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  • Ian Ritchie : Business AM

Potentially costly failure of political understanding

Wendy Alexander faces uphill struggle as MSPs ignore vital communications issue

LAST THURSDAY, the Scottish parliament debated the 'new economy'. The enterprise and lifelong learning (ELL) committee had undertaken an extensive inquiry, taking evidence from dozens of companies, experts and agencies, and its report was finally published a couple of months ago – just in time for MSPs to pack it as holiday reading for the beach.

So as I arrived at the visitor’s gallery last week I was greatly encouraged to see that the chamber was nearly full – clearly MSPs had read the report and were anxious to debate the consequences for the economy. The excellent work of the ELL committee had not been in vain.

Dream on!

The parliament was in full outrage all right, but not about the costs Scottish businesses have to face on the information superhighway. What was enraging members was the cost of taking the tarmac "superhighway" from Renfrew to Dunbartonshire over the Erskine Bridge. At 60p a time, we were told, the local economy was being unreasonably damaged.

The 60p debate over, the chamber promptly emptied. Apart from the actual members of the ELL committee, those remaining were mostly the MSPs who had been selected by the various parties to speak. Nobody much else stayed around. Henry McLeish, who in his previous job as ELL minister had strongly emphasised the importance of the new economy, and his personal commitment to it, was among the first to head sharply for the exit.

Not even all the members of the committee were there. Kenny MacAskill, the SNP MSP who had been so convinced that its recommendations were inadequate that he had refused to support its report, was very noticeable by his absence. Apparently, he had gone to the football match in Brussels and had yet to return.

Stewart Stevenson briefed the chamber on his credentials as a technology pioneer – apparently he had constructed a microcomputer 25 years ago, one of the first in Scotland. Jamie Stone of the Lib Dems congratulated him on his "anoraks I have worn" contribution to the debate.

In the absence of Mr MacAskill, everyone who spoke expressed strong support for the committee’s recommendations. Scotland "needs bandwidth and it needs it now" was the cry from all sides. Everyone seemed convinced that Wendy Alexander was seized of the urgency and had the drive and determination to push the agenda forwards.

Some members commented that maybe, just maybe, not all of the executive was as enthusiastic as Ms Alexander in giving top priority to this agenda. Unfortunately, as they looked around the chamber, they could see that not many of their fellow MSPs were giving this top priority either.

Although the debate was intelligent, it was not particularly well informed. There was lots of talk of Scotland either "getting into the premier division" or "becoming a third-world economy" depending on key investment decisions made now. But few MSPs seemed to understand what actions were actually required. They were particularly confused and worried about negative press comments from indigenous telcos, but it is vital that they understand the reasons for these protests. For they will only get louder in the next few months.

Scotland is a relatively small economy. Telcos will naturally give priority to delivering services to larger, more lucrative markets. As a result, there are relatively few competitors in the Scottish telecoms market and costs will often be considerably higher than in, say, London or Amsterdam.

To address this market failure, Scottish Enterprise and the executive are drawing up plans to increase bandwidth provision and increase competition. Part of this will be the coordination of all public sector demand, initially in towns in the Highlands and the Borders, so that the telcos that win the collective business can invest in the capacity needed with confidence.

Another key project is aimed at encouraging telecoms wholesalers into the Scottish market, bringing internationally competitive pricing to the major cities and towns of the central belt and east coast.

Each of these initiatives will create winners and losers, and the losing companies will squeal. Also, telecommunications is regulated on a UK basis and the London-based Oftel might not necessarily approve the measures being taken in Scotland.

It’s all going to be quite a challenge, and Ms Alexander will need all her drive and determination, not to mention a thick skin, to win through.

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