Connecting Scotland programme: full business case

5 Commercial Case

5.1 Introduction

The purpose of the commercial dimension of the business case is to demonstrate that the preferred option will result in a viable procurement and a well-structured deal between the public sector and its service providers. The commercial case for the next phase of Connecting Scotland sets out to appraise the commercial arrangements and procurement solutions currently in place for the project. This will help gain an understanding of any changes that may be required within the commercial arrangements and procurement strategy for the next iteration of the initiative dependent on the delivery model approved.

5.2 Overview of the procurement strategy for 4G & 5G mobile connectivity and web based proprietary devices

The procurement process for the award of the National Frameworks for Web Based and Proprietary Devices was conducted by the Collaborative ICT Team at Scottish Procurement. The development of the procurement strategy followed a robust process in accordance with the best practice established in the Procurement Journey. The strategy was developed with input from the supplier market and endorsed by a User Intelligence Group, with representation from across the Scottish Public Sector. The procurement followed the ‘Open’ procedure; this was conducted in accordance with the Public Contracts (Scotland) Regulations 2015 and sought to appoint a single supplier to deliver the Framework requirements. The contract was awarded to the most economically advantageous tender following a comprehensive tender exercise.

5.3 Overview of current contractual arrangements

The current Framework supplier of devices is XMA. All Scottish public sector organisations have access to this Framework and can place orders directly with XMA. Each call-off contract will be based on the Standard Terms of Supply (Schedule 5) of the Framework Agreement.

The current Framework provides access to a range of web-based and proprietary devices, with savings of up to 8.55% (depending on the category of device supplied) when compared with other frameworks. Devices are supplemented by a range of accessories and services. Since established on 30 November 2019, nearly 500,000 core devices have been supplied via this Framework. There were 63,603 devices supplied to Connecting Scotland.

The Framework secures a diverse range of products, which offers Scottish public sector organisations choice, at market leading prices. In addition, there is a range of competitively priced upgrades, accessories and services, which complement the core devices.

The Framework delivers significant cash savings and environmental benefits, including a reduction in carbon emissions through the inclusion of the latest environmental and energy efficiency certification. It satisfies demand for new and emerging requirements through a process of continuous improvement, throughout the life of the agreement.

The Framework provides one central point of ordering and contract management covering warranty, insurance, and general supply enquiries. The Framework addresses the Scottish Government’s and Scottish public sector organisations’ aspirations regarding ethical, social, economic, environmental and sustainability issues.

5.4 Charging mechanism in respect of XMA

The individual core elements of the Framework Agreement feature individual pricing methodologies: All three charging mechanisms will apply to Connecting Scotland

• Proprietary Devices – a minimum discount from list prices to be applied for the duration of the framework. (Apple & Microsoft Products)
• Web Based Devices – fixed price for the duration of the framework, subject to a Variation of Price clause based on movements in the £/US$ exchange rate. (HP Chromebook)
• Thin Client Devices – cost-plus, fixed for the duration of the framework.

The specific charging mechanism for web and proprietary devices is provided by XMA and is available on the Scottish Government procurement knowledge hub.

5.5 Connectivity contractual arrangements

The mobile voice and data services framework was awarded to Vodafone for a 3-year period (2 plus 1) in March 2020 and is due to be replaced in March 2023.

Scottish Government Terms and Conditions form the terms of the framework. A simplified order form was subsequently agreed with Vodafone for Framework public bodies to sign their call-off contracts; these contracts encompass the Standard Terms of Supply (Schedule 5). All Scottish public sector bodies can use the framework, except for the health sector who have their own arrangements in place.

The framework covers a wide range of mobile services, devices and accessories – it incorporates innovation and continuous improvement, including the provision of the latest generation of 5G connectivity and mobile data Internet of Things services.

The Connecting Scotland programme has benefitted through a reduced tariff providing unlimited data for users and free-of-charge MiFi connectivity devices provided by Vodafone; this resulted in significant savings for the programme.

There are single user social tariffs that are currently and widely advertised. These tariffs initially appear to be good value, but they are not unlimited data and are short term duration. Connecting Scotland is currently exploring a method of maximising connectivity with Vodafone, by aggregating and balancing data usage. This could benefit users by maximising available data and help Connecting Scotland by maximising cost effectiveness.

5.6 Charging mechanism in respect of Vodafone

The framework prices agreed with Vodafone are firm for the duration of the framework and associated call-off contracts. For the future iteration of Connecting Scotland there may be a need to request a price for a special project for example hardware associated with providing connectivity in a community space. This will be carried out via the proper procurement framework procedure.

5.7 Commercial benefits of the existing arrangements

The incumbent suppliers have experience in delivering similar scale projects. The frameworks provide access to 4G & 5G mobile data connectivity and digital devices at market leading prices.

Vodafone is one of the four mobile telecommunications network operators licensed to operate in the United Kingdom. They have been at the forefront of the development of cellular mobile communications since their launch in January 1985 and are currently rolling out their latest high performance 5G mobile network technology. Connecting Scotland benefits from having access to these developments and has an excellent working relationship with Vodafone at a local and national level.

XMA are approved distributors of IT technology for Microsoft, HP, Google and Apple. Connecting Scotland benefits from the client support services XMA provides from their national operations centre along with the local support they deliver from their Scottish office.

Vodafone and XMA have a record of accomplishment of providing commercial benefits to Connecting Scotland across the previous phases when the primary focus was on a “one to one” user delivery model. The future iteration of Connecting Scotland will include elements that focus on a “one-to-many” user delivery model.

Vodafone can contribute future commercial benefit via the provision of 4G and 5G wireless technology for place-based connectivity and enhanced options for maximising the capacity and cost effectiveness of mobile data usage.

XMA can contribute future commercial benefit via their enhanced service model which streamlines and adds value to the delivery and support of devices. XMA via their relationships with Microsoft, Apple and HP/Google are already contributing commercial benefit in terms of digital skills training and device accessibility support.

5.8 Commercial risks of the existing arrangements

The national framework agreements for both 4G/5G mobile data connectivity and digital devices are due to expire during 2023: the agreement with Vodafone is due to expire at the end of March 2023 and the agreement with XMA at the end of November 2023. The current suppliers may or may not be successful in retaining their respective framework agreements. Should there be any changes to the current procurement arrangements, provision has been made by Scottish Government procurement to ensure Connecting Scotland can continue to obtain devices and connectivity.

There is an additional commercial risk if Connecting Scotland does not receive sufficient quantum of funding to participate within the existing models of procurement. If Connecting Scotland is unable to purchase enough goods or services, there is a risk that the programme may miss the favourable prices available on the Frameworks. If Connecting Scotland is no longer a purchaser, then there is the risk that the commercial relationships with suppliers would fundamentally change or even cease to exist.

5.9 Overview of contractual arrangements with service delivery partner - Scottish Council for Voluntary Organisations

Connecting Scotland has a service delivery partner: the Scottish Council for Voluntary Organisations (SCVO).

Before the pandemic, addressing digital exclusion was a key priority for the Scottish Government, as outlined in the 2017 publication Realising Scotland’s Full Potential in a Digital World: a Digital Strategy for Scotland. Many targets had been met since publication of this strategy, including a coordinated partnership approach to addressing digital exclusion; introduction of a Digital Charter; and advances in broadband provision. Despite this progress, significant challenges to digital inclusion remained, especially to vulnerable groups such as older and disabled people and people in poverty.

As COVID-19 restrictions resulted in an accelerated move towards online provision of services, the impact of digital inequality became more pronounced, and the situation had to be dealt with as a matter of urgency. The Chief Design Officer of the Scottish Government published a Call to Action on 19 March 2020, inviting organisations and individuals to join forces to help tackle digital inequality. As leaders in the coordinated partnership approach already underway to tackle digital exclusion, SCVO took up the mantle immediately; sharing and answering the Call to Action and forming leading roles on the initial programme team set up to take forward this work, running the initial pilot projects. The output of this collaboration resulted in the formation of Connecting Scotland.

In the previous iteration of Connecting Scotland, SCVO were responsible for the purchase of connectivity and devices through the Framework suppliers, Vodafone and XMA. They also arranged the onboarding of users and the distribution of devices plus technical support and device repairs from XMA. including internet connectivity (MiFi/SIM card) management with Vodafone. SCVO also co-ordinated the user training, Digital Champion and technical support services within their own network of social good partners and managed relationships with all 32 Local Authorities, including the assessment panels for each delivery phase. They also managed the Connecting Scotland website and associated communications to ensure that clients and organisations were aware of the levels of support available. They are currently under contract to provide these services till 31 December 2023.

5.10 Breakdown of costs associated with the services provided by Scottish Council for Voluntary Organisations

Financial year	Date of Issue	Organisation	Grant Title	Award Amount (£)	Grant Description
2020-2021	14/05/2020	Scottish Council for Voluntary Organisations (SCVO)	Connecting Scotland - Phase 1	(Capital) £3,000,000 (Resource) £1,000,000	Connecting Scotland project to reach clinically high and very high-risk people in the COVID-19 situation who are currently digitally excluded
2020-2021	12/10/2020	Scottish Council for Voluntary Organisations (SCVO)	Connecting Scotland - Phase 2	(Capital) £13,750,000 (Resource) £350,000	Connecting Scotland project to reach clinically high and very high-risk people in the COVID-19 situation who are currently digitally excluded
2021-2022	23/03/2021	Scottish Council for Voluntary Organisations (SCVO)	Connecting Scotland - Winter Support & Phase 3	Winter Support Package (Capital) £4,100,000 (Resource) £95,000 Phase 3 (Capital) £25,400,000 (Resource) £400,700	Connecting Scotland project to reach clinically high and very high-risk people in the COVID-19 situation who are currently digitally excluded

5.11 Procurement of services and products required to simplify future Connecting Scotland operations

Connecting Scotland has been conducting primary research across previous individual users and stakeholder groups. In relation to devices, this research has highlighted some additional products that may be considered for inclusion within the portfolio of the device hardware. The additional products meet accessibility and educational needs. For example, there is a consideration to meet the requirement to provide a digital device with the functionality and memory capability to operate within an education or learning role.

Connecting Scotland has held meetings with Microsoft to gain insight into their best possible options. The device Microsoft recommend for this purpose is the MS Surface AC which meets the required specification. Microsoft do not supply this device directly; it is supplied via their network of distributors. XMA is part of this distribution network and Connecting Scotland would be able to purchase this device from XMA as part of the existing procurement framework agreement.

Connecting Scotland met with Google to gain insight into the capability of their devices to meet the needs of disabled users and those with visual or hearing impairments. Google confirmed that a full suite of accessibility tools is embedded within the Chrome OS operating system, which is present in the HP Chromebook. This is the primary device supplied to most Connecting users and supplied by XMA.

In relation to connectivity, as well as maintaining the individual connections, Connecting Scotland has conducted a successful partnership programme trial of providing connectivity within community spaces, exploring the “one-to-many” approach. To provide internet connectivity with the required data throughput speed, functionality and reliability, the use of an enterprise grade 4G wireless internet router is required. This device differs from the existing portable 4G MiFi device used previously by Connecting Scotland, as it is a permanent installation, with the facility to use an externally mounted antenna and be connect to a wired or wireless connectivity network within the building. Vodafone have confirmed that they can supply this type of hardware as part of their existing product portfolio under existing frameworks.

5.12 Strategy for the technical support of devices

Connecting Scotland in its previous iteration provided over 60,000 connectivity and device assets to citizens in need across Scotland. An important element of the Connecting Scotland service for the users both now and in the future will be the technical support of the user device hardware. This was not considered in the first iteration of Connecting Scotland due to the nature of the pandemic response.

It is important that the user understands and is comfortable with the process for accessing support with their device, including reporting a problem or a fault. It is also important that this activity is carried out in the most environmentally friendly and cost-effective way. As part of a future commercial strategy, Connecting Scotland should consider formulating and implementing a strategy for the effective technical support of devices for these reasons. Given the circumstances of those accessing the Connecting Scotland programme, having a device that is inactive due to fault or repair requirements negates all the possible benefits of having that device at all. Further due to the level of confidence of the user of the device, dealing with repairs and faults may be the cause of anxiety which again could negate progress in relation to digital inclusion.

To implement this strategy, there are two processes that should be considered which cater for the needs of the device and the client. According to the supplier, all the legacy devices deployed in the first iteration are now out of the manufacturer’s warranty period, which is typically one year. The device warranty support covers component failure or electronic breakdown of the device. However, accidental damage and liquid ingress are excluded from this warranty and will be chargeable.

Currently, if a Connecting Scotland device is returned to SCVO under this category, the direction has been to replace it, where devices are still available. This arrangement was put in place due to the complexity of the initial process for returns and the length of time repairs took. This is not sustainable in financial or ecological terms, so the team are working with suppliers to streamline this process and make the programme more efficient. A process for in warranty technical support is outlined in this document along with a process for out of warranty repairs and accidental damage. It is recognised that this aspect of Connecting Scotland would only be feasible under more expensively costed operating models however, it is important to include this information for completeness.

5.12.1 In-warranty device repair

The Connecting Scotland programme procures devices from its single source supplier XMA, who also provide technical support solutions for the hardware. XMA are authorised by the hardware manufacturers Apple, HP/Google and Microsoft to carry out approved warranty repairs on their behalf.

XMA have costed Level 1 and Level 2 client and device support where a problem can be resolved over the telephone. Level 3 support is where a device requires a physical repair. Fault reporting and repair support for users of the Connecting Scotland programme is carried out via XMA. Under this support service, users will be provided with the service request procedure, all contact details (in printed and easy read form within their Connecting Scotland welcome pack), and on the Connecting Scotland web site (should internet access remain available on the device). In the future, should this approach be funded, this information could be etched on the rear panel of all newly shipped devices and will also be available from the Connecting Scotland user support contact or Digital Champion. Devices that require a physical repair by XMA will be collected by courier from the user and a replacement device delivered.

5.12.2 Out of warranty device repair and accidental damage

The Connecting Scotland programme will include users with devices that are no longer covered by the manufacturer’s warranty. These devices may develop faults and require repair or may have suffered accidental damage. To address this problem on a local level, Connecting Scotland has been exploring a device support option in addition to the XMA device support process.

Connecting Scotland were approached by a local Scottish IT and electronics repair company to explore possible models. This company already provides repair services for the City of Edinburgh Council for devices in schools. They have walk-in centres in Glasgow and Edinburgh where they repair a wide range of digital devices. They also provide a device uplift and drop off service by courier. The company already undertakes out of warranty and accident damage repairs for a wide range of consumers. They are not contracted by the device manufacturers to carry out their warranty repairs; this is the province of XMA, but they can repair devices to the required standard out of warranty. There is a walk-in service or a courier service for users. The average cost of a device repair will be £100, and a screen protector to help prevent future damage will also be fitted. The Fast Track User Research programme currently being carried out by Connecting Scotland highlighted a requirement for and a willingness to engage with this type of service, for users with faulty and accident damaged equipment.

5.12.2.1 Overview of mobile connectivity from a commercial perspective

In order that Connecting Scotland can fulfil its obligations to its stakeholders and users, it must develop an understanding of the commercial landscape of mobile data connectivity.

The current mobile connectivity packages on offer from the four main UK mobile network operators are now focusing less on call minutes and text messaging and moving towards overall mobile data usage. In the context of Connecting Scotland this is likely to simplify the tariff structures that can be put in place, particularly if Connecting Scotland was ever required to provide mobile telephones to users.

The UK market is going through a phase of consolidation with varying levels of business alliances being set up between BT and EE and Virgin Media and O2. Connecting Scotland are currently supplied with mobile data connectivity by Vodafone, although it is possible to obtain connectivity from BT/EE if there was a situation where Vodafone could not provide adequate radio coverage and BT/EE could.

The UK Home Office is currently working on having the emergency services radio communications network upgraded. The project, known as the ESN, is being implemented by BT/EE. An obligation, as part of this project, is to offer commercial access to this network through what is called the Extended Area Service. The following is an extract from the Emergency Services Network Overview (updated April 2022):

“The Extended Area Service (EAS) is a critical part of ESN and will ensure there is ESN coverage in some of the most rural and remote parts of Great Britain. A total of 292 4G sites are being built by the Home Office to supplement EE’s ESN network and will maximise emergency service coverage in those areas. Wherever possible, mast structures will be designed to be easily upgraded. As part of the government’s commitment to increase digital connectivity EAS masts will be available for other mobile operators to offer commercial services as part of the Shared Rural Network programme run by the Department for Digital, Culture, Media and Sport”.

This may have a commercial and operational impact for Connecting Scotland as many of these radio masts will be in rural areas of Scotland. Connecting Scotland would be able to provide connectivity to users in these locations.

In commercial terms, mobile data is a commoditised product that is priced using a tariff structure akin to other utilities like electricity, gas and water. The mobile network operators are keen to have as many subscribers as possible on long term network services contracts. However, there is a move towards connectivity without a contract with retail suppliers like Voxi and GiffGaff, a variation on the “pay as you go” connectivity model. Anecdotal evidence from Connecting Scotland users and some stakeholders shows that this method of paying for connectivity is good value for money and easy to manage. This may be a useful commercial option should Connecting Scotland wish to harness any residual end of contract MiFi assets to provide a pool of rapid deployment connectivity should the need arise.

Voxi is owned by Vodafone, has its own social tariff and their sim cards are compatible with the Connecting Scotland MiFi units currently operating on the Vodafone network. This will also maximise the life of the hardware and defer any WEEE directive disposal costs. This option may also have the capability to augment the social tariffs provided via the mobile telecommunications industry sponsored National Data Bank which is administered by The Good Things Foundation.

5.12.2.2 Mobile connectivity from a technology perspective

Access to internet connectivity using the mobile telephone network is currently via the current fourth generation (4G) of digital cellular communication technology, operated in the UK by BT/EE, Virgin Media/O2, Three and Vodafone. These network operators will continue to utilise 4G, particularly in non-metropolitan areas and in rural communities. The network operators are currently introducing the fifth generation of digital cellular communications technology (5G) to provide enhanced connectivity for subscribers. It is already available in the metropolitan areas of Edinburgh, Glasgow, Dundee and Aberdeen.

These new deployments of 5G connectivity will deliver improved high-quality, resilient, high-data throughput speed and low latency mobile data performance. This technology is also available for use within private deployments. Private 5G networks are being installed in situations where high quality connectivity is required. A private system has recently been deployed in the maritime port in Belfast and in large industrial locations across the UK. Although the capital investment in these networks is likely to be high, to stimulate their adoption OFCOM have set the annual licence fee for private 5G networks at £950 for three years.

In the context of the future planning for Connecting Scotland, this technology could be harnessed to extend the existing connectivity from libraries and community venues out into the wider community. In essence, Connecting Scotland could provide free internet access in public spaces, possibly under a recognisable brand name.

Both 4G and 5G technologies will continue to meet the ongoing mobile connectivity needs of the users of Connecting Scotland.

There is a further option to integrate 5G mobile technology as part of the current “Last Mile” fixed line broadband delivery strategy. This hybrid approach – using both 5G and optical fibre – may reduce the roll out timescales of broadband. This will also enhance the performance of internet connectivity with the high data throughput speeds and low latency performance of 5G technology.

Connecting Scotland has adopted an integrated approach to working across the connectivity landscape. Central to this strategy will be periodic group sessions with key players across the public sector, academia, telecommunications industry and the third sector.

5.12.2.3 Fixed line broadband connectivity from a technology perspective

The technology currently underpinning fixed line broadband connectivity in Scotland is optical fibre with copper wire delivery for the “last mile” from the Openreach cabinet to the home. There have been recent proposals that 5G fixed wireless access be used to replace copper in some cases.

Presently, there is a lot of activity around upgrading the fixed line infrastructure and the installation of high-speed optical fibre (FTTH/P/B fibre to the home/premises/building), with organisations like CityFibre taking a prominent position in Scotland. BT/Openreach is also rolling out high speed fibre but is additionally upgrading their traditional/legacy networks with last mile copper delivery (FTTC fibre to the cabinet).

5.12.2.4 Strategy for managing the Connecting Scotland Connectivity Client Base: Connectivity support facilities

Connecting Scotland provides internet connectivity to users via 4G personal MiFi routers which are connected to the Vodafone Mobile Telecommunications Network. Each MiFi router is equipped with a SIM card (subscriber identity module). Each SIM card facilitates connection to the mobile network by pairing the SIM card number (IMSI) with the mobile identification number (MIN) on the corresponding mobile network. When a Connecting Scotland user is onboarded to the system, the connection process is currently carried by the Connecting Scotland delivery partner SCVO and Vodafone.

Vodafone has provided Connecting Scotland with a suite of online connection management tools, Vodafone Corporate Online, which is augmented by the support of a dedicated Vodafone service manager.

It is accepted industry best practice that organisations managing telecom connectivity have the facility to manage and monitor the activity of the connections on their client base. This does not mean that surveillance is used by the telecommunications service provider, as the information on who has the SIM is separate from the information on the SIM itself. The data is anonymised by Vodafone in line with best practice and regulations. These connectivity management tools will provide Connecting Scotland with up-to-date information on the data usage activity across the client base.

These connectivity management tools have not been used to their full capacity up to this point. In the future Connecting Scotland will also be able to access this facility directly to ensure that the connectivity is maximised both from the user’s perspective and to ensure best value for money for the programme.

5.12.3 Strategy for managing the Connecting Scotland Digital Support Work

An individual requires three elements to assist them in being digitally enabled: an internet-enabled device, connectivity and the skills and confidence to use these effectively. The individual also requires motivation to want to be digitally enabled. Evidence has shown that often the development of digital confidence and capacity relies on the goodwill of friends and relatives of the person learning. It is an established principle of effective digital inclusion that 'trusted relationships' and informal learning are central to building digital skills and confidence. This can be through friends and family, or trusted people providing support in the community where there are pre-existing relationships. The latter is known as 'embedded' digital support, where it is delivered alongside core support in the community and sits within the context of the learner's wider social needs. To this end, a proposal has been developed to respect and recognise these contributions while providing resource, training and support for those who require, (or would like) a more formal recognition of their actions.

5.12.4 Options for generating funding

Connecting Scotland is currently exploring options for generating funding.

In line with our strategic approaches for Connecting Scotland as set out in the strategic and socio-economic case, it may be possible for future iterations of Connecting Scotland to fulfil a facilitation role, supporting stakeholders and community organisations that are looking to generate funding and ongoing revenue in relation to their digital inclusion initiatives. For financial regulatory reasons, this will be restricted to helping stakeholder organisations gain a better understand of the funding landscape and what funding might be available by signposting them to sources of professional advice.

There are sources of funding from a local Scottish perspective and some alternative methods of funding that may be considered.

5.13 Conclusion

Connecting Scotland is well-placed to fulfil the commercial needs of stakeholders and clients. The team have access to the Scottish Government procurement framework, providing cost savings and environmental benefits. There are good relationships in place with suppliers which have brought further savings and put the programme in a good place in terms of taking advantage of newer technologies. Strong relationships with SCVO as delivery partner continue to bear fruit as the programme develops. The team are looking to the future by planning for the possibility of additional streams of income, including ESG.

The information held by the Connecting Scotland team in this area supports Options 2, where Connecting Scotland is a central hub for Scottish Government and part of a Digital Inclusion Alliance where this information can be shared easily and acted upon by individual organisation.