Stuart Gibson: Capital is scarce, but digital development will pay dividends

Wales, Yorkshire, Birmingham and even Cumbria and Cornwall, as well as comparable countries such as Sweden and New Zealand, are pressing ahead with digital development, while the Scottish Government points to further research before any meaningful decisions are made.

How Scotland will compete in national and international markets, which are increasingly dependent on state-of-the-art electronic infrastructure, is unclear. Equally, there is little detectable urgency in ensuring that we succeed in combating digital exclusion, particularly in rural areas.

First generation broadband policy, which is enshrined in an historic 512Kbps universal service commitment, will just about deliver e-mail and patchy internet access, but it desperately needs updating.

Next generation access infrastructure will offer much quicker downloading of films, music and broadband-delivered television. Fast upstream and downstream speeds will facilitate the transfer of complex data, large files and bespoke video applications relevant to SMEs. There are also significant savings to be gained in remote care and health provisioning, where Scotland is already an international leader.

We must move quickly to establish a framework strategy. The Digital Scotland Minister must establish a small team of key stakeholders - representing business leaders, the telecoms sector, local authorities and national agencies - to produce a practical Digital Scotland framework by the end of 2010.

Central to the plan must be the delivery of next generation or "superfast" broadband infrastructure across the vast majority of Scotland. Reform Scotland's latest report, Digital Power, suggests a target of taking fibre-optic cables to within two miles of all communities of more than 1,000 premises and within 20 miles of smaller communities using microwave and wireless links.

But the point of a plan and dedicated ministerial leadership - which Wales has had for years - is not just about improving infrastructure. It is about creating an industrial-scale digital economy, optimising public sector procurement and e-health benefits and developing a training and digital skills programme.

Reform Scotland believes that by 2015 we can substantially deliver on the targets set out within a 200m cost plan, but we must maximise existing fibre deployment and use wireless where practical; the plan must be phased and look to consolidate existing public sector networks and aggregate public sector procurement so that the net bill for government intervention is much less than the total cost.

BT and Virgin Media are building upgraded networks in our major cities, but with a high overlap in essentially the same, commercially viable, locations.There will be no room for altruism and some market intervention will be necessary. The challenge is minimising it and assessing how it is best executed and financed.

Capital is scarce and hard choices have to be made. But we need to ask whether, for example, Scotland needs a new Forth crossing more than a modern, fit-for-purpose electronic network, at a fraction of the cost.

The Scottish Government needs to commit to ministerial leadership and get some momentum behind an integrated Digital Scotland plan. The issue is no longer "first mover advantage" - it is about catching up before we get left behind.

• Stuart Gibson is former head of telecoms and media at HBOS and manging director of Funded Solutions, a business and banking advisory service.