There is an intrinsic link between broadband rollout and local job creation. Local authorities must realise this as Ireland approaches a National Broadband Strategy.
Let’s be very clear about one thing – there is an intrinsic link between job and business creation and broadband. Broadband in your area will make it easier for overseas firms to locate in your region, not to mention enable local entrepreneurs to build international web-based businesses.
So to any local authority reading this, ask yourself one question: do you want to create jobs in your area?
Last week, Communications Minister Pat Rabbitte, TD, unveiled the first report of the Next Generation Broadband Taskforce, which consisted of members of his department and the CEOs of at least 10 major internet infrastructure providers in Ireland.
Members of the of the Next Generation Broadband Taskforce
As well as Rabbitte, the members of the taskforce include Dana Strong, CEO, UPC Ireland; John Shine, deputy CEO, ESB; Paul Donovan, CEO, Eircom/Meteor; Robert Finnegan, Hutchison Whampoa/3 Ireland; Jeroen Hoencamp, CEO, Vodafone; Aidan Dunning, secretary general, Department of Communications; Minister of State Fergus O’Dowd, TD; Sean Bolger, CEO, Imagine; Tony Hanway, CEO, Telefónica O2; Conal Henry, CEO, E-net; Colm O’Neill, CEO, BT Ireland; and Katherine Licken, assistant secretary, Department of Communications.
On the face of it, the report points towards the final delivery of a costed National Broadband Strategy. But it raised also some serious anomalies that could stifle economic recovery and job creation across the land in the decade to come.
The overall report contains 42 different recommendations of the taskforce. Among the pertinent stumbling blocks identified is access to existing State fibre infrastructure – ducts run under the nation’s motorways for this purpose but access has been an issue – as well as the co-operation of various local authorities in rolling out infrastructure in towns and cities.
Key solutions identified include open access to State assets, fair and reasonable conditions, as well as local authorities working with telecoms firms at a pre-planning stage to help operators achieve 100pc coverage of a given area.
Rabbitte said every part of Ireland will have broadband by 2013 and will meet EU Commissioner Neelie Kroes’ targets of high-speed broadband for every citizen by 2020.
However, according to industry, more than 50pc of Ireland’s population will have access to at least 70Mbps by 2015. That leaves at least half the population that won’t have what will be international standards of broadband by that date.
That quite simply signals a looming digital divide that will put businesses and people on one side of the divide firmly in the global race for wealth and jobs, and businesses on the other side of the divide in a battle for survival and relevance.
The internet economy
Quoting Boston Consulting Group figures, Rabbitte said 3.4pc of GDP in Ireland comes from the internet economy. The European average is 6pc. The UK – which has 7pc of its GDP coming from the internet economy – is celebrated as the most internet-dependent economy in the world.
What Irish firms who have yet to even embrace the internet in any form – that’s 21pc of them – don’t realise is UK firms, in particular, are eating their lunches. In other words wresting business away from them.
“Broadband adoption isn’t what it should be – 20,000 SMEs in Ireland are not online and 21pc have never used the internet. The challenge for the taskforce is to make it easier to invest in the rollout of broadband, encourage citizens and businesses for better uptake and address infrastructure deficits,” noted Rabbitte.
Demand stimulation was also identified as a priority in the report. It will happen a lot more naturally if people are not only aware of the e-business and social regeneration possibilities open to them, but that the infrastructure exists.
Major projects like the 100Mbps connectivity for every secondary school in the country by 2014 will be invaluable in stimulating local demand.
And there is hope. The key difference I noted was the optimistic tone of Rabbitte, who said Ireland, if it rolls up its sleeves and offsets a damaging digital divide, could actually gain competitive advantage globally.
I asked Rabbitte if the plan to be unveiled in July will contain not only the capital expenditure plans of the various operators but what the Government itself is prepared to invest to support access in communities most in danger of the digital divide.
“Yes,” he replied. “It will have to. There are (economic) constraints but there are priorities and it (broadband connectivity) has to be close to the top of the nation’s priorities.”
Last October, Rabbitte said the State will be accessing the funding from the EU’s €40bn Connecting Europe infrastructure budget to invest in ultra-fast broadband. More than €9bn of the €40bn Connecting Europe framework will be available for telecoms projects.
Vodafone Ireland CEO Jeroen Hoencamp said the report finally sets out a road map for Ireland where consensus of the industry and the Government in terms of infrastructure has been reached.
“The recommendations must be fully implemented to ensure Ireland remains competitive on the international stage. However, we also need to ensure that we create a true digital society; we can’t fall behind our European counterparts. This report provides a baseline from where we can now assess what is required beyond the deployment plans we already have and a starting point for discussing how we get there.”
THE NEED TO AVOID A DAMAGING DIGITAL DIVIDE
50pc: Percentage of Irish population that will have access to 70Mbps broadband speeds by 2012
3.4pc: GDP in Ireland dependent on the digital economy – this compares to 7pc for the UK
21pc: Of Irish firms have never used the internet
20,000: Number of SMEs in Ireland not online
Hoencamp believes there are a number of challenges to achieving ubiquitous broadband in Ireland.
The local authorities are just one challenge, but there are an array of obstacles that must be addressed so Ireland meets its targets. From my perspective, one of the largest issues impeding Ireland’s investment has been the delay in the spectrum auction. In my view, next-generation mobile will be a key component of the overall tapestry of solutions that will give people access to next-generation services.
“Next generation is a prime candidate for co-investment. As I’ve said before, to make this attractive for industry, Government support is vital in terms of providing the right regulatory environment, removing administrative barriers and helping to stimulate the end-user demand that ultimately drives the business case for investment.
“Government involvement may also be required in those areas where it is not possible for operators to make a purely commercial case for investing in network rollout. For example, this could be by way of providing direct funding or indirectly via the involvement of State entities such as ESB or Bord Gáis,” Hoencamp said.
BT strategy director Peter Evans said the elephant in the room is really the funding model for next-generation access (NGA) given the scale of the investment required and the long-term returns.
“Industry will continue to invest in NGA in areas where a commercial return can be made (up to 60–70pc of the population), however outside of these locations, fiscal co-operation between the State and private industry will be necessary,” he explained.
In Northern Ireland, investments by BT and the NI government resulted in 89pc of businesses and consumer lines being connected to a fibre optic broadband service to ensure a ‘digital divide’ did not open up.
“ComReg must also ensure that regulation of NGA networks supports competition, as opposed to re-establishing another telecoms monopoly which would be a backward step.”
On the question of whether operators will invest in collaboration with one another, Evans said non-financial support, such as planning and demand stimulation, are crucial.
“Fixed, cable and mobile operators will continue to invest where a return can be made. However, for any operator co-investment must support rather than restrict competition, as competition is key to driving investment, reducing prices and improving service levels.
“Non-fiscal Government support will accelerate private NGA investments in urban areas,” he concluded.
“In non-urban areas, additional fiscal support from Government is likely to be required to accelerate private NGA investments, for example by the Government running a technology-neutral, open-access tender for NGA infrastructure gap funding.”