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Tithe an Oireachtais An Comhchoiste um Chumarsáid, Muir agus Acmhainní Nádúrtha An Dara Tuarascáil Bonneagar ardluais leathanbhanda náisiúnta a sholáthar [lena n-áirítear na costais ar úsáideoirí agus an cumas chun feidhmeanna Rialtais, Gnó agus Tráchtála a sholáthar tríd an mbonneagar ardluais leathanbhanda náisiúnta] Imleabhar 1 Márta 2004 Houses of the Oireachtas Joint Committee on Communications, Marine and Natural Resources Second Report Provision of a national high speed broadband infrastructure [including the costs to users and the potential to deliver Government, Business and Commerce functions through the national high speed broadband infrastructure] Volume 1 March 2004 CONTENTS
Chairman’s PrefaceI am pleased that the Joint Committee has adopted the sub-Committee on Information Communication Technology (ICT) report on broadband and has agreed to publish the Report as a Joint Committee Report. The Joint Committee has a range of areas within its remit; however, broadband is one area to which all the members attach the highest importance and priority. This is the first time an Oireachtas Committee has looked in detail at this developing area and given the importance of broadband to the social and economic development of Ireland it is likely to be an area that will be monitored closely in future. As the Irish economy develops to being a knowledge economy the ability to access, transfer, interpret and apply information and knowledge will be key and in such an economy broadband is the critical enabling technology. Indeed I am reminded how appropriate is the Andrew Carnegie quote – “The best means of benefiting the community is to place within its reach the ladders upon which the aspiring can rise…” If Ireland is to meet the challenges of being a knowledge economy, it is essential that universal broadband is available at affordable prices for both businesses and citizens. I believe that the provision of broadband will be crucial to the development of the Irish economy. Indeed, I fully agree with the General Secretary of the Department of Communications, Marine and Natural Resources when he advised the ICT sub-Committee that “…Broadband will be as important to the new economy as grass to agriculture…” The most obvious characteristic of the broadband market is the speed of change within the market. In the short period since the ICT sub-Committee began its work the state of the broadband market in Ireland has changed considerably. In the future, in the space of a couple of years the technology is likely to have changed again and this will present a unique challenge for governments who are not usually faced with having to make major infrastructural decisions in so uncertain an environment. Despite the rate of change in the market, the last few weeks of 2003 have seen the Government’s continued commitment to broadband with the announcement of significant further funding to support the rollout of a broadband network to a large number of rural towns via both a series of new Community Broadband Exchanges and a new Group Broadband Scheme. In the market there have been a number of encouraging signs that progress is now being made. In recent weeks the main telecommunications incumbent, Eircom, announced that a further large number of regional towns will shortly be DSL enabled and also that there will be new lower wholesale rates for DSL. This has been matched by announcements from ESB Telecoms and Esat BT in relation to reduced backhaul access prices and further, Esat BT has introduced competitively priced bundled voice and Internet services. Having said this it is quite apparent to the members of the Joint Committee that the issue of a competitive national broadband network is of critical importance to the continuing success of Ireland’s economic and social development. This is an area in which continuing Government support and involvement will be required on a on-going basis. While many of the submissions that the ICT sub-Committee received were technical in nature the one unifying message which emerged was that the availability of broadband is now a key component of national competitiveness and as such is one which is worthy of considerable Government attention. From both a business and a consumer viewpoint the necessity and potential benefits of access to competitively priced broadband have been made abundantly clear to the ICT sub-Committee. Moreover the point has been made that, in reality, decentralisation and balanced economic and population development cannot take place where there is regional or urban-rural broadband divide. Beyond this though the importance of a national high-speed broadband network is manifest in the potential of this technology to have a transformative effect on areas such as public services and the provision of healthcare. The potential here cannot be stressed too strongly. In every sense Government has a lot to gain, as with any other business, not least from the cost and efficiency savings that can be realised through the use of broadband. Beyond this though, the real gains Government will derive flow from the ability that a universal broadband infrastructure provides to Government to offer new services and to change the way in which exiting services are provided. From the submissions that the ICT sub-Committee received it would appear that it is in the healthcare and education sectors that many of the most immediate gains could be realised. With so much mention of efficiency gains and business benefits from the use of broadband it is vital to be conscious of the community aspect of broadband. At its core broadband is really about communication and in particular improving and facilitating new forms of communication. This has important implications for society as broadband holds the potential, but not as yet the promise, of becoming an enabling technology that will improve the lot of those disadvantaged whether by age, social class, ability or geography. By the same logic, failure to make the technology widely available has the potential to become the basis of further division within society, the double-edged sword of not alone reinforcing existing inequalities but creating new inequalities. The Government has set out its Information Society Action Plan in the report “New Connections”. However, if Government is serious about realising the targets included in that plan then action is crucially required this year. In 2004 the members of the Joint Committee feel that the key issue will be how the matter of the last mile/first mile access is addressed and resolved. Ireland must ratchet up significantly the numbers using broadband in order to begin to compete again on the world stage. For the Joint Committee, 2004 represents an ideal opportunity to begin to address the broadband divide. However, there is risk in that if critical decisions are not taken then Ireland will slip further behind our competitors. In closing, as Chairman of the ICT sub-Committee which considered the issue in such great detail, I would like to extend my appreciations to the other members of the ICT sub-Committee Deputies Thomas Broughan, Martin Brady, Simon Coveney (who was Rapporteur to the Committee), Denis O’Donovan, Eamon Ryan and Senator Brendan Kenneally for their commitment and dedication during the course of the hearings and in the preparation of the Report. I would like to thank Mr. Brian Smith of Boston College who on his internship acted as the sub-Committee researcher. I would also like to thank Mr. Fergal Merriman of Sonas Innovation who assisted the sub-Committee in the evidentiary module and Mr. Evin McLoughlin who assisted in the proofing of this Report. I would like on behalf of the Joint Committee to pay a special thanks to staff of the Houses of the Oireachtas, the staff in the Office of the Editor of Debates, the staff in the Broadcasting Unit, the sound engineers, the Superintendent, Captain of the Guard and the Ushers, the Director of Committees, Mr. Art O’Leary, the Deputy Director Mr. Padraic Donlon, the Clerk to the Committee, Mr. Ronan Lenihan and all the staff of the Committee Secretariat in particular Ms. Rita Sexton, Mr. David Alwright, Ms. Siobhan Murtagh and Ms. Jenny Duane for all their hard work and assistance to the Members in bringing this report to finality. Noel O’Flynn, TD, 24th March 2004 AcknowledgementsThe Joint Committee wishes to place on record its sincere thanks to the following who advised, made suggestions, presentations, submissions and gave evidence to the ICT sub-Committee, either orally or in writing. Without these efforts this report could not have been written.
Executive SummaryIntroductionThe ICT sub-Committee and the Joint Committee are united in the belief that a universally available high-speed broadband network is now an economic imperative if Ireland is to develop a ‘knowledge based economy’. The engine of growth delivering economic and societal development has, in the past, often come from the development of physical infrastructure such as the railways, the electricity grid, the development of the road network, etc. The Joint Committee believes that it now vital that Ireland develop a universally available high-speed broadband infrastructure which enables Irish citizens and business to access world-class broadband at a cost that is no higher than our competitor nations. The ICT sub-Committee and the Joint Committee reached a number of conclusions, the end result being 12 recommendations. Over time it became apparent that there were probably three main areas or themes which many, if not all, of the submissions touched on and it has been chosen, in this Section of the report, to group the recommendations under three chapters, titled as follows: - Planning to succeed Chapter 1 ‘Planning to Succeed’.Over the last two decades the global trend has been for Governments to reduce their direct involvement in the operation of the telecommunications markets, a trend replicated in Ireland with the creation of the ODTR (now ComReg) and the privatisation of Eircom. In the last few years however there is evidence that this trend has reversed. Governments now realised that a purely market driven approach will not deliver universally available broadband at affordable prices, particularly in rural areas where the business case for investment in broadband networks may not be compelling enough to attract investment from the private sector. The degree to which Governments have re-involved themselves in the telecommunications market has varied by country and political philosophy but without exception governments now realise that they must have a role in encouraging, co-ordinating and facilitating the development of their national telecommunications networks – especially broadband networks. The Minster for Communications, Marine and Natural Resources, Mr Dermot Ahern T.D. is committed to addressing the market failure, which delayed the rollout of broadband in Ireland. The last twelve months in particular have witnessed a number of major changes, some details of which are set out in (see Appendix V) of the report. Notwithstanding these recent initiatives, the members of the ICT sub-Committee and the Joint Committee believe that, until recently, there has not been sufficient strategic planning with regard to the development of broadband in Ireland. Hence the Joint Committee welcomes both the focus and the attention which the Minister is giving to this area together with the new emphasis being placed on strategic planning. There is no doubt that the pure market driven approach has failed to deliver universally available broadband at affordable prices for Ireland. The reality is that Ireland has now fallen behind our main competitor nations in the area of broadband and as a direct result Irish businesses have been placed at a competitive disadvantage. Irish consumers are paying more for broadband than consumers elsewhere and the Government itself may be limited in its ability to rollout new Government applications and services. The benefits of detailed strategic planning in this area are substantial – reflecting the substantial cost of investments in broadband and hence the cost of poorly judged investments. Most immediately, proper planning will ensure that the best use is made of limited Government and private sector funds and that such investment complements, rather than unnecessarily duplicates, the broadband infrastructure resources that are already in the ground, be they publicly or privately owned. The secondary benefits of proper planning will be that Ireland’s national competitiveness will improve and productivity gains are not squandered via costly broadband services. As importantly, proper strategic planning will ensure that investments in a national high-speed broadband network provide support to other national policies – such as the National Spatial Strategy and the move to decentralise Government. The ICT sub-Committee and the Joint Committee are strongly of the opinion that to reach the broadband goals Ireland has set as a country and to prevent, in future, Ireland from falling this far behind our competitors again a new emphasis will have to be placed on effective medium term planning in broadband. The Joint Committee makes 6 recommendations under the theme of ‘Planning to Succeed’ as detailed in the summary of recommendations. Chapter 2 ‘Addressing Market Failure’This last year has been one of rapid change with the rollout of broadband DSL and wireless based broadband services. Despite this the Joint Committee observes that market failure remains. The failure of the market is on two connected levels. Firstly a failure of existing service providers, with access to the first mile, to make broadband services widely available and secondly a failure of the market to develop a compelling mass-market means of competition to the incumbent fixed line operator across the first mile. Taken together these failures mean that the availability, price and choice of broadband services and service providers in Ireland is significantly more limited than in other countries. One of the most common observation made by those who came before the ICT sub-Committee was that broadband services, in the locations where they lived or worked, were either completely unavailable or only available at exorbitant costs via leased lines. This serves to reinforce rural-urban divides and cements existing divisions between those with access and those without access to broadband technology. These are the unavoidable consequences of market failure and as such they are having a very real impact on small business and consumers and on the ability to secure balanced regional development. In practical terms, for both the residential market and the average Irish business, this means they have access to a smaller range of broadband access platforms, being offered by a smaller range of providers and at prices that are higher than both our European neighbours and our international competitors. This is unsustainable. The obvious conclusion the Joint Committee draws from this condition of market failure is that the market, as presently structured, is not competitive. In the absence of broadband, cable and mass-market wireless services, there is no true cross platform competition to shake up the incumbent. This ‘platform competition’ has been the stimulus required to drive the adoption of broadband in other countries and its absence in Ireland is marked both by its fact and by its effect. Market failure remains despite the significant efforts that have been made to deregulate and open up the market, amongst them the process of Local Loop Unbundling (LLU). The Joint Committee is concerned that LLU on its own may not deliver real competition in the broadband market. In Ireland, as elsewhere, the reality following the process of LLU has been a disappointment and competition over the first mile has not increased significantly. In other countries, even those with alternative competing broadband platforms, part of the answer has been to aggressively mediate wholesale rates to their lowest possible level thereby opening up the incumbents infrastructure, at a viable price, for other operators. In the last year this approach has also been adopted in Ireland with an immediate impact on the wholesale rates being offered by the incumbent. The question that has to be answered this year is what approach should we endorse in relation to further reducing wholesale rates. The first approach would be for the regulator to further mandate the reduction in wholesale rates based on what is an acceptable price internationally and to then let Eircom rationalise and reduce costs as appropriate to achieve this. The second approach would be to take as the starting point for wholesale rates the rates that are viable given Eircom’s current cost structure. It seems clear, however, that lowering wholesale rates rather than simple relying on the process of LLU is likely to continue to be the primary means for increasing broadband take-up in Ireland. The incumbent in the Irish market is now a private entity and is entitled to act as such. The question that remains is whether in the current environment, costly investments in broadband with a long pay-back timeframe are going to be favoured, especially if, as has been speculated, such investments have a negative impact on existing revenues from ISDN and leased line businesses. On the flip-side, the Joint Committee believes that no telecoms company, especially an incumbent, can afford to be in the market in 2004 with an insubstantial broadband business. This would seem to be strongly reflected in the moves by Eircom in late 2003 to significantly increase the number of towns where DSL would be available and recent initiatives to reduce the wholesale cost of broadband and aggressively promote broadband adoption. The experience from the U.K. would seem to suggest that the incumbent could quickly build up a very significant wholesale business via the lowering of wholesale access rates. This positive approach is helped by the fact that the volume of electronic communications is increasing dramatically. The cautious approach, where the incumbent attempts to maintain revenues from out-dated technology, may not be the best business strategy in the long run. The Joint Committee is strongly of the opinion that 2004 is the year in which many of the failures of the market will finally begin to be addressed and true cross-platform competition over the first mile will begin to emerge. The Joint Committee makes 2 recommendations under the theme of ‘Addressing Market Failure’ as detailed in the summary of recommendations. Chapter 3 ‘Increasing Broadband Usage’.One of the recurring problems outlined to the sub-Committee was the limitation which operating in a narrowband environment placed on companies and individuals in the conduct of their business. The problem, in a nutshell, is that Ireland is operating in a narrowband environment while Ireland’s business trading partners, clients and customers are operating in a broadband environments and expect everyone else to be doing likewise. The types of limitations that a narrowband environment imposes are endlessly varied but a few examples from the submissions made may prove instructive. In one of the submissions the sub-Committee heard from a small indigenous business operating in a rural environment providing a range of training and consultancy services to clients across Ireland and beyond. Not only does this firm operate within a rural environment but it also make use of a large number of teleworkers who work remotely. This company faces a number of constraints in a narrowband environment. Firstly its foreign clients operating in a broadband environment assume the same is true of Ireland and the large files that it is increasingly using present problems in a narrowband environment in terms of cost and in terms of timely delivery and turnaround of products. Secondly, with no rural broadband available there are limitations and frustrations as to what can, in fact, be achieved via tele-working. Finally, and most obviously, in depending on a narrowband connection this company is placing itself at a competitive disadvantage relative to companies who can operate remote web based applications and other broadband dependent applications in a broad rather than a narrowband environment. This is typical of the frustrations faced by small business in Ireland. Unless prices decrease further broadband is only going to appeal to the few and its cost will only serve to generate, or reinforce a digital divide. Those left on the far side of the divide will miss out on the potential to improve the quality of life via remote working, they will miss out on the educational, health, community and entertainment services it makes available and they will miss out on all the advantages of broadband being enjoyed by consumers worldwide. For both small businesses and consumers an important but often over-looked side-effect of operating in a narrowband environment is the security of the environment in which they are operating. Whilst the security of computers and networks is a much wider issue, broadband does touch closely on this issue. By its nature most software needs to be patched and updated on a regular basis to keep it secure and by the same token anti-virus products need to be constantly updated to provide effective protection. In the absence of broadband upgrading and updating patches with the attendent need to download and install large files is so time consuming and costly that many businesses and individuals ignore it. Given the proliferation of viruses and software that needs patching and updating this has to be a major concern. It is not just citizens and businesses that are suffering in this fashion. Government is also suffering from the absence of a pervasive high-speed broadband network. Government is suffering directly in that as a large-scale user of broadband there are numerous areas where broadband cannot be accessed or can only be accessed via expensive leased lines. Equally it is suffering indirectly because existing services, which could be more efficiently provided in a broadband environment, are being hamstrung and new services that can only be provided in a broadband environment cannot be introduced. The Joint Committee makes 4 recommendations under the theme of ‘Increasing Broadband Usage’ as detailed in the summary of recommendations. Summary of Recommendations1. Defines broadband as a service that provides at least 512kb connectivity and sets as a target 5Mps connectivity by 2006 with widely available 10Mps connectivity in 2008 being the further target. 2. Develop a National Broadband Infrastructure Plan in 2004. 3. Appoint a single Minister of State with cross department responsibility for the rollout of a national broadband infrastructure and the development of e-Government services. 4. Encourage closer co-operation between the Government, the telecoms industry and the end-users of broadband services. 5. Mandate that all national, regional, county and city development plans incorporate the provision of broadband infrastructure with such plans. 6. Ensure that all new developments are ‘future-proofed’ for broadband. 7. Focus on “bridging of the first mile” as the first key policy issue. 8. Establish the proposed Management Service Enterprise (MSE) to ensure all existing broadband assets are put to full use. 9. Introduce measures to widen the ‘reach’ of broadband technologies. 10. Improve skills to allow greater broadband access. 11. Encourage business to increase their usage of broadband technologies. 12. Fully examine the potential of Government to use broadband. Section 1Chapter 1 – IntroductionAt the inaugural meeting of the Joint Committee on Communications, Marine & Natural Resources, it was agreed to establish an Information Communication Technology (ICT) sub-committee. The Joint Committee sent the following motions to the ICT sub-Committee 1. “That the sub-Committee should examine, consider and report to the Joint Committee on all aspects of the provision of a national high speed broadband infrastructure including the costs to users.” 2. “That the sub-Committee should examine, consider and report to the Joint Committee on the potential to deliver Government, business and commerce functions through the national high speed broadband infrastructure.” In preparing this report the ICT sub-Committee engaged in an extensive consultation process. This permitted the opportunity to interact with and question a wide variety of experts. Accordingly, the ICT sub-Committee received a significant body of oral and written evidence from a wide range of parties interested in the area of broadband and the delivery of Government, business and commerce functions via broadband. The ICT sub-Committee was fortunate to have had so much detailed information and advice at its disposal. The range of participants that came before the sub-Committee resulted in one of the most comprehensive ‘user focussed’ examinations of the broadband market in Ireland yet undertaken. Certainly it is the first time that broadband has been examined in anything like this depth at an Oireachtas level. This report is intended to serve a number of purposes. It brings together for the first time the detailed submissions and recommendations of a wide range of experts, interested parties, industry representatives and Government Departments on the issue of a national high-speed broadband network and in doing so is intended to further the understanding and level of debate on this key competitiveness issue. In addition, this report is intended to outline a number of the main requirements for progress in this area and recommends a way forward in developing a national high-speed broadband network. Further, this report highlights the critical importance that broadband is likely to have in ensuring balanced regional development, in providing communications resources for socially disadvantaged groups in our society and in limiting the effect of geographic isolation. The report is divided into two volumes; volume two contains the presentations, submissions and supplementary information supplied to the ICT sub-Committee and which the Committee considers as being germane to the report while volume one, the main body of the report is in two sections. Section One contains the body of recommendations that the ICT sub-Committee made to the Joint Committee in relation to the provision of a national high-speed broadband network. These recommendations have been loosely grouped under three themes based on the overlapping nature of many of the recommendations found in the submissions to the ICT sub-Committee. The three over-arching themes that emerged are ‘Planning to succeed’, ‘Market Failure’ and ‘Broadband Usage’. Section Two of the report summarises, under seven chapters, what the Committee considers are the key comments and observations of the various groups who presented to the ICT sub-Committee. This section of the report should allow a reader to browse the relevant comments from all parties under one heading – so the relevant comments from all parties on health, infrastructure etc can all be found in one place. Chapter 2 – Planning to SucceedRecommendation 2.1Define broadband as a service that provides at least 512Kbs connectivity and set a target of the widespread availability of 5Mps connections by 2006 and with a further suggested target of 10Mps connections by 2008. The Joint Committee considers it imperative to first of all define an understanding of the term broadband. During the consultation process the ICT sub-Committee heard various definitions of the term, some expressed in absolute terms and some expressed in terms of the ability to use various applications. The Joint Committee has concluded, for the Irish market, that speeds of anything less than 512kbs is not broadband but is in fact in a class known as ‘mid-band’. This would include such services as ISDN connections and 124 and 256kbs DSL connections. In this respect the Joint Committee’s definition of broadband differs from that in use by other groups and significantly differs from the definition currently to be found in Section 8 of the Finance Bill 2004. The Joint Committee believes that all connections at speeds of less than 124kbs, currently the majority in the Irish economy, have to be regarded as narrowband connections. Having said this, the ‘broadband bar’ is being raised constantly and in absolute terms the definition of broadband is constantly changing, but the indisputable fact is that this is upwards, not downwards. As an example, Japan has a 26Mps services available to consumers. Therefore, broadband can be taken to have a very different meaning in Japan to Ireland. As a consequence the Joint Committee believes it will be important to review and redefine the accepted definition on a regular basis. As such the Joint Committee believes that the Government should adhere to a target for the widespread availability of 5Mps services to residential users by 2006 and that this should then increase to a level of approximately 10Mps by 2008. If the potential of broadband is to be realised however, larger bandwidths will have to be made available in the short term to bodies such as schools, libraries and health care facilities. As such the Joint Committee believes that Ireland should be targeting bandwidths of 4Mps upwards for schools, libraries and health care facilities by mid 2005 with a view to rapidly increasing bandwidth once cost-effective solutions become available. The Government should also set a national target for the level of use of broadband that is both realistic and competitive in comparison with other countries. Whilst starting from behind, the Joint Committee believes that with the current level of development in the market and the continuing involvement of the Minister for Communications, Marine and Natural Resources Ireland should be targeting a residential broadband penetration rate of approximately 8% by the end of 2004. This would be in line with the EU average and would be a first step on the road to realising the vision set out by the Government in the Information Society Action Plan report titled “New Connections” of Ireland being in the top decile of OECD countries by 2005. With regard to schools and other facilities such as libraries Ireland should be targeting 100% broadband penetration in such institutions by mid 2005. Recommendation 2.2Develop a workable national broadband infrastructure plan. The current national broadband infrastructure strategy as detailed in New Connections needs to be updated, a role for the private sector needs to be mapped out and detailed implementation plans, timeframes and responsibilities need to be agreed. In so far as it exists for Ireland, the current national broadband strategy is to be found in the New Connections plan and in the Broadband Action Plan announced by the Minister in December 2003. Whilst New Connections provides a compelling vision of a broadband environment and the Action Plan announces a series of new broadband related measures, both fall short of providing a clear and actionable strategy, which can be endorsed, adopted and bought into by the private and public sector in partnership. As a country Ireland cannot afford to fall behind in this area nor can Ireland afford a free spending approach where the Government attempts to finance the rollout of broadband infrastructure on its own. It is only by both the private sector and Government working closely together that Ireland will be able to realise its broadband goals. As befits its importance, the Joint Committee believes it is now time for a co-operative planning approach to be adopted in relation to the provision of a national high-speed broadband network. The Joint Committee is strongly of the opinion that such a coordinated approach will pay significant dividends in the short term and greater dividends in the long term. Such planning should ensure that broadband policy is properly integrated into other national strategies. Any such plan will need to draw a careful distinction between an ambitious vision for a national broadband network and a workable reality. It will need to include short-term actions and goals but balance these with medium and long-term policies. It will need to account for the needs of the urban majority whilst also acknowledging the equally valid requirements of the rural minority. The Joint Committee believes that achieving widespread broadband availability will require the use of a variety of broadband technologies and as such any plan should not overly rely on the development of one particular technology. The plan should map out a detailed role for the public sector and an equally detailed plan for the private sector. Finally, and critically in addition to addressing backhaul and backbone broadband requirements it must clearly articulate a strategy for the development of a national first mile broadband network. The Joint Committee sees the preparation of such a plan as an immediate priority. At present users are operating in an environment where there is a lack of clarity around how Ireland will achieve the goals of the national broadband vision and there is a lack of shared understanding between the public and the private sectors as to their appropriate roles in making that vision a reality. Outcomes:
Recommendation 2.3Appoint a single Minister of State with cross department responsibility for the rollout of national broadband infrastructure and the development of eGovernment services. The development of a national high-speed broadband network and the creation of the services to be offered across this network will never fall neatly into any one Government Department. Even so, Government needs to speak and act with one voice on this issue and this can be done only if all Government Departments agree to work in pursuit of an agreed broadband network strategy and this strategy, in its entirety, is overseen and co-ordinated by one person. As the Advisory Committee on Telecommunications noted in 1998 “ a coherent approach to regulatory policy and implementation should be established between all relevant Government Departments”. The Joint Committee advocates, given the varying and time-consuming portfolio that the Minister for Communications, Marine and Natural Resources already manages, that a new Minister of State position should be created within that Department. This Minister of State would be charged with ensuring that a national high-speed broadband network is fully implemented in a timely fashion. The Joint Committee advocates that the Minster of State would have responsibility for building on the established strategy, ensuring the rollout takes place according to the plan and critically promoting and facilitating the usage of broadband once the plan is in place. This should be coupled with responsibility for the development and rollout of eGovernment services. As the Joint Committee will point out later, ensuring broadband resources are fully utilised once they have been rolled out will be one of the key challenges going forward. Such a Minister of State would take on some of the responsibilities currently held by Ministers in the Department of Communications, Marine and Natural Resources, the Department of Enterprise, Trade and Employment and the Department of An Taoiseach. The Joint Committee believes that the special Minister of State would be best appointed to the Department of Communications, Marine and Natural Resources given that Department’s key role with regard to the development of the telecommunications industry. Outcomes:
Recommendation 2.4Encourage closer co-operation between the Government, the telecoms industry and the end-users of broadband services. The rate of change in broadband, as has been pointed out, is astonishing and governments around the world have struggled to keep up to date on all the many developments in the area. The Government will be helped in its task if it has access to the expertise that exists in industry and consumer groups. This could happen via consultation with a broadband strategy advisory group, which could advise on developments in the broadband area. The purpose of such a group should not be to produce a new broadband strategy for Government, that leadership function must remain the domain of Government, but rather such a group should advise on what is feasible, practical and acceptable in terms of broadband network roll-out and utilisation. The need for just such a group was the rationale behind the creation of the Telecoms Strategy Group set up in February 2003. While the Joint Committee welcomes the introduction of such a group it is felt that, as presently constituted, it has a limited membership. The Joint Committee believes such a group needs to have a wider base of members including direct representation from Eircom, the incumbent. The Joint Committee also recommends that consumer representatives and representatives from the software and other IT industries should be included in such a group. As the organisations either using or selling the applications and the tools that make use of broadband, these constituencies also have a different and important perspective on the rollout of broadband. The involvement of the Government’s Information Society Commission in advising the Minister on broadband issues would also appear to have been very successful but the Joint Committee is concerned that the number of bodies examining and advising the Government in this area may not be ideal and is recommending that an amalgamation of the work of the different groups into one advisory body should take place. An example of the multiplicity of voices that can be heard on this issue was the fact that the industry group IBEC made three separate submissions to the ICT sub-Committee, one from their ICT Group, one from its Telecommunications and Internet Federation (TIF) Group and one from its Telecoms Users Group (TUG) and on several issues each group took different positions. Outcomes:
Recommendation 2.5Mandate that all national, regional, county and city development plans incorporate the provision of broadband infrastructure with such plans. As noted before once the regulation of the telecommunications market was handed over to the ODTR the Irish Government, like many governments elsewhere, began to reduce its involvement as an active participant in the telecommunications arena. As the state of the broadband market in Ireland now testifies this is not a market that can be left to develop on its own – especially if regional communities and the requirements of balanced development are to be secured. The Joint Committee believes that the Government needs to fully accept responsibility for rolling out the new national broadband strategy once developed. This means that the strategy will have to stipulate timeframes, allocate responsibilities and the Government will have to assume responsibility for ensuring that these timeframes are adhered to. Just as central government has a role so too does local and regional government and more needs to be done to ensure that both local and regional government are working towards a common goal and are working in tandem with, and not at odds, with central government. This will be particularly important in the context of the greater number of civil servants that are now likely to be working from rural areas. The consultation process the sub-Committee engaged in included a presentation from the South West Regional Authority which is doing a superlative job in bringing broadband to the South West area. In particular the Joint Committee recognises the innovative and entrepreneurial approaches that have been adopted by authorities such as the South West Regional Authority and the Dublin City Development Board in endeavouring to make broadband widely available within their area of influence, whether via satellite or via alternative means. To ensure that broadband gets built into the planning process across local government the Joint Committee recommends that plans for broadband infrastructure be incorporated into all regional, county and city development plans. Most immediately this will ensure that plans are actually being made to rollout broadband on a local basis and secondly it will ensure that both the public and private sector interests will have visibility of these plans and will be able to input into these plans before they are implemented. The recent announcement from Government on the decentralisation of a number of Departments to regional locations will have an obvious impact, as this move is likely to generate a large increase in broadband demand in non-urban areas. As such it has the potential to provide the justification for the rollout of broadband to these areas. This presents Government with an ideal opportunity to begin to aggregate Government demand for broadband in a tactical fashion to stimulate and support the wider market. Outcomes:
Recommendation 2.6Ensure that all new developments are ‘future-proofed’ for broadband The majority of the costs associated with providing broadband are capital costs. Whilst these costs are low when the infrastructure (or merely the ducting to carry the infrastructure) is laid during the building stage, costs spiral upwards when attempts are made to retro-fit facilities for broadband infrastructure. As such there is a compelling argument to be made that all new developments (both major structural works and residential developments) should be obliged to include provision for broadband. The costs associated with laying new fibre can be very high particularly where the ‘cut and cover’ method of digging the hole, laying the fibre and covering it over again is used. Not only is this costly, but as residents of Dublin, Cork and a number of other cities will attest to, it is hugely disruptive and time consuming. To some degree there will always be a need to conduct such works but effective planning and integration of broadband development into other developments should reduce this dependence. The Joint Committee recommends that all new major structural projects be subject to the requirement that such developments assist in the establishment of a national broadband network and as previously indicated that broadband development be built into regional, county and city development plans. This practice has already developed to a degree within certain parts of the country but it needs to become uniform. In effect this would mean that where new roads were being built (and where not duplicating existing infrastructure) ducting for telecoms cabling should be built along side the roads – as was the case with the development of Cork’s ring-road. Equally when it comes to the development of new industrial estates, grant aid and other forms of assistance should be conditional on basic broadband infrastructure of sufficient quality being made available on an open basis to all providers. In the case of our national building stock, new planning/building regulations should be considered which would mandate a minimum standard of basic infrastructure, which would be a condition of new developments. The infrastructure referred to would not be expensive cabling or servers etc. but rather the basic infrastructure that would allow such cabling etc. to be laid without excessive cost at a later date where demand warrants it. The detail of this would need to be worked out with input from industry, but the principle of ‘future proofing’ our national building stock is sound and will appeal to developers looking to differentiate their developments. The Joint Committee finally recommend that the Joint Committee on Environment and Local Government look in detail at this proposal. Outcomes:
Chapter 3 – Addressing Market FailureRecommendation 3.1Focus on “bridging of the first mile” as the first key policy issue. Often referred to, as the last mile, the ‘first mile’ is that part of the network that connects the end user, typically a residential or small business user, to the backhaul network. In drafting this report the Joint Committee has decided to refer to this part of the broadband network as the ‘first mile’ to underline that this is the crucial part of the broadband network to most users and it is the part which will require most focus and attention to get right. The first mile should now be the first priority. The ‘first mile’ of the broadband network differs fundamentally from the backhaul network in which the Government is now heavily investing though the Metropolitan Area Networks (MANs). While the first mile network is controlled virtually exclusively via the incumbent there are already a number of alternative carriers and semi-State companies with significant backhaul network assets. The difficulty this presents is that with one owner there is very little competition, with the exception of some limited wireless connectivity, over the first mile. The Joint Committee recommends that the Government urgently examines ways to bridge this ‘first mile’ gap. The Joint Committee believes that failure to do so will mean that the significant investments being made in the MANs by the State would only be providing “a field of dreams” facility which would be of little use to the Irish public. In making these recommendations it is not advocated that the Government re-enter the market as an operator but rather that the question of first mile access be addressed as a top priority. Whilst recognising the importance of the bridging the ‘first mile’ gap the Joint Committee does not want to be proscriptive about the measures necessary to achieve this. It is the firm conclusion of the Joint Committee that no one technology is likely to provide the most suitable first mile access in every case. The words “no one size fits all” were frequently heard by the ICT sub-Committee and it seems likely that advanced DSL, wireless, satellite and other new technologies will have a vital role to play in the development of broadband. As a first step though the Joint Committee believes it will be necessary for Government to develop a strategic approach to bridging this gap, a development which needs to be a key element of a new high-speed broadband strategy. Among the measures that could be considered are policies to re-invigorate LLU (possibly via the new Community Broadband Exchanges), mandating lower wholesale rates over the first mile, reviewing the tax treatments of investments in the first mile and support for alternative platforms which bridge the first mile including wireless, satellite technologies and potentially cable. The Role of ComRegIt is unlikely that Ireland is going to be able to develop a national broadband strategy which doesn’t adversely effect some commercial or State organisations. The Joint Committee urges ComReg not to be deterred by such difficulties or indeed by the threat of court actions which may be taken to question its regulatory decisions. Given that Irish broadband access costs continue to be significantly higher than those available in other competing countries the Joint Committee believes that ComReg should continue to take firm measures to both reduce wholesale broadband rates and to reinvigorate the Local Loop Unbundling process. The arguments from the incumbent that such an aggressive regulatory position would threaten future capital investment in the network is weakened by the submissions presented to the sub-Committee which showed that recent capital investment in the network had been relatively low in comparison to the amounts invested by other telecoms companies. While the Joint Committee understands that ComReg would need to maintain an independence from the broadband industry advisory board, the Joint Committee would argue that ComReg should have a central role in the establishment and ongoing review of the national broadband strategy. The Minister will also have to be willing to give appropriate direction to ComReg to support the necessary regulatory decisions for the implementation of the strategy. Wholesale RatesThe issue of wholesales rates, how they are set, at what level they are set and by whom they are set is a hugely complex area. The intention is that by providing a wholesale product at a wholesale price to other telecoms providers, such providers will then be in a position to add their margin and then offer a retail product to their consumers, thereby increasing competition. Just how low wholesale rates can go is always going to be a function of the costs in the incumbent and the profit margin allowed on top of these costs. The delicate balancing act that has to be played out is between the necessity for the incumbent to cover its costs and provide a realistic economic return on their infrastructure and the equally pressing requirement that wholesale rates are sufficiently low to attract other providers to the market and keep prices at international norms. Set the rates too low and returns on investments in infrastructure will not allow future investments in infrastructure, set the rates too high and there is insufficient margin for resellers and retail products are not made available at affordable prices. As was mentioned in page xvii of chapter 2 of the Executive Summary, the Joint Committee expressed the differing opinions on the issue of wholesale rates. What is clear is that to bridge the first mile and increase broadband penetration, broadband must be both available and affordable. To ensure this, retail rates will have to be reduced which in turn means either the wholesale rate or the retailers margins are going to have to fall. This conundrum has got be a priority for both Government and for ComReg in the first months of 2004. Wireless TechnologiesOne of the areas in which the ICT sub-Committee received a large number of submissions was in relation to various wireless technologies, which are now being put to use to deliver broadband to communities. The range of such technologies is startling and includes or could potentially include the use of satellites to deliver broadband, the use of the 2.5 and 3G mobile networks Wireless Fixed access (WiFi), Wireless Local Area Networks (WLANs) etc. These are not new or unproven technologies; they are already being put to good use by various groups in the delivery of broadband. Much preparatory worked has already been completed by Government in making spectrum available and while Ireland is ahead of many other countries there is more than can be done. Many groups which the ICT sub-Committee met have emphasised that competition between different service providers offering services based on the same platform, no matter how low the wholesale rate, is only partial competition. What is really missing from the Irish market is cross-platform competition and the Joint Committee believes that this is what the development of first mile wireless services would provide - strong cross-platform competition over the first mile between fixed line and wireless broadband providers. Wireless technologies clearly have a very important role to play in the strategy for a national broadband infrastructure network, and the Joint Committee is strongly of the opinion that Government plans for the rollout of broadband over the first mile should recognise fully the role that can be played by what are now proven wireless technologies. The Joint Committee believe these wireless technologies will have a particularly important role to play in geographically remote parts of the country and in areas of low population density where an economic case may never develop for the rollout of fixed line based broadband services. The Joint Committee welcomes the Wireless LAN pilot schemes being put in place at present by the Department of Communications Marine and Natural Resources. Outcomes:
Recommendation 3.2Immediately establish the proposed Management Service Enterprise (MSE) to ensure all existing broadband assets are put to full use. At a time when considerable funds are being expended by Government on the creation of new broadband assets, especially backhaul assets, it would be remiss to ignore and not to put to full use, in the nation’s interest, the full range of broadband assets that are already in the ground. One of the main ways in which market failure can be remedied is by providing alternative providers with wholesale access to networks. In essence this is what the Government is doing through its MAN initiative. This commitment to providing open access to networks should be commended, as should the commitment of the funds for the build out of the MANs network into the backhaul network. Significantly this move to build these networks also comes at a time when the telecommunications equipment needed to build out these networks is available at historically low prices. The observation needs to be made however that the incumbent does not own the entire backhaul network and so some level of openness and competition already exists in backhaul access in many areas of the country. In many areas, especially in the towns and cities, Esat BT already has extensive backhaul networks in place and in other areas significant fibre investments have been made by such semi-State organisations as ESB, CIE and Bord Gáis. Commentators have observed that the primary goal of the proposed Management Service Entity (MSE) should be to ensure that wholesale backhaul broadband access is provided, across a network of a requisite quality, in such areas as are mandated by Government. Crucially, whether or not this access should be provided via purpose built networks, via existing networks or a combination should be the choice of the MSE. The Joint Committee recommends that an aggressive ‘carrot and stick’ approach should be adopted from now on and should form the basis for policy in this area. The ‘carrot’, in this instance, would be the promise that duplicating networks would not be built if the operators backhaul network (assuming sufficient quality of the network) was opened up to other providers. The ‘stick’, in this instance, is the proviso from the MSE that in the absence of such backhaul networks being opened up to other operators a new competing network would be built within that area. The potential of this approach to deliver results was made abundantly clear in December. Within a week of the Minister for Communications, Marine and Natural Resources announcing that further funding was being made available for the development of additional regional backhaul Eircom announced that it would provide broadband to all the MAN designated towns and a slew of others. With sufficient financial backing from the Government the threat of competing networks would, in most cases, be sufficient to ensure timely and open access at competitive rates to existing backhaul networks. At this stage the Community Broadband Exchanges would then have an important role to play in facilitating new operators to access this backhaul and provide services onwards to endusers over the first mile. Crucially this is a ‘least-cost approach’ to delivering the primary goal of the MANs, a quality regional network of openly accessible broadband networks. As important, it would have the effect of sustaining the business models of those companies which have already invested in backhaul thereby providing more resources for a further build out of broadband networks. The question that this raises is whether by refocusing the MANs in this fashion it would be possible to reduce the absolute expenditure from Government on backhaul networks thereby freeing up more funds for targeted expenditure in areas where no existing infrastructure is in place or is likely to be put in place. The critical question for Government would appear to be whether existing investments and future investments in building the MANs networks are in fact going to provide value for taxpayers money and if in doing so they are likely to destroy the business models for companies which have already built such rings. If the MANs and other investments funded by Government give rise to the perverse effect of increasing the amount of duplicated/unlit fibre that sits in the ground in Ireland then they will be viewed as a policy failure. Outcomes:
Chapter 4 – Increase and Enhance Broadband Usage LevelsRecommendation 4.1Introduce measures to widen the ‘reach’ of broadband technologies The potential benefits that broadband can provide are significant for everyone but are doubly significant for those who are currently disadvantaged whether by age, social class, ability or geography. It would be perverse to allow the introduction of broadband reenforce existing divisions or discriminations or create potential new divisions or discrimination within our society. In referring to the ‘reach’ of broadband technologies the Joint Committee is referring both to the geographic reach and to the ability of broadband to reach previously disadvantaged and disenfranchised groups. Fundamentally broadband is a communication tool, one that is particularly helpful at communicating effectively over distance and reducing the impact of distance for those such as the senior citizens and those suffering from a disability. As has been pointed out to the ICT sub-Committee on more than one occasion, home PC penetration has been stubbornly resistant to any upward movement for the last three years having stalled at about 35-40% of households. Senior citizens and those with mobility difficulties, perhaps with family and friends abroad, are one of the groups that could benefit most from measures to increase PC penetration in the home. Indeed with such a high proportion of Irish people having either close family or friends living abroad they would seem to be in an ideal position to benefit from broadband technology. There are two main developments that will be required to ensure that the potential in this area is realised. Most obviously broadband must be physically available to these communities and groups. Secondly these communities and groups must have access to the computer hardware that will allow them to use this broadband. The first issue to be resolved is that of availability. As the Joint Committee has previously noted, the Government needs to consider very carefully whether the current expenditure on the MANs is the very best use of limited funds. In some ways it would seem to be more logical to narrowly focus these funds on ensuring that broadband is made available to those disadvantaged communities which will not otherwise get broadband – even when the MANs are completed. These may be geographically isolated communities, communities which cannot afford the broadband that is available or groups who would not even know how to go looking for broadband. The second issue is to ensure that once broadband is available these communities are in a position to access it. In the near future it seems likely that large numbers of consumers will be using their TVs, mobile phones or any number of other devices to access broadband services. At the moment however PCs remain the dominant means of accessing broadband, and ensuring that these communities can access and get full use from investments in broadband means increasing access, both public and private, to PCs in Ireland. In this regard the Joint Committee warmly welcomes the current provisions in Section 8 of the Finance Bill 2004 which would allow companies to provide an employee with a package consisting of a computer and broadband internet access at home without the employee incurring any income tax liability. The primary use of this equipment must be for business purposes and as such these measures are likely to provide a significant and much needed stimulus to teleworking in Ireland. The Joint Committee particularly welcomes that incidental private use of the equipment and the broadband access will not invalidate the tax break and believes that many employees would welcome the opportunity to avail of such a scheme if the measures in the Finance Bill 2004 are enacted. The Joint Committee, as previously mentioned, differs slightly from other groups in believing that the definition of broadband that should be used is that of connections speeds greater than 512Kbs. The Joint Committee believes that only connections of this speed or above can truly offer the benefits which the Finance Bill 2004 is seeking to stimulate. There are many employees and many who are not in employment who will not be able to avail of these new measures and the Joint Committee believes that other measures will be required to assist these groups. Firstly the Joint Committee recommends that Government consider the introduction of a PC recycling scheme, which would work much like the car scrappage scheme did in the past. This would probably take the form of users surrendering their old PCs and signing up for a broadband package which would include a new PC, ISP membership and broadband access. The new broadband customer would then receive a certificate of surrender, which could be used to get a tax credit the next year. The ability of such programmes to make an immediate impact on the market is witnessed by the huge success of the car scrappage scheme and the PCs that are surrendered can then be recycled and passed on to the wider community. Secondly to assist those who do not already have computers to be scrapped and to help increase the critical home PC penetration rate, the Joint Committee recommends that the Government examine the potential of setting up a national PC recycling scheme. The details of such a scheme would have to be worked out, but it would include both Government and the private sector and would involve stripping the PC of all its software, installing a standard basic set of licensed software on the machines and distributing these PCs at no-cost/low cost to disadvantaged communities. The potential of such initiatives was forcibly brought home to the sub-Committee in the submission that it received on the recycling programme that is already up and running in Tymon Bawn, Tallaght, Co. Dublin. The Joint Committee recommends that the Joint Committee on Education and Science look in detail at this proposal as a means of targeting PCs for the educational sector. Further, the Joint Committee also recommends, in the strongest possible terms, that the now defunct CAIT programme be the revitalised, but within the remit of the Department of Communications, Marine and Natural Resources. Whilst much can be done by increasing the home PC penetration rate, this will not be practical for all disadvantaged groups and as such wider public access to technology will also be critical. Without a PC there is currently no effective way to make use of broadband (awaiting the further development of digital television and 3G mobile phone services), but PC access does not have to mean access to a PC in the home. In practice much has already been achieved with wider public access to such technologies, either via libraries, community centres or other public access points. The Joint Committee recommends that further examination be given to how wider public access to broadband connected PCs can be made available with a matching commitment to the provision of training in how to make the most of this broadband access. Outcomes:
Recommendation 4.2Improved broadband access necessitates the skills to make use of it As with any new technology there is a learning curve in relation to the use of broadband but the real requirement for skills and training relates to the downstream uses of broadband. For full use to be made of the investment in broadband it will be necessary for people to know not just how to use it but also for what to use it. If broadband is going to successfully address the issues of disadvantage that now exist, access to this technology will not in itself be enough, providing people with the necessary skill-set is the other part of the jigsaw. Just as the Joint Committee has recommended that efforts be made to ensure that fibre does not lie unused in the ground, it also recommends that it will be necessary to put in place some basic programme to ensure that both small business and consumers make use of the broadband that they are in receipt of. The Joint Committee believes that the European Computer Driver’s Licence (ECDL), with its emphasis on a standard and recognised range of basic computer skills, has provided the stimulus for many people to improve and add to their basic computer skills. Therefore, a similar, simple, training course on the application of broadband would have the potential to provide a further, comparable, stimulus. Internationally there are number of examples of how simple training courses targeting, for example, small business, farmers, homemakers, school children, etc. have worked to establish a core and uniform set of skills that can then be built on. In reality once the content for courses such as ECDL are developed and agreed they are reasonably easy to make available on a national basis. Such basic skills could be made available to local communities via their library or community centre and more importantly it can be made available, via e-learning, over broadband. Perhaps most interestingly, by refocusing the existing CE system to emphasise and ensure ICT skills acquisition and transfer, the Joint Committee believes that Government could develop a large group of people who would themselves, once trained, be able to provide ICT training and support at a local level, most particularly in the educational and health sectors. This would have the effect of significantly improving the skill-set of these individuals and allowing them improve these skills in a practical environment. It would ensure that the investments that have been made are fully used and new investment is encouraged which would accommodate the work-life balance and child-care commitments of many of the participants in the CE system. Training in broadband skills and the use of broadband applications should be just one of the areas in which the refocused CE system would provide training. The requirement to match access to broadband with the skill-set to use this broadband is particularly marked in the field of education. With suggestions abounding about funds being requested from the telecommunications industry to provide broadband to every school, the question arises what is this broadband going to be used for. Obviously the first step is to reassess the basic curriculum with a view to establishing which parts of it lend themselves to being taught in a broadband environment. The second step then is to ensure that the basic skills needed to use broadband are incorporated into both the primary and post-primary curriculum. Neither broadband nor ICT are going to replace the existing means of educating, but put together they can certainly enhance it. The Joint Committee recommends that the Joint Committee on Education and Science look in detail at this proposal. Outcomes:
Recommendation 4.3Encourage business to increase their usage of broadband technologies Businesses and their clients have the most to gain from moving to a broadband environment but in many instances they may not be sure as to either the costs, the means of getting broadband or the uses to which it can be put. As has been noted before businesses operating in a narrowband environment are penalised in a number of ways which those operating in a broadband fashion are not. In particular the range of applications that they can deploy (web based application and remote expert systems) is limited, their ability to interact and react to client requests and orders is reduced, their telecommunications costs are increased and they may leave themselves open to cyber attack via unpatched and unprotected PCs. To encourage businesses to move to a broadband environment, it has firstly to be available and affordable and secondly companies have to be shown how broadband can bring positive benefits. To encourage businesses to use broadband it must first be readily available to businesses. For large companies, broadband is already readily available, but for both smaller organisations and consumers the issue of broadband to bridge the first mile remains a major concern. As such the Joint Committee recommends that particular attention be given by the Government to ensuring that at least one broadband platform (fixed line, wireless, satellite, cable, powerline) is available to the majority of businesses nation-wide by the end of 2004. If this can be priced at a level not much higher than a standard ISDN line, the Joint Committee believes that there will be significant take-up by business. Presuming that take-up increases substantially, the final part of the equation is to ensure that businesses have both the practical skill and the ‘best practice’ examples to assist them in getting the full use from their broadband access. The Joint Committee has already outlined a number of initiatives which it is felt would significantly improve skills in this area. Refocusing Community Employment (CE) Schemes with a view to developing and then passing on ICT skills would be a major advance and the Government could create an ECDL type qualification for use in such schemes. In addition, the Joint Committee recommends that a broadband roadshow should be put in place highlighting the benefits and potential applications of the technology. The Joint Committee recommends that visits by a roadshow to various towns be timed to coincide with or slightly precede major broadband developments that are going to take place in each town. These developments could be the lighting up of the MANs, the introduction of new Community Broadband Exchanges or the DSL enabling by Eircom of the local exchanges in each town. This roadshow, which would feature a wireless enabled bus would stop off at various points in each town, whether the school, the bank or the GPs office to explain the particular relevance and importance of broadband to that community. Currently a large number of companies have ISDN lines which are costly and which offer comparably little in terms of speed when measured against true broadband services. What is significant however is that those companies who have invested in ISDN have already shown an appetite for higher connection speed and a willingness to pay for it. These companies should be targeted for transfer to broadband in 2004 and the process of transferring should be facilitated. Outcomes:
Recommendation 4.4Fully examine the potential for government to use broadband As both the major end user for broadband in Ireland and an organisation with the potential to deploy a wide range of broadband-based applications and services, Government has a key role and responsibility in relation to encouraging and developing broadband use in Ireland. The potential for Government to use broadband exists at two levels. First, Government is the largest single end-user of broadband in Ireland. This in itself presents Government with opportunities to begin to use its significant market power in a tactical fashion to ensure the widespread availability of broadband. Second, the level at which the Government operates, in its capacity as a provider of service, has the potential to become an engine for the development of broadband services in Ireland. As the Government is now very prominent in developing a broadband network there are certain expectations that can be laid at the door of Government. In the first instance it should be expected that Government becomes one of the first case studies in how to effectively and efficiently access and put to use broadband. Further, Government should use its ‘customer clout’ in a strategic fashion to ensure the broadband infrastructure is developed in areas where the economics would not otherwise make sense. The idea of ‘seeding’ demand for broadband in rural areas, with an initial customer requirement from Government, is not a new one and is one that has worked well internationally. In this context the Joint Committee believes that the process of decentralisation that has been announced provides Government with an ideal opportunity to begin to use its demand for broadband in a strategic fashion to build out the nation’s broadband network. It is the opinion of the Joint Committee that plans should be put in place to ensure that any town that is in receipt of a Government function or a significant number of civil servants as part of decentralisation is also catered for in terms of broadband infrastructure. While the potential to use Government demand for broadband in a strategic fashion is significant the potential for Government to begin to use broadband to increase the efficiency and range of existing services and to introduce complete new services is perhaps, if possible, more significant still. The range of services and the level of interaction that can be provided in a broadband environment dwarf those currently available and from the submissions that the sub-Committee received it would appear that it is in this way that people would now like to interact with Government. The detail of potential eGovernment applications could take up an entire report and much work is ongoing in this area already with the public services broker and both the business and citizen focussed portals that have been developed. The critical issues from the point of view of the Joint Committee, however, is that broadband based services offered by Government can be operated at a reduced cost and Government can offer enhanced services. However, Government can only deliver on this potential if there is a widespread adoption of broadband. A prime example would be the need for GPs to adopt broadband so that initiatives such as a national disease database for GPs or web based applications could be used. Equally, information and advice on all manner of areas of Government may be available online but if accessing them mean downloading large Pdf files on a narrowband connection then for the user the phone, with its manning costs for Government, would be preferable. The real potential of broadband for Government is not in the front office provision of services but in the potential to re-engineer the back office functions of Government such as payroll, accounting, HR, procurement and IT services, centralise these functions into a shared services organisation, and then deliver these services from anywhere in the country using broadband. Using such an approach one can decentralise these operational functions to anywhere in the country while simultaneously deriving the cost savings associated with a shared services centre (in terms of Government the Joint Committee is predicting hundreds of millions in savings a year). HealthcareIt was in the area of healthcare and the potential applications of broadband to healthcare that the sub-Committee received some of the most interesting and stimulating submissions. What was very evident was that in a narrowband environment the eHealth applications that can be deployed are minimal while in a broadband environment the range of applications borders on the limitless. More important than the range of applications is the fact that, in delivering these applications and services in a broadband environment, significant costs savings can be realised, savings which can be, redirected back into other priority areas for health expenditure. By way of example the sub-Committee heard how the development of remote expert medical systems and remote diagnostic services would significantly reduce the time and cost associated with healthcare provision while simultaneously improving the quality of such provision. As important, the sub-Committee learned how such remote services, while eminently practical internationally, are impractical in the Irish context due to the cost and unavailability of broadband connections to the majority of the country’s GPs. Failure to fully realise this potential will have a major impact on the healthcare options to those in the regions and to other disadvantaged groups. Health would appear to be one of those areas where significant gains can be realised by the Government once broadband is widely available. If broadband was able to contribute even a small reduction in the total expenditure in the health sector then significant savings would be realised which could be targeted at other problem areas. In the expectation of such broadband becoming widely available in 2004 the Joint Committee recommends that the Government examine the potential for establishing an eHealth centre of excellence in Ireland, possibly in conjunction with one of the major teaching hospitals and probably with some assistance from the EU in the expectation that successful initiatives could then be replicated elsewhere. EducationOne of the other areas where broadband presents some interesting opportunities is in the area of education. Whilst all schools in Ireland have computers and indeed Ireland was the first country in the world to have every school in the State online these headline figures can be confusing. Ireland is now trailing its competitor nations in the number of PCs per student, broadband is virtually entirely absent, syllabi have not changed to incorporate online training tools and teachers are not trained to take advantage of a broadband teaching environment that will emerge. When broadband is twinned with significant numbers of PCs, teachers are trained in how to leverage broadband and syllabi that incorporate broadband tools, real benefits will be realised. In this environment broadband opens up new and interactive ways of learning, it facilitates the provision of courses and subjects that would not otherwise be available, it allows students to learn at varying speeds and access comparative quality course materials and teaching assistance remotely. Broadband in education is not a ‘holy grail’ but it does present a significant range of new and only partially understood educational opportunities. As important, integrating broadband into our education system will ensure a basic level of comfort and familiarity with broadband and broadband technologies that will increasingly be seen as the norm and then a prerequisite of modern living and working. The number of different elements that need to be put in place to make broadband work in education and the way in which such elements spill-over and overlap from one Department to another strongly emphasises the need for co-ordination and planning in this area from Government. Equally the proposal to levy the profits of telecom operators to provide broadband for schools which was announced some months ago emphasises the need for Government to work with and take the advice of these interested parties whilst drafting policy. As has been mentioned previously potential Governmental applications of broadband are themselves predicated on broadband being widely available to both consumers and businesses and these users being sufficiently skilled to make use of them. The Joint Committee is of the view that access to broadband, the skillset to use broadband and the actual advanced uses of broadband form a virtuous circle, and if one part of the equation is neglected the whole equation will fail. Outcomes:
Section 2Chapter 5 – Business Users5.1 For Ireland to be a knowledge based economy the business sector must take a central role. This requires the universal provision of broadband at an affordable rate and with a sufficiency of bandwidth which does not discriminate on a regional context. Mr. Martin Cronin, Forfás, the policy research organisation that principally advises the Department of Enterprise, Trade and Employment on enterprise and science and technology policy advised the sub-Committee “I will speak from the perspective of enterprise development and economic development and competitiveness ……Broadband communications helps companies to compete; that is a fundamental fact of life for us. To give a couple of simple examples, if a company is making a product and it needs to buy raw materials or components at a lower price, it may have to buy them overseas. A company can interact with overseas suppliers far more effectively and efficiently using broadband telecommunications. Conversely, if you have an Irish company that is extremely good at designing products, for example, it can do so for overseas customers and interact very easily with them. Thousands of people are employed here designing semiconductors, most of which are made in Holland, Taiwan, Singapore or the United States. Broadband communications allows such companies to interact with their customers. The main route to growing the Irish economy for more than 20 years has been to access fast growing new sectors, most of which are heavily dependent on telecommunications, the software industry being a good example. Employment in this area quadrupled here over the past 12 years. Internet-based services are extremely important and can be provided throughout the world from Ireland if we have the right telecommunications. We are sometimes a bit sceptical about broadband telecoms because of the dotcom collapse but even in the year following that collapse, Internet traffic around the world grew by 50%. So while the share price collapsed the business activities are still growing rapidly. Communications enables the growth of business in remote activities. …… An interesting example of this kind of remote operation is an Irish company called E-Training International which has just been awarded a contract by the Department of Foreign Affairs to work on its website ahead of the Irish Presidency. This company employs about 240 people, almost all of them in other countries because it does translation work, yet its headquarters is in east Clare. That illustrates the last point I wish to make about the importance of broadband for economic development, that it is fundamental to achieving a decent regional spread of economic activity around the country. ……There are many other examples of what telecoms has made possible around the country. MBNA employs 450 people in Carrick-on-Shannon and that is making a huge impact on the area. ……Prudential are doing software and insurance processing internationally out of Letterkenny. ……will turn now to the telecom infrastructure. ……The telecom infrastructure breaks down broadly into three chunks ……Our position on the international network is extremely strong. There are many different networks connecting Ireland internationally, some of which belong to what are known as carriers’ carriers. These are companies that hire out their capacity to any telecommunications company, with no barriers whatsoever to entry. ……We also have a strong position in respect of the backbone or national trunk routes around Ireland. There are several of them, owned by different companies, and they compete with each other. The ESB network will be a carrier’s carrier network and it will be open to any telecom company to buy space on it. ……Ireland is seventh in terms of cost comparisons - one of the best after the Nordic countries. This is an extremely good position to be in for a country with a very low population density and in which the cost per capita of providing the facilities is quite high. The main issue arises when we consider the local access networks. We face a very big challenge to deliver costcompetitive local access. It is like a weak link in a chain and it greatly restricts access to both the backbone and to international advantages that are available to us. This prompted the Government’s decision to invest in some metropolitan rings that would effectively serve as an alternative infrastructure to Eircom’s infrastructure and challenge the monopoly position it occupies at present. It is worth noting that international experience to date suggests very strongly that regulators have had little success in delivering effective access to monopoly networks around the world. One reason for this is because it is an extremely fast-moving business in which the technology reduces prices all the time. Each time the regulator sets a new limit there tends to be a lot of court action and litigation, and by the time this is sorted out the game has moved on and it is too late for the technology in question. ……Prices for broadband that depends on the local loop in Ireland are extremely high relative to the tariffs in other competing locations. Forfás has recognised the importance of advanced telecoms since 1996 and has been promoting very actively the provision of broadband ahead of demand ……Our position is like that of a small, relatively remote town without a decent road going thereto. The private sector will not build a road until there is demand, but one will not have demand unless there is a road. Therefore, we have to take a somewhat different view and intervene selectively and as cleverly as we can to provide facilities ahead of demand. This allows the development agencies to build up the demand. Nobody has to come to Ireland - it is so small that the rest of the world can completely ignore It ……One key task that needs to be completed in the shorter term is the establishment of competition at the level of the local loop, whether through investment in the Metro networks or the promotion of alternative technologies, such as radio technology. It is possible to have competition between technologies. It is fine to have a monopoly provider representing each technology as long as they are competing with each other. We need to try to promote the continued development of the backbone network to minimise the number of locations that are truly disadvantaged. Ironically, the more remote a location is, the more it will depend on telecom-intensive activities. Promoting awareness in respect of the take-up of broadband is extremely important to minimise that valley-of-death period after one establishes the infrastructure and during which one does not have enough demand to remunerate one’s investment.” The sub-Committee heard evidence from the Telecommunications Users Group (TUG) of IBEC when Mr. McSweeney advised the sub-Committee that while “……I am aware that two groups from IBEC have already made presentations to the committee. Neither of them represents business users but they represent the providers of telecommunications services. We have a different slant and represent other IBEC members……On broadband availability, it is quite obvious to most people in Ireland that the market system telecommunications companies are not providing broadband connectivity where there is a low population or low business density. Effectively, if one wants broadband one can get it only in the cities and some towns. We feel that there should be universal access to broadband, the benefits of which I will outline later. Although some telecommunications companies would lead one to believe that DSL is now universally available, it is anything but that. Even by the end of this year, we will only have 100 DSL-enabled exchanges. Let us take as an example a small drapery in County Donegal that gets 80% of its revenue from the United States and the rest from Europe. Previously, it only had a 56K modem with which to dial up its Web server. ……he has difficulty in gaining access to his Web server and his customers. ……he needs access to new technologies such as broadband. It would save the company much time and money. Even though the price of DSL in Ireland has dropped, it is still very expensive. ComReg research demonstrates that most of the trigger points for people taking up DSL seem to be between €30 and €40. We are still way off the mark in terms of its price. Let us consider another SME, which is located in Derrybeg, Gweedore, County Donegal. For the manager to expand his business he needs to have at least a 2 megabyte leased line. This will cost him €50,000 per annum, which is a huge amount of money for a small business. …..Broadband needs to be “always on”. It is a utility and one needs to be able to use it as one would use electricity or water. In Ireland, unfortunately, there is a limit imposed in terms of the download for DSL and if one exceeds it one is penalised. Elsewhere in the EU it is always on and one has free and unfettered access ……Leased lines cost 10%, 20% or 30% more than DSL. It is a cash cow for telcos, therefore, it is not a business they wish to emasculate ……Most people seem to think that DSL is the panacea, but it is only an introductory technology and we have a long way to go. The market in Dublin is competitive. As a corporate, I can get whatever I want wherever I want and many different companies will bid for the business. I can go through a process of a request for proposals and get a very good price. However, outside Dublin there is effectively only one operator - with a token presence from another - and I must accept what I am given. If we had more competition there would be greater availability and we would have lower prices. We would also have the choice of the different technologies to which I have referred and there would be a higher quality of service. Broadband would have a positive impact on rural communities. ……If we can get broadband into areas which are not currently well-serviced, bank holiday weekends will not see mothers and fathers saying goodbye to their adult children as they head to Dublin and their jobs, denuding the area of its young population. Other benefits include business, jobs and long-term GDP growth. Studies in the US have shown that having ubiquitous broadband would increase GDP by $500 billion. One of the pillars of this would be that one could do business anywhere - although there are other infrastructural issues which need to be addressed and it would also benefit the State by way of the increase in business activity and the tax base. I will not refer to all of the challenges. However, there is a gap in the market and the Telecommunications Users Group believes there is a latent demand for broadband services. Telcos do not believe this and the gap needs to be addressed. Even if people had broadband access at their homes and places of work, how would they access it? They need a device to do so and, most likely, that will involve something like a PC. ……People do not understand the benefits of broadband and an awareness campaign, which targets residential, small and medium enterprise people, is required. We must also use local communities because they will benefit and the telcos must be part of it since they will be competing for those customers. …… We need affordable broadband for all - no matter where a business is or what size it is. We also ask the committee that, when it publishes its report, its recommendations are actioned.” Mr. Dan Flinter and Ms. Jennifer Condon, Enterprise Ireland echoed the experience of Mr. McSweeney and the Telecommunications Users Group (TUG) of IBEC when Mr. Flinter advised the sub-Committee “The role of Enterprise Ireland is to work specifically on the needs of indigenous companies. It is very focused on firms that are owned and controlled in Ireland. Its efforts are increasingly focused in three areas - the commercialisation of publicly funded research, the business development of individual companies and the international marketing capacity of such companies. ……Approximately 3,500 companies in manufacturing and internationally traded services are within the statutory remit of Enterprise Ireland and it is responsible for them. These client companies have an annual turnover of about €24 billion and just under half their output is exported. There is a significant export orientation. ……Our clients are regionally distributed. It is perhaps relevant that, proportionally, a smaller number of them are located on business parks or industrial estates. Whereas the large international companies tend to congregate on large industrial estates or business parks, the vast majority of our clients tend to be located for historical reasons on standalone locations. This has implications for the availability of telecommunications. With regard to distribution, the figures do not show any surprises in terms of employment, except perhaps with regard to one aspect related to international services. To give members a sense of the changes in this sector, average employment in international services in 1991 was about 150,000 and 3,500 were employed in internationally traded services on the indigenous side. The latter figure now stands at 15,000. In a ten year period, therefore, employment in this area increased by a factor of four, making it an important area of growth and development which now accounts for 10% of indigenous industrial employment. ……A growing part of our activities comes under the heading of commercialisation of publicly funded research ……The logic of taxpayers investing in applied research is that it generates intellectual property which can be brought to the marketplace. The main trend in business development is that an increasing share of our funding is being committed to companies in the form of equity or preference shares, especially focused on funding near to market research and development, which in other words is the development of products which can be brought into the marketplace. ……The broadband agenda in which the committee is especially interested is essential to ensure researchers and universities have ready access to collaborators internationally. It is an important piece of infrastructure which is relevant to our considerations. Broadband is fundamental to the normal business of companies in transactions. For example, with the large international multiples expecting Irish companies to engage with them electronically, if the infrastructure needed to do this efficiently is not available, Irish companies will be placed at a competitive disadvantage. For some sectors broadband infrastructure is critical. Need, therefore, varies depending on the type of company. If we are serious about trying to develop a digital media sector as a key instrument in expanding the Irish software sector to a new level, the absence of broadband at a competitive cost will leave us at a significant disadvantage. Broadband is also an important item on the regional development agenda. Irish companies face a particular problem because they tend not to be concentrated on industrial estates, although some are. The vast majority of our clients operate independently in locations with few other companies, which creates an additional challenge in terms of distribution and access to the network.” Ms. Condon advised the sub-Committee “I will divide the client companies into two sectors: the traditional companies that are looking at e-commerce and Internet trading as a way of doing normal business and the high-tech companies for which information technology and high bandwidth are the core of their business. Always-on Internet is a fundamental requirement for the first block of companies. They cannot depend on dial-up access at slow speeds for a fundamental business channel. Many of the companies in the traditional sector are of small and medium size and deal with significantly larger and better resourced clients. The second batch of companies is the high-tech companies - characterised by the software industry - which require access to higher bandwidth services, ranging in terms of access from two megabits per second upwards. In talking to companies and asking them what issues they had with telecommunications services, cost emerged at the top of their agenda, both in terms of installation cost, which can be particularly important for regional or rural based companies, and operational cost. Another issue for our companies was the availability of guaranteed service levels from the telecommunications operators and providers. Obviously, as one invests more of one’s business or business channel in dependency on one’s telephone lines, ensuring the quality of one’s telecommunications service is fundamental. ……In terms of the regional development agenda, we have invested in the development of a number of technology hubs in Cork, Waterford, Galway and Sligo. The intention of the project, which is ongoing, is to provide a focus for the development of a high-tech industry in a number of regional locations ……Unbundling the local loop and solving the last mile issue are fundamental for our small companies in gaining access to always-on Internet. This is a priority for us and must occur sooner rather than later because people cannot delay their entry into on-line business. The second priority is the availability of a national broadband backbone, particularly the potential this offers for developing competition in the marketplace, which will also be a factor in developing choice for companies and driving down price. It will be particularly important to examine the use of alternative technologies in the regions and niche areas in order to overcome the last mile problem and accelerate the availability of local loop unbundling in some areas which otherwise would be at the end of a long progression.” When questioned as to how competitive Ireland was compared to other European companies producing similar products and the difference between a Dublin based company and a rural based company Mr. Flinter advised the sub-Committee “We have not been able precisely to calibrate the relative advantages or disadvantages of a company located in Dublin, for instance in CityWest, or one in another area such as Roscommon. It is reasonable to assume the company in Roscommon will be at a disadvantage on two levels. It may not have access to broadband or will get access later than a company in a large business park. One can see the difference, for example, in the west Cork business park in Clonakilty which has broadband. Companies located five or six miles out the road from the park will not have access to broadband or will gain access at a later stage ……Companies located in a rural community, rather than a business park, will probably not have always-on broadband access and when they gain access, it will be at a higher cost. While we do not have the data to show the difference location makes, as regards broadband access it is, initially, almost a black and white position - companies in business parks will have access, those outside them will not - and secondly, when the latter get access, it will almost certainly be more expensive. ……It is reasonable to conclude that young technology companies based in larger urban areas will - in fact, must - have connectivity ……On the issue of pricing, we must aim towards having a price that is at the minimum within the medium range of what is available and ideally closer to the lower end of what is available in our competitor countries. Otherwise we are creating competitive disadvantage for Ireland. We already have a competitive disadvantage due to our island status - for companies transporting normal products there is a cost involved in getting the product to the marketplace - so we must find competitive advantage in other areas. We must aspire to a national strategy that drives price down to a point closer to the lower range of what is available internationally. That is not easy on a geographical basis but that is what the aim must be in terms of the overall strategy. ……A key part of regional development is the development of new sectors because some of the older sectors will decline. The textile sector will not survive in Ireland over time. If we want to sustain development in Sligo, Donegal or Galway we must see new sectors developing. If the technology is not there to support those companies we are tying our hands behind our back from the point of view of regional development as well as national competitiveness.” In reply to further questions, Mr. Flinter stated “Maintaining competitiveness is hugely important. There are two things that drive the behaviour of companies. One of them is to do with demand in this country, whether it is e-government or retailers demanding services that require connectivity. However, what drives them most aggressively is international demand. If they do not follow the demands of international customers they will be out of business or find themselves at a severe disadvantage. The more traditional companies face the bigger challenge in this area because those in technology companies tend to be alert to the agenda and are able to specify more clearly the deficiencies in the current facilities, particularly in terms of price, availability of “always-on” services and so on. The real challenge is faced by the companies in more traditional industries, in which skill sets are not very well developed to deal with these issues. That is an area on which we must work harder. Our views on this issue are known in a number of quarters and are quite often conveyed through the work of Forfás, which seeks to represent the activities of all the development agencies in that regard. We do not put a company at a disadvantage if it does not have skill sets in this area. Our responsibility in dealing with existing manufacturing companies is to do something about the issue rather than refusing to engage with them on that basis. We need to do more than we are currently doing in this area and help firms to specify what they need. More of that activity could be helpful for firms. Deputy Broughan asked whether we would only support technology companies in Waterford Cork or Sligo and the answer is no. Companies tend to set up mainly in those locations because universities or institutes of technology are located there. To give an example, we expect to support about 60 new high-potential start-ups this year, most of them in high-technology areas and many in ICT. They will tend to be set up in the larger urban areas because those who are starting them are located in those areas. However, some interesting technology companies are not based in those localities and we are happy and keen to support them. They tend to congregate. For example, 75% of indigenous software companies are based in Dublin and, of those, about two thirds are based in Dublin 2 or Dublin 4. Such companies are not interested in being located in CityWest. They want to be in the city centre. That is an interesting feature of where they want be, whereas large international companies locate themselves on the periphery of the city. There may be sociological reasons for this but that is where they want to be. They tend to be close to urban areas as opposed to the periphery of towns. We are happy to work with emerging technology companies wherever they are located but the nature of the promoters tend to be that they are found in those locations. On the issue of India, there is huge growth in the software sector there, particularly in terms of writing code. Few jobs in the indigenous software have been lost to India. That has not been a major trend up to now. Some activities in the indigenous software sector will migrate to lower cost locations but the evidence so far is that has not been the case. It may be relevant in other sectors or to large multinationals but we have seen no evidence so far. However, it is a rapidly growing industry with huge growth in supply. One of the crucial elements in Ireland is that the supply of young graduates continues in that area in the long term. That is an important resource in addition to having the technological infrastructure to which we referred…. [this] is a big issue for the country as a whole in terms of the number of people who are pursuing programmes in engineering or the sciences ……the impact will be felt in two to three years’ time….If, for example, a five year horizon is taken, we will have a serious problem because of the reduction in the number of graduates in engineering and the sciences who will become available to industry or will participate in research in universities ……Of the 3,500 companies, between 700 and 800 need deep broadband capability and the remainder need it to carry out the commercial activities of their businesses…… and, given the direction in which we are going, that share will increase, if anything, because all the new entrants are involved in high technology rather than traditional sectors. On the issue of price ……we must aim to bring it down to international competitive levels and to the lower quartile rather than the international average. ……Having a first division solution may take three years and, in the meantime, companies may not have survived. It is important that we should have good DSL solutions because companies can use that technology. The first division is important for a limited number of companies. We are trying to achieve a balance ……however, it is important to make DSL work for companies over the next three to five years.” The Committee notes that several issues must be addressed if the business sector is to become the driver of the knowledge based economy that the Government wishes for Ireland. The evidence that the sub-Committee heard from Forfás, the Telecommunications Users Group and Enterprise Ireland is a roadmap for the way forward. However, there must be universal provision of broadband and it must be at an affordable price that, in the first instance, is at international competitive levels and driven to the lower quartile rather than the international average. This is a prerequisite for competitive advantage. In regard to high-speed, high-bandwidth, as Enterprise Ireland showed, it is a real requirement. Approximately 3,500 companies in manufacturing and internationally traded services are within the statutory remit of Enterprise Ireland and between 700 and 800 need deep broadband capability. The Committee considers that the issue of unbundling the local loop must be regarded as the primary national aim and takes priority above all other calls on the focus of Government, the Department of Communications, Marine and Natural Resources, ComReg and the telecom companies, both fixed and mobile. As Ms Condon advised the sub-Committee “Unbundling the local loop and solving the last mile issue are fundamental for our small companies in gaining access to always-on Internet. This is a priority for us and must occur sooner rather than later because people cannot delay their entry into online business.” Accordingly, it is the recommendation of the Committee that a partnership process, such as used in agreeing a National Understanding, must be set in place for the delivery of universal broadband at affordable rates. This round table must have all players to the debate included so that a national understanding can be reached so that the how, what and when on the delivery of universal broadband at affordable rates can be agreed in a programme that ensures every player clearly understands each others role, function and commitment to making Ireland a member of the top ten knowledge based economies in the world. For Government, business, ComReg and the telecom companies to do nothing less will leave a legacy condemning future generations to economic pauperism. Everyone has seen, with the recent ‘Celtic Tiger’, what Ireland can deliver. Not to consolidate or build on the gains made over recent years will see Ireland revisiting the economic stagnation, deprivation and emigration that characterised the period from the Famine to the ‘rising boats of the Lemass era’. Failure to commit and deliver the knowledge based economy leaves this ‘Appalling Vista’. Chapter 6 – Government6.1 If Ireland is to be a knowledge based economy then it is a prerequisite that Government create the environment that fosters the educational system to deliver students to this workforce, the business environment to ensure this sector can deliver the knowledge based economy and the regulatory environment that delivers competition in a consistent and transparent fashion. Mr. Colm Butler of the Information Society Policy Unit, Department of the Taoiseach advised the sub-Committee “In the e-Government area, we have done extensive work on the development of on-line public services, but we are also turning our attention to the wider question, namely, the issue of e-Government in the transformation of bureaucracies based on the availability of the sophisticated technologies. Reference was made earlier to education. The Department of Education and Science has been looking at infrastructure for schools, and our unit has engaged with it on the wider issue of the use of technology in the education process as opposed to simply using it as a curriculum item in schools. Over the next few months, officials from the Department of Education and Science will be preparing a report for the Cabinet committee on the information society in relation to education and the use of ICTs in the education process. We are also looking at the area of e-inclusion. The Information Society Commission has compiled a report which is about to be published and which is an analysis of public policy on e-inclusion. We have also conducted our own research within the Department to try to find out what State interventions are going on across the country. The purpose is to realign our thinking with regard to what has to be done to address properly the issue of giving people the ability to use technology, and what we might do in terms of creating the reason, because the reason is very important. I mentioned earlier that there is a Cabinet committee looking at the structures. There is also a group of Secretaries General of Departments which looks at wider information society issues, more specifically the area of e-Government which looms larger as a major issue as we go forward. The Information Society Commission is an independent body with its own working groups, and it reports to the Taoiseach. It is defining a new work programme over the next year to 18 months on the future for schools with regard to the information society and the future of working areas. There are various officials’ groups which we chair from time to time, depending on the issues that start to emerge. We also participate on the board of the Reach organisation and the Oasis project. In terms of e-government, the emphasis thus far has been on on-line service delivery and the focus initially was on the dissemination of information on life events using the Oasis website for citizens and on business life events using the BASIS website for businesses. They are up and running and in operation. There is also an e-tender site for public procurement. It is currently in a reasonably basic form and our desire is to move it forward to enable more on-line interaction with the procurement process, as we consider this is one of the areas in respect of which it would be encouraging for the SME sector to get on-line. In the area of e-government there is the goal of integration. The current system of Government has evolved around a series of silos, which are individual departments or units examining a particular area of public policy. As a result of advances such as the Internet and the expectation that people get a more rounded service, the trend is for issues to be dealt with on a more horizontal basis, using more the concept of a value chain rather than individual silos ……The tendency not only here, but in many countries, is to examine the possibilities of joining up Departments and agencies to deliver services in a different way. Part of what we are doing regarding the development of e-government is examining how we can streamline back office processes. We can amalgamate common processes and reduce the cost of governance, which is a major issue currently in terms of national competitiveness. Going forward with that, we are working closely with the Secretaries General to try to develop a vision over the next six to eight months on what that might be, but it raises certain issues. There are constitutional impediments to working across boundaries and the way Government is structured and interacts with the Oireachtas is based on the silos rather than across Departments. There are issues such as that to be addressed in the longer term. I would like to return to a point I heard earlier on the issue of PC penetration. When examining research data, one of the issues that comes to light is that quite a number of people do not believe they have a reason to use the technology. There is a fear that one could be in a situation of encouraging people to buy technology where there is no good reason to use it. There is an onus on all sectors of the economy to examine that aspect because, for example, people working in the community and voluntary sector could very well give their client base a reason to use technology by putting their services on-line. Government tries to give a reason to use its services online, but the reality is that a great number of people do not interact with Government most days of the week. One might occasionally go on-line to renew one’s driver’s licence or passport or pay for one’s motor tax. One can purchase flights and shop online. Therefore, the demand for such technology cannot be met from only the public sector. I mentioned that in Sustaining Progress, the recent partnership agreement, the social partners have taken on board a special initiative on e-inclusion. We have had an initial interaction with them. I made the point that e-inclusion is not any one person’s problem. If one reflects on giving people a reason to use it, on the basis of the fact that there are 4 million people or thereabouts living in Ireland, there are at least 4 million reasons to use the Internet. It involves many people becoming aware and engaging with the opportunity that these technologies present in terms of building mutually beneficial relationships, whether it is in business, school or at home. The ISPU is involved in a large number of areas. There are the seven policy strands of the New Connections policy document, and we are also monitoring the alignment of our policies with e-Europe 2005, which is the European agenda. We are also participating in the preparatory process for the world summit on the information society, which will have its initial summit meeting in December of this year. Other issues arise from time to time in respect of which we must drop everything and deal as the moment dictates. The fundamental requirement for the construction of an information society, a knowledge society or a knowledge economy, is the existence of a robust telecommunications infrastructure. The goals set out in New Connections indicate that we would have a high quality, affordable, always-on facility available by 2005. That would be the culmination of many targets in that area. When one considers the job of promoting the information society it is clear that it is not a job that will go on forever. What we should really be doing is examining how we can get everybody who has to be engaged with this process engaged so that we can at some stage look to an end game where we can say that Ireland is as far as possible e-enabled. Our current aim is to try to achieve that by 2005.” Mr. Dave Doyle of the Department of Finance advised the sub-Committee “……When examining particular sectors with which the Government deals it is important to consider the overall budgetary context in which a Government operates because this is a critical driver of our consideration when it comes to examining new development areas. I will touch on this briefly. What I will say on this front is not new and is presented in the 2002 budget documentation, but it is useful to zero in on it. We have moved from a period of high economic growth, which averaged about 7% from 1997 to 2002, to where our prospects for growth now average in the region of 3%. That was as of last December. On the budgetary front, our revenue performances have moved apace in line with that. Revenue now grows at modest rates in the lower single figures. On the spending front, overall spending by Departments between 2002 and 2003 grew from €26 billion to €38 billion, up by €10 billion or an increase of 47% in three years when inflation was around 15% in that period. In the same period our tax revenues increased by €5 million, from €27 billion to €32 billion, which was an increase of about 18%. In the first three years about which I spoke, 2000 to 2002, the Government and taxpayers had a cash surplus of about €4 billion. The budget for 2002 set out a projected cash balance over the three years 2003 to 2005 of a negative figure of €9 billion. On the economic front, I mentioned the average growth rates going forward. The international climate is weak, our inflation in terms of the domestic economy is about twice that of the euro zone generally and we are working in a competitive environment. If our cost base is out of kilter, it will undermine our competitiveness and diminish our capacity to compete. Movements in our currency have been relevant in that regard. A critical part of maintaining competitiveness would be to ensure that overall Government spending does not drive costs in the economy to a point where one has unsustainable competitiveness. We have many demands for improved public services, intervention and changes that people are contemplating such as an operator contemplating a major public intervention in this area. Those changes have to be accommodated within a limited pot of resources. We now face a situation where we have a €9 billion negative cash projection for 2003 to 2005 and one would expect that to colour our thinking generally. Regarding the telecoms sector and our perspective on it, we are fully supportive of and buy into the conclusion that a modern telecom sector is vital to support and drive economic development. There has been some limited intervention in the market by Government, either in global crossing or the 19 area networks. The area network projects were intended to be demonstration projects to prove that the “field of dreams” scenario referred to earlier with the ESB could be made a reality and that, when we put the services on, customers would step forward and the investment would be justified. When that approach was arrived at in the usual way between our colleagues in the Department of Communications, Marine and Natural Resources and ourselves, the intention was that these projects would be a test to prove that the market was there and that, once one invested, customers would step forward, avail of, exploit and pay for the service leading to self-remuneration going forward, pending further roll-out. As in all this, policy development is an area of flux, but that was the context for this proposal. Regarding the market, we see that it is primarily a matter for the private sector to provide the services its customers need. We see an economic need for high quality service but, given the overall fiscal context, the primary role in addressing this should be for the private sector. We see the regulatory regime in place as critical in facilitating and encouraging the private sector to target its investment in the right area and to have an appropriate pricing structure that will allow needed services to develop. We welcome the steps taken by both Eircom and its competitors to put in place low cost services in the market. We are confident, now that is done, that market penetration by broadband at the customer level will accelerate significantly. In terms of our perspective on business users, what is being put in place now will be of major benefit to individuals, SMEs, branch offices of large companies and teleworkers. Regarding high-end business users, our perspective is that they will be able to continue to exploit the existing facilities to meet their services. Not everyone agrees with that, needless to say, but that is our read of the market. On the Government role as a customer of the telecoms sector and provider of services to customers, in general, spending by Departments on information technology and telecommunications is several hundred million euro a year, with €100 million being spent on telecoms and €200 million on information technology. That is generally devolved to Departments. Our read on the quality of telecom infrastructure available to Departments and the public service generally is good, including access to broadband, but local offices need more capacity. The new initiative undertaken by Eircom will help to address that. Our overall objective on the customer end is to put additional capacity in place to provide end-line user services to customers so that users can access customers on-line to the maximum extent justifiable by feasibility and cost. For instance Revenue has a major on-line service for business customers for which take-up is significant, and it plans to roll out facilities for personal tax returns and so on. Our overall goal is to support Departments and public agencies in rolling that out and delivering the maximum possible on-line service. Some examples of the on-line services available include Revenue, FÁS and Civil Service recruitment, the Land Registry, exam results, the Central Applications Office, driving tests and e-tenders. They are all on stream as on-line services. Motor tax is being addressed as are applications for driving licences, births, marriages and death certificates. The overall objective is to put the maximum number of on-line services in place. In the short term this is adding to costs in that one must simultaneously provide on-line services and a real, human-to-human service given that many do not have access to the Internet or will not have the capacity to use it in the next four to five years and knowledge of IT is more extensive among the younger generation than the older population. I will leave it at that and will be happy to answer any questions members may have.” The Department officials in reply to questions advised the sub-Committee “……How will we develop the services everybody agrees we need if neither the State nor industry is willing to invest in them? Are we committed to the metropolitan area networks on the agreed three year roll-out programme and how will the State use such services? There is an ongoing debate on the question of investment and the levy. As I explained to Deputy Coveney during the recess, our colleagues in the Department of Communications, Marine and Natural Resources are grappling with this on a day to day basis and are evolving policy. They are best placed to answer the Deputy’s ……With regard to my earlier comment on the coffers being dry, I said they were short by €9 billion over the three year period. That does not mean they are dry, but one can interpret the €9 billion shortfall over the period 2003-05. I shared that information with the Deputy to draw his attention to the fact that if it was contemplated that one would spend €100 million on a new service, it has to be considered in the overall policy context of a lot of pressure on public resources. Costs are generally ramping up and demand is ramping up even further. There has to be reconciliation across programmes as to priorities. In the current year, priority was given to the metropolitan area network referred to and I would expect, to the extent that the Government has decided on a plan, that priority will continue for that trial project. I also said that the original intention behind the 19 towns initiative was as a trial project to show that the market would react to additional capacity in terms of customer demand, utilise the service and pay whatever commercial rate of fees were set for access and usage. This would remunerate investment going forward. Deductions will be made from the outcome of that experiment, which will not be known until the projects are up and running, marketed and so on. Policy in this area is in a state of flux. I am aware that our colleagues in the Department of Communications, Marine and Natural Resources are contemplating the overall policy context and I am sure they will be bring forward further proposals in the area. In my initial comments I mentioned the role of the regulator in promoting and developing the roll-out of new services. It is no accident that in recent months we have seen a series of announcements concerned with the launch of low-cost Internet access services. It follows the policy direction issued to the regulator from the Government, who negotiated with the industry to put that in place. At a national strategic level, the pricing structure in the market that the regulator approves has to take account of some of those commercial considerations ……It is possible that something could be done in terms of incentivising the industry through a pricing structure, incentivising particular areas, making some less critical services slightly more expensive and re-balancing the tariffs. However, the issue needs to evolve through the role of the regulator and, as I said, our colleagues in the Department of Communications, Marine and Natural Resources are re-evaluating the policy in the area of broadband. On the question of funding for the 19 projects, funds will be put in place for those that have received the go-ahead. I expect that future allocations will also be available.” Continuing the Department officials advised the sub-Committee “……would be unbelievable if we were not a major user of the metropolitan area networks. The ESB has positioned itself as “a carrier’s carrier ……That type of posture precludes it directly offering services for most Government applications because the level of capacity it would be offering would be significantly beyond the requirements of most Government agencies in the non-commercial public sector. However, one could see a future for some type of usage where one is talking about, say, diagnostics between two large hospitals where such a type of usage might be required. Nevertheless, given the posture the ESB has adopted - it is a realistic and good posture - it would expect to be directly involved in our type of business. In other words, we would go to the market looking for a service provision. Our intention is to try to create an environment where there would be multiple winners in future contracts and multiple continuing competitions. If the ESB can keep a posture of low cost provision, we expect that it will inevitably be attractive to service providers ……It is not the case that our job is purely to balance the books. Our job is to advise the Minister for Finance and the Government on the best possible mix and approach to allocating resources, having regard to the needs of the economy. As I intimated at the outset, we accept the argument that a top quality telecommunications infrastructure is a paramount requirement, whether in Dublin or the regions. We accept that as a given ……On the overall position, the Department of Finance fully accepts that a high quality infrastructure system in telecommunications is vital to drive the economy. In an internationally traded environment many of our employment activities will be under pressure because of excessive costs here and more competition on the international markets. We must tool up our skills generally, whether in education, road transport or telecommunications infrastructure. We buy into that fully. The policy to address that can be approached in several different ways. There can be an Exchequer-funded approach to putting services in place, and I have explained how that is going to be quite difficult unless there are major trade-offs made in other priority areas which I would see as extremely difficult for policy makers to contemplate. The policy formulators in the Department of Communications, Marine and Natural Resources are exploring the question of whether it is possible to put in place an arrangement between the regulator and the private sector that allows the private sector to roll out these new services on a commercial basis. I have no doubt that the sub-committee will explore that area further. I hope no one is under any illusion that there is a doubt in our minds about this being a critical driver for the future. Policy development in the area is in a state of flux, and we have to await developments in this regard ……The truth is that there is broadband to larger offices throughout the country. In other words, if there is enough demand, broadband will follow. The area where we have issues is with regard to branch offices, health centres, schools, etc. We are willing to help move things on with DSL, satellite, etc. using Government traffic in that area. We would benefit from it as much as the other potential users at those locations ……The relationship between ourselves and the Department spending the money is not one of hands-on control. The budget allocation is there and Mr. Tuohy’s Department’s role is to manage and put that in place. The investment is in train according to our discussions with that Department and we are happy about the approach so far. When we get our management services entity in place, we will be happier. Whether we will be happy in terms of the assessment of the outcome of the project remains to be seen ……I see many areas for priority activity, whether it is by the Government or the private sector. A top quality telecommunications infrastructure is one of those priorities ……With regard to fiscal incentives or tax concessions, there would be some cost in that people who are enthusiastic about computers or about upgrading their existing machine would be keen enough to avail of it. Prices have already come down dramatically so there is an incentive to buy. Tax incentives generally benefit people who have resources to be taxed rather than people who do not. On the other hand, a general grant based scheme comes into that competing resources category I spoke about earlier, so one has to ask where it sits in the queue. We will not start into sensitive health issues, but there are many queues and would a grant based scheme be a priority for the scarce public resources? In terms of the lack of awareness in the community about the possibilities of the Internet, the industry could certainly tackle that by way of a promotional campaign in the same way as people are encouraged to buy consumer products left, right and centre. The campaign could push the benefits of having access to on-line services and using it for information gathering.” Mr. Brendan Tuohy, Secretary General of the Department of Communications, Marine and Natural Resources advised the sub-Committee “……I will discuss what happened in the market in recent years, our economic strategy and the telecoms sector as well as the role of Government. In December 1998, when we liberalised the market, we were about 11 months behind most countries in Europe. A derogation was in operation but it was felt that liberalisation was the way to go. We floated Eircom the following July and the following March the markets turned quite dramatically. Around the time we floated Eircom we also sold off Cablelink to NTL, which was done by RTE and Eircom. Post MIOL was sold by An Post as well, while the ESB, which was involved through Ocean, got out also. That was a time of tremendous growth in the economy here and worldwide. To go back to the overall economic strategy from Irish and European perspectives, the European strategy is covered by the Lisbon agenda and every March at the European Council this is debated. A key element in that is positioning Europe as the world’s leading knowledge economy by 2010. That is not just for Ireland; it goes beyond this country. There is also an e-Europe strategy as well as developing the Europe agenda. Regarding the economy - the committee had our colleagues from the Department of Finance before it last week - one of the key challenges of this decade is enhancing productivity in the economy. The Americans claim much of the productivity in their economy in the past decade was brought about through using technology and this is a real challenge for us going forward. Members will have heard the ESRI report this morning and we have challenges there. In the last decade much productivity was brought about through female participation in the workforce. The challenge in this decade is how we leverage the benefits of technology to enhance that productivity. On the other area in which broadband has an important role, I will take the example of the 19th century, which was driven by steam. Steam drove all the changes. The 20th century was driven by electricity and, in some ways, the 21st century will be driven by knowledge. When electricity was being rolled out in rural Ireland in the 1950s, I am sure many people were asking, “what will we use it for? All we want is a light, a candle.” However, we are now redoing the electricity networks to make three-phased electricity available around the country. In ten years’ time people will be asking why was broadband not rolled out quickly? This is the challenge for all of us. Currently there is a global downturn, particularly in the technology and telecom sectors. There is very little capital available and there is a conflict in providing low costs and remunerating capital for industry and for shareholders. This conflict must be grappled with. The Minister believes strongly that providing Internet access and broadband at a reasonable price is what will drive demand. There is a chicken and egg situation, the industry will provide the infrastructure when the demand is there. The challenge for Government, together with the private sector, is, how to make the regulatory environment and the returns for investors such that the infrastructure will be provided in the timescale we are talking about. Europe in the Lisbon agenda, is trying to position Europe as the world’s leading knowledge economy. The changes in our economic structure in the past ten to 15 years have meant moving from an agricultural economy to a modern new economy. Approximately 25% of our exports are now related to technology. Of the top ten exporting companies, excluding the pharmaceuticals, the majority are technology companies. There is an issue as to how we continue to sustain this into the future with competition from the accession states, e astern Europe, the Far East and so on. There is a general consensus that we will not be a low cost economy, and, therefore, we must provide other added value to make that worthwhile. That sets the imperatives for investment around education, infrastructure - we can debate the cross-sectoral benefits of the different types of infrastructure - and broadband. Broadband will be as important to the new economy as grass is to agriculture. What we have experienced in recent years is a market failure or limitations of the market. When we liberalised the markets we believed the private sector would drive investment and provide the infrastructure upfront. It has not happened because there has been a shortage of capital in the sector. What the Government and Department have tried to do is not to interfere with the market but support it. In this instance we rolled out a programme for metropolitan area networks. That is an open access programme whereby any operator can come into the market. It supports and facilitates competition. It facilitates new entrants into the market where they can compete, drive down prices and provide a range of services. The second issue relates to the question of whether the State should invest and, if so, how does it do so. We have opted for a number of models. In the first NDP call we supported the rollout of DSL in more than 40 exchanges throughout the country. We let the private sector propose different proposals. The second time round, we found that the money was not available in many private sector companies and some of them withdrew from the NDP call. We used the local authorities where we were supporting the metropolitan area networks. Members will be familiar with the 19 towns involved. This project is being rolled out and some members will be familiar with Cork, the first project launched last year. They will be coming on board at the end of this year and we will see what happens. The challenge is one of timing for us, in other words, rolling this out speedily. At the same time, we do not want the State to supplant what the private sector is doing. We want it to complement it and getting that mix right is a big challenge. We are not the only country facing this problem. At a meeting in Brussels in January, each of the European countries gave a presentation on what is going on and almost every government in Europe is involved in supporting the rollout of infrastructure. The Swedish Government is providing €5 billion for the rollout of broadband in rural Sweden. If people think the market itself will do this, they should bear in mind that Europe is proving this is not so and there is a need for support in this area. As a country that is becoming more and more dependent on the new economy, and the type of jobs that go with it, it is probably more important for us and other countries which have a traditional manufacturing base.” In reply to questions from Members, the Secretary General advised the sub-Committee “Information and communication technology permeates everything. It differs from other areas in that it does not fall neatly into any one box. The use of technology has as big an impact on health and education as on our Department. Our job is responsibility for the basic infrastructure. That is the market. We are also involved in security, biometrics and the security side of networks including Internet, domain naming and so on. Today we are dealing with the market and the hard level of the infrastructure that goes in there. Grass is to an agricultural economy what broadband is to the new economy. It is the basic bedrock. You cannot have the new economy if you do not have broadband. ADSL is an introductory technology. The Government objective is to hit five megabits per second. That is the trigger point for streaming video and the like. Everyone accepts that it is going to happen but the issue is how quickly we do it. We are in a chicken and egg situation. The industry will provide broadband when the demand is there but the demand will not be there until the infrastructure and services are there. Our Department has a sectoral policy role. We interlink as part of the Government’s overall economic strategy. The Department of Enterprise, Trade and Employment looks after Enterprise Ireland/IDA and the enterprise and industry side of things and we link closely with it. The Taoiseach’s Department has a co-ordinating role across the issues of eGovernment, electronic services across the whole range of Government areas and some of the softer stuff across that. The big challenges for Government today do not neatly fall into boxes. Whether one likes it or not, Government must have co-ordinating mechanisms across a range of areas from the drugs problem to the ICT area. It is naive to think an individual can be responsible. Individual Ministers and Departments will continue to have to drive this within their own sectors. The Minister of State, Deputy Hanafin, and the Taoiseach’s Department effectively pull together the different agencies and Departments so that we are all singing off the same hymn sheet. The Taoiseach’s Department published the document, New Connections. That is the current strategy that we are pursuing. It specifies the five megabits per second. As the Department responsible for the telecoms sector we are trying to make this happen on the ground. The regulator’s role in this is the detailed regulation ……We changed the communications regulation environment last year by allowing the appointment of a three person commission and allowing the Minister to give directions to the telecommunications regulator, ComReg. The Minister did that in the form of one on broadband and one on flat rate Internet access. That came in on 30 June and, from what I am told, there has been a big interest in that. We have always believed in the importance of the availability of flat rate Internet access. We said this in a number of reports in 1998 and 1999. Knowing that if I pay X amount of money I will have unlimited access to the Internet is a key trigger point to switch on the Internet. If a family does not know what its Internet bill will be it will not be inclined to use it. We were head for head with the UK in Internet penetration in the late 1990s but as soon as the UK introduced flat rate Internet access they went ahead of us. I suggest that was partly due to the availability of flat rate Internet access. Those are the roles of the three Departments. Other Departments also have key roles. There are huge productivities to be gained by the use of technology. The committee has heard some of its uses in health, education and likewise. We might come back to its uses in education later because I know that has become an issue with this committee. Our own proposals are to look at the idea of always-on broadband access to every school, library and community centre of learning in the country. We think the future will be built around the schools and education side. If Europe is to be the world’s leading knowledge economy and if Ireland is to be a key player in that we must take a number of initiatives that are different from any other country. We cannot just follow if we want to be a leader. We must take a number of key initiatives. We propose that we look at the schools and education area and at providing free broadband access to all schools and libraries and see that as charged out against the sector. We will be talking to the industry about this. If the cost of doing that works out at less than €30 million and the total telecoms take last year was €3.6 billion it will be less than 1% of the total cost ……How do we grow the market while, at the same time, do the right thing for the country? Having literate young people who are used to technology will lead to inventions and innovation in the future. They must have that facility from an early age. We do not want to disadvantage our young people. We want to proactively advantage them or give them an advantage. In our view the way to do that is by providing free broadband access to all schools, libraries and centres of learning. We must take a number of initiatives that are different from other countries or all we will be doing is following. The second issue raised is the support we have given to different initiatives up to now. We went out for calls, to the private sector in some cases, and the ESB, being a semi-State company, applied. The ESB proposal was interesting. The board was looking for two loops, one in the south and in the north and north-west. We are putting much greater funding into the BMW region because EU rules allow that. This is an alternative to the other backbones, in the main Esat and Eircom, and is providing an alternative to that. The ESB is a carrier’s carrier. It does not deal directly with customers. I have full confidence that once the ESB starts marketing this it will be very aggressive and do very well on it. The board has a very good tradition on that. It was involved previously with Ocean at the start-up with BT. We have provided some funding there and one of our conditions is that the north-western loop will be rolled out at the same time as the southern one. The business case is not as strong for some of the less populated areas of the country as it is for Dublin or Cork, for example, so part of Government’s role is to ensure that we support the spatial strategy. Seán Dorgan, CEO of the IDA, recently spoke of the importance of infrastructure rollout to support the development of the regions outside Dublin. We are supporting a number of private sector initiatives and, in parallel with that we are doing the metropolitan area networks. Let me explain why we are doing that. We are the most competitive in the world on international connectivity simply because we did the deal with Global Crossing. It happened that we went to a competitive tendering process. We have more international connectivity infrastructure into Ireland than we need at present at the most competitive price in the OECD. The Government stepped into that market. In the initial discussions with the private sector companies they said they did not need it and that they could respond to the demand. However, the Government felt we had to move a stage beyond this and so we created that environment. Companies such as Google have come in, against stiff competition from abroad, and they are in here because of the availability of that infrastructure. The international side is highly competitive and successful here. In regard to the national backbone, the ESB system, in competition with Eircom and Esat etc., will drive the level of and lead to effective competition. The third level is the metropolitan network. The question is how do we connect up when we get into the local area. We had a situation where many companies maintained their own systems and would not allow other operators to use them. We had discussions with Eircom about opening up its system. Initially Eircom was not in favour of that but it has been more positive in recent months. We have had some good discussions with it about opening up its infrastructure to competition so that we do not have to relay every trench and fibre in the country. That level of change is important. Co-location facilities are another issue. If other operators want access, particularly from the home to the local switch, they must connect to the Eircom switch. However, now there is the idea of a co-location facility, another switch that is open to other operators. The last mile is the copper wire into the home. This is happening with ADSL at the moment and regulatory work is going on in order to make this easier for competition and for the services that go with it. In the past there was a feeling that we could have competition on infrastructure and on services. Now, much of the infrastructure is common and there is more aggressive competition on services ……Some of that will be done by wireless and there is increasing use of wireless technology in that area. Some presentations have been made in regard to WiFi 802.11b that, again, is in an unlicensed spectrum area. There has been increasing use of it. There are contentious issues in this area, similar to what we have on cable. The operators roll off the same bandwidth and the more there are the greater the problem. We will still need the fibre backbone in the area because it has unlimited capacity. Then we get to the last mile where some of it will be copper, some wireless and some cable. We do not have a developed cable market here. RTE and Eircom did well and sold Cablelink for more than £500 million. Then the market turned within a few months so the capital was not there to upgrade the NTL or Cablelink network. In other European markets digital services are provided by cable in competition with the telco. We do not have that here and have to jump a generation, almost… We are running a number of pilot projects and are willing to support initiatives that arise in this area. We support five wireless projects at the moment, two in Cork, one in Dundalk and two in the digital hub area. The Department, as part of an initiative, fund these. At present, wireless will not provide the same capacity as fibre. Fibre has, effectively, unlimited capacity whereas wireless will always have this contentious issue. That can be seen with the mobile phone when the network is busy. It is evolving and the technologies are improving rapidly ……Our Department is responsible for co-ordinating the rollout. We also have a regulatory policy role and work with the regulator who does the detailed regulation. There is a mixture of Government direct action on the policy side and the regulator taking detailed regulatory initiatives on the ComReg side ……In regard to the metropolitan area network, we have strict project management ……In the main, we are on target although there has been some slippage ……Times are competitive and one can buy fibre now at a fraction of the price it was five years ago because of the glut in the market. It is a good time for rolling out infrastructure. A question was asked about 95% coverage. There is a debate about what the cost of providing 95% coverage would be. Ballpark figures could be between €1.5 billion to €1.8 billion to provide that level of coverage. Investment is needed for that to happen, whether it is ADSL and/or moving on to fibre. In an ideal world, what would be desirable to do would be what has been done in some countries such as Singapore and Korea where fibre has been run into the home. Fibre will give unlimited capacity but it is very expensive to do that. There is a balance between those two issues and between cost and benefits. To put it in context, the flotation of Eircom and the sale of Eircom shares brought in a little over €6 billion to the Exchequer and that was put into the pension fund. The Department of Finance and my Department do not always agree on certain things. We would like to keep costs at a minimum. We regard telecoms as a contributor to the national economy and sometimes the view of the Department of Finance is that it would prefer to take the money up front in the form of licence fees or spectrum usage or whatever. That debate happens in every economy in the world. We would rather see it coming back in low charges and driving the economy. I am aware that the committee has taken up that issue with the Department of Finance. There is a price to be paid and the question is where the line is to be drawn and how value is obtained. I believe a cross-sectoral benefit cost/benefit analysis comparing broadband with some of the other sectors would see broadband coming out very well. If the economy is going to be positioned as a knowledge economy, the imperative for that level of investment becomes even more important. We have details of what other European countries are doing and we can make that information available to the committee. They all approach the issue very differently. Some are investing heavily in the third level institutes and the colleges by providing that level of infrastructure. We put a small amount of money, €3 million or €4 million, into the CAIT initiative that Deputy Ryan spoke about. That initiative was transferred to another Department after the change of Government last year. It is now in the Department of Community, Rural and Gaeltacht Affairs and we no longer deal with it. We have a key interest in dealing with social inclusion as has the Minister of State, Deputy Hanafin. It is not on our agenda. It was positioned in another Department after the election. I presume it is in the Department of Community, Rural and Gaeltacht Affairs, of which Deputy Ó Cuív is Minister. I cannot answer for it because it is not my area of responsibility. We have an interest and we are supportive of it. As part of our schools’ initiative, we will include not just schools and libraries but what we term community based centres of learning. ……Every presentation that the committee has received from the users, both older people and students, wants and demands the reintroduction of the CAIT programme. I hope you will convey that information to your Minister and to Government ……We set up the programme and we are very positive about it. For a small amount of money invested, it was a very positive and successful initiative and I believe any analysis will prove that. To answer the question about the cost of services to each house, ComReg has published a study on the subject. We believe that the introduction of flat rate Internet access and the like will have a huge impact on the use of the Internet technologies. In the case of schools, for instance, the biggest element of the cost of buying a PC and connecting to the Internet over a five year period, is the ISP and telecom charges which are 85% of the cost. It is very important to deal with that ……What we did there was exactly what happened all over the world. The OECD, EU and everybody were pushing the liberalisation of markets by selling off the incumbent under the private sector drive development. The subsequent downturn in the markets, and the removal of capital from those markets, made it very difficult for the shareholders in these companies to invest going forward. So there is this conflict where governments traditionally intervene in the market where there is a market failure. There would have been no rollout of electricity or the initial telecommunications in any country unless governments took the long-term view and made it happen. One of the issues with broadband is that everybody will say: “when the demand is sufficient we will rollout infrastructure, because then we will get a return”. However, some of the returns people are looking for are three-year or four-year returns. In many of these cases seven or ten years are required before getting that level of return. Some of the shareholders may not be prepared to wait that long….I see some of the wireless or satellite technologies becoming cheaper. They are not there at the moment. At the moment there are limitations ……with DSL there is a limit of, I think, 3 km to the local exchange. There is a limitation on the number of users, contention rates, etc. That is becoming an issue in Scotland and other places. I should like to return to the philosophical issue of whether the Government should be involved in owning infrastructure. Our Minister made it clear recently that in a parallel area on the energy side he is not at this point in time disposed to selling off the infrastructure, whatever about the services in some of the other areas. He made it clear in a discussion recently that sometimes we should not just blindly follow the ideology in the sense that everybody was locked into the belief that the private sector would do this, but the downturn in the market has not helped this ……I am not going to debate other areas. This is not a black and white issue. If we did not have the downturn we had, there would have been the capital investment to go in. However it did not happen that way. Deputy Coveney spoke about the rollout of broadband to the institutions, including schools, etc. We can consider this along with the levy issue. I am not at liberty to say what is going before Government, as the Deputy will appreciate. If matters go before Government they will come out. There have been discussions with the industry. When we get Government approval to discuss some of the specific issues around this, we then go back and start discussions with the industry. We flagged the fact that we were considering this but did not engage in serious discussions with them. I can circulate a chart we prepared last night to give a feel for the breakdown. While this is subject to correction we did it to give some indication about the breakdown of the costs over five years, for example, for a school with one PC. This does not reflect the fact that multiple PCs could be connected. It gives some idea of the breakdown of the costs. It is not the PC that is the major cost If we can drive the usage of the Internet and technology from an educational perspective that will drive the demand at home and in the economy generally and at the same time make our young people more literate in this area. So there is a belief in that. I believe all Members here would be committed to positioning Ireland as a leader internationally. For that to happen, we have to be prepared to take initiatives that do not just copy somebody else. The chart shows the total cost of linking up schools. It shows €100 for communications and €150 for-----That is just for setting up the PC, etc. The Deputy is talking about the operating cost. This includes the cost of the ISP, the telecoms, etc ……Members should not hold me to the detailed accuracy of this. These are just ballpark figures from some quick work we did overnight. It is probably worth looking at this matter from the point of view of finding out what are the issues. One could put considerable effort into one of these areas and get little benefit. The real issue is whether we can bring down the cost for schools. This would drive demand in the economy. Schools would not be the only beneficiaries. One needs to consider the issue from the point of view of creating a bigger market. The same principle applied when we did the Global Crossing deal. Let us not fight about market share but talk instead of expanding the market. The way to do this nationally is to encourage other companies, particularly large users, to enter the market. The issue of scale must also be considered. The greater the scale, the more dramatic will be the decline in marginal costings. If one has a significant scale in demand, one will be able to roll out broadband much more cheaply. Eircom’s success with pan-European call centres, which drove down costs and made it difficult for competitors to compete with it, is a good example of this ……The management services entity was mentioned. We have a management services entity which is out to tender. Initially, the group of 19 towns will be connected into the other backbone networks. We will evaluate progress as we proceed. The debate will be on whether the private sector will continue to roll out infrastructure in other towns identified in the national spatial strategy or whether further Government intervention will be needed. The matter is open for discussion because the infrastructure is still being put in. Many people believe there is a need for continued intervention which will mean the Department will have to fight for resources against other areas such as health and education. Any form of cross-sectoral cost benefit analysis would show that broadband investment is good value for money. All the work we have done in this area would prove this. The respective roles of the private sector and Government were mentioned. We see the role of Government as being one of facilitating the legal and regulatory environment, including working with the regulator. The Minister has already issued directions. We do not have a book we can follow on this issue as we are on new ground. The Swedes have already done some of what we are doing in terms of the management services entity and we look to them in some areas and break new ground in others, including regulation. We will have to assess progress on an ongoing basis. I cannot write the script because we are not following anybody else ……Unbundling the local loop will also give one the last mile. Other operators will then be able to go down to the local switch or co-location facility. They have MANs going into the high areas and must then go into the last mile. Part of the regulatory regime established by the regulator will effectively allow this to happen ……Around 18 months ago, when we introduced the concept of the MANs, we talked to Eircom about the use of its ducting. At that point, the company did not favour this approach but in recent months it has been much more positive about making infrastructure available. We do not want to reinvent the wheel. If infrastructure of the required standard is available, whether it belongs to Eircom, Esat or another company, we will incorporate it into the MAN. We have said this from day one and would like to be in a position to do it on condition that it is open to all operators. Its use cannot be constrained and we are not in the business of allowing it to be. The idea is to take infrastructure and build it out anew ……Much of Esat’s fibre is backbone. The company owns much of the backbone network in the ground and will be a user of some of the MANs, as will cable companies, some of which have expressed an interest ……The management service entity will carry out the negotiations when it is up and running. The Department does not get involved in such matters. We want to be a facilitator of the process not a telecommunications company.” When questions about unbundling the local loop and if Sweden uses a different model Mr. Tuohy stated “No, they also use unbundling. Many of the local authorities in Sweden own the infrastructure. The local authorities here own roads and water systems but traditionally have not owned the telecommunications infrastructure. In Sweden the local authorities provided this utility service.” When question about the education levy, Mr. Tuohy stated “On the educational levy, we have an ongoing liaison with the industry and also with ICT Ireland, which is the telecoms side of IBEC. Once the draft Bill is published, we will proceed to talk to industry about the detail ……The Bill will have a facilitative role and the committee and others will be involved in that process. The Bill will refer to the levy, the detail of which will have to be worked out. We do not have a blueprint for how we will do this but it is important that an initiative is taken to highlight the issue of education, which will be critical for the country. It is vital that industry drives demand. We have a good relationship with our colleagues in the Department of Finance from whom we are always seeking increased funding. Mr. Doyle’s acceptance of the importance of the provision of infrastructure, particularly broadband, is welcome. The real question is who will pay for it. We do not want to rule out the private sector doing much of the work, we want to facilitate this. Our interventions must be such that we maintain the principle of the market doing the work, while the Government intervenes in a way that is supportive of the market but does not displace it ……With regard to the issue of the disincentive to investment, it was felt in the past that one could have competition on services and infrastructure. There is now a growing feeling in many of the network industries that competition is focused more on services than infrastructure and one can share infrastructure, whether mobile phone masts or whatever, and have aggressive competition on services. This is an evolving issue. Nobody on our side is prepared to come down on one side or the other. We are learning as we go along. As a small, open island economy, rolling out competing infrastructures simultaneously presents many difficulties. One should make sure that what is put in the ground is available to other operators at the right price. This involves scale in that as people get more usage from infrastructures, such as fibre, the price falls. However, the up front cost of developing infrastructure of this nature is expensive. Somebody has to pay for it and the return per shareholder. As our thinking on some of these issues is evolving, I cannot give a definitive answer at this stage.” When asked for the Department’s views about ICT being now an integral part of our society both at home and in the workplace so that young people could be afforded every opportunity to avail of the latest technology to prepare them for life out of school, Mr. Tuohy stated “There is no question about it. In my view, broadband, education and research and development will be the three bedrocks of the new economy. The Minister for Communications, Marine and Natural Resources is involved in a global e-schools initiative that will be launched by Kofi Annan in December at the world summit of information society. The Irish and Swedish Governments are driving that initiative. It is important to look to the future in a global context. We must accept that education itself is becoming a huge industry. We have a good reputation internationally in regard to technology, on which we need to build. We need to focus on education and schools and make that one of our strengths. Last week I was in Northern Ireland with my colleague and we had a long discussion about some initiatives. We are working on a digital island project with our northern colleagues, which is important in the context of the island of Ireland. Much good work is going on in that regard. I admire the great work that is happening in the North in terms of education ……We have a national centre for technology in education that is most effective. I think its director, Jerome Morrissey, was in before the committee. It has received a tremendous response from teachers since it was introduced. The Department’s input will be in the area of Internet access availability and the cost of that. If we can do something in that regard it will be up to the education side to look after things such as teacher training in PC usage. To return to the first question from Deputy Ryan, this is an issue that spans the whole of Government. We are focusing on the areas in which we can make an impact as part of our contribution. We look forward to the committee’s support when the Bill is published. We can discuss the modus operandi but at the same time as we are growing the market we must do the right thing for young people to give them the skills base and access to services. That is a win-win situation. It is a small amount of money in the context of the total revenue stream from the telecom industry last year. I saw a recent figure of €3.6 billion, which puts it in perspective. I am sure that text messaging alone was a significant element of that. We need to give something back and provide for the future. The amount involved is small and comes to less than 1% of the total revenue stream for the sector. When Mr. Tuohy says that we need to give something back, is he referring to the telecom companies? We can broaden it. I do not just mean them; I accept that it will involve others as well. From the point of view of providing something for the education system, we will provide free, always-on broadband access to every school, library and community-based centre of learning. This will be a powerful step forward ……The most recent figure I saw on Internet usage is over 50%. One of the expected outcomes of flat rate Internet access and DSL availability will be an increase in the take-up of PC usage and Internet access. The third element in driving forward this area is education. This will have a huge impact in a short time. We are also doing some work with HEAnet. As members are probably aware, this relates to third level institutes. The objective is to have a Gigabit to the desktops in universities, the idea being that anybody going into university should be in a position to get exposure to a high level of connectivity in order to collaborate internationally as if one was next door. That must be introduced, not only at third level but at second level and primary level. There is no point in just connecting up to the Internet; there are broader issues surrounding it. The pedagogy of teaching could become much more student-centred due to the use of technology. The development of wide-area networks on college campuses will allow students to plug in their PC or laptop anywhere.” The Committee regard the contribution made by Mr. Dave Doyle of the Department of Finance as being of greatest significant when he advised the sub-Committee that “As I intimated at the outset, we accept the argument that a top quality telecommunications infrastructure is a paramount requirement, whether in Dublin or the regions. We accept that as a given ……On the overall position, the Department of Finance fully accepts that a high quality infrastructure system in telecommunications is vital to drive the economy. In an internationally traded environment many of our employment activities will be under pressure because of excessive costs here and more competition on the international markets. We must tool up our skills generally, whether in education, road transport or telecommunications infrastructure. We buy into that fully.” The Committee attaches particular importance to this as the language is clear and unequivocal and shows that the Department understands the vital importance of broadband to the Irish economy and how the Department has ‘bought in’ to the economic imperative that Ireland has broadband access. Further, from the contributions of both the Department of Communications, Marine and Natural Resources and the Department of Finance it is clear to the Committee that at the very highest levels in the Departments there is an understanding of the economic imperative for broadband. However, the Committee has a concern in regard to policy delivery on this economic imperative. This is prompted by the follow on comments of Mr. Dave Doyle, quoted above, when he advised the sub-Committee “We buy into that fully. The policy to address that can be approached in several different ways. There can be an Exchequer-funded approach to putting services in place, and I have explained how that is going to be quite difficult unless there are major trade-offs made in other priority areas which I would see as extremely difficult for policy makers to contemplate. The policy formulators in the Department of Communications, Marine and Natural Resources are exploring the question of whether it is possible to put in place an arrangement between the regulator and the private sector that allows the private sector to roll out these new services on a commercial basis. I have no doubt that the sub-committee will explore that area further. I hope no one is under any illusion that there is a doubt in our minds about this being a critical driver for the future. Policy development in the area is in a state of flux, and we have to await developments in this regard. I am sure the views of the sub-committee will be relevant and will be taken on board by the Government.” The economic imperative is such that the Department of Finance should be more proactive and definitive. If the Department of Finance is not prepared to consider “……an Exchequer-funded approach to putting services in place……” then it must give a clear direction to all the policy departments involved or impacted by the provision of high-speed, high-bandwidth broadband as to funding levels and mechanism that the Department of Finance it is prepared to commit the State to make and, by inference, give a clear indication to the policy departments as to how they should move forward in proposing alternative funding structures that are acceptable to the Department of Finance. Presently, it appears to the Committee, that the Department of Finance is ‘fence sitting’ and is equivocating by being in a mode of “……unless there are major trade-offs made in other priority areas, which I would see as extremely difficult for policy makers to contemplate……”. Decisions must be taken, direction must be given and in the view of the Committee this must happen now. The Department of Communications, Marine and Natural Resources, which in the opinion of the Committee is clear as to the cross sectoral and economic benefits of broadband, is, in the opinion of the Committee being hampered by a clear signal not being given as to depth and scope of State funding, if any, that may be provided. The development and delivery of policy cannot continue in such a vacuum. Clear unequivocal direction must be given so that policy can move forward. The view of the Committee, notwithstanding the arguments adducted by Departmental officials that there is co-ordination of policy, is that there must be, at Minister of State level, a Minister appointed with cross departmental responsibility for communications, broadband and ICT. The Committee agrees with the point made by Mr. Colm Butler of the Information Society Policy Unit when he advised the sub-Committee “The current system of Government has evolved around a series of silos, which are individual departments or units examining a particular area of public policy. As a result of advances such as the Internet and the expectation that people get a more rounded service, the trend is for issues to be dealt with on a more horizontal basis, using more the concept of a value chain rather than individual silos. The tendency not only here, but in many countries, is to examine the possibilities of joining up Departments and agencies to deliver services in a different way. Part of what we are doing regarding the development of e-government is examining how we can streamline back office processes. We can amalgamate common processes and reduce the cost of governance, which is a major issue currently in terms of national competitiveness. Going forward with that, we are working closely with the Secretaries General to try to develop a vision over the next six to eight months on what that might be, but it raises certain issues. There are constitutional impediments to working across boundaries and the way Government is structured and interacts with the Oireachtas is based on the silos rather than across Departments.” It is the opinion of the Committee that while every Department has a strategy statement there should be a requirement to have a strategy statement for Ireland - a cementing of joined up thinking for Ireland. It is the view of the Committee that this can only be achieved by the appointment of a Minister of State at the Department of Communications, Marine and Natural Resources to oversee the implementation of the overall ICT strategy. In making this recommendation, the Committee is aware of how this role will be cross departmental and thereby ensure that communications, broadband and ICT are embedded in the DNA of the culture of the policy formulators and the financing Departments. Chapter 7 – Education7.1 The universal provision of broadband to the educational sector is essential if Ireland is going to enable young Irish people to access the full range of on-line educational materials and on-learning opportunities and be an ICT proficient workforce for the knowledge based economy. In addition, the availability of universal access to broadband would enable educational content to be managed from a central location reducing the need for the latest high spec computers to be used in schools. In a submission to the sub-Committee the Department of Education and Science said “The emergence of the knowledge society has brought about a major shift in the policy environment. Information and communications technologies (ICT) are now a part of everyday life and have transformed the workplace, business, communications and the delivery of many public services. In education, ICTs are changing the way we learn and what we need to learn. Digital literacy is now an essential “life skill” in the same way as is literacy and numeracy. The integration of ICT into teaching and learning represents both a major challenge and an opportunity for education.” Digital literacy is now an essential ‘life skill’, but the reality is that this cannot be achieved without broadband. The sub-Committee heard from Mr. Jerome Morrissey of the National Centre for Technology in Education (NCTE) “……that in 2000, 69% of Post-primary schools had Internet access via an ISDN line, but by 2002 this had risen to 85%. While most Post-primary schools had ISDN, very few had broadband, with only 3.5% having a DSL connection, and 1.9% having satellite connections. In the primary and special schools the picture was, and remains, very different. The majority of schools were using telephone lines to access the Internet, and less than one third had ISDN connections” The NCTE submission continues “International comparisons increasingly underline the growing gap which exists in ICT provision against cutting edge education systems internationally. The EU Eurobarometer Survey of ICT in schools (2002) shows that Ireland is under the EU average for pupil to computer ratios (EU avg. 9:1) with the leading countries averaging as follows: Denmark 3:1, Finland 6:1, UK and Sweden 7:1. Ireland averages 10:1. Ireland is last in the EU in the provision of broadband connectivity within schools (0%), the EU average is 32% with Sweden, Denmark and Finland at 60% or above and the UK (where there is a commitment to 100% broadband provision by 2005) at 27%. Neither is it a co-incidence that the high ranking Nordic/Scandinavian countries are also the most technologically advanced and most profound users of ICT.” Table 1 - Pupil use of the Internet and email (source – NCTE submission)
The submission from the NCTE is an indictment of the availability of broadband in the educational system and is reflected in the data given in table 1 above in that for post-primary schools half of students have never used e-mail at school with 66.8% of students never (22.8%) or occasionally (44%) using the Internet. At the primary level this is much worse with over 94% of students never (59.9%) or occasionally (34.7%) using e-mail in school and 85% of students never (33.2%) or occasionally (51.8%) using the Internet. The presentations to the sub-Committee by Ms. Deirdre Matthews, teacher, and Ms. Ruth Devine and Ms Annie O’Connell, students from St. Vincent’s secondary school, Dundalk, illustrated the educational benefits for students to be gained where ICT and broadband are ubiquitously available. The presentations by Ms. Devine and Ms. O’Connell were based on the contrast between the life and the work of a student who is technologically aware and one who is not. Ms. Devine, in presenting the position of the technologically aware student, said “I have used technology, not only to learn from, but as a tool with which to construct knowledge.” Further, Ms. Devine went on to advise that “With the free availability of the Internet in school, I was able to take an online course in creative writing from the Center for Talented Youth in Ireland, based in DCU. I had the opportunity to access the expertise of third level educators in developing my writing skills at my own pace. Online communication was an essential part of this process, as I submitted my assignments and received feedback online.” Ms. O’Connell in presenting the counter position said “Although my school has a computer suite with dial-up Internet connection, getting into the room is a real problem, as there are 700 students in our school competing for 30 computers. When I do get on-line, I then have to sit and wait while the pictures appear at a snail’s pace. Also, since the school pays for the Internet by the hour, access is very restricted and after hours use is totally out of the question.” Further, Ms. O’Connell advised that “When it came to handing in the finished products, I knew that I was already at a disadvantage as to what grade would be given to me after all my hard work. Even though I’d taken a lot of care to make sure that my reports looked like ones of the highest standard, the reality was they looked unprofessional and unfinished next to the word-processed work of my friends in St. Vincent’s. I had to search through magazines and newspapers to find images and I had sketched a few little pictures to include in the reports, while my friends had had a whole library of images at their fingertips. My own presentations were so boring when compared to the multimedia presentations of my peers.” The NCTE submission and Table 2 below indicates that in Irish schools there are possibly some 83,663 computers. “The schools that responded reported a total of 67,350 computers. These figures may be adjusted upwards to take into account the schools that did not respond. Assuming that the schools that did not respond had the same average number of computers as those that did respond, this suggests that the total number of computers in schools was 84,663. This is a 65% increase on the number reported in 2000 (51,307).” Table 2 - Number of computers and pupil computer ratio
The data supplied by the NCTE shows a 65% increase in the number of PCs over that reported in 2000. However, the Committee has a concern as to the age and specification of equipment pre 2000 and whether this is of a sufficient standard to be fully utilizable with broadband and the application software that this will deliver. In this regard the presentation made by Mr. Jimmy Stewart, Director of the Classroom 2000 project in Northern Ireland is considered by the Committee to show a way forward on both the issues of redundancy and provision of equipment/infrastructure. Mr. Stewart advised the sub-Committee that “……C2K is an organisation that acts under the umbrella of the Western Education and Library Board. It acts on behalf of all five boards plus the Department of Education to provide an infrastructure solution for all our schools. It aspires to put Northern Ireland in the lead in terms of its educational service. There is recognition at Departmental and Ministerial level that ICT is central in many ways to the development of our educational system and a successful economy. It is part of an overall strategy in providing educational technology across all of our schools. That strategy has been in place since 1998 and has addressed key elements of development over the last five years. ……The C2K project’s responsibility has been to deliver the WAN and LAN infrastructures that supports those developments. Further, Mr. Stewart advised “The key element that moves the service forward in terms of its educational benefits is the wide area service. Effectively, we are connecting all our schools into a single, wide area network and within that network the schools are being provided with a wide and rich mix of curriculum and management tools which give them the ability to collaborate. Effectively, we are pulling together the management information and curriculum systems to try to create a fully integrated learning environment from which teachers and children can take advantage over the next few years.” When questioned Mr. Stewart further advised that “The ethos and philosophy behind C2K is to take technology issues away from schools and the partners we have, HP and SX3, are providing a managed solution for the length of the contract, so we are not in the situation of wondering what technology to buy next. We do not own any of this technology; none of it is owned by the service. It is all a managed service so we are buying access to resources at the desk within the classroom. I do not care if it is PC “A” or PC “B” or whether it is a PC at all. What we want is access to the services and that is what we are buying through these contracts. The £500 million is not buying a kit but a solution, though that is jargon. We are not buying a PC. The technology, the bandwidth and so on, are still in the hands of the managed service providers. If it does not deliver what we require in the classroom - if it does not deliver the video conferencing - then it is their job to enhance the technology and the bandwidth to match that. The payment is for access to resources. The risk of not getting that right lies with HP, SX3 and the other companies which have contracted with us.” In regard to the amount of bandwidth, Mr. Stewart said “Two megabits is our minimum provision. The experience we have had over the past 18 months has been that having provided two megabits to all our Post-primary schools to run on their existing curricular networks, there has been quite a significant growth of bandwidth usage over time and some schools - at particular times, usually outside school hours at lunchtime, immediately after school or in the morning - are already starting to peak at that two megabit limit. Our expectation is that whatever bandwidth you give them, it is not enough. If we are going to move into a world where video conferencing and video streaming becomes part and parcel of normal practice within the classroom, then clearly two megabits will not be a satisfactory ceiling for the connectivity. However, the solution is quite scaleable, in two megabit chunks, and certainly it would be our aspiration to have a plan in place to move that forward. Our expectation would be that the price of that two megabit solution will drop over time and therefore we will be able to enhance it within the existing budget.” The Committee notes from the Department of Education and Science submission that “Like many other countries, Ireland has in recent years has provided substantial resources for the promotion and development of ICT in schools. The Schools IT 2000 initiative was introduced by the Department of Education and Science in 1998 to provide capital funding, teacher training and various support services for ICT development and use in schools. This was the first major policy statement on ICT in education and was implemented in the context of a general low level of ICT provision and usage within schools at the time. More than €50 million of public funds was provided under Schools IT 2000 for computer equipment, teacher training and a range support services and innovative projects in ICT-based learning in schools. This was complemented by substantial private sector investment through industry sponsorship and various local partnership arrangements.” However, for the Committee, it is a matter of concern that the funding provided was €50 million compared to the Northern Ireland funding of £500 million (some €750 million) over a 10 year period. Further, the Committee considers that the C2K Project is an example of imaginative thinking in the approach to equipment, infrastructure and broadband provision by the use of a type of, or derivative of, the concept of a service level agreement. The Committee is of the opinion that the Joint Committee on Education and Science should give consideration to how the State, the Departments of Education and Science, Finance and Communications, Marine and Natural Resources could utilize this Public/Private Partnership approach to the provision of equipment, infrastructure and broadband for the Irish educational system. The data (Table 3 below) from the Department of Education and Science’s own web site shows which there are some 781,143 students, at both primary and post-primary level vying for these possible 84,663 computers, an average of 1 PC for every 9.23 students in both primary and secondary school. With the average school day being some 5 hours of actual teaching time and with an average of 190 school days in the school year then we get a very stark picture as to the actual amount of time that a student might spend in front of a PC, approximately 103 hours each school year or an average of 32.5 minutes per school day per school year. This is no basis for equipping students with the necessary skills to engage in digital learning or to empower the educational system to deliver the skilled workforce required for the knowledge based economy. Table 3 - Statistics from the Department of Education and Science Web Site.
The NCTE submission (Table 4 below) shows the broadband provision that exists in the Irish educational system Table 4 - Internet connection (source NCTE submission)
The reality is that there is no broadband provision to the educational sector, or at best any broadband that is being provided is miniscule and this compares with the “Two megabits is our minimum provision” which Mr. Stewart advised the sub-Committee was the position in Northern Ireland. In Ireland, in the primary school sector there are 3,282 schools with 441,0665 pupils having access to a reported 34,122 computers but with 99.2% connected to the Internet at or below ISDN standard, again compared to the two-megabit provision in Northern Ireland. In the post-primary school sector there are 750 schools with 340,078 students having access to 31,700 computers but with 93.2% connected to the Internet at or below ISDN standard, again compared to the two-megabit provision in Northern Ireland. The sub-Committee, in hearing evidence on broadband and education, consider that the provision of ubiquitous high-speed, high bandwidth to schools is the greatest economic imperative that Ireland faces. If Ireland is to be a knowledge based economy then this must be delivered, irrespective of location, to the education sector. It is the Committee’s considered opinion that both Government and the telecoms industry must ensure this as a national priority. Indeed it is understandable that the Government have proposed education levy. In his evidence to the sub-Committee the Secretary General of the Department of Communications, Marine and Natural Resources illustrated this “The challenge for Government, together with the private sector, is how to make the regulatory environment and the returns for investors such that the infrastructure is provided in the timescale we are talking about. If one considers what Europe in trying to do in the Lisbon Agenda, it is trying to position Europe as the world’s leading knowledge economy. The changes in our economic structure in the last ten to 15 years have meant moving from an agricultural economy to a modern new economy. Approximately 25% of our exports are now related to technology. Of the top ten exporting companies, excluding the pharmaceuticals, the majority are technology companies. There is an issue as to how we continue to sustain this into the future with competition from the accession states, Eastern Europe, the Far East and so on. There is a general consensus that we will not be a low cost economy, therefore, we must provide other added value to make that worthwhile. That sets the imperatives for investment around education, infrastructure - we can debate the cross-sectoral benefits of the different types of infrastructure - and broadband. Broadband will be as important to the new economy as grass to agriculture.” Further, Mr. Tuohy continued “How do we grow the market while, at the same time, doing the right thing for the country. Having literate young people who are used to technology will lead to inventions and innovation in the future. They must have that facility from an early age. We do not want to disadvantage our young people. We want to proactively advantage them or give them an advantage. In our view the way to do that is by providing free broadband access to all schools, libraries and centres of learning. We must take a number of initiatives which are different from other countries or all we will be doing is following.” Mr. Tuohy illustrated this to the sub-Committee when he advised that “In the case of schools, for instance, the biggest element of the cost of buying a PC and connecting to the Internet over a five year period, is the ISP and telecom charges which are 85% of the cost. It is very important to deal with that.” The data supplied by the Department of Communications, Marine and Natural Resources shows that over a 5-year period the costs of buying a PC and connecting to the Internet work out as follows: Table 5 – Total Cost of Ownership (source - supplementary information provided by the Department of Communications, Marine and Natural resources)
From this table we see that the provision of PCs and Internet access (currently in the main the Internet access is by way of PSDN dial up) costs, over a five year period in the region of €16,257. However, it is salutatory to see that almost 85% of this expenditure is on power and the provision of ISP, with the reality being that the vast majority of this Government expenditure is revenue to the telecom industry. Accordingly, the Committee notes the arguments by the telecom industry that broadband provision is a demand problem is not one that bears scrutiny and any insistence or continued reliance on this argument is spurious and has to be seen in the context of ‘sweating assets’. The Committee considers that the economic imperative is such that the telecom industry must accept and act in manner, which illustrates that it recognises that the telecom industry is a major beneficiary of Government initiatives. Further, the Committee considers that the telecom industry has a duty in regard to the funding of broadband to the educational sector. It is the opinion of the Committee that the provision of ubiquitous high-speed, high bandwidth broadband to schools affords the telecom industry a major opportunity to influence and drive the home market in broadband take-up and when this occurs then the telecom industry revenues will increase. Again the Committee reiterates that the provision of ubiquitous high-speed, high bandwidth to schools is the greatest economic imperative that Ireland faces. If Ireland is to be a knowledge based economy, with a well paid, fully employed workforce contributing to the State and the revenues of the telecom industry, then in the opinion of the Committee it is incumbent on the telecom industry to cease its perceived myopic approach. The Committee considers that two quotations should enter the common lexicon, that of Mr. Tuohy when he advised that “……Broadband will be as important to the new economy as grass to agriculture.” and of Ms. Ruth Devine when she advised that “I have used technology, not only to learn from, but as a tool with which to construct knowledge.” Such cohesion between the views of a student and the Secretary General of the Department is, in the view of the Committee, poignant and must lead us all to reflect on the importance of broadband and what it can deliver to Ireland. Chapter 8 – Health8.1 The ubiquitous provision of broadband to the health sector is essential if the public is to gain the benefits from the States investment in the health service, the reform of the health service that this investment will deliver, the value for money required by the public and the Government making the investment and the delivery of the e-health future. The traditional health care delivery model, conceived by the Egyptians 6,000 years ago is a pyramid structure that places consultants and teaching hospitals at the apex below which are regional hospitals, below which are general practitioners with patients being at the bottom. This 6,000 year old model expects patients to come to doctors whereas health care should be delivered to the consumers. Dr. Ricky Richardson advised the sub-Committee that “The essential question in respect of e-health is who will be the primary care physician in an e-health enabled health care sector. The answer is e-patients, that is, patients empowered with knowledge who are able to make more choices in respect of where and from whom they receive health care services and how it is delivered.” “E-health is a means of moving the interface point of the service out of the traditional space, a hospital, into the retail and home environments. At the same time, it is also much more complicated than this.” Dr. Richardson considered that e-health had to have “E-health has four or five critical aspects, the first of which is clinical applications. These are tele-consultations which were previously known as telemedicine, an expression which will die out quickly as it is only one part of one clinical application of e-health. The second clinical application is clinical decision making support software. I work as a paediatrician in Great Ormond Street Hospital in London. I have a computer on my desk which, when I question it, gives me information such that I can make a better decision on the management of the patients I look after. Vital signs monitoring services, often driven by call centres, can look after the vulnerable in our communities, namely, the people with chronic disease who consume, on average, 60% of health care budgets. Home care is rapidly developing as a means of looking after elderly and vulnerable people in the community. These are all clinical applications of e-health. The second pillar is the use of the worldwide web and e-learning tools to deliver personalised health care continuing medical education to doctors, nurses, allied health care professionals and everybody in the health care environment. The third pillar, the use of the media to deliver health care messages relevant to populations, is an under-utilised process. We know from experience in Malaysia, Queensland, New Zealand and elsewhere that one can change health care demand profiles of populations if one provides appropriate public information using the media. In Malaysia, for example, we barraged 100,000 members of the general public with information on health matters relevant to their communities using radio, television, the Internet and newspapers. We then measured their health demand profiles prospectively over five years and compared them with a matched control group in a different part of the country. While one cannot eliminate all the variables, one can eliminate most of them. Members of the informed group behaved completely differently from the control group. They self-treated conditions for which they would have previously attended the doctor, used pharmacists, established online patient association chatrooms, which was a surprising finding, and when they presented to the health care service providers, they were focused and acted appropriately. This had a massive impact on the cost to providers of delivering services. The last pillar is what I describe as the lifetime health plan. Again, this evolved from experience elsewhere in the world. The concept is that one gives a foetus an empty shell electronic file at conception, that is, when the mother’s pregnancy is first recognised. The file accumulates and records every health incident the individual in question encounters from conception to death. ……One also adds the genomic fingerprint data of the individual, the socio-economic journey he or she makes through life and their lifestyle patterns, environment and education. This provides one with an extremely rich personal dataset which is dynamic and growing for each individual. One then depersonalises the data, clusters it into populations and uses it as an epidemiological tool to predict health care trends in populations. When one sees adverse health care trends emerging, one eliminates them with e-prevention strategies, which we are beginning to do on the pan-European level with the assistance of the Commissioner for Health and Consumer Protection, David Byrne, an Irishman who is driving the process to get a pan-European epidemiological tool under way.” Dr. Richardson continued and advised that “Once one has an e-health enabled health care system, one can introduce national e-prescribing, e-booking services and similar initiatives. There are, therefore, four pillars of e-health, each of which must be developed concurrently. This can only be achieved using broadband and must be introduced on a national basis to derive benefits in terms of health budgets. We cannot do it without broadband and we have to do it on a national basis to get the benefits, in terms of health budgets. The area of e-health is very complex. It touches all of the stake holders I have listed here. It is not simply a veneer over an existing system, it is a transformational change - and that requires careful handling. It is also important to put it in perspective. We are all looking for cost containment in the way we deliver health care. We are living much longer than we used to which has an impact on the cost of keeping elderly people alive.” With broadband and e-health services will move out from hospitals and clinics into other environments, namely the retail environment. This will have profound implications for the delivery of health care for the community. Dr. Richardson illustrated this when he advised the sub-Committee that “In the UK, Boots, the chemist chain will offer X-ray services in its 1,400 retail outlets next year. That X-ray will be one fifth cheaper than the same X-ray sourced from a hospital because there is no overhead. Once one can dissociate the taking of the study from the reading of the study using digital technology one obviously places the taking bit where the people go. We are seeing a whole explosion of services moving out from hospitals and clinics into other environments; the retail environment, day care surgery, health kiosks within the project in Singapore ……Informed patients who have access to the web are now driving the whole thing. They have access to interactive digital health channels and they want direct access to patients. The demand is changing and it is changing because of knowledge sharing ……We are seeing a plethora of health on-line websites, some of the content of which is dubious but there is a hunger for it. District, general and regional hospitals will eventually become obsolete as we move the services out. There are analogies with the banking world. ATMs were initially installed inside the high-street banks but they are now everywhere.” This was re-enforced by Mrs. Catherine E. Walshe when she advised the sub-Committee that “These safe moderated senior sites have many other factors - discussion boards, health information etc. - which make them ideal browsing sites for oldies like myself. The UK’s Age Concern has many daytime moderated discussions in its chatroom. Many of its members have the advantage of broadband, so time is irrelevant. Also, WebTV, which is very popular in America, enables chatters in other countries to be on-line constantly. There is another great bonus in the chat rooms. I have two hearing aids which preclude me from lots of social activity. In a chat room, deafness does not matter. I know chatters in wheelchairs after strokes, whose voices are gone, and with cancer, whose lifeline it is to the outside world. This is invaluable for the disabled of whatever age. ……Mental health problems such as depression etc. have many support chat sites. Carers of those with Parkinson’s disease, Alzheimer’s and Lou Gehrig’s disease and others have many chat and discussion boards where carers get invaluable help and support. Broadband would facilitate access to such support sites when the peak rate factor would otherwise be a deterrent ……I want to add that there is a lot of emphasis in the Department of Health and Children on making older people as independent as possible so they do not end up in nursing homes. This has kept me alive. It has helped me through a lot of illness and I am a part of the world. Having shopping from Tesco brought into one’s kitchen is a very practical help to people living alone, the elderly and the disabled.” Mrs. Walshe confirmed the need for broadband and flat rate always on access and how this impacts on e-Health, particularly as it relates to senior citizens “The Irish health website, www.irishhealth.ie, recently won an award for its editor, Fergal Bowers, which was well earned. For me, it is a premier site because it is Irish and a nice sense of community is building there. I would say it is the only lively, interesting site on the Irish scene. Its discussion boards and weekly newsletter bind us all together. For senior citizens especially, who are getting a bit rusty around a lot of edges, it is an invaluable source of information. In the discussion boards we can give and request advice for various problems. It has very interesting and controversial health and national topics also where one can blow one’s top and know someone is listening - we oldies like to retain a semblance of dignity by blowing our top anonymously. I could browse there for hours but can only do so on Saturdays or Sundays because of off-peak rates operating then. How I would love to browse there to my heart’s content during the day. It makes one feel part of a living, breathing community and that is so important when one leaves the workplace and becomes a bit isolated by retirement, ill health or disability.” Mr. Tom Cahill, Data Controller in the Independent National Data Center, working on the Heartwatch programme - the initial implementation phase of a national strategy and primary care for the secondary prevention of cardiovascular disease – indicated in his evidence to the sub-Committee that “The targets for Heartwatch, the primary care national cardiovascular strategy for secondary prevention are: to reduce mortality by 15% among Heartwatch-registered patients and to improve the levels of morbidity among patients. There are 480 GPs and 14,000 patients in the initial implementation phase. Out of a national group of approximately 2,200 GPs, approximately 480 are in this year’s programme. We anticipate that by the end of 2004, those GPs will have registered in the region of 14,000 Heartwatch patients. The selection of GPs was biased towards computerised practices using practice management software packages. Some 80% of the GPs selected had to have computerised practices. Of the remaining 20%, half were to be computerised as part of the programme.” Mr. Cahill further advised the sub-Committee “When we started in November 2002, the ideal would have been to set up a national centralised database for participating GPs; national centralised applications that would ensure we could provide security and backup. Such Internet applications bring about a requirement for broadband infrastructure. It is not possible to support Internet applications of this kind on anything less than a proper broadband infrastructure.” Thus while Dr. Richardson shows the potential of broadband to the health sector we see from Mr. Cahill the practical need. Ms. Ursula Sullivan of the Southern Health Board (SHB) strengthened this practical need for broadband when she advised the sub-Committee “The clip demonstrates the work we are doing at the moment. Among the issues covered was working with GPs in issuing lab results. This is being done on a national basis by all the health boards. A working committee is dealing with the standard; we have agreed that we will all work towards Health Level 7, version 3, which is XML-compliant. This means that we will be able to work towards one national health record. As the committee probably knows, the boards that did not have a patient information system went out to tender and in February or March of this year they selected the same system as ours. If they had chosen a different one we would also have to work towards integration, but it is more convenient this way.” Ms. Sullivan indicated to the sub-Committee that the SHB had created, on their leased line circuits a virtual private network, the model which was now expanded to other health boards. Ms. Sullivan advised the sub-Committee “Regarding how widespread is the use of VPN, almost all boards are now on it - the last is due to be added this month - as it is now a national facility. This extends not just to the Department of Health and Children but also to other Departments ……one pretty good example would be Cahirciveen Hospital, where there is an X-ray unit with a visiting radiographer. All of those X-rays are sent on-line to Tralee General Hospital to be read by the radiologist. Prior to us setting up this digital link almost six years ago, X-rays used to be printed off and put in a taxi to be sent to Tralee. Alternatively, Caherciveen would wait for a visiting radiologist to visit once a week. Thus, it is possible to extend the service to such areas. Regarding an accident or major incident, with the help of the European Space Agency we built a forward emergency control vehicle. That gives the paramedics at the site of a major incident remote access to the accident and emergency department at Cork University Hospital so that the accident emergency consultants can advise on the treatment and management of persons in the remote area to make them sufficiently stable to be transported. On head injuries, in 1992 we set up a tele-neural radiological link with Limerick, which has now been extended to places like Waterford. If a person had a head injury, previously he or she was automatically put in an ambulance and sent to Cork, which really was not the best way to manage the injury. Now a CAT scan is done and transmitted in order that an opinion can be obtained from Cork as to how to manage the person. Apart from a reduction in the number of people transferred, there has been an increase - measured by the European Commission - in the positive outcomes of persons with head injuries at both Limerick Regional Hospital and Waterford Regional Hospital. In addition, the consultants at both hospitals did a survey of their own skills and found they have been significantly up-skilled by the availability of on-line support. This is currently running on ISDN, so we would like to think that with better access to broadband, we could also include things like MRI scans on the same link. The link is not wide enough to take that at the moment.” The Committee is convinced of the necessity for the ubiquitous provision of broadband. The work of the SHB and Heartwatch shows what is being currently accomplished and with the future, as set out by Dr. Richardson, then it is clear that the health delivery model will change as citizens are empowered to look after their own health care. Mrs. Walshe showed the sub-Committee in her precise presentation how this is changing and what the benefits are for all citizens particularly our senior citizens. The Committee agrees with Dr. Richardson when he suggests that Ireland should establish an e-health institute, which could be used as an exemplar site. Ireland with its IT industry could use the opportunity to develop solutions that can be tested and possibly part funded, on a pilot project basis, by the European Union for eventual adoption elsewhere within the Union. Health care economists must look at the macro picture, dismantling bricks and mortar to examine potential economies to the national health budget that can be wrought by the redirection of funding. Addressing e-health on a national basis will make it possible to reduce the overall cost. Dr. Richardson advised that presently 60% of the cost of being in hospital is directly attributable as hotel accommodation and overheads. We have the technology and the will and we could have wider implementation with broadband at an affordable rate, a bandwidth of 46 kps will not transfer images such as x-rays or MRI scans efficiently or support software platforms. The ubiquitous provision of broadband is a must to secure the return on the investment made in the health service. Chapter 9 – Society and Community9.1 The universal provision of broadband is a necessity if existing inequities are not reinforced or new inequities created. This module provided the sub-Committee with a view as to the breath and range of areas where broadband will impact on and affect most of the lives of Irish citizens. Mr. Peter Finnegan of the Dublin City Development Board made a presentation to the sub-Committee on the Dublin.ie initiative. “We have circulated a presentation and backup material which includes a report on the commitments to ICT made in the Dublin city strategy and submitted to the Department of the Environment, Heritage and Local Government ……Its activities are provided for under the Local Government Act 2001 and within that context it has agreed an economic and social strategy for the city of Dublin which in our case is called Dublin - A City of Possibilities. We regard ICT as central to that and to the 15 themes in the strategy. We have named one of those themes as creating a connective and informed city and I wish to speak about that theme. The vision is to ensure that by 2012 every citizen has access and an ability to use and manipulate information by using ICT. We have also actively participated with the chamber of commerce initiative to ensure that Dublin becomes a city of e-excellence. The tool for driving that agenda is a web portal called Dublin.ie. We are developing a number of initiatives such as broadening the democratic base in the city. There is also some information on a Chinatown on-line initiative in which we are involved. All themes of the strategy are centred ……It also involves creation of marketplaces, such as in the family theme area, the creation of a marketplace in child care facilities and services. I refer to the creation of an initial basis of information with regard to crèche and other facilities for children in the city. Dublin.ie is, fundamentally, an attempt to create a local roundabout on the worldwide web in a manner which puts the power of entry and content management in the hands of citizens. In that way, we are trying to provide reasons for citizens to use the web ……We are trying to build upon the reasons community and voluntary organisations might wish to communicate with their members, using the web for that purpose. We are trying to build up a level of usage that will create pressure on the infrastructure. In the strategy, we are critical of the degree to which broadband has not been rolled out sufficiently, either nationally or, more particularly in urban areas, into the home base and is not available at an affordable price. We are trying to generate a level of pressure in the system as a means of raising the infrastructural issues. Currently there are 50,000 individual visits per month on the website, which has been in operation since April 2002. The e-mail facility has more than 10,000 users, which is significant for a timeframe of within one year. As a strategic driver of change, we are dealing with issues of integration of public service delivery to citizens and social inclusion. In relation to the digital divide, we are looking at the use of ICT to overcome some of the social inclusion issues in the city and the use of entertainment and fun as a way of drawing in people who, traditionally, have been alienated in this regard. There are also issues with regard to participation, including giving citizens the power of creating documents on the web; diversity, learning and the creation of a series of neighbourhoods with their own information base. As a follow-on from e-public service and e-business, we are trying to develop a new area, citizen e-space. This is complementary to what is happening in national policy under REACH ……It was found to be complementary in terms of bringing citizens into a space which could generate pressure on the public sector to provide more public services on-line and promote a new engagement by the commercial sector with citizens. This development is not confined to Dublin city, although it is being initiated there. We have consulted our colleagues in other development boards about the concept of citizens on-line as a national network of county-based portals or local roundabouts on the web. We believe that the framework developed in Dublin should be made freely available elsewhere in the country. There will, of course, be costs involved in putting it in place and assimilating local information needs. Through linkages between the various portals, information of national or regional application could be shared. In that regard, we are currently talking to people in counties in the Border regions, including district councils in Northern Ireland, with a view to using INTERREG and PEACE II funding to support the roll-out of the initiative in that area. We will also look at other areas of the country. We are setting out to create on-line services that are relevant to the everyday life of the city or country dweller and to use technologies within the culture and reach of everyone, including the use of television access, which has been successful in some countries as a means of bringing Internet technology into the home. This is particularly important in the context of disadvantaged communities, in which one tends to find television sets but no computers. Education and training in the use of technology is important. We are looking towards a long-term sustainable model, without the necessity for large-scale organisational back-up, putting the tools for information up-date into the hands of community groups and citizens. What have we been doing to date? We have been creating the reason to access the web. We have obtained funding support from the Department of the Environment, Heritage and Local Government, under the initiative support in a competitive tender. We have developed a software framework with an easily used content management system, providing an events diary, directory of services etc. We are providing a citizen’s e-mail facility which, I believe, is the first in this country and one of the few existing in Europe. We are mobilising community participation, particularly through the organisations in Community Forum, of which there are 800 listed in the community services directory and of which approximately 80 have websites on-line, using the free web space available within the Dublin.ie initiative. We are extending that facility to schools, particularly through the Comhairle na nÓg initiative. By September, we hope to have approximately 100 schools coming on-line in the city network. There is an issue to be addressed in that regard as to the affordability and range of broadband access to schools, which is currently insufficient. We are creating web building capacities which can be used by citizens and community groups. We are developing a marketplace infrastructure around that to allow for linkages between people of a similar interest and to bring the public sector and commercial interests into that marketplace. We are also putting pressure on the creation of means of access. That involves exploring the potential for the use of the television set, to which I already referred. We are also looking at the use of wireless broadband as a means of cheap and rapid roll-out of broadband in urban areas. We have considerable information on this already, working with our colleagues in Dublin City Council. Building on the fibre optic networks in public ownership, one could very quickly turn on a wireless infrastructure to give access at virtually no cost to the citizen. It would definitely solve the problems to which the last speaker referred and could be applied very rapidly in urban areas at relatively little cost ……We argue that public funds have already been spent on the industry rollout of broadband, but that has not extended into the home. There is a need for public realm usage at affordable rates, including the use of television and wireless, to which I have referred. There is also a need to activate the very good proposals in the Government action plan New Connections, published in March 2002. In that regard, the idea of community champions, working within communities, is particularly important ……Lastly, and perhaps most importantly in policy terms, there is a need to change our planning conditions to provide, as we said in the strategy and in the current review of the Dublin city development plan, that all new-build systems should provide the IT broadband infrastructure in the same way as electricity and water are currently provided as baseline services.” In regard to questions from the Members, Mr. Finnegan advised the sub-Committee “……getting the system into homes and communities, and doing so in a way that makes economic sense, is the challenge. My personal opinion from what I have gathered in my involvement with the chambers committee and from my knowledge of the field is that it does not make a lot of commercial sense for the telecommunications companies to take broadband into homes unless there is a high volume of usage and it is generating a high volume of revenue. In that context - I link this to the issue of the public realm in Dublin - there is a lot of fibre optic and a lot of the main equipment in the ground belongs to the public sector - in this case, it belongs to the local authority. There is also material that belongs to the Garda and other public interests. It would not be impossible to construct a wireless system off that at relatively little cost. We have done some initial guesswork on this in the city of Dublin and we reckon there are about 200 access points. We could, for example, activate those covering the entire city extremely well with 11 mb of access for between €500,000 and €750,000, which is not a huge amount ……My interest is in the citizen, the community. I believe we could construct a wireless system that could be run by the public sector at virtually no cost to the community. ……it may be difficult in other parts of the country because of the geographical spread of rural counties ……Giving access is one thing but having the material there, the computer or TV set, to use it is another ……It is about getting people to use the web for everyday matters and that in turn will generate an audience that will make demands on the public sector to speed up the delivery of public services on-line and ensure that a broader range of people have access to it. In relation to the area of disadvantage, we are currently collaborating with the Dublin employment pact. I am looking at the effect of the digital divide in terms of disadvantage in the city and the broader metropolitan area of Dublin. We should have results on that in the late autumn or early winter of this year. One thing is clear - we have seen this happen in primary schools, particularly in RAPID areas - the standard of homework that is expected in primary and secondary schools is enhanced by Internet access. A child from a low-income family without Internet access at home does not have the same opportunity as other children in the system. That needs to be rectified. In that context it is a much broader policy debate - there is a case for the Government generally to look at the provision of the tail-end equipment. In the Nordic countries people were provided with computers and this should be considered here, particularly in the context of disadvantaged communities. An intermediary step would be to look at the television as a box that can be alternated at a very low cost, to extend it to computer use. There are initiatives in Dublin that are relatively small-scale, but they are growing, which involve companies like IBM providing computers for communities. That could be extended, particularly with Government support.” The Committee considers the points made by Mr. Finnegan in regard to the ‘digital divide’ and Internet access to be crucial to the whole issue of driving both demand and supply. Garda Eddie Sadlier made a presentation to the sub-Committee on his work as a juvenile liaison officer in Tallaght. Garda Sadlier stated that “I have been involved in the development of community centres for 20 years, and with one in particular, Tymon Bawn Community Centre in Tallaght on Firhouse Road West. At present we operate on a broadband Internet connection and have over 60 computers networked together and working off one connection to the NTL system ……that is NTL’s broadband system. We run computer training for FÁS, renting space to companies that train the long-term unemployed and others ……I have used Tymon Bawn as a role model for how community centres should develop. There are 30 community centres which members will be able to identify in south County Dublin, big buildings with sports halls. Most are closed and do not have any daytime use or activities. ……Ours is the only community centre in south County Dublin with broadband Internet connection. One must have computer access for computer training. To have 25 or 50 computers on-line is quite a drain on any system - ISDN could not cope with it ……I telephoned NTL and, within two or three hours, my community centre had broadband installed. It was simply a matter of connecting a modem to a system ……Tallaght is fortunate in that NTL provided it with broadband. However, the uptake has been slow. It is quite expensive for a household to install. It was cheap for the centre as I twisted the arm of the engineer and did a deal with him ……I have access to recycled computers and have 300 to 400 in stock ……RTE was one of my biggest and best suppliers. Microsoft supplied me with some free software. I am trying to get the county council to buy into the idea. I have established six training rooms. There is one in Crumlin, four in Tallaght and one in Loughlinstown. Community centres are open from 9 a.m. to 11 p.m. If people do not have access to a computer or the Internet, they can go to the community centre and use the facilities there. Our system is on 24 hours a day at the cost of €30 per month ……It is a 500kb system and is fabulous. NTL came to us to see it being networked. An engineer offered his services free to set up the network. He works for one of the companies and is happy to give his time. He has built a server that can handle up to 60 computers without blinking. The system has cost next to nothing, perhaps a couple of hundred euro.” What the Committee discovered from Garda Sadlier is that marginalised communities will suffer the reinforcement of existing inequities and the creation of new inequities. “……How does a senior citizen or a woman with two or three children go to Tesco? He or she could go on-line at their local community centre and access Tesco. The community centre suddenly becomes a Tesco -this will be supported by Tesco - or a local bank or a library. People can access services more easily because of broadband Internet technology. I was trying to get the county council to buy into an idea whereby each community centre has a credit card. A person would go in and hand over their money in cash and the community centre would use the credit card on-line, giving access to Tesco or Ryanair.” A ‘digital divide’ cannot be allowed. The Committee considered this would be worse when considered in the context of gender and disability. Ms. Saidbh McCarthy’s presentation on the gender perspective reinforced the points made by Garda Sadlier when she advised the sub-Committee “In the area of access, the technology costs hinder the penetration to individuals and in some cases to the community. The cost of entry - buying a PC, getting fixed-line installation and signing up to the Internet - can be prohibitive to many households in this country. Even if one has a PC and a fixed telephone line, the ongoing costs are unrealistic. There are now flat-rates available, but at €60 per month that is too much for many households. Without a flat-rate or an “always on” cost, the potential for out of control costs inhibits the uptake for many households. It is too frightening for the household to take up the opportunity to have that Internet access.” While Ms. McCarthy specifically addressed the issue of gender inequality the Committee considers that the point raised in regard to the costs of entry and the on-going costs (telephony) is vital to the understanding of how existing inequality will be reinforced and new inequalities created. The Committee holds that the Government must institute a policy that causes all the players to ensure that this does not occur. To give effect to this the Committee holds that the Government must ‘broadband proof’ all policy to ensure that all other sectors, business, software producers, hardware manufactures, financial institutions, ISP and telecommunication providers do not compound existing problems and create or reinforce existing or new inequalities for society. To illustrate this point one has only to see how the CAIT Programme has been run down in the transfer of functions from one Department to another and the Committee regard the non-continuation of this programme as a major disservice to the community sector. Ms. McCarthy continued “The capacity and skills issue relates to the use of such technology, even if it is available. It concerns women in the home, women …… with low levels of literacy and lack of access to technical education, such as single mothers who leave school early or older women who left school early or left the education system before technology skills were taught, with the result that they have been excluded from the knowledge network and economy ……children gain access through schools while their partners have access to and use the Internet at work. These women are at home without access and they are inhibited from doing anything because of their lack of technology skills ……If one wants to go back into the workplace, one cannot search for a job on the Internet or e-mail one’s CV. These are basic facilities that most of us take for granted, as we can do them anytime, but, if one does not have Internet access at home or is inhibited in terms of the use of technology, one cannot do that. If one decides to go back into the workplace, one cannot avail of on-line training if one does not have Internet access at home. This is also taken for granted as something normal that can be done all the time. I refer to access to consumer rights and issues. On-line banking, for example, is a valuable facility for those living in rural areas but, if one does not have Internet access, one cannot avail of on-line banking or go to a local branch to undertake normal transactions that we all take for granted. “I refer to public sector policy on the provision of services. The Government should lead by example. Policy makers have not realised the full potential of ICTs in gender development. No work is being done on the convergence of gender strategy and ICT policy and, therefore, no enabling framework is in place. No initiatives are targeted towards women. Current ICT models for Government delivered services remain restrictive. They are restricted to digitising currently available information so that one can obtain certain information, or forms are published on line that already exist and existing manual processes are automated to make them a little better. However, that does not change the way services are delivered or the interaction between the citizen and the State. There are fragmented initiatives but no cohesive strategy. Nevertheless, the CAIT initiative was extremely valuable. It involved community-based projects and networks within communities that could apply for funding to deliver access. It was an excellent initiative but, unfortunately, it has been disbanded, although it is exactly the type of initiative that is needed now. Creative thinking and new approaches are needed for community-based initiatives. If gender specific policy initiatives are adopted, we can create the enabling environment that gives women economic empowerment and allows them to fully participate in the knowledge economy ……Women’s social empowerment through ICT will revolve around whether they have access and capacity, particularly in education, health and basic social services. Women comprise the majority of the poor in Ireland. This is not unique to Ireland ……Women need to be involved in decision making regarding the development of the new technologies, therefore, they need to be involved in the deployment and development of content and policies so that they can participate fully.” Ms. McCarthy continued “We need tactical and strategic initiatives. From a tactical viewpoint, I refer again to community access initiatives under the CAIT scheme. These are important because they are from the ground up. Strategically there is the public services broker and REACH, and I am sure members are familiar with both those initiatives. They are looking at the longer-term delivery of e-government services to citizens. Without these two approaches taking into consideration gender initiatives, women will continue to remain on the wrong side of the digital divide. That said, Ireland is technologically vibrant and is committed to gender equality. We have terrific initiatives in the Departments of Education and Science and Justice, Equality and Law Reform. Both are signed up to the Beijing principles, and have a national development plan for women, which includes ICT initiatives ……We are in the unique position of being able to fulfil both the tactical and strategic programmes which we need to do to have a fully inclusive knowledge society and economy. We have all the complexity without the scale. Ireland is a small country geographically and in terms of population - 5 million - but has everything a large country has, such as health services, education, the poor and the rich, and the need to find jobs for people. We have everything but on a smaller scale. That is good because it means we can do more and quickly. We can emulate. There are great gender initiatives in Sweden and South Korea, where they connected 1.5 million households. In Canada - the committee will hear from someone from Canada later - they have a specific women in technology initiative which is overseen by the equivalent of a Minister of State and which examines the gender and technology aspects.” Ms. McCarthy highlighted two further areas that in the opinion of the Committee are very relevant, the content “What is being done in terms of metropolitan, wide and local area networks is fantastic, and the VSAT initiative, which has been ongoing in recent years, is a terrific visionary roll-out and is exactly what we should be doing. However, without gender consideration on the content and services, it will not be enough. It is not just about the roll-out of fibre-optic cables but about the content and what it can be used for.” And the footprint of the necessary PC equipment “The considerations of women in the home are that account must be taken of what we call the footprint. If one lives in a small estate, it is not practical to have a large computer. The size of equipment should be reduced and we should opt for something small, such as a laptop.” The Committee wishes to draw attention to the Irish Business and Employers Confederation (IBEC) Telecommunication and Internet Federation (TIF) Annual Conference Telecoms – A New Beginning on 23 October 2003 - “The Telecommunications and Internet Federation is the representative body for leading industry and associated interest groups in the field of electronic communications. The Federation informs policymakers; namely the Government, the EU and the Office of the Director of Telecommunications Regulation, of the industry’s needs in respect of telecommunications and Internet policies including fixed, mobile, wireless, cable, applications, Internet service provision and technology research developments. IBEC’s Telecommunications and Internet Federation(TIF) undertakes:
The TIF Annual Telecoms Conference was accompanied by an eight-page special feature supplement in the Irish Independent of 16 October 2003. The Committee makes the observation that the lack of diversity, in the make up of the key note speakers at the conference together with the lack of diversity evidenced in the special supplement, could be indicative of the difficulties that have to be faced in advancing an agenda dealing with existing inequality and the creation of potential new inequalities. Global leaders in business and technology acknowledge the importance of ensuring that social inclusion and diversity issues are addressed. The economic benefits of strong diversity policies necessitates top down leadership in this area. On the issues of disability the sub-Committee heard from Mr. Brian Boyle and Mr. Don Bailey that “It is important that all avenues are available to us to communicate and interact with society. The structural problems are very slow in allowing us to do that. Broadband access will allow us to communicate much faster. We will need conventional access but broadband will make things much easier.” This again illustrates the central theme that was made to the sub-Committee that existing inequities are not reinforced or new inequities created. Mr. Brian Boyle advised the Committee “The potential for people with disabilities is that, first and foremost, it helps to surmount the obvious barrier in terms of participation - transport. Along with the difficulties experienced as a result of transport, one aspect to be avoided with the home office is the social isolation experience, especially of people with a disability living in rural communities. The provision of an individual isolated home working environment is not often the easiest solution. There have been projects and initiatives that have examined the provision of telephone and Internet provider access for people with a disability living at home ……The UK has embarked on a process of providing distance education, on an “anywhere anytime” policy, not just for people with disabilities but for a larger group of marginalised people ……Going back to what the previous speaker said, much of this does not just depend on providing an access framework but on providing relevant content which has been researched, made applicable and, to some extent, directed and mandated by specific representative groups of people with disabilities. This underpins the provision of the potential to participate equally in a knowledge community. It is not simply about providing access but about providing layers of access ……One of the areas that has promised most potential to people with disabilities is distributed services, as I have called it. This comes down to the notion of on-line shopping and on-line community living as a way of providing a more equal participative model for people with disabilities. I outline this with the caveat that it must be borne in mind that providing access to a person with a disability in home is not just a simple solution. There are isolating effects that must be ameliorated. The notion of distance or tele-medicine has been experimented with in some European countries. In the Irish context, the infrastructure for it does not exist. People do not have access and there is no structure whereby they can access their general practitioner or specific services from home. The potential exists and it is one of the most desirable avenues people with disabilities would like to take. Within the activities of daily living, access to personal management and daily shopping services has promised a great deal ……Accessibility of services that most of us take for granted, for example the booking of holidays, transport and accommodation, offers huge potential in terms of providing people with disabilities with the same level of access to services that the rest of us have. Under the banner of e-government there are benefits to be gained in terms of Government transparency and increasing the participation of people with disabilities. There is a sense, especially in rural communities, that people with disabilities do not have a voice or an avenue for their voice. Providing a forum for participation both locally and nationally makes a huge difference. Having access to information that is updated on a regular basis makes a difference. This allows more direct input into policy-making as opposed to working through specific action groups. Within ecommerce, providing a broadband structure that works for people with a disability, is affordable and has relevant and manageable content can produce citizens who have more autonomy in terms of their personal and financial management ……A broadband network will also provide access to recreational pursuits and to engaging with people online at a social or recreational level. The focus should be on providing a platform that provides equality of participation within a range of services ……For people with disabilities, a flat rate of €60 or €48 a month is prohibitive ……It is a key necessity not only to provide people with the computer hardware but also to provide them with software that will support them, whether they have a literacy, physical or sensory difficulty. There is a lack of training and experience. I am critical of the type of training and experience that has been provided to people with a disability to date. On the flip side, I commend the CAIT initiative for addressing that gulf.” In hearing evidence on the issue of teleworking the sub-Committee was advised by Ms. Nana Luke that “Broadband is an essential component of the information and knowledge society. Its successful roll-out will greatly determine Ireland’s standing in the global knowledge economy ……Broadband is essential infrastructure that is probably even more important than roads. It is neither a regional nor market issue ……Scariff is a small market town of 900 people including a hinterland of 1,500 people. It is approximately equidistant between Limerick and Ennis and is about 25 miles from each. The communications infrastructure consists of ISDN and normal telephone lines. The chance of getting broadband in such a town through market forces is very small. BT has rolled out DSL in Britain and the trigger level for an exchange is normally about 350 connections. In a town the size of Scariff there are fewer connections that this ……Our project partners are in universities and big companies. They are using broadband that is always on and they do not even know the size of the attachment they send. When the ISDN at our end is on for two hours and we are downloading a 10 megabyte file we are already reaching the limits of what the technology can do …The principle of e-working is founded on a knowledge based business. We are not looking at something requiring huge infrastructure in terms of roads, heavy machinery, new factory buildings or business parks ……There is definite potential for employment generation and also for easier participation in the labour force. If one looks at this in European terms, the e-Europe Action Plan emphasises the need for e-work centres in local communities to specifically meet this goal of making it easier for people to participate in the labour force.” In reply to questions, Ms. Luke stated “……the issue of the roll-out of broadband being costly. The reality is that it is costly but the Government and its predecessor realised that this was the case and that the system needs to be supported, especially in more rural areas ……We are past the stage of asking if it will happen and if the Internet will ever catch on. It is here and is the way people do business and the way business will increasingly be done. DSL or broadband at relatively low levels, below a megabit per second, would be very basic infrastructure ……In Japan, they are talking about 100 Mbps ……The reason Internet uptake in Ireland has stagnated and there is a relatively low level of use by those who have it is because it is expensive. As it is not unmetered, people must pay by the minute. That is a barrier. ……In terms of cost, fibre is very expensive but wireless area networking is not. That technology is maturing rapidly and prices are quite reasonable.” Dr. Sarah Skerratt in making a presentation to the sub-Committee on her research for the National Institute for Regional and Spatial Analysis (NIRSA) titled “An Evaluation of the roll out of Broadband to Regional Communities” - alternatively “Taking discs into Sligo” stated “The two objectives of the six week study, which was funded by the National Institute for Regional and Spatial analysis, were, first, to examine how rural broadband is addressed by the Government and telecommunications companies and, second, to examine the expectations and preparedness for broadband within the rural sector of the north west.” Dr. Sarah Skerratt continued “Are there digital divides? ……First, there will never be ADSL beyond five kilometres outside major centres. This is recognised. Something which came across strongly to me, as a foreigner conducting research here for six weeks and having researched broadband and telecommunications in the United Kingdom and other parts of Europe, is that broadband was always used in the same breath as DSL. People thought of broadband as DSL and since they would not get DSL they believed they would not get broadband….. They believed they would never get it outside that limit because the telecommunications companies would not go any further. There were also mixed feelings about the national spatial strategy’s prioritisation of gateways and hubs. One interviewee said it would suck all the enterprise into metropolitan areas even though that was not the original intent of the strategy. The comments from interviewees echo what I found in my desk study of policy documents in the National Development Plan 2000-2006. There is reference to addressing remote rural areas through reaching out to them through telecommunications infrastructure. However, in the national spatial strategy there is a reference to “creating a critical mass and sucking entrepreneurs into that area” in order to make provision for them. This apparent dichotomy is recognised by those living in the north west…… Several times I was given the example of Birmingham ……I looked up the population densities and the census figures. Birmingham has a population of about 1.5 million and the west midlands has a population of approximately 5 million. I understand the population of the Republic of Ireland is in the region of 3.9 million. Given that the same population size in Ireland is spread over a much greater area, the telecommunications companies will not be interested. There is some hesitation even in Birmingham, so how can they be involved in Ireland? How will they have an interest in the north west region? A third reason I was told the Digital divide exists is because broadband is not seen as infrastructure ……The words I can repeat here in this context are: “frustration”, “personal affront”, “anger” and “injustice” at not having this infrastructure, which is seen as a basic utility. Telecommunications are just as important as roads, rail, airports and skills availability ……What happens if counties Leitrim and Sligo do not get broadband? I do not know how well this cartoon shows up on the screen, but it reads: “Information super highway closed for resurfacing” ……Those in rural areas expressed a number of concerns, including how their area will develop if broadband is limited to being within two to three miles of an enabled exchanged. If we keep focusing on enabled exchanges, if we keep defining community in the way outlined to by the previous presenters, then there will be those who will not be reached by this technology ……The final point here is that Ireland will lose competitiveness because the philosophy seems to be that if FDI comes here the infrastructure will be built, rather than first building the infrastructure as a means of attracting FDI. It is a reactive rather than a proactive stance, which will be to the detriment of the north west ……Becoming focused on metropolitan areas will increase the rural digital divide. There is a need to raise understanding, awareness and demand to demonstrate the relevance of broadband ……It is evident to me that remote rural areas will not get DSL ……Therefore, there is a need to address alternative technologies that pick up that last kilometre, or first kilometre, as it was suggested to me it should be termed ……There is a need to look at the community as the key driver ……Half way through my interviewing I was given an illustrative example of a man who works on behalf of community organisations in north Leitrim. He lives approximately 35 kilometres from the town of Sligo and he zips up his files on his computer, drives the 35 kilometres to the institute of technology, puts them onto the system there, e-mails them, picks up any files, zips them and drives home. That is more reliable and faster than doing it from his modem at home. That is the reality of life in the north-west in terms of digital and analogue”. Mr. John McAleer, Director of the South West Regional Authority advised the sub-Committee “……The South West Regional Authority has been co-funded by the European Space Agency to trial, evaluate and disseminate, on a Europe-wide basis, the use of satellite technologies to deliver bandwidth to communities in the south-west region. This has been done with a view to overcoming difficulties in distributing broadband throughout the region. While we are less than six months into the 18 month programme, it is evident that satellite can deliver broadband at affordable costs ……The pilot programme enjoys the participation of the major space segment players, such as satellite operators and those who provide dishes and telecom services by satellite, who have worked with us in it ……Some very big players from Europe and the US have joined us in this project. The economic viability of the satellite option is greatly enhanced by the linking of 802.11 b and 802.11g wireless local area networks, or LANs, to the satellite systems. The 14 locations in the region that are being covered under the pilot programme, such as towns, technology parks, dental surgeries and schools, are equipped with satellite dishes which provide uploads and downloads of data. Where wireless LANs have been developed, the local server is supported by a pro-active cache which updates itself constantly with the most popularly used Internet sites and informs other caches around the region ……While we are still in the early stages of this pilot study with the first wireless LAN system coming on line in Caherciveen on Friday of this week, we are very confident and anticipate that the cost per private user will be of the order of €25 per month for always-on connectivity. We selected Caherciveen as it is almost as west as one can get in Europe. Our claim is that Caherciveen is the most westerly town in Europe with broadband. If we can do it in Caherciveen, we can do it anywhere, which is not to imply any disrespect to the town. I wish it to be clear to the committee that satellite technology is not a fully competing alternative to fibre optic, or even to DSL, but it is an excellent option to consider to deliver services which will permit small business to operate out of peripheral locations. Satellite technology can also facilitate the roll-out of e-government and other services to local communities. It has the significant advantage of being readily available and cost effective, particularly when provided on a community-wide basis via wireless local area networks. It is not necessary to dig up roads to provide this system. A satellite system can be put in place in about one and a half hours. We welcome the interest of the joint committee in our work and we recommend that to deliver bandwidth to all rural areas the State contracts to purchase a sizeable bandwidth sector on the transponders of one or more of the satellite operators covering Ireland. There are satellites overhead and they have telecommunications transponders on them the bandwidth of which is sold to users. We suggest the State works with us to observe what we do to inform its consideration of the bulk purchase of space on a transponder over Ireland. Such an approach would have two distinct advantages. Bandwidth costs would be significantly lowered and, as the systems are fully scaleable, priority bandwidth could be ascribed to particular users when required. If, for example, a Department were to establish itself in the west requiring a great deal of bandwidth to send its monthly report, the system could be tuned to provide greater bandwidth for a time on a certain day and retuned to provide for normal day-to-day needs. A fully scaleable service is one in which bandwidth can be ascribed to users as they need it. The adoption of the approach we recommend should involve identifying target sites for servicing selected on the basis of strategic importance. I have in mind towns which have perhaps lost manufacturing operations. We recommend that serviced industrial sites or technology centres be made available. In these areas, surplus bandwidth can be provided to local communities via wireless networks. Such an approach will provide an immediate solution to bandwidth delivery at capital costs of approximately €7,000 per location for the satellite equipment. Wireless technologies are inexpensive to purchase and install. Our recommended approach has the advantages in a quickly changing technology environment in which wireless is growing as a preferred technology, that investments which are not viable would not be made in buried services which have potential for early obsolescence.” The Committee found that, several points emerged in regard to how broadband can and will impact on society and community. The Committee considers that the following issues must be addressed: 9.2 Gender equality and disabilities issues together with empowering disadvantaged communities, both rural and urban, can be addressed through the universal provision of broadband, PCs and Internet access. The Committee concurs that access is not affordable for every household (by implication women who work in the home) and access is not affordable certainly for marginalised or disadvantage communities. By addressing householder access there may be, by implication, movement on the gender issue, however, the Committee has reservations that the wider issue of lack of diversity can be addressed in a meaningful manner given the lack of diversity seen at the TIF annual telecom conference and the special supplement in the Irish Independent of 16 October. This could be disheartening when judged against the efforts made to address lack of diversity and gender equality in the National Development Plan and National Understandings. 9.3 The aims of the Community Employment Schemes must be refocused. Herein the Committee considers that the Tymon Bawn experience shows the way forward where, at a community level, computer training for FÁS is provided. It is the position of the Committee that, under a refocused CE system, those given core ICT training could, once trained, work as the ICT support staff necessary for the community, education and health sectors. 9.4 The CAIT programme should be reactivated with immediate effect and restored to the Department of Communications, Marine and Natural Resources. 9.5 Senior citizens and those with disabilities must have universal access to broadband, PCs and the Internet. The benefits to the Irish taxpayer are potentially enormous particularly having regard to how the future of health services can be delivered and in the reforms that are proposed in the Hanley and Prospectus reports. Chapter 10 – Regulation and Competition10.1 The regulatory environment is a key driver in the universal provision of broadband in the Ireland. Dr. Sarah Skerratt in her presentation to the sub-Committee advised that “……Several times I was given the example of Birmingham and I could not understand why people in the north west would want to equate themselves with Birmingham in the United Kingdom for any reason. I looked up the population densities and the census figures. Birmingham has a population of about 1.5 million and the west midlands has a population of approximately 5 million. I understand the population of the Republic of Ireland is in the region of 3.9 million.” If Ireland is to have universal broadband, then aside from any issues such as the ‘digital divide’, the size of the market and how this is regulated has to be a major focus. This impacts on new entrants and incumbents being willing to make the necessary investments and when put simply, in comparative terms, Ireland and Birmingham while having similar population bases have no other market commonalities and certainly a regulatory comparison is difficult to justify. Professor William Melody, managing director of the Centre for Tele-Information, Technical University of Denmark advised the sub-Committee “The first key element of telecommunications reform is the establishment of an independent telecommunications regulator. Ireland has that in ComReg. The second element is the privatisation of the incumbent telecommunications operator, Eircom in this instance. Ireland has gone part of the way towards that. The third element is the introduction of effective competition to the incumbent operator and steps have been taken in that direction. The fourth element is the minimisation of barriers to participation of new ICT network services suppliers and Ireland is in the process of doing that. What progress has Ireland made in regard to telecommunications reform? The most significant factor is that Ireland had a delayed start. The reform process started here in 1996, compared to the EU where it began in 1987 and the UK where it began in 1984. It began even earlier in the Nordic countries, the European leaders in the area. Ireland has had difficulty in working through some of the major required institutional changes. It has uneven performance with slow Internet and broadband development but is a leader in mobile penetration, despite relatively high prices by EU standards. In regard to Ireland’s EU status on the implementation of telecommunications reforms, the independent regulator has been established and is functioning effectively as a member of the European regulators group. The full privatisation process for Eircom is not yet complete. By the normal standards of privatisation Ireland is not simply moving the incumbent out of the Government but moving it out of the Government into a private corporation with public shareholders ……There is a history to the experience of incumbent monopolies in all countries ……The regulator is the institution established to do this. One can relate the effectiveness of regulation with the effectiveness of telecommunications reform. Ireland must facilitate completion of the structural adjustments required of Eircom in its transition from a monopoly protecting the existing services in order for it to become the leading player in a competitive market developing new services ……The quality of regulators in different countries varies dramatically from very good to very bad. There are criteria used by independent observers in assessing regulation. They can range from the processes by which regulation is applied, to the resources devoted to it and to the end result, which is what we prefer to use. The end result is whether network development is delivered. The best regulation, I believe, is in the Nordic countries because the Nordic countries lead almost all the indicators of progress. They have the best network rollout of voice service, broadband service and mobile service. They have the lowest prices and the best quality. The Nordic regulators are not that big by European comparisons in terms of their staff size. Much of their success can be explained in terms of the culture and the way their Governments work. They have the advantage of being fairly small countries. They tend to delegate authority to administrative tribunals of all kinds and run them transparently with accountability and they all seem to run well. The UK and Oftel has gone through a very interesting experience. When Oftel was at the same age as ComReg is now, BT was not saying nice things about it. BT suggested Oftel should be dismissed and was taking it to court. It suggested that it be left to the competition authority that was not in Oftel at that time. Experience is needed by all parties in order for them to come to accept a fundamental institutional change. My observation is that as a regulator created fairly late in the European game, ComReg has come quite rapidly up to the European standards. The ultimate and brutal test will be whether it will be able to stimulate rollout and the policy objectives. That will be a difficult task because part of that involves helping Eircom move from a monopoly view of the world and its services to a competitive view. That can take years in the case of an incumbent monopolist. Often it only happens with a significant change in staff ……I would rank Ireland as among the middle group of regulators below the Nordic countries and the UK and higher than a significant number of countries that I would prefer not to name since we train their staff. We are trying to improve them. I regard the Danish regulator as a good regulator because the Danish regulator has been able to achieve the objectives of regulation. Denmark has access to broadband for the whole country. Denmark still has the concerns that Ireland has in terms of stimulating enough demand to use that effectively ……The regulator sets the interconnection price based on costs, which is always a problem with the incumbent. The regulator makes this decision that ensures that the company in the region receives reasonable interconnection prices ……The current EU view of the world is that where there is monopoly, it should be regulated. It is now encouraging national regulators to use competitive standards to regulate the monopolies; to look for the nodes of monopoly and regulate those, rather than the more traditional comprehensive regulation of companies. As someone who has been part of this process since the earliest days in many countries, I have no faith that the market will solve all the problems. There will be a need for continuing regulation and for some form of government subsidy to make sure that everyone has access to participation in these services. In fashioning that approach, my recommendation is to make the supply side of the market as competitive as possible, stimulate demand as much as possible and then consider the subsidy on the supply side, but be very careful.” Mr. Irla Flynn, ALTO in his presentation to the sub-Committee on the matter of regulation advised “They need a choice of services at low prices - prices are still too high. The late liberalisation of the market in Ireland contributed to this; also, the fact that the telecoms regulator in Ireland, the ODTR as originally set up, did not have a clear mission, had some resource issues and did not have the powers necessary to tackle the problems in the sector. Many of those issues have now been resolved with the establishment of the new regulator but for a crucial period the office of the regulator was not as effective as it could have been. The market power of the three dominant players shows that the market is uncompetitive today. In the fixed market, for example, Eircom has 80% market share, which remains quite steady. Competition is not making the inroads it should be. Looking to the future, a competitive market is the best means of delivering broadband services ……Clearly that is not the way to create a more competitive market. The regulator needs to focus on key issues, one of which is promoting competition. We also think it needs to ease off in the regulating of other operators or provide a clearer, more simple regulatory approach ……We support efforts to give ComReg extra powers, which should be happening through the transposition of some new EU directives ……The Government should also consider giving policy directions to ComReg. When ComReg was set up the Minister for Communications, Marine and Natural Resources, Deputy Ahern, issued a policy direction one of the elements of which was a requirement for flat-rate Internet access to be introduced. Six months later we have flat-rate Internet services on the market, so clearly the policy direction had an impact.” Mr. Ed Brophy of NTL advised the sub-Committee “……However, it would be useful to outline what we have observed about the regulatory and policy environments. The question is whether regulation in Ireland has encouraged or hindered investment. There is a mixed answer to that question. On the one hand, it has obviously facilitated market entry by new operators but, on the other, particularly in the case of cable, it has removed scarce funds that might have gone towards broadband investment, that is, the 3.5% cable licence fee. A new regulatory framework will come into place from 25 July which should eliminate some of these distortions and lead to a better investment climate. There is much talk about competition; it is the overriding objective of regulation. However, the overriding objective of regulation must be sustainable competition rather than competition as the be all and end all. That would create incentive for investments and this will lead to infrastructure based competition rather than competition using Eircom’s network via DSL which will not necessarily lead to the type of broadband market we want in Ireland. Regulators will have to abandon their fixation on competition for competition’s sake and low prices because the corollary of low prices is low levels of investment. There is a need for greater public policy coherence. The national spatial strategy, for example, was clearly not aligned with the regional broadband programme. Some towns that availed of funds under the regional broadband programme were not included in the national spatial strategy as potential gateways. There is a disjunct there. The approach is not joined up and that needs to be addressed. There should also be a requirement that broadband infrastructural requirements at local and regional levels are factored into planning guidelines. Another area where there was an apparent lack of joined up policy formulation was awarding the Government’s telecommunications services contract, VPN, to Eircom. That sent a negative signal to new entrants. One arm of Government, via ComReg, was trying to encourage competition and new entrants into the market but another arm was effectively strengthening the dominant operator ……It was but the feeling was that the manner in which the tender was written meant that only one operator could win it. That has to be looked at again. Measures that lead to closer co-ordination between industry and Government will improve the situation. The telecom strategy group, of which we and Chorus are members, is a good first step but there might be a need for a permanent advisory and monitoring group. There is talk that the information society commission will fulfill that role. There are recommendations that might move the situation forward. There is merit in imposing a ducting requirement on devlopers of new housing estates and an automatic right of way for broadband networks.” Mr. McCabe of The Telecommunications and Internet Federation (TIF) of IBEC advised the sub-Committee “……Regulation is one of the key elements in achieving - what everybody would seek to achieve - broadband Ireland, to coin a phrase. Regulation is not a simple process. It might be useful to outline some basic principles from an industry viewpoint for the committee and to make some comments on the way forward. The essence of regulation from our viewpoint is to ensure fair competition and protect the investment environment. Both are important if we are to proceed further. Without fair competition and services, obviously we cannot achieve broadband Ireland. Nor can it be achieved without investment; if the infrastructure is not in place, then we are building on sand. To that end regulation should encourage effective and sustainable competition. There is the question as to whether competition should be services based or infrastructure based. Will all broadband services be available over a fixed line or is competition between platforms to be encouraged, be it fixed line wireless, cable or satellite? The consumer does not mind particularly, provided competitive services are available. From a structural point of view, however, it is a combination of both. The role of the Department is critical and industry has been seen to see the initiative given by the Minister earlier this year and at the end of last year, in his clear indication of Government policy direction to ComReg. ComReg is at the heart of regulation. The Competition Authority has also commented in recent months on the regulation of the telecoms market. The ideal situation is to move from a monopoly to a regulated market with a regulator and in time market forces will take over and any issues of competition should be handled by the Competition Authority, so that ultimately ComReg - or any such body - would fade out. There is no evidence of that occurring to date. The optimal regulatory focus should promote competition and facilitate investment. All operators are working to a commercial remit. They look for a return on their investment so that adequate margins at wholesale level should be ensured ……In a commercial environment any operator will have to look for a return on investment so there will have to be adequate margins at wholesale level to ensure that competitors will enter the market and existing people remain - and that market forces ultimately set pricing levels. The EU has brought out a new directive which will take effect this month. This means regulation will be based more on competition law than on standard regulatory processes. Operators will no longer require a licence as such but will have authority to implement services based on given criteria as set by the regulator. Such regulation should be platform neutral so that it does not favour one platform over another. Each has its different merits. The market will decide which is most attractive. In terms of the particular concerns that the industry has in relation to regulation, there has to be accountability across the board. The question may be posed: who is regulating the regulator? That merits discussion, perhaps in this forum and outside it. The office of the regulator is not an easy one but the effectiveness of an independent regulator should be reviewed. In particular, there should be clear benchmarks for the performance of the independent regulatory function, which would have accountability in terms of pricing and the levels of competition and investment in the marketplace. All three of those benchmarks should be applied when the performance of the independent regulatory function within Ireland is being reviewed ……Sometimes the ability to set pricing levels is impeded by complex regulatory structures. We have seen that recently in terms of the wholesale rate that was supposed to be introduced to the marketplace but was then referred to the courts so that the process was halted. We believe the appeals board should speed up that process so that operators will not automatically have recourse to the courts and the process - in the event of an appeal - will hopefully be fair, but also fast, so that the market can move on and everything is not bogged down ……The cost of regulation to operators is another matter for concern. We understand from the ComReg annual report that there is a cumulative surplus in the region of €50 million, which has been required from industry for the running of the office. Industry has no difficulty with this, but it should cover the cost of that office and not be generating profits as such ……As mentioned earlier the decision making process and consultation procedures can sometimes cause great angst among operators: either a very short period of time is given for consultation or the procedures are not clear. There appears to be a lack of transparency and justification about some of the decisions made within the office. Indeed sometimes the operators hear about decisions taken from the media rather than the office itself. The office’s use of publicity has at times caused concern among operators.” Dr. Phil Nolan, CEO of Eircom advised the sub-Committee in relation to regulation “……Eircom today is a commercial company, driven by both customer and shareholder value. We are the telecoms infrastructure provider. We have 207,000 fibre kilometres ……We are operating in a competitive market as approximately 60% of the voice market is mobile. Our wholesale prices are pretty much around the European average and we have the lowest what is termed the “interconnect” - the charge that is applied to other operators to terminate fixed voice calls in our network. We have the lowest flat rate Internet charge at a wholesale level in Europe - this has been recently introduced. The prices for other operators to use our network for those two things are the cheapest in Europe. This was the first country in Europe to introduce CPS - carrier pre-select - which is the ability for a customer to say: “I would rather one of your competitors carries my calls and bills me than you do”. All of that was achieved very rapidly because Ireland was very late in starting the deregulation process. Eircom was privatised in 1998 while, by comparison, BT was privatised in the 1980s. The regulatory system has taken much longer to develop. Ireland has by contrast to other places, come a long way in a short time which means that in many ways its process has been a bit rushed ……Ireland is disadvantaged when it comes to telecoms networks. I am familiar with the ComReg presentation to the committee. It demonstrates that basically 30% of the population live in Dublin, 20% of the population live in the major towns and the other 50% is what we call rural ……In working in partnership with Government, Eircom and the Government made this place the call centre capital of Europe and we have a good network and a good suite of products which are at competitive rates for Europe. We believe the regulatory environment is too much cost driven. It is too much a case of getting the price of voice telephony down rather than saying: “Let’s create a framework which will encourage the roll-out of broadband”. In this the network must never be priced below cost. The most important thing in this is that broadband is about the network. Without the network, nothing works. There has to be an incentive for investment in networks. If there is no incentive for investment in networks, then, in the long term, whatever competition exists which relies on the network is not sustainable ……Otherwise we will not get people to invest in networks. The classic example of where this goes to completion is shown in the United Kingdom railways. The network must have an incentive to invest because it is the core.” In reply to questions from the Members, the Committee was advised “……On the question of the United Kingdom regulator, regardless of where one is, one will find the regulator in one’s backyard much worse than elsewhere. That is the nature of the business. What would one expect people to think? There are ups and downs and differences between the regulatory regimes across Europe ……Our case is that the regulator is being tough on this issue, whereas operators elsewhere would argue a case in a different area. It is all a measure of how it appears in the round. A critical issue is the cost of capital. BT in the United Kingdom makes a 13.5% return, which is what the regulator there permits, whereas we make an 11.5% return. To claim the position in some countries is much more difficult than in others is wrong. The regulators are different. The UK also has an appeals system, which we should have here. There are many issues on which the regulator and the company under regulation will not agree because of the nature of the frameworks we have built. If one were to examine regulators’ decisions, one would find they always state their objective is to introduce competition, but never mention the licence obligation which requires them to allow the incumbent to make an appropriate return in order that it will reinvest in the network. This obligation is also in place but is not highlighted by regulators. There will always be differences of opinion and it is no surprise, therefore, that there will frequently be disagreements. When a disagreement involves a matter of principle, one needs arbitration because the sides cannot get together. While there have been differences as well as advantages and disadvantages, I do not believe the regime here is any more onerous in the round than elsewhere.” In reply to the direct question from a Member “Does the ability of other operators to piggy-back on the network without making any real investment act as a disincentive for them to invest?” Dr. Nolan advised the sub-Committee “The regulatory framework dictates that this is the case because it prices us below net entrance costs. Is it sustainable? There are many models of regulation. If one looks back at privatisation, it was successful in that it brought new products and lower prices and changed the market. This was helped by growth in the market and it established the usual objectives of privatisation and deregulation ……one of which is to remove from the Government balance sheet the necessity for funding this area. As a result, it is no longer competing with hospitals and schools for funding. That much has been achieved. A great deal of commercial capital was available for it and it was successful. Regulation, however, should be only a transient stage. As one goes forward others should become involved which will lead to the development of competition, thus rendering regulation unnecessary. However, things did not happen the way they were planned. Continuous regulation strangles returns from the industry and this leads to falling investment. This is unsustainable because there are no networks being produced other than ours and if we are made to sell below cost, then we will not be sustainable in the long term. In order to create new networks there has to be a return for new investment. In a static market I do not think it is possible to get the required investment to build new networks. In such a case one has to rely on a well built existing network. It has the characteristics of a natural monopoly but it needs to be well regulated. It does not need to have as its overriding objective the introduction of competition. Good regulation is required, which should have as one of its prime objectives, to ensure that the incumbents can make a return which will encourage new investment. It depends on which model one chooses. The way this model is going, it is unsustainable because it does not give the required incentive for network investment ……There is a critical issue here. Does one want to say that effective competition cannot be established until there is a certain market share? If that is what one wants to do that is a completely different understanding of competition to mine. There is no need for a regulator as nobody can ignore the market price. The market sets the price, not some incumbent who manipulates the price to what he or she wants it to be. Where there is sufficient market power to regulate the price, then regulation is often introduced. Some 20% of the fixed line market is with somebody else. We have to take note of its prices because consumers will go to the company with the lowest price as long as the service is good. Many people leave us and then come back to us. We also have significant competition from mobile. My children do not use fixed line phones. Many of the new generation just use mobiles. That is competition. We cannot price in such a way that we drive people to use mobile only. There is a great deal of competition. If one wants to establish that a given party will have no more than a certain percentage of the market, then one will have to dramatically change the regulatory regime. In order to get more people to invest in the networks more money will have to be put into the network side than is currently the case. While there are many difficult elements here, competition does exist. People regularly leave Eircom” In reply to the direct comment from a Member “Dr. Nolan said that there is a choice in terms of the direction in which we go. The reality is that in terms of the regulatory issue we do not have a choice. European regulations are very well defined in this area and they are not something to which we can opt in or opt out. Across a whole range of services, be it postal services or telecommunications, the EU is pressing for the opening up of access to the networks, regardless of whether the universal service provider feels that its competitive position is compromised or otherwise. It is not a choice we have, this is being dictated by the EU.” Dr. Nolan advised the sub-Committee “……There are EU regulations, but there is a huge variation in the way the EU regulations have been put in place. We must consider different costs and different ways of doing things. In Ireland and the UK there is wholesale line rental; that does not exist in most European countries. There are different rules in different places. Most EU rules do leave significant opportunity for local regulatory authorities to recognise local needs. A simple example would be the cost of access to networks. In some places, Belgium for example, broadband is cheaper than it is here. The price for other operators to access the network, however, is approximately 1.6 times what it is here. There is nothing wrong there. There are general rules contained in EU regulations; in my experience, much of it is in language that has to be ambiguous to make it acceptable to everybody. There is also the opportunity of transposing that into local regulations which are more fitted to the local regulatory environment. That is the way things have been done. It was mentioned that the market had to be opened up. Ireland is one of the most open countries. The European Commission did a report in which it gave each country a regulatory score card encompassing how open it was in competitive moves and Ireland scored at the forefront of that, along with a couple of other countries such as the UK and Denmark. We are not against opening up the market. We facilitated bringing in all these moves towards competition. We have had a couple of arguments about pricing. Inevitably, those are difficult issues to overcome. Most of our moves towards deregulation are at the forefront, however. This was the first country to have carrier preselect for all calls, well ahead of the rest of Europe. In other areas we may have lagged behind a little, but overall we have been in the front of the pack, despite having started much later in 1998. We are not asking for special treatment for Eircom. We are saying that there are structural costs that one cannot wish away no matter how much one would like to. The cost of having a particular demographic population is one that is there. If I could take it away I would, but I cannot. It is there and must be recognised. We are applying the European rules as quickly as anywhere else, but we are asking that the European rules say that these services should be cost reflective and the prices should ensure an appropriate return to the investor and ensure investment for the future. We are not asking for special treatment; we are implementing EU rules. We have had one or two difficulties over pricing, but in all other respects we are pretty much at the forefront of things. Broadband is not part of the USO. If it were to become part of it the costs would become very significant. I think that ComReg did a presentation and analysis of the cost of this and depending on how much coverage and what speed is required, we are talking about more than €3 billion.” Mr. David Taylor and Mr. Peter Evans from Esat BT advised the sub-Committee “……Last Friday we launched the first FRIACO, flat rate, narrowband service, again through the innovation of the Minister, Deputy Dermot Ahern. What do we bring to Ireland? We believe we bring competition, choice and innovation to Irish consumers and business on a national basis. We have our own network - 2,000 kilometres of fibre network around the country - and we use wholesale services from Eircom where we do not have our own network or where it is not cost effective to access the customer ……We will continually drive down price points for services. As our wholesale costs are driven down, we will pass these on to our customers. However, we cannot drive down Eircom’s wholesale prices. The regulator must do that. We will continue to develop new and innovative products and we will drive the awareness of broadband through advertising, partnerships, sponsorship and events ……[Mr. Taylor] Members asked about the role of ComReg. First, one must ask about the role of a regulator. Regulators regulate dominant firms and act as a proxy for competition. When competition becomes available those regulators can fall away. The situation here is that the market was liberalised in 1998 and competition developed for the first two years and got up to 20% of the total market, though it has remained flat ever since. Do we have effective competition in Ireland? One member answered that when posing a rhetorical question earlier, and the views of other delegations seem to be that effective competition does not exist in Ireland today. What is the role of ComReg ……As a telecoms operator, yes, there is not effective competition in Ireland right across all the markets. If that is our view and that of Government and consumers, then obviously regulation has to continue. If competition has also remained flat for the last two years, it implies that additional powers have to be given to provide another function. With broadband we have the bulk of supply supplied over the local loop, that is the final mile. Eircom, as the ex-State incumbent, controls the final mile and it is all about access to that final mile.” In reply to the direct question from a Member “I presume you are still the incumbent. If you were to compare your experience as effectively competing against the incumbent in this market, how do you think British regulatory authorities took a more dynamic role in regard to making your company in the UK open up to more competition than has been the case with our regulatory authority? Is there a difference?.” Mr. Taylor advised the sub-Committee “Regulation in the UK is handled differently from how it is handled here. The simplest way to describe it is that Oftel has what is called co-competition powers. It acts as a competition authority and a regulator and is extremely tough in the enforcement of those powers. The Government and regulator stance in the UK, from the Prime Minister down, is totally in favour of making broadband Britain happen. BT comes under enormous pressure, both publicly and privately, to ensure it is competitive. Basically this is about the provision of competitive services. It has been realised that we cannot have just one company providing services. There must be a number of competitive services or consumers will not buy the product. Enormous pressure is applied to BT at various levels to ensure that its prices and services for wholesale enable a competitive market to develop. It is quite different ……BT is in a very difficult position. In the UK, where it is the incumbent, it has a strong regulator and in every other market - Germany, Ireland, Spain - it has a weak regulator” Ms Etain Doyle, Mr. John Doherty, Ms Isolde Goggin from ComReg advised the sub-Committee in their presentation “……The supply of broadband has been slow but is now improving. It is a key national priority to make further progress on that. We have concerns about competition which is extremely important. it has been very important in other countries in driving out broadband in terms of both platforms and services. We think convergence, in particular, mobile developments, may help in this area. We believe that demand needs further stimulation and that price is still a concern for most of those involved. In demand, it is necessary to segment the markets. One needs to look separately at the needs and issues of large companies compared with those of small ones and the needs of different companies within this small area and those of the residential market. While SMEs, for example, use the Internet, the challenge is to move them from that level into e-business and e-commerce. Regarding the residential challenge, one of the major issues is awareness. I will now pass over to Mr. John Doherty to begin the presentation. [ Mr. John Doherty] To give a context to what we do, I will quickly cover the legislative framework. In terms of key EU and national regulatory objectives, ComReg promotes competition and the interests of consumers and contributes to the development of the overall EU internal market. This is changing now and we are in the throes of working with Government in terms of the changed EU regulatory framework which begins on 25 July. There will be fewer directives - down from 22 to five - and there will be greater reliance on voluntary action by market players. We are now beginning to regulate markets rather than technologies where historically there might have been a focus on technologies. There is to be much greater compliance with competition law. This will link the threshold for regulation to competition law, the concept of dominance and increased interaction between all the so-called national regulatory authorities, the competition authorities and the European Commission. As the sub-committee will be aware, the ministerial directive of January 2000 set out objectives for national broadband towards which we have been working. The slide in the presentation shows a general interaction on key relationships within the legislative framework. It shows how ComReg, Government, the Oireachtas and committees like this one interact in terms of policy development, initiatives and directions, the interlinking of this with the European Commission overall and, through the European regulators group, trying to develop a common approach as far as one can be adopted across Europe. That is by way of background. Considerable progress has been made in the overall telecommunications market in Ireland since liberalisation, but like every other market in Europe and worldwide, progress has slowed since the economic dip began in 2000. The other licensed operators represent about 21% of the market in Ireland. There have been some good success stories and progress continues to be made, but it is definitely affected by the present economic climate ……[Ms. Doyle] Mr. Doherty has outlined the framework and I will move on to supply ……DSL is being rolled out and the disadvantages are availability and the length and condition of the line. Technology is improving all the time and the UK began, like us, at 4 km and moved to 6 km from the exchange. The original technology used for DSL was large and pretty expensive and now there is what is known as “pizza box” technology, which is much smaller. It can deal with a small number of lines but is appropriate for smaller exchanges. As we discuss these, six months or a year can result in changes in the technologies. On cable, Ireland has operators with extensive experience and customers are used to cable but the problem is that cable networks are expensive to upgrade. Countries that upgraded during the best period up to 2000 did well on this front. Satellite is available nationwide. It is good for broadcast and involves low installation and set-up time but it can be expensive. However, it has been a solution for a number of people in more remote areas and in areas that have not been covered by other services. There are national licences available for fixed wireless access but the take-up has been more limited. The cost to the customer, premises and equipment can be expensive in the higher frequency bands. It is cheaper in the lower bands and we are working on that. Ms Goggin will tell the sub-committee more about that. Mobile technology is used by most consumers. There are 1.6 million PSPN lines in Ireland but there are 3.1 million mobile telephones. Mobile technology has come out of nowhere in the past few years but people feel comfortable with their mobile telephones and, with the additional functionality provided by 2.5G and 3G, in particular, this will be another source of broadband availability that could be overlooked but should not be. I refer to optical access, fibre-optic cable and wireless optical. Fibre-optic has been available for a considerable time. Digging issues and costs are considerable. Wireless optical is newer but it is also a technology that needs to be examined. A range of technologies is available. The next slide refers to people who were asked, if they had to have one of these technologies, which it would be and we are trying to ask in relation to what. It takes a minute to download a 60 page document and it may well take longer if the lines are congested and so on. It only takes 28 seconds on an ISDN line, 7 seconds on a cable modem, 1.8 seconds on a leased line DSL and, as one gets into higher capacities, one hardly notices the time taken to download the document. The slide highlights the time involved if one were using a digital camera and sending photographs over the Internet to a family member or as a sales pitch. It does not make sense to send photographs on a dial-up modem. From a business point of view, it can be seen how quickly one needs to move up the scale and, from a domestic point of view, one needs to be pretty sophisticated before one moves up the scale or has access at home for teleworking. We have seen where we are. How is it that other countries are where they are? Competition between alternative networks was a key factor in spurring network roll-outs. Broadband penetration is highest in the cabled central European countries - Sweden, Belgium, the Netherlands, Austria, Denmark and Switzerland. Many of these will be seen on the OECD slide which shows us way down the line. It is interesting to note that Germany is a main exception. Deutsche Telekom owned the cable assets in Germany until earlier this year. Therefore, this type of pressure was less there. This is also the case in Portugal. In some of the larger countries where the incumbent was slow to react to the threat from cable operators, broadband is beginning to take off. In the United Kingdom, BT was relatively slow to react until early last year when it suddenly noticed there were several hundred thousand subscribers to NTL and Telewest cable modems. It also came under pressure in different ways. Spain and France would be in the same position. The smaller peripheral markets show little evidence of much inter-network competition. Portugal, Finland and Ireland would be in this category. The question for us and these other countries is to what degree has missing out on the short window of opportunity for investment, between the liberalisation of markets in 1998 and the slowdown in capital markets, made in terms of making it more difficult to get up that that curve than might otherwise be the case. Looking in more detail at the Irish market, there is the incumbent with a large residential base, which owns the bulk of the fixed line infrastructure and can be strongly focused on maximising value from existing investments. The other licensed operators are largely Irish subsidiaries of global telecommunications players, although there are also some interesting Irish-based companies. These mainly work in the high-tech multi-national companies end of the business. Esat BT has a broader range of business. Most of these companies have some fibre-optic infrastructure in Dublin, mainly serving the large business parks. They are working in a constrained funding environment with a high degree of focus on maximising free cash flow ……The operators want profits but customers have proven that they will not pay more than a certain amount for these services. A concentrated effort across all of them is needed to make it work…[Ms. Goggin] ……This is a quick run-through of our work programme for the rest of the year insofar as it affects the broadband area. Going back to the objectives outlined by Mr. Doherty earlier, we have the objective of promoting access products, specifically access products or wholesale products. This is where the incumbent, Eircom, is obliged to make part of its network accessible to other operators so that they can get access and provide products. Competition is then introduced at the retail end. There are partial private circuits, to which I will return, and wholesale line rental, the area where, if someone wants to take their calls from an alternative operator, he or she can get a single bill from that operator which covers line rental and the call cost. That also feeds into other areas and products. FRIACO, flat rate Internet access call origination, is a wholesale product with which one can get access to the Internet that is always-on. One is not metered because there is a flat rate. We hope that will be in the market as a retail product by 27 June. It is intended to benchmark the Irish sector against key indicators of price of products and services in the OECD to see how we are doing in competitive terms. In consumer awareness terms, we want to develop the carrier pre-select regime to make people aware of alternatives for choosing which operator through which to get their calls. We have a function in complaint management, which is in the current framework and will also be in the new framework, as Mr. Doherty mentioned. Lately, we have been doing much work on implementing the universal service obligation directive and we have just issued a response to consultation a week ago on the transposition of the directive, which is due to happen in the next month or so. The areas of innovation and investment are interesting for the area of broadband and access to broadband. We have been working to get new products into the market, particularly radio products, as there are many areas which do not have the high density which drives cable or fibre access. There are areas of scattered population where a single point to point radio link may be more suitable and cost-effective for broadband access. When we talk about convergence here we mean that, historically, the telecommunications sector meant fixed in one box, mobile in another and broadcasting in yet another whereas now, there are products which mix these up. This result in the use of terms, such as “nomadic” or “portable” services, which is similar to having a PC and getting Internet access from a wired hot spot. It is not exactly mobile access in the way we understood it because one cannot use the facility in motion but it is not exactly fixed either. It is a hybrid, which is where terms such as “portability” and “nomadicism” come from. There is also convergence between broadcasting and mobile, with people downloading video clips to 3G phones. There is convergence also between broadcasting and fixed, with operators offering triple play between telephony, Internet access and cable television, all in one pipe. We do a lot of work on that and on releasing bits of the spectrum so that operators, particularly small niche operators, can come on stream to offer innovative services and broadband services, though not necessarily on a massive scale involving the whole country. In terms of regulatory certainty and professionalism, Mr. Doherty mentioned the new EU regulatory package, which has to be implemented by 25 July, a month from tomorrow. It may cause us to wake screaming in the middle of the night. Fitting that into the framework has been a big part of our work. Particularly important points for broadband access include leased lines, where we have 22,000 lines, or 95% of them, under 2 mb. That is small in European terms. We have many leased lines at the lower end of the spectrum, not the big 34 mb or 155 mb pipes. We have been working for a long time on the quality of service offered to other operators, as this is how one gets other operators into the market. One gets access for the other licensed operators to these circuits. There have been issues of service delivery and quality over the years but we have worked very hard on that and now delivery is up to the best EU standards. Partial private circuits, which I mentioned earlier, is the most efficient way for some operators to configure their leased lines. They would tend to have many leased lines from Eircom in different parts of the country and partial private circuits means they can configure this in a more cost-effective way. Part of the partial private circuit is the access network, the local network between one and one’s exchange, and pricing for that has been a matter of dispute between us and Eircom. I cannot say much about it as it is sub judice at the moment. We asked Eircom to submit a price for those circuits but that is now subject to court proceedings. It is the same basis for pricing as the local loop unbundling. We had directed a price of €14.67 for that unbundling, but were in court today on the issue. It seems we may be able to go ahead on the basis of reverting to the old price of €16.81, which would allow us to make progress on the PPC, but that is not confirmed as yet. Local loop unbundling was the result of an EU regulation which required the incumbent to open up its local access network for competitors. We developed a process in which Eircom was required to publish an offer and meet requests. It was a very slow process but it finished in 2002 and Esat BT now has 38 exchanges unbundling and offering services. As I said, there is also the issue of pricing. The DSL product, or the digital subscriber line, is where one has one’s existing copper wire and can offer higher speed services over it. The wholesale pricing is approved by us. When we had a high price of over €100 a month the demand was low. As Mr. Doherty said, the price has dropped since the end of April so we will see the effect of that on demand and in the statistics. Regarding licensing schemes for spectrum, again we have done our best to be innovative and allow in niche operators rather than putting up barriers to entry. The 3G mobile is the larger scale mass market product from Vodafone, O2 and Hutchison. We have fixed wireless access and wireless LANs, all of which again are radio-based products, which are almost overlaying the existing network and getting new services out. FRIACO is not a broadband product - it is narrowband - but there is an issue of people in transition in terms of getting them used to using narrowband before they move on to broadband ……We need progress on the demand side. We have concerns about competition, both in terms of platforms and services. The market is fragile and, without these services, we cannot expect it to grow. Managing competition is extremely important. Convergence with other types of broadcasting and mobile platforms can be helpful. The demand side needs further stimulation. Awareness of what broadband can do needs to be dealt with. Price is of concern, both for businesses and residential users. We are better off now than we were previously but more needs to be done. In looking at the markets, large businesses’ concerns, including those of SMEs and the residential sector, are different. The SMEs are the most important from the point of view of jobs and growth in the economy if the number of companies working in the internationally traded sector are to grow. In the past, if one wanted to buy an airline ticket, for example, one had to go to the local travel agent who only competed with another local travel agent in a conveniently located spot in the next town. One now has an opportunity of buying tickets on the Internet from anyone internationally. The same is the case in respect of insurance brokers and many small businesses. They are becoming part of the internationally traded sector. If other people are further up the learning curve than they are, they have a serious issue. It is not a matter of looking at a broadband statistic; it is a matter of looking at a much bigger economic issue in terms of SMEs. On the residential side, we need to increase the awareness of the benefits of broadband and we may need to elaborate on the benefits. We need content, e-government, e-business, things that people want to do and use on the Internet, so that we can make this progress”. Regulation is critical to the delivery of broadband. It is evident to the Committee that there are two different views on regulation, the industry/TIF view, that is, regulation is there to ensure fair competition and protect the investment environment “The essence of regulation from our viewpoint is to ensure fair competition and protect the investment environment. Both are important if we are to proceed further. Without fair competition and services, obviously we cannot achieve broadband Ireland. Nor can it be achieved without investment; if the infrastructure is not in place, then we are building on sand. To that end regulation should encourage effective and sustainable competition.” and the ComReg view which is that “In terms of key EU and national regulatory objectives, ComReg promotes competition and the interests of consumers and contributes to the development of the overall EU internal market. This is changing now and we are in the throes of working with Government in terms of the changed EU regulatory framework which begins on 25 July. There will be fewer directives - down from 22 to five - and there will be greater reliance on voluntary action by market players. We are now beginning to regulate markets rather than technologies where historically there might have been a focus on technologies. There is to be much greater compliance with competition law. This will link the threshold for regulation to competition law, the concept of dominance and increased interaction between all the so-called national regulatory authorities, the competition authorities and the European Commission.” The Committee concurs with the view of Professor Melody when he advised the sub-Committee “I have no faith that the market will solve all the problems.” The Committee does not see the development of the regulation of the telecoms industry in the way put forward by TIF “The ideal situation is to move from a monopoly to a regulated market with a regulator and in time market forces will take over and any issues of competition should be handled by the Competition Authority, so that ultimately ComReg - or any such body would fade out.” The continuation of the quote “……There is no evidence of that occurring to date.” is in, the Committee’s opinion, rhetorical in light of the past history between the incumbent and ComReg, a point echoed by Professor Melody “……here is a history to the experience of incumbent monopolies in all countries.……The regulator is the institution established to do this. One can relate the effectiveness of regulation with the effectiveness of telecommunications reform. Ireland must facilitate completion of the structural adjustments required of Eircom in its transition from a monopoly protecting the existing services in order for it to become the leading player in a competitive market developing new services.” There would be merit in a fading out of ComReg if the historical experience of regulation was one of co-operation and not contention. Further, the Committee notes Professor Melody when he advised the sub-Committee “……My observation is that as a regulator created fairly late in the European game, ComReg has come quite rapidly up to the European standards. The ultimate and brutal test will be whether it will be able to stimulate rollout and the policy objectives. That will be a difficult task because part of that involves helping Eircom move from a monopoly view of the world and its services to a competitive view. That can take years in the case of an incumbent monopolist. Often it only happens with a significant change in staff.” There have been changes in staff in Eircom and the Committee notes that this has seen greater effort being made by Eircom in the rollout of broadband. The Committee does agree with the thrust of the points made by TIF when they advised the sub-Committee “……All operators are working to a commercial remit. They look for a return on their investment so that adequate margins at wholesale level should be ensured….In a commercial environment any operator will have to look for a return on investment so there will have to be adequate margins at wholesale level to ensure that competitors will enter the market and existing people remain - and that market forces ultimately set pricing levels.” This was further emphasised by Eircom when Dr. Nolan advised the sub-Committee “….The most important thing in this is that broadband is about the network. Without the network, nothing works. There has to be an incentive for investment in networks. If there is no incentive for investment in networks, then, in the long term, whatever competition exists which relies on the network is not sustainable…. Otherwise we will not get people to invest in networks.” The Committee considers that for the industry and the regulator the difficulty is to balance the essential need to regulate with the need to ensure that there is an incentive to invest where that investment generates an acceptable rate of return on the investment for the investor. The Committee believes that investment in the telecom sector has to be regarded by both venture capitalists and the Revenue Commissioners (in reality the Minister and Department of Finance) as being infrastructural investment and therefore a long-term investment. All factors impacting on such investment, write-downs and return on investment have to be long term. Short-term structures do not apply and where applied will continue to retard the investment in broadband. A proper approach to long-term infrastructural investment by Government, the telecom industry and capital investors can be the stimulus to ensure the Ireland will have universal broadband. The Committee considers that TIF makes two valid points, who regulates the regulator and the need for some appeal mechanism other than recourse to the Courts? To this end the Committee considers the point made by Mr. Ed Brophy, NTL to have validity “The telecom strategy group, of which we and Chorus are members, is a good first step but there might be a need for a permanent advisory and monitoring group. There is talk that the information society commission will fulfill that role. There are recommendations that might move the situation forward.” Taking the points made by TIF there is a need for an advisory and monitoring group, such as the Telecom Strategy Group. However, it is the opinion of the Committee that such a position only has merit if Government acts on the Committee proposal that while every Department has a strategy statement there should be a requirement to have a strategy statement for Ireland – a cementing of joined up thinking for Ireland. It is the view of the Committee that this can only be achieved by a Minister of State, with a cross departmental function to ensure that communications, broadband and ICT are embedded in the DNA of the culture of the policy formulators and the financing Departments. Chapter 11 – Rollout11.1 Central to the delivery of universally available broadband is how the rollout of broadband is going to occur. The Committee holds the view that there is no total Ireland solution, that is, no one size fits all. Further, the Committee considers that there are two elements to the rollout of broadband. First, what is broadband and second, how can broadband be rolled out? What is broadband? The Committee considers that the reply made by Mr. Phil Smith, CISCO most accurately defines what is broadband. Mr. Smith advised the sub-Committee that the Broadband Stakeholder Group in the UK, of which he was a member “….defined broadband as two things, one being speed high enough not to limit the applications one is using, which might be the case with DSL, and the other a platform on to which one can build applications not limited by the scope of the platform itself” The Committee considers that the rollout of broadband is not an easy task taking account of both regional and digital divides, the need not to reinforce existing inequalities or create new inequalities. The Committee is of the view that fiber-optic cable past every home is not viable so, therefore, a combination of technologies must be utilised. It is the opinion of the Committee that DSL is not broadband, rather it is an introductory technology and while there is an arguable case to be made that, initially, this may be sufficient for the home there is a difficulty because as an ‘introductory technology’ it does not have a sufficiency of bandwidth for the requirements of business, particularly SMEs, the education sector and the health sector. What is the state of the Irish telecommunications? In regard to fiber-optic cable a. The national backbone, delivered by the ESB, is 1,300 Km of fiber-optic cable (Slide 16 of ESB Presentation to the sub-Committee). b. Eircom has 207,000 Km - Dr. Phil Nolan, Eircom 1st July, 2003 “In common with BT Esat, there is a huge overcapacity of fibre, particularly in backbones. We have 207,000 fibre km’s in Ireland.” c. Esat has 2,000 Km -Mr. Peter Evans, Esat 1st July, 2003 “We have our own network - 2,000 kilometres of fibre network around the country” In relation to fixed lines the position is a. Eircom – supplementary information supplied to the sub-Committee 13th November 2003 (Slide 2 of presentation – “Continued build-out of broadband infrastructure: 850,000 lines enabled, on target to complete 1m”) b. There are 1.6 million PSPN lines in Ireland – Etain Doyle ComReg 24th June, 2003 Leased lines a. There are approximately 22,000 retail leased lines but only 5% of these were in excess of 2 megabit. (Mr. John Doherty – ComReg) Mobile phones a. There are approximately 3.1 million subscribers in the mobile market - about 80% penetration. (Mr. John Doherty – ComReg) What is clear to the Committee is that where there is a very large amount of infrastructure and fibre available, the reality though is that the vast majority of this is unlit and that is an indictment of all the participants. The Committee holds, in the strongest possible way, that this is a national scandal and must not be allowed to continue. In the national interest every effort must be made to utilise this great asset. It is beyond the understanding and comprehension of the Committee that companies can cite the harsh investment climate and the need to have the regulator focus on investment returns when so much capital is tied up in under-utilised dark fibre that is yielding little or no return on investment. If this is indicative of the industry then the Committee makes the observation that it is no wonder the capital markets are reticent in providing capital for long-term infrastructural investment. Mr. John McSweeney of the ESB, on the national fiber optic backbone advised the sub-Committee “It is important to outline to the sub-committee the strategy of ESB Telecoms. It is a non-core activity for the ESB and investment will only be supported when commercial payback can be demonstrated. There is also a requirement to rely on our asset base for leveraging wherever possible. With that in mind, the experience goes back to the construction and management of the largest private network in Ireland before the introduction of the new operators. As you are aware, we were involved with Ocean as a joint venture partner with BT, which was subsequently bought out by Esat. We then sold our interest to BT. ESB Telecoms is a limited company, incorporated in 2001. Turning to the business lines, our interest in infrastructure provision started with towers in 1997 after our unsuccessful bid for the second mobile phone licence with Persona, and we offered our sites to both the winners, Esat Digifone, now O2, and Eircell, now Vodafone. We are the leading independent telecommunications infrastructure provider. We own and manage over 400 sites and we insist on mast sharing by mobile operators. A capital investment programme on towers is under way because we realise that broadband will not be confined to fibre, but also to radio and mobile. We are undertaking a survey of all ESB sites nationwide to hopefully assist in the roll-out of 3G as that arises. We are also trying to promote the use of existing ESB electricity pylons for the location of mobile phone antennae. There are examples of this around the country. It does not suit every single application, but as we speak, all operators are on pylons. We also design, install and construct a range of different antennae or masts throughout the country while meeting with local authority requirements. The clients using our towers are all the mobile phone operators and Chorus and Esat. In addition, they are shared by the local authorities, the Garda, the Irish Aviation Authority and what may be termed the blue light industry. Turning to the FibreCo, we are trying to provide a national, large-scale broadband service. It is a flagship project within the national development plan and is fully supported by the Government. It consists of some 1,300 km. of 48 core backbone fibre, connecting all urban centres in a figure of 8, with a spur to Letterkenny. The southern loop was made operational in the fourth quarter of 2002 and we will have the complete circuit finished by the end of the year ……here is a reasonably good fit of the roll-out of the ESB’s backbone with both the municipal area networks and the spatial strategy ……We have a national footprint in terms of people. We also manage the ESB’s digital microwave network, a nationwide network, in additional to the fibre optic roll-out. Members of the sub-committee will have read in the newspapers that we will pilot a power line technology trial in autumn 2003, that is, the use of a high-voltage network for the transmission of broadband, a technology that is not yet proven. We will pilot it later this year. Fundamentally, ESB Telecoms is a national provider of top-class infrastructure to telecommunications operators, whether they be mobile, fixed or radio.” In reply to a question, the ESB advised the sub-Committee “It is important to explain where we position ourselves as a carriers’ carrier. We believe we are making it possible for new carriers to come into this business by offering a backbone that is pitched at a price level significantly below the incumbents. It is the same position we took in the development of the mobile business through the provision of towers, in other words, as an enabler to work with operators to enable them access the home. The question on wireless is apt. It is likely that it will take a combination of technologies to achieve the ubiquitous delivery of broadband into the home. It is going to take a backbone system. It is going to take municipal area networks or local area networks and probably high-speed radio to deliver the final local access, particularly in rural areas. I think it is going to take a combination to deliver this. We will play our part in the backbone provision because that is where we see our strength. Obviously we have a universal service obligation in the delivery of electricity. I do not see the same responsibility lying on our shoulders for the delivery of telecoms. I know that our chairman has seen the wireless backbone in a particular way. We talked about rural electrification; he talks about rural “fibrication” as an enabler to start. That is where we see ourselves - working with operators to give them an alternative to Eircom and Esat. In that regard, we offer dark fibre and we are the only carriers to do so. Everyone else offering broadband only offers managed services. ……Regarding the managed services entity, we are studying the terms of that competition. We are, however, precluded from entering into it because anyone with a basic licence or greater is not allowed to bid for it. We are looking at the implications of that as we speak. On the pricing issue, I mentioned initially that our prices are extremely competitively pitched against the current prices available in the marketplace. It will only be when the full national circuit is complete that we will be in a position to answer whether they are attractive to third parties. If new entrants come into the market, we will certainly be able to operate a flexible and price competitive regime that will surely attract them to our network. We are working with some potential customers. We have one contract signed on a local basis, which proves we are capable of offering a service that will connect to a municipal area network. That is even before the network is finished. That is a signal that there is a future for us. As the economy improves and industry and homes increase the demand for broadband, we believe we will be in a position to offer a competitive price. I emphasise again that it is not just backbone fibre and that the towers and the masts can be equally instrumental in driving this forward as broadband to the home. Together with everyone in the industry, we are definitely concerned with working to make sure that happens. We are certainly committed to driving it out, but there is one condition I am bound by, namely, that any decision for investment will require a proven business case. That is one condition I labour under ……The decision to invest was taken at a time when telecoms was riding on a high. Seventeen companies were operating in the country, but many have gone to the wall. There has been a significant difficulty in getting the return on investment we made. However, we believe the business will recover and that it is a good investment for the medium term. It must be remembered that investment was on the basis of a very successful towers business that was also started at a time when it was not obvious there would be business and a successful joint venture with BT. We have a track record of success and we are patient. There are no plans to extend the network to local areas, but we will keep it under review. If we find that the take-up from the back-haul makes it a sensible decision, we would have no hesitation in looking for further support, but it would have to be on the basis of a prudent business case. In terms of the pricing on the wholesale side, I draw a distinction between managed bandwidth and dark fibre. From a dark fibre perspective, we are the only ones in the market for that, and that is primarily to attract new operators. On the managed bandwidth, in terms of published prices, we operate at a serious discount compared with the incumbent and a discount of between 12% and 17% compared with everyone else in the field ……We have points of presence established around the network ……In those points of presence we have set up an interface between the high voltage network and the public fibre uptake with a safety barrier in between to ensure there are no issues of safety. We have 28 of those around the complete network and they are available as co-location spots for any local area operator who wishes to join it. If not, we will have to come to an arrangement with the incumbent for the last mile access. I emphasise that our strategy is to be a carrier’s carrier, not to get down to the retail offering ……they are available for municipal area networks which might want to extend the fibre backbone, wireless or mobile networks. All three are available on the co-location.” Mr. John McAleer, Director of the South West Regional Authority advised the sub-Committee “……I would like to make the case for satellite broadband. The South West Regional Authority has been co-funded by the European Space Agency to trial, evaluate and disseminate, on a Europe-wide basis, the use of satellite technologies to deliver bandwidth to communities in the south-west region. This has been done with a view to overcoming difficulties in distributing broadband throughout the region. While we are less than six months into the 18 month programme, it is evident that satellite can deliver broadband at affordable costs ……The pilot programme enjoys the participation of the major space segment players, such as satellite operators and those who provide dishes and telecom services by satellite, who have worked with us in it ……Some very big players from Europe and the US have joined us in this project. The economic viability of the satellite option is greatly enhanced by the linking of 802.11 b and 802.11g wireless local area networks, or LANs, to the satellite systems. The 14 locations in the region that are being covered under the pilot programme, such as towns, technology parks, dental surgeries and schools, are equipped with satellite dishes which provide uploads and downloads of data. Where wireless LANs have been developed, the local server is supported by a pro-active cache which updates itself constantly with the most popularly used Internet sites and informs other caches around the region. Bandwidths through the satellite system can be of whatever size is economically justified. The question of what bandwidth can be justified must always be asked. People refer to broadband without quantifying the usage level or need anticipated. In the case of satellite, broadband can be scaled and switched up or down. There is a cost factor in that. Typically, we work at a level of 512 kbs up and 1 mb down and by using the wireless and cache systems users see a connectivity of approximately 7 mbs per second on 311 B system. It is much higher on the G system. In the case of industrial users, the satellite system can also support virtual private networks, VPNs, over the satellite connection. While we are still in the early stages of this pilot study with the first wireless LAN system coming on line in Caherciveen on Friday of this week, we are very confident and anticipate that the cost per private user will be of the order of €25 per month for always-on connectivity. We selected Caherciveen as it is almost as west as one can get in Europe. Our claim is that Caherciveen is the most westerly town in Europe with broadband. If we can do it in Caherciveen, we can do it anywhere, which is not to imply any disrespect to the town. I wish it to be clear to the committee that satellite technology is not a fully competing alternative to fibre optic, or even to DSL, but it is an excellent option to consider to deliver services which will permit small business to operate out of peripheral locations. Satellite technology can also facilitate the roll-out of e-government and other services to local communities. It has the significant advantage of being readily available and cost effective, particularly when provided on a community-wide basis via wireless local area networks. It is not necessary to dig up roads to provide this system. A satellite system can be put in place in about one and a half hours. We welcome the interest of the joint committee in our work and we recommend that to deliver bandwidth to all rural areas the State contracts to purchase a sizeable bandwidth sector on the transponders of one or more of the satellite operators covering Ireland. There are satellites overhead and they have telecommunications transponders on them the bandwidth of which is sold to users. We suggest the State works with us to observe what we do to inform its consideration of the bulk purchase of space on a transponder over Ireland. Such an approach would have two distinct advantages. Bandwidth costs would be significantly lowered and, as the systems are fully scaleable, priority bandwidth could be ascribed to particular users when required. If, for example, a Department were to establish itself in the west requiring a great deal of bandwidth to send its monthly report, the system could be tuned to provide greater bandwidth for a time on a certain day and retuned to provide for normal day-to-day needs. A fully scaleable service is one in which bandwidth can be ascribed to users as they need it. The adoption of the approach we recommend should involve identifying target sites for servicing selected on the basis of strategic importance. I have in mind towns which have perhaps lost manufacturing operations. We recommend that serviced industrial sites or technology centres be made available. In these areas, surplus bandwidth can be provided to local communities via wireless networks. Such an approach will provide an immediate solution to bandwidth delivery at capital costs of approximately €7,000 per location for the satellite equipment. Wireless technologies are inexpensive to purchase and install. Our recommended approach has the advantages in a quickly changing technology environment in which wireless is growing as a preferred technology, that investments which are not viable would not be made in buried services which have potential for early obsolescence.” In reply to questions from the Members, Mr. McAleer advised the sub-Committee “The question is not about competing with wireless, but one of backbone as wireless must have a backbone. Like the water supply, wireless requires a trunk main to distribute it to houses. Without such a main, one cannot distribute water or, in this case, broadband. Wireless usually runs from a fibre backbone, which means it is distributed from a fibre point. This is referred to as the “last mile”. Therefore, the question is not one of competition, but of establishing a modus operandi for getting the broadband into a point from which one can distribute for the “last mile”. The system does not compete with cable for obvious reasons. The amount of bandwidth one can provide on a fibre optic cable is practically infinite. In terms of commercial operators ……To answer the question of whether a fibre connection is warranted, one must build into the equation the capital cost of the fibre and factor in the number of end users. A range of issues are involved in this process, many of which will be examined in our project. Some of these relate to the contention rate in relation to a satellite operation, in other words, the number of clients feeding off one transponder in space. Clearly the larger the number, the lower the standard of service each client receives. We will consider the issue as a public service provision. In a self-funding environment, we believe €25 per month per user would cover its cost and in those circumstances, one would want a user population in, for example, a town, of approximately 70. The Deputy’s second question referred to the ability of the service to download data and inability to upload it. This is a matter of horses for courses. Certain systems can download data, but are not good at uploading it, whereas others are equally good at doing both. This is both a cost and system factor. It is, however, possible. Our approach and the equipment we are using will deliver a fully scaleable service which can download up to 20 megabits, provided one is prepared to pay for it, and upload as many as ten megabits. One always has a lesser upload, even where just 512k, which is the equivalent of a DSL line, is being uploaded. DSL uploads and downloads data in normal circumstances. In our case, it will be possible to send and receive data and we will run full video conferencing and other facilities over the system. The figure of €7,000 per location relates to the cost of a dish and ancillary equipment, which includes a satellite modem and a caching system, which is a service dedicated to the satellite. However, units are available for as little as €300 and certain operators provide systems free of charge and recoup the capital costs by charging subscribers on a monthly basis. Again, cost is a function of the type of use. We are addressing the strategic regional use end of the market rather than home use. The Deputy also asked about the funding we received from the European Space Agency and the position of the Government. The European Space Agency provides 50% of the funding for the project with the balance provided by other agencies in the space industry. The project has also received support from Enterprise Ireland. There is an Irish Government envelope within the European Space Agency’s budget. We had to obtain clearance from the Government to obtain the money from this envelope which is administered by the European Space Agency. Therefore, we have been indirectly funded by the Government. I acknowledge the continuing excellent encouragement and support Enterprise Ireland has offered the project. The Senator asked a question in regard to Waterford city and €45 a house. The city case is completely different to the rural case. In Cork city, for example, a fibre optic ring is being put in because for a relatively small area of territory one has a relatively large number of users which then makes an economic and business case for telecom operators to put in the service knowing that they have a big clientele. It costs as much to put in this service on county roads as it does within the city streets, perhaps more, because one will not have the ducting. In the case of the county road one might have 20 potential users after putting in 40 miles of cable whereas in the city for 40 miles of cable one might have up to 1,000 potential users. That is the difference and that is why it is difficult to make a business case for the rural areas. On its capacity to compete, as I said in my paper, wireless just cannot compete with fibre. It realistically cannot compete with DSL. I have DSL in my office and for a cost in the region of €47 a month I have a service that is on all the time that has a bandwidth of more than 500 KB. The 500 KB are dedicated to me. Wireless cannot compete with that but the reality is that many rural areas will not see DSL or fibre. What is one to do with those areas? It is a good system to pick up those areas which otherwise would be left out of the loop completely. As to the dishes on the house; again, it depends on whether one is getting the €300 dish or the type of system in which we are dealing. The normal dish one would see on a house is an 80 cm one. Our dish would normally be a 1 m dish but the hardware on it is much more substantial than what one would see on a house, for example. Should the people of the Beara Peninsula be entitled to broadband? Absolutely, they should be. As we go into the information age people will have more and more of a dependency on connectivity. However, we have to be realistic; one could maybe say that the people of the Beara Peninsula should have a DART service as well. It is the same argument ……I could revert to … [the] … question in regard to the Beara Peninsula, or the Kerry example; ideally, they should have the same connectivity but the reality is different. The example of the ESB networks was used. However, in some parts of the country there are 220 kV lines while in other parts one has 110 kV lines. In places there is three phase electricity while there is two phase electricity in other places. This is due to the level of anticipated usage. As things stand, it is unlikely that the people of the Beara Peninsula would need a 2 GB fibre, for example, or a 90 GB fibre. The reality is that because of cost factors we will not see it. It was mentioned that it might take 40 years to do it. I would envisage that in 40 years this technology will have changed so substantially that none of us can imagine how it will operate. Meanwhile, there is an immediate need. There is a strong perception in towns that, for example, have development committees and aspire to getting small industries to set up there that they are no longer at the races in terms of attracting development if they cannot deliver some degree of bandwidth. Very often, quite a small element of it is sufficient to satisfy the needs of small companies. I am not talking about saving the world type of technology, I am talking about technology that will be adequate and that will see us through until something else turns up ……referred to the fibre optic rings and the management contract. The fibre optic rings are predominantly in urban areas. The idea is that the State will provide an incentive for the market to operate and that is what is happening. We are suggesting something very similar, namely, that while independent operators will provide satellite services to a certain market, which is likely to be a home market, the State will need to take a view on what is required at a strategic level. In my presentation I suggested that if the State bought into this idea, it would identify strategic locations, purchase the bandwidth for them and guarantee a quality of service to ensure that they always have sufficient bandwidth for their requirements. There are two separate levels - strategic and operational - and I am referring to the strategic one. The other benefit associated with the satellite option is that one normally contracts the bandwidth for 12 months. It is scaleable. For example, the State could contract 40 megabits of data, which, if purchased megabit by megabit, would cost about €100,000 per annum. Obviously, if the State bought them, they would be substantially cheaper. It would manage and roll them out on a public private partnership basis. It would provide the public infrastructure from which operators could compete to provide services. This guarantees the quality of service. The Chairman made the point that there is not one size to fit all, which is very true where this technology is concerned. There is much hype about the level of bandwidth people claim to need. I was speaking to a person I know in one of the Swedish regions last week who told me he had ten megabits coming into his home. I asked him why he needed this and he said it was because his children could download three or four movies every evening. However, we are not interested in people downloading movies but in facilitating people who are setting up businesses. The dish is not free of charge in the cases of which I am talking but there are plenty of people providing dishes for nominal charges. To explain the charge of €25 per month, one can buy one’s bandwidth, which can be anything from 64 kilobits up and 112 kilobits down to ten megabits up and 20 megabits down. I am talking about a megabit up and a megabit down. Sixty-four kilobits up and 64 kilobits down amount to €200 per month while a megabit up and a megabit down amounts to €2,500 per month. If one were to opt for a level of connectivity between these parameters, such as 256 kilobits up and 512 kilobits down, or 256 kilobits up and one megabit down, the cost would amount to approximately €1,875 per month. One has to examine the contention ratio for that signal. All telecoms are contended. For example, if a telecom operator is offering a line of a certain bandwidth, this is normally contended, meaning that there may be 50 more customers using it, just like one’s telephone system. If everybody in Ireland was to pick up a telephone and make a call at the same time, the telephone system would be strained. One has to factor in a varying number of users. The process to which I am referring involves buying approximately one megabit and feeding it through a server and an intelligent cache. The cache builds up a pattern of use, on the Internet for example, and ascertains how many people log on to look at news sites in the morning, certain airline sites to look for tickets or at match results on the GAA’s site. This information is sent to and from the satellite all the time, and thus the information is refreshed. This happens in any case in respect of many standard terrestrial systems because the refreshment process is being carried out through the service operator. It does not have to go all the way around the Internet. If one had 75 users on the basis of that megabit being delivered through the cache, which gives them the impression of seven to 11 megabits of speed, those users, paying €25 per head, would pay for that system and its maintenance. The system is costing €7,000 in capital and €1,800 per month. One could decide to charge €50 and allow only 20 people use the system or, for example, charge them €100 and double the monthly bandwidth being pulled down. Our systems seem to suggest that once the server is refreshing itself, it will handle e-mail, VPN and all the other operations. The detail associated with the costs outlined needs to be discussed at a technical level with the consultants”. Mr. Irla Flynn, Chairman of the Association of Licensed Telecoms Operators (ALTO) advised the sub-Committee “……is an industry group representing new telecoms operators ……Our view is that the telecoms market here is not competitive and that we have a long way to go before we achieve that. The supply of broadband is uncompetitive; we have only recently seen the introduction of broadband technology, in the form of DSL, on a widespread basis. Customer numbers are well behind those of our EU or OECD competitors and DSL prices, from figures I have seen from ComReg recently, are among the highest in the EU. We have a long way to go; consumers in Ireland are stuck with legacy technologies such as ISDN and leased lines, which are very expensive. In terms of demand, the key point is that SMEs and residential users are not having their needs met ……They need a choice of services at low prices - prices are still too high. The late liberalisation of the market in Ireland contributed to this; also, the fact that the telecoms regulator in Ireland, the ODTR as originally set up, did not have a clear mission, had some resource issues and did not have the powers necessary to tackle the problems in the sector. Many of those issues have now been resolved with the establishment of the new regulator but for a crucial period the office of the regulator was not as effective as it could have been. The market power of the three dominant players shows that the market is uncompetitive today. In the fixed market, for example, Eircom has 80% market share, which remains quite steady. Competition is not making the inroads it should be. Looking to the future, a competitive market is the best means of delivering broadband services. We need new entrants to come into the market and we need existing players to invest, and for that to happen operators must have confidence that the market provides them with a fair opportunity. If we have that competitive dynamic, new services will be introduced and prices will be brought down, which is what we all want to see ……I echo Professor Melody’s comments about the vital role of Eircom is the only network that can actually deliver broadband throughout the country on a relatively cheap basis and it is somewhat disappointing that the company does not have a positive outlook on broadband. There needs to be a change in mindset. That is crucial, because as long as people are negative about it and do not see the potential, everything will be held back. A change in outlook is absolutely vital. Professor Melody also mentioned the cost base in Eircom. The company is providing a platform for other players and if it is passing on high costs in terms of high charges, that results in high charges for consumers. Clearly that is not the way to create a more competitive market.” Mr. Colm Piercy of Digiweb advised the sub-Committee “I represent Digiweb, a satellite and wireless broadband provider. As a very new entrant to the market we are very pleased to be asked to talk about our experiences, the opportunities we have seen and the challenges we have faced. Digiweb has been a service provider for about six years and has been delivering services across the country. We are unique in that we are now delivering both satellite and fixed wireless broadband solutions ……We have been involved in wireless land trials that involved rolling out a broadband network across County Louth and providing services to a large proportion of that county. We are also starting a broadband rollout into Cavan as an extension of the other project. Both use fixed wireless technology. We have also been running commercial trials of a number of new systems for delivering centrally managed broadband access to educational organisations. We can deliver to a customer anywhere in the country a direct two-way broadband connection, via satellite, which delivers a high-speed, always-on link. Newer satellite technologies have enabled us to deliver high-reliability services, faster connections and greater flexibility in their introduction. There are two factors which mark satellite out from other technologies under consideration: a short install lead time and complete independence of any other infrastructure existing within a region or within the country. The technology itself is currently scaleable up to 52 Mbps but speeds tend to be lower at present. We provide services to customers across the spectrum from small to large businesses ……The services we are delivering are typically in the half megabit down link, bursting to one megabit, with rates from €84 per month upwards. These are flat rate services across the country ……The second technology with which we are working is fixed wireless broadband. The most important point to emphasise is that wireless delivers the most cost-effective, flexible and rapid deployment of any broadband technology. We are focusing on a regional rollout strategy. We are currently focusing on counties Louth, Cavan, Monaghan and Meath. We are building a wholly wireless infrastructure. We have decided to move away from taking services from other operators because we simply cannot work with the costs. We are building our own infrastructure to Dublin and Belfast to give us the connectivity we need. Pricing is equivalent to or lower than DSL. We are delivering between 0.5 megabit and 10 megabit services to customers ……We are also interconnecting through to Dublin. At this point we cannot find an alternative wholesale carrier to take our traffic across their network at a cost that will allow us to deliver services to our customers. We are also extending services into Cavan and, initially, into Virginia. This is a very small town with a population of approximately 2,200. It has been omitted from all the broadband lists compiled by various parties. The BMW regional assembly has been able to bring services into play ……Both of these projects are funded by public-private partnerships or whatever. This has been a key stimulus in bringing these projects into play ……Now that this infrastructure is in place, we are in a position to rollout the services rapidly. We are talking about a number of months rather than years.” In reply to questions, Mr. Piercy stated “Incentives and subsidies have been mentioned, particularly in the case of rural areas. Whatever format it might take is something that needs to be considered. Some form of subsidy or tax incentive should be put in place to enable companies outside of mass rollouts and mass technology to avail of broadband technologies. This would apply to satellite that will give full countrywide coverage. On regional quality, once one moves outside Dublin it is very difficult to access these networks. There are various projects going on. Previous speakers referred to the ESB and various other projects. These are very interesting but we have yet to see how that turns out in terms of providing competitive interconnectivity.” Mr. Ruairi Jennings of Irish Broadband advised the sub-Committee “I work for Irish Broadband, which was established in May last year. It is a subsidiary of NTR plc. We are focused on delivering service to data services in both the residential and the business market. To do that we use wireless technology and by doing so we can innovate our product, cut costs independently of incumbent or existing operators and provide a competitive and compelling offer to our customers ……We have three levels of product, the first of which is a rip-wave product, a modem that is plugged into a user’s PC. It is a wireless product that does not require a line at site and we are currently carrying out commercial trials of this product in south Dublin. It would sit on my kitchen table in Stillorgan and connect to the mounting four kilometres away. I can use it in my kitchen, living room or upstairs office and it has a range of up to six kilometres. That is the residential, low end offering that we will introduce at €30 per month. There is a second service called Breeze Access. It allows us to get up to 1 megabit per second contended bandwidth and is focused on small business customers, starting at a price of €135 per month. It is a comparable price point to DSL but it is symmetrical and companies have a fixed IT that allows them to run servers and run their own websites from their office. That cannot be done with DSL. Finally, there is a third tier of service, called IP Link, which is uncontended bandwidth up to 34 MB per second for larger clients. Clients such as KPMG and FM104 use that service ……The price points we are delivering range from an install of €120 and €30 a month for a 512 kilobit per second broadband service up to a €50 per month for enhanced home service in the residential section. The difference in terms of quality is the symmetry of the service - the user getting the same speed down to the computer as up -and service quality revolving around contention and the number of other users sharing the connection ……Our network is currently only focused on the Dublin region and our Dublin rollout is organic ……Because we use our own network infrastructure, we are not relying on incumbent players passing on their costs to our network. We invest and believe we will generate a return on it, as opposed to taking costs downstream from other providers. We are currently adding to this network in Dublin and anticipate that, by the end of the year, we will have full coverage in the Dublin metropolitan area…. Our typical Breeze installation is an external antenna installed on the customer’s premises and, for consumers, we have the rip-wave modem for direct service. The second option has cost benefits for us. We can lower our installation charges to the customer because we can post this device or courier it to the customer who installs it himself or herself. With the other services we need to send out a technician to install an antenna. We have recently awarded a contract for the installation of a 311-megabit per second wireless FDH ring around Dublin. There are plenty of fibre options in Dublin but there are practical difficulties with accessing those networks for a wireless provider. We need to connect into fibre networks using wireless links and, often, the access to the fibre makes it impossible to install a wireless link at the fibre point of presence. In addition, it is cheaper for us to install our own wireless network than to lease it from an incumbent such as ESB FibreCo, Eircom or Esat ……The key challenges for Irish Broadband are the rolling out of service and proposition throughout Ireland and the overcoming of any barriers to doing that. Affordable backhaul from regions is a key issue ……At present we operate using unsecure, licence exempt spectrum in the 2.4 and 5.8 GigaHertz bands. Positively, I commend ComReg for releasing that spectrum. We are ahead of the posse in that regard - in Britain, they still have not released the 5.8 GigaHertz spectrum that operators like Digiweb and ourselves can use to serve our customers.” Mr. Willie Fagan, Chorus in his presentation advised the sub-Committee “……I wish to speak briefly about technologies. I am not a technocrat or an engineer by background but I need to refer to the technologies we employ, namely, cable modem, which is a black box that fits between the cable system and a computer, and the networks in which we locate these, especially the fibre networks. I will speak about wireless because Chorus is in the wireless business, has been for many years through its use of MMDS and has recently gone into fixed wireless. I also want to speak about fixed wireless and wireless networks. On cable modem, members will probably have heard a great deal in their hearings about delivery speed and some of these numbers can become a bit boring. The typical delivery speed of a cable modem is 512 kb downstream and 128 kb upstream. However, for cable modem to work effectively, a minimum standard of cable is needed, which is a 550 MHz hybrid fibre content cable. Unfortunately, most of the cable in Ireland was laid before such cable became either available or the norm. Chorus is a company that has been formed in much the same way as the unification of Italy. It was formed from many small companies and networks built by different people at different times. The cable modem service is available where we have upgraded networks, especially in Kilkenny, Clonmel and Thurles. We are making the service available at about €50 per month. It is flat rate access. Chorus has about 40 cable networks passing about 220,000 homes. Most of these do not meet the specification to deliver broadband. I have provided a map of the country with blue dots showing the cable networks and red lines showing the backbone where we can interconnect these networks. As will be seen, they are widely dispersed. A simple way of looking at it is that Chorus is everywhere NTL is not and vice versa. I will let my colleagues from NTL talk about that later. Issues relating to cable would be the cost of upgrading, the return on investment, combining television and data services and standardising these services. We do not have standardised services. Another matter would be issues with local authorities regarding the cost of makeover of roads. We find that it sometimes doubles and trebles our costs. Another issue is cabling into new estates. We would like to see it as a planning requirement that all new housing estates built from now on would be ducted for the provision of cable - not just ours but anyone’s. Another issue is a link to the Government funded metropolitan area networks in Cork, Limerick and Athlone. I can claim authorship for the one in Cork because I persuaded the city engineer in Cork to become involved in this. It is beneficial to us - we will admit that - in that it can reduce the cost of our upgrade to provide broadband by up to two-thirds ……Yes, it is the same, but I can provide it. It is not a problem. I wish to move on to wireless access. We had licences in two different areas, one nominally called broadband and the other narrowband. I will touch on the capabilities of these two types of wireless network. We also have extensive networks using what is traditionally known as MMDS. All these are in different spectrum bands. Fixed wireless networks are shown in the presentation and these are linked into the backbone network. The purpose behind displaying this is to show Chorus’s ability to link networks and services. On the map in the presentation, the coloured areas show the areas of coverage. The little green dots show where we have other low level sites which may provide a local service or where we plan to have sites. The main functioning ones are coloured and are mainly concentrated around our company headquarters in Limerick. The next diagram in the presentation may seem to indicate that Ireland has been bombed overnight by the US Air Force but it shows that the MMDS signal coverage is very extensive and, in terms of providing wireless, offers tremendous opportunities which I would like to touch on shortly. The customer equipment for what was originally called broadband fixed wireless, which was at 26 GHz, proved to be very expensive at around €5,000 a time and too expensive for small and medium enterprises. The business model for that has yet to be proven. We are not aware of anyone running a business on this band and we have given back our licence and closed our one site in Dublin. Despite its title, narrowband can do broadband, and I hope I do not confuse the committee by saying this. We are running broadband services off Keeper Hill in Limerick - that is the large pink area on the map I showed earlier. That will give 512 kb downstream and 128 kb upstream at a price of €50 per month for residential customers. We have 36 base stations and would like to expand that service. The MMDS spectrum is widespread. In our case it passes 442,000 homes. That is more than double what we pass on our cable networks. It has been traditionally used for broadcasts but in 1999 we were allowed 15% of that spectrum for forward path. There are questions about the availability of the spectrum after 2005. There has been talk about some of it being allocated to 3G. We feel that the user spectrum for return path using cable modem would provide low cost ubiquitous service. It would be the cheapest and most widely available form of broadband, especially in rural areas. However, such a network could not be maintained and developed initially on the demand for broadband. To maintain the system and a revenue stream that would justify the broadband service as it is developed, good digital television product would be needed that would be competitive with what is provided by Sky and other satellite operators. Cable and wireless can provide competition for DSL. I know the committee has probably heard all the DSL operators saying their platform is the only story in town. I can point to what has happened in other countries in which cable modem has been able to compete and get ahead. Even in the United Kingdom to this day the number of cable modem users exceeds that of DSL users. Outside urban areas - and much of Ireland is such - wireless may be the only option. Chorus is looking for regulatory equity and certainty. We do not always get these. We do not want to moan about our regulator, simply to mark that point. Perhaps there could be a more consultative approach from our regulator. We often read about regulatory decisions at the same time as they appear in The Irish Times. They affect us and that can therefore sometimes be a little disconcerting because one feels one has not really had an input. We would also like full co-operation from local authorities regarding the makeover of roads, and a planning requirement for the ducting and cabling of new estates. In other words, new housing estates should be broadband ready. We would like synergy with the Government funded networks. We want to work with the MANs, especially in areas such as Cork, Limerick, Athlone, Mullingar, etc., and others that may be rolled out. What we are looking for and what drives our business is return on investment which for us involves the profiling and matching of supply and demand. I am on the Government telecommunications strategy group and we are producing a paper at present on demand stimulation. Recent MRBI surveys indicate that many people in Ireland are still not aware of broadband and its benefits. The two must be profiled together to make this a success.” Mr. Ed Brophy and Mark Mohan from NTL advised the sub-Committee “……The company entered the Irish market in 1999 with the purchase of Cable Inc., which had about 30 years’ work in the Irish market behind it at that stage. NTL Ireland’s main business is multi-channel television, with around 370,000 residential customers, of whom 50,000 are now digital customers, and those services are available to the vast majority of them. We have 76% penetration in our cabled areas, which are principally the main urban areas of Dublin, Galway and Waterford. We are an Irish cable company with 550 employees in this country, and over the past four years we have been a net contributor to the Irish economy in that we have invested considerably more money than we have generated from it ……Sky is not regulated in this country and its revenues are returned to the UK. It has around 275,000 digital customers in this country. Members should have a map in front of them showing the Irish market. It may be blacked out on the paper copy, but it shows Ireland and delineates the areas in which we operate, which are Dublin, Galway and Waterford. The next slide shows a map of the UK and Ireland, marking out our main backbone network, spread from Ireland across into the UK. As members can see, it is a very extensive fibre backbone network covering the main cities on the east coast of Ireland, Dublin and Belfast, then crossing from Northern Ireland into England, Scotland and Wales. We have full redundancy on the network in that we have two submarine pipes crossing the Irish Sea into the UK. I will talk a little about our experience in the UK and then in the Irish market. NTL is the largest cable company in the UK, with 2 million television customers, 2.4 million telephone customers and now 660,000 broadband Internet customers with an additional 436,000 dial-up Internet customers. All those figures are as of the first quarter of 2003. NTL is the largest cable broadband provider in the UK. We launched broadband services in the UK in 2000. We achieved 12,500 customers in our first year, 112,000 after year two, and at the end of year three, 2002, we had over 500,000 broadband customers. Put simply, the growth in broadband subscription has been exponential. One of the key drivers in learning from the UK experience has been platform competition, in other words, not relying on the incumbent telephone company’s telephony network which becomes DSL-enabled. Rather, one should provide services on one’s own cable network thereby getting one out of the wholesale/retail price gap problem which arises in such situations. We operate on our own network in the UK. We have led the market on price in all cases since we have the lowest priced product in the ongoing subscription price and the entry subscription price to avail of the service. For example, we do not charge for cable modems but supply them to the customer and we mirror that in the Irish market. We have product leadership in that our product is generally perceived as being more advanced than that of the competition. For example, the main product purchased in broadband markets tends to be a 512 kps connection to the Internet. We provide one that is 600 kps. Network availability is clearly a huge issue and members will have seen the extensive network across the United Kingdom on the previous map. We have product innovation, attempting to do things before other competitors in the market, such as providing software to enable customers to have their own service rather than need to call out engineers to do it for them. We do that in the UK extensively. Some more examples from the UK will illustrate a point that was made by Mr. Fagan earlier. In the UK market, cable is running ahead of DSL in customer penetration and having competition between the two platforms drives overall penetration. On the map before members, the light grey line shows cable subscriptions and the dark grey one DSL subscriptions. The heavy black line illustrates the cumulative number of broadband customers for cable and DSL in the UK. There are now over 2 million customers there on broadband. will turn the presentation to Ireland and what we have done here. We launched broadband to specific parts of west Dublin in early 2002. We made a service available to 23,000 homes in that area, and of them we currently have 2,200 customers, which is 9.6% penetration on broadband. That is very good compared with the kind of penetration delivered in the UK and other markets. In specific regions in the UK, cable companies are now approaching 9% or 10% penetration, and we are doing the same in the small area to which broadband is currently available. Our target penetration is 15% for that area by the end of this year. Among our key consumer insights arising from the experience is that there is very little understanding of broadband among the bulk of the population. That has been borne out by recent MRBI research on behalf of the regulator. A major sales effort is required to encourage customers to subscribe to the services and, since customers are extremely price sensitive, downward pressure on price is what we are seeing, and that is understandable. Regarding feedback, much education is required as part of the sales process. One needs to explain from first principles what broadband encompasses and take the customer all the way through the key selling points. Installation fees and modems are a major barrier to entry. In other words, customers do not want to have to fork out hundreds of euro to avail of broadband services. Regarding use, time on line more than doubles when using broadband. The key selling points would be that the service is always-on since one does not need to dial up as for traditional access; services are available at very high speed, allowing customers to download material very quickly- ……The key selling points include it being always-on, so no dial-up is required. The high speed is important and a flat rate monthly fee is extremely important so customers have a guarantee in terms of the amount of money they will have to pay each month for Internet access for the family. The telephone line is not in use when availing of the cable modem service whereas with traditional dial-up Internet access, one cannot use one’s telephone line at the same time as dialling up the Internet. The next slide sets out the price comparison. We talked about price leadership in the UK market and we will attempt to do the same in the Irish market. We are doing that in the west Dublin area where our service is available. Our leading product is branded “Always-On 600”, which is a 600 kilobyte per second product, and is priced at €40, including VAT. We provide the modem and the installation fee is €65. With regard to the other fixed line operators, their products operate at lower speeds, higher prices and with more significant installation fees, ranging from €99 to €200. We lead the market in terms of price. Where are we going from here? I have discussed the 23,000 homes in west Dublin. Since that experiment we have moved on to a new area in Lucan, also in west Dublin, and we made the service available to 4,125 homes in late May. We are planning to launch to a further 6,000 homes next month and a total of 16,000 homes will be enabled for broadband in the Dublin area this year. Service could potentially be made available to approximately 140,000 homes in Dublin, Galway and Waterford by the end of 2004. That is subject to internal capital approval but it is our intention to achieve that aim. We have instigated that process already. With regard to the remainder of the homes to which we provide television services, which number more than 400,000, in the last quarter of this year we will commence a major planning exercise to investigate the potential for enabling the remainder of this network for broadband. In the near term we can say that 16,000 homes will be enabled and in the medium term of two years, there is a target of 140,000, with plenty of planning taking place this year to investigate what is involved in providing service beyond that. To summarise, platform competition is where the action is. We are leading the way on price and we intend to continue that, and on product.” The Committee considers that the following points need to be made: 11.2. Investment in broadband, delivered by whatever means (DSL, Fibre, WiFi or Satellite) has to be regarded as being infrastructural investment and must, in the contest of the Tax Code and the management of the regulation be treated as a long term investment. Infrastructural investment, by its very nature, must not be financed, managed or regulated in a manner more suitable to short or medium term commercial investment. The Committee notes the investment model used by the Grant County Public Utility Department (PUD), Washington State and regards this as a type of model that may be employed in the infrastructural investment required to rollout broadband. In Grant County the PUD is making a 6-year investment based on a 30-year plus return on investment. If the tax code and the regulatory environment treat broadband infrastructural investment as a short term commercial investment and set price structures for the local loop unbundling wholesale access without regard to need for the incumbent to recoup on the investment made then it should come as no surprise that the incumbent would ‘sweat assets’ or, at best, delay if not defer necessary infrastructural investment. This is also recognised as being the case with the investment in the national backbone made by the ESB. The ESB investment is commercial, funded from current revenues (slide two of the ESB presentation – “Investment will only be supported when commercial payback can be demonstrated”). Therefore, access pricing is reflective of this reality. The Committee reserves its position on the ESB national backbone being a potential ‘field of dreams’ as the Committee is of the opinion that the access pricing would be more conducive to market uptake if the revenues required were based on returns predicated on long term infrastructural investment. This point is made by the ESB in their remarks to the sub-Committee that “On the managed bandwidth, in terms of published prices, we operate at a serious discount compared with the incumbent and a discount of between 12% and 17% compared with everyone else in the field.” 11.3. The need to establish a strategic plan for the universal rollout of broadband. The Committee considers that the ESB make the point very well when they advised the sub-Committee “It is likely that it will take a combination of technologies to achieve the ubiquitous delivery of broadband into the home. It is going to take a backbone system. It is going to take municipal area networks or local area networks and probably high-speed radio to deliver the final local access, particularly in rural areas. I think it is going to take a combination to deliver this.” As a combination of technologies from the national backbone to the MANs, LANs, WLANs, WiFi or Satellite will be required for the universal provision of broadband then it is self evident that a strategy should be put in place to manage this rollout. The proposed Management Services Entity (MSE) will only deal with the management of the MANs project. A coordinated, funded and strategically focused method and not the current piece-meal, fragmented approach is required. In this regard the Committee is very dismayed at the number of variables in the rollout of broadband. The management role of the Department of Communications, Marine and Natural Resources, the role of the Regulator, the independence and fixed focus of the MSE project, the incumbent telecommunication providers and their stock of unlit fibre, the fixed line providers with a Universal Service Obligation (USO), the ESB provision, as a carrier’s carrier, of fibre on the national backbone, the role of the mobile phone operators particularly as 3G is rolled out, the potential of the cable operators (Chorus and NTL) and Satellite/WiFi to deliver broadband can result in several State and commercial entities duplicating effort and expenditure when a strategic plan could better focus all these efforts with a greater result that is more in tune with the national interest. 11.4. The need to educate people to the benefits to be gained from broadband. The Committee notes the divergent views of the various parties to the debate, the operators holding that demand is the main problem with the protagonists countering with the argument that low take-up is a supply problem. It is the opinion of the Committee that it is neither a demand nor a supply problem in the rollout of broadband; rather it is both a demand and a supply problem. To this end, if not on a county basis, then at least on a provincial basis all players to the debate - the industry, Government, the regulator should fund a mobile Internet bus to operate as a traveling wireless Internet café. The emphasis of this project is that every school and center of learning should be visited together with community groups. Appendix 1Joint Committee on Communications, Marine and Natural Resources Orders of ReferenceDáil Éireann on 16 October 2002 ordered:
Seanad Éireann on 17 October 2002 ordered:
Appendix IIJoint Committee on Communications, Marine and Natural Resources Order Establishing a sub-Committee 27 November 2002
Appendix IIIList of Members of the Joint Committee
Appendix IVList of Members of the sub-Committee on Information Communication Technology
Appendix VDetails of some recent initiatives
Appendix VIGlossary of TermsA Access Node – A point on a network which provides a means for subscribers to access a network. ADSL (Asymmetric Digital Subscriber Line) – Access technology over the ordinary telephone cable. Allows access speeds from the network to the user of up to 8Mbit/s depending upon the distance to the nearest broadband node. Analogue – an earlier transmission technology which was susceptible to interference and distortion from external sources. Antenna – a device for transmitting, receiving or transmitting and receiving signals. ATM – (Synchronous Transfer Mode) – a fast cell switching technology for a data transfer. B Bandwidth – A term used to refer to the volume of data that a telecommunications channel can carry. Base Station – a facility to house equipment to deliver wireless, e.g. mobile phone. Bluetooth – A wireless protocol which facilitates connectivity between the equipment of various vendors with a range of 10 metres, which is generally used to connect laptops, PDA’s etc. Broadband – is a general term referring to fast date access – usually greater than 2Mbs. BWLL – Broadband Wireless Local Loop. This technology allows companies to beam high-speed Internet services to buildings via radio waves rather than using wires. This allows the service to become operational faster than traditional broadband connections, which have to be installed by digging up roads and laying cable. C Cable – refers to coaxial cable which is traditionally used for television connections. Cable Modem – a device enabling connection from a TV or a PC to a cable TV line and can receive data at high-speeds and facilitate internet access. Circuit – The physical path or connection, including equipment between two given points. D Decoder – A device that converts data from one form to another. Downstream – In a communications network there are two transmission directions, coming to and going to a point. Downstream refers to that direction from the central facility to the user. DSL(Digital Subscriber Line) – a technology which facilitates the provision of high-speed voice and data services simultaneously over the same copper cable. Duplex – A telecommunications term meaning simultaneous two-way transmission. E Exchange – A term used to refer to a telephone-switching centre – a physical building or room. F Fibre – is the shortened name given to optic fibre which is made from pure glass and uses light to transmit information. Frame Relay – Form of data networking appropriate for organisations with 3 or more locations with mid to high bandwidth needs. Voice services are available but still underdeveloped. Frame Relay is gradually being replaced by faster technologies such as ATM. FRIACO – Flat Rate Internet Access is charged at a flat-rate, in contrast to a metered rated where charges are applied based on the time spent accessing the Internet. G GSM (Global System for Mobile Communications) – a digital cellular standard for mobile wireless. H Headend – This term is used to describe the originating point of a television signal in a television network. HEAnet – provides high quality Internet Services to the Irish Higher Education sector. HFC (Hybrid Fibre Coax) – A term used to describe a network infrastructure based on copper and optic fibre – traditionally deployed by cable television companies. Hub – The point on a network where circuits are connected. I IP (Internet Protocol) – A network protocol on which the Internet is based. ISDN (Integrated Services Digital Network) – Offered in two forms – Basic ISDN (2 x 64kbit/s channels) and the faster Primary ISDN (30 x 64kbit/s channel). K Kbps (Kilobytes per second) – This is a thousand bits per second. A bit is the smallest unit of data that a computer can process. L LAN (Local Area Network) – A short distance based network typically found within a building or campus. Leased Line – A leased line is a telephone line which has been leased for private use. Large companies often lease lines from providers (e.g. Eircom) providing them with bandwidth and the ability to connect between the different sites of the same company. LLU (Local Loop Unbundling) – Allowing other telecommunications companies and service provider’s access to the former incumbent’s local network to provide services directly to the customer. M MAN (Metropolitan Area Network) – A telecommunications term used to describe a network serving business and residences in an urban area. Mbps (Megabytes per second) – This is a million bits per second. A bit is the smallest unit of data that a computer can process. Modem – a piece of equipment used to convert digital signal to analogue signals and vice versa to facilitate sending data over the analogue public switched telephone network. N Node – A point of connection into a network O Operator – This is an organisation licensed to provide telecommunications services P Pair – Can be fibre or wire and is used to refer to two separate conductors travelling in the same route and serving as a communications channel. PDA (Personal Digital Assistant) – an electronic handset smaller than a laptop computer which supports specific functions like email, calendar, address book management etc. Peer-to-Peer – Communications between two entities that operate within the same layer of a system. Picocell – A wireless base station designed to serve a small area. PoP (Point of Presence) – A PoP or point of presence is an access point to the Internet. An ATM node is a particular type of PoP. Protocol – A protocol is a set of rules that govern the format of messages that are exchanges between computers and people. PSTN (Public Switched Telephone Network) – This refers to the general fixed line telephone system throughout the country and is based on copper cables. R Resilience – the ability to provide a backup service in the event of a disruption or breakdown. S Service Providers – are the companies who deliver services including but not limited to television, Internet access, voice, and high-speed data. U Upstream – In a communications network there are two transmission directions, coming to and going to a point. Upstream refers to that direction from the user to the central facility. V Voice over IP – a method of delivering voice on Internet and data networks. VPN (Virtual Private Network) – This is a circuit that allows private data to pass over the Internet in a secure fashion. VSAT (Very Small Aperture Terminals) – Suitable for applications such as transmission of voice and data from head office to branch office providing bandwidth from 9.6Kbit/s up to 45Mbit/s. W WLAN (Wireless Local Area Network) – A high-speed communications system designed to link computers and other data processing devices within a small area. X xDSL – refers to Digital Subscriber Line a method of providing high-speed data services over copper wires which are currently supporting a voice service. Appendix VIIBIBLIOGRAPHYDublin City Development Board, (2003), Action for Dublin, www.dublin.ie Amárach Consulting (2003), Consumer Trend Watch Q2 2003, Amárach Consulting. Broadband Advisory Group Australia, (2003), Australia’s Broadband Connectivity, National Office for the Information Economy, Canberra, Australia. Centre for Digital Government & The Council of State Governments, Citizen 2010 – Leading for Results, Governing Through Technology, www.centerdigitalgov.com, www.csg.org Commission for Communications Regulation, (2003), Strategy Statement (2003-2005), ComReg, Dublin 1. Commission for Communications Regulation, (2003), Quarterly Key Data, ComReg, Dublin 1. Commission for Communications Regulation, (2003), Quarterly Market Commentary, ComReg, Dublin 1. Commission for Communications Regulation, (2003), The Future Framework for the Regulation of Universal Service in the Irish Telecommunications Market, ComReg, Dublin 1. Commission for Communications Regulation, (2003), The Future Delivery of Broadband in Ireland – Responses to Consultation, ComReg, Dublin 1. Commission for Communications Regulation, (2003), Broadband & Data Communications, ComReg, Dublin 1. Corevalue Ltd., (2001), The Stimulation of Internet Penetration & e-mail Usage among Irish Citizens, Corevalue Ltd., Dublin 2. Department of Communications, Marine & Natural Resources, (2003), The National Development Plan Fibre Optic Metropolitan Area Networks. Department of Communications, Marine & Natural Resources, (2003), Regional Broadband Programme, Magnum Opus. Department of the Taoiseach, (2002), New Connections – A Strategy to realise the potential of the Information Society, Government Action Plan. Department of the Taoiseach, (2003), New Connections – A Strategy to realise the potential of the Information Society – First Progress Report, Government Action Plan. Dublin Chamber of Commerce, (2003) Dublin as a World Class e-City. Dublin City Development Board, Dublin 8, (2003) Commitments relating to Information and Communications Technology (ICT). Dublin City Development Board, (2002), Dublin 2002 – 2012 – a city of possibilities, Dublin City Council. E-Training International, (2003), Scariff Community Broadband Initiative – Community Access to Broadband via Satellite, E-Training International, Co. Clare. Electronic Government, Volume 2 – Issue 2, (2001), Got Strategy, e-Republic Inc. CA, USA. Electronic Government, Volume 3 – Issue 4, (2002), Broadband Dilemma, e-Republic Inc. CA, USA. European Institute for Comparative Urban Research, (2003), ICT Clusters in European Cities During the 1990s – Developing Patterns & Policy Lessons, Erasmus University Rotterdam, The Netherlands. Forfás, (2004), Broadband Telecommunications, Benchmarking Study. Information Society Commission, (2003), e-Inclusion – expanding the Information Society in Ireland, www.itech-research.ie/publications/list.html International Federation of Journalists, (2003), Quality Journalism for the Information Age. ITAC, (2002), Teleworking Comes of Age with Broadband – Telework America Survey 2002, Telework America, www.workingfromanywhere.org Mobile Government, (a supplement to Government Technology), (2003), Mobile Health, e-Republic Inc. CA, USA. NDP, Gender Equality Unit, (2002) Gender Equality in IT, E-commerce and Internet Usage, www.ndpgenderequality.ie, ComReg, Dublin 1. Organisation for Economic Co-operation and Development, (2001) The Development of Broadband Access in OECD Countries. Office of the Director of Telecommunications Regulation, (2002), Future Delivery of Broadband in Ireland, ComReg, Dublin 1. PriceWaterhouseCoopers, (2001), Technology Forecast: 2001-2003, Mobile Internet: Unleashing the Power of Wireless, PWC, Technology Centre, USA. PriceWaterhouseCoopers, (2002), Technology Forecast: 2002-2004, Volume 1: Navigating the Future of Software, PWC, Technology Centre, USA. PriceWaterhouseCoopers, (2002), Technology Forecast: 2002-2004, Volume 2: Emerging Patterns of Internet Computing, PWC, Technology Centre, USA. Rural Resource Development Ltd., (2003), Evaluation of IT Resources in County Clare, E-Training International, Co. Clare. Skerratt Sarah, (2003), The implications for rural and regional populations of the Irish Government’s provision of broadband communications infrastructure & ‘Taking discs into Sligo’, NIRSA, Maynooth. South West Broadband, (2003), Exploring Satellite Technologies in Business, Education & Public Services, South West Regional Authority, Co. Cork. Western Development Commission, (2002), UPDATE on Telecommunications in the Western Region, WDC, Co. Roscommon. World Economic Forum, (2003), The Global Information Technology Report (2002 – 2003), Oxford University Press, New York. www.dublin.ie - a user’s guide – helping shape Ireland’s information society, Dublin City Development Board, Dublin 8, Eskimo graphics. |
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The process of developing such a national strategy will force policy makers to make the hard decisions in this area that have, so far, been left unanswered