universal DSL. See G.lite. VDSL Very High Bit-rate Digital Subscriber Line (VDSL)is proposed for shorter local loops, perhaps up to 3000 ft. Data rates exceed 10 Mb/s.

Source: http://homepage.interaccess.com/~jkristof/xdsl-faq.txt

http://homepage.interaccess.com/~jkristof/xdsl-faq.txt


APPENDIX 2: MVL: A BROADBAND SUBSCRIBERLINE TECHNOLOGY

Features of MVL [http://www.paradyne.com/]:

♦ First DSL Modem to be FCC Part 68 approved and registered as "safe to deploy in the publicswitched telephone network"

♦ Complements the deployment of standards-based ADSL (DMT/G.lite) and SDSL services

♦ Integral part of Paradyne's "Never Say No DSL" Hotwire GranDSLAM advantage

♦ Offers superior spectral compatibility:

♦ Operates within globally accepted spectral requirement of T1.601 Basic Rate ISDN

♦ T1.413 spectral requirement

♦ Operates at under 100 kHz

♦ Superior loop reach in excess of 30,000 feet in real-world deployments, greater than CSA/RRDspecification

♦ Splitterless Design; No service technician truck roll required at the customer premises

♦ 768 Kbps speed downstream and upstream

♦ High density 12-port line card delivers 216 IP MVL ports per Hotwire GranDSLAM chassis

♦ Flexible Ethernet or ATM output to the service provider's network

♦ Low power dissipation of 1.12 milliwatts per port allows greater port density and lower costs

♦ Industry-defining MVL technology with products designed and optimised for residential, branchoffice and SOHO markets

♦ Supports from one to four Hotwire IP MVL modems on a single telephone wire

♦ Impervious to bridged taps

♦ Offers superior functionality for simultaneous data and voice services, and enables Services onDemand:

♦ Simultaneous POTS and data

♦ Hotwire HomeLink feature enables peer-to-peer print and file sharing between IP MVL modemsconnected to the same WAN link

♦ Dynamic bandwidth allocation supports multiple applications simultaneously

♦ Plug and play installation; no end-user configuration required

♦ Operates over existing twisted or untwisted wire and plugs into existing telephone jacks

♦ Each IP MVL modem supports up to 250 IP devices connected to the ethernet port

♦ OpenLaneTM Network Management Solution delivers end-to-end NMS monitoring, control anddiagnostics

PARADYNE CORPORATION ON-LINE MVL FEATURES PAGES:


The award-winning Hotwire Multiple Virtual Lines (MVL®) System is an industry-defining family of solutions designed and optimised for the residential, small office/homeoffice (SOHO), and branch office environments. Based on Paradyne's patented MVLtechnology, the Hotwire IP MVL System fundamentally changes the way data and voiceservices are delivered to the mass market.

The Hotwire IP MVL System extends the Hotwire product line into the residential, SOHOand branch office market space with unprecedented functionality, performance and cost.Hotwire IP MVL is deployed from the very same Hotwire GranDSLAM that supports theprovisioning of Paradyne's complete family of multiservices line cards, consisting oftoday's commercial-grade ADSL (DMT/G.Lite), IP RADSL, IP SDSL, TDM SDSL, ATMSDSL and IDSL services. Paradyne delivers the only DSLAM in the industry able tosupport this broad range of services from a single platform, with this centralised powerforming the core of Paradyne's "Never Say No DSL" deployment strategy. The HotwireGranDSLAM allows service providers to deploy standards-compliant ADSL(DMT/G.Lite) and SDSL, deploy IDSL for customers residing behind a digital loop carrier(DLC), and IP MVL to provision DSL services over extended loop lengths. "Never Say NoDSL" to your customer again -- the Paradyne advantage.

Hotwire MVL System Overview

Hotwire IP MVL Systems offer both flexibility and investment protection. The Hotwire IPMVL solution is comprised of a Hotwire IP MVL Line Card installed in the HotwireGranDSLAM chassis, which communicates with a Hotwire IP MVL Endpoint Modem atthe customer premises. The 12-port, high-density Hotwire IP MVL Line Card is availablein two flexible configurations supporting either an Ethernet or ATM networking model.

Ethernet Networking Line Card

The Hotwire 8312 IP MVL Line Card accepts 12 subscriber lines coming in from a Telcoconnector at the rear of the Hotwire GranDSLAM and efficiently aggregates them onto asingle 10Base-T full-duplex Ethernet connection for backhaul onto the service provider'snetwork. When coupled with the Hotwire IPC, the Hotwire IP MVL solution can furtheraggregate 10Base-T connections and offers internetworking to frame relay or ATMnetworks.

ATM Networking Line Card

The Hotwire 8314 IP MVL Line Card accepts 12 subscriber lines coming in from a Telcoconnector at the rear of the Hotwire GranDSLAM. The data on these lines is quicklyencapsulated and directed onto the powerful ATM backplane. The data from each of theHotwire 8314 IP MVL Line Cards installed in the Hotwire GranDSLAM is efficientlyaggregated onto a single high-speed ATM connection for backhaul onto the serviceprovider's network.

The Hotwire IP MVL 6310 customer premises modem delivers up to 768 Kbps of


customer. Hotwire MVL has the unique and powerful multi-drop feature, which allows upto four Hotwire IP MVL modems to be connected to the same telephone line and share acommon WAN access. This multi-drop support is available through the Hotwire IP MVLLine Cards and IP MVL Endpoint Modems (6310-A2 or greater). The Hotwire HomeLinkfeature enables peer-to-peer print and file sharing capabilities among the four Hotwire IPMVL Modems within the home or small office environment. Hotwire IP MVL Modemsare customer installable, plugging into any existing RJ-11 telephone jack, and transparentlyoperate over existing in-home wiring (twisted or untwisted) for total customer convenienceand satisfaction.

Industry-Leading Performance

The Hotwire IP MVL System has achieved distances in excess of 30,000 feet in real-worlddeployment. This industry-leading performance is obtained mainly due to the Hotwire IPMVL System operating at frequencies below 100 kHz. This results in an unimpairedperformance even in the presence of T1/E1 disturbers. Hotwire IP MVL is unique in that itwill maintain the highest possible speed and longest possible reach in the presence ofcommon real-world disturbers.

Superior Spectral Compatibility

Solving mass market deployment issues relating to spectral interference and crosstalk, theHotwire IP MVL System operates within the same globally accepted spectral limits ofANSI/ETSI Basic Rate ISDN (T1.601). This self-imposed design rule ensurescompatibility with existing services. Hotwire IP MVL Systems will be no more of adisturber to other services than ISDN, which is globally deployed today. In addition,Hotwire IP MVL Systems are also spectrally compatible with the T1.413 standard and useless than 10 percent of the signal processing power required for other full-rate DSLimplementations.

High Density and Low Power Consumption

The Hotwire IP MVL System delivers performance advantages allowing it to achieve highdensities within the central office, multi-dwelling unit (MDU), multi-tenant unit (MTU)and Hospitality environments. The 864 ports that are supported in a seven-foot cabinet,when using the Hotwire 8810 DSLAM chassis, have a power dissipation of less than 1.12milliwatts per port. The Hotwire IP MVL System is designed and built for industry-standard NEBS compliance.

Services on Demand

The ground-breaking innovation of MVL technology is its ability to transform a singlecopper wire loop into multiple virtual lines which support multiple servicessimultaneously; Hotwire IP MVL leverages this capability to deliver unique functionality,referred to as Services on Demand, which enables:


♦ Multiple virtual line provisioning for high- or low-speed services, allowing fromone to four devices to share a single line at the same time.

♦ Simultaneous access of multiple devices sharing a common WAN interface.

♦ Dynamic bandwidth allocation for multiple and independent applicationssimultaneously.

♦ Hotwire HomeLink (in-home LAN) peer-to-peer print and file sharing within thesame environment using Windows 95/98 file and printer sharing application.

Dynamic Bandwidth Allocation

The Hotwire IP MVL System dynamically and instantaneously allocates bandwidth formultiple, independent applications. While one user might be downloading files from theInternet, another user within the same environment can concurrently upload files back to ahome office and yet another can listen to the newest audio streaming clips from anotherWeb page.

Hotwire HomeLink

The Hotwire HomeLink LAN feature enables multiple Hotwire IP MVL Modems, sharingthe same WAN link, to communicate in a peer-to-peer networking fashion. HotwireHomeLink provides this LAN communication for end users connected to up to fourdifferent Hotwire IP MVL Modems at the customer premises, sharing the same WAN link.

Hotwire HomeLink peer-to-peer communication allows Hotwire IP MVL connected usersto utilize the available resources of each computer, such as common files, popularprograms, backup devices and colour printers (used with Windows 95/98 file and printersharing application).

Network Management Solution

The Hotwire IP MVL solution offers service providers extensive management capabilities.The entire Hotwire family is managed using Paradyne's OpenLane Service LevelManagement Solution, an advanced Web-based management application that providesconfiguration control, health and status checking, diagnostic troubleshooting tools, real-time and history performance monitoring displays, as well as service level resultsreporting. OpenLane inter-operates with standard management platforms such as HPOpenView and Tivoli NetView in NT and/or UNIX (Sun) environments.

On-site maintenance cost and customer interruptions are reduced through the ease and


Technical Support Programs

You can easily ensure your investment protection for years to come. Paradyne offers threekey technical support services in a single package: Software Maintenance, TechnicalAssistance and Communication/Documentation.

MVL Specifications

Hotwire IP MVL Line Card• 12-port line card which is installed in the Hotwire GranDSLAM

Hotwire IP MVL Endpoint Modems• Model 6310-A2: Ethernet standalone modem with a 10Base-T interface. MAC

learning bridge.• Model 6310-A3: Integrated POTS filter and supports the pass-through for a second

phone line. Ethernet standalone modem with a 10Base-T interface. MAC learningbridge.

Transmission Speeds• 8312/8314: Eleven speeds are available at 128K, 192K, 256K, 320K, 384K, 448K,

512K, 576K, 640K, 704K and 768K• 6310: Automatically matches the speed of MVL Line Card

DSL Interface• 8312/8314: 50-pin Telco connector on the back of the Hotwire GranDSLAM chassis• 6310: RJ11C connector

Digital Interface• 8312: Full-duplex 10Base-T• 8314: ATM• 6310: 8-Pin Mod 10Base-T Ethernet port

Status Indicators• 8312/8314: Normal, Alarm, Test Ethernet Link Activity, MVL Port 1-12 Link-Up• 6310: Power, Alarm, Test, DSL Link, Ethernet Link(s)

Management• 8312/8314: Integrated SNMP agent• 6310: SNMP management by proxy

Dimensions• 8312/8314 Line Cards: 11.15 in. (28.32 cm) high x 10.4 in. (26.42 cm) deep x 0.8 in.

(2.03 cm) wide• 6310 Endpoint Modems: 6 in. (15.24 cm) wide x 8.75 in. (22.23 cm) deep x 1.25 in.

(3.18 cm) high


• 8312/8314: Draws power from the DSLAM chassis• 6310: 90V AC to 259V AC, 47 to 64 Hz, 120V AC, 60 Hz

Physical Environment• 8312/8314:• Operating Temperature: 32° F to 140° F (0° C to 60° C)• Storage Temperature: -40° F to 158° F (-40° C to 70° C)• Humidity: 5% to 95% relative, non-condensing

Certifications• FCC Part 68, UL1950 3rd Ed., CSA C22.2 No. 950-95, EN60950, NEBS Level 1,

FCC Part 15 Class A 3rd Ed., EN55022 (CISPR22), VCCI


DIGITAL EXCHANGESDIGITAL EXCHANGESIN THE WESTERN ISLESIN THE WESTERN ISLES

Stornoway (Sys-X)

North Tolsta (UXD5B)

Back (Sys-X)

Port of Ness (Sys-X)

Barvas (UXD5B)

Gravir (UXD5B)

Crossbost (UXD5B)

Great Bernera (UXD5B)

Scarp (UXD5B)

Scarista (UX5DB)

Balallan (UXD5B)

Shawbost (UXD5B)

Drinnishadder (L/Conc.)

Callanish (UXD5B)

Timsgarry (UXD5B)

Carloway (UXD5B)

Leverburgh (UXD5B)

Borve (UXD5B)

Harris (Tarbert) (Sys-X)

Sclapay (UXD5B)

Garrabost (Sys-X)

Manish (UXD5B)

Lochboisdale (Sys-X)

Lochmaddy (UXD5B)

Castlebay (UXD5B)

Benbecula (Sys-X)

Grogarry (UXD5B)

Locheport (UXD5B)

Northbay (UXD5B)

Bayhead (UXD5)

Sollas (UXD5B)

Eriskay (UXD5B)

Carnan (UXD5B)

Bornish (UXD5B)

Berneray (UXD5B)

0 40KmMs

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APPENDIX 4:

BACKGROUND INFORMATION ONTELEPHONE EXCHANGES

TXD or Digital exchanges are software controlled using both digital signallingand transmission to connect the calls.

The first fully digital exchange to be brought into service in the UK was aUXD5A (Unit eXchange Digital), a modified Monarch 300 line PBX atGlenkindie, Aberdeenshire in 1979. And from 1983, an updated version UXD5Bwas installed in further rural locations.

However, on 15th February 1968 an exchange, using TDM and PCM (Pulse CodeModulation) was demonstrated at the Post Office Research Station at Dollis Hill. Thisdigital tandem exchange was moved into Empress, West Kensington, London in April 1968to switch calls from Acorn, Ealing and Shepherd's Bush. It was the first exchange to switchPCM signals from one group of lines to another in digital form.

The UXD5, a public-exchange variant of the Monarch digital PABX and remainsonly in the Highlands of Scotland and rural Wales.

System X was the original specification developed by the British Post Office(B.P.O), Standard Telephone & Cables (S.T.C), General Electric Company(G.E.C.) and Plessey.

The first production System X exchange, a junction tandem exchange TXD14,began working in Baynard House in July 1980.

System X designations are:

TXD01 MultiplexorTXD02 Very Small Local ExchangeTXD03 Remote Concentrator Unit (RCU) parented on a DCCE (Digital Cell CentreExchange). MXD03 mobile version.TXD04 Small Local ExchangeTXD05 as per UXD5TXD06 Medium Local ExchangeTXD07 Large Local ExchangeTXD08 Digital Principle Local Exchange based on MLE above.TXD09 Digital Principle Local Exchange based on LLE above.TXD10 Medium Combined Trunk/ Local ExchangeTXD12 Medium Trunk ExchangeTXD13 Large Trunk ExchangeTXD14 Junction Tandem Exchange


System Y is the AXE10 version bought ' off the shelf ' from Thorn Ericsson andproduced at factories in Brighton and Scunthorpe.

TXD20 an AXE10 exchange opened in Keybridge House, International SwitchingCentre, Vauxhall, London in 1984. And the first local AXE10, in Sevenoaks, Kentwas brought into service just two years later.

System Y designations are:

TXD53 RCU parented on a central processor.TXD57 Large Local ExchangeFive designs of digital exchange are/have been installed in the UK. System X,AXE 10, UXD 5, 5ESS PRX and DMS100. System X is an all-British family of digitalexchanges manufactured by GEC Plessey Telecommunications (GPT); AXE 10 is aSwedish design and manufactured in the UK by Ericsson TelecommunicationsLtd; UXD 5 is a small system specifically developed by BT for rural areas, and5ESS PRX is the European version of a system developed by the Americancompany AT&T and widely used in North America. The DMS100, designed andbuilt by Northern Telecom (NT) is being used for Featurenet services.

The last analogue switch was removed from the trunk network in June 1990. Alltraffic on the trunk network is now handled by 59 fully interconnected DigitalMain Switching Units (DMSUs) and four partially connected Digital SwitchingUnits (DSUs) which help handle high call volumes from between London and theHome Counties. International traffic is handled by 4 dedicated exchanges.

At the local level, around 97% of customers are connected to digital or modernelectronic exchanges.

At 30th September 1993, BT operated 7,537 local exchanges in the UK, comprising5,532 digital, 1,301 electronic, 38 crossbar and 666 Strowger (electromechanical). ByMarch 1996 all customers will be served by modern electronic exchanges.

What is the difference between a System X and System Y exchange ?

System X was a co-operative development by Post Office Telephones, GEC,Plessey and STC. There was a big bust-up in which STC were removed (and givenexclusive rights to supply TXE4) and GEC and Plessey were given all the rightsand obligations to develop System X as a commercial system which BT wouldthen buy by competitive tender.

It was decided that there should be at least TWO suppliers to the PO/BT, andthere was a large international tender to decide on a second, competitive system.Ericsson made the AXE10 which offered practically the same flexibility in asmaller box (mainly because System X was designed by committee: (it was alreadydated before the first release model became available).


The AXE10 was chosen and was then (and still is) bought by BT in competitionwith System X. The AXE10 became BT's 'System Y' just to keep things 'simple'.

If anything the AXE10 is more full-featured than the 'X' but BT only took the basicsoftware package on each, so both offer practically the same. Incidentally, Cellnettried to use System X as their mobile switch but dumped it as it was very old tech.Vodafone tried Ericsson, and that is why Vodafone runs totally on AXE10s.

Sources: UK Telecoms Newsgroup FAQs + associated links.


APPENDIX 5:

Applications for Broadband Satellite Internet Access

Web BrowsingThe most common use is, obviously, WWW browsing, FTP access, and also electronicmail. High end users, Telecommuters and Small Office/Home Office users desire highbandwidth access, which cannot be satisfied by common technologies. Browsing as aninteractive application and greatly depends on the performance of the satellite protocol.Other factors are the hit ratio of the cache server and the Internet gateway performance.

Information dissemination and broad-/mulitcastSatellite networks are better media to deliver bulk data, anywhere and anytime. Someillustrative examples include maps and situation awareness data, stock market and financialnumbers, battlefield information, and medical data. Data broadcast, such as Webcasting,network news, and TV programs can be very expensive for point-to-point networks, but isideally suited to broadcast satellites. Therefore, GEO satellites are far more suitable forthese applications than is the traditional terrestrial network.

VideoconferencingVideo conferencing applications use data compression to allow two-way multi-user videoconferencing connections to work over limited bandwidth channels. The PSTNinfrastructure of today limits the video conferencing to one-on one, point-to-point sessions.Networks with downstream bandwidth rates as the Satellite based networks can provide therequired capabilities for multi user simultaneous sessions where the downstream datacombines several sites participating in the conference.

Corporate ApplicationsA major application for businesses is the extension of their Intranet or corporate network toall of their subsidiaries. With satellite, all subsidiaries in the spot beam of the satellite haveinstant access to the database at their headquarters. Some typical examples are:

• News agencies for distribution of high resolution images,• Travel agent information with up-to-date availability of rooms hotels or other facilities,• Real estate agencies- with up-to-date information including video clips,• Remote shopping- services including high definition images and video clips of the

offered goods,• Digital distribution of CDs and video to agencies for immediate launch, promotion

campaigns and production• Administration Data Base - Schools, universities, hospitals, ...• Banks – access to the customer financial data• Hotels – hotels in remote locations offering internet access in their hotel rooms

Distance LearningAccess to remote site containing educational oriented data as electronic library, lecturesetc. can be achieved by students anywhere in the Satellite coverage area.The content can be transmitted via the high-speed satellite channel either individually to


Internet Service ProvidersISP’s are companies that provide a range of IP based services including Internet access andrelated connectivity, web hosting, data warehousing and targeted information services.ISP’s can effectively use satellite communication to provide fast Internet access tosubscribers or businesses, which are out of reach of DSL or cable modem providers. Oneof the services taking advantage of the satellites broadcast nature is Webcasting, whereVideo or Audio signals such as news, interviews, or reports are broadcast over the Internet.

Local caching or mirroring is a means of improving the response times for Internet usingwhen accessing the web. The most commonly accessed Internet pages are locally stored inhuge servers. VSAT technology can be used to feed and update these local servers with thecurrent web contents and thus improve the performance of the ISP.

Source: http://www.stmi.com/whitepaper.html

http://www.stmi.com/whitepaper.html


APPENDIX 6: teleworking

The First Age: telework is out in the cold

The 1980s: European teleworkers measured in thousands rising to 1 million by the late 1980s

Telework was a topic for discussion amongst some researchers and policy makersand practised only by a handful of gurus and by the technological elite

The Second Age: telework is in the kitchen

Early to mid 1990s: 1 to 2 million European teleworkers

In this age, vanguard economic groups took over, especially those individuals with theresources and authority to be able to determine their own ways of working without recourse

to higher decision-makers.

The Third Age: telework is by the fire

1997-98: between 2 and 4.5 million European teleworkers (though this is probably an under-estimate) This age marked the take-off of telework during which a meeting of minds and

objectives started to form between large numbers of decision-makers (who began to see theeconomic benefits of teleworking), and large numbers of workers (who began to understand

and demand the benefits telework could bring to both their working and private lives)

The Fourth Age: telework is in the frying pan

From 1999: over 9 million European teleworkers

Telework is now in flux; it is starting to exhibit a wide range of characteristics and forms,entering a large number of different sectors and situations, and using manifold techniques

and methods, all of which, however, arise from the core characteristicof being enabled by the new network technologies.

In this context, telework is indeed becoming the new form of work.

Source: Botterman, Maarten & Johnston, Peter., (August 1999), Status Report on European Telework – New Methods of Work 1999,Office for Official Publications of the European Communities, Luxembourg, ISBN 92-828-7960-7


Appendix 7:

ICT SKILLS PROPOSALS

The 'ICT Consortium' recommends action on a number of fronts toaddress both the immediate shortage and long-term

availability of skilled people.

• Proposals to increase long-term availability of Skilled workers

The 'ICT Consortium' recommends:

• The establishment of a Task Force comprising of industry, educational institutions,the European Commission and the Member States to examine how the educationalinfrastructure can meet the ICT needs of European industry and to implementappropriate actions. That is, to put in place a clear framework that describes the skillsand competencies required, the ladder for career progression, the qualifications andtraining required and to identify where such qualifications can be obtained. The ICTConsortium initiative known as the 'Generic Skills Pilot Project' should form the basisfor work in this area.

• The appointment of a dedicated team within the European Commission under the directresponsibility of a Commissioner to co-ordinate all Community action in this area.

• Encouraging Electrical Engineering and Computer Science University departments tocombine in order to recognise communications convergence and remove bothduplication and historic differences in approach and culture.

• That IT literacy should be treated as a core part of school curricula in the same way asreading and writing and to be taught not as an option, but as a set of key skills and thekey to ongoing learning.

• That educators at all levels, but especially those with career guidance responsibilitiesmust actively work to attract students, especially girls into science, engineering andICT relevant courses and positively present the opportunities available within the ICTsector.

• That all teachers, lecturers and education officials should be IT literate and activelyencourage the use of ICT across curricula and non-curricula activities.

• That all investment, individual or business, in ICT learning and education should betax-exempt. This should include the provision of free services and of ICT kit to staff.

• That professional institutions responsible for curricula development and accreditationshould be much more flexible on course and entry criteria to meet the needs of the


rapidly changing ICT industry. ICT professionals and companies are less concernedwith professional membership than abilities, approach and motivation.

• Access and format of ICT tertiary education should be much more open and flexible toencourage the entry of people who did not follow traditional routes.

• Governments and the private sector should work together to provide ICT trainingthrough public / private partnership programmes. A number of programmes of this kindhave been undertaken with impressive results and these should be carefully evaluatedas possible models for more general application.

• Consideration should be given to opening-up higher level engineering education inEurope to the private sector.

• Increased capital investment in learning centres and networks as well as investment inmaterials is needed.

• Just-in-time cross training is needed to give new skills to already experiencedprofessionals.

• Promoting ICT/technical studies by reducing the tuition fees or providing otherfinancial incentives for these studies.

Acknowledgements


Thanks also to the following people consulted and who took time out to talk orreply via e-mail to requests for information :

Jimmy Duncan, Consultant, ShetlandAndrew Muir, Mason CommunicationsNeil Finlayson, iomart LtdMichael Jones, Paradyne CoKen Kriz, Paradyne CoDavid McGovern, BTBernard Steinebrunner, STM Inc.Stan Schneider, Gilat, EuropeMaurice at DirecPC, UKDonnie Morrison, www.work-global.comAngela Macleod, www.work-global.comDr Wolfgang Greller, Scottish Centre for Information ResearchStuart Robertson, KIT, Highlands & Islands Enterprise

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