ARTICLE IN PRESS

Telecommunications Policy 30 (2006) 481–495

www.elsevierbusinessandmanagement.com/locate/telpol

Broadband diffusion in remote and rural Scotland

Andrew Tookey, Jason Whalley, Susan Howick
Department of Management Science, Strathclyde Business School, Graham Hills Building, 40 George Street, Glasgow G1 1QE, Scotland, UK

Abstract

There is considerable interest worldwide in broadband diffusion, with research focusing on aspects such as the provision
of broadband in remote areas and the socio-economic factors that determine the likelihood of adoption. This paper
identifies the policies and initiatives used to encourage broadband awareness, availability and adoption in remote and rural
Scotland. Complementary and (in some cases) contradictory policies are explored and areas where policy may be applied
in the future suggested. Influence diagrams are used to investigate the impact of different policies on take-up rate and
total adoption.
r 2006 Elsevier Ltd. All rights reserved.

Keywords: Broadband; Diffusion; Remote and rural Scotland; Policy

1. Introduction

With the announcement in late 2005 that BT would upgrade 300 or so telephone exchanges in remote and
rural Scotland, almost the whole of Scotland now enjoys access to broadband. This effectively brought to an
end a series of policy initiatives that began in 2001 and which sought to encourage the diffusion of broadband
in remote and rural Scotland, both in terms of the availability of infrastructure as well as its adoption by
businesses and households. The Scottish Executive, like many other governments, welcomed broadband and
emphasised its socio-economic benefits. Businesses in remote and rural Scotland can access global markets and
households enjoy access to content located elsewhere (Scottish Executive, 2002a). Renewed economic activity
and a reduced sense of isolation will stem the flow of migration to urban areas and thus maintain the viability
of remote and rural communities.
Although a broadband infrastructure will now be available in most remote and rural communities, this does
not mean it will be used. If the socio-economic benefits of broadband are to be realised, broadband also has to
be adopted in remote and rural Scotland. An interesting and timely question to ask therefore, is how can
broadband adoption be encouraged in remote and rural Scotland? This question could be answered through
reference to policies adopted elsewhere. Whilst there is undoubted merit in drawing comparisons to other
geographies, the focus here, on remote and rural Scotland, precludes many of these comparisons as they focus
on either the general broadband or urban markets. Another approach would be to critically assess the policies

Corresponding author. Tel.: +44 141 548 3798; fax: +44 141 552 6686.
E-mail address: susan.howick@strath.ac.uk (S. Howick).

0308-5961/$ - see front matter r 2006 Elsevier Ltd. All rights reserved.
doi:10.1016/j.telpol.2006.06.001
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482 A. Tookey et al. / Telecommunications Policy 30 (2006) 481–495

enacted in remote and rural Scotland between 2001 and 2005. This would enable the more successful policies
to be identified and used as the basis for future policies that focused on encouraging broadband adoption.
The approach adopted here combines a critical assessment of past policies using a general diffusion model.
The diffusion model is used to identify those factors that may encourage adoption and thus allow appropriate
policy recommendations to be suggested. As a consequence, the remainder of this paper is structured as
follows. In the following main section, an overview of information and communication technology (ICT),
broadband adoption and its use in remote and rural areas is presented. Section 3 details the policy initiatives
that have been launched in Scotland to encourage the diffusion and adoption of broadband. In Section 4, the
authors use a general diffusion model to identify areas where policy initiatives should be developed and draw
conclusions in Section 5.

2. ICT and broadband adoption

Broadband has been much discussed in recent years. For instance, Bauer, Kim and Wildman (2005)
examined broadband diffusion across 30 OECD countries and found that the main factors influencing
broadband take-up were cost conditions of network deployment and the preparedness of the nation. They also
found, perhaps surprisingly, that income showed a negative correlation, which they suggested could be linked
to path dependency or leapfrogging.1 Savage and Waldman (2005), in contrast, developed a utility function
based on survey results that shed light on which broadband attributes are considered to be the most important
by potential adopters.
Both Varian, Litan, Elder, and Shutter (2002) and Vidgen, Francis, Powell, and Woerndl (2004) have
argued that there are advantages to businesses of using broadband, whilst Firth and Mellor (2005) argue that
‘‘broadband may be an essential cost of ongoing competitiveness’’ but warn that this cost may not be
sustainable in remote areas. Although the socio-economic benefits of broadband are widely acknowledged, it
is also recognised that the benefits that accrue are not evenly distributed across society (Firth & Mellor, 2005).
There are geographical and social dimensions to this uneven distribution, with some areas and parts of society
enjoying greater benefits than others. These benefits are also hard to measure, though Ramirez and
Richardson (2005) do suggest a four-fold framework as well as a methodology for identifying the impact of
telecommunication services on rural and remote communities that could be adopted to assess broadband.
Rather than repeat the arguments that have already been made with respect to the advantages and
disadvantages associated with broadband, the following sub-sections focus on those factors that affect
broadband diffusion in remote and rural areas. The sub-sections detail general influences on ICT and
broadband adoption before focusing on more specific factors such as cost and access speed.

2.1. Internet and ICT adoption

Potential adopters of broadband can be split into two groups—those who already have Internet access
(usually via a dial-up connection) and those who do not. Members of the former group will switch to
broadband if it is available and they are convinced of its merits over their existing Internet supply. Members of
the latter group need to first feel a requirement for having an Internet connection at all and then be convinced
that broadband is their best option.
A 2004 survey showed that over a third of the UK adult population still do not use the Internet (Ofcom,
2004). The main reasons for non-use at home are a lack of need or interest, although a significant minority are
put off by various cost considerations. Strover (2001) quotes research carried out in the USA in the late 1990s
showing that households in rural areas are less likely to own computers and to have home Internet access than
those in urban or central city areas.
Rural small and medium-sized enterprises (SMEs) face a number of supply and demand barriers to higher
ICT adoption. On the supply side, a lack of broadband infrastructure and affordable ICT expertise in rural
areas have been reported by Grubesic (2003), Galloway and Mochrie (2005) and Grimes (2005). The difficulty
1
‘‘Path dependency’’ occurs when countries that were early adopters of dial-up are slow migrating to broadband, whilst ‘‘leapfrogging’’
happens when those countries that were late adopters of dial-up move straight to broadband (Bauer et al., 2005).
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of accessing training for staff working in rural SMEs (Deakins, Galloway, & Mochrie 2004) and agriculture
(Warren, 2004) is also a barrier to the successful adoption and use of ICT.
On the demand side, Galloway and Mochrie (2005) report a perceived lack of need amongst rural SMEs.
Rural businesses in England adopt ICT significantly more slowly than their urban peers, with micro-
businesses2 and farmers being particularly disadvantaged in their adoption (DEFRA, 2005; Warren, 2004).
The initial adoption of ICT amongst UK farmers presents many difficulties, including their perception of the
relative benefit of using ICT, educational factors and a preference for using press, TV, fax, phone, etc. The
presence of other family members using a computer is a key help in getting the farmer to use the Internet for
business (Warren, 2004).

2.2. Adoption of broadband

The Broadband Stakeholder Group (2004) identifies awareness, cost and availability as three ‘‘macro-
barriers’’ to broadband adoption. They note that all of these barriers are being lowered across the UK through
advertising campaigns and competition between suppliers. They also list a number of ‘‘micro-barriers’’ to
adoption. These are a set of smaller reasons which may not be enough on their own to stop a household from
adopting broadband, but which form a large enough barrier when several are present. These include concerns
about viruses, changing e-mail address and so on.

2.3. Attributes of broadband

Speed, service reliability and ‘‘always-on’’ have been identified as important attributes for consumers
considering broadband Internet access (Savage & Waldman, 2005). The relative importance of these attributes
depends on social grouping—higher income respondents value these attributes more highly than lower income
users and those with a college degree value speed more, always-on less and reliability about the same as those
without a college degree.
Warren (2004) reports that the minority of farmers who are computer literate struggle with a slow
connection, so the speed of broadband is likely to be a positive factor for them. Research into the factors
shaping an individual’s attitude towards broadband showed that compatibility (how broadband fitted in with
an individual’s experiences and expected future needs), visibility (the degree to which broadband was visible)
and result-demonstrability (how observable the results of using broadband were and how communicable to
others) were all significant in shaping a positive attitude (Oh, Ahn, & Kim, 2003).

2.4. Financial factors

Bauer et al. (2005) note that as broadband is a young technology longer-term diffusion rates are not yet
achieved, so the links between broadband penetration and income or price are not yet clear. Cost is an
important factor in deciding to switch from dial-up to broadband (Geroski, 2000). This is not just the cost of
equipment purchase; for businesses and other organisations there are also the time and financial costs of
retraining staff and any ‘‘down time’’ while the new technology is installed.
Other difficulties in persuading users to switch from dial-up to broadband are reported by Dutton, Gillet,
McKnight, and Peltu (2004). Potential converts are often unaware of the additional benefits that broadband
will bring. If it is perceived as just being ‘‘faster Internet’’ then any extra cost may be difficult to justify if a
dial-up service has previously been acceptable. They also warn of the negative association with ICT
investment, such as previous investments in costly ICT systems and applications which failed to deliver and
were difficult to implement.
Financial factors have also influenced the availability of broadband. Suppliers have been reluctant to invest
in infrastructure in locations where they expect take-up to be low—Grubesic (2003) and Prieger (2003) report
a negative correlation between broadband availability and rural locations. Competition plays an important
role in influencing the speed of broadband uptake (OECD, 2001), but is often missing in rural markets.
2
Micro-businesses are those businesses with 10 or less employees.
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2.5. Social factors

Hollifield and Donnermeyer (2003), reporting on ICT diffusion in rural communities in the USA, found
that the strongest predictor of whether an individual would adopt a specific technology was whether they used
the technology at work. This was particularly true for individuals with low formal education. Savage and
Waldman (2005) found that broadband adoption is most likely in households with a higher income, a college
education and multiple computers.
Without wide availability, adoption rates will be low, but suppliers will be reluctant to provide access unless
they are guaranteed high adoption. One way out of this vicious circle is by subsidising either the providers or
the potential adopters, or both. Encouraging local businesses to adopt technology provides a knock-on effect
to individuals adopting the technology, this being particularly true for locally owned businesses. One way that
this may occur is through the migration of technologically aware entrepreneurs to rural areas who, through
their interaction with local businesses, encourage them to adopt broadband (Malecki, 2003). Other factors
influencing ICT adoption include socio-economic characteristics such as gender, age and education (Hollifield
and Donnermeyer, 2003; Madden & Simpson, 1997).

3. Scotland

Located in the north of the British Isles, Scotland is the second largest of the four countries that constitute
the UK. The population of Scotland is just over five million people, the majority of whom live within the
central belt that runs from Glasgow in the west to Edinburgh in the east. Glasgow is the largest city in
Scotland, whilst Edinburgh is the second largest city. Scotland’s other pre-eminent cities are Aberdeen,
Dundee, Inverness and Stirling. Almost one third of the population live within these six cities, one
consequence of which is that population densities vary considerably across Scotland. Glasgow has the highest
population density at 3290 people per km2 and the Highlands region the lowest at eight people per km2
(National Statistics, 2003: p. 19). Fig. 1 shows the locations of the six cities and the regions of Scotland served
by each of its two regional development agencies, Scottish Enterprise and Highlands & Islands Enterprise
(HIE).
The Scottish Executive is the devolved government of Scotland. The remit of the Scottish Executive is
determined by the Scotland Act 1998 that devolves policy responsibility for some policy remits to Edinburgh,
where the Scottish Executive is based, whilst retaining other areas in London (UK Government, 1998). Those
policy aspects that are retained in London are often referred to as ‘‘reserved matters’’ and include, for
example, energy regulation and national security. As telecommunications relates to the UK single market,
responsibility for the industry has remained in London. As a consequence, Ofcom—the UK telecommunica-
tions regulatory authority—regulates all of the industry across the UK. This, however, does not mean that
broadband policy development is the exclusive preserve of London. Ofcom has consultative panels
representing each of the UK’s four constituent countries and the respective assemblies actively engage in the
consultative processes.
Within Scotland, the Scottish Executive and the two regional development agencies have developed their
own broadband initiatives within the wider UK framework, aimed at increasing both supply and demand. The
following four sub-sections provide respectively an overview of rural Scotland, BT’s trigger and exchange
upgrade programme, the broadband policy initiatives launched by the two regional development agencies and
the two major public sector broadband projects launched by the Scottish Executive.

3.1. Rural and remote Scotland

‘‘Rural and remote Scotland’’ is taken here to mean the whole Highlands and Islands region served by the
HIE and the Dumfries and Galloway and Scottish Borders local authority regions (for which Scottish
Enterprise is the regional development agency). These regions are shown in Fig. 1. The public sector is the
largest employer in these regions, providing around 29% of jobs (Highlands & Islands Enterprise, 2003; South
of Scotland Labour Market Information, 2004). The job structures in rural and remote Scotland compared to
the rest of Scotland are different—a higher proportion of employees in rural and remote Scotland are in
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Fig. 1. Map of Scotland. Source: http://www.scotland.gov.uk.

occupations that typically require lower levels of skills and qualifications (Futureskills Scotland, 2003). The
significance of this for domestic broadband use in rural and remote Scotland is shown by reference to
Hollifield and Donnermeyer (2003), who demonstrated that one of the key factors determining whether a
household adopts ICT is whether the head of the household uses ICT at work.
The regional development agencies conduct an annual e-business survey, monitoring the use and attitudes
towards ICT in businesses throughout Scotland (Scottish Enterprise, 2005). The proportion of businesses
based in rural and remote Scotland connecting to broadband is increasing as shown in Table 1.
Despite this trend, rural and remote Scotland lags behind the rest of Scotland—over 60% of organisations
in Scottish Enterprise’s Glasgow and Edinburgh and Lothians regions have broadband connections. This can
be partly attributed to the make-up of each region: industrial sectors which have the highest broadband
adoption rates, such as financial intermediation companies, are most likely to be based in urban areas, whereas
low adoption industries such as agriculture are predominantly rural.
The 2004 and 2005 e-business surveys reveal a widely held misperception amongst rural organisations
concerning broadband availability. According to the 2005 survey, 46% of businesses in the HIE region
currently using dial-up or ISDN believe that broadband is not available to them but reside within exchange-
enabled regions. Similarly, 59% of all businesses in Dumfries and Galloway and 35% of all businesses in the
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Table 1
The proportion of businesses with broadband connection by region

Year Percentages of all businesses with broadband connection

Highlands and Islands Dumfries and Galloway Scottish Borders

2002 — 2.3 0.65

2003 5.0 3.5 4.1
2004 14 13 17
2005 31 25 43

Source: Highlands & Islands Enterprise 2005; Scottish Enterprise 2005.

Scottish Borders believe that broadband is unavailable. This perception, however, may decline over time.
Research reported by DEFRA (2005) on SMEs in rural England shows that although broadband take-up in
rural areas lags behind that in urban areas, this gap is much less noticeable in rural locations in which
broadband has been available for more than 12 months.
Although comparable data for domestic broadband connections is not publicly available, the annual
Scottish Household Survey shows that a higher proportion of households in rural Scotland than urban
Scotland have home Internet connections (Scottish Executive, 2005a). The same survey also demonstrates that
higher income households are most likely to have broadband. Significantly the survey did not measure
broadband adoption by region across Scotland and as up-to-date information is not available from operators
such as BT, a more detailed picture is not possible.
A survey of older people across Scotland (Scottish Executive, 2003) shows that for all but the oldest (75+)
age group, computer ownership and Internet access are more prevalent in rural areas, contradicting the
findings reported by Strover (2001). The survey data suggests that the next generation of over-75s is twice as
likely to own a computer and use the Internet. Although older people are less likely than younger people to
have had any formal computer training, it is likely that future generations of older people will have had more
IT training and experience. As a result, the proportion of older people willing to use IT will grow.
Population estimates (General Register Office for Scotland, 2004) show that whilst the number of
households in rural Scotland is expected to increase by around 3% between 2002 and 2010, the number of
households with children is set to fall by around 14% over the same period. Savage and Waldman (2005)
found that larger households were most likely to have a high-speed Internet connection.
The Scottish Borders has the highest level of unqualified workforce compared to the rest of Scotland and the
level is also above the Scottish average in Dumfries and Galloway (South of Scotland Labour Market
Information, 2004). This suggests broadband adoption is likely to be low in these regions (Savage &
Waldman, 2005), yet paradoxically the Scottish Borders has a higher proportion (21%) of people with a
degree or higher degree compared to Dumfries and Galloway (16%) and the Scottish average (19%).

3.2. BT exchange upgrade and enabling

BT owns and maintains telephones exchanges throughout rural Scotland. Since 2001, BT has increased the
number of its exchanges that are DSL enabled, with the number of enabled exchanges in the UK increasing
from 750 in March 2001 to almost 3000 by June 2004 (Ofcom, 2004). In part this increase was driven by
registration campaigns that encouraged would-be broadband users to register their interest and through doing
so reach the ‘‘trigger levels’’ set by BT. Once the trigger level was reached, BT would make the necessary
investment to enable the exchange. On the basis of the almost 3000 exchanges, around 85% of the UK
population has broadband access via BT (Ofcom, 2004).
In April 2004, BT announced the immediate end of its trigger scheme. Those exchanges that had reached
more than 90% of their trigger level were given a ‘‘ready for service’’ date sometime in the following weeks.
This was followed in June 2004 by BT’s announcement that it would systematically upgrade all those
exchanges that had a trigger level by the summer of 2005 and that several exchanges would be upgraded earlier
than anticipated. When completed, broadband would be available to around 99.6% of UK businesses and
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homes (BT, 2004). At the same time as announcing this expansion plan, BT stated that around 100,000
businesses and homes across the UK would be without broadband due to the small size of the local exchange.
Significantly BT stated the delivery of broadband to these businesses and households was dependent on
external support. This meant that within Scotland, 399 exchanges would not be upgraded. This reluctance to
invest in rural and remote exchanges is not unsurprising when Richardson and Gillespie (2003) is taken into
account. They draw attention to BT’s unwillingness to offer ISDN in the area served by HEI in the early
1990s.
In April 2005, the Scottish Executive announced that BT would be upgrading 378 of these exchanges under
its ‘‘Broadband for Scotland’s Rural and Remote Areas’’ initiative (Scottish Executive, 2005b). This
programme of upgrades would be funded as part of the Scottish Executive’s £24 million broadband strategy,
with additional funding (up to £5 million) from the European Regional Development Fund (Scottish
Executive, 2005c). Two hundred and thirty exchanges received full upgrades enabling a full range of ADSL
services to be delivered; 148 exchanges were BT Exchange Activated, giving a limited 512 kbps service. It is
worth noting that prior to this expansion of broadband availability into remote and rural Scotland, there were
only approximately 63,000 out of Scotland’s half a million wholesale customers in the area served by HIE (BT,
2005).
Through this programme, all exchanges in mainland Scotland were able to offer a broadband service by the
end of 2005. The 21 rural exchanges which were not included in this programme of upgrades are all small
exchanges located in the Western Isles region of the Highlands & Islands. Broadband coverage in the areas
served by these exchanges is being provided through the Connected Communities project (see below).
The final exchange upgrades and the development of the Connected Communities programme meant that the
Scottish Executive was able to announce that broadband would be available to ‘‘all communities in Scotland’’
(Scottish Executive, 2005c). Interestingly a ‘‘community’’ was defined using ‘‘census output areas’’ (COAs), the
smallest building blocks for the higher order definitions of communities within the national census. A typical
COA contains around 50 households. No policy for broadband provision to smaller villages or isolated businesses
and households has been announced and the number still beyond the reach of affordable broadband is unknown.

3.3. Scottish executive and regional development agency initiatives

As noted above, the Scottish Executive is the devolved government of Scotland. The Executive and its two
regional development agencies have developed their own broadband initiatives which complement those
enacted by London. These initiatives have sought to raise the awareness, availability and adoption of
broadband both nationally and locally.
A number of awareness-raising campaigns have been carried out by the regional development agencies, such
as Highlands & Islands Enterprise’s ‘‘Speak Up For Broadband’’ campaign which received backing from a
collaborative group of local companies. These campaigns initially focused on increasing registrations on
trigger lists and included TV, cinema and press advertising. Both agencies ran neutral broadband websites to
provide information for households and businesses. Scottish Enterprise’s website has evolved into the
Broadband For Scotland website www.broadbandforscotland.co.uk, the main outlet for information about
broadband in Scotland. Local champions were also used to advocate broadband within rural and remote
communities and to encourage trigger list registrations, emphasising the benefits to the community as a whole.
For businesses, Scottish Enterprise continues to fund a number of e-business demonstration centres giving
advice on e-business, broadband, running workshops, clinics and demonstrations. A satellite-enabled
‘‘broadband bus’’ carries this message to remote parts of the Scottish Enterprise region. Both regional
development agencies ran business incentive schemes offering subsidies for businesses taking up their first
broadband connection. These schemes are no longer in operation, though anecdotal evidence suggests the
amount on offer—£300 for an ADSL connection—were too small to have a major impact on take-up.
In areas where ADSL upgrades were initially considered unlikely, alternative technologies such as powerline
carriers have been trialled. In 2002, Highlands & Islands Enterprise also collaborated with BT in two local
Exchange Activate upgrades, carried out as an investigation into the commercial and technical feasability of
this technology (Scottish Executive, 2002b). As mentioned earlier, this technology has since been used
extensively in rural exchanges.
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The Scottish Borders Rural Broadband Project (SBRB) aimed to provide a wireless service to homes and
SMEs in nine pilot regions that were not in the reach of any other broadband services. Although launched
successfully in all its target districts in 2004, take-up suffered when BT upgraded all the local exchanges in the
Borders region and the SBRB was wound down in 2005. Although the project itself failed, it achieved the aims
of raising awareness and take-up in the Scottish Borders region. It is possible that the announcement that
SBRB would be launched influenced BT to abandon its trigger lists in the region and upgrade all the local
exchanges in the SBRB target area.
The Connected Communities project in the Western Isles will supply an affordable satellite broadband
service throughout the areas served by the 21 local exchanges that BT will not be enabling. The service was
launched in late 2005 and is due to come fully online in early 2006. The work-global.com website aims to
capitalise on this service by promoting the Western Isles as a cost-effective location for contact centres, jobs
dispersal and e-working projects.

3.4. Public sector projects

The Scottish Executive is committed to two large public sector broadband projects: the rural Pathfinder
projects (Scottish Executive, 2002a) and the national Scottish Schools Digital Network (SSDN, Scottish
Executive, 2001).
There are two Pathfinder projects focused on the Highlands & Islands and the South of Scotland
(comprising of Dumfries & Galloway and the Scottish Borders), aiming to meet the broadband requirements
of the public sector (schools, health and local authority services). The partners in the project include the
Scottish Executive, the enterprise agencies and local authorities, with the local authorities taking the leading
roles (Scottish Borders Council, 2005).
Since the scope of the projects was laid out in 2001, responsibility for upgrading the National Health Service
(NHS) network in Scotland has passed to N3 Scotland (see http://www.n3.nhs.uk/n3scotland/) and the
Pathfinder projects now focus on providing broadband services to schools, libraries and council offices. The
two projects were launched in December 2004.
In 2001 the Scottish Executive commissioned a report which recommended that every school should have a
broadband connection of at least 2 Mbps via a dedicated intranet (known originally as Spark, now generally
referred to as the Scottish Schools Digital Network, (SSDN). Schools would be connected to the SSDN
network hub via the local authorities, i.e., Pathfinder in rural areas. The SSDN would also contain a national
repository of information, best practice, teaching aids and software required for customisation at local
(school) level. The response of the Executive was to endorse the report and act on its recommendations
(Scottish Executive, 2001).
Learning and Teaching Scotland (LT Scotland) are managing the SSDN, which consists of two major parts:
the SSDN Interconnect and the SSDN Intranet. The Interconnect consists of 37 broadband connections
providing links to Scotland’s local authorities, two national agencies (LT Scotland and the Scottish
Qualifications Authority) and SEEMIS (the management information system used in schools). The connections
were installed during the second half of 2003 and became fully operational during the first half of 2004. The
SSDN Intranet will be a secure IP environment designed to deliver a range of services, applications and content
to teachers, pupils and education managers across Scotland. The procurement of the intranet was completed in
September 2005, with expected implementation by early 2007 (http://www.ltscotland.org.uk/ssdn/index.asp).
This commitment to public sector broadband projects will ensure that employees in the largest employment
sector in remote and rural Scotland are exposed to broadband. In addition to providing broadband at work,
the Scottish Executive has put in place a scheme which allows all public sector employees to purchase a
computer and peripherals at a discounted price (Scottish Executive, 2004).

4. Policy analysis

The previous section has highlighted the wide range of initiatives that have been undertaken with the
intention of encouraging broadband diffusion within remote and rural Scotland. The wide-ranging nature of
these policies raises two questions: first, how do the initiatives complement one another and secondly, have
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A. Tookey et al. / Telecommunications Policy 30 (2006) 481–495 489

any of the initiatives been more successful in encouraging broadband diffusion than others? Fig. 2 presents a
policy map of the national and regional (Highlands & Islands Enterprise and Scottish Enterprise) initiatives.
The timeline in Fig. 2 indicates for how long the initiative was running. Solid circles mark the start and end of
the initiative, arrows indicate whether it is still running and question marks indicate whether there is some
uncertainty over either the start or end date of the initiative. Those initiatives associated with considerable
doubt over either the start or end dates are omitted from Fig. 2.
Fig. 2 can be used to highlight when and where an initiative was undertaken as well as complementary or
contradictory initiatives. One such contradiction would be whether the business incentive schemes were wound
up shortly after BT announced it would be upgrading all its exchanges. This would result in many SMEs
finding that their local exchange is ADSL-enabled but they would not be able to obtain a grant to help them
with adopting broadband. That the e-business demonstration centres continued to be funded means that
information on broadband availability and deployment will continue to be funded so that businesses can take
advantage of ADSL broadband. In contrast, the ‘‘Speak up for Broadband’’ campaign ended when BT
announced its plan to upgrade all of its trigger listed exchanges as it had achieved its aim of widespread
availability through encouraging trigger level registration.
Although Fig. 2 highlights which initiatives are ongoing, it does not provide sufficient insight into how these
initiatives actually interact with one another. A useful starting point to determine such interaction is Bass
(1969). Bass (1969) developed a diffusion model in which adopters are classified as either innovators or
imitators. The former base their decisions to adopt on advertising and other public domain information
whereas the latter base their decisions on word-of-mouth recommendations from earlier adopters.
Fig. 3 illustrates the concepts articulated by Bass (1969) in the form of an influence diagram (Sterman,
2000). The diagram highlights the key variables that are contained within the diffusion model and how they
relate to one another. Each of the arrows (X-Y) can be interpreted as ‘‘a change in X is believed to lead to a
change in Y’’. A plus (+) sign at the arrowhead can be interpreted as ‘‘an increase/decrease in X is believed to
cause the same directional change in Y’’, whereas a minus ( ) sign at the arrowhead can be interpreted as ‘‘an
increase/decrease in X is believed to cause the opposite directional change in Y’’.

BT trigger lists Upgrade trigger Upgrade all exchanges

?
list exchanges
National

N3 Scotland
SSDN
Powerline trials
?

Speak Up For Broadband

Exchange Activate
HIE region

Connected Communities project

?
work-global.com website

Pathfinder Highlands & Islands

Business incentive scheme

Broadband For Scotland website Neutral website

SEn region

Scottish Borders Rural Broadb and project

Pathfinder South of Scotland

e-Business demo centres

2001 2002 2003 2004 2005 2006

Fig. 2. Policy map.

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Fig. 3. General diffusion model (Sterman, 2000).

In Fig. 3, the coefficients of innovation and imitation represent the probabilities of a potential adopter
deciding to make an innovative or an imitative purchase. In this basic model, the coefficient of innovation is
determined by external sources of awareness, usually interpreted as the effect of advertising. The coefficient of
imitation depends on the contact rate—the frequency with which adopters and potential adopters encounter
each other—and the adoption fraction, that is, the proportion of such encounters that are sufficiently
persuasive to lead to the adoption of broadband.
A modified version of the general innovation diffusion model is presented in Fig. 4. In this modified version,
two pools of potential adopters are identified: those currently using a narrowband (dial-up) connection (upper
half of the diagram) and those without any current Internet connection (lower half of the diagram). In this
model, no distinction is made between business and residential users and the public sector broadband projects
are excluded. A factor that has been included in this model is the availability of broadband as this is
recognised as being key to whether or not an individual can choose to adopt broadband. The model also
includes utility functions for dial-up users and non-users. The utility function weights the different criteria on
which a potential adopter bases his or her purchasing decision (Savage & Waldman, 2005).
The two model outputs of interest are the total number of adopters (which will include both the number of
households and businesses that eventually decide to adopt broadband) and the rate at which they adopt. The
sizes of the two potential adopter pools (with and without dial-up) will directly influence the overall number of
adopters. The rate of adoption is affected by the coefficient of innovation and imitation. Fig. 4 indicates that a
change in the utility function affects both coefficients, consequently the utility function directly influences the
rate of adoption.
The different policies identified above will influence the overall diffusion process at different points in the
model. The model can be used to assess how a policy will impact the broadband adoption process. For
example, the amount and quality of publicity, advertising and information provision will influence the
coefficient of innovation. Exchange upgrades, trigger lists and the provision of alternative technologies will
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A. Tookey et al. / Telecommunications Policy 30 (2006) 481–495 491

Fig. 4. Broadband diffusion model.

influence availability whilst policies towards price, broadband specifications (speed, etc.) and so on will affect
an individual’s utility function and hence the coefficients of innovation and imitation. Although Fig. 4 does
not consider quantitative data, it has the benefit of being a simple model which decision-makers can use to
assess the possible impact of future policies.
The model can also be used to provide an understanding of how different factors contribute to broadband
adoption and how these factors interact with one another. Two such factors that can be explored are pricing
and advertising. The price of broadband influences an individual’s utility function for both users and non-
users of dial-up. The latter group will be concerned with the absolute cost, which will consist of the flat-rate
broadband monthly fee and the cost of a suitable computer and peripherals. The absolute cost will be of less
importance to dial-up users (who are likely to already own a suitable computer and are already paying for an
Internet provision) than the relative cost compared to their current (usually pay-as-you-use) dial-up
connection. If the model was to distinguish between domestic and business users, the financial utility function
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for businesses would also include the business incentive schemes run by the enterprise agencies. The influence
diagram of the financial utility function for dial-up users is shown in Fig. 5.
In Fig. 5, falling broadband costs lead to an increasing utility function, hence making broadband more
attractive. In addition, for dial-up users high dial-up costs increase the utility function and make the switch to
broadband more attractive. On closer inspection, it is possible to identify a feedback loop in Fig. 5 (identified
by a negative sign enclosed by an arrow). This loop shows us that the dial-up users for whom the utility
function is highest are those with the highest dial-up costs as they are the heaviest users. Since these users are
the most likely to switch to broadband, the average dial-up cost will drop as the heavier users of dial-up
migrate to broadband, with the consequence that those dial-up users who remain are those with a lower utility
function. This is a balancing or ‘‘goal seeking’’ feedback loop that indicates that dial-up users will continue to
migrate to broadband as long as there are discernible financial benefits in such a move.
A second-area that can be explored using the model are the promotional campaigns run by both regional
enterprise agencies and the Scottish Executive. These influence the innovative adoption rate (via the coefficient
of innovation) where broadband is available and encourage trigger list registration where it is not. That the
scale and scope of the promotional campaigns has been reduced implies that they have been successful and
thus no longer necessary—trigger list targets have been reached and awareness of broadband increased. These
relationships are shown in Fig. 6 below. Feedback loops in this model show how promotional campaigns
influence the coefficient of innovation and availability and hence the number of adopters. The feedback loops
are applicable to both users and non-users of dial-up, though the coefficient is likely to be higher for the
former group. The loops show that the Scottish Executive and the enterprise agencies have reacted to the
success of their campaigns to encourage trigger registrations and adoption—with comprehensive availability

Fig. 5. Financial utility function model.

Fig. 6. Promotional model.

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and increasing adoption there is no longer a perceived need to conduct high-profile awareness-raising
campaigns.
According to Bass (1969), innovative adoptions are highest at the beginning of the product cycle and
decrease over time. In such a situation, it is natural to concentrate promotional activity at the time of the
product’s launch. In remote and rural Scotland, availability did not become widespread until several years
after broadband was launched in other parts of the UK. As a consequence, widespread availability coincided
with the scaling down of promotional activities.
If the various promotional activities had been maintained, they would have capitalised on the widespread
availability. This is particularly important when it is remembered that widespread availability is not the same
as widespread adoption of broadband. Thus, rather than scaling down promotional activities the various
regional development agencies should in fact have maintained their efforts so that widespread availability is
translated into widespread uptake.

5. Conclusion

This paper has described the policy initiatives that have been implemented in rural and remote Scotland to
encourage the diffusion and adoption of broadband. These initiatives, which are wide ranging in nature and
have changed over time, have sought to widen the availability of broadband and encourage its adoption so
that its socio-economic benefits can be enjoyed. Complementary and (in some cases) contradictory policies
were explored and areas where policy may be applied in the future suggested. Influence diagrams were used to
investigate the impact of different policies on take-up rate and total adoption.
Whilst it is clear that progress has been made in encouraging the diffusion of broadband in rural and remote
parts of Scotland, the first conclusion that can be drawn is that broadband availability does not lead to its
adoption. Through a range of initiatives broadband is now available across almost all of remote and rural
Scotland. However, adoption in these areas has lagged behind availability in part because advertisement
campaigns designed to raise awareness have been curtailed at the point when availability has been achieved.
Thus, the second conclusion that can be reached is that national initiatives such as those designed to raise
awareness of broadband are not perfectly aligned with initiatives that are solely focused on rural and remote
Scotland. It is, therefore, questionable as to whether either initiative has been as effective as it could have been
if they had been co-ordinated.
A third conclusion that can be drawn relates to cost. Although broadband costs have declined and are
continuing to decline, it is necessary to draw a distinction between those already using narrowband (dial-up)
connections and those who are not. For those with an existing connection, relative costs are important, whilst
for those without, absolute costs come to the fore. Absolute costs form a higher barrier to adoption in remote
and rural Scotland than elsewhere due to the lower incomes enjoyed in these areas. Although broadband
prices have declined in the UK, service providers have also tended to improve the specification of the product
that they provide whilst maintaining a more or less constant price (Baake, PreiXl, Swaminathan, & Wey, 2005:
145ff). Thus reducing costs, in terms of both broadband access prices as well as the cost of the relevant
equipment, is necessary to further encourage broadband adoption in remote and rural Scotland.
Through focusing on broadband in rural and remote Scotland, this paper has raised several areas where
further research is warranted. The model presented above provides policy-makers with a tool which can be
used to assess how individual policies will impact on the broadband adoption process. The model can also be
used to provide an understanding of how factors such as pricing and advertising contribute to broadband
adoption. The model could be extended through differentiating between residential and business broadband
users. The extension would seek to determine whether residential and business adoption is driven by a similar
set of factors, or whether the coefficients of imitation and innovation are fundamentally different. If they are
different, the policy implication would be that different and perhaps more targeted policies need to be
developed.
This suggests a second area of further research, namely, what is the contribution of broadband to rural
development? Some have equated broadband to the transformation effect of electricity in the 1920s and 1930s.
This does not acknowledge that for broadband to have such an impact, how it can be used needs to be fully
understood by business and residential users alike. Although some attempts have been made to suggest how
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broadband could be used, these need to be extended and intensified on the one hand and related to the rural
and remote context of users on the other hand. Hence, further research is required into how broadband may
be used to help achieve the wider socio-economic objectives outlined by the Scottish Executive. Of particular
importance here is the issue of geographical peripherality. In a six country study of rural connectivity, those
surveyed in Shetland, one of the more remote and rural parts of Scotland, were the least likely to say that
information and communication technologies compensate for geographical peripherality (Grimes, 2005: p.
1076). If the wider socio-economic objectives of the Scottish Executive are to be achieved, further research is
required into how this may be overcome.
Even though these areas of further research have focused on Scotland, it is clearly the case that an
international dimension can be added so that initiatives enacted in Scotland to encourage rural and remote
broadband diffusion can be compared to those undertaken elsewhere. Not only would this allow for initiative
effectiveness to be compared, but it would also identify whether there are initiatives used elsewhere that could
be implemented within Scotland.

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