Broadband Report

THE FUTURE OF BROADBAND
TELECOMS PROVISION IN
THE WESTERN ISLES AND
ASSOCIATED SKILLS
DEVELOPMENT REQUIREMENTS
Rural Broadband Telecoms & Skills Research March 2001
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A DESK BASED RESEARCH REPORT ON

BROADBAND TELECOMS IN RURAL AREAS
AND RURAL ICT SKILLS NEEDS
(WESTERN ISLES OF SCOTLAND)
MARCH 2001
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 the
Western Isles and the rest of the world, the less the effects of remoteness
are and the increased potential for integration into the global Information
Society.
TECHNOLOGY TRAFFIC
56K Modem Single track road
ISDN2 Double track road
ADSL/Cable M25 around London
Broadband (2Mbps+) Los Angeles 7 lane freeways
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.
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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 ...................................................................................... 165

Appendix 2 – MVL: A Broadband DSL Technology .......................................................... 170
Appendix 3 – UXD5 & System X Exchange Information ................................................... 176
Appendix 4 – Additional Telephone Exchange Information .............................................. 177
Appendix 5 – Applications for Broadband Satellite ........................................................... 180
Appendix 6 – The Development of Teleworking ................................................................ 182
Appendix 7 – ICT Skills Proposals ..................................................................................... 183
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Management Summary
Introduction
As evidenced by a multitude of developments, society is now rapidly progressing into a new era - the
Information Age. It is becoming widely recognised that for participating in this new age a broadband
telecommunications infrastructure is the essential enabling technology. For the Western Isles this
provides a unique opportunity to capitalise on these advances in a way that can provide for future
economic needs.
This report was commissioned to facilitate early adoption of the most appropriate infrastructure
investments, which will ensure that the early foothold which the Western Isles have gained in the
Information Age continues and increases apace to the benefit of future generations. We need to be
able to both anticipate and capitalise on ICT developments in terms of creating jobs and a higher
standard of living for residents of the Western Isles.
Situation in the Western Isles today

The Western Isles are currently served by one dominant telecoms supplier, BT. Throughout the
islands there are 35 telephone exchanges, of which 28 are an older technology1 with limited ability to
be upgraded to meet future demands. A second supplier, Thus, has installed a fibre network to
strategic 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 trunk
network and no undersea fibre link exists. The study revealed that the current trend lies in optical
fibres and this may therefore limit the islands’ ability to implement broadband technologies of the
future, 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 just
beyond the horizon but may come to the fore soon. It concludes that early adoption of fibre
technology could deliver lasting and radical social and economic change in the Western Isles. The
report recommends to implement a strategy to deliver "fibre to the home" and “fibre to the “Fibre to client”
business”. strategy
To achieve this goal the Western Isles should link into the main trunk services in mainland Undersea fibre
Scotland via undersea fibre links. links
Broadband Wireless Access was identified as being a cost effective solution with a relatively short
rollout timescale. This was seen as complementary to fibre and a possible interim or transnational Broadband
solution. Further research needs to be done in this field. wireless access
A public-private partnership between the local stakeholders could form the basis of a phased and
cost 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 eventually
extend to households and community focused centres (e.g. Iomairt Nis) throughout the Western Public-private
Isles. partnership
The report further recommends consideration of the strategy adopted in other rural areas
where any upgrading and repairs of roadworks or relaying of sewers, water services, power or
gas, include the laying of suitable ducts to distribute fibre cables. The laying of ducting as a matter
of course when digging up roads, pavements, new business and housing sites is recommended
as a strategy to speed up connectivity of homes and offices with minimal cost implications. Rollout strategy
An opportunity exists to focus on in-demand ICT skills to plug the developing skills gap and
encourage specialist teleworking and outsourcing teams to become established. Such specific
ICT skills outlined within the report combined with the appropriate generic skills will potentially
provide 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 ICT ICT skills
skills register and school leavers could be progressed. strategy
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Timescale
With recent changes at both regional and national levels there is a genuine willingness to
stimulate radical change in the islands and to transform the economic outlook. With an
immediate adoption of a broadband strategy the various stages of implementation should be
carried out over the next 5 years.
Recommended stages:
Immediately Adoption of strategy

Rollout strategy
Wireless access
2002 (ongoing)
Undersea fibre connection
to mainland
-
2005
Fibre to the home/office

2006
The most laborious and time-consuming aspect of the proposal is the laying of underground
ducting and fibre. Once fibre is in place, termination equipment can be upgraded as need
commands. The study undertaken predicts that the infrastructure proposed would continue to
deliver gains for 20 to 30 years.
Stakeholders and Beneficiaries

Adoption of the above recommendations would elevate the Western Isles to be recognised as a
location where two of the most important advantages of the Information Age could be combined:
Φ "quality of life" location

Φ "high bandwidth" connection to the international community
Being a highly marketable branding for "connected communities" these factors would enable us
to attract inward migration and inward investment, by removing geographic boundaries.
The stakeholders and beneficiaries in this development would in the first instance be the main
employers and service providers on the island, such as the Council, health board, education and
local businesses. The local community will at this initial stage be a passive beneficiary, yet
increased access to better and faster services will be developing. Following the successful
completion of the programme the whole of the community will benefit actively from the proposed
developments, 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 are
understood and met. Great time and expense has been devoted to giving people basic ICT skills
to participate in the Information Age. However the report found that more specialised and refined
skills 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 the
emerging new marketplace. Apart from their generic application as key transferable skills, they
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• 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 approximately
1.7M persons. In terms of scheduling developments, specific training on the above topics is
expected to show results within a very short timescale and can run in parallel with infrastructure
development. 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 have
acquired the skills which will ensure they are more marketable and have the capacity to increase
their earning potential.
Monitoring & Review Policy

The fast rate of change in the technology sector means that a constant review of policy and
changes to meet new requirements are an essential element of continued success. This is as
much the case with telecommunications bandwidth as it is with skills requirements. It is therefore
recommended that monitoring developments on an regional, national and international basis, as
well as reviewing the adopted policy is conducted on an regular basis.
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The Future of Broadband Telecoms Provision in the Western Isles
A Desk Based Study

Broadband Telecoms Research Summary
The following section summarises the result of desk- A desk based study
based research and monitoring in the Broadband sector, assessing developing
assessing developing technology, understanding trends technology and trends in
and relating them back to the context of the rural the Broadband sector and
relating them back to the
Western Isles. Some key areas of research into factors
context of the Western
such as demand for broadband were out-with the scope Isles.
of the study due to limited resources.
The report reviews the role of OFTEL and its policy The US is several years
framework in relation to the rollout of broadband ahead in its approach to
provision to peripheral areas such as the Western Isles, recognising the need for
noting the approach and policy applied in the US and broadband provision in
their principle of
comparing their approach with ours. It would appear that
Universal Service in rural
the US is several years ahead in its approach to areas.
recognising the need for broadband provision in their
principle of Universal Service in rural areas. In the UK the
In the UK the current
current OFTEL regulations do not provide for the OFTEL regulations do not
provision of Broadband services to rural areas. provide for the provision
of Broadband services to
The report considers the key broadband technologies rural areas
potentially applicable to an Island area such as the
Western Isles. DSL, the new generation
of broadband satellite,
In view of the costs, cable was considered to be an broadband wireless, 3G
mobile and fibre optic
unrealistic option in relation to its level of service,
cable were ultimately
compared to competing technologies. DSL, the new settled upon for
generation of broadband satellite, broadband wireless consideration, with the
(licensed/unlicensed), 3G (Third Generation) mobile and latter being the seemingly
fibre optic cable were ultimately settled upon for ‘dream’ solution.
consideration, with the latter being the seemingly ‘dream’
solution. ISDN received only a fleeting mention, as a ISDN received a fleeting
good example of a seemingly advanced interim mention; it was a good
example of an advanced
technology, which never achieved full market
interim technology that
penetration. ISDN will however, remain a useful, never achieved full market
although limited, service option for some time. penetration.
3G mobile and broadband satellite will inevitably be

rolled out in our broadband future. All-inclusive coverage ISDN will however, remain
remains an issue in sparsely populated areas, a useful, although limited,
particularly with regard to 3G mobile services. The service option for some
nature of the level of service and its applicability to our time.
broadband future remains unanswered at present.
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Consideration of (A)DSL raised many issues which would

need to be dealt with regarding the capacity and ability of
the existing exchange and copper infrastructure network ADSL was considered
in the Islands to enable its rollout. While ADSL less than optimal, as it
technology was considered to be less than optimal, as it would not be able to
would not be able to achieve radical and lasting change achieve radical and
lasting change in the
in the development of the islands, innovative
development of the
partnerships utilising variant xDSL technology could still Islands.
provide potential.
Innovative partnerships
Broadband Wireless Access was identified as being a utilising variant xDSL
cost effective solution with a relatively short rollout technology could still
timescale. Examples of successes elsewhere in both provide potential.
urban and rural areas across the globe were highlighted
and several differing models in the licensed and
unlicensed bands examined. The current licensing Broadband Wireless
situation in the UK was reviewed as was the developing Access - a cost effective
technology. An innovative build-out through public/private solution with a relatively
and even community partnerships was considered short rollout timescale.
possible. There appeared to be some mileage as an area
An innovative build-out
of further research and testing, although it was concluded
through public/private
that an all-inclusive service would be an interim solution partnerships was
in the longer term in our digital future. considered possible.
There appeared to be
The early adoption of a fibre optic network was identified some mileage as an area
as being the key to deliver lasting and radical, social and of further research and
economic change in the Western Isles for the 21st testing.
century.
The potential
As the study progressed, the increasing magnitude of the development gains from
economic and social development attainable by the the early adoption of a
rollout of the appropriate broadband solution for a remote long-term Information
rural area such as the Western Isles became increasingly Society enabling
apparent. In addition, the potential development gains infrastructure, became
from the early adoption of a long-term Information increasingly clear. In this
Society enabling infrastructure, became increasingly respect, fibre-to-the-
clear. In this respect, fibre-to-the-home/fibre-to-the- home/ fibre-to-the-
business was shown to
business was shown to be the ‘killer’ broadband solution
be the ‘killer’ broadband
capable of instigating lasting and radical social and solution capable of social
economic change in the Western Isles of Scotland. With and economic change in
costs falling to being on par with replacement copper or the Western Isles.
ADSL rollout a key development opportunity appears to
have presented itself. Other telecoms operators in the Telecoms operators in the
US faced with similarly ageing telecoms infrastructure not US faced with similarly
able to provide broadband services without upgrading, ageing telecoms
have instead migrated direct to replacement fibre. An infrastructure not able to
opportunity for an innovative fibre-development provide broadband
partnership, with initial costs perhaps being borne by the services without
upgrading have instead
public sector to key locations Islands-wide appears to
migrated direct to
have much scope. replacement fibre.
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The early adoption of a fibre optic network was identifiedThe early adoption of a
fibre optic network was
as being the key to deliver lasting and radical, social and
economic change in the Western Isles for the 21st identified as being the key
century. to deliver lasting and
radical, social and
economic change in the
Additionally, the Western Isles should link into the main Western Isles for the 21st
trunk services in mainland Scotland via undersea fibre century.
optic cable.
The Western Isles should
At least one other local authority has already made such link into the main trunk
a policy decision relating to the laying of ducting in all services in mainland
new developments and upgrading/repair works Scotland via undersea
undertaken throughout their Islands. As stated above, fibre optic cable.
investigations into existing infrastructure and the
opportunities it presents are recommended and a series
Undersea fibre optic cable
of pilot projects to strategic points in the Islands presents
to the mainland and
an obvious opportunity for progress. Iomairt Nis, Garenin between the islands was
Village, Uig Community Centre, The National Gaelic considered an essential
Resource Centre in Lochs, The Harris Genealogy progression towards
Centre, The FE Centre in the Uists, Barra Learning long-term connectivity
Centre and a range of other key public sector service requirements of future
provision sites, in addition to Stornoway could all be generations.
feasibly targeted for broadband fibre. A second phase
could then enable a build out into surrounding
Radical and innovative
communities and ensure equitable access to all residents
approach to economic
and businesses in the Western Isles. Digital inclusion is a
and social development
key aim of any broadband rollout.
via broadband provision
would provide enormous
marketing opportunities
Undersea fibre optic cable to the mainland and between to attract inward
the islands was considered an essential progression investment and stimulate
towards long-term connectivity requirements of future re-population and new
generations. enterprise.
There can be little doubt that such a radical and

innovative approach to economic and social development The timing of the
via broadband provision would provide enormous report is opportune
with encouragement
marketing opportunities upon which to attract inward
at the regional level
investment and stimulate re-population and new for a radical
enterprise. Taken together with a series of opportunities approach to rural
that the writer termed ‘the holy grail’ of rural development to be
development, with the Islands achieving a profile in the pursued within the
broadband sector similar to that of Skye in the Tourism Western Isles.
sector, would be achievable. Finally, it was noted that
the timing of the report was opportune, given recent
discussions and encouragement at the regional level for
a radical approach to rural development to be pursued
within the Western Isles.
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Introduction
New work practices involving networked and convergence technologies are predicted to
affect every working person in the EU over the next 5-10 years. The development of the
Information Society (IS) is increasingly becoming the single biggest instigator of social
and economic change not only within Europe, but also worldwide. Indeed, Information
Society 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 (our
main 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-market
opportunities requiring new ways of working, changing the way both businesses operate
with their customers and suppliers.
Such new ways of working and operating will require new skills and competencies and an
increasingly adaptable workforce. As a result, the key to enabling a competitive Europe is
increasingly 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 the
regional level as we move towards a way of working which will increasingly gravitate
towards people rather than place, providing the appropriate ICT infrastructure is secured at
the regional level. Given such background, the rationale for this study becomes
immediately apparent to the reader.
In terms of rural development, it is the presupposition of this report that an area such as the
Western Isles can get a ‘jump’ on the regional, national and indeed international
competition. There is a clear opportunity to transform the existing stagnant rural economy
of the Islands into a key development zone for the developing Information Society. A
concentrated focus on related IS ‘development’policies targeted at developing broadband
communications and enabling associated skills development can, it is assumed, provide the
basis for the Western Isles to become one of the ‘leading lights’ in rural Europe for the
creation of new ICT related enterprise development and job creation. The UK has overall
been slow, along with a number of other European counterparts, at adopting new
broadband technologies and addressing predicted IS skills shortages. It follows that in such
a context the ‘early adopters’ / ‘early market entrants’ will be able to establish a growth
base, by which future development momentum can be driven.
In relation to methodology this report will set the Information Society in context to
establish the economic and social dimensions of the change which one might anticipate
over 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 with
comment on their relevance to the rural and Western Isles context.
Ultimately, targeting and rolling out this provision will be the main enabler upon which
skills development can be encouraged and targeted to further optimise the ‘development’
environment. Then, in part 2 a consideration of the new opportunities broadband will
bring and associated new ways of working will be progressed, followed up by a discussion
on the much publicised e-commerce revolution and the development of the digital
economy.
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A consideration of teaching and learning opportunities will then be reviewed and a final
focus of health telematics as a further practical example of where early progress can be
achieved in the rural context will be discussed. To close out this part of the report an
overview of developing policy for the IS will be reviewed, followed by a contextual
analysis of skills development in consideration of the opportunities and findings identified
in part 1 of the report.
The securing of an appropriate broadband rollout, whatever form this may take, in
combination with an associated human resource development strategy will arguably
provide the key base infrastructure to enable a maximisation of economic and social
benefit in the study area. It is the presumption of this report that a significant rise in
average incomes associated with increasing economic and social opportunity, a resulting
reversing of population decline and a significantly increased rate of inward investment, are
all achievable through concentrated development policies in the Western Isles in advance
of 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 and
academics across the globe that the West was increasingly moving towards what was
commonly termed the post-industrial society. This term was used to convey the level of
structural change that was taking place in Western economies right across Europe and
North America in particular. An increasing focus into the service based industries has been
apparent with a significantly less reliance on heavy industry and manufacturing. The
Highlands & Islands economy for example became increasingly service based as the 1990s
drew 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 to
where such economies will focus their future activity, to enable sustainability in the longer
term. In recent years the focus of this change has become increasingly apparent and very
much centered on the development of the so called Information Society or as others refer
to it, the Information Age.
The main premise of this report is that this is a real and currently occurring change in
society within which ‘early adopters’ will have a distinct advantage. For those
communities and regions that recognise the future the specific development needs and
requirements, one might argue that there will be significant dividends to be accrued. In the
context of this report we are talking about job creation, rises in average income, population
growth, inward investment, improvements in leisure & recreation and social possibilities,
increased enterprise formation and opportunity growth. Overall, what one might refer to
this as the achievement of significant and lasting rural development, a goal as yet not able
to be achieved in the Western Isles context in living memory.
What specific evidence can we refer to, to support the concept of our increasing move
towards the Information Society?
A number of trends quite clearly illustrate the factor which are combining to rapidly lead
us towards the impending Information Society. It needs to be recognised that this change is
recent, only really gathering momentum in the second half of the 1990s. In identifying this
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Society has changed in so far that during the second half of the 1990s the public began to
change from being ‘passive users’ of PCs and telecommunications to become ‘active
choosers’ of PC and ICT technologies.
By 1999, on average, 1 in 4 of European households owned at least one PC, whilst in some
of the Nordic countries this figure was closer to 1 in 2 on average. PCs by the late 1990s
had, and continue to be, an everyday tool of both the home and workplace, used for
business, personal home services (e.g. home banking, travel booking services...etc)
entertainment, education...etc Attitudes towards technology have changed significantly
during this period, with another shining example being the growth in mobile telephone use
which the public has embraced to the extent that by Christmas 1999 it was estimated that
40% of the UK population possessed such technology, with approximately 500M
worldwide. This phenomenal growth occurred just
several years after the liberalisation of the
telecommunications markets, which increased
choice and reduced prices for consumers.
Utilising this technology, customers are increasingly

being involved in the ‘work to be done’, as more
flexible access to key services become apparent. The
banking sector is a good example where first the ‘hole in the wall’ increased both the
involvement and access to services and now the Internet allows on-line banking enabling
the 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 economic
productivity, competitiveness and overall business performance." [Botterman & Johnston] No
longer will small businesses need just to focus their activities locally, as global market
knowledge 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 be
discussed in detail in chapter 8) employees, businesses, customers/clients, suppliers…etc,
with the concept of e-commerce being of growing importance. Clearly, there are
increasingly few instances where businesses and homes are not at the very least employing
some new element of the developing ICT revolution. Within this context there is an
increasing level of (wireless) convergence between elements of this new society, between
broadband telecommunications, the internet, PCs, TVs, CD/music players, mobile
communications devices, cameras, personal organisers/pocket PCs, video-cameras…etc
which 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 a
universal expectation, to fulfil work related, learning and leisure demands. As such, new
concepts of time & space, work & leisure and family & community. [Botterman & Johnston -
1999] will need to be addressed, issues characteristic of societal change.
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According to the DTI there are several driving forces that are integrating together which
are leading us towards what they term the Information Society. Firstly the DTI identifies
growing overall income levels that in turn has translated into an increasing demand for
goods and services. Secondly, increased access to an advanced ICT infrastructure that is
able to support and deliver a wide range of services and thirdly a strong local and regional
supply 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 message
is clear and the focus and rationale for the following study self-explanatory. One of BT’s
policy advisors at an industry conference also highlighted the choice ahead, in this instance
for Wales (which already has a more advanced infrastructure than in many other parts of
the 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 a
recent MORI poll in the UK revealed 15M home PC users (of which 1/3 have purchased
goods/services on-line and a further 1/3 undertaken banking transactions) and 14M mobile
phone users (now in excess of 20M), with a further 17M people planning to use a new
technology product for the first time in the next six months!
“Such global trends promote a stark message for European nations such as Wales, who possess
sophisticated telecommunications infrastructures but have limited success in utilising them. The
message 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 areas
such as the Western Isles and it is the potential route to both we will examine in the
following chapters.
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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 its
remit also includes Broadcast services. Given this dual role, it has a key role in the
development of convergence technologies in the UK. OFTEL describes itself as being a
government department that is independent of ministerial control and in this respect, in
many characteristics a unique entity. It is headed by the Director General of
Telecommunications, who is appointed by the Secretary of State for Trade and Industry. It
describes its main objective as being for: "…customers to get the best possible deal in terms of
quality, choice and value for money."
1.1 OFTEL's Universal Service Obligation (USO) is a common feature of other telecoms
regulators around the world and is ultimately present to ensure social and economic
inclusion within the new developing Information Society. In the past, universal access at
an equitable price to the existing and developing telephone network was considered to be
essential for all taxpayers so they could communicate with others in society no matter what
their location, social status or age and/or disability.
In addition to basic access guarantees, it has also been a common feature of OFTEL's
operations 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 another
are having difficulties remaining connected (e.g. low-user schemes) perhaps, most
commonly, due to issues of affordability.
In July 1999, a consultative document was issued by the Director General of

Telecommunications in OFTEL entitled 'Universal Telecommunication Services'. It is this
document that will be the focus of comment throughout this section, as it raises many
issues 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 later
sections 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 OFTEL
there is a real cost in providing such safeguards (i.e. the USO) in the license and the
operator (BT) must pass such costs on to the consumer. However, according to OFTEL's
own forecasts in 1998/9, there was in actual fact only a minimal, if existent at all, cost to
BT in the USO (refer to Box 1).
Indeed as OFTEL itself states: "It could also be argued that OFTEL should be examining the
cost of universal service to an efficient operator, rather than the cost BT incurs in delivering
universal service."
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It qualifies such a statement by indicating that BT has a significant resource of 'fixed radio
access' for which it has even been awarded spectrum. If introduced in the local loop, in
rural areas, in situations where it was 'the least cost technology' then significant efficiency
savings could be realised in servicing both 'uneconomic' areas and customers. Thus the
apparent costs of the USO to BT could be reduced significantly according to OFTEL
projections.
BT has made only minimal use of its spectrum resources to date, perhaps indicating a
commonly 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 important
safety net, it is important to remember that it comes at a price." In context, BT is quoted as
making a profit of £105 every second*, offering its telecom services at a 233% mark-up.**
BOX 1 Universal Service Costs/benefits
Universal Service Costs / Benefits 1998/9 £Ms

Uneconomic Areas 5-10
Uneconomic Customers 38-48
Uneconomic Public Call Boxes 10-15
Total Costs 53-73
Benefit (Life Cycle, Ubiquity, Brand Image) 61
Source: www.oftel.gov.uk
1.2 Regardless of such issues, a number of which were clearly raised by its own staff, to
qualify its analysis, OFTEL does not believe that it is necessary to re-evaluate the costs and
benefits of the USO at this point in time. Yet, on the other hand, contends that if the USO
were to be extended to cover broadband services, the key argument against this would be
related 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 time
been investigating this very issue to ensure 'digital inclusion'.
There is without doubt a valid issue here related to the subsidisation of higher cost
broadband 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 even
apparently require an increase in basic charges for all. With regard to cross-subsidisation
within existing broadband users (e.g. of ADSL) with future revenue streams being
uncertain at a time of developing and competing technologies then once again the problem
of cost and subsidisation of 'uneconomic' locations becomes further complicated. This,
combined with an anticipated increased need because of a higher basic subscription cost
for broadband services does not easily lend itself to a clear cut solution utilising the
Universal Service model to address inclusion issues.
Yet on the other hand, as the development paradigm in our society moves increasingly
towards sustainability, then one could argue a private company (with an effective
monopoly) providing a basic (utility) service to potential members of a new Information
Society should be expected to forego an element of short-term profit for the benefit of
society and longer term gain.
_____________________________________________________________________________________
A long-term consideration of the business-cycle would view such potential USO

obligations as an investment rather than a cost. Cross-subsidisation in such an instance
would not be necessary, hence negating OFTEL's key argument against extending the USO
to broadband services.
On the other hand, as broadband communications develop via a range of different

technologies (wireless, cable, satellite...etc) then the justification for a Universal Service on
existing copper wire based solutions (i.e. ADSL) on a limited number of telecoms
providers would be in itself become untenable without a wider extension to other
broadband 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 (March
2000) has also been publicly applying pressure to BT/OFTEL about the UK government's
frustration regarding the lack of development in the UK telecoms (broadband) sector in
general, the related lack of competition in the 'local loop', be it urban or rural and the
development of a two-tier Information Society of 'haves' and have-nots'. The rolling out of
copper-based solutions to even commercially attractive locations has been slow to show
progress.
1.3 In summary then, the key questions that OFTEL recognise as needing to be addressed in
the report relate to several key issues. Firstly, as discussed above, the cost and fairness
implications on existing telecoms suppliers, and secondly the appropriateness in policy
terms of extending the USO to broadband technologies in advance of future changes in
society.
In policy terms the report quite clearly indicates that the USO is not likely to change in
advance of societal change:
"Universal service is about finding ways of meeting the needs of those remaining few whom the
unregulated market might choose not to serve. It is not about predicting what will be required in
the future and requiring it advance. Neither is it about prescribing what is required for future
economic growth and prosperity. That would not be "universal service" as currently understood
and funded."
A key issue then relates to the interpretation of the objectives of the Universal Service. In
this sense the OFTEL/(BT) interpretation is without doubt valid, but hardly progressive in
nature, 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 be
an 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 developmental
opportunity for communities currently excluded from access to broadband services which
are not yet used by the majority in society. In such a situation, one could argue that as a
result 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 value
in practice to excluded communities.
_____________________________________________________________________________________
Universal access for consumers to the broadband information society is also desirable to
enable the UK to expand at the forefront of technology based development and to make
commercially viable an increased range of products and services to such consumers.
Indeed, arguably it is the rural or traditionally excluded consumer who proportionately is
going to consume such products and services at a higher level i.e. video on demand as
there are few rural cinema and video hire shops. This 'critical-mass' effect as it is referred
to in the report however is not one OFTEL considers relevant within the scope and remit of
the USO as it stands and therefore not grounds for further intervention in the telecoms
marketplace. This is a convenient interpretation once again, in the view of the writer, with
negative implications for the development of an inclusive rural society in the UK, wired
into future mainstream product and service provision.
1.4 Rural areas are without doubt more costly to service, populations are more spread out, the
physical distance from the local exchange (3.5 – 4.5km depending on line quality is the
quoted current limit of ADSL) and cost constraints associated with infrastructure
development in 'wilderness' areas are high and the number of consumers low as are the
subsequent revenue streams. Business usage is also limited, further affecting the revenue
stream. In the 'free-market' model such uneconomic areas would be left to their own
devices. But this is not an acceptable political reality in a post-industrial 21st century
'developed' UK society increasingly embracing the principles of sustainable development
and consequently being committed to conserving regional distinctiveness, rural society and
overall ensuring social and economic inclusion for all in the wider UK context. Market
intervention to achieve such goals it can be argued, is therefore not interference to the
detriment of all in the long term, but actually quite the reverse. The European Union's
Regional Policy operates on just such principles, actively working towards a society where
each and every citizen has an equal opportunity to participate in the economic and social
life within the '21st century' society in Europe.
Currently the parameters of the Universal Service on BT are unlikely to change to ensure
access to new copper-based broadband services for the reasons discussed above, despite
the perceived need in uneconomic (rural) areas. Access to new interactive products and
services via ADSL is not a short-term reality for 'uneconomic' areas. Innovations in the
provision 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 interactive
access to other local services related to health (Medical Imaging and Consultation), social
services and local authority functions together with high speed access to the Internet and
World Wide Web, will by-pass such areas who will get no input to their optimum
development 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 such
intervention with OFTEL's current interpretation of its objectives, this report will
nevertheless argue strongly that intervention in the telecoms sector to achieve wider social
and economic goals will be essential to avoid the current impasse, whereby rural telecoms
infrastructure is caught in a perpetual cycle of catch-up with that in urban areas. This is not
only an uncompetitive situation but also given the rapid level of change in the current
sector one which is arguably not sustainable, due to the increasing timescales required just
to access yesterday's technology.
_____________________________________________________________________________________
This latter fundamental issue is the basis upon which an increased level of public assisted
projects must be secured. The risks associated with a continuing non-proactive stance
could be significant, yet the potential gains realisable in a potentially location-independent
economy for those 'included' could be a massive boost to the rural economy as traditional
industries continue to decline.
1.6 In the short term, OFTEL is convinced that the main route to broadband access in the UK
will be via DSL technology utilising existing copper-based telephony structure. OFTEL
has also noted that as BT supplies 85% of such lines in the UK, the unbundling of the local
loop to promote competition could achieve real competitive gains and therefore negate any
potential bottleneck holding back the development broadband technology over the existing
copper line network. At the time of writing there has been little progress with co-location
space-related issues in the popular urban exchanges and high costs (approx. £30K per user
based 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 not
responded to demand from potential entrants for exchange space in key areas, but has
instead opened up, arguably, less viable exchanges first in many instances. It remains to be
seen whether co-location as its terms and conditions exist at present will be the catalyst for
competitive broadband provision of the nature envisaged by OFTEL.
"On Friday 10 March 2000 OFTEL began a statutory consultation on a proposed modification to
BT’s licence. The purpose of the proposed modification is to require BT to allow operators to lease
its local access lines, a process known as local loop unbundling. Operators would then be able to
use their own DSL technology to provide broadband services to customers, including services like
high-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 of
e-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 ensuring
that UK consumers and businesses are well placed to make use of new Information Age
technologies that will deliver these services."
1.7 Finally, it is interesting to note however, that the American government has been much more
forward thinking in its consideration of 'Universal Service' and as far back as 1995 prioritised a
new and advanced USO including provisions for the socially excluded. According to Larry
Irving, Assistant Secretary for Communications and Information, U.S. Department of
Commerce (1995): "We believe the following four goals are essential to promote universal
and 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 rural
residents are informed about the opportunities that exist and the best ways of
harnessing them for their communities. These communities need to know what
technologies and applications are available, what existing infrastructure they have
and need, and what has worked for similar communities.
_____________________________________________________________________________________
The US government's report from which the above originated in 1995 began with the
following key quotation and the situation it describes across the Atlantic in 1991 is
reminiscent of many areas in the Highlands & Islands today :
“Many of America’s rural areas show signs that raise concern for their future: loss of
economic vitality, a relative decline in income, high unemployment, low workforce
participation, and an exodus of talent. Advances in communication and information
technologies, however, can reduce the barriers of distance and space that disadvantage
rural areas" (Office of Technology Assessment, U.S. Congress, 1991).
and concluded: "Government regulations and policies will also play an essential role in the
development of the Rural Information Infrastructure. Different regulations and policies
will likely be required in rural areas than in urban areas."
Nevertheless, even with this recognition, a further report in July 1999 has concluded that
rural areas in the US are contributing significantly to their 'digital divide' – "At every income
level, households in rural areas are significantly less likely - sometimes half as likely - to have
home Internet access than those in urban or central city areas." One wonders if the UK is
willing to take action now to avoid this inevitable scenario being replicated this side of the
Atlantic 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 the
UK government are still reluctant to address, despite the occasional comment on social
inclusion and increased access to the communications network. One might easily conclude
that OFTEL requires to be much more flexible in its interpretation of its Universal Service
obligations. Indeed the Countryside Agency in England has requested that OFTEL widen
its USO to include broadband provision to rural areas. At the time of writing there has been
no response to this request.
The momentum of the so called Information Age or Society is clear and there will be many
opportunities for UK business and consumers alike that will have economic and social
consequences in all walks of life. The commitment is real, but the question of inclusiveness
remains for 'uneconomic communities' in the UK (at least 5 years after the US government
began to address such impending issues) be they in low income urban housing schemes or
scattered remote communities in the Western Isles of Scotland. For this reason it is
essential that we now consider the options for such areas to enable them to become wired
into the impending Information Age. A similar process on a national scale has just been
completed in the US with the subsequent report 'Advanced Telecommunications in Rural
America: The Challenge of Bringing broadband Service to All Americans' being published
in April 2000. The next chapter will begin by assessing the services available by firstly
considering the competing DSL broadband technologies relevant to the rural context. This
report 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 Information

Administration / Rural Utilities Service Advanced Telecommunications in Rural America:
The Challenge of Bringing broadband Service to All Americans (April 2000)
http://www.digitaldivide.gov/
_____________________________________________________________________________________
2 Competing DSL Technologies
POTS, the Plain Old Telephone System is the basis for the majority of xDSL (Digital
Subscriber Line) services on the market today. xDSL refers to an increasing number of
digital transmission technologies utilising POTS to provide high bandwidth information
services to small businesses and increasingly consumers’ homes, as the service becomes
more affordable and widespread in both Europe and particularly North America. As
indicated in the last chapter, BT is only now in 2000 beginning to roll out ADSL services
throughout selected sites in the UK after much delay. Refer to Appendix 1 for details on
the full range of developing DSL technology worldwide. The availability of such services
is not as straightforward as it might first seem and we will consider specifically in this
chapter the kind of issues that need to be addressed if the most appropriate DSL service in
the 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 the
same line. The element of the line concerned with data download and upload is described
as being 'always on' i.e. the DSL modem used to connect to the data service is permanently
connected to your local exchange. Indeed, technically, DSL refers to the modem pair (at
the consumer and exchange ends) rather than the lines used. Connecting to on-line services
therefore becomes that much quicker without the experience of a 'dial-up' process, engaged
tones, dropped lines...etc. The local exchange is then able to switch a request for
information (from your DSL modem) down the telecom suppliers 'backbone'
communications infrastructure to your ISP, via its high bandwidth link 'pipe' and then on
into the Internet through its own 'backbone' communications infrastructure on into the
Internet to access your desired location.
PSTN – Public Switched

Telephone Network
ISP Server Voice Calls
ATM ADSL Modem User's ADSL Modem

Rack
Local Telephone Existing Copper Pair Line
Exchange with
DSLAM
1.5Mbps to 7Mbps
16kbps to 640kbps
The Internet Box 2 ADSL

_____________________________________________________________________________________
ADSL is able to work in unison with existing telephony services due to the presence of a
Digital Subscriber Line Access Multiplexer (DSLAM) at the telephone exchange that
separate voice traffic to the Public Switched Telephone Network (PSTN). In some
instances (e.g. with ADSL) a splitter is also required at the customer's premises to
undertake a similar separation at the user end.
Voice signals are sent on the basic copper pair network by analogue wave transmission for
which 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 be
familiar. 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 data
via a standard modem, the modem modulates the digital signal and sends it as an analogue
signal. This latter process is considered to be a 'bandwidth bottleneck'. In the ADSL
context, modulation refers to the key method of putting data into a high frequency carrier
signal for transmission and receipt on the twisted copper-pair wires.
With DSL: "Digital data is transmitted to your computer directly as digital data and this
allows 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 that
bandwidth to enable voice-band telephony to work in tandem with such digital data coding
technology (see above). This is an important feature of ADSL that will be discussed further
in this chapter. This can be achieved by using a splitter at the home/business user end or if
adhering to G.Lite ADSL standards, can be set up from the telecom supplier's local
exchange.
DSL services (such as ADSL) are ultimately expected to replace slower and older ISDN
technology on both cost and speed grounds.
In the UK, the supply of ISDN services has proved a lucrative market for BT and in the
view of many industry commentators e.g. Freeserve's Chief Executive (John Pluthero), BT
has deliberately delayed the introduction of DSL technology, indeed BT even claimed that
this delay was due to a lack of demand for the service in its trials: "It's a disgrace. The
reason BT is deliberately slowing down the rollout of ADSL, and let's be clear, it is
deliberate, is because it is protecting its Highway [ISDN] business."
Gartner Group analyst Adam Daum has also commented on the loss of ISDN 'Home
Highway' revenue. "BT has dropped the price of Home Highway to make it attractive to
the mass market and has promoted it actively. It has created the embryo of a good market
and ADSL will undermine that."
The main advantage of DSL based 'always-on' will be the growth of the internet
marketplace in the UK, as for a fixed price (in the future) of between £20-£50 per month
UK internet users will be able to connect to the internet without worrying about their
quarterly phone bill or indeed missed calls and therefore increase their overall average time
on-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, which
home 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 (Spring

2000) 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's
population, 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 the
end of 2000 it is expected that over 2 million households in the US will have active DSL
accounts and that every major US city will have DSLAMs installed at their telephone
exchanges.
Meanwhile rural areas in the UK face an uncertain future with regard to access to (A)DSL
based 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 mainly
optical fibre cables connecting the numerous switching centres. However, connections
between these switching centres (exchanges) and consumers of telecom services are still
dominated by the original twisted copper pair lines, of Victorian origin. Such lines (of
which there are 600 million worldwide (Scientific American Oct. '99) were originally
designed 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 differing
gauges.
BOX 3 The 'twisted pair' is the ordinary copper wire that connects home
computer and indeed many business computers to the telephone company. To
reduce crosstalk or electromagnetic induction between pairs of wires, the two
insulated copper wires are twisted around each other. Each connection on
twisted pair lines requires both wires to be functional. [http://whatis.com]
The information carrying capacity of such lines is ultimately limited and determined by
sources of noise and interference. In a well specified and designed digital transmission
system, such effects will be minimised. ADSL is one such digital technology –
Asymmetric Digital Subscriber Line. ADSL is a relatively new 'broadband' technology
which enables existing copper pair lines to be utilised for the transmission and receipt of
broadband telecom services, in some instances at up to 7Mbps, although 1-2Mbps being
more typical. Even this latter figure is a significant improvement than that of 56Kbps
standard that modern day modems achieve. ADSL, in common with other DSL
technologies outlined in Appendix 1, is an 'always-on' technology (unlike ISDN and
analogue modems), hence for a set amount of money per month the customer can have
unlimited access to the internet.
_____________________________________________________________________________________
[Source: Scientific American Oct. '99] BOX 4 - ADSL OVERVIEW
"By employing a passband modulation method an ADSL transceiver can operate at

frequencies above those of standard telephony, allowing the ADSL system to coexist with
the telephony system on the same pair…ADSL can be seen as a frequency division
multiplexed system in which the available bandwidth of a single copper loop is divided into
three parts…" [SAS: White Paper – ADSL]
The three parts of the system referred to above consist of the existing voice-band
telephony service, the Upstream channel and the Downstream channel. The Asymmetric
element is related to the fact that the Downstream channel in the digital system is the
primary channel to which most of the bandwidth in the system is devoted (i.e. the flow of
information towards the consumer), whilst the Upstream channel (from the consumer to
the service) is normally allocated significantly less resources, due to reduced need (e.g.
voice telephony and internet based services) and other transmission advantages related to
cross-talk interference (refer to section 2.3).
ADSL modem technology then, transforms existing standard analogue telephony lines into
high speed digital lines, via digital coding techniques giving potentially up to 99% more
capacity for internet based data transfers without affecting one’s existing telephony
services. The existing voice-band service is normally separated at the customers home or
office by a splitter, a device which forks the line into two branches, one which goes to the
telephone 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. 0-4kHz
frequencies only being transmitted towards the telephone for termination.
According to the ADSL Forum, 33.6Kbps modems (which require quality lines with a
high signal-to-noise-ratio) are already at the limits of capacity (35Kbps) of the twisted
copper pair according to Shannon’s theorem* and although 56Kbps modems can extend
this speed by utilising digital connections in the downstream direction in the
communications network, they are still limited to 33.6Kbps in the upstream direction. This
would seem to be the limit for analogue modems.
_____________________________________________________________________________________
ISDN technology remains expensive (e.g. BT Home Highway) in the UK and although it
can increase connection speeds to 128Kbps using two standard telephone lines (costing
twice as much in calls) to provide a dual channel 64kbps x2 connection, it remains slow
even compared with the anticipated G.Lite 1.5Mbps ADSL standard.
Current developments in the ADSL field include the adopting of an industry-wide global
standard for the technology, named G.Lite. This standard if adopted will reduce the overall
speed performance of ADSL (down to 1Mbps to 1.5Mbps Downstream and 0.384kbps to
0.5Mbps 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 costs
and power consumption. Furthermore, higher speed standards will require shorter line
lengths and thus either less customers or higher infrastructure costs. G.Lite is thus viewed
by many within the industry as being a sensible balance for the industry, although without
doubt 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 analogue
telephony, known technically as a splitter, thus saving on the requirement of engineer visits
to 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 a
DSLAM 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 synchronous
services (e.g. SDSL) being more applicable to LANs, web-hosting services and remote
working. “SDSL is the most popular with businesses and teleworkers. SDSL meets the
requirements of these segments because symmetric bandwidths of up to 1.5Mbps mimics
LAN connectivity. This enables workers to send and receive large files from corporate
servers with high speed in both directions.” [www.iec.org/]
This is an important difference and will determine the priority version of DSL that is
appropriate to perceived needs in rural areas such as the Western Isles. The key constraint
though with SDSL is its service reach of 3.0km. This would tend to significantly limit the
availability of SDSL to home-based rural teleworkers in the Western Isles, a key
anticipated market for demand in broadband services in the islands in the next several
years.
Rate Adaptive DSL (RADSL) is another form of DSL that has gained increasing ground in
the US. Such technology is able to adapt its connection speed to that achievable on any
given line and so operates at lower speeds over longer lines and higher speeds in instances
where line conditions are more favourable i.e. when there is only a short loop between the
customer and his/her exchange. From the service provider’s perspective it is also desirable
as 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 compromise
technology that increases bandwidth and extends the reach of digital line technology, as in
many instances one's phone line will not come directly from the telephone exchange but
will 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 splices
prior to reaching the customer. Therefore if high-speed signals were attempted to be sent
in both directions, the effects of cross-talk and line noise/interference would be
significantly increased.
So what is cross-talk interference? It has been described in the DSL Sourcebook as

follows: "The electrical energy transmitted across the copper wire line, as a modulated
signal also radiates energy onto adjacent copper wire loops which are located in the same
cable bundle. This cross coupling of electromagnetic energy is called crosstalk. In the
telephone network, multiple insulated copper pairs are bundled together into a cable
called a cable binder. Adjacent systems within a cable binder that transmit or receive
information in the same range of frequencies can create significant crosstalk
interference…The result is a slightly different shaped waveform than was originally
transmitted."
BOX 5 Information carrying capacity in digital systems is limited by the access

channel itself and external sources of noise [SAS: White Paper – ADSL]:
Near-end crosstalk – arises due to signals which interfere with the input of a collocated
transceiver at the same end. The transmitted signal leaks into the receiver via capacitive
and inductive coupling paths.
Far-end crosstalk – occurs when signals from transmitters on other pairs in the same
cable 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.
Crosstalk interference (refer to box 5) will be greater in cables nearer the exchange where
many cables come together and hence a high speed digital signal sent from the end user to
the exchange (Upstream channel) cannot achieve the same performance as one sent from
the exchange (Downstream channel). This is because as a signal sent from the exchange
naturally attenuates over distance, it is more susceptible to cross-talk interference which
gets less as one goes further away from the exchange, as an increasing amount of lines
reach their termination destination and as any interfering signals also attenuate.
In the opposite scenario, as a signal sent from the user to the exchange naturally
attenuates, it comes up against increasing sources of interference the closer it gets to the
exchange due to the increasing number of lines and other signals it comes into close
proximity to.
_____________________________________________________________________________________
Asynchronous DSL therefore has significant design advantage that is adapted towards
maximum 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 by
the other two, as data transfers in the Upstream and Downstream channels can be
transmitted at frequencies above that of the voice frequency band, hence all three are
compatible, this being one of the key advantages of ADSL technology using standard
twisted copper pair lines.
The two main digital coding techniques used in ADSL, namely Carrierless Amplitude and
Phase (CAP) modulation and Discrete MutiTone (DMT) modulation are both (as
mentioned earlier) passband modulation techniques which means that they can be designed
to be used over any specified range of frequencies. In essence, the main technique used by
DSL technology is referred to as multiplexing, the process of amalgamating numerous
signals into one, more complex signal version, which is then transmitted and separated out
again 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 provide
ADSL based services. "The technique divides an overall bandwidth of about 1 MHz into
256 subchannels of about 4 kHz each. In essence, it creates 256 virtual modems operating
simultaneously over the same line." [Scientific American Oct. '99]
In contrast to this method, Carrierless Amplitude and Phase (CAP) modulation digital
coding techniques use a single carrier channel and can be considered a variant of
Quadrature Amplitude Modulation (QAM) that is used in V.34 (28.8/33.6kbps) modems to
optimise performance on standard twisted copper pairs. CAP: " describes a version of
QAM in which incoming data modulates a single carrier that is then transmitted down a
telephone line. The carrier itself is suppressed before transmission (it contains no
information, 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, one
could argue that such specific coding techniques (assigning an additional but separate band
to POTS based copper lines for upstream data and another for downstream data) were a
prerequisite for success, separating frequencies using what is termed Frequency Division
Multiplexing (FDM).
FDM also has a further advantage in so far as it enables Downstream and Upstream
channels to operate at differing frequencies (the lower frequency in the Upstream
direction, for reasons already discussed) hence reducing 'near-end' interference because it
transmits on a different frequency than any directly adjacent service receives, thus
reducing cross-talk.
With regard to the future of such technologies, they are expected to develop into 'rate
adaptive' and symmetrical forms, which are expected to go some way towards extending
the current ADSL service, reach from its current 3-5Km
_____________________________________________________________________________________
A more symmetrical service (e.g. SDSL as described earlier) will also be of increasing
interest to larger SMEs who foresee a future which includes extended in-house web-based
services (e.g. web hosting), videoconferencing...etc
A third and newer DSL technology that is synchronous in nature is also worth
consideration. It provides 768Kbps connections and can be delivered out to 9Km and is
called Multiple Virtual Line (MVL). This newer technology has no need for a POTS
splitter and needs no configuration at the user-end. In addition, as it only emits a low
power level per modem card (between 1.5 and 0.5 watts) and it can be used in the same
bundles as other services without any noticeable adverse effects and can even be delivered
over non-twisted pairs.
BOX 6 Demands on MVL DSL Source: www.paradyne.com
The synchronous nature of MVL, its plug and play installation and length of reach, all
indicate a product of potential significant relevance to the Western Isles context, for both
business and domestic usage. Refer to Appendix 2 for further details.
The current form of coding technique being rolled out in the UK to provide ADSL
services is DMT. "During initialisation, DMT monitors the line conditions and works out
the capacity of each sub-channel in the ADSL frequency band based on it's Signal to Noise
Ratio. If one channel is experiencing noise due to say RF interference, it will not be used
in 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 its
length, as this ultimately determines bandwidth. This is a key issue for rural areas. As a
signal is passed down a line, it experiences attenuation the further it goes, and the higher
frequencies (such as those used by ADSL technology upwards of 3,400Hz) are affected to
_____________________________________________________________________________________
"One might compare the transmission of an electric signal to driving a car. The faster you
go, 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 to
support higher speed services also results in shorter loop reach. This is because high
frequency signals transmitted over metallic loops attenuate energy faster than the lower
frequency signals." [The DSL Sourcebook]
The diameter of the copper wires in the loop also affects performance and an increased
diameter will reduce attenuation effects as thicker wires carry more current further because
they have less electrical resistance over a given length. Thicker wire is therefore better for
longer 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 levels
greater than this the signal attenuates significantly.
The main problem with regard to the above is that existing copper-based line systems were
not designed for digital transmissions and so were provided using the thinnest copper-pair
line that could support the voice-band demands of the day. Obviously the thinner the wire
the less copper used and less cost per metre of line provided. The average line gauge in the
US is between 0.4 and 0.5mm. Typically, 0.4mm gauge line can provide services only 2/3
of the distance of 0.5mm line. In the US the split in gauges is approximately 60% in the
0.5mm 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 providing
broadband ADSL services to outlying rural areas. As stated in section 3.5 at a distance of
approximately 3.5km to 4.5km from the 'base station' delivery of ADSL becomes
problematic for the above reasons. Although such problems may be experienced at
considerably less distances depending on the quality of the lines e.g., the presence of
bridged 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 and
can be a costly process, particularly if engineers have to be despatched to both exchanges
and customer premises in advance. Current moves in the industry in North America are
towards the automated testing of loops, reducing both time and associated cost
implications of developing a new service.
Apart from overly long local loops in rural areas which attenuate signals due to a loss of
resistance on the thin copper pairs and cross-coupled (cross talk) interference issues, there
are several other main issues which affect the quality and availability of ADSL and other
digital services on POTS.
Firstly, one has to consider the presence of loading coils, which are in effect a bottleneck
in the supply of digital services over existing copper pairs. Loading coils have been a
universally utilised tool by telecoms companies throughout Europe and North America
and are used to minimise noise interference on traditional voice-band services on long
local 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 loading
coils act as a severe limitation to the provision of not only ADSL, but all other digital
services (e.g. ISDN) as well. "It has also been reported that load coils impair the
operation 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' with
the appropriate testing instrument. However, in instances where there is old plant that has
been up-graded over the years, perhaps by the introduction of new exchanges…etc some
old 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 as
ADSL. In an ideal situation a telephone line goes from the exchange to the user directly
i.e. point-to-point. A bridged tap occurs in a situation where a new service is provided to a
customer at some point along an already existing pair that perhaps previously supplied a
former customer. As a result, some of the signals passing down such a line will continue
along the old line and not be terminated (i.e. as there in not a telephone, modem, fax
machine any longer at the old location), but instead reflected back towards the original
signal. As a rule of thumb:
"If the length of the tap is small, when compared to the signal wavelength, the reflected
signal rejoins the original signal after a minimal phase shift and there is little attenuation
of the original signal. When the bridge tap length approaches one fourth of the signal
wavelength, the reflected signal rejoins with a phase difference nearing 180 degrees and
causes significant attenuation." (University of Saskatchewan)
Such bridged taps also often occurred during repair work, as well as when providing new
services (adding some flexibility and cost savings to telecoms suppliers) and tend(ed) to
have little effect on standard voice telephony services due to the long wavelength of voice
band services in comparison to the length of such taps.
However, with higher frequency digital services possessing a much smaller wavelength
and rural areas tending to possess higher than average bridge tap lengths, digital service
provision 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 a
user's location and the exchange and which can consequently result in signal loss in digital
systems via the reflection from the non-terminated pair of wires (refer to Box 7).
_____________________________________________________________________________________
BOX 7 A BRIDGED TAP
New Location
Working copper pair
Non-terminated pair
Telephone
Exchange
Bridged Tap Old Location
e.g. old croft house
In lower specification ADSL services up to 1.5Mbps such bridged taps will not normally
have a significant effect other than restricting the bandwidth and speed of the service able
to be provided, unless of course the length of tap is extremely long, a phenomena more
likely 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 resultant
different characteristic impedances present in a local loop: "..variation in wire gauge adds
to the challenge of determining a particular DSL system's performance over a particular
loop." (DSL Sourcebook)
Other line defects and weaknesses also need to be thoroughly assessed in advance of
rolling out high frequency digital services on existing local loops. These assessments
might include metallic tests ("..standard tip-to-ring, tip-to-ground and ring-to-ground
parameters including DC voltage and resistance, along with AC voltage, resistance and
capacitance") longitudinal balance, the presence of water in cables or cable jackets, line
mix-ups in a cable (split-pairs), poor contact junctions, injections of electromagnetic noise
and even seasonal temperature fluctuations in the copper.
It should also be noted that the performance attainable from ADSL can vary significantly
depending on the presence of other digital services already been supplied in the consumer
local loop (e.g. particularly T1/E1 leased lines). Other digital services can significantly
degrade the ability of ADSL to perform effectively in a local loop, as interference
increases significantly in loops where bundled lines are transmitting and receiving digital
information at similar frequencies.
In North America when ADSL is planned for an area, a range of tests are undertaken to
evaluate the necessary loops. "The impact of electronic devices, load coils, bridge taps and
gauge changes are all evaluated." [America's Network Dec. '98]. BT has just completed a
_____________________________________________________________________________________
2.6 ADSL Provision in the Western Isles Context
The need for broadband telecoms links in the Western Isles based on such technology has
already been outlined in chpt 1. According to BT's on-line information the provision of
ADSL services at any given location in the UK: "… is subject to technical limitations and
survey. Service availability in an area is constrained geographically and is subject to
change."
The full rollout of ADSL services to rural areas such as the Western Isles is as yet
unannounced although is commonly thought within the industry to be a number of years
distant to such non-profitable areas, even although the official BT position (see above
quote) does not qualify such a view. BT it seems, continues to promote its leased line and
ISDN (Home Highway) sectors (www.zdnet.co.uk) and maintains that unmetered
broadband access via ADSL will 'increase the load and stretch an already creaking
network'. This latter view appears to be the shared by BT engineers locally, after several
recent discussions.
The consensus view appears in line with the following: "Even when DSL rollout actually
begins, 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 key
fields.
It appears clear that even if rollout costs could be minimised and the number of customers
passed maximised e.g. by using G.Lite ADSL and issues related to line quality assessed, it
nevertheless appears that at the present at least, BT does not consider such issues, unlike
its rivals in the US. Its sole indicators of an area's ADSL's readiness is instead based on its
demand, 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 the
commitment of BT to its rural customers, in the absence of any USO by OFTEL and the
long-term strategic thinking of the local and regional development agencies. Certainly in
the US, new forms of the DSL technology are being piloted and demonstrated specifically
due to their appropriateness to the rural market e.g. MVL, the so called low power, high
reach DSL alternative.
It may be that if progress is to be made in the rural context, different DSL development
models to that appropriate to urban areas will need to be investigated and progressed, MVL
being just one in addition to RADSL and G.Lite ADSL. However, as we shall see in
section 2.8, the absence of SDH (and the non-availability of DSLAMs for UXD5b
exchanges) is a potential constraint that is unlikely to be addressed within this current
market ethos.
_____________________________________________________________________________________
With regard to the digital exchanges present in the Western Isles there are 35 in total (refer
to Appendices 3 and 4 for location and background). 6 of which are BT's System X, 26
UXD5B, 1 older UXD5 and 1 L/Conc. Of these, the System X are TXD03 Remote
Concentrator Units (RCU) parented on a DCCE (Digital Cell Centre Exchange) and the
UXD5B are TXD05 units.
Their type and its appropriateness for (A)DSL provision is not yet clear, but with the
DSLAM scalable base units (for System X exchanges) required in this instance it would
appear that such infrastructure appears to be less important than it was when trying to
supply ISDN services to as wide a customer base as possible in the Highlands & Islands, as
there is no need to replace or up-grade existing exchange infrastructure, but instead just
add to it.
However, a key consideration may relate to their bandwidth connections to the Island's
backbone, which if limited may constrain the uptake of broadband services in many rural
areas 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 radio
links 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 DSL
becomes a priority, a cost effective automated line-testing method should be investigated
to minimise any potential initial 'market-entry' costs, as such pre-testing is a prerequisite to
the development of such DSL based services.
It would appear unlikely that in the rural context where market demand is going to be
initially low for broadband services (due to the low number of overall consumers and their
reduced exposure to similar services) in the short to medium term, that BT will undertake
such testing in advance of any local loop unbundling. In rural areas there would appear to
be only a marginal market for one or two telecoms suppliers and content providers, BT is
unlikely to do the 'groundwork' on such local loops in advance, because this may just
prime 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's
while bearing such costs to establish their service(s) in advance of the unbundling of the
local loop (currently scheduled for July 2001) and any associated competition that that is
likely to unleash.
In addition, an appropriate scaleable DSLAM solution will also require investigation from
various suppliers, catering for low-demand rural areas in the first instance but having the
flexibility to be scaled-up at some future date. Such a solution is likely to be quite different
than that currently being rolled-out in the UK's mass-market urban locations. Indeed BT
has indicated that it is not likely to develop/install DSLAM capable of servicing the small
type 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 Western
Isles 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 deal
with particular manufacturers or not. ADSL G.Lite and/or MVL would appear to be front
runners in this respect.
In summary then, it appears that there is potential scope for innovative technology
solutions based on high speed DSL broadband solutions in rural areas such as the Western
Isles, although not necessarily ADSL.
However, it is important to recognise that at present, this depends on the willingness of a

UK-wide private telecoms supplier with a responsibility to its shareholders and one which
is in the process of coming under increasing competition in many of its former core
markets. In such a context, such rural market issues, although important to residents and
businesses in the Highlands & Islands, will likely only be considered as a peripheral
consideration for such a company.
A partnership-agency approach based on an initial area of need, is thus strongly

recommended with BT and any other potential market entrants, to encourage an
assessment and implementation of the types of solutions most appropriate to the rural
context, should DSL be a chosen priority for the Western Isles. In the absence of such an
initiative it seems unlikely that any DSL-based solution for rural areas will be forthcoming
for many years to come, as any future rollout in 2001 is still going to be dependent on
demand in the first instance. Hence, in the absence of any change to the USO (refer to
chapter 1) in the interim that appears unlikely (until such services becomes considered
mainstream elsewhere in the country) a clear path to the development of such broadband
technology in rural areas does not exist. Hence, the immediate need for the proactive
solution suggested above to investigate cost-effective rural solutions. The development of
such 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 out
the use of the twisted copper-pair as being a potential supplier of broadband telecoms to
businesses 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 technologies
of the ‘Information Age’ throughout the world and as such has an important position
within the overall broadband sector. Ovum, a UK based consultancy firm, has recently
predicted that DSL line installations will increase from 800,000 worldwide to a staggering
45M within 5 years (by 2005), 10.5M of these being in Western Europe. As yet, rollout is
being constrained by a lack of competition among existing telecoms suppliers leading to
high 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 can
relate this to the above scenario, refer to Box 8. Even in the US, there have been numerous
court cases by new market entrants experiencing a lack of co-operation and access to local
loop and exchange facilities from the incumbent telecoms supplier, during DSL rollout
programmes. It remains to be seen how smoothly the transition to the competitive local
loop will be in the UK, after unbundling in July 2001.
_____________________________________________________________________________________
Box 8 Telecom Costs for ADSL
Country Carrier Rental / Downstream Cost per 1kbps

Month (£) Data Rate supplied (£)
US Bell Atlantic 26.36 640kbps 0.04
US US West 13.17 256kbps 0.05
Belgium Belgacom 28.50 up to 1Mbps 0.03
France France Telecom 20.87 500kbps 0.04
Germany Deutsche Telecom 31.58 768kbps 0.04
UK BT 39.99 512kbps 0.08
Singapore Sing Tel Magix 13.44 512kbps 0.03
Information 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 installation
charge. Most of the others do charge extra for a modem although their installation fee is less, but also have added usage charges.
In addition, the newest variant of DSL currently being piloted in the US, namely ‘Voice
over DSL’ or VoDSL will without doubt impact on existing telecom supplier’s business
accounts, by enabling, for example, the additional provision of reportedly between 16 and
24 additional voice lines being deliverable over the existing copper pairs, with obvious
savings to SMEs and larger firms & industries as well. Such technology is without doubt
going to shake up the existing telecoms sector as it exists in the UK today. According to
many critics, BT’s delayed and speed-restricted rollout of ADSL in the UK, (as mentioned
earlier), can be viewed as being protectionist towards the business-end and as a result has
also 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 broadband
home-leisure market in the UK and abroad. The key competitive factor being its ability to
utilise existing communications infrastructure and increasingly on a global scale not
require, 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), thus
reducing 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 marginal
markets such as the rural areas of the UK such features will without doubt even more
important.
Nevertheless, it is also worth noting that Bell Atlantic in North America has reportedly
admitted that it may never be able to provide broadband DSL services over 40% of its
existing lines due to technical and reach limitations. One suspects that the majority of these
lines are located in rural/suburban localities. In our rural locality there are still further
issues to be considered.
_____________________________________________________________________________________
2.8 ADSL & PDH/SDH Issues
During the research associated with this section and discussion with several parties it was
brought to the writer's attention that SDH transmission was not available throughout the
Highlands & Islands apart from in the Inverness area. This issue has therefore been
indicated as being a key constraint on the introduction of DSL services outside of the
Inverness area. As a result of this, an investigation was undertaken to help understand the
real issues.
The growing demand for high-bandwidth services has meant that there has been an
increasing need for broadband networks across the globe and this in turn has increased the
demand for more stages of multiplexing in digital signalling technology and integration of
technology as convergence continues apace. Initially, in recognition of early trends,
Plesiochronous Digital Hierarchy (PDH) was introduced in the 1960s and this can be
described 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 in
a single transmission frame. PDH based transmission can be considered, in effect, not as
efficient, as it requires more than one transmission frame to carry the 'bits' of information
and suffer(s)ed from compatibility issues. In terms of basic transmission systems installed
worldwide, PDH remains the most common.
The 1980s saw the introduction of Synchronous Digital Hierarchy (SDH) systems
making their first appearance. These had the obvious advantage of being more efficient,
faster and cheaper, in so far as they needed less costly network interconnection
technologies. PDH systems were often incompatible with each other and different systems
from different manufacturers, in for example the US and Europe, were complicated to
interconnect with each other. In so far, as SDH became an internationally recognised
system of digital transmission (1990), this standard enabled the interconnectivity of high
bandwidth 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 in
setting up gateways between different network providers using compatible systems of
transmission protocol.
In short, SDH allows the provision of added-value revenue earning services for telecoms
suppliers, whilst PDH requires 'very expensive equipment' at each and every exchange to
multiplex and demultiplex high speed lines. SDH has no such requirement for multiplexing
and demultiplexing at exchanges in the network, 'an often costly and complex requirement
in 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, in
response 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 used
proprietary (and often incompatible) technology to enable high-bandwidth links. In terms
of reliability, SDH systems are also superior, incorporating automatic backup and repair
mechanisms 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 needed
to transport the new services that users want…Operators want to be able to provide
features from one end of their network to the other so that they can offer a wide range of
revenue generating services, thus realising a vital competitive edge. " - Alcatel
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, a
transmission rate of 64 Kbps, the bandwidth normally used for one telephone voice channel. Both the North
American T-carrier system and the European E-carrier systems of transmission operate using the DS series
as 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 is
four 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.
Table 1 summarises the set of signals and relates them to the T-carrier and E-carrier
systems. The SDH standard in Europe and its equivalent in the US, SONNET, enables the
efficient translation of these differing carrier systems.
Digital Signal Designator Data Rate DS0 Multiple T-Carrier E-Carrier

DS0 64 Kbps 0 - -
DS1 1.544 Mbps 24 T-1 -
- 2.048 Mbps 32 - E1
DS1C 3.152 Mbps 48 - -
DS2 6.312 Mbps 96 T-2 -
- 8.448 Mbps 128 - E2
- 34.368 Mbps 512 - E3
DS3 44.736 Mbps 672 T-3 -
- 139.264 Mbps 2048 - E4
DS4/NA 139.264 Mbps 2176 - -
DS4 274.176 Mbps 4032 - -
- 565.148 Mbps 4 E4 channels - E5
_____________________________________________________________________________________
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 its
telecoms 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 in
the characteristics of the leased line. ADSL and other broadband technologies are forecast
to impact on such traditionally expensive leased lines.
With regard to SDH, STM-1* (Synchronous Transport Module) is a frame with a bit rate of
155Mbps and is the basic element of the SDH network. However it is also capable of
transporting any PDH signal at <140Mbps. This performance is achieved by a procedure
termed '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 same
time be capable of handling future services such as ATM…Terminal multiplexers are used
to combine plesiochronous and synchronous input signals into higher bit rate STM
signals…Plesiochronous and lower bit rate synchronous signals can be extracted from or
inserted into high speed SDH bit streams by means of ADMs*" [*Add/Drop Multiplexers] – SDH
Pocket Guide, Wandel & Goltermann Communications
For the technically minded, the process by which the above transmission of PDH and low
bit 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 always
much larger than the payload to be transported. The remaining capacity is used partly for
justification (stuffing) in order to equalise out timing inaccuracies in the PDH signals. Where
synchronous tributaries are mapped, fixed fill bytes are inserted instead of justification bytes. A
virtual container (VC-n) is made up from the container thus formed, together with the path
overhead (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 indicating
the start of the POH. The unit formed by the pointer and the virtual container is called an
administrative 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 into
a 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 SDH
transmission network via the mapping and packing of STM-1 signals and although there is
some loss of speed, this in practice is largely negligible on the current communications
system operating in the Highlands & Islands today. So although the PDH/SDH issue has
not been a factor to date in the Highlands & Islands, it needs to be recognised that PDH is
not practically able to support newer digital services* such as ADSL which requires SDH
infrastructure 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 the
availability of SDH in the trunk route infrastructure according to the above-named
consultants that are xDSL compliant. THUS, formerly Scottish Telecom, have already
provided an SDH network into the Western Isles as part of the UHI project and an
155Mbps STM-1 capable microwave radio link, has allocated approx. 40Mbps bandwidth
to Lews Castle College, with other customers being Iomart, InES and the Air Traffic
Control service. It has also been indicated that the provision of On-Digital broadcast
services will also require an SDH architecture, hence providing possible further
opportunities for investigation outside the scope of this report. This is already available in
the 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 an
absolute constraint on ADSL services, after much background research on just such this
topic, and indeed on this very topic there has been conflicting viewpoints. So, in the
absence evidence in the literature read, one could conclude that PDH as a transmission
system is less optimal than SDH for broadband services but not necessarily prohibitive of
such services, but instead particularly expensive to implement and increasingly tricky to
manage as demand for new services increase. This is ultimately an upgrade problem for the
incumbent. Although saying this, the replacement for SDH appears close to being
approved 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 much
more suitable for this application, because it offers better transmission quality, enormous
routing 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 an
advancement 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 to
circuit 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 the
physical layer that can be anything like SDH, PDH, or xDSL.
Given the above background theory it is difficult to pinpoint any network specific problem
in the Highlands & Islands that cannot be potentially overcome with appropriate funds,
should DSL be the key recommended strategic broadband technology. As we shall
consider later in this report there are other options for which, arguably, much stronger
cases 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 no
means a straightforward process to provided new high speed services to customers. The
most common example used on the Internet by several commentators both academic and
commercial was that of one providing a theoretical client a 2Mbps leased line service
halfway between two major services centres. In practice, on a plesiochronous network this
would require the 140Mbps channel to be demultiplexed down to its constituent 64
primary multiplexed signals to enable the 2Mbps channel to be identified and extracted and
then the channels would need be remultiplexed back up again to reconstruct a 140Mbps
signal. So where previously there might have been just a simple repeater between the two
major service centres, there is now an expensive and complex mulitplexing/demultiplexing
infrastructure to meet the needs of a single customer.
"Obviously this problem with the "drop and insert" of channels does not make for very
flexible connection patterns or rapid provisioning of services, while the "multiplexer
mountains" required are extremely expensive." [www.businessakademie.com]
In summary then, "The PDH is based on asynchronous operation, i.e. there is no master
network clock. This makes it expensive to ‘drop and insert channels’. The SDH is
synchronous 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 straightforward
task to allocate bandwidth on demand to customers requiring new digital broadband
services. 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 change
and increasing demand for dynamically allocated network capacity over a PDH network is
clear and if the Highlands & Islands are to advance via terrestrial based broadband services
then the case for such new investment is no less essential than it was in 1989 when HIE
and BT invested over £20M in digitising the exchange network in the region. Although
PDH equipment is still widely available it must only be a matter of time until it starts to
become 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 region
then a basic infrastructure capable of easily accommodating new broadband business and
consumer 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 an
opportunity for a fibre-based replacement programme, this being an issue to be considered
in the last chapter of this section.)
"The more efficient "drop and insert" of channels offered by an SDH network, together
with its powerful network management capabilities, will lead to greater ease in
provisioning of high bandwidth lines for new multimedia services, as well as ubiquitous
access to those services. Thus, the simplification of the network, and the new flexibility this
brings, 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 it
has been suggested to the writer (in consultations undertaken to date) that this (PDH-SDH
transition) might be an issue for OFTEL to consider and action upon, to ensure the
attainment of its goals related to local loop unbundling. Yet with the arrival of DTM
appearing imminent it may be more appropriate to by-pass SDH network transmission
architecture and aim to ‘jump a generation’ and embrace the new IP-based DTM in line
with a total re-evaluation of the Western Isles’ telecommunications infrastructure regarding
its suitability for broadband. This may be an issue to be picked-up again in a future
chapter.
Finally then, as intimated on the previous page, although xDSL as a technology provides
many potential benefits, it is by no means a straightforward solution to build a broadband
future upon in the Highlands & Islands in the present telecoms climate. As a fixed line
solution it may be initially considered more realistic than cable/fibre in the short term
because of the geography of the area, lack of competing telecoms providers and lack of
present infrastructure, combined with a low and scattered subscriber base of hugely non-
economic proportions for this particular technology. However, there may even be long
term options (e.g. innovative partnerships) here as well, which will be expanded upon in a
later section. Nevertheless, as an overall solution providing ubiquitous access services, this
must surely be more likely from the wireless services of the near future and it is them we
will 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. '98
www.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 and
Bridge 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

_____________________________________________________________________________________
Chapter 3 Wireless Broadband: Satellite
3 An Overview of the Technology

Wireless Broadband solutions are perhaps the most obvious form of delivery for rural
areas in the Highlands & Islands currently on the market. Indeed just last year several
commercial providers begun to offer consumer services to the home both in Europe and
North America. A recent demonstration in Islay by BT also generated much interest in the
area, as has the more recent High-Ways Ltd offering in Inverness that promises to provide
an Internet via Satellite solution within the Highlands & Islands within the next several
months. 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 even
considered 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 of
World Communications' described geostationary orbiting relay satellites on an equatorial
plane, theorising their stationary appearance and noting that only three would be required
to 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 when
TV itself was in its infancy and when it was not even known whether radio signals could
penetrate such a distance through the atmosphere. Clarke also accurately discussed
downlink frequencies, antenna receivers and theorised about 'photoelectric cells' to provide
the required power. Arthur C Clarke then was the first person credited with the first
technical explanation of how future geostationary communication satellites would evolve.
In 1964, the first geostationary satellite, Syncom 3 was launched, after being predicted by
Clarke 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 existing
copper and cable networks have struggled to deal with subscriber capacity at such an early
stage in the UK's transition to a broadband 'Information Age'. Certainly for rural areas and
ideas related to social inclusion this is one particular technology that could address two of
the main concerns raised throughout this report. Questions still remain however on the
reliability and standards of service available at present and as with many new technologies
there 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 portion
worldwide, 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 broadband
satellite high-speed internet access service to its MSN subscriber service. In Europe a
similar service is already available via Europe Online providing both content and high
speed 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 which
still relies on terrestrial copper connections for the uplink, a model which even the industry
recognises is never likely to generate anything more than 'niche' demand and is not a
model being replicated in the new ka-band broadband services being developed.
The very characteristics of rural areas transfer specific advantages to satellite based
broadband solutions. Rural areas tend to be scattered with often very low subscriber
densities and as a result are not an attractive proposition to commercial communications
operators, yet such areas also suffer because USOs worldwide fail to incorporate
broadband as a basic requirement., as discussed in chapter 1. Such a situation will therefore
make any investment in, what the Americans would call, rural information infrastructure
(RII), prohibitive.
All other broadband communication solutions for rural areas require not only require
investment at the client end but also in the delivery infrastructure (e.g. towers and base
stations 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 areas
at a comparable price and this is the key advantage of this technology as the price of
satellite broadband internet consumer services plummet as competition across the
broadband sector intensifies. Certainly, then from the providers point of view, which must
include consideration of a "…balance between cost, capacity and grade of service.." the
implementation of satellite-based subscription services would appear to be the most cost
effective route to broadband internet access in rural areas.
Indeed, according to STM Wireless Inc. there are several key applications for which
broadband satellite internet access can provide effective communications (refer to
Appendix 5) these being mutlicast, distance learning, corporate applications, telemedicine
and even web browsing. STM Wireless itself is rolling out three separate internet
broadband satellite services for SMEs, SOHO users and ISPs.
So what exactly are the options for rural consumers who live further than 5km from their
local exchange and are not served by a cable provider and are not able to attain 'line of
site' delivery from alternative wireless services? Satellite has this unique niche in the
market and furthermore appears increasingly in sync with developing broadband internet
content.
"Satellites have a certain unique advantage. They are unequalled for broadcast
applications such as the delivery of the same information to a large group of users. A
majority of the Internet applications in the future will be streaming, broad- and multicast
services 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 earth
approx. 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 the
naked-eye. The service footprint of these satellites is impressive, each individual being
_____________________________________________________________________________________
A total of just 3 satellites in this orbital plane can thus serve the vast majority of the Earth's
surface, making such a solution attractive to service providers. In practice, a service
provider 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 thus
more 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 communications

networks regarding their performance with internet based applications and content and this
is the latency effect, or time delay, between upload requests and download transfers of
information.
The delay effect between two so called 'earth stations' or communication access hubs is put
at 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 to
the other station(s) and on to the client. Refer to Box 11.
Box 11 Internet-over-Satellite To cover longer distances

inter-linked systems can
relay 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 receives

satellite operator's ground station the signal and processes
via a fibre-optic network. only data that is encoded with
The message is encoded the correct IP address.
into a radio wave and beamed
to satellites overhead.
[Source: Scientific American] In-home cabling then carries
the signal to a PC. Return
transmissions are beamed
back in a similar manner.
In effect, such communication satellites can be thought of as being distant signal repeaters
in the sky. For large downloads and streaming audio and video casts this is not much of a
problem, but for standard TCP/IP based internet browsing or on-line gaming which require
a significant amount of 'handshaking' between the client PC and remote server, then more
of a problem is experienced with the time delay or latency experienced.
However, as increasingly advanced signal processing has developed, this has gone some
way to counter the enormous distances involved and delays encountered. There would
appear to be a realistic prospect of such advances in radio signal transmission and
processing leading to a much more usable service with only negligible delays in service
requests. A further discussion on the technical limitations real and perceived will be
discussed 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 latency
of a typical New York to California fibre hop. Round-trip delay already seen
terrestrially as packets are sent, received and acknowledged. This is magnified in the
journey 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 cannot
live 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 between
90-120 minutes. The footprint of such satellites is obviously significantly smaller than
GEOs and may be in the range of only 3000 to 4000km. As a result any communications
solution using such satellites requires a large number of satellite units in a range of
inclined orbits. LEOs require 48+ satellites in orbit to enable the commencement of a
reliable service
Indeed, as they only remain visible for a period of 20 minutes before moving below the
horizon, they need to be able to switch their work over to another satellite in the same or
adjacent orbit. Such satellites also suffer from the effects of ‘atmospheric drag’ that acts to
gradually 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 distances
involved and resultant reduced delay in service requests (approaching that of fibre), but to
track and communicate with such fast moving objects, requires sophisticated antennas and
consequently adds to costs. In addition, with regard to LEO constellations, it is not know
for certain how well they will be able to handle 'jitter' (refer to Box 13). In a low orbit
satellite constellation any given transmission will be received and then transmitted on by
several satellites. However, as this transfer of the information is not a foregone conclusion
with 'jitter' entering the equation, such a scenario could potentially lead to the TCP
management 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 able
to 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 multiple
satellites. And because satellite orbits are typically maintained within a range of
locations, rather than one precise location, the pieces of a single transmission can
be subjected to varied delays and subsequent packet reordering. [Networking in the
21st 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 and
orbit at height of approx. 10,000km above the earth. MEOs literally occupy the middle
ground, requiring 20 satellites, are 'in-sight' for 2-4 hours, but tend to suffer from higher
amounts of radiation from the 'Van Allen belt'. They go some way to both addressing the
latency 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 level
of coverage provided by multiple satellites and the latter designed to maximise availability
over a particular region of the world.
Ultimately though, the GEO network of satellite communications is the most sought after
in terms of planned developments over the next several years and perhaps the main reason
relates to cost and market uncertainty. Teledesic's (backed in part by Bill Gates) LEO plans
for example are to cost in the region of $9bn.
"Typically the GSO environment may require initial investment (and therefore market
exposure) of under $200 million whereas the LEO or MEO environment involves initial
exposure 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 three
primary 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 a
particular portion of the spectrum to each user. FDMA can be used for either analogue or
digital signals. TDMA on the other hand, assigns each user a particular time frame with
his/her data bits stored in a buffer and burst to the satellite using all of the 'transponder
bandwidth' 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 users
effectively 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.
_____________________________________________________________________________________
In practice, some of the existing suppliers of satellite communications such as the now
defunct Iridium corporation used a combination of both FDMA and TDMA. Alternatively,
others such as 'Globalstar' use an advanced combination of FDMA and CDMA. In this
latter scenario the available spectrum is split into a series of 1.25MHz sub-bands. This
allows all users of the services to simultaneously utilise each sub-band via CDMA.
Frequency is another key consideration when considering the effectiveness and

appropriateness of satellite communications systems, particularly when looking forwards
to future broadband services. A list of the main licensed satellite frequencies is listed in
Box 14:
BOX 14 SATELLITE COMMUNICATION SPECTRUM
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

_____________________________________________________________________________________
The frequency of new services are chosen on the basis of performance and increasingly, on
the availability of spectrum. Many of the new broadband services in development and
planning are proposing to use Ka-band and V-band frequencies. This without doubt raises
issues for areas such as the Western Isles of Scotland. At high frequencies rain attenuation
becomes a significant factor in the provision of reliable services.
As frequency increases, the wavelength of signals decrease near to the size of actual
raindrops 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 signal
results. In addition, a further effect can occur as a result of rain at the 'earth terminal' and
these can provoke a further degradation of the signal of a similar magnitude. The ground
antenna can experience increased 'system noise temperature' because 'the antenna see
warm rain at room temperature instead of the cold sky'.
Combined, these effects did not initially inspire much confidence in the reliability of such
broadband 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 actual
fact translates to between 7.3 days (175.2 hours per annum) lost communications, which
for many businesses in particular, if falling within the working day, may prove
unacceptable.
It will "…not be possible to achieve the same availability at Ka-band and V-band as we
are accustomed to achieving at C-band or even Ku-band." [www.satellitetoday.com]
Box 15 Analogue Vs Digital
"A sinusoidal electromagnetic wave has three properties: amplitude, frequency and phase.
Any one of these parameters can be modulated to convey information. The modulation
may be either analogue or digital. In analogue signals, the range of values of a modulated
parameter is continuous. In terrestrial radio systems, for example, AM and FM channels
represent amplitude and frequency modulation respectively. In digital signals, the
modulated parameter takes on a finite number of discrete values to represent digital
symbols. The advantage of digital transmission is that signals can be regenerated without
any loss or distortion to the baseband information. A fundamental parameter in digital
communication is the ratio of bit energy to noise density Eb/N0. This parameter depends
on three characteristics: the bit error ratio (BER); the method of modulation; and the
method of coding…" [www.satellitetoday.com]
The ultimate design of satellite systems varies in almost every instance to be discussed and
will inevitably result in a wide variety of alternatives and tradeoffs. It may be that a
particular set of choices will reflect a particular design philosophy or experience in some
other field of communication e.g. Teledesic and Craig McCaw.
As far back as 1993 NASA demonstrated Ka band satellite communications success at

penetrating through heavy rain clouds using its Advanced Communications Technology
Satellite (ACTS). This 'powerful' satellite utilised: "..on-board processing and spot beams"
_____________________________________________________________________________________
to enable effective communications under such climatic conditions. Previously this was
considered to be a significant constraint on such high frequency services.
These new more powerful Ka band satellites will allow high frequency narrow radio
beams to be transmitted to ever smaller customer receiving dishes (although positioning
will require to be increasingly more accurate), although the LEO antennas will need to be
significantly more sophisticated to be able to track these fast flying satellites, and as a
result be more costly.
Over the next 10 years it is estimated that over 500 dedicated broadband internet satellites
will be operational in the Ka band. Fully operating Ka band systems will not be available
to 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 in

the 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 a

competitive advantage is apparent, if not now in the near future. Indeed, speed demands
over the internet are widely quoted as doubling every year. To date, this demand remains
for the most part unsatisfied.
In the global sense, any telecommunications company looking for a universal global
presence without having to rely of foreign or competitor's ground-based infrastructure to
provide 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 to
be true broadband delivery systems and do still rely on user's terrestrial copper-wire
connections 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 relay
satellite network. "IP over satellite is not the issue. It works…end of story. The issue is what kind of
data service do you need for your application." In communities in areas such as Baffin Island more
than 25% of the population are now on-line through such IP over satellite connections. The network
provided 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 Micro
has just invested in an extended network covering a much greater range in the Artic. This newer
network is designed around multiple transmit hubs which are in the C-band. At each access site there
are between 2 and 10 demodulators and these as a result make up what is known as a full mesh
network capable of download speeds of up to 2Mbps.
_____________________________________________________________________________________
In any case there is a shortage of spectrum available. A UK venture EasySat Internet

Service was reported as being unable to expand in December 1999, due to a shortage of
spectrum available from Eutelsat's 13o East 'Hotbird' orbit. In the US, users of the Hughes
Corporation's DirecPC (now available in Europe) have been reported as leaving the service
due to bandwidth constraints. In short there is a clear requirement for additional Ka-band
spectrum in the next several years if broadband internet services in Europe and elsewhere
are going to be realised. The US, as we shall see in the next section is without doubt in the
lead in this area of telecoms activity. Although, for example, in 2002 Eutelsat's next
satellite (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 and
small 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's
strategy of addressing the multimedia market and facilitating the development of
innovative interactive digital applications." [www.eutelsat.org]
Similarly, in the US, such combinations are going to be used to provide the first
functioning broadband services in an ever increasing competitive market:
"The $1.6 billion CyberStar program will use both Ku-band and next-generation Ka-band
satellites, pushing its service date ahead of rival systems such as Teledesic LLC, Lockheed
Martin’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 suppliers
are now planning new Ka-band spectrum satellites over the next 5 years, with a predicted
order book of 1,300 worldwide during this time period. The recent bankruptcy however of
the 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 planned
constellations as investors have become nervous of the large amounts involved and the
potential for disaster if their target market fails to materialise.
The vast majority of the new generation systems (when launched) will also include some
form of on-board processing and switching (in effect a network management system) to
improve and enhance current broadband data transmissions, enabling full two-way services
from 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 of
using the available spectrum efficiently is to use multiple "pencil" spot beams, each
covering only a small area of the earth. This allows frequency re-use in much the same
way as a cellular phone network re-uses spectrum." [www.spotbeam.com]. This use of multiple
spot beams requires both the switching and on-board processing of data requests between
the 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 that
because 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 services
costly for consumers and only really viable for large businesses and broadcasters
transferring regular and large amounts of information.
This new high frequency spectrum is seen as the new convergence opportunity in the
telecoms, computing and broadcasting industries. According to DTT Consulting
(www.spotbeam.com):
"The Ka-band satellites offer fundamentally different services from conventional communications
satellites. 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 point
circuits to both business and individual users at a cost far lower than available via satellite
today…However, unlike a normal telephone network, such satellites will be able to offer all end
users a wide variety of services from simple narrowband through to broadband applications."
From the European perspective however, such Ka-band advancements are not
apparently being embraced in the revolutionary way they are across the Atlantic and
the DTT Consulting report (1999-2000) concludes: "Europe remains way behind the
United 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 of
investment ($bns) and competition occurring in the US market where it seems inevitable
that there will be a period of amalgamations and mergers in a bid to survive, as access to
continuing finance becomes an increasingly important criteria in advance of infrastructure
completion and service revenues commencing. It is accepted even within the US industry
that by 2002 there is little realistic chance of more than 3 or 4 of the main players surviving
the 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 and
maybe MEO networks will have a distinct advantage in terms of the delivery of high speed
internet 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 present

outside of providing 'convergent' interactive services. High speed internet access to the
masses is without doubt the perceived starting point. This being the case, then the
implications 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 services
scheduled for between 2000 and 2002.
Soci‚t‚ Europ‚ene des Satellites (SES), the operator of the Astra satellite system will from
this year (Astra satellite 1H) and next year (Astra satellite 1K) have satellites in orbit with
the new generation of Ka-band transponders on board. A typical GEO satellite will carry
two 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 such
communications satellites is now to change as the new generation of broadband satellites
will, as stated earlier perform new signal processing functions, switching and redirecting
amongst a large number of spot beams in most instances. These new satellite transponders
will 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 are
performed by the ground-based transmitter and/or receiver in a transparent satellite system. These
functions may include recovery of the original information on-board the satellite and processing of
this information into a different carrier format for transmission to the ground. Any transponder
that recreates the carrier in this way is usually referred to as a regenerative transponder.”
Source: www.eutelsat.org/
"SES has for some time operated an Astra-NET service, similar to Eutelsat’s Easynet using
a terrestrial return link, but the new service marks the introduction of genuine two-way
interactivity via satellite…The new Astra Return Channel System (ARCS), set to become
operational 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, but
later ATM will be introduced to provide bandwidth on demand...
SES is now working towards a next generation system; this will combine regional GEO
satellites with a global GEO/LEO constellation."
Eutelsat, - The 'Hotbird' network or constellation presently contains 5 GEO satellites

which 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 be
complemented 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-band
transponders will also be complemented by Ku-band transponders to address developing
capacity 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 orbit
in the future as demand for interactive broadband bandwidth increases.
"The Ka-band service will deliver fully interactive IP and DVB services to homes and
small 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's
strategy of addressing the multimedia market and facilitating the development of
innovative interactive digital applications."
_____________________________________________________________________________________
Euroskyway, is backed by Alenia Aerospazio and two dozen partners, and will eventually
comprise 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 2001
in Western Europe. The five key satellites will operate in the Ka-band and the transponders
will incorporate next generation digital on-board processing. The Uplink and Downlink are
expected to operate in the 20-30GHz frequency band and customer bandwidths are
expected 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 footprint
covering 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. In
addition to fixed applications, the small EuroSkyWay terminals can be installed in cars
and aboard aircraft. EuroSkyWay will offer "bandwidth on demand" to service providers
such as telecommunications operators, TV broadcasters and Internet access providers who
want to expand their infrastructure and reach new customers."
Matra Marconi Space initiative called WEST (Wideband European Satellite

Telecommunications) has unveiled proposals to invest $2bn in a new generation Ka-band
constellation comprising of two GEO satellites and nine MEO satellites with near global
coverage.
Services are anticipated to be rolled out in the first instance in Europe in 2001, being
extended worldwide by 2003. Advanced bi-directional services to the home are to be
provided 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 in
terrestrial infrastructure as well as a way to quickly create corporate or other
infrastructures. 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 European
initiatives in the Ka-band frequency and the timescale for the introduction of consumer
broadband two-way multimedia convergent services, with the lack of recent press
indicating some potential slippage in the timescales mentioned above. Initial services
however, will not likely be the full satellite broadband product, although being in many
ways comparable. Time to market has resulted in many trade-offs in the technology
employed. For example most use existing (tried & tested) GEO technology with added on-
board processing for Ka-band services, rather than more complex low latency LEO
clusters, although plans to upgrade service on an on-going basis in response to demand are
articulated. Many of the planned US systems are more ambitious in initial deployment,
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with the possible exception of the latter example above, which plans new and innovative
laser links for intersatellite communications.
On the North American front there are also 3 or 4 main initiatives aimed at bring
true multimedia broadband convergent services to the high speed internet market.
Teledesic, with backing from Bill Gates (Microsoft), US cellular phone pioneer Craig
MacCaw, a Saudi prince and Boeing and Motorola, it is claimed that their network will be
the first truly global broadband internet service delivering both voice and data services able
to fully serve rural areas and developing countries. The telecoms market has a place for
this product according to Teledesic in a market worth $730 billion in 1998 growing to
more than $2 trillion by 2010. Certainly, one of the key advantages of the Teledesic
product will be its ability to bypass local network bottlenecks in remote and rural areas
where existing terrestrial suppliers have skimped on bandwidth availability due to
investment considerations (i.e. return to shareholders) related to the low user ratio and
related revenue streams available in relation to the cost of upgrading the network
“Telemedicine, distance learning, electronic commerce and videoconferencing are just a

few of the new, bandwidth-dependent applications that are changing the way businesses
and individuals interact. Teledesic will facilitate these and other applications with high
levels of quality, security and reliability.”
Teledesic's plans include a 288 LEO-satellite system to operate in low earth orbit, using the
Ka-band frequency for both uplink and downlink segments as well as for its intersatellite
links. Initial plans incorporated an 840 strong network of LEO satellites, although this has
since 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 Mbps
on 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 has
recently secured $1.4bn form parent company General Motors. Its full operational capacity
is scheduled for 2002 and it will operate in the high frequency Ka band. The satellite
cluster itself will include 8 GEO satellite with an anticipated uplink speed of 6Mbps and
108Mbps 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, as
well as broadcast capability throughout the service area.
"With Spaceway, large businesses, telecommuters, small office / home office (SOHO) users
and consumers will have access to two-way, high-data-rate applications such as desktop
videoconferencing, interactive distance learning and Internet services operating at speeds
faster and at costs less expensive than those provided by such current land-based systems
as frame relay... The satellite system will employ innovative, on-board digital processing,
packet switching and spot beam technology to offer single-hop connectivity throughout the
service area regardless of location. This connectivity, for example, will allow customers to
communicate directly via satellite with other customers without having to go through a
retransmission service or hub. It also permits direct, full broadcast capability throughout
the service are." [www.hns.com/news]
_____________________________________________________________________________________
SkyBridge LP is backed by Alcatel and its partners and shareholders are: Boeing, Loral
Space & Communication, Litton and EMS Technologies of the United States; COM DEV
of 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 high
data 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 and
operated 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 lower
Ku band, orbiting at an altitude of 913 miles (1,469 km) with an inclination of 53°. The
low earth orbit utilised allows the minimal latency times – possibly as low as 30
milliseconds, this being required for the provision of real-time interactive services.
Approximately 200 gateway stations are planned for worldwide coverage. Each gateway
will have a 234 miles radius (350 km) coverage.
The 200 'Gateway' stations planned will interface with the existing terrestrial network
through an ATM switch, ensuring seamless integration into these networks. Users - either
business or private individuals, companies, factories, hospitals or schools - will be
equipped with low cost terminals ($700 for a residential terminal).
"Seen from a user terminal, several satellites are always visible in the sky, and depending
on the geographic location of the terminal one or several satellites can be used to connect
the 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 is
called a "gateway cell."
Astrolink The Astrolink satellite cluster will consist of up to nine GEO satellites
distributed among five separate orbital positions. Astrolink will initially begin service with
4 satellites and later expand as demand increases. Operating in the Ka-band frequency (20
GHz to 30 GHz), each satellite will have a powerful telecom switch onboard with a
capacity of more than 6 Gbps. Each satellite will also include 44 "spot beams," with each
one 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 telecommunications
market. 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 able
to accommodate multiple types of data, video or voice traffic. ATM's ability to guarantee
quality-of-service levels has led to its widespread adoption by the telecommunications
industry. In addition, ATM makes it possible to bill customers for their actual network
usage 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 North
America and Europe are advancing with investments of 10s of billions of dollars, in view
of the belief that next generation satellite services will secure 10-15% of the broadband
market between now and 2010. For rural areas the provision of two-way interactive
satellite 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 within
the broadband market, with the exception of Fibre-To-The-Home solutions and there can
be little doubt that future demand for bandwidth will continue to grow at exponential rates
and 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 and
most successful companies is testament to this belief, as are the terms used to describe such
new 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 time
or in advance of the new 3G UMTS wireless solutions based around broadband radio
2Mbps communications which are due to become active in 2003. Competition is
anticipated to be fierce to entice the rural consumer/business not served by Cable or ADSL
and 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 the
performance of high latency broadband satellite applications and numerous research task
forces and forums were set up during the last decade in advance of predicted internet based
satellite networks. Again, as with so much within this dynamically changing industry there
are presently varying views on how successful the eventual services to be provided will be
able to perform. It is clear however that several key modifications to the standard TCP
protocol look likely as being adapted in advance of such services commencing. These
modifications being specifically aimed in most instances at addressing high latency
performance issues with TCP.
For some applications (e.g. interactive gaming), it would appear that irrespective of such
modifications 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 the
future are confident that by the rollout date predicted for such new services, the majority of
the 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 on
effective throughput rates and satellite network efficiency. Bit error rates, congestion,
queue management, Window size and buffer status can all have a serious impact on the
overall 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 the
satellite transmission network as congestion and as a result slowing data packet
transmission in instances where it is not optimal to do so, re-transmitting data packets at a
slower pace. In addition, the adaptation to change in the conditions in the network by TCP
is limited itself by the round trip time in the system (i.e. the latency involved in sending a
packet of data and receiving back its acknowledge). Furthermore, once these problems
have been overcome there is also much delay in increasing transmit rates back up to the
optimal level. On low latency, low noise terrestrial fibre, coaxial and copper based
networks for which the standard TCP was designed, its adaptations to congestion work fast
and effectively, not so on satellite based transmission networks.
One of the main culprits within the TCP standard is an algorithm used to address
congestion issues and this is called ‘slow start’. In opening a connection TCP tests the
network for the optimal transmission speed available by sending an initially small amount
of data through the network, which when acknowledged generates the next burst which is
50% larger than the previous. This process slowly increases the TCP ‘Window’ size as
data sent is received successfully and related acknowledgements received in return. This
process continues until congestion is encountered whereupon the window size (usually
initially about 512 bytes) decreases by 50%. If no further congestion (i.e. packet loss) is
experienced the process of window size adaptation upwards begins again to the maximum
size.
Obviously then if satellite networks with high bandwidth require large windows, but these
windows keep reducing due to noise and latency then network bandwidth efficiency will
remain low.
In instances where data transfers are small or bursty on high bandwidth terrestrial networks
or high latency satellite networks then it is clear that TCP will only on very rare occasions
enable full bandwidth speed to be utilised. Hence, in many instances ‘slow start’ will
restrict optimal traffic flows on a WAN.
Any loss of packets results in the downsizing of the TCP ‘Congestion Window’ which
results in less amounts of unacknowledged data being able to be handled in the network
connection.
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 window
used by TCP and a new format of TCP called TCP-LW has become increasingly utilised to
increase 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 larger
window size…on a satellite link with a round trip of 0.8 seconds and bandwidth of
1.54Mbps, 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 11
seconds to get up to speed on a GEO link with large windows, 4 seconds on a LEO, and 2
seconds on a LAN. In the first 11 seconds only 20Mb was found to have been transferred
via the GEO satellite link, a significant initial performance loss, particularly when related
to short, ‘bursty’ type data traffic.
TCP-SACK has been another response to satellite latency and noise issues that are
misinterpreted by standard TCP/IP networks as congestion. In higher bandwidth high
latency networks, a packet loss may be followed up by further successful data
transmissions.
Irrespective of this, standard TCP will timeout and all later data will also be discarded and
re-transmitted through a smaller ‘window’ at a lower rate, as the timeout error will have
been interpreted as congestion in the system. TCP-SACK (SACK= Selective
Acknowledgement) however is more explicit in its approach and generation of
acknowledgements and as a result enables the retransmission of the corrupt segment only
via the network, hence helping to maintain overall system bandwidth.
Other variants of TCP such as T (Transaction)/TCP, which is designed to reduce the initial
latency inherent to TCP by bypassing three-way handshaking conventions and TCP
‘Slowstart’ by using cached information from previous connections on the condition of the
network. This may enable a rapid initial gains in speed. TCP Vegas is a method by which
the round trip time of data is monitored and as performance in the network reduces, a
reduction in the congestion window is stimulated in advance. Similarly, as the round trip
time decreases again the window size can be again increased in advance of the standard
version protocols and algorithms.
This monitoring of the network reduces packet loss significantly and as a result keeps in
check the time consuming congestion adaptation processes in the standard version.
Lastly, there is also a method referred to as TCP Spoofing whereby premature

acknowledgements are made by higher latency networks such as GEO satellite networks in
advance of the real acknowledgement from the receiver and this deceives TCP into
increasing window size via the ‘Slowstart’ algorithm by making in think it is operating
over a very low latency network.
_____________________________________________________________________________________
When the real acknowledgement is receive it is suppressed to avoid duplication, if it does

not arrive at all, then an eventual timeout stimulates a retransmission of the missing data
segment.
Such research and modifications are still maturing and in February 2000 the Internet
Engineering Task Force’s TCP Over Satellite Working Group reported the next generation
of TCP modifications to enhance TCP/IP traffic for satellite communication networks “..to
better utilise the bandwidth provided by long-delay satellite environments.”
The combination of the above enhancements to TCP/IP to address high latency and high
noise broadband satellite communications has also been recently complemented by
modifications 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 with
terrestrial broadband connection networks. Nevertheless, whether the combination of such
technology advancements can be achieved to a sufficient level to enable video
conferencing applications remains to be seen, although some within the industry would
contend that this already possible.
Nevertheless, it should be noted that many providers on the other side of the Atlantic have
already staked and continued to stake billions of dollars of next generation broadband
satellite solutions that widely incorporate GEO constellations. These new systems are also
forecast to have reduced noise and use error correction systems, giving them further
advantages over existing solutions.
BOX 18 MOTOROLA'S APPROACH TO GEO LATENCY AND TCP/IP ISSUES

Motorola…plans to provide dual-use terminals reportedly costing $750 on the low end that let the user
choose whether a given application is to be sent to a LEO or GEO satellite. The traffic will be subsequently
sorted 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, the
traffic 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 of
Motorola’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 entertainment
and instructional videos, LEOs don’t efficiently utilise bandwidth because they have to regenerate the
signal.” He envisions a scenario in which an Internet user might order a video via LEO and have that order
filled 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 distributors
and 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 for
a Telemann 200 PCI DVB/MPEG plug & play card. This card connects to a satellite dish
that 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 across
the UK.
Firstly, there is the 'Alternet' service for a subscription of £9.99 per

month, and this provides high speed internet access via a proxy server
service 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 charges
for being on-line. Upload speed is also obviously restricted to 56Kbps with the appropriate
modem.
.
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 from
Europeonline.
These 'multicast' services do not require an internet connection to necessary be live and are
made 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 'broadband
internet' experience can be seen from the following service pages:
_____________________________________________________________________________________
The Ultranet service was launched in October 1999 and by February only 7,000 of an
anticipated 130,000 users had subscribed to the service. Partly as a response to this, the
Alternet service was launched, which then meant that the one of the perceived constraints
of 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 market
alternative to ADSL and cable. "For people who do not live in an area served by DSL or
cable, satellite is the only alternative…." he said (February 2000). "….I should imagine
satellite 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 free
telephone costs for modem upload requests will be on offer. The system also has another
advantage in so far as once an upload direction request for a service has been made i.e. a
streaming 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 already
available across North America. It is predominately targeted at the business sector and
enables speeds of between 400kbps to 3Mbps. This service uses the Eutelsat satellite
network, which although providing services and bandwidth to ISP and telecoms providers
does not directly provide consumer services. DirecPC is a service supplied throughout
_____________________________________________________________________________________
For £399-00 + VAT and delivery, DirecPC will supply the appropriate satellite dish, PCI
DVB card and software to enable the set up of the service. A subscription charge of £13.50
per 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 for
business customers for up to 1000Mb per month of bandwidth costing up to £320-00 per
month in subscription charges and £0.32 for each additional Mb used over the 1000Mb
limit in this instance.
Finally, it is worth briefly considering the latest addition to the options currently on offer
based in Inverness and only announced in May 2000 by Hi-Ways Ltd. A locally based
service distributor within the Highlands & Islands is surely the optimal wireless solution
for those resident in the area and one that could generate knock-on employment
opportunities in the area. In effect this business is a reseller for Eurosky with the standard
subscription costs as quoted above and a range of installation options and related costs
ranging from £300 to £700 for the full package of equipment and installation along with
data, free satellite TV access and 'Viaccess' Decryption. For the average home user
without a satellite dish at present and looking for data and satellite multicast services the
cost equates to £460 with self-installation. A further range of services direct to the TV is in
development.
3.8 Summary & Analysis
An explicit aim of the next generation of satellite networks, predominantly in the Ka band
is to service currently under-served areas i.e. rural areas and areas where local loop
conditions 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 a
competitive rate to that of DSL, cable, (3G) wireless...etc. Certainly none of the other
competing broadband systems have articulated their intention to specifically serve rural
customers 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 rural

areas 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 very
positive aspect in its favour, given current exponential demands for bandwidth year on
year, which one could anticipate well into the future. Indeed, one would have to suggest
that any strategy on future broadband requirements must consider such a factor as being of
significant importance. Consumer ADSL is largely limited to 512kbps in the UK and
2Mbps for businesses. Theoretical maximum throughput is estimated in the 8Mbps range
given optimum line conditions and a location only a short distance from the local
exchange. Consumer cable services in N. America are theoretically capable of 30Mbps
throughput, but in practice customers’ bandwidth is limited by the teleco and by other
users on the same cable loop. In any case cable is not a robust business solution for rural
areas, 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 actually
been identified by the industry is the third generation mobile telecom suppliers providing
UMTS (Universal Mobile Telecommunications Service) to consumers in all areas at up to
2Mbps, 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 competitor
offering even higher bandwidth comparable with predicted consumer satellite services and
it is the combination of these technologies that we will consider in the next chapter, some
of 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 competitors
mentioned above, must make the next generation of broadband satellite one of the key
contenders 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 the
year 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-Home
and a new DirecPC service negate many of the traditional problems associated with
satellite services up until now, by also using satellite for the uplink as well as the
downlink. Certainly up until very recently VSAT solutions (providing dedicated up and
down bandwidth) for remote or mobile businesses were pricey, but with the type of recent
development above, then satellite options become increasingly affordable and the new
broadband services will ultimately phase out the expensive traditional VSAT market.
Indeed it has been suggested that even in areas where terrestrial broadband services are on
offer, price competitiveness with even this sector is anticipated in the longer term from
broadband satellite solutions.
“Affordable broadband satellite access to the internet is just around the corner. And not a
minute too soon for people who live and work in remote and rural areas under served by
land based service providers.” [www.about.com]
It should also be noted that with experience to date, satellite customers tend to remain
satellite customers once signed up and the new convergence of existing services with more
interactive 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 other
multimedia opportunities will be able to be provided to consumers and businesses alike on
a 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 multicast
services to many users at once, whilst LEOs will enable more interactive services such as
on-line gaming and perhaps MEOs being used for web browsing. As mentioned earlier
many of the new constellations will include a mixture of orbits and hence will be able to
provide the widest range of next generation convergence services to both customers and
businesses alike in both urban and rural areas at equal cost. In short then, the key
advantage of broadband satellite will not just be the high speed internet access and some
other additional services, but a product that offers a full range of convergent media
services within 5 years. Other wireless options simply do not promise such a package and
others 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 Global
Communications 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 forecast
of per annum commercial launches in the US from 51 to 41 between now and 2010 also
stating that problems remaining with non-geo satellites have pushed back timescales. It
may be then that service commencement of global broadband satellite systems will be
nearer 24 months+ away, rather than the more widely anticipated 12-24 months earlier
envisaged. It remains to be seen if initial European services can rollout on their anticipated
timescale.
Finally, one also has to consider Ka-band rain interference issues discussed earlier
particularly when considering our study area, although one would have to speculate that
the $bns of research and development funds have addressed this issue. Nevertheless, this
remains a key unknown factor with this technology in a high precipitation climate, similar
to 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 satellite
broadband market leads almost all analysts to agree the networks planned and anticipated
will be developed, enabling the satellite market to become a main contender in the global
broadband market. Views are mixed on the ability of the technology to deliver all the
services anticipated e.g. high speed TCP/IP based internet access, videoconferencing,
interactive gaming…etc – will jitter in the new LEO constellations affect latency to a
significant degree or not? – will high latency GEO Ka-band constellations be able to be
adapted for internet based TCP/IP communications? What is sure however, whatever the
final mix of services and content provided by the remaining providers, we, in areas such as
the Highlands & Islands of Scotland are part of their initial target market. One, where
increasing competition in the broadband market as a whole will result in broadband
services 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 a
key future role for satellite broadband services in rural areas, this perhaps being a finding
will that will surprise many. Particularly those with experience of the large antennae
expensive existing VSAT services for business or those familiar with the first generation
of internet-over-satellite services where numerous problems relating to bandwidth have
been experienced and where the uplink relies on terrestrial lines via a modem. These are
limited services separated by billions of dollars & euros of investment by the
constellations currently being deployed with new on-board functions and abilities. The
new 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 being
held by the new Ka-band interactive satellite service operators for which we will be in the
European footprint will be extremely beneficial in assessing the area's eventual broadband
future. Satellite has the bandwidth to be a future proof solution if it proves able to provide
a reliable and cost effective service to rural areas such as ours. Indeed in convergence
terms is also optimal. Such potential broadband services will most likely be those that pave
the way for later competitors, aside from cable and ADSL which appear to be likely to
remain 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/
_____________________________________________________________________________________
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 The
Limit (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 via
HOT Telecom - http://www.direcpceu.com/
Hughes Communications, UK SME/SoHo orientated Internet Satellite service provider

http://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 Communications
in 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-Speed
Internet 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: Software
giant teams with Gilat to push high-speed Internet access via two-way satellite this year
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/
Skystation International's - Stratospheric Telecommunications Service. http://www.skystation.com/
STM Wireless Inc., Satellites role in Broadband Internet Access (1999) http://www.stmi.com/
Surrey University, General website on everything to do with satellites from PhD student at Surrey
University -http://www.ee.surrey.ac.uk/Personal/L.Wood/constellations/index.html
Syed, A., Preeham P. and White J., Digital Satellite Systems for Internet Access (1997)
http://fiddle.ee.vt.edu/
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 for
broadband satellite in 'non-commercial' regions is that originating from radio/microwave
(radio waves with a frequency >1GHz) based telecoms technology and the soon to be
introduced 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 and
businesses will originate from wireless devices.
In terms of definition it is important that we first clearly define the competing technologies
as they exist at present. There are three basic competing/complementary technologies
referred to in the literature reviewed (MMDS Unlicensed and LMDS) and a fourth, 3G
mobile, 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 Multichannel

Multipoint Distribution Services (MMDS) which is an already existing technology that has
been used to provide analogue TV programming during the past several decades. It has
recently been adapted to enable two-way (synchronous) internet connections, mostly in the
_____________________________________________________________________________________
This technology is being held in some areas of activity as being the key enabler of the mix
of services related to audio, broadband data and video services to the masses. Sprint and
MCI 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 cellular
telephony, much more confidence has also been placed in radio as a broadband access
technology, as technical limitations have increasingly been overcome: "…digital technology
has greatly improved the signal quality of broadband wireless systems, and permits operators to
greatly increase the amount of data that can be sent across a particular amount of spectrum."
[http://www.insight-corp.com/]
MMDS is already a commercial

reality in the broadband market
in the US. For example in
Phoenix, Arizona the Sprint
Broadband Direct service
[http://www.sprintbroadband.com/]
(refer to diagram on left) offers
synchronous 10Mb/s internet
connections to both homes and
businesses within a 50km radius.
It incorporates a 'low cost'

transmission tower at the
supplier 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 reduced
entry cost, in a recent article in PC Magazine on-line. Sprint has recently announced a deal
with Lucent 's ORiNOCO wireless networking system for use in the home and small
business interface -environment. This is a product which will be considered in a latter
section.
This type of product would without doubt have much relevance to the Western Isles and
Highlands & Islands context, given its 'last-mile' bypassing ability, potentially enabling a
fast-track route to rural broadband service provision, irrespective of the condition of the
existing local loop infrastructure.
Indeed in the US during 1999, MMDS frequencies became sought after commodities in
targeting the demand for internet broadband bandwidth along with digital TV direct to the
growing home market. MCI and Sprint spent close to $2 billion in 1999 buying up MMDS
spectrum licenses in the US. On the other hand, LMDS spectrum based systems have
largely targeted the urban business market in the US with specific line of sight
requirements and a reach of only 4 to 5km. MMDS channels have been traditionally
transmitted from both omni-directional and directional antenna to provide extensive line of
sight in all directions.
MMDS has also been recognised for its simplicity and low cost rollout. It involves
_____________________________________________________________________________________
small receiving antenna at the customer end, plus wireless modem. It also has an
approximate quoted range for service delivery of 45-50km and is therefore a very
interesting technology for the rural context. For example, the US company WinStar
Communications Inc, quoted as being the world's largest spectrum holder, has been
investing in rural Venezuelan state of Merida in a government supported partnership
scheme in the 2.5Ghz spectrum at the above quoted distances with a reported synchronous
connectivity of 10Mb/s in both directions. In terms of hardware, Spike Technologies
installed their wireless local loop solution in this region – see box 20.
Box 20 - A Broadband Wireless Solution
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 with
the base station antenna. A single base station can cover up to 2,800 square miles and can be
configured to give each user a 10 Mbps upstream and downstream connection while handling a
potential of up to 33,000 users (assuming the frequencies are available).
http://www.spiketechnologies.com/index2.html
_____________________________________________________________________________________
Such examples of MMDS technology potentially enable the realisation of a vast range of
broadband services in rural areas. Indeed, Spike Technologies specifically refer to their
technology's ability to address and overcome the issue of 'digital haves and have nots in the
new information society in both rural areas with a low population density and urban areas
with older telecoms infrastructure or that outwith the range of Cable/DSL services.
The Spike HighPoint TM family enables high speed local loop connectivity to the internet in
both 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 48
kilometres.
However, in terms of practical implementation in the real world, MMDS has not lived up
to its quoted potential, although is still a worthy technology nevertheless. It does need to be
taken into account that in any area within a given 50km radius of the high power MMDS
transmitter, potential service connection is by no means guaranteed. Both geographical
obstruction ' service shadows' and building shadows combined with the natural curvature
of the earth have meant that often in practice a reliable service radius of nearer 20-30km is
achievable. Thus a single basic array implementation of MMDS is likely to yield a lower
return than perhaps initially anticipated by service providers.
In an ideal situation the terrain needs to be both flat and gently sloping up towards the
transmitter which will be located on a hilltop, with supporting infrastructure already in
place e.g. the Eitshal transmitter location in Achmore in Lewis? – however this may not be
an electromagnetically 'quiet' area – often another prerequisite with digital wireless .
"Experience has demonstrated, unless the transmitter is located in a site meeting most of
the ideal conditions, it is practically impossible to achieve a reasonable percentage of LOS
homes beyond a 30 kilometre-radius service area (in many cases 20 kilometres). Once an
MMDS design is implemented, it is not economically feasible to make changes due to the
disruption and cost of re-orienting the antennas for thousands of subscribers."
[http://www.cableaml.com/50Kmyth.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 the
transmitter's LOS efficiency. It is essential that any 'shadow' areas do not incorporate any of the initial main commercial service
concentrations.
_____________________________________________________________________________________
It is clear then that to maximise MMDS performance not only does a thorough
geographical survey require to be undertaken but also a wide ranging market survey, to
enable 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 low
power 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 resulting
in 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 cell
may in fact prove to be more financially viable than a blanket coverage option on a larger
scale. 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 the
most 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 several
important 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 LOS
coverage increasing the revenues per square kilometre of coverage.
_____________________________________________________________________________________
A significant rationalisation in the operator's

initial 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 on
investment and a more manageable impact on cash flow." [http://www.cableaml.com/50Kmyth.html]
BOX 22 MMDS System
Broadband MMDS Repeater
MMDS Signal
MMDS Signal
Fibre or Microwave link
Base Station Broadband MMDS

MMDS Signal
Transmitter & System 'Headend'
Broadband MMDS Transmitter
Radius of service areas: Typically 10-30 kms
An effective multi-cell architecture with a limited number of broadband transmitters and

supporting high-powered (e.g. 'linearized on-frequency') repeaters is one suggested design
that potentially is able to service initially key areas and latterly (depending on the quality
of initial planning), with the introduction of repeaters, other 'shadow' areas. 'Linearization
techniques' have been suggested* as being able to increase the power output to be utilised
in repeaters (and transmitters) to increase their service range efficiency and this in turn
enables the network infrastructure costs to be minimised. "With systems available now up
_____________________________________________________________________________________
to 2 kilowatts in linear-equivalent power output, it is possible to capitalise on the

advantages of a distributed MMDS topology at a fraction of the cost of a centralised
architecture using channelized transmitters." [http://www.cableaml.com/50Kmyth.html]
However, for rural areas with a low populations density, such as much of the Western
Isles, the large cell architecture may have benefits, being the most cost effective situation,
although obviously the small, multi-cell architecture provides higher capacity and higher
coverage benefits, but is more costly to rollout.
Other architectures on the market such as Cable AML's 'BWA-2000' range, are designed to
operate within the standard MMDS 'channelisation scheme'. In this instance the available
bandwidth is divided into 31 channels of 6MHz of spectrum, giving a quoted 30Mbps
downstream and 2.56Mbps upstream. The architecture of this solution is outlined in Box
23.
BOX 23 : Outline Architecture of MMDS Broadband System

Source: http://www.cableaml.com/bwa2000.html
The several key elements of the MMDS system of which some may be physically separate
or part of the same array - The Headend and Base Station, the Transceiver & Repeater
elements and the Customer Premises Equipment (CPE), are shown above.
The pace of development in the wireless broadband sector is growing at a exponential rate
and new more efficient equipment is coming to market each quarter with increasingly more
sophisticated functions and user orientated interfaces. The NextNet plug-and-play CPE
shown in the photo below is typical of such developments.
_____________________________________________________________________________________
"NextNet's unique customer premise equipment integrates the data transceiver and antenna into a single compact
unit that is completely customer-installable" - http://www.nextnetworks.com/products_prod_bottom.html
The unit above allows SOHO users, via an Ethernet connection, single or multiple user
access through a single subscriber connection. Such flexibility will also be of direct interest
to the home of the future where internet access will be a family affair and multiple
connection 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 going
to become a significant component of the US broadband market. In the UK, the situation is
not so clear as the recent focus of license auctions has been in the 3G frequency of
spectrum. Most recently during September / October 2000 recent license activities have
been focused in the LMDS band at 28GHz, with a latter auction specified in the higher
frequency 40GHz band. However, it has also been indicated that that spectrum formerly
employed by Ionica in the 3.4GHz band is also likely to be up for auction before the end of
2000. But, it is not yet clear whether such spectrum is to be offered on a national or
regional basis. It is also interesting to note that BT has had an allocation in the 2GHz
spectrum 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. This
spectrum may be reallocated in the near future.
The focus in the higher band frequency spectrum is understandable given developments in
LMDS elsewhere, however this spectrum is likely to be focused in the mass market urban
locations, due to its similar reach restrictions to that of ADSL. There are however other
options in the unlicensed bands at 2.4GHz in particular and certainly in the US, where a
number of manufacturers have developed broadband wireless technology in line with the
ISM (Industrial, Scientific & Medical) restrictions of this band.
A recent report in the UK: "Compatibility between Radiocommunication & ISM systems in
the 2.4 GHz frequency band" by the Radiocommunications Agency investigated quality of
service issues involving operations in this band and these will be further discussed in a
later section. In short, in rural areas, where interference is likely to be significantly less
than that from urban areas, then there would appear to be some potential here worth further
investigation with reach, in the absence of such interference, being quoted in the 30km
range. 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
_____________________________________________________________________________________
quoted as being due to the power level limits in the ISM 2.4GHz band which has been
quoted as being a key determinant in access provision. This is an area that will be further
considered in section 6.4.
Clearly, the provision of MMDS wireless architectures are of significant relevance to this
study. However, at the same time, spectrum availability is of key importance in the overall
equation 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 situation
significantly and in any case some alternative potential based on similar technology does
exist in the unlicensed bands.
4.3 Local Multipoint Distribution Services (LMDS)
"LMDS is a broadband wireless point-to-multipoint communication system operating

above 20Ghz (depending on the country of licensing) that can be used to provide digital
two-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 from
the 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. This
has resultant cost implications and also raises potential planning related issues in both the
urban and rural context, as the public grows increasingly intolerant of such structures and
their unknown long term effects on human health.
The service itself incorporates a broadcast like down channel: point to multipoint, with the
up channel (from the service subscriber to the base station) being a point-to-point
communications link. LMDS supports both ATM and IP transport methodologies within its
network interface, the key elements required to build a broadband internet access network
around. A typical downstream data rate for LMDS is 38Mbps and this can be configured to
be symmetrical in design.
A 'base station' in such a network (refer to Box 24) will normally comprise several key
components including obviously the microwave transmission and reception equipment, but
also modulation and demodulation functions and the 'network interface for fibre
termination', whilst also in some instances including a local switching element. The
advantage of this latter element means that service subscribers can communicate with each
other 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, the
Customer Premises Equipment (CPE) (refer to Box 25) adds up to a quoted investment of
anywhere between £85-£450 per household [http://nwest.nist.gov/lmds.html], with a total cost of
nearer £700 per subscriber.
_____________________________________________________________________________________
BOX 24a: The Madrid LMDS System Architecture
Source: http://www.cableaml.com/madridtrialsystem.html
Box 24b: Background System

The system's single Base Station is located in Faro de Moncloa (Madrid). It is connected to the Headend by a two-way
point-to-point microwave link. The downstream carriers from the Headend are translated to the 28.25 - 28.75 GHz
band, amplified, and transmitted through two 180° antennas, for a complete 360° coverage at a power level of 5
Watts/carrier. The upstream signals from the subscribers in the 30.85 - 31.15 GHz band are received through the same
sector antennas, processed, and transmitted to the Headend through the upstream point-to-point microwave link. A
redundancy 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 Access
infrastructure 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 format
compatible with the Access Systems, and the equipment required for inter-connections between subscribers. Also
included is the carrier modulation and de-modulation equipment (at IF frequencies) and the RF up and down
conversion equipment for both the downstream & upstream carriers.
BOX 25: The Customer Premises Equipment Configuration
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 grow
this magic figure becomes more realistic. However, any model would require to be
business-based in the first instance to enable a commercial service to become established.
_____________________________________________________________________________________
Its high capacity and range of resultant tiered service may mean that LMDS certainly
becomes a major contender in the top end of the market, providing spectrum costs do not
inflate 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 with
their high rooftops and dense subscriber market. However, provision to residential
locations 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, many
residential neighbourhoods are not keen to be in the vicinity of microwave propagation
technologies, due to concerns over health. This will without doubt increase costs of rollout
and add to uncertainty regarding the level of service penetration achievable. LMDS has the
ultimate cost advantage though, in a world of increasing bandwidth demands and that is an
unsurpassed value of service, given the bandwidth available – in competition terms there
will be many opportunities to charge much lower monthly costs for comparable bandwidth
being accessed from elsewhere e.g. ADSL
However, although LMDS provides high bandwidth services, in comparison to the lower
frequency MMDS spectrum, there is a significant service range and resultant cost penalty
related to the additional unit cost of infrastructure per subscriber. LMDS transmissions in
the millimetre wave band are highly susceptible to rain fading (as well as foliage and
terrain) 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) LMDS
frequencies are attenuated by 4.5 dB/km, so that a small cell of 3 km radius suffers a 13.5
dB fade at its outer edge. In contrast, MMDS frequencies are affected negligibly; about
0.01 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 in
high precipitation environments, hence presumably giving fixed terrestrial infrastructure
the edge in such instances. In practice then LMDS appears less appropriate to the rural
Western Isles situation than the MMDS solutions considered previously.
In addition, in the US context one of the main constraints has been the lack of standards
within this industry. For example, some providers base their architecture around 'Time
Division Duplexing' (TDD) whilst others prefer and promote 'Frequency Division
Duplexing' (FDD) as being the most optimal method of dividing and sharing frequency
amongst subscribers. Various differences in each approaches characteristics will make one
more appropriate than the other depending on issues such as the location of the main
customer base and the 'burstiness' of the communications which prevail over time.
However, this variance in approach in the industry to date has affected both
interoperability and costs.
Two years on, after the issuing the LMDS spectrum licenses in the US, there has only been
a 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 be
close 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: "…. local
exchange telephone service, internet access, and other broadband services. It is expected
that this assortment of services will benefit not only residential and business consumers but
can also assist in fulfilling the telecommunications and information technology needs of
schools, libraries, health care providers, and rural communities"
[http://nwest.nist.gov/lmds.html]. Nevertheless, again one has to recognise the level of
investment spent on the licenses purchased, this being justified by expectations of LMDS
service revenues estimated in the $1billion range in the coming decade, as the technology
and operators mature as an industry sector.
On the other hand, one has to question the relevance and practicality of this particular
technology for rural locations, even although the latest rounds of spectrum bidding and
activity in Europe have been in this particular area – refer to section 6.2 for details in the
UK. Nonetheless, it is the promise of 155Mbps connectivity 'through the air' that is the
main attraction to service providers and according to industry commentators and
promoters, 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 greater
percentage of the investment is shifted to customer-premise equipment [CPE], which
means 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 streaming
multimedia from Web sites.
In recognition of this potential, the first wave of broadband wireless access network
activity in the UK has been in this area of spectrum, as there appears much competitive
potential to other developing technologies. A diversified and competitive access market is
a 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 the
RA, as will the soon to be auctioned 40GHz spectrum which are in many respects
competition to traditional fibre solutions at the top end of the access market for large
businesses.
Alcatel, in Europe, is an example of one of the global-level suppliers of such products and
claims to have over 100 LMDS customers installed with over 3000 base stations in service
throughout Europe and beyond. In Spain, for example, Retevision, Spain's second-largest
fixed-line operator, is currently deploying Alcatel's LMDS solution in Barcelona and
Palma de Mallorca, with further extensions planned in Valencia and Zaragoza later this
year. 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 a
commercial 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 high
population density areas ." A clear business focus, but also a clear urban focus too, for the
LMDS services. The service itself is reported as having symmetric data rates, of initially
2Mbps and 10Mbps with QPSK and 16-QAM modulation. Further increases in data speeds
are 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 to
provide 2-bits for every Hertz of frequency. The throughput in QPSK systems is thus twice the baud, where the baud can
be considered to be the basic measure for the data transmission speed. 'One baud is one electronic state change per
second', but, as this can now involve the transmission of more than one bit of data, as increasingly more advanced
modulation techniques have been introduced, transmission speeds are now increasingly measure by bits per second rather
than baud.
16-QAM: 16-Point Quadrature Amplitude Modulation, is a more advanced again, spectrum efficiency technique, which
transmits 4-bits for every Hertz of frequency. In this instance the measured transmission rate in bits per second will be 4
times the basic baud rate of the signal.
However, it could be argued that LMDS broadband wireless systems have limited
requirements for increasingly higher order modulation techniques which are both more
expensive and complex to implement, "As the modulation formats become more complex,
including multiple amplitude and phase states such as QAM, then the amplifier must
exhibit a more linear gain and phase response in order to preserve the integrity of the
modulating signals and minimise spectral pollution caused by intermodulation products"
[http://www.avren.com/main_frame.htm] as there is arguably sufficiently large availability of
bandwidth within the LMDS architecture already. It is commonly stated (e.g. WebPro
Forum) that LMDS will be constrained on distance (and the propagation environment)
rather than capacity. It is also worth noting that the introduction of more complex
modulation techniques results in a lower customer service area, with 64-QAM solutions
limited perhaps only to 2.5km, due to the increased signal strength required for its effective
implementation.
In addition, quality of service issues regarding the availability of the service will further
restrict the range of the product. This is of particular note in the UK, where the RA's
consultation paper on 28GHz spectrum has indicated that it is unlikely to feed consumer
demand services, but rather that of specific business locations such as industrial and
business parks. As stated earlier range for a 99.99% availability service is likely only to be
up to 5km at maximum, in an average propagation environment.
It is hoped within the industry that the development of the so-called third generation of
wireless telecoms will pave the way for the adopting of industry standards in the LMDS
sector, 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 its
higher 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 lack
of mobility, because of the increased complexity of signalling.
There can be little doubt that investors in LMDS spectrum licenses (28GHz) will do so in
the 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 Madrid
example. In the US, 'Touch America' provide a portfolio of 'last mile' telecoms in which
LMDS plays a significant role and is providing the range of added-value services outlined
above. Another examples from the US gives a possible indication of a potential route to
add 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 is
made available, regardless of geography."
Virginia Tech specifically targeted LMDS due to the very fact that it has been viewed as an
urban based technology and that it would be able to bid for spectrum in its own and
surrounding rural areas without competition. With a 3 month rollout, implemented by
WavTrace, this technology has been provided to rural communities and businesses at a
very early stage in this technology's development, to traditionally non-commercial areas.
By forming a 'research consortium' to progress its vision, distance learning, telemedicine
and videoconferencing have become widely available in its cell coverage areas. This
appears to be a very interesting model aimed at levering in new telecoms technology to
rural non-commercial areas and hence potentially applicable to the Highlands & Islands.
There certainly does seem to be many instances in other countries where the traditionally
thought-of public sector has been instrumental in levering in new technology which have
been poorly served by incumbents with little vision or impetus towards serving up
broadband to the non-commercial sector. Without such initiative then, LMDS or other high
frequency 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 density
present. That is not to say that such an initiative could not be implemented, with the right
combination of partnership resources, targeting multiple outcomes incorporating the wider
community 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 of
microwave broadband radio services in rural areas. As we shall see, there are particular
problems in urban areas related to the 'noisy' environment present, which do not exist in
many 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 and
Medical) referred to in section 4.2, this being a common standard at this frequency range in
many parts of the world. There are many examples of the utilisation of this band for
broadband communications in both this country and further afield, sometimes to
supplement existing broadband services in rural areas and sometimes, with the aid of a
burgeoning supplier industry, aimed at providing a cost effective broadband alternative
service to that offered by the incumbent telecoms supplier. Comment will also be made on
the viability of the higher 5GHz unlicensed band.
"For those areas of a given geographic region that do not meet the minimum number of
potential subscribers to justify the expense of an MMDS base station, using license exempt
solutions in the ISM bands offers an attractive solution to the coverage problem." [ADC
Telecommunications]
In numerous instances in the US, the unlicensed bands have been used to complement
MMDS core networks, by extending reach to shadow and other non-economic areas,
without increasing initial deployment costs significantly. Wireless routers operating
outdoors in the ISM bands are a mature technology and as such, a relatively reliable
solution and most importantly a cost-effective solution as well. Indeed many suppliers of
the ISM equipment also manufacture core MMDS technology in conjunction with RLAN
products. Indeed, there are at least a _ dozen competing manufacturers in this field who are
currently 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.com
Proxim 'RangeLAN' http://www.proxim.com
RadioLAN 'Bridgelink' http://www.radiolan.com
Western 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 the
manufacturer. Recently completed tests* showed that the Breezecom products showed
strongly 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, were
disappointing 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 encouraged
compatibility and competition in this sector. This is not the full story however, as radio
systems in the ISM unlicensed bands must comply with particular specifications. "In the
UK, RFA systems using the 2.4 GHz frequency band must comply with ETS 300 328 and
CEPT Recommendation 70-03, which stipulates a maximum EIRP of -10 dBW." [RA & Aegis
Systems Ltd]
So what does this mean in practice and how limiting are operations in the 2.4GHz
unlicensed band as a result?
The main interference which limits operations in this band come from several main sources
according to the Radiocommunications Agency (RA) in the UK. Included in this list are
_____________________________________________________________________________________
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 and
inter-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 in
the ISM unlicensed band.
Certainly in the US, and one would parallel the UK situation, wireless radio access in the
unlicensed bands has been much more feasible and indeed successful in the low density
and resultant low noise rural areas. The concentration of interference sources will be
significantly less for service operations in the ISM bands outside of urban areas and
quotations of service- reach of 32km+ are not uncommon for broadband equivalent radio
based services. For example Western Multiplex's 2.4GHz ISM product quotes service
provision out to 60km+.
There are certainly good examples in the UK where various organisations have taken the
initiative and supported the wireless broadband route. Perhaps of most note in our study
context is the occurrence of Local Authorities and Universities in England, who have
invested in such wireless technology. Lancaster University Schools Network has
networked 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's
equipment, including 3 of the main manufacturers mentioned on the previous page. In the
Local Authority sector Stevenage Borough Council has networked LANs in 9 separate
offices over a 25km2 radius via rooftop- mounted 'wireless bridges'. Their network also
includes 3 repeater stations to overcome specific topographical difficulties. Operational
since 1998, the network connections have enabled 3Mbps sustained transfer rates between
sites and over 20Mbps in aggregate throughput. The antennas used have been either
directional (18 or 24dBi) or Omni-directional (10dBi), with the core infrastructure being
supplied by Breezecom. Cost savings in both instances would appear substantial, where
previously leased lines dominated communications.
In the private sector there has also been much interest in high capacity wireless networks in
the UK, with Littlewoods recently having 130 of its UK stores inter-connected via Lucent's
WaveLAN product. Their decision to go wireless was related to both cost and a simplified
rollout/installation of the network. In addition, configuration flexibility and interface with
existing 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 same
ISM frequency band must largely have been overcome. Spread Spectrum techniques have
been the key method employed to overcome interference problems (real or potential) in
broadband radio solutions. There are actually two separate techniques employed – Direct
Sequence Spread Spectrum (DSSS) and Frequency Hopping Spread Spectrum (FHSS).
"Conceptually the technique is relatively straightforward, involving the multiplication of

the wanted information signal by another wide band signal called a spreading code…The
coded 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 the
resilience of the signal to other co-channel interference). Decoding of the transmitted
signal 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 to
achieve the highest levels of data throughput. On the other hand FHSS is generally
considered to provide a lower BER (Bit Error Rate) thus giving more protection against
interference. The only downside of Spread Spectrum technology is the high signal
processing overhead which makes it difficult to attain a high level service solution within
the ISM band whilst staying within the standards and guidelines for operations set by the
ETSI standard (ETS 300 328) and the IEEE interoperability standard (802.11b) for
RLANS.
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 speeds
at up to 2Mbps for under £50 per month including all UK-based voice calls and a free
second line, to residential and small business users. However, to do this it is quoted as
operating at the very limits of the EIRP (Effective Isotropically Radiated Power from the
network base station) –10dBW, in these 'noisy' urban environments, electromagnetically
speaking.
"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 operating
range and coverage area (because it can operate with a lower carrier to noise ratio) and
enables greater data throughput…" [RA & Aegis Systems Ltd]
BOX 26 A Broadband Wireless and combined RLAN Solution from Western Multiplex
In short then, there would appear to be some real potential in rolling out some form of
broadband wireless access systems in rural areas across the Highlands & Islands, given the
maturation of the technology (in response at least in part to industry standards) the low cost
rollout (without the need to enter an expensive purchasing of frequency) and the relatively
quite electromagnetic background, providing existing line of sight knowledge can be built
upon and used to minimise associated infrastructure costs. There is clear scope for the
education and public sectors to become the catalysts for rollout into rural communities, as
_____________________________________________________________________________________
An ideal system in the Highlands & Islands could have a licensed MMDS (regional
allocation) spectrum core system, with the use of the unlicensed bands to incorporate 'shadow'
areas, similar to what has been implemented by ADC Telecommunications in several
instances in the US. But what about the current state of spectrum allocations and auctioning in
the 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 will
only be of limited interest, as stated earlier, to rural areas due to their limited reach. 2GHz
spectrum, on the other hand, which is currently geographically limited in its coverage (i.e. it is
not a national license) looks likely to be released soon by BT, as it has never been utilised in
rural areas in the UK and may provide a commercial opportunity if released on a regional
rather 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 license
which was offered, due to Atlantic's success at operating a low power spread spectrum
wireless service. Ionica's former 3.4GHz and 10GHz spectrum also looks set to enter a
process termed 'comparative selection' before the end of 2000, according to the
Radiocommunications Agency. Again, if offered on a regional basis, such spectrum may also
present 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 developing
wireless data and telephony services in the Thames Valley region initially, with expectations
of rollout to as much as 60% coverage of the UK by 2003. Synchronous data rates of between
256Kbps and 1Mbps are offered as part of the Tele2 service, which is now increasingly
available throughout many of the regions in England.
There has also been recent interest in the 5.8GHz ISM band and the 5GHz band in general
and a recent consultation process by the RA (January 2000) has been completed. "Current
plans for these bands are based on the assumption that all services deployed will be private
systems operating on the same or a similar basis to fixed local area network facilities. Hence
a regime of licence exemption has been proposed. No assumption has been made of the
presence in these bands of any type of third party or public access services. With this
consultation document the Agency is seeking to verify whether this is still an accurate
reflection 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 the
basis 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, local
area provision to third parties would be forbidden. The Agency is aware that at present there is no
spectrum provision for local area public access to the internet. This consultation seeks to establish
whether 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 its
resultant opening up for 'local area public access' could have positive benefits to rural areas
in proximity to a main node of high speed entry into the internet. For example a company
such as Iomart based in Stornoway could provide wireless bridge broadband access to
communities up to 25 miles away at connections between 45Mbps and 100Mbps. Western
Multiplex'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. Both
operate in the currently proposed unlicensed 5.0-5.8GHz bands.
Certainly, these network extension products designed to operate in the ISM and US
designated U-NII bands provide much potential for rural areas, should a decision from the
Radiocommunications 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 GHz
band "Recommendation 70-03 permits it to be used for non-specific short range
communications at EIRPs up to 25 mW". Thus at present: "It is not envisaged that this
band is suitable for anything other than private, self-provided, low power systems". Within
the 5.8 GHz ISM band the relevant equipment specification relates to conforming to I-ETS
300 440. It should be noted that current proposals envisage the extension of the unlicensed
elements within this band to the 5.150 to 5.350 GHz, 5.470 to 5.725 GHz HIPERLAN
bands.
The responses to the RA consultation are available for viewing (March 2000) although no
final decision has been made for the future potential of this band as yet. Although, again as
outlined 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 operation
within the newly established 5GHz public bands in Canada, with proven operations already
out 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 been
quoted as being comparable to fibre optic based networks, being suitable for internet
backhaul services.
In summary, unlicensed band services would appear to provide much potential to extend
core broadband services to rural customers and further investigations outwith the scope of
this 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 telecommunications
which will be available to consumers and businesses alike in 2002/3. The first generation
of GSM mobile phones have been a true revolution in the European and UK context with
over 34 million estimated users in the UK alone, signing up / connecting mostly over the
last 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 is
itself expecting to be servicing 1 billion internet subscribers worldwide at this time. In this
sense, 3G, when it comes, may provide a significant internet access revolution, which
traditional telecom service suppliers must compete with. [Statistics from BBC Online]
Within the generation of mobile telephony products, we are currently (autumn 2000) at
1
_____________________________________________________________________________________
mobile phones. However, the first 'internet' generation of mobile telephones, referred to as
WAP (Wireless Application Protocol) phones are available in the market. However, the
market for this generation of phones has been slow to take-off in Europe with reportedly
few companies making any money from this 1st generation of internet mobile phones. It is
generally considered that the UK consumer is awaiting the next generation technology
before discarding their newly purchased standard mobile phones. WAP enabled WWW
sites are not widespread, the connection speed of 9.6kbps only allows a very basic version
of any site to be uploaded and the Japanese experience has shown this 1st generation to be
non-user friendly in terms of browsing. The phones themselves have been also been
reported to suffer from the small screen size, a short battery life and limited memory and
processing capabilities. Nevertheless, it will apparently be difficult to purchase a non-WAP
enabled phone during 2001, with 420million existing mobile users worldwide by
December 2000. [http://www.theregister.co.uk/content/archive/13307.html]. Basically the WAP
enabled 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 speeds
for internet browsing between 115kbps and 171kbps. It is called GPRS (General Packet
Radio Service). As its name implies, GPRS is a packet-based technology, which uses
bandwidth more efficiently by breaking up voice and data traffic into small chunks and
only 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 internet
users today who are used to 56kbps connections to the internet, which in reality average
between 45-52kbps.
However, recent industry (Nokia, BT, Motorolla…etc) revisions in performance now

indicate a more likely connection speed for GPRS as being in the 27-43kbps range, this
being quite a revision downwards by the industry. It is now anticipated that it will not be at
least 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 to
businesses in the South of England and subsequently a phased rollout to the rest of the
country. Consumer products will come later in the build-out programme. Lastly, along the
evolutionary highway of interim 3G technology is EDGE (Enhanced Data GSM
Environment) based GSM technology which can deliver 384kbps
and with Ericsson stating recently that its base- station
infrastructure can be software upgraded to enable EDGE services,
then this technology would appear to be realisable in the
Highlands & 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 real
interest within the realms of this study.
Although it is obvious that the developing 'interim' technology (WAP and GPRS) is of
higher profile at present. However, 3G is the universal broadband packet based
communication system which is likely to be the main competitor to any and all of the
broadband solutions assessed to date, enabling a 2Mbps (in stationary mode / 384kbps on
the move) direct connection into the internet, which in itself will open up a whole host of
market opportunities related to broadband connections, but with the additional mobility
_____________________________________________________________________________________
component. With 3G, high speed voice, data and multimedia traffic become a reality and
the 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) will
mean that mobile users of laptop PCs and phones will be able to connect to a roaming
service wherever they are in the world and access a consistency of broadband service
access. This will be a true revolution in global access to internet content, with users
connecting-in via a combination of terrestrial wireless and satellite links.
In line with the International Telecommunications Union's IMT-2000 vision, UMTS will
utilise spectrum in the frequency range 1980-2010 MHz with a 2170-2200 MHz portion
reserved for the satellite element of the UMTS systems.
Source: BBC On Line
The process of licensing 3G spectrum is in the process of being progressed worldwide

through a process of auctions and 'beauty contests'. The UK government chose the auction
route 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 the
bidders surpassed even the most optimistic estimates. A total of £22.5bn was raised in the
UK auction, highlighting the future predicted dominance of 3G technology. The table
below outlines the bidders, the money spent and the resulting blocks of spectrum bought.
UK 3G (UMTS)MOBILE SPECTRUM AUCTION
TIW Licence A – 2x15MHz paired spectrum + £4.3847bn
5MHz unpaired spectrum
Vodafone/ Licence B – 2x15MHz paired £5.964bn
Airtouch
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 £4.095bn

The one area of concern from the rural perspective from this 3G auction/purchase is that
the 'minimum coverage requirement' for the 3G licenses at auction was 80% of the
population 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 that
our 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
_____________________________________________________________________________________
& Islands that are not yet connected to a digital telephone exchange, some 10 years after
the main upgrading programme. Perhaps at the very best we may achieve broadband 3G
services 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 an
impending rollout programme, without once again significant public sector incentives, to
either 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 clear
we should be focusing our efforts elsewhere, as no doubt a 2Mbps link in 2007 will be the
equivalent to a 56kbps connection today – i.e. far from the optimum solution. On the
positive side: "..users can have multi-mode devices that switch to the currently available
technology (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.
BOX 28 Orange GSM 1800 Service
http://www.gsmcoverage.co.uk/gsm_coverage_maps.html
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 be
improved upon, due to the ability of users to link up to any available interim service from
any operator as the convergence towards 3G continues.
_____________________________________________________________________________________
There can be little doubt that enhanced GSM services (2.5G) such EDGE originally due for
commercial rollout in Europe in 2001 (although now apparently delayed until 2002 due to
equipment and testing delays) will enable enhanced 384kbps internet connections over that
which is currently available in many rural areas. However, concerns have been expressed
within the industry on the true real time speeds that will be achievable. Non-shadow GSM
areas that currently do not have access to ADSL or Cable will benefit and a new host of
services will be possible. However, there is uncertainty in the market and service providers
in Europe in particular are already considering skipping EDGE to move directly to another
standard called W-CDMA, this being the final upgrade path to 3G for GSM carriers, whilst
also offering comparable connections speeds. However, even here some commentators are
predicting that 3G may never actually be implemented in its current envisaged form due to
the 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 in
the UK? "By 2003, it is forecast that there will be nearly 1 billion mobile devices in use
throughout the world. As a result of this penetration , more people will access the Internet
via 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 the
demand for infrastructure to support and manage new wireless applications is forecast to
reach $25 billion within 5 years". [www.commonwealthassociates.com]
If we look East to the Japanese

experience then some indication of the
potential becomes apparent. In Japan in
early 1999 there was a lack of cheap
high speed internet access (i.e. dial-up
internet access was billed by the minute),
so when DoCoMo Net launched its new
mobile 28.8kbps wireless service 'I-
mode' in February 1999, within 12
months it had 4 million registered users
and now has 8 million subscribers,
making it the fastest growing internet
service provider in the world. As well as
web browsing the mobile service
portfolio includes e-mail, interactive
gaming, multimedia content and instant
messaging. However, perhaps the most
interesting statistic is that 90% of the I-mode service subscribers are first time internet
users, 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 the
technology but rather the business sector, where there has been a marked growth in the
remote and mobile elements of the workforce.
Infometrics Research in the US has predicted an increase of this component of the
workforce by 30% between now and 2003, with each user costing an average of $10,000 to
service. The US consumer market appears to be quite different however with a Forester
Research survey showing that 75% of households did not value services such as receiving
news, 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 mobile
internet revolution. Indeed a recent survey in the UK has shown that young people are
increasingly giving up cigarettes to run instead the ultimate fashion and communications
accessory – the mobile phone. This market will be without doubt be a key area for the
industry 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 young
adults of tomorrow who already have a grounding in mobile communication devices. In
this context the major investment by UK providers in 3G frequency spectrum becomes
somewhat 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 2GHz
chiefly for the distribution of broadcast material." As a BWA technology it has begun to
be exploited for the delivery of commercial broadband services in the US and other parts
of the rural Americas and beyond. In this sense it has become a maturing technology with
much apparent potential, although the question of accessing appropriate regional spectrum
still remains. LMDS as a separate technology is where most spectrum licensing activity is
in the UK at present in the BWA sector. However, due to its reach capabilities it is of
limited potential to non-built up areas such as the Western Isles and Highlands & Islands in
general, although again appears to be an under-exploited robust technology. Of
complementary and/or alternative interest to MMDS spectrum is the unlicensed band
2.4GHz and 5.8GHz products and solutions, which have the obvious advantage of not
requiring investment in operating licenses and can therefore be piloted quite easily and in a
short time frame, although having to operate within specific levels to avoid interference
within and with other spectrum. In addition, there may also be restrictions on third party
services 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 be
some years away (2003 at the earliest) for rural areas such as the Highlands & Islands, with
an expensive overhaul of GSM equipment ultimately required to provide full mobile 3G
services. Indeed, the upgrade requirements will, it has been stated, lead to a more
streamlined route to the mobile broadband goal envisaged, whatever 3G form this will
eventually take. Investors in the UK 3G licenses have however expressed some concern in
recent months regarding the technology’s ability to live up its hype in view of recent
experiences by I-mode in Japan. It appear the technology’s performance will not now be
able to handle true broadband services such as video on demand, but rather more
conservative 10-15 second video clips and this has obvious repercussions for anticipated
revenue 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 broadband
solution in line with the Western Isles' needs there are several areas which need to be
progressed and researched further.
_____________________________________________________________________________________
Firstly, with regard to mobile wireless broadband which will it appears be at least a
contributory component in our broadband future it will be important that the infrastructure
in the area is at least enabled to provide blanket GSM mobile coverage even in the most
remote communities, to ensure that the Islands are part of the mobile (upgrade) broadband
revolution which is without doubt on its way when considering the advancements in
countries such as Finland and Japan. Significant investment has been made in the spectrum
and we need to ensure that the service operators are committed to 100% coverage rather
than just the 80% of the population to which they are obliged under their current 3G
licenses. Government funding to avoid any digital divide developing in the next generation
would not seem unreasonable given policies for social inclusion and the acceptance
elsewhere, in the Americas for example, for intervention in the market to assist rural
telecoms infrastructure provision. There is not shortage of evidence worldwide to support
this opinion.
Given the state of flux in the mobile wireless broadband marketplace there may also be
mileage in entering into a research and development partnership at the Highlands & Islands
level with one or more of the current 3G license holders to pilot cutting edge mobile
broadband and ascertain its true performance abilities.
Likewise, in the Broadband Wireless Access sector, a model of establishing public-private

partnerships to lever advanced broadband infrastructure into rural communities has already
been tried and test in the rural United States. The provision of BWA links for local
authority, health sector, economic development or education services/purposes may
provide opportunities for innovative 'piggy-back' community broadband wireless networks,
with the key base station infrastructure being funded for initially core public sector
functions, but with spare capacity. An obvious private sector partner would be Cisco
systems given their presence already on the Islands. Again, these are technology solutions
that have been used by other large businesses and local authorities, educational
establishments and health boards in other parts of the country. Even if the Unlicensed
spectrum is not to be made available for ‘public’ access, there may still be opportunities for
community organisation based access to homes.
In the short-term such initiative could bring real broadband opportunities for local
communities in the Western Isles now, in a short space of time, targeting key communities
such as Ness, Lochs, Tarbert, Balivanich and Barra, where a range of multi-functions are
provided 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 telecoms

development can be envisaged, to provide a broadband solution for key communities, with
mobile solutions addressing and indeed targeting any 'shadow' communities at a latter
stage.
_____________________________________________________________________________________
ADC Telecommunications & Wireless, Inc Use of License Exempt Bands to Enhance Broadband
Services 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 Wireless

Internet 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),
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 Madrid
Multi-Access LMDS (28-31 GHz) Trial System , ( June 1999),http://www.cableaml.com/madridtrialsystem.html
Moghe, Sanjay & Roman, Vincent - ADC Telecommunications Sumi, David & Gee, Len -
Wireless, Inc. - Wireless, Inc. Use of License Exempt Bands to Enhance Broadband Services in an
MMDS Network (2000) http://www.wire-less-inc.com/solutions/license-exempt.html
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)
Phone.com, White Paper:Enabling the Wireless Internet, (February 2000) http://www.phone.com
Radiocommunications Agency, Compatibility between radiocommunication & ISM systems in

the 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 to
Workplace 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)
_____________________________________________________________________________________
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)

_____________________________________________________________________________________
5 An Overview of the Potential
FTTH and FTTC are the 'holy grail' of broadband communications and, particularly the
former, the main high bandwidth level of service to which foreseeable broadband networks
will aspire and compare themselves to. FTTH is the surest way to future proof any
broadband telecoms network today in the year 2000. It may be, that communities such as
the Western Isles of Scotland where investment in broadband interim solutions has been
largely non-existent, that a direct investment path to Fibre provides the best value for
money 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 wiring
management. That book has now been rewritten due to the dramatic cut in cost of installing fibre to the
desktop. The continued price reductions for fibre cabling and components have brought the overall cost of
fibre installation close to that of Category 5 unshielded twisted pair (UTP) copper wiring…No longer should
fibre 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-end
twisted-pair cable required for today’s high-speed networks." [www.networkcomputing.com]
In addition, new methods to provide FTTH avoiding the main costs associated with
digging up the road and pavement, are being discussed. One example is the provision of
fibre to homes via the existing sewage duct infrastructure. Given this background then, one
needs to carefully consider this 'ultimate solution' in the context of the broadband
discussion 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 near
unlimited speed achievable and the bandwidth attainable. It truly appears to be the 'holy
grail' particularly for currently under-developed rural regions. Bandwidth will not be
determined by the constraints of the technology, but rather the consumer's needs. Refer to
Boxes 29 and 30.
If our past experience and continuing knowledge of demand for bandwidth tells us
anything, it is that future demands will continue to increase at a pace faster than the rollout
of 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 due
to their limited operational life as cutting edge telecoms technology. Just 10 years ago
major investment in bringing ISDN capabilities to rural areas in our region was seen as a
major infrastructure provision of lasting effect. However, such technology has now been
overtaken before even significant market penetration has been realised and we are
assessing where our next key investment should be focused.
Unlike other broadband solutions such as Cable and ADSL which often tend to exclude
rural and even suburban locations, in the US some of the best early examples of FTTH
have been in just such areas on an initial small scale. For example Bell South in state of
Georgia installed its first FTTH network to 400 homes in the Atlanta suburbs, and as we
shall discuss in the next section there are also other examples of early rollout in the US
which 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 which
make them less ideal than the new Gigabit Ethernet based fibre systems. in terms of
service provision they are limited in the true bandwidth available to customer, typically
being 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 network
equipment required. On the other hand, Ethernet is a proven technology with a much
simplified interface which saves on cost, enables higher throughput (in comparison to
PON) and allows greater flexibility of service. in seconds rather than perhaps days or
weeks. In addition, in so far as an Ethernet based infrastructure can enable multi-service
provision down the 'pipe' consumer choice is expanded and the overall quality of service
which can be achieved, arguably higher.
" Ethernet's performance, scalability, acceptance and support, together with advances in
hardware, 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 that
the PON FTTH networks currently being rolled-out 'en-masse' in the US may not be as
future proof as the newer Gigabit Ethernet infrastructures, although from the limited
information 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 and
contain 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 head
node of the overall system. ONUs may be located on street locations or in the users
premises and NIDs, when necessary, will be located on user premises. The termination
point 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 over
traditional 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 fibres
of the same diameter, advances in the technology has made installation significantly more
straightforward, its cost is now on a par (maybe even less) with that of 'category 5' copper
and 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 service
subscribers. Clearly, the 'interim' technology outlined to date (for all its potential) is
equivalent to no more than the 2400bps connection of 1992 in comparison to the 2Mbps
DSL connection of today, in terms of quality of service. In the 90s for example there has
been 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 early
1990s, but the fundamental architecture remained the same. Fibres ran from one electronic box to another. A
laser transmitter pumped pulses down fibres made of exquisitely pure glass. On the other end, a receiver
converted 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, they
digitise 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. Further
steps make faster signals and send them through fibres.
At the fibre output, other electronics process each signal. They typically demultiplex it, breaking it into
component parts for redirection, and often combine these parts with pieces of other signals and send them
through another fibre. Sometimes they amplify and regenerate the signal, allowing it to pass essentially
unchanged through another length of fibre." [www.techreview.com]
It is interesting to note however that fibre optical cable in the communications network is
still a relatively new provision, only being introduced nationally to the backbone when
deregulation 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 submarine
fibre optic cable to meet the telecoms needs of the Isle of Wight. Then later in 1986 the
first fibre optic cable across the English Channel came into service. Two years later in
1988, the first submarine fibre cables became operational across the Atlantic and then a
year 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 often
quoted within the telecoms industry, so given future bandwidth requirements, one could
easily anticipate the revenue benefits associated with the plethora of new broadband
services to outweigh costs significantly, in the long term business cycle. FTTH trials over
the 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 to
enter, with the convergence of the internet and other consumer devices, being increasingly
integrated via 'bluetooth' wireless standards. On the business front, a fibre enabled region
becomes a significant potential inward investment site, and a potential major growth centre
for existing businesses migrating to the e-commerce, on-line revolution. As outlined in
Section 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 and
becomes one of the most significant growth centres in rural Europe.
Telecom suppliers can already make a cost effective case for supplying fibre to areas with
just 100s or even just 10s of homes, but full FTTH has remained expensive until recently
due to the terminal equipment required. However recent announcements relating to new
equipment coming to market (e.g. Marconi) price the installation of FTTH on a par with
DSL. The implementation of standards across the board will also help.
Full Service Access Network (FSAN) is currently a fibre standard approved by the ITU
and subscribed to by many of the major telecoms suppliers worldwide such as British
Telecom, Bell South, France Telecom, Nippon Telegraph & Telephone...etc. Such
standardisation of fibre access technology to homes and businesses will surely only serve
to drive down prices further of (e.g. terminal equipment) installation and supply to
businesses and homes alike.
Verizon Communications (October 2000) have identified that the key components to
enable FTTH i.e. 'aerial fusion splicing', 'self-supporting fibre cable and fibre drops', the
price of fibre itself and one-fibre 'PON architecture', have all combined to make the price
of 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 is
beginning to focus on FTTH in new build situations, with FTTC being the norm in upgrade
situations to date. However, of major interest is that one of the key initial customers for
optical fibre suppliers in the US (e.g. Optical Solutions Inc.) has been small local telecoms
suppliers using fibre to supply broadband services to rural homes outwith the reach of
ADSL and Cable e.g. Rye Telephone of Colorado City is installing fibre "to 500 homes in
a sprawling 80-square-kilometer community called Hatchet Ranch."
British Telecom's current focus on fibre rollout in the UK is focused on supplying fibre to
the 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 profile
instances. It is worth noting however, that the focus of fibre rollout in the US has
predominantly been in regions experiencing economic and population growth, where new
build opportunities have presented themselves, rather than in regions where fibre has been
supplied as a direct replacement for existing copper networks. In addition, FTTH, FTTC
and FTTB (Fibre To The Building) are in many instances in the US being rolled-out to
residential customers in the first instance. "While most optical access bandwidth providers
pedal 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 bundled
services 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 the
US 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. In
realisation of the potential lead being taken by competitors, to the incumbents, in
supplying fully fibre solutions to customers, venture capitalists have literally been falling
over 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 a
costly alternative, yet on the other hand continue to roll out ADSL, to utilise existing
copper 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 increasing
bandwidth-demand requirements onto such networks. As Joe Dooley of Optical Solutions
Inc. puts it: "…those who still believe FTTH is too expensive on a per-subscriber basis are
either ill-informed or operating from dated information." Certainly for the 60-70% of
households that can get ADSL in 'enabled' areas it is a major advance on a 56Kbps modem
connection. Its rollout in the UK remains constrained, held back by BT's resistance to
giving open access to its full local exchange infrastructure.
Even then the exchange infrastructure is proving costly for competitors at approx. £150K
per site, in addition to on-going line rental and equipment and line testing costs with only a
limited number of customers available due to the high pricing required of in excess of £40
per month for the basic 512Kbps service. Recent research for the Gartner Group suggests
consumers 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 rural
areas such as the Western Isles, though as indicated earlier, this may present an
opportunity to jump a generation in the development of broadband infrastructure in areas
such as the Western Isles. One of the main criticisms that might be directed at such interim
technology is that although it appears to provide value for money for suppliers in
conventional terms, they fail to take into account residual values. In considering FTTH one
can confidently make the case that its value will actually appreciate over time, as more
broadband services emerge to utilise the potential bandwidth available.
One would expect a high level of customer loyalty in the long term, as when new
bandwidth demands become apparent, the fibre customer's pipe can simply be opened a bit
further to enable any new bandwidth-hungry services.
Subscribers to DSL, cable, wireless, satellite…etc in this future will likely need to change
supplier and technology to meet their needs. This loss of potential revenue for alternative
suppliers in year X is not likely to be shown in conventional accounting assessments, and
as new higher value services come on line (with their associated revenues) the opportunity
cost foregone is likely to be even higher.
"For those with a vision of offering all of the services subscribers want today and the
services they will want tomorrow, an FTTH infrastructure is really a business necessity. It
is 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 the
opportunity cost of lost customers and the loss of revenue from as yet unrealised future
broadband services. To counter this potential loss, interim technology will have to be
upgrade at further cost to ? – FTTH! Hence, there must even be a case for incumbents like
BT, to, instead of maintaining an ageing copper infrastructure (in rural areas such as the
Western Isles), upgrade direct to fibre at an earlier rather than later stage in the business
cycle. Due to the additional revenue which can be attained by upgrading now, instead of
inevitably at some later stage 'down the line', after more costs have been incurred to
maintain a decreasingly reliable infrastructure and satisfy some interim broadband needs in
the short term to stave off criticism from OFTEL and others. Replacement fibre is already
as 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 entrants
into the local loop interested in building-out a long-term appreciating infrastructure, rather
than a depreciating alternative. With such a long-term perspective there can be little doubt
that 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 of
broadband in the Western Isles becomes clear, providing some innovative solutions to
address initial rollout costs can be identified. There are without doubt issues relating to
robustness 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 be
weather dependent. In Denmark such concerns have not hindered investment. The Danish
government’s ‘Info Society 2000’ programme has already stated its intention to lay down
in 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 first
instance between key sites in the country’s network not presently ‘future-proofed’ with
fibre, but which is committed to bring broadband to the whole country.
The technology is improving rapidly however to address such remaining issues/concerns

and some estimates predict FTTH being available universally throughout the United States
within 10 years, on the basis of present trends. The Rye Telephone Co in Colorado
provides an example how forward–thinking telecoms carriers are already addressing fibre
issues. Posing the question of whether to reinvest in their ageing copper infrastructure,
much of which was requiring constant upgrades, repair and extensions, a clear economic
justification for the replacement of the old copper with new fibre was apparent. This will
become an increasingly imminent decision faced by (a) carrier(s) in the UK and there
would 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 for
by DSL, Cable, Wireless...etc It should be noted however that initial ducting cables lain by
the main telecom suppliers in the US in the last 10 years contained 'dark' fibres, spare
capacity for future demand. However, the onset of internet based demand was not foreseen
on 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 for
bandwidth is unrelenting, with internet traffic said to be doubling every six months, hence
the extension of fibre networks worldwide is inevitable and the surest way to build in
future-proofing to any technology investment. "These days, telecommunications companies
can be categorised into 2 groups - the quick and the dead. The 'dead' may kick themselves for not
embracing FTTH when they had a chance. " [www.about.com]
Certainly in business terms there are huge revenue rewards to be achieved for those
businesses or indeed areas arriving first in a market with an existing and a futuristic range
of products and services able to be developed. An ever growing customer base and an
appreciating infrastructure are two clear economic reasons for FTTH. Given that ADSL
costs £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 services
for carriers of over £100 per month (Forrester Research–Beyond Broadband). In terms of
opportunity 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 a

determination of will and vision to invest heavily today in infrastructure which will
appreciate and pay dividends for communities at some time in the future.
The spending of tens of millions of pounds to provide key infrastructure for remote
communities in the Western Isles is not a radically new concept, but it is rather the nature
of 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 causeway
has 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 new
infrastructure or perhaps on the back of public sector upgrades, as suggested in sections 6
for 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 economy
of the Islands, would be unlikely to be surpassed by any other single development
commitment and investment.
The jumping of a generation from narrowband to the 'holy grail' of broadband can actually
be considered to make economic sense for carriers, consumers, service providers and
businesses alike. It is potentially a 'win-win' situation if recognised. Ideally, an undersea
fibre link to the mainland would be the ultimate solution, but the extension of current
microwave backbone links could without doubt be achieved cost effectively to support an
FTTH rollout in the Western Isles. In this respect it may be worth investigating if any of
the Utilities possess any spare undersea ducting from the mainland to the Islands. Certainly
Scottish Hydro Electric possess undersea cables for the national grid infrastructure, and
although no new undersea cabling is anticipated within the next 10 year timeframe, future
investment may be brought forward to achieve economies, should another proposal
targeted at laying an undersea link be tabled.
This aside, one must consider the economic development potential of entering such an
advance broadband market so early. Inward Investment and new business opportunities
would 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 Holographic
TV/Video, because of the almost unlimited capacity available.
As one Californian community working with their local council on a pilot FTTH project
stated – the new infrastructure will provide an invaluable asset for our children and our
community and provide a lasting legacy. In 5-10 years as the lifespan of other broadband
technologies comes to an end after being superseded by bandwidth demands, FTTH
networks installed now will continue to be appreciating in value, rather than coming to the
end of their lifecycle. Although, give the time lag in rural areas will still be only in the
middle of their lifespan in areas such as the Western Isles. In such a fast moving industry
of increasing importance it would be folly to invest heavily in a rural area in anything other
than the most future-proof technology on the market. hence, we have the main case and
justification for investment in fibre optic infrastructure.
Bates, Devon, Marketing & Comm.s Manager, KMI Corporation, Fibre-To-The-Home Approaches: Cost
Parity 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)
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 Ideal
Infrastructure 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 (November
2000) 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 face
Interconnect Issues inside the Final Mile (October 2000) http://lw.pennwellnet.com/home/home.cfm
_____________________________________________________________________________________
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)
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 vision

might not be clear. However, what is clear from the research,
which has cumulated in the formulation of this report, is the
immense development potential looming just over the horizon in
both economic and social/community terms.
It requires a strong vision
Continued economic stagnation and population decline are and a belief in the future
issues which the author discusses everyday with people from all to bring about change,
differing backgrounds throughout the Highlands & Islands. In both social and economic.
doing so the writer is aware of, arguably, the current
development paradigm of conservatism and consolidation and Development is about
the conventional wisdom of diversification. It requires a strong long-term quality of life
vision and a belief in the future to bring about change, both gains and sustainability.
social and economic. Development is about long term quality of
life gains and sustainability rather than short term materialistic
gain and it is the former that a realisable broadband future for
Children from an earlier
the Western Isles could without doubt bring, although this may age are becoming part of
not be immediately obvious to many. the digital information
society, often before their
Children from an earlier age are becoming part of the digital parents.
information society, often before their parents. What will retain
children in years to come in remote Islands like ours? – not just Our children will need the
the quality of life, but also the opportunity to earn income in line opportunity to earn
with their aspirations and attain services from this future income in line with their
broadband society in their home area. A key policy decision aspirations and attain
now could reverse youthful out-migration within 5 years, lead to services from this future
broadband society in their
re-population and attract significant publicity, awareness and
_____________________________________________________________________________________
also been shown to raise average incomes significantly, as new

opportunities are realised A decision now could
reverse out-migration,
Broadband will be the new enabling communications lead to re-population and
infrastructure for economic development in rural areas, just as attract publicity,
awareness and inward
roads, bridges, ferry and air services were in the last century. investment.
Upon this realisation, the significance of our route to our
inevitable broadband future becomes realised. In market terms Broadband will be the
the Western Isles are always going to be at a competitive new enabling
disadvantage in our current development paradigm. If we can communications
break free from this harness, and combine the potential new infrastructure for
economic development in
opportunities realisable from broadband with the unique quality
rural areas, just as roads,
of Island life on offer, then we could conceivably become a high
technology rural development zone. bridges, ferry and air
services were in the last
The increasing pace of development is unrelenting in the century…. we could
become a high
technology and communications field, meaning that any interim technology rural
investments made will never become available mass market, development zone.
before being abandoned - e.g. ISDN. Such a cycle of catch-up
may even prove to be depressingly unrelenting in the years to
come and do nothing to address economic stagnation, as new
adopter sites increasingly take a higher share of the spoils. As The increasing pace of
the soon to be published Ovum ‘Broadband Network development is
Infrastructure in the Highlands & Islands’ report states: “In the unrelenting in the
long-term (10 years+) fibre to the building will become the main technology and
access technology. This change will take longest in rural areas communications field.
where the distances and hence cost of laying new fibre will be
The Ovum ‘Broadband
the greatest.” No doubt the ‘change’ will take even longer in Network Infrastructure’
remote island communities off the North Coast of Scotland if we report states:
do not grasp the current opportunity now. “In the long-term (10yrs+)
fibre to the building will
The conclusions from such analysis are surprisingly clear and become the main access
were certainly not anticipated. A synthesis of the information technology. This change
gathered to date, points directly at fibre optic cable as being the will take longest in rural
key enabling technology. areas where the distances
of laying new fibre will be
It is paramount for the Western Isles to future-proof any the greatest”
investment undertaken. Investment in leading edge technology
A synthesis of the
now will give us an economic advantage for the first time in information gathered to
decades. We need to jump a generation, just like many of the date, points directly at
WAP-3G telecoms suppliers are already doing, cutting out the fibre optic cable as being
cost of interim solutions, which will never prove economic or the key enabling
reach mass-market status, because of the next generation technology for a number
arriving so quickly. of reasons.
Contrary to popular belief, it is rural customers (because of the We need to jump a

ageing infrastructure faced by telcos and its need to be generation.
upgraded) in the US that have been named as being the driving
force behind many fibre deployments by telecom suppliers.
It is rural customers in the
_____________________________________________________________________________________
Evidence from case studies suggests that one could make the as being the driving force
case that fibre is the most cost effective solution in the long behind many fibre
term. Not only because it has come down in price to the cost of deployments by telecom
copper installations, but because of the added social and suppliers.
economic value which could be realised. Conversely, any of the
One could make the case
other solutions would need to account from the opportunity cost that fibre is the most cost
of not providing cutting-edge fibre services. effective solution in the
long term.
It would be very easy to conclude, that a 'diversified' range of
the interim broadband solutions will be the best, most suitable
and most likely for the Islands. To achieve this in a reasonable A 'diversified' range of the
timeframe, one could envisage the need for numerous public interim broadband
sector incentives for various suppliers and operators of varying solutions will not be ideal
descriptions. In such a scenario, the chance of realising a for the Islands. In such a
radical and lasting shift in the Islands fortunes will be gone. scenario, the chance of
realising a radical and
lasting shift in the islands
The conclusions and vision outlined above however, are
fortunes will be gone.
unambiguous. Accepting the analysis provided then, begs the
question how do we get where we want to be going?
Broadband Telecoms Recommendations

• There needs to be a subscription to the principle of the This will mean that any
vision outlined above by the development agencies at the local further works related to
level, right up to the national level. The recommendation is that digging up roads,
any further works related to digging up roads, pavements, new pavements, new builds…
etc in communities
builds…etc in communities around the Western Isles, will
around the Western Isles,
incorporate the laying of ducting cable as a matter of will incorporate the laying
procedure. This level of commitment from the development of ducting cable as a
agencies will be an early way in which any future vision can be matter of procedure.
worked towards. Assessments of existing opportunities (e.g.
via the sewage pipe infrastructure) and potential for cost
effective rollout would also need to be examined.
A full cost/benefit
analysis would need to be
• A full cost/benefit analysis would need to be commissioned commissioned to build
to provide the basis on which to build the vision for a the vision and identify
clearly the goals
‘connected community’ strategy, this in effect, being the
achievable.
catalyst for the ensuing development process.
There needs to be a multi-

• There needs to be a multi-agency development partnership agency development
set up at the highest level, including local, regional and national partnership set up at the
and perhaps even international interests from both the private highest level - local,
and public sectors. A commitment from the public sector to regional and national and
upgrade its links throughout the Islands may be the necessary even international
catalyst for the private sector to build-out broadband into interests from both the
adjoining communities e.g. CnES making a policy decision to private and public
sectors.
link its offices throughout the Islands by broadband fibre, or
_____________________________________________________________________________________
undersea fibre link also

requires consideration.
• The opportunities of an undersea fibre link requires
consideration.
Wide ranging financial
assessment would need
to be undertaken to
• A wide ranging financial assessment would need to be assess the level of
undertaken to assess the level of incentive required, and incentive required, and
consequently assess the timeframe under which development assess the timeframe
could take place. under which development
could take place.
• Broadband wireless could without doubt be rolled-out on a

much shorter timescale and is the most 'suitable' interim Broadband wireless could
technology and appears to be an additional area worthy of without doubt be rolled-
out on a much shorter
additional consideration.
timescale and is the most
'suitable' interim
technology.
A Final Overview
There now appears to be a genuine willingness at regional and
national levels to stimulate long-term sustainable economic
development in the Western Isles.
As one Californian community put it, ‘broadband fibre will

provide a lasting legacy for our children’. Sustainability requires
that we consider not just this generation, but also the next. If It is time that a long
imagined visualisation of
one accepts that the ICT revolution currently happening is on a
a 'connected community'
par with the agricultural and industrial ones of our past then we in the Western Isles was
must, with this single key opportunity, invest in the correct established benefiting the
network infrastructure which will not only look after our present whole community, and
needs, but also that of the next generation. Time and having long lasting
community concepts also become a factor and if we are to build significant economic and
out a broadband infrastructure now it must also serve the needs social impacts.
of the future - 20-30 years from now. Fibre-based infrastructure
is thus the clear choice.
The current internet
It is surely time that a long imagined visualisation of a revolution and associated
‘connected community' in the Western Isles was established, convergence technology
benefiting the whole community, having long lasting significant and the resulting effect
economic and social impacts, thus achieving and indeed going on society is surely of a
beyond the present government's aim of rural social and magnitude never again to
economic inclusion in the digital broadband information age. In be experienced by our
development terms there is surely no competing opportunity current generation.
awaiting to be exploited. The current internet revolution and
associated convergence technology and the resulting effect on
society is surely of a magnitude never again to be experienced
by our current generation.
_____________________________________________________________________________________
states: providers to offer a mix of

"Arriving first to market with an assortment of current and video, voice, and data
futuristic multitechnology services is a business strategy that offers services to an ever-
whopping revenue potential. The attraction for service providers to growing customer base is
offer a mix of video, voice, and data services to an ever-growing that they can double or
customer base is that they can double or triple their revenues within a triple their revenues
very short period of time…To be poised for the future and sustain within a very short period
success, the reality is that service providers may need to upgrade of time… the reality is that
their networks sooner rather than later. Deploying a powerful, highly service providers may
scalable technology platform capable of supporting unlimited amounts need to upgrade their
of bandwidth will give those willing to make the investment to meet networks sooner rather
demand, a rich selection of next-generation services and applications. than later.
Whether it's fibre-to-the-curb (FTTC), fibre-to-the-home (FTTH), Whether it's fibre-to-the-

or fibre-to-the-office, this long-awaited technology is clearly built curb, fibre-to-the-home, or
for the needs of the 21st century. A fibre-based solution enables fibre-to-the-office, this
service providers to deliver in-demand, bandwidth-intensive long-awaited technology
communications services and add these services to a growing is clearly built for the
list of offerings at breakneck speed." needs of the 21st century.
_____________________________________________________________________________________
PART 2
Chapter 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 report
was based clearly on the notion that our society is going through a rapid and lasting change
which 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 enable
future-proof access to the Information Society for residents and businesses in the Western
Isles. Such access being considered of immediate need, to enable access to the new
‘development cycle’ associated with the formation of the Information Society. However it
is not difficult to argue that such infrastructure alone, will not necessarily maximise
opportunity, unless there is an associated concentration on the ‘soft’ infrastructure. In this
instance we are talking about the ‘people’ factor. The targeted development of the capacity
and competencies of the local resident and business population, one can argue, will be as
important a focus as the provision of the ‘hard’ infrastructure, if value for money from
such major investment is to be achieved.
Such a viewpoint provides the rationale for this part of the document which will show that
such a complementary initiative on skills development will be essential from the rural
development perspective. An overview of several key and relevant aspects of the
developing Information Society will be considered to help target and focus resources in the
most value-added areas/sectors. Consideration will be given to both the current and
developing jobs market in the ICT sector, identifying areas of opportunity for out-sourced
work from the Islands, as well areas of potential where new business start-ups could
conceivably be progressed (to target developing opportunities), given an appropriately
skilled workforce. Case studies and overviews from other experiences in Europe and
beyond will also be considered.
It is interesting to note the complementary nature of such a given initiative in view of the
developing skills shortages in this sector across Europe. Figures gleaned from studies
undertaken by Datamonitor, IDC and Goldman Sachs point to a shortfall of 1.7M workers
in the ICT sector across Europe between now and 2003. The associated loss to the EU
economy as a result will be in the region of £37bn if such shortages remain. Although if
addressed, it has been estimated that productivity gains from this sector alone could
increase GDP by 1.5%. IDC estimate that employment demand from the ICT sector by
2003 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 development
initiative in the Western Isles has the potential to ‘pay dividends’ in terms of employment
creation and GDP gains given the current market outlook. Indeed, the UK has recently
begun to relax its immigration laws for non-EU residents with ICT skills to plug the
anticipated gap. In this context an under-utilised workforce in the Western Isles is less than
an acceptable position to be in.
Furthermore, a recent EU summit on Technology, Innovation and Skills Training (March

2000) 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 Western
Isles context this makes a strategy aimed at concentrating on ICT skills development all the
more attractive. Again, what is to be considered in this part of the report was proposed at
this summit as being the possible solution to such developing problems – i.e. the
development of public/private training partnerships and a reform of the education system
in member states, along with various tax incentives.
If this supply-side friction can be negated then (b2b – business to business) e-commerce
alone has the potential to increase EU GDP by 5% over two decades. EU Development
Programmes such as the Highlands & Islands Special Programme must therefore be highly
focused 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 on
external assistance via out-sourcing to address the skills gap. “Two-thirds of the companies
Forrester interviewed experience project delays or problems as a result of staffing
struggles, 27% of which are experiencing delays lasting a year or more. Precious time and
money are spent recruiting, and even then significant numbers of vacancies remain
unfilled.”
As a result of ad-hoc out-sourcing contracts much productivity is being lost and Forrester
predicts and recommends a much more retention orientated out-sourcing environment
developing. In the Western Isles context this market situation must present a huge
opportunity, given experience to date in developing and managing such out-sourced
contracts. 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 that
meets their quality standards and targets, they will be very much interested in retaining an
on-going relationship, due to growing skills shortages. Therefore one can argue that if the
Islands can develop a value-added ICT workforce, in conjunction with the appropriate
telecoms infrastructure, the development potential would appear to be only constrained by
the number of people available for work within the Islands.
Such projections may at first appear grandiose, until one realises that numerous companies
in the EU already have been offering £1000 bonuses to staff who recommend a potential
employee who is then taken on by the company. In other instances internet technology
companies (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 potential
employee who is later employed. The internet itself is also providing direct opportunities
for freelance and distance contracting work spanning the globe. A recent survey by the
international recruitment consultants Robert Walters (http://www.robertwalters.com) found
that even junior web designers are able to earn between £20-£35 per hour rising to £50-£70
per hour for senior Java programmers. New websites have been targeted directly at this
sector – http://www.elance.com and http://www.freelanceinformer.co.uk being just two
recent 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 rural
development opportunity awaiting to be potentially exploited. This section of the report
will now go on to look in more detail at the developing market opportunities, examining
case studies and relating them to the Western Isles’ development context.
_____________________________________________________________________________________
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 of
innovative new ways of working. T&O is typical of the new work perspective of those EU
citizens included in the new Information Society. E-commerce, knowledge management,
globalisation of trade and markets, virtual learning and skills development, smart
organisations, organisational teams...etc are all concepts with which such persons are
familiar with, if not active within. The changing roles of the worker in the Information Age
are already becoming well understood: doing work/managing work/selling work/buying
work….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 are
being pursued. New questions related to: Do particular aspects of work necessarily need to
be done in-house?, or can they be out-sourced to specialists? are being asked, whilst just
several years ago the very concept of out-sourcing work was one to instil universal
nervousness at the management level in particular. A changing market where demand for
labour has outstripped supply in the ICT sector has now made the asking of such questions
a necessity rather than being questions for the large corporate, only being acted upon to
achieve some profile raising PR.
The potential for such activity has also increased, as the customer or client in the
Information 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, enabled
by flexible technologies. In this context the potential for location-independent out-sourcing
development and teleworking increases further, providing the key infrastructure is present.
In this case where the potential opportunities for the key infrastructure recommended are
already identifiable, the opportunity cost in economic terms of not proceeding are
calculable and likely to be high. This is a far removed scenario when ISDN-enabled
exchange infrastructure was rolled-out across the Highlands & Islands, where minimal
thought, arguably, was given as to how we might use it. The question: How can we use the
new broadband technology and skills to improve the way we work and create new
opportunity? is already being asked and considered within this document and by several
other initiatives within the wider Highlands & Islands context.
Technological developments (e.g. broadband communications) opens up new opportunities

for work in 3 main ways according to Botterman & Johnston, 1999:
1. Technology enables existing activities to be done more quickly, more consistently

and at a lower cost this means we can achieve more for the same expenditure in
time, 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 had
to be performed in a particular place.
3. Technology enables new activities to be undertaken, which previously were
impractical 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 to

specialist skills on a flexible basis. In short, one can make a direct correlation to the arrival
of the Information Society and the availability of the appropriate technology, combined
with the availability of the principal skills and knowledge required. The former can be
utilised by applying the latter to enable enterprise and opportunity to generate the activity
required 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 far

as the term is used in several differing contexts. Teleworking in the context of this report
will be taken to mean a new way of working for people in rural areas which is line with the
first 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 specific
skills which are utilised by distant businesses on a contract basis. This is the type of new
opportunity for remotely based rural populations which has been secured in the Western
Isles of Scotland in recent years and which will be discussed further in the focus on the
Western Isles experience during the last three years.
2. The telecommuter who remains employed by a centrally located employer, but who may
work from home several days per week. This is perhaps the most commonly perceived
idea of how to define a teleworker. It is this concept which generates most enthusiasm
among urban-based decision-makers wishing to reduce urban congestion and
environmental (air) pollution.
3. The term encompassing people who work from of a non-central (i.e. rural) telecentre or
telecottage, who perhaps previously needed to commute and are largely involved in work
for urban businesses. This form of teleworking received much publicity in the UK during
the rail strikes of the early 1990s when commuters had repeated problems travelling to
London from the large rural commuter belt of South East England and began to turn to
their locally based telecottages which previously had been largely non-commercial
community 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 a
distance, increasingly via Call Centres in the UK. One such example in Forres in the
Highlands of Scotland employs several hundred people largely for the processing of
parking fines in the London Metropolitan area of South East England. BT, the major
telecoms provider in the UK has also sited a UK national helpdesk facility employing
similar 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 skills
shortages, such work will only find its way to ‘location independent’ rural areas if the right
infrastructure is complemented by the appropriate skills base. This is without doubt the
challenge for the Western Isles in the next phase of the Information Society development
cycle. So what are the opportunities in the ‘new economy’ for teleworking & outsourcing?
_____________________________________________________________________________________
There are numerous case studies of teleworking development across Europe which we can
examine and analyse in the context of the Western Isles. One can consider some of the key
elements and projects originating from each country which is or has aided the development
of this sector.
The Ötztal Telecentre, in Umhausen (Tyrol - Austria), is a good example of a rural ICT
initiative originated in 1996 which was aimed at up-skilling the rural population (mostly
the farming sector originally – ‘IT for farmers’) to encourage new teleworking
opportunities by providing a core of broadly skilled ICT residents. By 1999, 100 farmers
had completed the courses developed. The success of this project led to it being available
throughout Austria by 1999 and a further 250 people throughout the country were
undertaking the course in that year. The project was a success in that it took the skills
training to the rural dweller via investment in telecentres and included a wide range of
basic application training. Since the project started a core of 10 teleworkers gained
employment on an e-commerce initiative being progressed by a large Austrian record
dealer.
Other notable contributions from the Austrian experience include the development of
‘model contracts’ for teleworking/outsourcing, a factor which in some instances has helped
to 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 that
there is a promotional effort required here in the Western Isles instance given the unique
experience to date. Making available on-line, examples of past successful contract
agreements/specifications or alternatively entering into the consultancy market in this area,
are but two opportunities of relevance from the Austrian experience, which may address
traditional industry’s concerns in teleworking.
Of additional note in the development of the future skills resource required by a successful
economy in the Information Age, Austria was one of the first countries to offer free
internet 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 interesting
examples 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 groups
of skilled teleworkers in particular areas of expertise i.e. C++, Java, Delphi, SQL, Visual
Basic, HTML, DHTML, Cobol, Assembler, WAP…etc and does business with distant
clients. Such a model appears clearly focused on addressing and exploiting the current
opportunities opening up in the EU ICT market, where shortages of skills are leading to
outsourcing 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 and
provides the potential business development model for highly skilled groups of
teleworkers, operating in a future island context where broadband is available.
Like Austria, Belgium has been doing much to lay the foundations for the next generation
of the ICT literate and aware population. By 1999 95% of the population had access to
2Mbps+ broadband internet connections, predominantly via Cable. Such high specification
core infrastructure allows a potential level of internet literacy much higher than many of
Belgium’s rivals and will generate new broadband-based services in advance of other EU
_____________________________________________________________________________________
In Denmark there have also been notable contributions to the development of location-
independent working. For example - Excel Data (http://www.exceldata.dk/) an information
systems and e-commerce consultancy has recently been involved in a successful satellite
office initiative. Such initiative is very much in line with the innovative presence the
business wishes to portray to its customers. It is such pilot initiatives by high profile ICT
sector businesses in the UK that the Western Isles must be in a position to exploit. As ‘new
ways of working’ projects (e.g. teleworking) are increasingly ‘fashionable’ image building
events for innovative ICT companies and consultancies.
Denmark as a whole is often described as being one of the best placed EU countries to
exploit the developing information society. As such, its Ministry of IT & Research recently
produced the document ‘Realigning to a Network Society’ which states:
“Denmark has commenced its conversion to the society which is going to take over from
the industrial society: the network society. In all aspects of life - work, training and
education, leisure time, culture and trade and commerce - this will offer a large number of
new technologies and possibilities…The challenge will be to exploit the future possibilities
by realignment in all areas of our economy and society. In short, the challenge is to make
Denmark 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 for
the 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 existing
incumbent. The second priority also relates to broadband, in the form of the development
of UMTS networks. The promotion of broadband provider-based competition on a nation
wide basis including Denmark’s many rural areas and island communities to include all its
citizens is an area in which the UK would do well to emulate. The Danes were also one of
the first countries to adopt ECDL, having developed several earlier version on a similar
theme. Most recently the Danish Ministry of Education have developed the ‘Educational
Computer 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 in
Europe with 16.8% of its workforce being involved, with Sweden, The Netherlands and
Denmark being not far behind.
Not surprisingly Finland has been one of the key countries in the EU which is keen to
address flexible and teleworking via the use of ICT. Indeed the use of ICT has been quoted
as being the driving force behind the transformation in traditional work practices in
Finland. The Finnish ‘Telework Theme Group’ (http://www.uta.fi/telework/english/),
a multi-agency initiative aimed at progressing a national ‘telework development
programme’ 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 the

Western Isles of Scotland. Finland itself is considered to be several years ahead of the rest
of Europe in the ICT sector with, for example, very high rates of mobile telecom
connections – 70.4% of the population compared to just 31.8% of the population in the US
and 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.
_____________________________________________________________________________________
With regard to preparing for the Information Society, Finns have had free access to the
Internet via their public libraries for some time now. Such initiative could be considered
desirable in the Western Isles regional context via both centrally located facilities and
mobile facilities for rural areas. Such integration of public services with ICT services could
be considered as part of the preparation for an island context in which teleworking based
on out-sourced employment contracts across broadband networks to/from the islands has
been realised.
What is particularly interesting in the Finnish example is that: “…the typical teleworker in
Finland 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 upon
him.” [http://www.sak.fi/].
Right across Europe much progress is being made in the teleworking field. In France for
example, the French Telework Association has been in extended talks with France
Telecom regarding future opportunities. In Germany the Ministry for Education and
Science has teamed up with three of the country's trade unions to develop an ‘employee
orientated telework consultancy’ service (http://www.onforte.de/English/english.htm).
Amongst other things the site and associated service give advice and legal guidance for
teleworkers, provide examples of best practice and give access to examples of previous
contract agreements which have been undertaken successfully. Furthermore, an indicator
of momentum relates to the number of major German ICT consultancy firms increasingly
list teleworking as one of their ‘specialisms’ e.g. TA Telearbeit -
(http://www.ta-telearbeit.de/tahtml/we_english/indexengl.html). Such initiatives have
relevance to the UK.
Ireland has a population of 3.8 million and over the last several years has been referred to
as the ‘Celtic Tiger’ because of its booming economy. The Call Centre industry has played
an important part in its growth. Skills shortages have already become apparent in this
sector, with great demand for persons able to speak a second European language.
Previous issues of poor working conditions and 'burnout' among staff have improved as
skills shortages have led to an improvements in conditions with starting salaries now being
in the region of £IR10-14K. Ireland has already demonstrated that the Call Centre industry
can be a valuable contributor to employment geared around out-sourced activities. This is
of special note within this study context as the Call Centre industry is the fastest growing
sector in the Highlands & Islands of Scotland employing over 2500 at the end of 2000. It
is interesting to note the demand for language skills in this industry as such centres expand
to the European level. A second language appears to be an increasingly in-demand skill
which will complement the core ICT skills of persons in this sector and expand the
European 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 Western
Isles?) has also been recently been complemented by the organising of business breakfasts
for corporates related to the opportunities in teleworking in Ireland. In addition, on the
infrastructure 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.
_____________________________________________________________________________________
Finally, Ireland has also taken a major step forward for such members of the workforce by
signing up and ratifying (only second country to do so) the International Labour
Organisation's (ILO) Convention on Homeworking. This gives such workers the same
rights 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 working
population involved in teleworking) and Sweden (15.2% % of the working population
involved in teleworking) are also worth mentioning, in so far as they have spawned several
projects worth noting in the context of this study.
In the Netherlands in recent years one of the most impressive examples of new ways of
working is related to the idea surrounding the functional office, designing office space to
be more compatible with the home environment. Oracle, in attempting to boost company
productivity, 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 data
centres, all achieved in a period of seven months.
With estimates of approximately 80,000 to replace a member of staff in an ever

increasingly competitive ICT market, Oracle accrued significant annual savings and
measurable increases in staff productivity. This particular project won the Dutch Telework
award 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 200M
and funded over 50% from government sources, is aimed at encouraging teleworking
among between 10,000-25,000 persons living in the Hague-Amsterdam-Utrecht triangle
during 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 paradigm
shift in big businesses’ obsession with scale towards a more humanistic workplace of
smaller scale (with a sense of community, company loyalty…etc) units /centres will have
obvious benefits for outsourcing initiatives to rural areas such as the Western Isles. In this
instance one must hope that this socio-economic experiment by the Dutch proves as
worthy as several others piloted by the Dutch years before being introduced in the rest of
Europe. As the ICT based jobs market becomes increasingly competitive from the
employer perspective, models of working based on employee retention and productivity
must surely gain ground, hence potentially providing increased opportunity in areas such
as the Western Isles
According to the Netherlands Telewerk Forum:
“Teleworking has become part of the culture in certain companies, and advertisements with
teleworking as a secondary term of employment are also appearing. It is also in line with steadily
increasing educational levels, independence and personal responsibility. For the companies
themselves, the argument that teleworking needs to be introduced not only in order to keep good
people, but also to attract new personnel if certain expertise is becoming scarce in the immediate
vicinity is becoming stronger.”
_____________________________________________________________________________________
An anticipated replication of such a scenario and thought processes across Europe also
shows 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 teleworking
in the internet economy has been made.
For example Bredbandsbolaget (http://www.bredbandsbolaget.com/eng/node85.asp) has

articulated the importance of broadband to enabling increased teleworking in Sweden and
has also set out to wire every household in Sweden with at least a 10Mbps Ethernet fibre
broadband link. Telia, the main telecoms player in Sweden is also keen to extol the virtues
of broadband and the opportunities in provides for teleworking and videoconferencing.
Sweden as a whole has committed itself to high-speed broadband internet access for
everyone in the country and this has been backed up by government legislation and a
resulting public-private partnership to implement ‘the world’s best information technology
infrastructure’.
The government sponsored report which initiated this drive, further stated that such
infrastructure would lead to significant growth everywhere in the country, whilst
increasing global competitiveness significantly and therefore resultant employment
growth. In the Western Isles context this report is in effect making a similar case on the
micro scale in the absence of any similar national scheme in the UK. It is clear that
broadband and new opportunities related to new ways of working in the new economy are
inter-related and some areas will grow and flourish and others will continue to lag behind
at perhaps an ever increasing rate. The Western Isles in effect must find the commitment
that the Swedes have shown on a national scale, to reposition their economy in advance of
future changes in society. By doing this they will be perfectly placed to exploit new
opportunities in the new global digital economy of the 21st century. In short, it appears that
Sweden as a nation is already undertaking many of the proposed preparatory works
required to ensure that it will be a major 21st century economic power and the quality of
life 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 an
economic issue, but a major issue which will face policy makers in many uneconomic
areas (e.g. the Western Isles) unless early adoption of the appropriate development
strategies are implemented in advance.
So what about the UK then? It has been estimated by the EITO that by 2004, 10% of the
UK’s total workforce will be involved in teleworking. This situation places us far behind
the more technology progressive European countries whose early adoption of new ways of
working may very well give them a competitive edge. Nevertheless, there is a growing
commitment in the UK to the concept of teleworking, particularly in recent times form
government sources, as witnessed by this selection of reports recently published:
Teleworking and Local Government: Assessing the costs and benefits – Ursula Huws
Working Anywhere - DTI
Managers Guide to Teleworking - Dept. of Employment
Moving into the Information Age – an International benchmarking study - DTI
The British and Technology – Motorola Report
Teleworking Britain – MITEL Report
Pay and Conditions in Call Centres – Incomes Data Services
_____________________________________________________________________________________
In short, there is a cultural change taking place in the UK, albeit at a slower pace than
many of our European counterparts where more progressive workplace legislation and
government policies are making an impact . Teleworking, Outsourcing and ‘new ways of
working’ are being given increasing status by both government and business alike. Areas
and organisations with past experience and a work history in the sector must surely be
increasingly strongly placed, providing infrastructure develops in such areas at an
equivalent 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 with
the rate of the development of teleworking. In some instances even the size of the average
house in a particular country has been shown to be correlated with teleworking penetration
at the national and regional levels. In summary, an increased commitment to the
Information Age at national and regional levels in even a generic sense will, one could
confidently speculate, lead to an increase in new ways of working and doing business over
the next decade.
At present some watershed developments have happened in the UK over the last 12
months in particular. Specifically, the type of projects required for out-sourced teleworking
to become a reality in a location independent industry. The development of new e-lance
and free-lance sites on the internet have developed, at least in part by necessity to address
increasing skills shortages throughout Europe. Such developments were going to be
predicted by this report and their related opportunities highlighted. However, 12 months is
a long time in the Information Age! Nevertheless, the development of such specific sites
looking to contract out work to highly qualified, highly paid, skilled teleworkers in the ICT
industry, 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 the
European ICT skills gap is addressed over the next decade. Indeed, some of the jobs still
advertise potential candidates to be based in certain areas of the country, but it is not
difficult to predict a much more geographically flexible scenario, particularly with
broadband video conference communications just around the corner.
In this sense the development of a highly skilled workforce in the Western Isles will not
necessarily lead to out-migration, as has been the case in the past, providing we focus our
future efforts on the areas of most opportunity. It is such specifics we will address in the
next section on e-commerce and the digital economy.
_____________________________________________________________________________________
Indeed, other sites such as www.elance.com and http://www.robertwalters.com/which

are predominantly US based, in most instances have no geographical preconceptions and
_____________________________________________________________________________________
Such sites have complemented the already booming recruitment sites spring up all over
Europe and North America. Such employment opportunity information and active
recruitment 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 track
record in the provision of skilled employees in the first instance, giving such individuals
the industry experience required to return and develop new business ventures be they
virtual 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 for
geographically-dispersed specialists, for example, makes telework more desirable for
businesses now than in the past. Telework in turn, forwards the evolution of post-
industrialism by facilitating decentralised production, integration of geographically
dispersed 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 the
1990's to increase the flexibility of employment (to reduce supply-side friction) and
increasingly focus on project orientated (time-limited) tasks often involving team-based
approaches would appear to have created a labour market situation which should be ready
to embrace out-sourced teleworking on a significant scale. To date, such outsourcing has
not been a common phenomena to teleworking initiatives, although as indicated above this
is beginning to change. A clear opportunity is thus apparent for an area such as the
Western isles which already possess a track record in teleworking.
In this sense it is also worth mentioning outsourcing to Call Centres – now one of the
fastest growing employment sectors in the Scottish economy. In so far as these Call
Centres can be location-independent they are also of interest within the context of this
study. Indeed in the Highlands & Islands of Scotland, as stated earlier, there are now over
2,500 people reliant on this industry, one of the fastest growing in recent memory. Added
value opportunities will bring their own demands in the Call Centre industry, many more
related to inter-personal and communications (written & oral) in both English and another
EU 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, issues
related to distance and its potential impairment to teamwork are all of consequence when
considering new ways of working. On the wider level we must also consider market
competition, instability and societal change.
In this sense teleworking/outsourcing can be thought of as not only a technological

innovation but also a sociological evolution of the linkages between managers and
employees resulting in new organisational structures and new and innovative business
processes both between businesses (b2b) and between businesses and the end consumer of
their goods and services.
_____________________________________________________________________________________
7.3 Teleworking & Outsourcing, Europe’s New Economy & the Western Isles
Given the preceding discussion and overview, what are the key
opportunities related to teleworking, outsourcing and new ways
of working developing in Europe and the UK of relevance to the
Western Isles?
It is essential that we understand the areas of developing

opportunity within the EU economy (in the first instance) which
can be exploited using ICT, in order to be able to identify the
types of skills that are going to be in high demand several years
from now.
In summary, drawing on the European experience to date we

can immediately identify several areas of opportunity of
relevance to the Western Isles:
• The development of virtual teams of skilled teleworkers, with aThe development of

web presence and a track record appears to be a clear virtual teams of skilled
opportunity for development. The local public sector could be teleworkers, with a web
presence and a track
utilised to help establish credible and relevant track records for
such teams. record appears to be a
clear opportunity for
• The parallel development of on-line course and module development.
delivery (via UHI) in the core skills demanded, has been shown
to be of significant benefit to other rural areas. eg European
Computer Driving License (ECDL)
• The provision and availability of past contracts

specifications/agreements for scrutiny by potential business
The availability of real
providers needs to be progressed, to convince and satisfy
examples which can be
middle-management that such out-sourcing contracts have quoted and from which
been shown to work successfully in the past. The availability of testimonies can be
real examples which can be quoted and from which secured is also of key
testimonies can be secured is also of key importance. importance.
• The provision of a commercial consultancy service to aid
structural change in urban areas, with set targets for the
securing of outsourced contracts to rural areas (i.e. the
Western Isles) would also appear to have some potential to
assist teleworking development.
• Opportunity for a parallel service to provide national free phone

advisory service for teleworking enquiries for both business
and teleworkers and website. Also initiative based on business
breakfast for key businesses has already been piloted
successfully elsewhere.
Promotional campaign to
• Promotional campaign to highlight the ‘cool’ of rural satellite highlight the ‘cool’ of
offices within new economy sector – A statement of progress – rural satellite offices
‘we have the technology know-how to even run an integrated within new economy
office from the Outer Hebrides of Scotland’ . Opportunity for sector.
_____________________________________________________________________________________
unique team building events in rural context from beach

barbecues to orienteering events. New ways of working pilot
projects, projection of positive image to customers…etc Parallel campaign to
promote Islands as a
• Parallel campaign to promote Islands as a perfect location for perfect location for re-
re-locating teleworkers, to bring new skills into the area along locating teleworkers, to
with new contacts and possibly employment. bring new skills into the
area along with new
• Highlight Swedish & Danish examples to The Scottish contacts and possibly
Parliament - of forward thinking in action which is as committed employment.
to broadband in rural areas as in urban centres.
• Opportunities for skills development to mature in-line with Opportunities for skills to
growth in outsourced customer service centres (call centres) to mature in line with growth
provide new level of communication, inter-personal and foreign in outsourced customer
language skills, in addition to key ICT skills. service centres to provide
new level of
• Teleworking initiatives in areas such as the Western Isles communication, inter-
require to capitalise on both public sector and market personal and language
momentum to lever in both investment and jobs. In the view of skills, in addition to key
the author, it may take a proactive decision by the public sector ICT skills.
in the Western Isles in the first instance to give new
teleworking initiatives a track record and therefore a
competitive foothold in a burgeoning growth sector.
As already stated, it is going to take a proactive public/private

partnership to be the catalyst for the types of development discussed
to date. An idea of possible funding priorities in this sector was
It is going to take a
provided in 1998 when the EU allocated funding to ‘Telework
proactive public/private
Conversion Projects’ throughout Europe, with the following funding
partnership to be the
breakdown: 50% of funding for equipment and infrastructure 30% to
catalyst for the types of
business process re-engineering and 20% to education.
development discussed to
date.
In conclusion, it is very much the view of the writer, given the
above case studies and their relevance to development in the
Western Isles teleworking context that a real opportunity exists
in this sector. In the new economy, outsourcing - be it to call
centres or individual teleworkers or indeed teleworker teams -
A real opportunity exists
will generate significant new activities in non-traditional non-
urban locations for business and commerce. The rural Western in outsourcing, - be it to
Isles may have an opportunity to secure such business, given call centres or individual
teleworkers or indeed
the appropriate skills base and key infrastructure discussed in
teleworker teams - will
Section 1. The specific skills demanded are already becoming
generate significant new
apparent as one browses the emergent number of freelance activities in non-
and e-lance websites being rapidly developed. traditional non-urban
locations for business
It is no surprise that the most heavily subscribed FE and HE and commerce.
courses in the Western Isles are in the computing field. The
change is taking place in education, as demanded by the
public, but there is a worrying lack of realisation of how we will
begin to meet the economic development needs of future, now.
_____________________________________________________________________________________
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 the
business's core competencies and out-sourcing non-core functions, such as customer
support, to specialist companies under contract. Early successes in teleworking in the
Western 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 become
established – 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 CSC
to this study? Well, as mentioned previously this is a key growth sector with specific
opportunities for development to enable an increasingly competitive future for rural
locations. As we identified in the Irish example, as the industry grew so did the demand for
bi-lingual staff to service European-wide demands. In context, this is no surprise. Most of
this demand was said to have been fulfilled by immigrant workers. It is thus clear that in
the Scottish/UK context there is a clear opportunity to plug such a gap and gain a
competitive locational advantage in advance.
If one subscribes to the idea of an ever closer integration of the UK and Europe, then an
increasing amount of opportunities will present themselves. As the personal computer has
penetrated widely into both homes (over 50% in several of the Scandinavian countries) and
offices during the last decade it has increasingly changed the way business is done and
transactions completed (e.g. online purchasing). The knock-on effects have been that
business, (particularly ICT companies) has also had to modify how it operates. For
example home PC users (and more recently internet TV users) are increasingly requiring
both telephone and e-mail feedback and assistance 24/7.
Why? – because they are utilising an increasing range of on-line services and have
increasingly high expectations of e-commerce demanding instant service and solutions.
As Europe increasingly integrates then the advantage will increasingly go to areas that can
provide either bi-lingual or multi-lingual staff able to service the wider European market
where similar customer demands are present. Indeed, one could foresee a situation where
the SME sector in the UK is going to increasingly require cost effective multi-lingual
customer services, as they increasingly embrace business opportunities, e-commerce-led
or otherwise with their European neighbours. In terms of skills development this would
appear to an area of significant future potential. Recruiting bi- or multi-lingual staff with
the appropriate experience and skills is not an easy task for the UK SME sector. “There
has been a particular increase in demand for multilingual staff. Multilingual candidates
are 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 has
developed a specific qualification integrating both ICT and EU language skills. This would
appear to be an area UHI could also legitimately develop and integrate perhaps right
through its new degrees. Such graduates one might argue would be very much sought after
commodities 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 can
resolve their problem in their native tongue."
Other location factors mentioned by LiS in Call Centre location relate to the presence of a
vibrant community, with an excellent choice of affordable housing and a safe environment
for young families. The Western Isles could thus be expected to compete strongly in this
sector for these reasons and a host of others already well documented – available
workforce, low staff turnover, increased productivity, low costs of development (assisted
area status)…etc. The development of broadband and appropriate skills development
would surely lead to a highly competitive situation for inward investment, as mentioned in
the introduction to this document.
It is not entirely inconceivable that the potential to provide everything from pre-sales
enquiries to aftersales support across Europe, for specific SME ‘niche’ products/services
being 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 opportunity
in the new economy such added-value CSC functions are real and early entrants will be
able to establish a track-record in advance of the limited competition. An area such the
Western 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 the
potential to be outsourced is that of Cap Gemini. Cap Gemini is the largest European
provider of consulting and information technology services. Its Business Process
Management has been developed to address the needs of businesses considering the
outsourcing of some of their non-core current functions. As such this appears to be a
development 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 housing
benefit applications. Three London burghs also outsourced the annual processing and
payment collection of 300,000 parking tickets. Scottish Hydro-Electric outsourced call
centre services to cover enquiries, emergency and complaint calls.
The Cap Gemini Call Centre is referred to by the company as a business process
management facility. Interestingly the company initially sought the following attributes in
its 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 business
park, for many of the same reasons as those quoted above demonstrate the growth potential
of this sector in the rural Highlands & Islands context. Appropriate focus on skills
development and the associated infrastructure required in the Western Isles can lead one to
confidently predict future success in this sector, if targeted.
Such facilities can also provide invaluable ‘first’ job experience for school leavers and thus
help retain an increasing number of our youth. For example such facilities could provide an
invaluable opportunity for school leavers to earn some money prior to entering higher
education, whilst also giving them key transferable skills. Sponsored employee
programmes could also be on offer for top performers, to enable the retention of links with
the company and islands.
In short the CSC sector is an area of outsourcing which can potentially provide new
opportunities in an otherwise stagnant Islands economy. It utilises the opportunities
developing in the new economy and has the potential to establish a wide range of positions
pertaining to a range of jobs of differing skills and pay levels. It is the type of 24/7 service
orientated 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 must
consider the true buzz-words and their meaning and relevance to development in the
Western Isles. In many respects they are fundamental to future economic and indeed social
development. In this sense they are more than just buzzwords. They are the driving force
behind all the recommendations and analysis provided in this report. Exploiting them
effectively is arguably, to be the measure of success of any area within the EU within at
least the first half of this new century.
With telecommunications going digital and even wireless, an expectation of high speed
broadband internet access being universally available anywhere, anytime is becoming
persistent – 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 annual
expansion 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 UK
it is available in close to 50% of all households.
Deregulation of telecoms markets has resulted in the increasing globalisation and

horizontal and vertical integration within the industry, stock market flotations…etc
National boundaries and associated laws are becoming increasingly blurred as
technological convergence occurs and barriers to trade are reduced. The sheer volume of
international trade occurring has increasingly made the collection of import taxes and
duties 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 driving
forces behind globalisation of the market place it is increasingly becoming the enabler for
many industries as they recognise that both their competition and customer base is
becoming increasingly global, and therefore need to act appropriately and expand/diversify
their operations to compete. ICT is hence certainly central to such development.
The globalisation of markets, e-commerce and the development of an inclusive information

society has the potential to increasingly shift the current global economic system to that of
one approaching perfect competition.
Full access to product and service information will become increasingly the norm and
comparisons 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 the
booking of air tickets. In other instances generic price comparison sites have developed
http://uk.pricerunner.com/ which enable consumers to get the best prices in the UK or
indeed 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 services
which possess particular value-added attributes. Indeed, on the type of price-listing
websites referred to above ‘value-added’ sections in the product categories are already
developing in response to the near perfect competition on price increasingly being
experienced. In this sense the unique distinctiveness of the ‘Hebridean’ product will
provide many potential opportunities in the global market. Although it needs to be
recognised 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 do
not enter the global market at an early enough stage. It is imperative that the Western Isles
becomes a central player in the move towards the new economy, for if it is not, the threat
of further marginalisation within the Scottish/UK economy, nevermind the global
economy, appears to be a real prospect. There can be little doubt that our better connected
urban counterparts will compete directly for ‘scraps’ in the digital economy, as location
independent work becomes available. The Western Isles cannot afford to become a
peripheral player, as further losses to the economy will ensue, as well as much potential
new activity being foregone. A standard economic cost-benefit analysis will demonstrate
the need for investment in this sector now.
However it is worth noting the other side of the argument with regard to advance provision
enabling participation in the digital economy. There is a particular school of thought that
will argue that unless demand-side activity can justify investment in broadband and skills
_____________________________________________________________________________________
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 a
lack 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 of
promotion by BT and a lack of development impetus on the side of the agencies to
encourage 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 SME
sector 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 the
horse before the cart. We are talking about requiring the key infrastructure to enable
participation in a major economic and social opportunity, where nobody really knows what
the end use of such broadband technology will be. Increasingly innovative methods will be
employed requiring an ever changing set of optimum skills. Hence, awaiting demand to
lead to the supply of infrastructure will in this instance be self-defeating approach, as
innovation effectively develops where the conditions are right.
Whilst one can argue that the availability of optical fibre and maybe even wireless
broadband telecoms is likely to be a prerequisite for attracting inward investment, it should
be remembered that such strategies by development agencies will only lead to limited local
multiplier effects in themselves. The key to the regional development of the information
society must concentrate on the developing of indigenous SMEs and related
entrepreneurial activity, whilst enabling social inclusion.
In this context there can be little doubt that in areas of current 'market failure' such the
sparsely populated (low demand) areas of the Scottish Highlands & Islands, the absence
of the appropriate ICT broadband/mobile infrastructure and associated convergent
economic activity & skills development, is likely to prove a future inhibitor of
investment and economic growth.
Yet, on the other hand, such areas in the new location-independent information society
potentially have the greatest attraction to the new breed of ICT business with their high
quality of life perception. However, without early recognition of these opportunities
exclusion will be an inevitable consequence.
The UK government and its telecoms watchdog OFTEL have articulated their aim for the
UK to become a centre for e-commerce, but unlike Sweden and Denmark and several other
EU countries, there is no apparent commitment for all its citizens to be central players in
the new e-commerce revolution. The problem seems clear within the current policy
context, which we will discuss further in the next chapter. A widening gap with regard to
digital 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 products
in combination with their limited bandwidth (e.g. ADSL, Cable) and initial apparent
reliability problems does not augur well for future rural rollout timescales. "Given that the
market for broadband is in its infancy, current data usage will become increasingly critical
as 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 means

unexpected 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 revenue
streams 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 current
situation 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 as
the 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 be
marginalised from it. To paraphrase the wisdom of the experts 'in five years time there won’t be
any Internet companies because they will all be Internet companies or the won’t be companies at
all’" [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, this
quotation increasingly rings true. The ‘bandwagon jumpers’ without any solid business
acumen have been found out and cast aside ruthlessly by the market, hence the well
publicised demise of the dot.coms. Nevertheless, in business circles there was little
surprise 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 flavours
business to consumer (b2c) and business to business (b2b). The economics are simple.
For example in the banking sector costs can be reduced significantly:
BOX 31 THE COSTS OF BANKING
1.2 1.07
Cost Per Transaction ($)
1
Internet
0.8
PC Banking
0.6 0.52
ATM
0.4 Telephone
0.27
Branch
0.2
0.01 0.015
0
Internet PC Banking ATM Telephone Branch
(Source: Booz-Allen & Hamilton)
The introduction of the Euro, will herald a new transparency in pricing among European
countries 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 for
both the consumers and potential e-businesses alike. Furthermore, for the banking sector
the potential of attracting a pan-European customer based will become a reality. One
wonders about the potential financial sector developments still to be realised in relation to
_____________________________________________________________________________________
It may be that the UK's reluctance, to date, to embrace the Euro may give future
competitive advantages to continental banks in the new networked Europe. “Support for
the 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 UK
participation 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 the
present include technical (encryption/security), legal (regulations), economic (short-term
capital costs), user-friendliness (ease of access through PC, TV, mobile phone), cultural
(mistrust of technology), and quality (of products & services available)…etc Many such
issues are being actively addressed by government and industry.
However, getting back to the economics, for the first several years of 21st century business
to 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 reliable
suppliers are found. This will inevitably lead to intense competition and ultimately a
significantly better deal potentially for SMEs.
With regard to rural locations this will mean an enlargement of market opportunities
combined with more competitive input costs. The increasing focus on b2b from b2c by
recent high profile examples such as Urban Fetch and LetsBuyIt are characteristic of such
a movement.
Nevertheless, there is a core of goods and services that are already commonly traded
between consumers and suppliers on-line e.g. books, CDs, PC games, holidays and an
increasing range of ‘white’ goods and consumer electronics. This range is continuing to
experience a dramatic increase in quantity, choice and diversity. The successful internet
entrepreneurs of the last several years and without doubt the next several years will be
those individuals who can recognise the on-line commercial opportunities in advance of
the masses, for particular goods and services and have access to the appropriate skills and
technology 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 prerequisites
well-known in economic theory. Specialised infrastructures for the organisation of
commercial 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 of
Shinjuku in Tokyo with respect to electronics), and more recently malls of various sorts in
suburbs of cities…..Another essential cost feature associated with commercial transactions
is of course the information search cost preceding a possible transaction. In transaction
theory these are called the ex ante transaction costs…. On both accounts, information
highways are likely to significantly reduce costs. The emergence of virtual malls is likely to
replace the physical infrastructure; the information search costs are similarly likely to
_____________________________________________________________________________________
become significantly reduced due to the ease of electronic access and the available
databases on products and suppliers. " [Luc Soete, Maastricht Economic Research Institute 1999].
Again, this highlights the economic fundamentals which will drive the digital economy. So
lets be very clear in recognising this current move towards the digital economy. It is not a
passing fad, it is a global economic revolution, a new way of doing business, which is as
potentially relevant to the Western Isles as it is to London. However, the process is more
complex than it appears on the surface.
A significant element of this commerce seems likely to be derived not from the simple
substitution 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 for
example PC/Internet banking has been a new, increasingly widespread and innovative
development in the banking sector which has even spawned new businesses (and
competition) in a sector where traditional barriers to entry have been high. Such services
are 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 the
basic level the new ways people are finding to trade on-line. A recent high profile example
of this method relates to the recent energy crisis which led to blackouts in California. In
response 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 should
stabilise the market and drive the price of electricity down…This is a key step in our efforts
keep the lights on in California at a reasonable price." [California State Governor]
"
Others such as Napster ( www.napster.com) are fundamentally changing traditional
business models related to the distribution of music, despite vast commercial interests in
the traditional model.
In other instances price comparison sites such as http://www.toobo.co.uk/ and

http://uk.pricerunner.com/ are redefining the art of sales and marketing by providing
no-nonsense bottom-line information to consumers on price alone, from a vast range of
competing sources. New forms of ‘adding value’ to more expensive products are thus
being pursued by suppliers in an increasingly dynamic and growing marketplace.
A whole host of new financial services related to on-line share dealing, betting, mortgage
applications, insurance comparison and arrangement sites, investment opportunity
sites…etc are all challenging the traditional way that businesses interact with their
customers and each other. Business information portals for UK SMEs
http://www.is4profit.com/business_directory.asp and www.b2byellowpages.com are
also already widely established. Other b2b innovations include specific company and
business research tools downloadable to the desktop such as that available from
http://www.1jump.com/ .
“Microsoft questioned key executives from 400 major UK organisations on the progress
and future impact of B2B e-business initiatives in the UK….B2B e-business is a priority
issue 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
_____________________________________________________________________________________
Forrester research estimated in December 1999 that b2b e-commerce was set to grow in
the US from $108 billion in 1999 to $1.3 trillion by 2003, a level approximately ten times
that of b2c. Indeed, it was estimated that during the year 2000 more than 50% of US
businesses begun selling goods and services on-line. Theoretically, there is no aspect of a
business’s activities that fall outwith the e-commerce b2b sector. From the purchasing of
raw 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 to
which B2B E-commerce represents the largest productivity tool for the economy over the
coming 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 no
explanation, a revolution is happening.
B2B is not limited by the number of consumers with PCs and the number of them that are
on-line, the number that are on-line with unmetered access, the bandwidth of their
connection and then the number of them that feel confident enough to purchase over the
internet. B2B’s growth in comparison to b2c growth is thus going to be significantly
higher.
The following diagram highlights this situation in the US context:
B 32
BOX
The digital economy is thus a well acknowledged business trend, so much so that it would
be accurate to describe it as a structural change in business and commerce. With a
sometimes quoted 1-2 year lead-in time for e-commerce enabled businesses, there is a
danger that traditional economy businesses which have been slow to invest may see their
market share disappear, by the time they get geared-up for the new economy. Referring
back to the very first quotation in the opening lines of this section, it thus seems clear that
the areas that are both most appropriately geared-up and switched-on to the new digital
economy will be the ones that reap the benefits in the long run. The business case for the
_____________________________________________________________________________________
Western Isles to invest heavily now to become part of this evolution to business revolution
is hence self explanatory. For example:
"Electronic exchange is likely to lead to a substantial reorganisation of markets with the

value chain shifting across business. The phenomenon of outsourcing is typical of such
reorganisation. As witnessed in the rapid growth of business services, activities that are
not part of the core manufacturing or service production of the firm can now be carried
out more efficiently outside of the firm, in specialised companies." [Luc Soete, Maastricht
Economic Research Institute 1999
The Western Isles’ economy must be able to up-skill and up-grade its communications
network to be in the right position at the right time to exploit such opportunities. A radical
and focused approach to future development initiatives is therefore recommended, squarely
centred on the structural and cultural change necessary to attain success for the present and
more 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 both
social and commercial use and also to overcome particular region’s ‘communication
deficit’.
The project includes funding for a nationwide broadband telecoms network proposed by
the Electricity Supply Board (ESB), numerous e-commerce projects and initiatives, and
also the deployment of innovative broadband solutions such as WLL and DSL in many
rural areas with an inherently poor communications infrastructure.
Interestingly, the ESB’s choice for its new network is 2.5Gbits/sec fibre which is
apparently already being rolled out on the ESB’s electricity infrastructure between Dublin
and Limerick. A strong emphasis has been placed on public-private partnerships, as has
been recommended within this study and initially 13 such projects were approved. There is
little 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 moves
if we are to compete and succeed in the Information Age. There would appear to be a
unique opportunity for Europe's periphery to become more economically and indeed
socially integrated into the new EU internal market and beyond.
The expanding EU internal market would appear to be an ideal breeding ground for
inclusive e-commerce development, particularly when combined with a common European
currency. 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 on
competitors…etc) will be negated and the opportunities for the periphery-based SME will
be 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 and
social challenges facing Europe today... "
_____________________________________________________________________________________
The eEurope Initiative (to be discussed further in chapter 8) currently being promoted by
the European Commission’s Information Society Directorate is thus aimed at:
∫ Bringing every citizen, home, school,

business and administration on-line
∫ Creating a digitally literate and

entrepreneurial Europe
_____________________________________________________________________________________
∫ Ensuring a socially inclusive

Information Society
As a microcosm of Europe the Western Isles could do a lot worse than subscribing fully to
such themes which will bring about not only a population integrated into the Information
Age, but also one which will be well placed to exploit new business and social
opportunities. Sweden and Ireland are two examples in which such themes and targets are
being embraced. Scotland, the Highlands & Islands and the Western Isles all appear to be
unclear 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 sceptics
who question the demise of the dot.coms as being anything other than a blip are the ones
who will lose their competitive advantage as we move incessantly towards the digital
economy.
Some good examples of the growth of e-business can be reviewed via the following portals
which focus on growing SMEs online:
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/
As we shall ascertain in the next chapter, it is within the SME sector that UK efforts in the
e-business/e-commerce are currently focused. SMEs are going to need assistance to
restructure their operations and realign themselves within the new economy. New ways of
working will have to be adopted, as key Information Age skills are not necessarily going to
be present and therefore they must be able to adapt to survive.
_____________________________________________________________________________________
The Spectrum Business and Consumer Surveys (1997) in support of the ISI ‘Moving into
the Information Society’ publication showed that there was a large gap between the usage
of ICT between large and small companies. It was identified that SMEs in the UK in
particular should be a key target sector – "These companies need to be the focus of
government, trade association and large company efforts to stimulate UK development
towards the Information Society…As SMEs are so pivotal to the UK economy, it may be
that the route to achieving the Information Society will be through winning the hearts and
minds of SME management."
As a result of this analysis the ISI has been squarely focused on the SME sector in the UK
and 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 not
just the UK, but Europe also, will provide a range of potential key opportunities for the
Western Isles economy.
In summary then, e-commerce is not being progressed for any other reason than
economics, as indicated at the start of this section. The incentives related to gaining a
competitive advantage by reducing operational costs, streamlining business processes and
improving communications with customers has led to the current e-commerce revolution.
E-commerce: “…cuts across geographic boundaries and time zones to save time and
costs, to open up new market opportunities and enable even the smallest of companies to
compete on a globally. Electronic commerce spans established processes such as bar code
scanning and electronic data interchange (EDI) as well as newer arrivals, like e-mail, the
Internet, 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 the
potential to offer key opportunities which will be location independent. Given the
anticipated 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 present
outsourcing opportunities and enable new business models and entrepreneurial start-ups to
operate as effectively, in many instances, from a Western Isles location as from a London
location. Availability of the appropriate broadband technology has already been discussed
as being one of the key pre-requisites. An appropriate skills base along with the supporting
policy environment are also of key importance. So, now that we have established the
magnitude of demand and opportunities related to the digital economy we now need to
more clearly focus on such issues to help aid the anticipated development process. This is
what 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 College
London, 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: 3rd
Generation 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 Internet
Revolution: 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 in
Developing the Euro-Mediterranean Information Society, Summary Proceedings.
EU Publication, DG Information Society, IST 2000, Office for Official Publications of the European
Communities, Luxembourg, ISBN 92-894-0042-0
EVANS, Owen, Policy Officer, BT Parkgate, Cardiff, Wales, Building the Welsh Economy on Global
Digital Infrastructures ,IST Conference Helsinki 1999.
FOLIAS, Christos, MEP, Trade and Technology as Global Drivers of Local Economies, IST Conference
Helsinki 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, Equity
Research.
HEIKKILÄ ,Pauli, Managing Director, Digita Oy, Value and Value Creation in the Digital Economy, IST
_____________________________________________________________________________________
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 Mindsets
towards flexibility and entrepreneurship in the Information Society, Presentation of the Irish Initiative, IST
Conference Helsinki 1999.
LOCATE IN SCOTLAND, (1998), Call Centres in Scotland – Where the Accent is on Success, Scottish
Enterprise Publication.
MARSHALL, Ian W. and ROADKNIGHT, Chris, BT Labs, Adastral Park, Martlesham Heath Ipswich IP5
3RE, 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:Internet
Commerce 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 of
Maastricht Website: http://meritbbs.unimaas.nl/soete Towards the Digital Economy: Scenarios for
Business IST Conference Helsinki 1999.
TRISTRAM, Clive CHKS Ltd., 1 Arden Court, Arden Road, Alcester, B49 6HN, England Ethical Issues in
Healthcare Telematics, IST Conference Helsinki 1999.
US DEPT. OF COMMERCE, (Oct. 2000) Falling Through the Net: Towards Digital Inclusion, Economics
and Statistics Administration.
WAGGONER, James & Mlinar, Gavin (January 2000), The Vertical B2B Sector, Sands Brothers
Investment 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 a
Mobile Information Society, IST Conference Helsinki 1999.
ZALE, David & Waggoner, James., (July 2000), The Business-To-Consumer E-Commerce Sector, Sand
Brothers & Co Ltd, Investment Bankers.
ZAMINDAR, Marya, (1995), Telework in Finland – Factors Behind Telework Use as Seen From an
Employer Perspective, Ministry of Labour, ISSN 0787-9393
_____________________________________________________________________________________
INTERNET SITES ACCESSED FOR RESEARCH PURPOSES:

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/
www.b2byellowpages.com
http://www.is4profit.com/business_directory.asp
http://www.1jump.com/
www.elance.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/
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http://www.gs.com/hightech/research.html
http://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 the
unimaginable in new forms of partnerships, seem to be the sacred blessing when we look at
qualifications 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 with
any authority the key skills and human resource requirements of the digital economy. What
is clear is that there is going to be a deficit of 1.7 million of employees across Europe by
2003, as mentioned earlier in this report, which if not addressed will seriously undermine
the EU economy. This deficit is already apparent. As such this deficit presents a key
opportunity for rural areas in so far that it is this deficit that will force key businesses
throughout the UK and Europe to investigate and adopt ‘new ways of working’ to address
such 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 being
demanded. Again, it needs to be reiterated that unless such skills and human resource
development is undertaken across the board, the rollout of broadband will neither make
sense nor be justified, unless such supporting development is secured and widely available
to be accessed by the Western Isle’s population. If one gives the population first class
communication links in the information age, coupled with the skills to utilise it to generate
new 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 the
Island’s future place in the Information Society will be shared throughout the community
and 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 to
identify the types of opportunity and the specific skills required by such an area as the
Western Isles. One is also then able to begin to identify how we might achieve the desired
outcomes 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 this
parallel initiative is recognised then key targets and milestones will need to be set across
all sectors of the community, if we are to ensure that universal social and economic
inclusion is achieved. In theory, the new technology aspects of the Information Age will
often be as relevant to the pre-school child as to the OAP. It may be the move towards
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already developing opportunities for persons with the right skills in the new economy, even
if 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 through
last year’s downturn in confidence in the ICT sector as a whole. Although some share
prices may have fallen, this has had little to do with performance and more to do with an
initial over-valuation of stocks and subsequent adjustment. Recruitment demand is still
high as intimated above and forecast to significantly outstrip supply. Although many
efforts are being made in a number of areas to address such issues, a local response to the
opportunities identified is essential if the area is to develop along the appropriate
development path.
"…although the flow of people from the education system with IT qualifications is rising, this will
not in itself be enough to ensure that employers are able to recruit people with the combination of
skills and aptitudes which they seek…Some skills mismatch is inevitable given the rapidity of
technical 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 UK
economy and hence is a good place to start. Unlike many other UK industries a significant
number of businesses in this sector have been, and continue to, experience double figure
growth rates on an annual basis:
BOX 33 GDP AND SOFTWARE & SERVICES COMPARED
% Growth
18
16 Software & Services
14 GDP
12
10
8
6
4
2
0
-2
1987
1988
1989
1990
1991
1992
1993
1994
Year
1995
1996
1997
1998
Source: Office for National Statistics (1998 Est. for S&S sector)
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This sector has been characterised by market expansion, increasing global competition,
technological development and innovation. People are the key to the current and future
prosperity of this sector. During the 1990s in the UK, the supply of such skilled personnel
failed 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 evened
out, the overall trend in demand remains upwards.
One of the key points highlighted by the DfEE’s ‘Skills for the Information Age’ report
was that: "…many roles in IT services are suitable for people without deep technical skills at the
point of recruitment, with many employers often most interested in transferable, interpersonal
skills 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 ICT
Advisory Service has sought out new teleworking jobs. Likewise, at the Iomart Internet
Service 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 would
appear 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) as
has attitude and enthusiasm. With regard to the latter, the school leaver market would
appear 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 through
time into the local ICT sector would be desirable. A collaborative approach by the
public/private sector to employ this target market whilst sponsoring them to gain official
qualifications could be a win-win situation. In theory, one could ‘snag’ school leavers by
the enticement of earning money to go towards the ever increasing cost of studying on the
mainland, then offer an alternative day-release route through UHI or other provider and/or
sponsor the most able after a two year period, tying them in to return to the Island or
company for a certain amount of time after graduation.
Ultimately, the future of the Island’s development capability depends on achieving success
in retaining potential youthful out-migrators and their associated ICT skills. Future
entrepreneurial activity and ICT business start-ups are essential in the new economy. The
associated development of a new business start-up venture capital fund by the public
authorities may also help drive such development.
However, as outlined above, excluding the software and systems development (and
management) functions, it would appear that the ideal employee in the high growth
software & services sector in the 21st century will need quite a different range of skills that
what one might first have imagined.
In the IT Services sector _ of employees are likely to be managerial, professional and

technician-level employees, many being accepted from other occupational groups. In the
telecoms and electronic manufacturing sectors a significantly smaller number of employees
fit into the above categories, being replaced by electrical and electronic engineers and
production operator and assembly staff. It is the former sector that is likely to be of most
relevance to development in the Western Isle's context. The Information Technology,
Communications and Electronics Skills Strategy Group (ITCESSG) findings show that
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recruitment problems in the ICT sector in the UK with associated salary inflation. This
would appear to be a ripe market for teleworked outsourcing, particularly given that the
supply of appropriately qualified staff is going to be in increasingly short supply in urban
areas in particular.
The ITCESSG's findings also state that there is a specific demand for: "…people who
combine up-to-date technical knowledge and problem solving ability with good communication
skills and the capacity to 'understand other people's businesses'. " Such a finding is entirely
consistent with the more widespread convergence of numerous business sectors in the
Information Society.
Capacity building in the technical field is still an opportunity nevertheless, as recent

research by IBM Global Services has estimated (taking into account Y2K demand, the
possible entry of the UK into the Single European Currency and growth in the wider
economy) that future employment growth rates in outsourcing and internet-related activity
by/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 International
Data 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-wide
would rise to 12% of total demand by 2002. Again this confirms previously quoted
statistics and as a result there would appear to be a clear opportunity here for outsourcing
to a highly skilled Western Isles labour force.
Recent estimates by the Labour Force Survey (LFS) still conclude that: "…insufficient
numbers of students with the skills and knowledge required to work in the ITCE industries are
emerging."
Other findings from the ITCESSG study are also of note. IT businesses gravitate towards
graduates, even with non-technical specific degrees, due to their perceived analytical and
conceptual skills. On the other hand although the electronic sector is much more discerning
on 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 would
appear 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 the
numbers of people with technical skills coming through the higher and further education routes to
increase sufficiently over the next few years to meet the growth in demand, unless more able young
people – 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 and
impersonal and this does not appeal to either many young people or women. Such an
assertion is illustrated by the low numbers of each entering the industry. As a consequence
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if up-skilling is to be achieved within these two key groups then a parallel campaign of
awareness-raising and education about the sector needs to take place.
A parallel and on-going effort to attract more people into the industry via skills
development may be necessary to add-value to a parallel development of broadband over a
minimum of 5 years. Perhaps initially targeted at those persons available on the skills
register. A complementary campaign to encourage business outsourcing to the Islands
skills base of teleworkers could then be a logical next step.
The DfEE’s ‘Skills for the Information Age’ also recommended the on-going importance
related 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 to
National Information Systems Skills Framework – which describes the skills and key
competencies required for different IT jobs, the ladder for career progression and the
qualifications 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 being
critical:
1. Oral Communication
2. Problem Solving
3. Team-Working
4. Improving your own Learning
5. Business Awareness
6. Creativity & Innovation
There would appear to be a clear opportunity to link UHI degrees into such key
competencies and a range of new tailor-made courses designed specifically for the ICT
sector. A recently developed website http://www.career-space.com/ demonstrates how
seriously the industry is addressing the projected skills shortage. Sponsors apart from the
European Commission include IBM Europe, Nokia Telecommunications, Philips
Semiconductors, Thomson CSF, Siemens AG, Microsoft Europe, and British
Telecommunications Plc. The on-line presence itself is aimed at a: “…project is to put in
place a clear framework for students, education and training institutions and Governments, that
describes 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 and
to: “..provide higher education ICT curriculum designers with clear up-to-date and easily
accessible information on the skills needed by the industry, and assist Governments in developing
policies to foster the growth of ICT skills in Europe.” As such, this initiative in addition to the
above report, provides important pointers as to where investment in skills develop should
be 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 artistic
2. People who are excited by technology
3. People who have a liking for science and mathematics
4. People who good communications skills
5. People who like dealing with people
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To date there have been 13 generic job profiles in various sub-sectors with a full range of
supporting information provided, aimed squarely at filling the skills gap. A comprehensive
set of recommendations has been formulated which require careful consideration if key
opportunities are to be exploited. These recommendations are included in Appendix 7.
This new strategy “…requires quick cost-effective responses. The 'ICT Consortium' calls
therefore for immediate, effective and concerted action by the European Commission, the Member
States, industry and the educational institutions to address the skills shortage and to establish: A
New 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 increased
convergence related to doing business and being integrated into the ICT sector. NTOs are
accredited 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 Gemini
that brought Higher Education and industry together to consider and promote career
opportunities in the ‘IT Services’ industry. The project was completed in March 2000 and
is 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 UK
alone and targeted its initiative at not only attracting more students and young people into
the 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 on
looking at employability skills now and in the future and involving employers, educators
and students to help the changing of perceptions on all sides with regard to what each other
was/is doing. This lack of communications/understanding is arguably, apparent in the
Highlands & Islands context and again arguably, at the local Western Isles level. There
does not appear to be an overall visionary strategy that each ‘segment’ of the market has
enthusiastically 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 looking
for in graduates, rather then just IT skills. Indeed, the significant majority of respondents
from the SME and large business sector stated that they are quite happy to recruit non-IT
graduates, as they did not necessarily require ICT skills at the point of entry. Both students
and employers identified skills awareness and work experience as being two of the most
valuable activities that could be undertaken. The project itself and resulting advisory
booklet: “Have you got what IT takes?” won the top prize in the category ‘Best Higher
Education Careers Literature’ and as such is also a credible piece of work, The six key
skills required by any graduate were identified by the three main interest groups
involved in producing the report:
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• Teamworking
• Problem Solving
• Improved Learning
• Business Awareness
• Creativity and innovation
BOX 34
As Box 34 demonstrates, the awareness-raising effect among groups of students from the
‘arts & humanities’ faculties broadens their employability significantly. Where previously
the IT Services sector was considered to be a career path closed to such students for a
range of reasons which were largely misconceptions, once recognised, it is a legitimate
aspiration from a whole range of disciplines.
As can be quite clearly explicated from the three separate skills development initiatives
discussed above, there are core skills that must be developed to support the development of
e-commerce and ICT related industries. A common misconception among students and
educators is that such industries are looking to employ ‘techies’ but this is not necessarily
the case as there other more important skills of the nature mentioned in the above
discussions. One would have to look to UHI in such a context to increasingly work and
consult with the IT sector within and beyond the Highlands & Islands to build and
integrate such core competencies into its new degree programmes. Other key areas
identified in this research relate to the importance of work experience and a second EU
language, if we are clear about looking to and addressing the future skills requirements of
industry in the Highlands & Islands and beyond.
Ultimately, UHI degrees need to offer something more to employers in the Highland’s and
UK’s fastest growing industry (which is suffering from an increasing skills shortage), than
standard degrees from traditional Universities. Such degrees need to be ‘21st century’
enabled and address key developing market requirements. UHI arguably, therefore needs
to work closely with the IT sector along the lines of the Gemini project in South East
England and market itself and build its reputation upon producing such graduates. It is
after all marketing itself as being a technically innovative educational delivery
establishment and has an opportunity to produce graduates that will be sought after by an
industry that has been involved in agreeing and approving the key competency strands
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problem solving, team working, work experience…etc. The UHI initiative at introducing
PPCs linked to degree programmes is very much compatible with such thinking, but needs
to 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 areas
that are relatively straightforward to identify by considering industry trends and more
specifically developing industry demand. There is a clear parallel opportunity here to build
up key technical skills within the community of the Western Isles for example which will
provide opportunities for new business start-ups to address developing market skills
shortages in the UK and Europe, given the location independence of much of this work. As
outlined in the introduction to section 6, by 2003 there is going to be an anticipated 1
million e-business related positions shortfall [Internet Magazine, Dec. 2000]. One could
anticipate that this unsatisfied demand will lend itself, particularly in the technical skills
context, to an increased level of outsourcing – refer to sections 6.3 and 6.4. Existing
structures in the Western Isles such as the Lasair teleworking model may directly benefit or
such workflows may also target the call centre model at varying scales.
Could there be an opportunity to complement the Highlands & Islands Learning Grid
proposal with broadband telecoms being delivered to rural ‘outreach’ centres to that of one
providing key advanced rural ICT workspace infrastructure to address future potential
demand? Obviously such an initiative would include a certain amount of risk, as all
advance infrastructure does. On the other hand such key infrastructure may open up a
multitude 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 totally
complementary and potentially an innovative added-value development model. It may also
be the catalyst to ‘kickstart’ the proposed H&I’s Learning Grid. In rural development
theory ‘best practice’ relates to the integration of skills development with that of
developing industry opportunities in rural areas.
Returning to the key areas of developing demand for technical skills there are several areas
of obvious demand. Richard Bowery, MD of internet recruitment site CareerPlus has
identified one of the key opportunities in his experience: “The demand for web skills has
never been higher and there’s simply not enough trained technical staff to go around…the
message is clear – get a smattering of Internet knowledge under your belt, and you’ll
become 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 ensure
that 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 actual
ICT degrees evidence of work experience in the web development field is considered
essential by many within the industry. “For web developers…for the commercial side,
experience matters more than qualifications, so evidence of work placements is highly
regarded.” [Richard Jones, AS Manager, Sourcethatjob.com, Dec. 2000]
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Overall, and somewhat surprisingly, skilled ‘web developers’ are said to be one of the
rarest commodities in the market, presently commanding major salaries and bonuses across
UK industry. An outsourcing business opportunity must surely reside here and therefore a
potential drive towards plugging such a skills gap via new skills training has the potential
to 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 recruitment
site Boldly-go.com: “The single most valuable skill a techie could learn to augment their
value in the market place would be customer-facing skills and commercial acumen. These
are the skills that will outlive any development tool of the day. A lack of these
interpersonal 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 skills
on the technical skills development course. This is an important point and one that if acted
upon appropriately could give ICT-sector graduates from the UHI a competitive advantage
in the IT-services supply market.
This sector is also an increasing focus of the UK government as well as the European
Commission, as mentioned earlier. Employment Minister Tessa Jowell has recently stated
that the UK government will be increasingly focusing on improving IT skills, The UK
government’s Skills Task Force estimates that at least half a million further IT workers will
be needed over the next ten years. In this sense it will be imperative to raise the profile of
outsourcing to rural areas as a key policy not only in practical terms but also in regional
development terms. Given the focus, a clearly targeted strategy should be able to attract
substantial development funding, in light of the wide range of indicators which identify the
clear needs with the developing e-business sector.
So where might an IT skills development focus concentrate? When we are talking about
web development / programming skills we are talking about Java and C++ the object
orientated programming languages, these two in particular being considered to be ‘the
most sought after’ according to the Robert Walters Salary Survey report in August 2000. In
addition, the need for ‘good’ database skills was also stated as being an increasing
requirement within the industry. Additional key skills requirements, according to the same
survey, for web development include Flash, Dreamweaver, Javascript, Cold Fusion and
Active Server Pages in particular. The outlook for such skills is considered to be strong as
competition 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 should
be 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 to
be 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 sites
include Photoshop, SQL Server Programming skills, Perl Programmers, HTML and
Oracle. According to the most recent labour force survey by NTC Research: “.. Java,
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designers are still in short supply. Permanent skills most advertised for included Java and
C++ programmers, software design engineers and telecoms engineers.”
In summary, there is a clearly identifiable range of skills demanded in UK industry and

commerce in particular aspects of IT and Communications. Perhaps the most significant
challenge is in identifying the key areas of future demand. There is always the concern that
by the time any strategy up-skills potential employees in the industry, that the industry will
have 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 will
lead to the type of employees who in their particular industry will have to continually
update their skills in any case, as skills in programming languages make the transition to
other a relatively painless experience. Some UK firms for example have been employing
C++ 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 difficult
to employ at present.
There is clearly a bottleneck within the supply of the UK and European IT & Telecoms
workforce which is predicted to continue and thus presents, as mentioned in section 6.4
and 7, a real opportunity for rural economies to integrate into the Information Society by
providing 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 the
recent staff cuts at tech firms, according to research out today. The news comes from UK
bank LloydsTSB, who has been conducting a survey into staffing levels for the last eight
years. The findings show 56 per cent of firms have difficulty recruiting skilled business and
IT services staff. This compares to just one in five companies reporting recruitment
difficulties 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 consequences
for the economy should skills constraints remain. Decreasing output and resulting
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addressed, with periods of boom and bust as continual readjustments are made in response
to 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 towards
what is termed the Information Age, the opportunities this presents and areas of demand
for specific teaching and learning strategies.
As indicated in the introduction to chapter 7 the achievement of broadband will require a

complementary and indeed advance up-skilling of the Western Isles skills base. If achieved
and the clear opportunities for employment and income targeted, then the development and
integration of the area’s economy into the Information Age will be secured. To achieve this
it seems clear that there is a need for at least two separate up-skilling initiatives, one
focused on generic ‘graduate’ skills of relevance to the IT industry and the other focused
on the appropriate mix of IT skills for industry. It will need to be accepted that this later
initiative 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 & Islands
in particular. At the same time there needs to be an increasing involvement by industry and
commerce in the up-skilling process, both advisory and financial. The latter in recognition
of the new key role in the development process that the teaching & learning sector can
address in the future – i.e. the supply of appropriately skilled staff. If not realised, then
industry will ultimately be the one that suffer the consequences as chronic skills shortages
occur.
According to ‘Skills in the Information Age’ – DfEE, there are too few examples of Higher
Education and industry colluding within the UK, although there are numerous examples in
the 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, was
highlighted as an example of best practice in the UK where response times to the needs of
the 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 Scotland
situation.
"Some businesses pointed out that the willingness of education institutions to work with
them varied enormously. It was reported that the newer universities and colleges were
likely 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 such
developments 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 to
equipment and practices.
For the ‘development’ agencies, similar to industry and commerce, there needs to be a
clear recognition of the role in our economy’s structural change of the teaching, learning
and training efforts by both UHI and other existing or potential private sector market
entrants. A teaching & learning sector in the Western Isles that is adaptive to the dynamism
of the ICT sector and able to supply the skills demands of industry will need on-going
development 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, the
development need required to progress the skills initiatives outlined can be achieved. As in
the Broadband section, there is no escaping the need to pull the area’s resources by
forming an inclusive partnership with local, regional and even national interests
represented.
If not achieved a key opportunity will be lost. The private sector by its very nature is not
able to invest heavily in taking staff on without the key skills and training them, for fear of
losing them to competitors after investing much. The education sector does not receive
development 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 a
difference. So, if a responsive and continually developing skills sector is to be achieved in
the Western Isles, then clearly some new innovative partnership initiative is going to be
required to aid the area’s transition into the Information Age.
The dual goals of both hard (broadband) and soft (skills development) infrastructure
development in the Western Isles context are achievable, but will take a ‘leap of faith’ by
some and perhaps never sit comfortably with others.
Innovation, a paradigm shift, new ways of thinking, new concepts of the workplace and
organisational structures are all potentially achievements requiring to happen in a very
short space of time, if the Western Isles area is to take its chance and be an early entrant
into the new digital economy. The evidence for the magnitude of change in society and the
economy brought about by the ICT revolution is comparable to anything experienced since
the beginning of the 20th century. As such, it requires bold steps and new sense of purpose
to 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 society
of the 21st century for both the current and future generation.
“The combination of digital information with communications technology will be as powerful a

force of transformation in our society as the invention of the wheel or the industrial revolution in
their time…At this time, there is a need for Scotland to embrace with enthusiasm the opportunities
and possibilities that arise from the digital communications technologies. ” [Extract from minister’s
speech 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 a
solid foundation in existing UK national, regional and local strategies. In this respect there
is a multi-level strategic framework being developed working towards the development
goal of integrating Scotland and the Highlands & Islands (and the Western Isles) fully into
the Information Society. How such policies will eventually manifest themselves in the
Western Isles context is not yet clear, hence the rationale for this particular study. Rather
than sitting back and seeing what happens, there is a clear feeling that we, as a remote area
on the periphery of Europe develop a sense of purpose with key development goals. One
must 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 innovation
and enterprise to flourish by priming the key infrastructural conditions necessary for
bottom-up private sector development to become established – i.e. the optimisation of
skills and telecommunications at the local level. As we will see in the following section
contemporary development policy is totally attuned to the finding and recommendations
expressed 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 the

information age. It was the ‘Bangemann’ report of 1994 that really provided the catalyst
for the modern day European policy context. This report identified the challenges
presented by the impending ‘European ICT revolution’ [Smith, 1997], whilst also elaborating
on the potential opportunities and consequentially recommended, for the first time, specific
EU policy measures for ICT and the Information Society.
In the current European context the European Commission has been driving the policies of
the new Europe, particularly through the recently formed Information Society Directorate
General (DG). More recently at the highest level, the Council of Ministers, comprised of
the heads of state from the member countries, in Lisbon in March 2000 formulated a more
focused policy direction. It is also a stated aim of Sweden in its Presidency role in the first
half 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 Information
Society is clear: “These changes, the most significant 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 and
social 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 policy
makers of the early 21st century rise to the challenges they must face and seize the
opportunities presented. A view very much shared by the writer in considering the Western
Isles 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 rural
areas such as the Western Isles. It must be remembered that our baseline is that much
lower than many other communities in Scotland and indeed Europe and therefore a
disproportionate level of investment is likely to be required. Yet, if the opportunity is to be
seized 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 the
report the above strategy prioritises education and skills development: “Education is vital
for the economic and social progress and for guaranteeing equal opportunities in our society. In the
digital age, it is key to ensure life-long learning for new generations of creators, researchers and
entrepreneurs. All citizens must be able to play an active role in the Information Society.” The
message here is as clear for the Western Isles as it is for elsewhere. A new, on-going and
inclusive 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, in
many 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 of
Europe at the Lisbon Summit. The term eLearning specifically came into being and
referred directly to actions aimed at intensifying and mobilising the education and industry
sectors in Europe, adding to that being formulated throughout the member states. The
actions themselves specified that all schools in Europe must have an internet connection by
the 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, vocational
training organisations, learning centres, public libraries…etc. To achieve such veritable
goals and actions Member states have been directly encouraged to utilise EU Structural
Funds, Community Programmes and even collaborate closely with the European
Investment Bank where necessary.
eLearning then, is the term used for the Council of Ministers’ strategic directions and
associated actions. It presents a major opportunity for the Western Isles to access the
resources required by it, to thrive and prosper in the Information Society. In summary, it is
about:
• 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
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• Providing school leavers ‘broad digital literacy’ by the end of 2003
The adoption of such guiding principles and objectives requires the level of infrastructural
changes discussed throughout this report. Moreover, the EU’s Fifth Framework
Programme (FP5) has identified complementary priorities for the European Union's
research, technological development and demonstration (RTD) activities for the period
1998-2002 to aid the transition into the Information Society.
The Information Society Technologies (IST) Programme is part of this research and
development programme and the recent reports ( available from: http://istevent.cec.eu.int/en/) from
Helsinki and Nice have been invaluable reading in convincing oneself of the major efforts
being undertaken at the European level to guide and mobilise our society’s transition by
addressing such key issues as broadband and e-skills or eLearning.
In summary, there can be no doubting the level of commitment within EU policy and
funding to support initiatives of the types mentioned briefly within this report. We have
already looked at examples of best practice from the Member States and case studies such
as that recently invested in by the European Commission and European industry at
www.career-space.com. One cannot help be concerned about the lack of strategic direction at
the Islands’ level given the strength, legitimacy and all-encompassing nature of the policy
and 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 Isles
initiative aimed at both broadband and e-skills? Similar to the European level context the
UK national policy context is both supportive from the highest levels of government and
quite specific with its message. As a nation, the UK must move quickly to enable its
citizens, businesses and education sector to become part of the ‘on-line’ Information
Society. A particular focus has been given to the promotion of e-commerce and assistance
to the SME sector, in recognition of both the opportunities available and the costs
associated with being a ‘follower’ rather than a ‘leader’. At the micro-scale (i.e. the
Western Isles) similar arguments apply and require to be voiced equally loud.
From the Government’s ‘Our Information Age’ policy statement on its vision for future
development, to the DTI’s ‘Competitiveness in the Knowledge Driven Economy’ to its
‘Approaching Convergence in the Information Age’ policy paper on the changing
regulatory framework, to its ‘A New Future for Communications’, to its ‘Communications
White 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 “…the
availability of widespread access to higher bandwidth services and bring together public
and private sector stakeholders to develop a practical broadband strategy” thus being of
direct relevance to the earlier chapters in this report…the policy framework and
_____________________________________________________________________________________
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 place
in the way that work, communicate and lead our lives. The related e-Envoy website
specifically addresses the need for skills development in its ‘Confident People’ policy
context 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 + £230M
for improving ICT Skills Levels – CLCs, NGfL, Ufi’s Learndirect, Life Long Learning and
Individual 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 to
see through expensive transitional strategies for the Information Age, right through society
in the UK. All in all, in browsing the above content, one gets the clear message originating
from the highest levels of government – i.e. join and converge or wait and become
peripheral.
Already referred to in several instances throughout the report is the Department for
Education and Employment’s ‘Skills for Information Age’ report by the ITCE Skills
Strategy 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 words
into action and quickly.” The report itself addresses how to meet current and future ICT
skills needs, it considers how to attract more people into the industry (including
electronics) and retain the more able in face of EU-wide skills shortages, it considers how
to expand and develop industry and education liaisons regarding current and future skills
issues and it also finally attempts to strengthen the sectoral skills/training bodies such as
the NTOs in the up-skilling process. Again, the consistent themes running through this
report have been recognised and are clearly in line with the strategies and policies outlined
in this report with regard to the Western Isles context e.g. partnership initiatives between
education, other agency and private sector aimed at both ‘generic’ skills demanded within
industry and specific ICT areas of demand.
Yet another element of specific policy interest is the NGfL. In 1998 the UK government
committed itself to providing a National Grid for Learning (NGfL), now incorporated
within its ‘UK On-Line’ initiative. This particular element of policy is itself consistent with
the EU proposals mentioned earlier on eLearning strategies. The strategy is based around
the provision of a national learning resource available universally on the internet. It is
aimed at schools, further education, higher education and targets the access of ‘life long
learning’ and ‘career development’ via on-line content. The NGfL is also targeted at
providers from community organisations and libraries, right through the spectrum of
providers to the private sector.
_____________________________________________________________________________________
Approved centres are to be set-up and connected via ‘high-speed’ internet access to this
national grid and substantial funding is available to meet the requirements of accessing the
grid from infrastructure to teaching and learning development projects and initiatives. “The
NGfL includes extra funding for hardware, software and networks, as well as for training
in 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 public
library network and the UfI’s ‘learndirect’ needs and requirements.
In the planning of the provision of ‘Grid’ access to schools there is recognition of extended
needs of community, access, social inclusion and sustainability and the need to control
costs for contributors to the ‘Grid’. One can therefore conclude that not only is the NGfL
an important national initiative for the rural as well as urban context, but that it also may
provide an opportunity for the added-value skills provision outlined as being of immediate
strategic need for the Western Isles in this report, whilst also being a contributor to the
funding of targeted ‘broadband’ infrastructure for both schools and communities in rural
areas such as the Western Isles. The recent Highlands & Islands Learning Grid proposals,
to be discussed below, are an example of such ‘opportunistic’ and integrated strategy
formulation.
Finally, in the national policy context with regard to skills development in the Information
Age one can look at the policy of the National Training Organisations. Of recent and
notable 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 firmly
routed in e-commerce and related activities, as business processes and the internet become
increasingly integrated and possibly indistinguishable.
The national e-skills NTO, referred to earlier in the text, have been the result and as we
have already seen much of its policy findings/proposals are of relevance to the future
policies 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 to
education, training, qualifications and competitiveness issues for IT users and
professionals….” 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 the
skills 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 the
UK’s IT industry is almost entirely due to professional skills shortages. The winners and
losers in e-business will be determined by access to skills… IT literacy is rapidly becoming
as fundamental to employability as reading and writing. For the UK to remain a world
power 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 and

auctioning 3G spectrum. On the other hand, as indicated at the start of this report, one has
to be less than enthusiastic by the level of response from OFTEL in response to
government, 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 and
Telecommunications Agency (CCTA) in the UK provides an on-line database of projects
and initiatives related to how the UK is responding to the Information Society and as such
aims to provide a quality information resource for knowledge, information and learning
with regard to aiding the UK’s efforts in areas such as teaching and learning and the
provision 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 provide
one with much of the information relevant to Scotland’s response to the Information
Society. Of most importance, arguably, is the ‘Digital Scotland’ Task Force report and
related policy recommendations. Again this strategy’s framework is consistent with the
aims and objectives of the actions outlined in this paper, with key themes being amongst
others being collaboration and speed.
The report displays very clearly the belief in the coming of the ‘Digital Age’ and
Scotland’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 and
industrial revolutions that have proceeded it. This, being in line with the view taken within
this current report.
Specifically, the report highlights the need for SMEs to the potential economic advantage
of the opportunities presented by ICT. Secondly it highlights the need for new strategies
for teaching and learning and new modes of delivery to ensure that Scotland is not
constrained by skills shortages in its transition and integration into being a key player in
the ‘Digital Age’ within Europe. Encouragingly, the report also highlights the need for
such technology to enable social and economic inclusion, the implication being that there
will not be a ‘fast-track’ for urban Scotland to the disadvantage of rural Scotland, but
rather a single and all-encompassing ‘Digital-Age’ development effort, irrespective of
location or circumstance. Action at both the Scottish and local level is identified as being
an essential pre-requisite for Scotland as a nation.
With regard to the vision identified there is once more an unequivocal belief that ICT
development needs to become a much more significant element of the traditional
development process within Scotland:
“Our vision is for a prosperous, inclusive, open and modern Scotland where full
employment is achieved. A Scotland which achieves economic growth rates ahead of the
_____________________________________________________________________________________
which are at home in the e-economy; and a well-educated, well-trained, highly-skilled

workforce…A vision also of a Scotland where many people choose to work in rural areas
where they can combine an excellent physical environment with opportunities for
knowledge work. A Scotland where no-one is excluded from education and training
opportunities or from access to public services because of where they live, or their social
or ethical backgrounds.”
At the micro-level such policy and vision is of the nature of that already outlined within
this report and indeed was behind the rationale of the commissioning of this report in
December 1999. Again the policy context at the Scottish level can be seen to be entirely
consistent with the findings and actions outlined within this report and indeed supportive
given already defined commitments on providing the ‘right skills’ and a ‘world-class
telecommunications infrastructure’ with ‘pervasive and affordable access for all to the
web and other digital technologies.’ This surely translates into a combined regional
broadband and ICT skills development initiative in the Western Isles.
As mentioned at the national policy level, Scottish regional versions of the University for
Industry (SufI) and Learndirect, Scotland are also complementary and of direct relevance
and other discussions and debate (‘Skills for Scotland’) in the Scottish Parliament e.g. via
the Enterprise & Lifelong Learning Committee are also of consequence.
If we examine development policy for the Highlands & Islands specifically one can also
identify numerous policies that actively encourage and support the range of actions
outlined 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 appears
to be widespread synergy with the related actions and vision outlined within this report.
Broadband provision to the Information Society (a fundamental requirement) and related
skills development are aimed at maximising rather than just improving regional
competitiveness, whilst also dealing directly with social & economic inclusion issues on
Europe and Scotland’s periphery. Essentially, any development strategy or initiative
which will not just stem population decline but most likely reverse it must surely maximise
the priority for the funding available, as no other such strategy in recent memory has
achieved the outcomes achievable by the implementation of the policies and actions in this
report.
Secondly, from the Highlands & Islands Enterprise (and WIE) perspective a focus on
broadband telecoms and ICT skills development are already clearly articulated goals.
Recent initiatives have seen the contracting of a major UK ICT consultancy firm to
examine the demand for broadband in the Highlands & Islands. This report should prove
complementary to this report, providing it takes a long-term perspective on the
development process to achieve sustainability. HIE and it's LECs are committed
to the development of e-commerce and now have a dedicated website
http://www.hiecommerce.com/ which is targeted at the development of SMEs throughout
the region.
Fundamentally, it is recognised that there is an enormous potential opportunity for the use
of 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,
_____________________________________________________________________________________
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 key
business strategies aimed at improving competitiveness (businesses and localities),
encouraging new-starts and attracting inward investment are all central to the aims of the
strategy and actions outlined in this report.
In addition, the recently published HIE Skills Strategy states: “Special focus will be given
to developing ICT and management and leadership skills thus enabling individuals and
businesses of the Highlands and Islands to gain a competitive advantage.” This focus
being aimed at targeting opportunities related to inward investment, e-commerce and
networking and programming amongst others.
Thirdly, from the UHI perspective there is an on-going commitment to the area to provide
and develop out-reaching distance learning centres via broadband telecoms (e.g. Highlands
& Islands Learning Grid proposals) for VC delivery. Ultimately, the UHI project has the
aim of being the key facilitator of Higher education opportunities for communities right
across the region of a nature and level appropriate to that demanded by the private, public
and voluntary sectors. It has already spent £22m on technology to overcome the distance
barriers within the region, with a further rollout/upgrade of outreach centres off the main
learning grid being increasingly prioritised, given higher than expected demands. For
example at the LCC campus the dual VC suites have increasingly been booked up for VC
teaching from 9am-5pm every day of the week, with demand particularly high from small
outreach centres throughout the region. Unfortunately such centres have only 128kbps
bandwidth, making then less than ideal for VC teaching.
“The amount of bandwidth required for video conferencing will depend on the quality required as
well as the number of streams. The workable minimum for around 128Kbps, moving up to the
384Kbps 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 each
other 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” and
as such is committed to expanding its reach. Clearly for teaching purposes in response to
demand for bandwidth, next generation IP/VC systems which reduce costs and offer
improved quality will require 2Mbps and upwards for the near TV quality systems required
for VC teaching. In short, UHI development is likely to be totally supportive of broadband
networking in remote areas such as the Western Isles and will via the LCC campus, play a
key role in ICT skills development within the area, if the goal of broadband can be
achieved.
Finally, at the Western Isles level in examination of the Western Isles Transitional Strategy
2000-2006 stated policy areas relate to increasing business competitiveness, creating
employment and increasing incomes, creating the conditions for regional competitiveness
and developing human resources, whilst achieving rural development. In short, such
priorities are the potential outcomes of focusing on a broadband telecommunications
upgrade, combined with a complementary skills development strategy. At the local level
there 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 most
outlying areas.
From the local authority perspective between 1999-2002, the Western Isles council has
articulated the ICT industries upon which it is to prioritise resources to achieve rural
development. Amongst other such priorities there is the on-going commitment to develop
an 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 outlined
within this report.
At the Local Enterprise Company level there are the following clearly articulated policies
for 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 being
suggested by this report.
In summary, in consideration of the EU, national and regional level policy and strategic
level framework for the Information Age, one must conclude that the focus of this report is
both timely and completely relevant to the required incorporation of the Western Isles into
the Information Society at an early stage.
The policy context is uniquely placed to enable the area to seize the types of opportunities
brought 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 rural
communities where enterprise and opportunity are primed and populations have stabilised
as 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 Got
What It Takes?, Project Gemini
DIGITAL DENMARK, (February 2000), Digital Denmark: Conversion to the Network Society, On-Line
Publication
DIGITAL SCOTLAND TASK FORCE, (May 2000), Digital Scotland Task Force Report, On-Line
Publication.
EU Publication, (June 2000), eEurope Action Plan, Brussels, 14-06-00
EU Publication, DG Information Society, IST 2000, Office for Official Publications of the European
Communities, Luxembourg, ISBN 92-894-0042-0
HIE, (June 2000), Realising Potential: A Strategic Plan for Developing Sectoral Skills in the Highlands
Islands, On-Line Publication
HMSO, (Dec. 1998), Our Competitive Future: Building the Knowledge Driven Economy, On-Line
Publication
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-Line
Publication
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

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INTERNET SITES ACCESSED FOR RESEARCH PURPOSES:
http://www.learndirectscotland.com/
http://www.career-space.com/
http://www.ngfl.gov.uk/regional/scotland.html
http://www.tft.co.uk/
http://www.e-skillsnto.org.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://www.information-society.org.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
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Chapter 9 The Information Society & ICT Skill Requirements

Summary, Conclusions & Recommendations
It is clear that as the EU ICT skills gap develops, outsourcing is As the EU ICT skills gap
increasingly becoming a necessity for many firms and develops, outsourcing is
industries in the UK and beyond. Recruitment is becoming increasingly becoming a
difficult and staff turnover and wages high as firms compete for necessity for many firms
and industries in the UK.
key members of staff, with many posts remaining unfilled for
Recruitment is becoming
many months. As suggested by EU policy makers the difficult and staff
development of public/private training partnerships to target turnover and wages high
resources at key areas of current and advance need would with many posts
appear to be key requirement for ‘best practice’ initiatives. remaining unfilled for
Public sector investment can be maximised and SME many months.
opportunities realised as ICT-related staffing constraints are
negated and new distance learning opportunities become
deliverable via broadband to rural Island communities.
More fibre-connected people-centred workspaces (customer More fibre-connected

people-centred
service centres) need to be created as new ways of working
workspaces need to be
are adopted to meet the needs of all flexible workers in the new created.
economy for which our Islands need to be renowned. Futuristic
thinking which our European counterparts are already
adopting. What is termed functional offices with a different feel
from that of the conventional workplace need to be developed
to cater for all e.g. including crèches, cafes, jazzy colour Experience in Ireland
schemes, casual dress codes…etc to attract (young) points to the need for
employees and increase productivity. Experience in Ireland multi-lingual employees
points to the need for multi-lingual employees as being a major as being a major selling
selling point in itself and an area of increasing demand. It point. It needs to be
recognised that only 10%
needs to be recognised that only 10% of UK workforce is
of UK workforce is
involved in telework at present, whilst this number is close to involved in telework at
20% in Finland. present, this number is
close to 20% in Finland.
There is much anticipated scope for development in this sector,
as witnessed by the recent development of e-lance websites
with literally 1000s of jobs for teleworkers with the right mix of
skills. The Western Isles already has a recognised track record
in this area and needs to exploit it, providing we can get this
skill mix correct. Initially the local public sector may assist
giving newly trained workers the all-important track record. It will not be acceptable
to wait for demand-led
initiatives to trigger
With the Customer Service Centre market growing at 40% per investment … those
annum, there needs to be an increasing recruitment drive most appropriately
targeted at school leavers offering desirable working conditions geared-up will attract
and incentives to earn money and advance their education via most of the demand-side
sponsored employee schemes for example. activity and investment
at the expense of the
With regard to the Island’s move toward the new economy, it areas that opt to ‘wait
_____________________________________________________________________________________
trigger investment. The more progressive areas in Europe have

already considered the folly of this in the new Information Age,
where it has been recognised that those most appropriately
geared-up will attract most of the demand-side activity and
investment at the expense of the areas which opt to ‘wait and
see’.
As no one can confidently predict where this new revolution is

going, the postponement of investment until the market settles
is not a legitimate development policy. One must be part of the
revolution if one is to gain the advantage and opportunity
associated with it.
As Business to Business (b2b) competition increases via e-

commerce enabled transactions that will be distance
independent and reduce supply cost significantly for e-
commerce enabled SMEs in the Islands there are both threats
and opportunities. Non-e-commerce SMEs in the region will
find their products and services being replaced by those that
are, by an efficiency-seeking commercial market. Yet for those
that take the leap of faith, an increasingly global marketplace
(b2b and b2c – Business to Consumer) will be on their
doorstep and new opportunities abundant. Obviously ICT skills
and appropriate telecoms will require to be developed
throughout the Islands area, to enable this transformation. In
the view of the writer this is therefore not an option but rather
an immediate necessity.
Specific skills necessary
– a number of sources
With regard to the specific skills necessary in the Information have been quoted within
Age, a number of sources have been quoted within the text the text which largely
which largely agree on the generic content required: 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 be

noted, which in many instances were viewed as being less Low priority given to
important to the ICT sector. There appears to be a pervasive technology skills –
view within the sector that if the key generic skills can be viewed as being less
attained then the ICT skills can be developed in-house. In all important to the ICT
but the most technical of posts, such feedback appeared to be sector than business and
commonplace. customer service skills.
_____________________________________________________________________________________
Language, Science and mathematics along with specific ICT Language, science &
skills were viewed as being important, although the range of mathematics along with
the above generic skills was still sought after. In almost all specific ICT skills were
instances previous work experience was a stated preference viewed as being
important.
and again there may be a role for the local public sector to aid
this transition initially.
Appreciation of such findings need to be incorporated into an

Islands-wide Information Age Skills Development strategy,
incorporating an awareness-raising initiative for non-ICT Findings need to be
graduates and employees within the area, similar to that of incorporated into an
project Gemini in South-East England. Islands-wide Information
Age Skills Development
An opportunity to deliver core skills online via outreach centres strategy.
combined with added-value SME integrated workspace would
appear a real prospect with linkages to other national initiatives
such as the NGfL and SufI’s ‘Learndirect’ initiative.
An opportunity exists to focus on in-demand ICT skills to plug

the developing skills gap and encourage specialist teleworking
and outsourcing teams to become established. Such specific
ICT skills outlined within the report combined with the Focus on in-demand ICT
appropriate generic skills will potentially provide the catalyst to skills to plug the
enable a transition in the Western Isles workforce to one developing skills gap and
compatible and in-demand within the new ‘Digital’ economy. A encourage specialist
pilot project targeted at those individuals on the ICT skills teleworking and
outsourcing teams to
register and school leavers could be progressed.
become established.
Again, it is here that an ICT skills/training partnership between
the education sector, industry and the public sector will identify
clearly the needs, opportunities and delivery options to
integrate the Island’s population into the Information Age and
respond dynamically to future trends. Such initiative has
already been shown to be profitable in the examples outlined
within the main text.
There is a clear policy framework in which to develop the

Western Isles’ skills development response to the Information
Age. This policy is integral to the advancement of the
broadband telecommunications recommendations made
earlier. There is an obvious synergy between the two key areas
considered in this report. The commitment at the EU, national
and regional policy levels which focus on ‘skills for the
information age’ recognise some of the infrastructural
requirements for delivery and have associated funding for such
development. A dual development approach can therefore
achieve cost savings by combining the financial allocations for
both skills and broadband rollout by encouraging the facilitation
of an all-encompassing partnership approach at the local level
_____________________________________________________________________________________
APPENDIX 1: xDSL TECHNOLOGY
Technology Speed Distance Applications

Limitation
(24-gauge wire)
56 Kbps analog 56 Kbps downstream None E-mail, remote LAN

modems 28.8 or 33.6 Kbps access,
upstream Internet/intranet access
ISDN Up to 128 Kbps 18,000 feet Video conferencing,
(uncompressed) Full duplex (additional disaster recovery,
equipment can leased line backup,
extend the transaction processing,
distance) call centre services,
Internet/intranet access
Cable modem 30 miles over Internet access
10–30 Mbps downstream coaxial (additional
128 Kbps–10 Mbps equipment can
upstream (shared, not extend the
dedicated, bandwidth) distance to 200
miles)
ADSL Lite Up to 1 Mbps downstream 18,000 feet Internet/intranet
Up to 512 Kbps upstream access, Web browsing,
IP telephony, video
telephony
ADSL/R-ADSL 1.5–8 Mbps downstream Up 18,000 feet (12,000 Internet/intranet
to 1.544 Mbps upstream feet for fastest access, video-on-
speeds) demand, remote LAN
access, VPNs, VoIP
IDSL Up to 144 Kbps full duplex 18,000 feet Internet/intranet
(additional access, Web browsing,
equipment can IP telephony, video
extend the telephony
distance)
HDSL 1.544 Mbps full duplex (T1) 12,000–15,000 feet Local, repeatered
2.048 Mbps full duplex (E1) T1/E1 trunk
(uses 2–3 wire pairs) replacement, PBX
interconnection, Frame
Relay traffic
aggregator, LAN
interconnect
SDSL 1.544 Mbps full duplex (T1) 10,000 feet Local, repeatered
2.048 Mbps full duplex (E1) T1/E1 trunk
(uses 1 wire pair) replacement,
collaborative
computing, LAN
interconnect
VDSL 13–52 Mbps downstream 1,000–4,500 feet Multimedia Internet
1.5–2.3 Mbps upstream (depending on access, high-definition
(up to 34 Mbps if speed) television program
symmetric) delivery
_____________________________________________________________________________________
Asymmetric Digital Subscriber Line (ADSL) ADSL technology is asymmetric. It allows

more bandwidth downstream—from an NSP’s central office to the customer site—than
upstream from the subscriber to the central office. This asymmetry, combined with
“always on” access (which eliminates call setup), makes ADSL ideal for Internet/intranet
surfing, video-on-demand, and remote local area network (LAN) access. Users of these
applications typically download much more information than they send. Downstream,
ADSL supports speeds between 1.5 and 8 Mbps; upstream, the rate is between 640 Kbps
and 1.54 Mbps. ADSL can provide 1.54 Mbps transmission rates at distances of up to
18,000 feet over one wire pair. Optimal speeds of 6 to 8 Mbps can be achieved at distances
of 10,000 to 12,000 feet using standard 24-gauge wire.
Rate-Adaptive Digital Subscriber Line (R-ADSL) R-ADSL operates within the same
transmission rates as ADSL, but adjusts dynamically to varying lengths and qualities of
twisted-pair local access lines. With R-ADSL, it is possible to connect over different lines
at varying speeds. Connection speed can be selected when the line synchs up, during a
connection, 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 for
the telco to install and maintain a premises-based POTS splitter. Elimination of the POTS
splitter 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 it
more widely available to mass market consumers. It will support both data and voice and
provide an evolution path to full-rate ADSL.
The effort to introduce ADSL Lite has been spearheaded by the Universal ADSL Working
Group, an industry group that worked to develop a worldwide G.Lite standard within the
International Telecommunications Union (ITU) Study Group 15. An ITU standard
(G.992.2) was approved in October, 1998. Additional standards work can be expected in
ANSI TIE1.4, the ATM Forum, and the ADSL Forum to address issues such as
compatibility with home wiring and network interfaces. 3Com is an active participant in
these standards bodies working on the development of ADSL Lite.
ISDN Digital Subscriber Line (IDSL) IDSL provides full duplex throughput at speeds up
to 144 Kbps. Unlike ADSL, IDSL is restricted to carrying data only. While IDSL uses the
same 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, so
it does not cause switch congestion at the service provider’s CO. ISDN also requires call
setup, 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 most
mature 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 three
pairs—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 a
data rate of 2.048 Mbps.) Although HDSL’s 12,000 to 15,000-foot operating distance is
shorter than ADSL’s, phone companies can install signal repeaters to cost-effectively
extend its useful range. HDSL’s reliance on two and three twisted-pair wires makes it
ideal 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, but
over a single pair.
Single-Line Digital Subscriber Line (SDSL) Like HDSL, SDSL supports symmetrical
TI/E1 transmissions, but SDSL differs from HDSL in two important ways: it uses a single
copper-pair wire, and it has a maximum operating range of 10,000 feet. Within its distance
limitation, 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 xDSL
technology, supporting a downstream rate of 13 to 52 Mbps and an upstream rate of 1.5 to
2.3 Mbps over a single copper-pair wire. VDSL can be viewed as a cost-effective
alternative to fibre to the home. However, the maximum operating distance for this
asymmetric technology is only 1,000 to 4,500 feet from the central office; this distance can
be extended by running fibre optic cable from the CO to an optical network unit and
copper from that point to the user location up to 4,500 feet away. In addition to
supporting the same applications as ADSL, VDSL’s additional bandwidth could
potentially enable NSPs to deliver high-definition television (HDTV), video-on-demand,
and switched digital video, as well as legacy LAN extension symmetrical services. VDSL
is 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 xDSL
technology. The key to ADSL is that the upstream and downstream bandwidth is
asymmetric, 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 the
telephone cabling system and the desire to accommodate the typical Internet usage
pattern where the majority of data is being sent to the user (programs, graphics, sounds
and video) with minimal upload capacity required (keystrokes and mouse clicks).
Downstream speeds typically range from 768 Kb/s to 9 Mb/s Upstream speeds typically
range from 64Kb/s to 1.5Mb/s.
_____________________________________________________________________________________
ADSL Lite (see G.lite)
CDSL Consumer Digital Subscriber Line (CDSL) is a proprietary technology

trademarked by Rockwell International. CiDSL Globespan's proprietary, splitterless
Consumer-installable Digital Subscriber Line (CiDSL).
EtherLoop EtherLoop is currently a proprietary technology from Nortel, short for

Ethernet Local Loop. EtherLoop uses the advanced signal modulation techniques of DSL
and combines them with the half-duplex "burst" packet nature of Ethernet. EtherLoop
modems will only generate hi-frequency signals when there is something to send. The rest
of 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 to
avoid interference on a packet-by-packet basis by shifting frequencies as necessary. Since
EtherLoop will be half-duplex, it is capable of generating the same bandwidth rate in
either the upstream or downstream direction, but not simultaneously. Nortel is initially
planning for speeds ranging between 1.5Mb/s and 10Mb/s depending on line quality and
distance limitations.
G.lite A lower data rate version of Asymmetric Digital Subscriber Line (ADSL) was been
proposed as an extension to ANSI standard T1.413 by the UAWG (Universal ADSL
Working Group) led by Microsoft, Intel, and Compaq. This is known as G.992.2 in the ITU
standards committee. It uses the same modulation scheme as ADSL (DMT), but eliminates
the POTS splitter at the customer premises. As a result, the ADSL signal is carried over all
of the house wiring which results in lower available bandwidth due to greater noise
impairments. Often a misnomer, this technology is not splitterless per se. Instead of
requiring 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 the
negotiation 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 IDSL
technologies.
HDSL High Bit-rate Digital Subscriber Line (HDSL) is generally used as a substitute for
T1/E1. HDSL is becoming popular as a way to provide full-duplex symmetric data
communication at rates up to 1.544 Mb/s (2.048 Mb/s in Europe) over moderate distances
via conventional telephone twisted-pair wires. Traditional T1 (E1 in Europe) requires
repeaters every 6000 ft. to boost the signal strength. HDSL has a longer range than T1/E1
without the use of repeaters to allow transmission over distances up to 12,000 feet. It uses
pulse amplitude modulation (PAM) on a 4-wire loop. HDSL2 High Bit-rate Digital
Subscriber Line 2 was designed to transport T1 signalling at 1.544 Mb/s over a single
copper pair. HDSL2 uses overlapped phase Trellis-code interlocked spectrum (OPTIS).
IDSL ISDN based DSL developed originally by Ascend Communications. IDSL uses
2B1Q line coding and typically supports data transfer rates of 128 Kb/s. Many end users
have had to suffice with IDSL service when full speed ADSL was not available in their
area. This technology is similar to ISDN, but uses the full bandwidth of two 64 Kb/s
bearer channels plus one 16 Kb/s delta channel.
MDSL Usually this stands for multi-rate Digital Subscriber Line (MDSL). It depends on
the 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 for
medium-bit-rate DSL. Confused yet?
RADSL Rate Adaptive Digital Subscriber Line (RADSL) is any rate adaptive xDSL
modem, but may specifically refer to a proprietary modulation standard designed by
Globespan Semiconductor. It uses carrierless amplitude and phase modulation (CAP).
T1.413 standard DMT modems are also technically RADSL, but generally not referred to
as such. The uplink rate depends on the downlink rate, which is a function of line
conditions 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 more
generic 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
_____________________________________________________________________________________
APPENDIX 2: MVL: A BROADBAND SUBSCRIBER

LINE 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 public
switched 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/RRD
specification
♦ 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, branch
office 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 on
Demand:
♦ Simultaneous POTS and data
♦ Hotwire HomeLink feature enables peer-to-peer print and file sharing between IP MVL modems
connected 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 and
diagnostics
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/home
office (SOHO), and branch office environments. Based on Paradyne's patented MVL
technology, the Hotwire IP MVL System fundamentally changes the way data and voice
services are delivered to the mass market.
The Hotwire IP MVL System extends the Hotwire product line into the residential, SOHO
and branch office market space with unprecedented functionality, performance and cost.
Hotwire IP MVL is deployed from the very same Hotwire GranDSLAM that supports the
provisioning of Paradyne's complete family of multiservices line cards, consisting of
today's commercial-grade ADSL (DMT/G.Lite), IP RADSL, IP SDSL, TDM SDSL, ATM
SDSL and IDSL services. Paradyne delivers the only DSLAM in the industry able to
support this broad range of services from a single platform, with this centralised power
forming the core of Paradyne's "Never Say No DSL" deployment strategy. The Hotwire
GranDSLAM 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 No
DSL" to your customer again -- the Paradyne advantage.
Hotwire MVL System Overview
Hotwire IP MVL Systems offer both flexibility and investment protection. The Hotwire IP
MVL solution is comprised of a Hotwire IP MVL Line Card installed in the Hotwire
GranDSLAM chassis, which communicates with a Hotwire IP MVL Endpoint Modem at
the customer premises. The 12-port, high-density Hotwire IP MVL Line Card is available
in 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 Telco
connector at the rear of the Hotwire GranDSLAM and efficiently aggregates them onto a
single 10Base-T full-duplex Ethernet connection for backhaul onto the service provider's
network. When coupled with the Hotwire IPC, the Hotwire IP MVL solution can further
aggregate 10Base-T connections and offers internetworking to frame relay or ATM
networks.
ATM Networking Line Card
The Hotwire 8314 IP MVL Line Card accepts 12 subscriber lines coming in from a Telco
connector at the rear of the Hotwire GranDSLAM. The data on these lines is quickly
encapsulated and directed onto the powerful ATM backplane. The data from each of the
Hotwire 8314 IP MVL Line Cards installed in the Hotwire GranDSLAM is efficiently
aggregated onto a single high-speed ATM connection for backhaul onto the service
provider'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 up
to four Hotwire IP MVL modems to be connected to the same telephone line and share a
common WAN access. This multi-drop support is available through the Hotwire IP MVL
Line Cards and IP MVL Endpoint Modems (6310-A2 or greater). The Hotwire HomeLink
feature enables peer-to-peer print and file sharing capabilities among the four Hotwire IP
MVL Modems within the home or small office environment. Hotwire IP MVL Modems
are customer installable, plugging into any existing RJ-11 telephone jack, and transparently
operate over existing in-home wiring (twisted or untwisted) for total customer convenience
and satisfaction.
Industry-Leading Performance
The Hotwire IP MVL System has achieved distances in excess of 30,000 feet in real-world
deployment. This industry-leading performance is obtained mainly due to the Hotwire IP
MVL System operating at frequencies below 100 kHz. This results in an unimpaired
performance even in the presence of T1/E1 disturbers. Hotwire IP MVL is unique in that it
will maintain the highest possible speed and longest possible reach in the presence of
common real-world disturbers.
Superior Spectral Compatibility
Solving mass market deployment issues relating to spectral interference and crosstalk, the
Hotwire IP MVL System operates within the same globally accepted spectral limits of
ANSI/ETSI Basic Rate ISDN (T1.601). This self-imposed design rule ensures
compatibility with existing services. Hotwire IP MVL Systems will be no more of a
disturber 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 use
less than 10 percent of the signal processing power required for other full-rate DSL
implementations.
High Density and Low Power Consumption
The Hotwire IP MVL System delivers performance advantages allowing it to achieve high
densities 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 1.12
milliwatts 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 single

copper wire loop into multiple virtual lines which support multiple services
simultaneously; 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 from
one 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 applications
simultaneously.
♦ Hotwire HomeLink (in-home LAN) peer-to-peer print and file sharing within the
same environment using Windows 95/98 file and printer sharing application.
Dynamic Bandwidth Allocation
The Hotwire IP MVL System dynamically and instantaneously allocates bandwidth for
multiple, independent applications. While one user might be downloading files from the
Internet, another user within the same environment can concurrently upload files back to a
home office and yet another can listen to the newest audio streaming clips from another
Web page.
Hotwire HomeLink
The Hotwire HomeLink LAN feature enables multiple Hotwire IP MVL Modems, sharing
the same WAN link, to communicate in a peer-to-peer networking fashion. Hotwire
HomeLink provides this LAN communication for end users connected to up to four
different Hotwire IP MVL Modems at the customer premises, sharing the same WAN link.
Hotwire HomeLink peer-to-peer communication allows Hotwire IP MVL connected users

to utilize the available resources of each computer, such as common files, popular
programs, backup devices and colour printers (used with Windows 95/98 file and printer
sharing 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 Level
Management Solution, an advanced Web-based management application that provides
configuration control, health and status checking, diagnostic troubleshooting tools, real-
time and history performance monitoring displays, as well as service level results
reporting. OpenLane inter-operates with standard management platforms such as HP
OpenView 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 three
key technical support services in a single package: Software Maintenance, Technical
Assistance 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 learning
bridge.
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
_____________________________________________________________________________________
Port of Ness (Sys-X)
0 40Km M Borve (UXD5B)
s Barvas (UXD5B)
Shawbost (UXD5B)
North Tolsta (UXD5B)
Carloway (UXD5B)
Callanish (UXD5B) Back (Sys-X)
Great Bernera (UXD5B)
Garrabost (Sys-X)
Timsgarry (UXD5B)
Stornoway (Sys-X)
Crossbost (UXD5B)
Scarp (UXD5B) Balallan (UXD5B)
APPENDIX 3: UXD5 AND SYSTEM-X

Gravir (UXD5B)
Scarista (UX5DB)
Sclapay (UXD5B)
Harris (Tarbert) (Sys-X)

Leverburgh (UXD5B)
Drinnishadder (L/Conc.)
Berneray (UXD5B) Manish (UXD5B)
Sollas (UXD5B)
Bayhead (UXD5) Lochmaddy (UXD5B)
Locheport (UXD5B)
Benbecula (Sys-X)
Carnan (UXD5B)
Grogarry (UXD5B)
Bornish (UXD5B)
Lochboisdale (Sys-X)
Eriskay (UXD5B)
DIGITAL EXCHANGES
Northbay (UXD5B)
IN THE WESTERN ISLES
Castlebay (UXD5B)
_____________________________________________________________________________________
APPENDIX 4:
BACKGROUND INFORMATION ON
TELEPHONE EXCHANGES
TXD or Digital exchanges are software controlled using both digital signalling
and transmission to connect the calls.
The first fully digital exchange to be brought into service in the UK was a
UXD5A (Unit eXchange Digital), a modified Monarch 300 line PBX at
Glenkindie, Aberdeenshire in 1979. And from 1983, an updated version UXD5B
was installed in further rural locations.
However, on 15th February 1968 an exchange, using TDM and PCM (Pulse Code
Modulation) was demonstrated at the Post Office Research Station at Dollis Hill. This
digital tandem exchange was moved into Empress, West Kensington, London in April 1968
to switch calls from Acorn, Ealing and Shepherd's Bush. It was the first exchange to switch
PCM signals from one group of lines to another in digital form.
The UXD5, a public-exchange variant of the Monarch digital PABX and remains
only 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 Multiplexor
TXD02 Very Small Local Exchange
TXD03 Remote Concentrator Unit (RCU) parented on a DCCE (Digital Cell Centre
Exchange). MXD03 mobile version.
TXD04 Small Local Exchange
TXD05 as per UXD5
TXD06 Medium Local Exchange
TXD07 Large Local Exchange
TXD08 Digital Principle Local Exchange based on MLE above.
TXD09 Digital Principle Local Exchange based on LLE above.
TXD10 Medium Combined Trunk/ Local Exchange
TXD12 Medium Trunk Exchange
TXD13 Large Trunk Exchange
TXD14 Junction Tandem Exchange
_____________________________________________________________________________________
System Y is the AXE10 version bought ' off the shelf ' from Thorn Ericsson and
produced at factories in Brighton and Scunthorpe.
TXD20 an AXE10 exchange opened in Keybridge House, International Switching

Centre, Vauxhall, London in 1984. And the first local AXE10, in Sevenoaks, Kent
was brought into service just two years later.
System Y designations are:
TXD53 RCU parented on a central processor.

TXD57 Large Local Exchange
Five 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 digital
exchanges manufactured by GEC Plessey Telecommunications (GPT); AXE 10 is a
Swedish design and manufactured in the UK by Ericsson Telecommunications
Ltd; UXD 5 is a small system specifically developed by BT for rural areas, and
5ESS PRX is the European version of a system developed by the American
company AT&T and widely used in North America. The DMS100, designed and
built by Northern Telecom (NT) is being used for Featurenet services.
The last analogue switch was removed from the trunk network in June 1990. All
traffic on the trunk network is now handled by 59 fully interconnected Digital
Main Switching Units (DMSUs) and four partially connected Digital Switching
Units (DSUs) which help handle high call volumes from between London and the
Home Counties. International traffic is handled by 4 dedicated exchanges.
At the local level, around 97% of customers are connected to digital or modern
electronic exchanges.
At 30th September 1993, BT operated 7,537 local exchanges in the UK, comprising
5,532 digital, 1,301 electronic, 38 crossbar and 666 Strowger (electromechanical). By
March 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 given
exclusive rights to supply TXE4) and GEC and Plessey were given all the rights
and obligations to develop System X as a commercial system which BT would
then buy by competitive tender.
It was decided that there should be at least TWO suppliers to the PO/BT, and
there was a large international tender to decide on a second, competitive system.
Ericsson made the AXE10 which offered practically the same flexibility in a
smaller box (mainly because System X was designed by committee: (it was already
dated before the first release model became available).
_____________________________________________________________________________________
The AXE10 was chosen and was then (and still is) bought by BT in competition
with 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 basic
software package on each, so both offer practically the same. Incidentally, Cellnet
tried 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 Browsing
The most common use is, obviously, WWW browsing, FTP access, and also electronic
mail. High end users, Telecommuters and Small Office/Home Office users desire high
bandwidth access, which cannot be satisfied by common technologies. Browsing as an
interactive 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-/mulitcast

Satellite networks are better media to deliver bulk data, anywhere and anytime. Some
illustrative examples include maps and situation awareness data, stock market and financial
numbers, 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 is
ideally suited to broadcast satellites. Therefore, GEO satellites are far more suitable for
these applications than is the traditional terrestrial network.
Videoconferencing
Video conferencing applications use data compression to allow two-way multi-user video
conferencing connections to work over limited bandwidth channels. The PSTN
infrastructure 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 the
required capabilities for multi user simultaneous sessions where the downstream data
combines several sites participating in the conference.
Corporate Applications
A major application for businesses is the extension of their Intranet or corporate network to
all of their subsidiaries. With satellite, all subsidiaries in the spot beam of the satellite have
instant 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 Learning
Access to remote site containing educational oriented data as electronic library, lectures
etc. 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 Providers

ISP’s are companies that provide a range of IP based services including Internet access and
related connectivity, web hosting, data warehousing and targeted information services.
ISP’s can effectively use satellite communication to provide fast Internet access to
subscribers or businesses, which are out of reach of DSL or cable modem providers. One
of the services taking advantage of the satellites broadcast nature is Webcasting, where
Video 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 using
when accessing the web. The most commonly accessed Internet pages are locally stored in
huge servers. VSAT technology can be used to feed and update these local servers with the
current web contents and thus improve the performance of the ISP.
Source: 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 makers
and 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 the
resources 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 the
economic 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 characteristic
of 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 to

address 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 educational
infrastructure can meet the ICT needs of European industry and to implement
appropriate actions. That is, to put in place a clear framework that describes the skills
and competencies required, the ladder for career progression, the qualifications and
training required and to identify where such qualifications can be obtained. The ICT
Consortium initiative known as the 'Generic Skills Pilot Project' should form the basis
for work in this area.
• The appointment of a dedicated team within the European Commission under the direct
responsibility of a Commissioner to co-ordinate all Community action in this area.
• Encouraging Electrical Engineering and Computer Science University departments to

combine in order to recognise communications convergence and remove both
duplication and historic differences in approach and culture.
• That IT literacy should be treated as a core part of school curricula in the same way as
reading and writing and to be taught not as an option, but as a set of key skills and the
key to ongoing learning.
• That educators at all levels, but especially those with career guidance responsibilities
must actively work to attract students, especially girls into science, engineering and
ICT relevant courses and positively present the opportunities available within the ICT
sector.
• That all teachers, lecturers and education officials should be IT literate and actively
encourage the use of ICT across curricula and non-curricula activities.
• That all investment, individual or business, in ICT learning and education should be
tax-exempt. This should include the provision of free services and of ICT kit to staff.
• That professional institutions responsible for curricula development and accreditation

should 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 concerned
with professional membership than abilities, approach and motivation.
• Access and format of ICT tertiary education should be much more open and flexible to
encourage the entry of people who did not follow traditional routes.
• Governments and the private sector should work together to provide ICT training
through public / private partnership programmes. A number of programmes of this kind
have been undertaken with impressive results and these should be carefully evaluated
as possible models for more general application.
• Consideration should be given to opening-up higher level engineering education in

Europe to the private sector.
• Increased capital investment in learning centres and networks as well as investment in

materials is needed.
• Just-in-time cross training is needed to give new skills to already experienced

professionals.
• Promoting ICT/technical studies by reducing the tuition fees or providing other

financial incentives for these studies.
Acknowledgements
_____________________________________________________________________________________
Thanks also to the following people consulted and who took time out to talk or
reply via e-mail to requests for information :
Jimmy Duncan, Consultant, Shetland

Andrew Muir, Mason Communications
Neil Finlayson, iomart Ltd
Michael Jones, Paradyne Co
Ken Kriz, Paradyne Co
David McGovern, BT
Bernard Steinebrunner, STM Inc.
Stan Schneider, Gilat, Europe
Maurice at DirecPC, UK
Donnie Morrison, www.work-global.com
Angela Macleod, www.work-global.com
Dr Wolfgang Greller, Scottish Centre for Information Research
Stuart Robertson, KIT, Highlands & Islands Enterprise

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THE FUTURE OF BROADBAND

A DESK BASED RESEARCH REPORT ON

(WESTERN ISLES OF SCOTLAND)

Report and Research conducted by Michael M Smith, MA MSc,

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

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

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

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

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

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

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

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

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

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

Appendix 1 – xDSL Technologies ...................................................................................... 165

Situation in the Western Isles today

Findings and recommendations

Immediately Adoption of strategy

Fibre to the home/office

Stakeholders and Beneficiaries

Φ "quality of life" location

Skills in the Information Age

• Written & oral communication (e-communication)

Monitoring & Review Policy

The Future of Broadband Telecoms Provision in the Western Isles

A Desk Based Study

3G mobile and broadband satellite will inevitably be

Consideration of (A)DSL raised many issues which would

There can be little doubt that such a radical and

What is the Information Society?

Utilising this technology, customers are increasingly

1 OFTEL and the Universal Service Obligation

In July 1999, a consultative document was issued by the Director General of

BOX 1 Universal Service Costs/benefits

Universal Service Costs / Benefits 1998/9 £Ms

A long-term consideration of the business-cycle would view such potential USO

On the other hand, as broadband communications develop via a range of different

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

OFTEL, Universal Telecommunication Services: A consultative document (July 1999)

OFTEL, Access to Bandwidth Consumer Workshop (March 1999)

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)

US Dept. of Commerce, Survey of Rural Information Infrastructure Technologies, (1995),

US Commerce Department's National Telecommunications and Information

2 Competing DSL Technologies

2.1 DSL: An Overview

PSTN – Public Switched

ATM ADSL Modem User's ADSL Modem

The Internet Box 2 ADSL

ADSL is currently nevertheless being rolled-out by BT to over 400 exchanges (Spring

2.2 ADSL: An Introduction

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

"By employing a passband modulation method an ADSL transceiver can operate at

2.3 Cross-Talk Interference and resultant Digital Coding Techniques

So what is cross-talk interference? It has been described in the DSL Sourcebook as

BOX 5 Information carrying capacity in digital systems is limited by the access

Radio frequency interference

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