Briefing paper: Affordable internet

6 February 2018 Our position In December 2017, the Scottish Government announced plans to invest £600 million to meet its commitment to delivering 100% superfast broadband coverage by 2021. This will reduce the rural inequality of access to high speed internet connections. However, providing infrastructure alone is not enough to close the digital divide. Full digital inclusion is achieved where people have:

• The confidence and motivation to go online;
• An affordable internet connection at home and access to the right devices (not just a smartphone); and
• The basic digital skills to enable them to realise the social and economic benefits.

The evidence clearly shows digital exclusion exacerbates existing deep routed inequalities and affordability is a key barrier for our poorest communities. Without internet access in the home, individuals have limited access to public services, channels for civic and democratic participation, knowledge and information tools, opportunities for social engagement, the labour market and learning opportunities. The lack of internet access also contributes to the poverty premium, as the cheapest goods and services are often only available online. The Scottish Government is right to invest in infrastructure. However, we believe that more needs to be done to ensure home internet access remains affordable for everyone. This could be achieved by:

• More internet providers developing social tariffs that provide a basic broadband service to those on low incomes. These tariffs must reflect what Ofcom considers to be acceptable for an average user.
• Those working to tackle poverty and inequality recognising the savings that can be made by being online, and ensuring people can easily apply for social tariffs.
• Providers and housing associations working together to provide low cost internet access to tenants, building on the success of a number of pilot programmes in Scotland.

The digital divide New technology and the internet continues to radically change how we live, learn and work. With 8 out of 10 people using the internet on a daily basis, online services have become integral to most of our lives. However, these top level statistics hide a deeper digital divide. Over the past year, growth in internet use has stalled in Scotland. This suggests that all those who want to be connected, can get a connection, and can afford the cost, have done so. People that lack confidence or are unable to afford connectivity are being left behind. Moreover, simply having access to the internet is no guarantee that people can use it to save money, apply for jobs and access the full range of social and economic benefits it can bring. In Scotland, similar to the rest of the UK, one-in-five of adults still do not have basic digital skills that enable them to realise the benefits of our digital world. Over the past three years, with the support of the Scottish Government, BT and European Structural Funds, the Scottish Council for Voluntary Organisations (SCVO) has invested over £1m in 127 local projects across Scotland, enabling over 15,000 high-need individuals to get online and develop their skills. Our review of these projects, together with the wider evidence base on tackling digital exclusion, highlights a number of common themes:

• People that are most in need of support from public services – including people on low incomes, people with disabilities and older people - are amongst the least likely to be able to access information and opportunities online or have the digital skills to transact and apply for jobs.
• Access to support is least available where it’s needed most, and is more likely to be taken up by those who are already more proficient.
• Ambitions to deliver more public services online, particularly social security entitlements, risk further disenfranchising people who already face multiple forms of social exclusion.
• Access to the internet at home and the ability to use devices other than smartphones when needed are important considerations. The cost of purchasing a computer or affording an internet connection must be addressed alongside those of lack of confidence and skills.

Overall, the evidence suggests that approaches to overcoming digital exclusion must be embedded in a broader approach to tackling social exclusion. Providing connectivity Realising Scotland’s full potential in a Digital World sets out the Scottish Government’s vision for how citizens, organisations, businesses and public services can maximise the opportunities and minimise the risks of new technology and the internet. A key ambition of the strategy is to delivery high quality connectivity across the whole of Scotland. There is a specific commitment to “ensure that every premise in Scotland is able to access broadband speeds of at least 30 Megabits per second by 2021.” The regulation of telecommunications and broadband is a power reserved to the UK Government. However, devolved administrations can choose to invest in infrastructure where telecommunications providers are unwilling or unable to provide connectivity on a commercial basis. To deliver the commitment in the Digital Strategy, the Scottish Government must therefore invest to address the current rural connectivity gap. The Reaching 100% (R100) public consultation was launched in July 2017 in advance of an open procurement process to deliver the infrastructure needed in Scotland. It identified that a total of £400-600 million may be invested from a range of funding sources, including the Scottish Government, UK Government, local authorities (including through City Regional Deals), and the European Union. On 14 December 2017, the Scottish Government confirmed an investment of £600m for the initial phase of the Reaching 100% programme and launched a procurement process across three regional lots. Ensuring that everyone in Scotland has access to a quality internet connection is an important goal. However, those that are least likely to use the internet at home are those on the lowest incomes. SCVO believes that if we are to truly tackle digital exclusion we must consider the affordability of internet connections in the home. Internet and income The internet has been accepted as an essential for every non-pensioner household since 2010 (Minimum Income Standard (MIS) 2010) and in 2016 the UN declared access to broadband to be a basic right. Without internet access in the home individuals have limited access to public services, channels for civic and democratic participation, knowledge and information tools, opportunities for social engagement, the labour market and learning opportunities. Despite this, many individuals and households cannot afford the devices and connections needed to benefit from the many advantages the internet offers. Home internet access varies considerably by household income. In 2016, 63% of households with an income of £15,000 or less had home internet access rising to 98% in households with incomes of £40,000 and over (Scottish Household Survey, 2016). Additionally, only 65% of social housing tenants have home internet access, compared to 88% of home owners or private rented tenants. Older people, those with disabilities, and those in social housing or on low incomes are all more likely to be digitally excluded. The poverty premium There are strong economic benefits to being online. Increasingly the cheapest products and services are only available online. The internet is therefore an ‘enabling’ service that has the potential to reduce cost across a range of household spending, for example, by shopping online for cheaper deals or through price comparisons. The latest estimates suggest that a household on an average income can save £744 a year from having broadband in the home. Other evidence has suggested that those on the lowest incomes (who buy less overall) can also save around between £200 and £300 per year (Wheatley Group pilot project in 2014 and SQW Consulting report in 2008). These savings are not available to households without home internet access. Similarly, telecommunications tariffs are increasingly structured around inclusive packages. As a result, individuals and families with basic packages pay more per unit of consumption (Consumer Futures, 2013). More must be done to prevent this poverty premium. More generally, finding the most cost effective broadband provision can be difficult. The Competition and Markets Authority recently published a report highlighting that online price comparison sites are poorest when comparing broadband when set against a range of other products and services. Wider context Both the UK and the Scottish Government are increasingly moving services online. The Department for Work and Pensions, for example, plans for 80% of Universal Credit applications to be completed online by 2017 as part of a transition towards digital only services. The digitalisation of public services can simplify and integrate services. Similarly, internet in the home can offer faster, more convenient access to public services. However, the people who are most likely to be supported by public services are also those most likely to be digitally excluded. Online public services must be assessable to all, to date the varied needs of public services users has not be fully considered. The drive to digitalise public services must therefore be supported by initiatives to ensure that everyone can use and access digital services. Internationally, the digital revolution is driving innovation, growth and competitiveness. Equal access to information and communication technology (ICT) is also essential to achieving many of the Sustainable Development Goals (SDGs) including, achieving quality education, creating decent work and economic growth, and reducing inequalities. Digital inclusion is therefore key to tackling inequalities, meeting the SDGs and building a fairer Scotland. The challenge The evidence clearly shows providing infrastructure alone is not enough to close the digital divide and tackle digital exclusion. The challenge now is to provide affordable internet connections for all. Some steps have been taken to address this. For example, as part of their Universal Service Obligation (USO), BT provides the BT Basic + Broadband package for £9.95 per month to individuals who receive certain entitlements. This includes telephone line rental, broadband speed of up to 17Mb/s and a usage cap of 12GB. Ofcom believes social tariffs are an important mechanism to ensure individuals on low incomes are not socially and economically excluded as a result of broadband prices being a barrier to digital participation. They note that a social tariff “should be consistent with any universal decent broadband offering” and “the size of any attached data allowance should meet the needs of the consumers it is designed for ” (Achieving decent broadband connectivity for everyone, 2016, p34). The report separately notes that 10Mb/s would currently be an acceptable speed and the average household consumes 87GB per month. Therefore, there is scope for BT to improve the data allowance is provides to meet Ofcom’s guidance on a decent social tariff. Additionally, there is significant scope to increase the awareness and uptake of the existing social tariffs from BT in order to save people money. Only around 10,000 people out of 4 million eligible take up the service. Ofcom research conducted in 2014 found that 70% of people eligible for BT Basic were not aware of it. To address the gap in household internet access in social housing, some housing associations have begun to provide a WiFi service for tenants in their own homes, with costs representing significant savings on individual household subscriptions (some starting as low as £3 per month). Additionally, organisations from across the public, private and third sectors have made commitments through Scotland’s Digital Participation Charter to tackle digital exclusion, including some providing free WiFi in public places. Conclusion In our increasingly digital world, access to a quality internet connection must be available to everyone. Currently there is a significant gap in access to quality connections in rural areas and significant public investment is about to be made in infrastructure to address this. However, ensuring that everyone can benefit from the internet means recognising that those on the lowest incomes are the least likely to be able to access these benefits. With significant investment of public funds in addressing the rural connectivity gap, we believe there should be an obligation on internet service providers to ensure the internet is affordable to those on the lowest incomes. This could be achieved in a number of ways, including:

• Improving the existing social tariffs available from BT, or other providers developing new products for low income households.
• Increasing the uptake of social tariffs.
• Housing associations providing low-cost subscription internet access for tenants using shared infrastructure.

About us  The Scottish Council for Voluntary Organisations (SCVO) is the national body representing the third sector. There are over 45,000 voluntary organisations in Scotland involving around 138,000 paid staff and approximately 1.3 million volunteers. The sector manages an income of £5.3 billion. SCVO works in partnership with the third sector in Scotland to advance our shared values and interests. We have over 1,900 members who range from individuals and grassroots groups, to Scotland-wide organisations and intermediary bodies. As the only inclusive representative umbrella organisation for the sector SCVO:

• has the largest Scotland-wide membership from the sector – our 1,900 members include charities, community groups, social enterprises and voluntary organisations of all shapes and sizes
• our governance and membership structures are democratic and accountable - with an elected board and policy committee from the sector, we are managed by the sector, for the sector
• brings together organisations and networks connecting across the whole of Scotland
• SCVO works to support people to take voluntary action to help themselves and others, and to bring about social change.

Further details about SCVO can be found at www.scvo.scot. Contact Sheghley Ogilvie Scottish Council for Voluntary Organisations, Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh EH3 6BB Email: sheghley.ogilvie@scvo.scot Tel: 0131 474 8000 Web: www.scvo.scot