‘We need to connect Ireland with high-speed fibre and we need to do it fast’

1 Jul 2009

Magnet CEO Mark Kellett believes deploying fibre networks across Ireland is a national imperative.

Last week, the nation was greeted with images of a ship bringing fibre cabling belonging to Hibernia Atlantic ashore at Portrush as part of the €30m EU-sponsored ‘Project Kelvin’ that will connect Ireland to a 24,000km transatlantic cable.

Across this cable, everything from money to film and music will zip at the speed of light, ensuring Ireland is connected to the highways of 21st century digital commerce.

Hibernia Atlantic is a subsidiary of US investor Ken Peterson’s Columbia Ventures investment vehicle and owner of Irish-based telco Magnet Networks.

The submarine cable will connect the US and Canada instantaneously with towns such as Letterkenny, Monaghan, Castleblayney, Dundalk and Drogheda and several other points across Ireland, fuelling the potential for entrepreneurs to build global businesses and for multinationals to invest in towns that need it.

For Magnet Networks’ CEO Mark Kellett, the capacity will not only expand its reach across the Republic, but will also open up a vital market in the North and potentially the UK.

Perhaps more symbolically, however, he hopes it will signal the time when the Irish nation get real about the potential for fibre to regenerate regions, boost enterprise and improve social necessities such as healthcare and the environment.

“Ireland is the last landfall between the US and Europe and if we have all the correct pieces in place in terms of the right fibre infrastructure, we will spawn our own technology companies and businesses that sell online and capture the next generation of financial services players who will trade in picoseconds – one trillionth of a second.”

Kellett’s company, Magnet, has the largest fibre network in Ireland, plus 40 unbundled exchanges nationwide. As well as providing 50Mbps broadband services where the company has fibre, Kellett believes digital entertainment in Ireland will not only be about digital TV, but also about PCTV over which channels such as RTÉ and MTV can be broadcast to laptops via the internet.

As an investor in local loop unbundling, he makes no secret of his frustration that despite Magnet investing up to €80m in unbundling local exchanges, along with similar investments by companies like Smart Telecom and BT, 96pc of the DSL broadband lines sold in Ireland originate still with the incumbent.

Putting his feelings aside, Kellett believes Ireland’s future economically and socially will depend on next-generation fibre networks. “A lot of the groundwork has been laid in terms of the metropolitan area networks [MANs], but will we ever address the smaller towns and villages? The fact of the matter is Ireland is still playing catch up.

“We will need to be very selective in terms of what we want to achieve. Are we going to be the No 1 location for software development or games development? Or how about financial services? Well, guess what, we will be none of those things unless we have the infrastructure to support those industries.

“What’s also missing is the infrastructure to support second-level education. We need to be the best at maths and science and we need to ensure that kids are finishing school with 21st-century work skills.”

An accountant by profession, Kellett was chief financial officer of Magnet before taking on the CEO role two years ago. Prior to that, he worked in Silicon Valley with companies such as Thorn and Sun Micro-systems and was group finance director for Yahoo! in Europe. He was also instrumental in Yahoo!’s decision to create 400 jobs in Dublin in 2005.

“Ireland actually has an absolute competitive advantage as a nation in terms of where it’s physically located and in terms of the flexibility of our workforce here, which was demonstrated with the pay cuts and restructuring. We have an opportunity to re-emerge as a credible force.

“But to do that, the country’s leaders need to give the nation a very clear objective. To quote Henry Kissinger: ‘If you don’t know where you are going, every road will get you nowhere’. Ireland can still position itself at the forefront of industries such as software and pharmaceuticals, but to do that you need a robust communications infrastructure with the fastest route to market.”

Last week Communications Minister Eamon Ryan TD unveiled his framework document Next Generation Broadband: Gateway to a Knowledge Ireland, which outlined plans to link up the State’s abundance of stranded fibre assets. Ryan also unveiled a €16m investment in a pilot project to put 100Mbps broadband into 78 post-primary schools around Ireland.

But Kellett argues the nation needs an urgent action plan because the time for talking is over. For example, he points out that if CIE’s fibre assets were activated, they would link up 90pc of urban centres across Ireland.

A fortnight ago, the UK unveiled its Digital Britain plan to place a 50p tax on every copper line to build up a fund to fibre connect the last third of the UK without super-fast broadband. Australia is investing $5bn in a fibre rollout across the entire sub-continent.

“The Australians have a great saying: ‘We’re going to do this right’. That’s the same attitude we need in this country. A total fibre rollout in the UK is going to cost about £5bn sterling. Some people have suggested a fibre rollout in Ireland could cost between €3bn and €5bn. I’d say there’s not a chance – it would be a lot lower than that.

“A fibre plan would spearhead jobs and inward investment. So, do we invest all that money in Metro North or do we invest half of that money in fibre to bring about the economic regeneration of Ireland?”

If Ireland is going to see the eventual arrival of next-generation broadband services, Kellett is adamant that the right regulatory environment needs to be put in place and the mistakes made with DSL avoided.

“If we could play in a truly fair, properly regulated marketplace and be able to serve the 620,000 homes, we could potentially reach today with high-speed services, I could go back to our investors and say: ‘Look I can demonstrate an economic return on investment.’ If that was the case, the private sector would build these networks without the need for Government intervention.

“This infrastructure will define the nation’s ability to compete for decades to come. If money is tight, we need to look at mechanisms like the National Pensions Reserve Fund. Investment in these networks will create employment and so the Government would make the money back in taxes and, at the same time, see the construction of an asset that has a 20- to 30-year lifespan and will generate an economic return.

“In the 21st century, business will move at the speed of light. We have to ask ourselves as a nation: are we giving ourselves the chance to compete?”

By John Kennedy

Pictured: a woman and a child watch the 24,000km transatlantic cable ‘Project Kelvin’ come ashore at Portrush. Pictured right is Mark Kellett, CEO, Magnet Networks

This story is part of the Digital 21 campaign to encourage Ireland to develop a National Digital Development Plan, ensuring the country anditseconomy are strategically well placed to thrive in the 21st century. For more stories, and to add your comments, visit www.digital21.ie