Northern Ireland s Fibre Future

(1)

Northern Ireland’s

Fibre Future

Report on the economic impact of

fibre broadband in Northern Ireland

SUPERFAST

(2)

SUPERFAST

Broadband Northern Ireland

Contents

Page

Introduction

Fibre Broadband in Northern Ireland

1 – 4

Internet

Enabled

e-Solutions 5

–

6

Creative

&

Digital 7

–

8

Financial

Services 9

–

10

Advanced

Manufacturing

11

–

12

Retail 13

–

14

Agri-food

15

–

16

Overall Value of Fibre to Businesses in Northern Ireland

17 – 18

Method of Calculating Business Impacts

19 – 21

Contacts

(3)

SUPERFAST

Introduction:

In January 2013, BT commissioned Regeneris*, to conduct a study into the potential economic

benefits of fibre broadband. The BT economic impact of fibre broadband report studied specific

sectors and sought to identify what benefits fibre could bring to the NI economy by 2018.

Regeneris then compared these with a sample of similar sectors in the United States, using data

from the Strategic Networks Group (SNG)*.

*Regeneris: Regeneris Consulting is an independent economics firm that provides research-based advice to major corporates, developers, national government bodies and local government. They regularly assess the economic impact of broadband

investments in a number of locations across the UK. This work has informed business planning and bid development, including for a number of the current crop of BDUK projects and projects to help secure investment from European funding sources. www.regeneris.co.uk

(4)

Start-ups



NI has fewer business start-ups than the rest of the UK



Successful start-ups contribute significantly to a growing

economy

FIBRE BROADBAND IN NORTHERN IRELAND

SMEs



99%

of businesses in NI are small or medium-sized

enterprises which together generate

75% of NI’s

turnover



SMEs tend to innovate and exploit new technologies the most

Major barriers to the adoption of online e-Solutions :



Poor internet speed





A lack of skills and training



Privacy and security concerns



Uncertainty over the benefits of e-Solutions

Fibre broadband creates new market opportunities for NI’s businesses

Northern Ireland was the ﬁrst region in Europe to have 100% broadband availability

Fibre is a truly enabling facility which puts businesses at the forefront of innovation and efficiency

and can drive business growth

By making fast broadband widely available, NI has addressed one of the major barriers to economic

growth, allowing businesses to now focus on exploiting the potential in place

90% of premises in Northern Ireland are connected to a fibre cabinet

(5)

Benefits of

e-Commerce

 Market, sell and deliver products to a wide geographical area

 Aid expansion into new markets

 Create media rich web content to advertise and promote products

Benefits of

e-Processes

 Efficiently manage and coordinate suppliers in the production chain through real-time logistics and collaboration

 Train employees more flexibly, at lower cost

 Generate efficiency savings through cloud-based customer relationship management (CRM) and enterprise resource planning (ERP)

*data relates to a survey of 16,000 US firms using the internet supplied by Strategic Networks Group Inc, www.sngroup.com

% rating as good or excellent*

Basic

Fibre

Reliability

70%

92%

Speed

61%

88%

Value

69%

90%

 It results in cost savings - remote working reduces office overheads

 It reduces the need for travel,reducing travel expenses and lowering firms’ carbon footprint

 It frees more time for productive activities and customer service

 It assists employees’ work/life balance which improves motivation and retention

Fibre could enhance the productivity of SMEs...

Businesses with fibre are more satisfied...

21%

more firms with a fibre

connection practice

teleworking

compared to

those with basic broadband*

Rich media or service

creation

is

20%

higher

among fibre businesses*

Companies with

fibre can make

better use

of

higher value

e-Commerce

solutions

Flexible working

is becoming increasingly popular...

(6)

NI’s productivity (output per hour worked) is the lowest in the UK

NI has the lowest % of ‘innovation active’ firms in the UK - innovation active firms improve products, processes and

ways of doing business

NI is a predominantly rural economy with a low business density

92% of businesses require the internet for business purposes

Innovation

Productivity

Geography

Labour productivity has been 15-20% below the UK average since 2003

NI has fewer registered patents per capita than any other region in the UK



Fibre helps put rural businesses on a level playing field, ensuring they remain competitive

Belfast generates 30% of NI’s total GVA but contains only 15% of NI’s population

A recent survey of

400 businesses in

NI’s border

region

1

found that:

Challenges and Opportunities for Northern Ireland

Within the Northern Ireland border region

*

, 21% of people haven’t signed up for a broadband connection

1



Fibre can help businesses develop and utilise new, more efficient work processes and products



Fibre allows employees to complete their tasks faster and more efficiently



Fibre delivers the type of internet connection that successful businesses say they need

75% said that the speed and reliability of their connection is most important to their business



of which 91% say internet connectivity is critical to their business

*(Armagh, Dungannon, Cookstown, Omagh and Fermanagh)

Source: NI Executive “Rebuilding and Rebalancing the Economy: An Evidence Base 2012”

(7)

Economic Impact of BT’s Planned Fibre Network

Covering

91%

of residential and

83%

of business lines

North East South East

£88m

£84m

West

£65m

South

£96m

£89m

Expected 15 Year GVA Impacts

Fibre Enabled Street Cabinets

(8)

Internet Based Business Applications

 Through online sales and by creating a wide range of services and content, the internet has provided an entirely new business channel  Many businesses are already exploiting the revenue generating opportunities presented by e-Commerce

Sales of goods or services

 Taking orders via a website and processing payments and delivery can reduce cost and speed up customer experience

Delivering services and content online

 Especially suitable for products such as software, ebooks and videos

 Some services may also be licensed or streamed rather than purchased by download, creating opportunities for recurring sales based on monthly subscriptions

 Traditional delivery of physical products can also be tracked through an online ordering process

Rich media and service creation

 Creating 3D views of products, multi-media presentations, and value-added tools, such as online calculators or map-based services can provide an interactive user experience, tailored products and services, and promote sales

Average Annual Impact

on Revenue per Business*

Countrywide Business Impacts

if 10% of Non-users Adopted e-Solutions*

£0 £20,000 £40,000 £60,000 £80,000 £100,000

Sales Delivering services & content Rich media & service creation

Agri-food Retail

Financial Services Creative & Digital Advanced Manufacturing

INTERNET ENABLED E-SOLUTIONS

Rich Media & Service Creation Delivering Services & Content Sales Advanced Manufacturing Creative & Digital Financial Services Retail Agri-food £6,450,000 £30,210,000 £4,910,000 £3,360,000 £1,950,000 £1,830,000 £1,790,000 £3,360,000 £32,590,000 £11,360,000 £670,000 £870,000 £1,190,000 £11,390,000 £3,910,000

Combined annual revenue generation and cost savings

(9)

Average Annual Impact

on Revenue and Costs per Business*

Emerging Fibre Enabled Applications

 Fibre allows businesses to improve processes and overall performance through

e-Process applications

 e-Processes are allowing businesses to achieve substantial cost savings and generate additional revenue

 The additional benefits of these high value e-Solutions may currently be small in comparison to those from established internet uses but will increase significantly with the introduction of ubiquitous fibre broadband

Accessing Collaborative Tools

 Allow for easy sharing of information from any location. Facilitate team collaboration and communication on shared activities

Teleworking

 Enables people to work remotely from home as effectively as if they are working from an office

 Enable businesses to access skilled employees outside of their local area

and reduce ongoing costs of office space

e–Document transfer

 Internally or between customers, partners, or suppliers offers greater ease of access and enhanced security

INTERNET ENABLED E-SOLUTIONS

Teleworking e-Document Transfer Accessing Collaborative Tools Advanced Manufacturing Creative & Digital Financial Services Retail

*data provided by Strategic Networks Group Inc, www.sngroup.com

Agri-food £1,060,000 £3,210,000 £430,000 £220,000 £180,000 £50,000 £70,000 £100,000 £1,540,000 £740,000 £100,000 £70,000 £190,000 £1,520,000 £240,000

Combined annual revenue generation and cost savings

Countrywide Business Impacts

If 10% of Non-users Adopted e-Solutions*

£0 £1,000 £2,000 £3,000 £4,000 £5,000 £6,000 Revenue Cost Savings Revenue Cost Savings Revenue Cost Savings A c c e s s ing c o lla b o ra tiv e to o ls e -D o c u m e n t tr a n s fe r Tele w o rk ing Agri-food Retail Financial Services Creative & Digital Advanced Manufacturing

(10)

CREATIVE & DIGITAL

This sector includes firms involved in: film, software, games and print media publishing; broadcasting; computer

programming and consultancy; architectural services; fashion, industrial and graphic design; photography

There is a strong presence of Creative & Digital firms in NI...

2,400

Businesses Of which

37%

are inComputer Programming & IT Consultancy

3%

of businesses in NI

5,000

Self-employed

31,000

jobs

7%

employment growth in media production in 2011 Generating

42%

of sector

GVA

(2008)

£800m+

GVA

pa

_{Creative, arts &}

entertainment activities grew

13%

between 2010-11

NI has seen a significant growth in the number of

Architecture and Design

firms US Television series

Game of Thrones

is estimated to have

generated

£43m

of expenditure in the NI economy

...However NI’s creative industries have been losing ground on

the rest of the UK

Digital Animation, Mobile and Web Content and e-Learning / Serious

Gaming are key growth sectors targeted by Invest NI

Fibre allows Digital and ICT firms to:

 Utilise online delivery mechanisms for packaged software: software as a service (SaaS) where applications and data are hosted online to hugely

reduce distribution costs

for developers



Improve the quality of service

they provide—engage in face-to-face communication using VoIP services, deal with urgent client issues from home and service computers remotely

NI’s creative industries make a

proportionally smaller contribution

to total employment and GVA

than in the UK

Over

750

software and

electronic

publishing

businesses

R&D & innovation are a key contributor to sector growth:



Fibre can help the digital content industry

connect and network

with educational and research centres—helping generate new

intellectual property through

increased collaboration

a 1% gap in business numbers in

2008 has widened to a 6% gap in

(11)

Greater download and upload speeds lead to greater utilisation of

e-Solutions by firms

A greater use of e-Solutions generates higher internet revenues

Firms in this sector could

generate

41%

of their

revenue

from the internet*

NI’s Creative

firms could

reduce

operating

costs

by

11%

* Switching to fibre broadband could

increase the

proportion of sales

generated through

the internet

from

39%

to

50%

* Over 2,000

creative businesses in NI

have fewer than 10 employees Smaller firms tend to exploit internet benefits least As firms grow in size, they grow

their internet based revenue Use of the internet could offset

employment reductions in other areas

Even when overall job numbers are falling, the internet has a net positive

impact in this sector

37%

of all new jobs in Creative & Digital industries can be attributed to the use of the

internet*

56%

of Creative & Digital sector firms use

cloud-based applications for

collaboration*—more than in any other sector

High resolution photos, videos and graphics can

be uploaded & downloaded at high speeds

Cloud computing makes it cheaper and easier for entrepreneurial artists and

designers to create and distribute content easily and

speedily Around

60%

of creative firms make use of broadband for Teleworking*

There is scope for

strengthening NI’s Creative

& Digital sector through use

of fibre

Current Value of the

Internet

to Creative & Digital Businesses in Northern Ireland

£560,700,000

All NI

Sales Cost Savings

Av per Firm

£237,000

£36,000,000

£15,000

Estimated Added Value of

Fibre Broadband

to Creative & Digital Businesses in NI by

2018

£76,200,000

All NI

Sales Cost Savings

Av per Firm

£32,000

£5,000,000

£2,100

Annual

Returns

Data from SNG; Calculations by Regeneris. 2018 assessment assumes 40% adoption of fibre

51%

of firms engage in multi-media or tele-conferencing* Annual Returns

VALUE OF THE INTERNET TO CREATIVE & DIGITAL

Current

Potential

(12)

… However there is a

significant opportunity to further

develop NI’s financial services industry

compared to other

regions of the

UK

..

FINANCIAL SERVICES

Northern Ireland has a

strong presence of financial

intermediaries and financial services technology

firms

...

2,400

Businesses

3%

of businesses in NI

50%

based

in

Belfast

23,000

jobs Recognised

high

growth

sector

in NI

£1.4bn

GVA

pa

“As a location Northern Ireland offers us a strong pool of university educated people, an attractive cost base and a geographic location that allows us to service our global client base.”

Brian Conlon, CEO, First Derivatives plc

Northern Ireland has developed a cluster of financial firms in

banking, capital markets

and insurance

, serving global

clients

24 hours a day

Northern Ireland supplies

ﬁnancial

technology and services

to domestic and international clients

providing

infrastructure,

applications support and

software development

Overall productivity in

financial services is

70%

of the UK average

..and there is scope for

raising levels of efficiency

within the sector outside of

Belfast

3%

of total NI

employment

50%

employed in

banking

services

4,000

net new

jobs in financial

intermediation

1998-2008

This sector includes: banks, building societies, credit unions, investment funds, loans and mortgages; insurance

services; pension funds; brokerages; administrative services; accountancy, auditing and tax advisors;

(13)

The

700 Accountancy** firms

in Northern Ireland could use

cloud computing

to get employees to

share data and information whilst out of the office, making day-to-day operations easier and reducing operating (IT) costs

Faster download and upload speeds lead to greater utilisation

e-Solutions by firms

A greater use of e-Solutions generates higher internet revenue

Internet revenue could

account for

22%

of total

revenue in the Financial

Services sector*

Switching to fibre broadband could

increase the

proportion of sales

generated through

the internet

from

41%

to

52%

* receive large

amounts of data and information rapidly

64%

of financial firms

make use of

cloud

computing

for running basic

applications in order to reduce costs and increase efficiency*

69%

of these firms rate the ability to access their shared data from any

location as

very

important*

engage with clients

around the world and outside normal working

hours

reduce

transaction

costs

New fibre broadband services mean NI

firms could more easily:

Fibre could be critical for

attracting and retaining

Financial Services firms in

NI

80%

of financial firms rank the

presence of broadband as

essential or very important

for

remaining in their location*

£287,200,000

All NI

Sales Cost Savings

Av per Firm

£170,000

£21,100,000

£13,000

Fibre Broadband

to Financial Services in Northern Ireland by

2018

£35,800,000

All NI

Sales Cost Savings

Av per Firm

£22,000

£2,600,000

£1,600

Annual Returns Annual Returns

VALUE OF THE INTERNET TO FINANCIAL SERVICES

Current

Current Value of the

Internet

to Financial Services Businesses in Northern Ireland

Potential

*data relates to a survey of 16,000 US firms using the internet supplied by Strategic Networks Group Inc, www.sngroup.com **Source: ONS UK Business Activity Size & Location 2011

Finance firms which use the internet could

save

9%

in operating

costs*

28%

of all new jobs can be attributed to the internet*

(14)

Many industries in this sector, such as machinery and

equipment manufacturers, electronics, chemicals and

aerospace, are

leading industries for Northern

Ireland...

...However the structure of NI’s manufacturing sector is changing

in the face of

intense global competition

...

ADVANCED MANUFACTURING

730

Businesses Of which

45%

manufacture machinery & equipment

26,500

jobs

13%

recent annual employment growth

8%

employment growth in pharma

for last 2 yrs

In order to compete effectively internationally, there is a recognised

need for NI manufacturing to move up the value-added chain and

embrace knowledge intensive, higher skilled markets

- moving away

from primarily competing on cost towards

advanced processes

based on innovation and

technological strengths

embedded within

the supply chain

Fibre can aid in the switch from centralised production and

business control to more flexible, distributed production

based on specialisation, customisation and collaboration

through integrated supply chain networks

At least

2,000 manufacturing jobs have been created each year

since 1998

Manufacturing needs to

continue to be the major driver of

innovation

in the Northern Ireland economy through the introduction of

new products and processes...

Advanced manufacturing is the largest of the 5 technology areas

identified by MATRIX NI as making a

significant

contribution to the NI economy

..and the sector is forecast to contract significantly in the near future

… and manufacturers should build upon their close links with

academic institutions

- Queen's University Belfast is rated as one of the

top British universities for engineering courses

This sector includes manufacturers of: chemicals and chemical products; pharmaceuticals; computer, electronic

and optical products; complex machinery; components for motor vehicles and other transport

£1.3bn

GVA

pa

(15)

71%

of firms use

collaborative tools

made easier with superfast broadband*

58%

of manufacturersuse

cloud computing for Customer Relationship

Management (CRM) software or other sales

platforms*

17%

of Advanced Manufacturing

start-ups

can be attributed to broadband*

Firms which use

the internet

reduce

operating

costs

by

4%

*

25%

of advanced

manufacturing

revenue

is

driven by internet

use*

share test information

virtually meaning fewer

prototypes are needed

exploit network speed

and reliability to upload

and download large

three dimensional

renderings essential

for 3D printing

communicate and

coordinate with suppliers

to manage inventories

and execute orders in

real time

New fibre broadband services mean NI Advanced Manufacturing

80%

of advanced manufacturers with broadband say it is an

essential or very important factor for

remaining in their location* Switching to fibre broadband could

increase the

proportion of sales

generated through

the internet

from

24%

to

30%

*

All NI

Sales Cost Savings

Av per Firm

All NI

Sales Cost Savings

Av per Firm

VALUE OF THE INTERNET TO ADVANCED MANUFACTURING

Current

Potential

Current Value of the

Internet

to Advanced Manufacturing Businesses in Northern Ireland

£412,400,000

£590,000

£14,300,000

£20,000

Annual Returns

£56,000,000

£80,000

£1,900,000

£2,700

Annual Returns

Estimated Added Value of

fibre

to Advanced Manufacturing in Northern Ireland by

2018

Fibre is a vital enabling

technology which could

underpin the diversification and

sustainability of manufacturing

businesses in NI

(16)

...However there are significant

challenges and opportunities for the

retail sector

in NI...

There is a large retail sector in Northern Ireland

contributing significantly to the economy...

RETAIL

16,000

Businesses

19%

of businesses in NI

130,000

jobs

£3.4bn

GVA

pa

NI retailers could benefit from

e-Commerce

by:

 marketing, selling and delivering products to a wider geographical area

 running online businesses from home

 expanding outside of local customer bases and cost pressures

 advertising and promoting products through media rich web delivery

 increased reliability of connection and reduced downtime

 minimising the order time for customers

e-Processes

allow NI retailers to:

 coordinate suppliers efficiently through real-time inventory management

 train employees remotely, saving money and travel time

 utilise cloud-based customer relationship management (CRM) and enterprise resource planning (ERP) software

 make quick changes in product pricing for electronic point of sale (EPOS)

The retail sector in NI is over

10% less productive

than the UK sector as a whole

A weakened Euro

has made Northern Ireland retailers less attractive to Republic

of Ireland consumers

Maximising their

online presence

is critical for retailers facing significant

international competition

Small businesses must

market their products as widely and as effectively

as possible

if they are to attract customers to their stores

13,000

retailers

employ <10

people

over

100

companies

employ more than a hundred staff

Over 20,000

self-employed

(2008)

£33,000

GVA/job

(17)

Fibre facilitates innovation

which is becoming vital for ensuring the

prosperity of retailers in NI Fast internet is

very

important

in deciding where to locate for

75%

of retailers*

29%

of all

new jobs

in retail can be attributed to internet use* Retailers use the internet for

purchasing goods and services and communicating

with suppliers

For firms online,

31%

of retail

revenue

is driven by internet use*

Small retailers could use the internet to market their unique selling

points

such as welcoming staff, a personalised service, local knowledge and

family tradition or heritage With fibre, businesses could more easily

acquire suppliers, staff and

customers from a wide geographical area

The internet presents an enormous opportunity for retailers

to grow their businesses

- internet sales currently account for less than 10% of all retail sales in the UK (by volume)

Switching to fibre broadband could

increase the

proportion of sales

generated through

the internet

from

31%

to

40%

*

VALUE OF THE INTERNET TO RETAIL

Current

Potential

Firms which use the internet

reduce

operating

costs

by

7%

*

5.1%

of

in-store sales

are influenced

by mobile**

*data relates to a survey of 16,000 US firms using the internet supplied by Strategic Networks Group Inc, www.sngroup.com **Source: The Dawn of Mobile Influence, Deloitte Digital 2012

Current Value of the

Internet

to Retail Businesses in Northern Ireland

£4,103,200,000

All NI

Sales Cost Savings

Av per Firm

£255,000

£238,400,000

£15,000

Annual

Returns

Fibre Broadband

to Retail in Northern Ireland by

2018

£526,000,000

Sales Cost Savings

Av per Firm

£33,000

£28,900,000

£1,800

Annual

Returns

Fibre supports the use of

numerous e-Solutions which

could enrich and improve the way

in which products are marketed

and sold by retailers in NI

(18)

NI has a

significant presence of large, successful,

international food manufacturers and distributers...

...However there are

significant opportunities to improve the

agri-food sector in NI...

AGRI-FOOD

£1.2bn

GVA

pa

4%

of

NI’s GVA

(2011)

16,500

Businesses

20%

of businesses in NI

52,000

jobs

500 businesses

employing around

18,000 people

are

involved in the

manufacture of food

products

MATRIX NI believes that the future of agri-food is dependent on the

capabilities of life sciences, ICT, advanced materials and

engineering. The internet is an essential means of distributing

knowledge and learning

Fibre can aid the creation and efficient management of a

complete supply chain

Agricultural productivity is less than

60%

of the UK average

Produce could potentially be

better marketed and sold

abroad

£440m

GVA

from

agriculture

Total income from

farming has

increased by

50%

since 2005

Expenditure on marketing has

only increased by

1%

since

2005

Agricultural producers need to be aware of the ways in which

technology can help their businesses operate effectively

(19)

VALUE OF THE INTERNET TO AGRI-FOOD

Current

Potential

Firms using the

internet

reduce

operating

costs

by

7%

*

4% more jobs

are directly attributable

to use of the internet in

rural areas

than

in urban areas*

market, sell and distribute produce to a wider geographical area access government information interact and coordinate with firms in their supply chain The new fibre services mean NI

Fibre allows food manufacturers

in NI to efficiently organise their

production processes and build

demand by marketing and

selling their produce online

Advancing agri-food depends on developing:

‘knowledge based toolsets that enhance and

communicate the safety, security and purity aspects of

products and provide assurance of quality to the

consumer’

(MATRIX NI)



Fibre makes it easier to develop

websites,

interactive tools, videos or

animations

in order to fulfil this ambition

MATRIX NI is promoting

‘increased collaboration

between food companies and research institutes, and

with other regions and countries in order to maximise

the impact and benefit of knowledge transfer’

 Fibre can help organisations

communicate and

collaborate

using tools such as

cloud storage

and

video conferencing



Fibre can strengthen the links between industries,

allowing companies to benefit from

innovation

and knowledge transfer

Current Value of the

Internet

to Agri-Food Businesses in Northern Ireland

£615,000,000

All NI

Sales Cost Savings

Av per Firm

£37,000

£61,400,000

£3,700

Fibre Broadband

to Agri-Food in Northern Ireland by

2018

£82,200,000

All NI

Sales Cost Savings

Av per Firm

£5,000

£6,400,000

£400

Annual Returns Annual Returns

Agri-food firms could generate

31%

of their

revenue from the internet*

(20)

OVERALL VALUE OF FIBRE TO BUSINESSES IN NORTHERN IRELAND

Business

Challenges

Priority Focus

Opportunities

Potential Results

Creative &

Digital

 Lower business density than in other parts of UK

 Contributes comparatively less GVA and fewer jobs to the UK economy

 Maintaining nascent growth

 Focus on R&D and innovation

 Broaden client base

 Strengthen emerging specialisms

 Networking

 Cloud-based collaboration

 Internet hosting

 Increasing internet sales

 Multimedia and teleconferencing

 High speed uploading and downloading of graphics and multimedia

 Generate new Intellectual Property

 Stimulate new start-ups

 Revenue generation of c.£76m by 2018

 Cost savings of c.£5m by 2018

Financial

Services

 Raising levels of productivity and prosperity outside of Belfast

 Retaining and attracting international clients and companies

 Ensuring small firms remain sustainable and competitive

 Undertake measures to raise efficiency levels and reduce costs

 Secure optimal infrastructure

 Reduce transaction costs

 Host business applications online

 Broaden client base

 Revenue generation of c.£36m

 Cost savings of c.£2.6m by 2018

 Consolidate sector strengths

Advanced

Manufacturing

 Rising to the threat of international competition

 Supplying knowledge-intensive, highly-skilled products

 Maintain status as major driver of innovation in NI

 Sustain recent employment growth

 Reinforce strengths in skills and technology

 Provide resources and support for strong and emerging sub-sectors

 Diversification into high value-added markets

 Better integrated supply chain

 Using cloud computing for CRM

 Stronger links with knowledge sector

 New products and processes

 Exploit networks to share large 3D renderings and designs

(21)

OVERALL VALUE OF FIBRE TO BUSINESSES IN NORTHERN IRELAND

Business

Challenges

Priority Focus

Opportunities

Potential Results

Retail

 Raising levels of productivity

 Accommodating adverse currency fluctuations

 Harnessing the sales potential of the internet

 Ensuring the sustainability of small retailers

 Fully engage with internet retail

 Use the internet for marketing and promotional purposes

 Undertake measures to raise efficiency levels and reduce costs

 Quicker and more efficient communication with suppliers

 Increasing the proportion of internet sales

 Train employees remotely

 Utilise cloud-based CRM and ERP software

 Market and sell products to a wider geographical area

 Minimise order time

 Sustainable small retailers

 Internationally competitive large retailers

Agri-food

 Increasing collaboration with other sectors

 Maintaining the sustainability of small farms and retailers

 Strengthening position of large food processors

 Market and sell produce abroad

 Strengthen supply chain

 Maximise productivity

 Efficient management of supply chain

 Market, sell and distribute produce to a wider geographical area

 Improve connectivity for firms in rural areas

 Build links between industries to stimulate innovation and knowledge transfer

 Cost savings of c.£6.4m by 2018

All Sectors

 Maintaining the sustainability and prosperity of businesses

 Being at the forefront of innovation and efficiency

 Maximising the benefits of new technologies

 Embrace potential efficiency enhancing measures

 Diversify into new products and markets

 Solidify competitive advantages

 Invest in infrastructure, skills and training to exploit productivity advantages of new technologies

 Market and sell specialisations effectively

 Significant opportunities for cost savings and revenue generation

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Statistics used in the sector profiles to describe the current and recent historical performance of Northern Ireland’s businesses were obtained from a range of publicly available economic datasets:

 ONS UK Business: Activity, Size and Location, 2011

 Northern Ireland Quarterly Employment Survey (QES), December 2012

 ONS Business Enterprise Research and Development, 2011 Dataset

 BIS UK Innovation Survey, 2011

 Statistical Review of Northern Ireland Agriculture, DARD, 2011

Matching NI Data to SNG Internet Usage Data

Northern Ireland’s business base was matched to the SNG dataset based on a variety of parameters such as business sector, size and location (rural/ urban) to generate impact estimates.

Estimating the Value of the Internet Economy in Northern Ireland

Data provided by SNG shows average % cost and revenue uplifts attributed by businesses to the internet across our priority sectors and employee size categories.

Regeneris has applied these uplifts to average cost and revenue data for Northern Ireland in order to generate an estimate of the current countrywide value of the internet.

Data on average revenue per firm in Northern Ireland is based on average turnover per worker from the 2010 Annual Business Inquiry and scaled up by average firm size. Base figures for average operational costs are taken from SNG data and scaled to fit the sector and size mix of the Northern Ireland business base.

Following an initial analysis of the Northern Ireland business base and a provisional assessment of the likely productivity benefits to particular industries, the following five priority sectors were formed:

The most recent GVA and employment data available was aggregated using the relevant SIC codes to give a description of the size of each sector.

METHOD OF CALCULATING BUSINESS IMPACTS

Sector Analysis

Priority Sectors SIC 2007 UK SIC Description Advanced Manufac-turing

20 Manufacture of chemicals and chemical products

21 Manufacture of basic pharmaceutical products & pharmaceutical preparations 26 Manufacture of computer, electronic and optical products

27 Manufacture of electrical equipment

28 Manufacture of machinery and equipment n.e.c. 29 Manufacture of motor vehicles, trailers and semi-trailers 30 Manufacture of other transport equipment

Retail

45 Wholesale and retail trade and repair of motor vehicles and motorcycles 46 Wholesale trade, except of motor vehicles and motorcycles

47 Retail trade, except of motor vehicles and motorcycles

Creative & Digital

58 Publishing activities

59 Motion picture, video and television programme production etc 60 Programming and broadcasting activities

62 Computer programming, consultancy and related activities 7111 Architectural activities

7410 Specialised design activities 7420 Photographic activities Financial

Services

64 Financial service activities, except insurance and pension funding

65 Insurance, reinsurance and pension funding, except compulsory social security 66 Activities auxiliary to financial services and insurance activities

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Estimating the Potential of Fibre Broadband to Boost the Internet Economy by 2018

Based on initial observations by SNG on the difference in effects between those with faster connection speed versus those with first generation

broadband, an assessment has also been undertaken as to the likely impact on our key sectors of the widespread availability of fibre.

Current Annual Impact of Internet Enabled Business Solutions

SNG data also shows the annual cost savings and revenue impacts attributed by businesses to a range of specific business solutions. (The specific solutions tested are described on pages 5-6).

Countrywide Business Impacts Associated with 10% of non-users Adopting e-Solutions

Using this data, SNG has looked at the effect on costs and revenue if 10% of non–users were to take up these business solutions (e.g. if 70% of firms were currently utilising e-Document Transfer, this would mean 10% of the 30% of non-users, i.e. a rise to 73%).

Again, Regeneris has applied these findings across the business base in Northern Ireland using UK Business Activity data for 2012 in order to estimate the impact investments in business support and/ or demand stimulation, aimed at increased use of internet enabled business solutions, might generate. The assessment of impact centres on the improved performance of existing firms and the associated employment and wealth (GVA) creation for Northern Ireland.

METHOD OF CALCULATING BUSINESS IMPACTS

Economic Impact of BT’s Planned Fibre Network

Cost Savings and Revenue Impacts:

The Benefit of Internet Enabled e-Solutions

Network enablement:

The assessment is based on BT’s expected business coverage. In practice, the pace of roll out will vary according to local demand and conditions, but these simplifying assumptions provide a reasonable estimate of the expected schedule, based on Regeneris’ experience and knowledge.

Adoption:

An overall adoption rate of 40% is applied. Based on the latest rates of fibre take-up Regeneris believes that this is a conservative central estimate and that adoption could easily rise to levels seen under first generation ADSL broadband (c.70% over the longer term). Adoption is assumed to be higher in knowledge based sectors, lower in manufacturing and construction sectors and lower still in other service sub sectors. It is assumed to be higher amongst larger firms.

Exploitation and the Value of Services:

There are potential productivity gains for businesses from fibre. A 2008 report commissioned for the EC*_{estimated the following productivity impacts}

generated under first generation ADSL broadband:

 Manufacturing and Construction: 0.14% increase in GVA per firm per annum

 Knowledge Intensive: 0.58% per annum

 Other Services: 0.32% per annum

These are applied to average GVA per firm figures derived from the 2010 Annual Business Inquiry. An equivalent increase is added to account for the benefits derived from accessing new markets or developing new products and

_____________________________________________________________

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METHOD OF CALCULATING BUSINESS IMPACTS

Economic Impact of BT’s Planned Fibre Network

services (Manufacturing & Construction and Knowledge Intensive Industries only).

Time Dependency:

Regeneris has assumed the following build-up periods:

 Service provided after 1 year (from announcement)

 Assumed business adoption levels reached after 3 years

 Full productivity improvements reached after 1 year

 Full innovation benefits reached after 4 years

Technological Change:

We have assumed a 5% uplift in annual impact in the short-term (5 years), a 10% uplift on impact in the medium-term (10 years) and 20% in the long-term (15 years).

Multiplier Effects:

A combined induced and indirect economic multiplier effect of 1.25 has been applied as this is appropriate for the size of the impact area (NI).

Displacement & Substitution:

These are assumed to be zero since the effects are expected to be limited.

Discounting Impacts:

Impacts are discounted at a rate of 3.5% per annum. An increasing uplift in business performance due to expected developments in broadband enabled applications has been applied over time. However, no allowance has been made for any uplift in worker productivity additional to this.

______________________________________________________________ Statistics and calculations correct as of February 2013

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SUPERFAST

Contact:

Frank McManus, Head of Wholesale Sales & Services

T: +44 28 9021 4067

E: frank.mcmanus@bt.com

Tara Whaley, Head of Public Affairs

T: +44 28 9021 2039

E: tara.whaley@bt.com

Media Enquiries:

Gina Kelly, PR & Corp Relations Manager

T: +353 1 4325110

E: gina.kelly@bt.com