Communications Minister Pat Rabbitte, TD, tells John Kennedy that the digital economy is central to Ireland’s future. People spend €3bn a year online, but 70pc goes overseas, he says.
The year 2012 is shaping up to be perhaps the most pivotal year in Irish telecoms history since the State decided to privatise Eircom in 1999.
In the years that have followed there was always a sense Ireland was playing catch-up in areas like broadband and digital TV. Now that there is no doubt that the digital economy is becoming the real economy, there’s a chance for Ireland to settle the account and perhaps get a taste of what it’s like to be in pole position.
First, there’s the work of the Next Generation Taskforce chaired by the Minister for Communications Pat Rabbitte, TD, that involves the leading telecoms operators in Ireland and may soon see a joint investment plan involving fibre and wireless infrastructure. The work is almost complete and Rabbitte will bring a strategy before Government.
Second, the switching off of Ireland’s analogue TV network on 24 October will free up vital 800MHz and 1800Mhz spectrum that can be used to allow 2G mobile to be replaced everywhere with 3G broadband and for the next-generation 4G infrastructure investment by operators to begin. The spectrum auctions are set to begin before the summer.
Finally, third, before the end of this year, Rabbitte plans to introduce a Knowledge Society Framework to close the digital divide in Irish society. A Boston Consulting Group Study before Christmas showed that while the UK can boast that 7pc of GDP comes from the digital economy, the Republic of Ireland, at best, can hope for 3pc.
Part 1 of video inteview with Pat Rabbitte where he talks about the importance of the digital economy:
The importance of broadband
Rabbitte points out that broadband infrastructure is absolutely essential for a sustainable economy into the future. “And if we manage to get any competitive advantage, so much the better.
“The idea behind the Next Generation Taskforce is that it is a partnership between the policy makers and the leading telcos operational in Ireland. The purpose is to design a road map for the future in terms of identifying where the weaknesses are, where investment needs to be made and where improvements need to be made.
“Two weeks ago, we had our last meeting and final thoughts came from the telcos on Friday. So essentially the work is done, a report is being compiled and I will bring it before Government. After that, we will produce a policy paper that, in effect, will be Ireland’s broadband plan for the future.”
I ask him will the State be investing alongside the telcos in the nation’s future telecoms infrastructure.
"There is significant investment already coming in from the private sector and you can see that in some of the services now available. Where there are blackspots where Government intervention is necessary, I think the Government will have to put its money where its mouth is, because where market failure is identified there will be a necessity for Government intervention."
I spoke to Rabbitte before Christmas at a Dublin City Council think-tank at Farmleigh in Dublin and he made it clear that a Knowledge Society Framework is crucial if we are going to allow everyone in Irish society to benefit from the opportunities of the digital age, particularly in areas like e-commerce, entrepreneurship and digital literacy.
"My plan is to see such a framework in place by the end of this year. The digital economy is vital to Ireland’s future. About 3.4pc of GDP is already provided by digital enterprises and that is going to grow. We need to capitalise this and exploit our natural advantages in this area.
"There are a significant number of people excluded in the sense that they are not digitally literate. Programmes to teach digital literacy skills have so far been successful, with 700 centres in different locations around the country and there are organisations working with the unemployed, too. The aim is to have a digitally literate population."
Irish companies and the digital economy
I point out that Irish firms are failing to capitalise on the digital economy and e-commerce in the same way as their UK or mainland Europe counterparts. The .ie Domain Registry (IEDR) revealed that only 66pc of Irish businesses had websites and of these a mere 21pc had e-commerce capability.
At a time when Irish businesses are being crushed, savvier businesses in neighbouring economies are eating their lunch.
"I think we were surprised ourselves during the process of the Next Generation Taskforce in our interaction with SMEs and their representative organisations that they don’t give a high priority to the digital economy.
"They feel that they are so oppressed in present economic circumstances that they have other priorities.
"Yet, there’s about €3bn being spent by Irish consumers online and about 70pc of that is going to overseas companies – so there’s a necessity to try and increase awareness in this area and that will feature strongly in our framework policy."
At the same time, Rabbitte points out that there are plenty of reasons to be optimistic for Ireland’s success in the digital economy: in terms of the massive multinational base involving firms like Google, Microsoft, Facebook and Amazon; and the significant start-up energy that has emerged in Ireland despite the recession.
"There is an emphasis on digital start-ups in the jobs strategy document Minister Richard Bruton produced earlier this year and if you look at the contribution of the Digital Hub, for example – it has 70 SMEs located there employing 800 people. There are spin-off organisations that are the result of the cluster environment there.
"Also the cluster of multinational technology companies is producing a wealth of experience and Enterprise Ireland and IDA Ireland have a number of programmes designed to increase the number of indigenous start-ups and attract overseas start-ups to locate here.
"A phenomenon of this new generation of digital enterprise is that in the twinkle of an eye they can go from being a start-up to being a magnificent success. There are, of course, going to be failures as well but the nature of these start-ups is out of kilter with the trajectory of traditional enterprises.
"Digital games company feature strongly in the Bruton jobs strategy, but the wider definition of digital enterprises also holds out considerable opportunities for Ireland."
Opportunity lies in switchover to digital from analogue
Rabbitte says the switchover from analogue to digital is an opportunity to deliver almost universal broadband across Ireland.
"The spectrum auctions are likely to happen before the summer. The 800MHz band is an attractive band and there will be lively interest in it. It offers the opportunity to enhance broadband in parts of the country where it is weak at the moment.
Part 2 of interview with Pat Rabbittte where he talks about wireless spectrum:
"Between the National and Rural Broadband Schemes, we have ensured that there is now a basic service pretty much everywhere. But outside of major urban areas, broadband can still be weak. Ireland is unique among EU or OECD countries in terms of spatial geography because fewer people live in urban areas.
"So the availability of this quality of new spectrum is an opportunity to enhance services to people in outlying areas."
Looking to the future, Rabbitte is confident that a new national broadband plan, his new Knowledge Society Framework, and the imminent availability of new wireless spectrum, will put Ireland back in the lead.
"I would like to think we have the capacity to gain some competitive advantage in the digital economy."
He added that it’s all to play for. "We have gained experience from the global digital leaders based here. We have a literate, English-speaking workforce. We have a congenial tax regime and my colleague Brendan Howlin, TD, will be bringing e-government policies before Government before Easter."
Photo: In the course of the Next Generation Taskforce’s work, one of the surprising revelations is the low priority hard-pressed SMEs are giving to the digital economy because they feel they are so oppressed in present economic circumstances that they have other priorities, Minister for Communications Pat Rabbitte, TD, says
Communications Minister Pat Rabbitte, TD, will be giving the opening address at Silicon Republic’s Digital Ireland Forum on 23 March in the Convention Centre, Dublin.
Watch a video of Communications Minister Pat Rabbitte outlining how Ireland will keep its edge in the digital economy: