‘Data is the new oil’

23 Jun 2011

The Government’s new taskforce is focused on delivering 30Mbps broadband for all, and 100Mbps for half of Ireland’s citizens. But will it succeed?

While social media IPOs have people wondering if we’re facing another internet bubble, the one thing that is true about the internet economy is that people today are networked and connected better than at any point in history, and are consuming data at rates never thought possible.

“Data is becoming the new oil.” That’s the viewpoint of Niall Dunne, the Dubliner who last week was appointed global chief sustainability officer at telecoms giant BT. Dunne has a point – the internet is changing the rules of commerce so countries like Ireland need to realise that high-speed networks are replacing roads, railways, airports and sea ports as the primary channels through which trade flows.

If Ireland wants to exist in the future as an economic entity, it has to be able to compete and hold its own in the battle for digital dominance. Countries such as the UK, France, Australia, China, the US and Singapore have highly evolved digital strategies that involve rolling out state-of-the-art broadband networks. Finland has enshrined internet access as a fundamental right under law.

By next year, Northern Ireland will have 90pc of homes connected to fibre broadband, making it the most connected geographic area in western Europe.

So what of the Republic? If Ireland wants to continue to create jobs, businesses and grow exports it needs the digital networks of tomorrow.

New Government taskforce

Last week, Communications Minister Pat Rabbitte, TD, convened a high-level Next Generational Broadband Taskforce that comprises the CEOs of the major telecoms and ISP companies. Fergus O’Dowd, TD, Minister for State at the Department of Communications, will deploy the broadband component of the Government’s NewERA plan that projects 90pc of homes and businesses in Ireland having fibre connectivity.

Rabbitte has said he wants Ireland to achieve the targets set out by European Commissioner for the Digital Agenda Neelie Kroes of 30Mbps for all citizens and 100Mbps for half of citizens by 2020.

At the opening of a new metropolitan area network in Claremorris, Co Mayo, last Friday, Rabbitte said the new taskforce has six months to “put flesh on the bones” of plans to move Ireland from basic to faster broadband everywhere.

This won’t be easy. Over the past decade, regulatory and competitive issues resulted in Ireland trailing many nations in terms of deploying this vital infrastructure. Lobby group IrelandOffline last week quoted Ookla Net Index data that showed Ireland is 79th in the world for upload speeds and 24th in the EU.

For download speeds, Ireland is 49th in the world and 23rd out of the EU-27. In terms of broadband quality, Ireland is 38th in the world and 18th out of the EU nations.

Access issue

The key issue isn’t the fibre networks that criss-cross Ireland – there’s an abundance of them. The key issue is enabling homes and firms to access them.

This will require expensive civil engineering work. Various estimates put the cost of doing so at between €2bn and €3bn. Since Ireland doesn’t have the money, it will be up to the telecoms industry to make the investment. But then Irish-based CEOs have the difficult task of getting their corporate parents to make the investment.

As Rabbitte points out, the most likely role for the Government will be to ensure there is the “best policy environment to ensure maximum investment by the sector”.

In many ways, Ireland’s broadband problems might play to its strengths since many next-generation technologies are still only being deployed, such as 4G mobile, otherwise known as Long Term Evolution, which will send fibre to mobile base stations. Most CEOs will say the industry will need to co-invest in these new networks, the problem has been getting the industry to work together.

The devil will be in the detail, explains BT Ireland CEO Graham Sutherland. “Over the next two years you will see fibre become more deeply ingrained in the Irish geography and new products and services will emerge.

“However, you will still come to a point where you realise there’s an uneconomic element to it. But if you want to see Ireland emerge as a strong country competing on the global stage you can’t have a digital divide between urban and rural. There’s an element of responsibility for the Government to stimulate the solution.”

Sutherland says that in Northern Ireland, areas deemed uneconomic were part-funded by the Government. “By March 2012, you’re going to see fibre connectivity in more than 90pc of homes in Northern Ireland. I think that’s going to be essential if countries, particularly small economies, are going to compete on a global stage.”


BT and Vodafone’s work

BT is currently building a Total Transmission network, which involves an advanced next-generation fibre network in the Republic of Ireland being rolled out. BT, which has deployed the bulk of Ireland’s mobile networks for companies like Vodafone and 3, signed a multimillion deal two years ago to transfer BT’s consumer, small-business broadband and voice customer base to Vodafone.

BT continues to invest in local loop unbundling (LLU). With 50 exchanges now unbundled, the company has the capability to deliver high-speed broadband to more than 700,000 phone lines in the country.

Sutherland believes the Republic’s future high-speed networks will have to be a combination of fixed and mobile networks. “The digital divide needs to be eliminated. There are long-term targets out to 2020, but I don’t think economies like the Republic can afford to wait that long.”

Vodafone Ireland CEO Jeroen Hoencamp believes infrastructure alone won’t be enough to make Ireland competitive into the future – it’s going to require more than infrastructure, in terms of ICT, education and the regulatory environment that the State can facilitate.

Vodafone has invested €1.3bn in its network to date, including €60m during the past year. It has also invested €100m in IT infrastructure, which it says puts it ahead of the curve, and plans to invest 20pc more in its network and IT infrastructure in the coming year.

“I really like Neelie Kroes’ ambition for 30Mbps speed broadband to every home in Europe by 2020 and 100Mbps for half the population of Europe. It may sound ambitious but technologically that is possible today, even on a mobile network,” Hoencamp says.

“The key thing to do now is find a business model that works between telecoms companies and the Government. The public and private sectors are going to have to work together, because in a country like Ireland, it would be economically unviable to have different companies building out separate infrastructure.

“The country isn’t willing to put up to €3bn on the table so we have to work together. Minister Rabbitte’s initiative is critical to get the public and private sectors working together to find a model where we can build infrastructure together while remaining competitive on the retail side,” adds Hoencamp.

To view videos of Ireland’s digital leaders discussing Ireland’s digital promise, go to Digital 21.

Photo: Vodafone CEO Jeroen Hoencamp (left) and BT Ireland CEO Graham Sutherland. Both CEOs believe Ireland will need to pick up the pace in terms of ensuring the country has the communications infrastructure it needs to be relevant in the global economy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years