Low PC penetration impacts broadband take-up

19 Jul 2005

Eircom commercial director David McRedmond has acknowledged that the initial phase of early adopters has already signed up for broadband and has warned that more needs to be done in terms of boosting Ireland’s low PC penetration rate if the rate of broadband take-up in Ireland is to be improved.

In its most recent financial results in May, the company said broadband DSL customers increased to 128,000 customers by the end of March, compared with 39,000 in March 2004. Latest figures, suggest DSL customers stand at more than 140,000.

In an interview with siliconrepublic.com, McRedmond said the company is working towards getting 90pc broadband coverage in Ireland by March 2006.

He said it has been working to drive down prices and increase broadband rates, including the introduction of a number of time-based products for residential and SME customers starting at €19.99 a month. “The 1Mbps minimum rate we currently offer is one of the highest minimum levels for an incumbent anywhere in the world, though we are under pressure to introduce a ‘light’ product of around 256Kbps.”

He continued: “The price is right but the big issue right now is how we drive demand?”

McRedmond admits Ireland has passed the early adopter phase, but argued that a major hurdle preventing broadband take-up is the low level of PC penetration in Ireland at only 42.3pc, far behind Sweden (54pc) and the US (82pc).

“We are through the early adopter phase and ought to be hitting the mass-market take-up stage. That is not happening. A huge amount of work needs to be done to drive PC penetration and we have written to the Government on the matter to do what it can on promoting PC ownership. Also, we need to get lower prices for PCs at reasonable specifications.”

McRedmond called for the creation of a tax incentive scheme that would boost interest in owning a PC. “While the situation is not dire, we are well below the EU average in PC ownership,” he says. “There are other elements that need to be considered here — for example there aren’t too many outlets selling PCs. Okay, you can go and buy a computer online, for example, but there are few places in the whole of south Dublin that you can physically walk in and buy a PC. This is clearly something that’s missing in the Irish market.”

McRedmond said in previous months the company had attempted a PC promotion that aimed to boost PC demand. “We ran a PC promotion but the cheapest point we could get a PC to in this country was €563, we were aiming for €550.”

He said another factor that is impacting universal broadband rollout is the need for compelling reasons for people to adopt broadband. “We all know of things such as downloading music, buying Ryanair and Aer Lingus flights and great examples of e-government such as the Revenue On-Line service and the Motor Tax website, but we need more reasons for people to want broadband.”

McRedmond also called for greater commitment by the Government to complete broadband to a scale similar to Northern Ireland (NI). “In NI and Scotland the Government funded 100pc rollout of broadband. It put out a tender and finished the job. In NI, BT rolled out broadband to 60pc of lines by exchange.

“Here, we are heading towards 90pc and are only looking for the Government to complete the last portion. While the Government has set aside funds in the Group Broadband Scheme, it could take years to complete judging by the current rate of applications. What we are saying is less piecemeal, let’s go and complete the job. Our task is clear — everyone should have broadband.

“We have written to the Department of Communications and told them we would like to make progress but it has to be in everyone’s interest. There needs to be a real push on the demand side and this can only happen by driving up PC usage, coming up with more compelling reasons for using the internet and making great progress in terms of giving schools broadband. It’s not that the Irish are less interested in broadband and PC usage, it’s just not being made easy enough for them.”

Anticipating the usual level of criticism he elicits every time he speaks on broadband, McRedmond told siliconrepublic.com: “There has been a lot of criticism of Eircom on this subject, but a lot of it is wrong. We have pulled out all the stops. We are making announcements every month, we are moving fast and hard on this one. We have a good set of products, fair prices and they are widely available. What the Irish market needs is stimulation in terms of good reasons to adopt PCs and broadband.”

By John Kennedy