Is Ireland at the races?


25 Mar 2004

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Ireland’s relationship with technology is a heap of contradictions. Our software industry employees 30,000 and generates exports worth €14bn but there’s a brain drain in science and engineering courses. Our rate of mobile phone usage is among the highest in Europe but our PC ownership is one of lowest. Our kids are PlayStation addicts but rarely use computers at school. We talk about being the e-hub of Europe but have all but lost the plot on broadband. Employers provide computers at work but many of them dislike the idea of their staff teleworking.

Why is our attitude to technology so patchy is an interesting question in itself, but it is less important than asking what this means for Ireland’s quest to become a fully-fledged digital economy.

A number of obstacles stand in the way of realising these ambitions. Top of the list must be broadband. There are still plenty of internet sceptics who question the value of high-speed data communications but the major policy think tanks at home and abroad have consistently identified broadband connectivity as a prerequisite for economic competitiveness. This assessment from Forfás is typical: “The ability to create, distribute and exploit knowledge and information is the main source of competitive advantage, wealth creation and improvements in quality of life … world-class broadband telecommunications infrastructure and services are essential to the development of a knowledge-based economy.”

Until recently, Ireland’s broadband strategy was nothing short of a fiasco. In an international broadband benchmarking study published by Forfás in January 2004, it was shown that Ireland’s overall takeup of broadband by business and residential users — at less than 1pc of population — was extremely weak relative to the other 20 countries in the benchmark group. The report concluded that Ireland was three years behind the average country in the group in terms of overall broadband takeup and five years behind the most advanced countries — Korea followed by Canada and Denmark.

Just how far behind we are was highlighted in Ireland’s Broadband Future — the Information Society Commission’s (ISC) report of last December — which concluded there would need to be a 50-fold increase in the number of broadband connections in Ireland by March 2005 to reach the top-end forecast for the EU as a whole. Even assuming the widespread availability of broadband at a competitive price, the proportion of Irish households to have high-speed internet access by 2007 would still be no more than 9pc, the study found.

Adding further grist to the broadband mill is the just-published report of the Joint Committee on Communications, chaired by Cork Fianna Fáil TD Noel O’Flynn, which takes issue with what is seen as a market failure in the provision of broadband and also the fact that DSL — the most common broadband system in Ireland — cannot deliver the 5Mbps speed specified in previous government targets.

Implicit in all of these reports is the contention that the Irish Government needs to ‘get real’ on broadband. For years there has been a tendency to set totally unrealistic broadband targets — both in terms of speed and delivery schedule. Up until very recently the Government’s main broadband goal was for Ireland to be among the top the 10pc of OECD countries by 2005.

Not any more. In a recent policy direction to the Commission for Communications Regulation, Communications Minister Dermot Ahern TD watered this down — Ireland should now “be at or better than the EU average for end-user access to and usage of broadband by mid-2005,” he said.

What difference does this make? In July 2003 the average broadband penetration in the EU was 4.6pc but this figure is bound to be dragged down once the 10 accession countries join in May. For example, broadband penetration in Poland, the largest of the accession countries, is just 1.2pc.

While Ireland’s broadband target has become much less ambitious, there also seems be an acceptance, for pragmatic reasons one assumes, that DSL now confers acceptable broadband speeds — even though the average 512Kbps download speed is just one tenth of what the Government originally envisaged.

DSL has indisputably become the number one focus of both Government and industry broadband delivery strategies. The most significant development of recent months has been the rapid growth in the uptake of DSL services and the steady fall in their cost driven by the reduction in Eircom wholesale line rental costs on 1 March. Eircom’s basic DSL package now costs €39.99 per month while competitors have undercut this to around the €30 mark. This is significant because international experience suggests that a price range of between €30 and €40 per month is required for mass-market adoption of DSL.

This theory is being borne out in Ireland where the March price cuts have apparently caused a surge in demand. Eircom sources claim that 1,000 people a week are signing up for its DSL services and would-be subscribers are being wait-listed for at least a month as the incumbent struggles to meet demand.

Some would say that the concerted efforts to boost broadband should also be directed at PC ownership because of the close interrelationship between the two technologies — the device and the connectivity. PC ownership usage is another area where we historically compare badly with our neighbours. In 2000, almost two thirds of households in Denmark had a home computer and in Australia, Canada, Sweden, Switzerland and the US ownership was above 50pc. In Ireland, the rate was just 32.4pc (source: Eurostat).

But here too, change is in the air. The most recent figures from the Central Statistics Office (CSO) (June 2003) showed that Ireland’s PC ownership rate had jumped to 42.3pc. An estimated 576,500 households in Ireland now have a home computer, more than twice as many as in 1998. A clear demonstration of the symbiotic internet-PC link is the fact that over the same five-year period — 1998 to 2003 — internet access increased seven-fold to 458,700 households.

The issues of broadband and PC usage dovetail nicely in the education area where the lack of modern technology has long been a contentious issue. “Third level is well looked after but in primary and secondary schools, PC hardware and software budgets from the governments have been scandalously low — and always have been,” says Dermot McElroy managing director of Iqon Technologies, Ireland’s largest indigenous PC maker. “In most European countries there’s a PC for every two students whereas here a secondary school with 500 pupils might have one lab with 20 PCs and half the primary schools don’t have any systems,” he told siliconrepublic.com.

The twin issues of connectivity and equipment are now being addressed. The Government recently announced an €18m broadband for schools plan that will see every national and secondary school in Ireland wired for broadband within two years.

It is further understood that the Minister for Education, Noel Dempsey TD, imminently plans to announce a major three-year investment programme in hardware and software for primary- and secondary-level schools with a rumoured price tag of between €130m and €150m.

Another issue that needs to be urgently addressed is the so-called digital divide. This refers to the gap that exists between the technology haves and have nots and works on a number of levels — between the affluent and poor; white-collar and blue-collar jobs; country and city; young and old; well and poorly educated.

Incredibly, we don’t have reliable statistics on the use of the internet by different demographic groups and occupations. The ISC’s e-inclusion report last October pointed this out and called for the CSO to undertake this role. One of the few relevant CSO statistics in this regard is that 55pc of Irish adults are late adopters to IT, meaning they do not have access to the internet or they use it less than once a month.

While the digital divide is an equality issue, it is also an economic issue in that e-commerce can never achieve its full potential in Ireland unless these differences are addressed. Take senior citizens as an example. This group — which tends to have both money in their pocket and time on their hands — are a potentially lucrative market for online brands. In the US the value of the ‘grey dollar’ is recognised and this market segment is significant and growing. The same cannot be said of Ireland. According to the CSO, just 11.6pc of people aged between 65 and 74 have used a computer while the figure for internet usage among this age group is even lower — 8pc.

If these are all real, tangible obstacles to Ireland’s development as a digital economy, there are also less tangible ones, which could go under the heading ‘mood of the country’. For example, how well-founded is our claim that we are a high-tech economy? McElroy feels that the information and communications technology (ICT) industry has an unhealthy reliance on big, mainly US-based hardware and software firms.

“As much as we see ourselves as a supposedly developed IT nation, the bulk of the companies operating in the sector are multinationals. I sometimes think we are codding ourselves in terms of how strong an IT country we are. This is worrying when you see an awful lot of software development moving to India and a lot of PC manufacturing going to Eastern Europe,” he remarks.

Others in the ICT industry take the opposite view: that the industry’s achievements are not given due recognition. IBEC-affiliated lobby group ICT Ireland is greatly concerned by what it sees as a negative perception of the ICT sector among the public. Its director, Brendan Butler, feels there are a couple of things feeding into this. The first is the economic downturn and the weakening of the labour market for technology jobs. IT students and potential students have heard grapevine stories of dismal job prospects, which has led to a fall in the number of fresh young talent coming into the industry. The second is media coverage, which Butler argues has focused unfairly on jobs losses. He points to the massive coverage given to the Irish closures of Gateway, 3Com and Philips but the relatively sparse coverage given to positive jobs stories concerning eBay and Google.

The upshot, he feels, is that the ICT sector is unfairly burdened with a poor image. “My concern is that some of this is endemic and has almost become part of the mindset,” he remarks.

On the positive side, Butler feels that there are signs that the internet is winning acceptance with growing numbers of people. The growth in business-to-consumer commerce, especially the booking in holidays and hotels, is a positive development. There are pockets of progress in the e-government area too, with the interaction between businesses and Revenue On-Line Service being particularly noteworthy.

The downside — and there is a big downside he feels — is that the experience of technology in education has been “appalling”. Also, the story of online public services has been patchy at best.

“Anything that requires you to call to a counter — passport renewal, motor tax, marriage and death certificates and so on — you should be able to do over the internet. I know there are projects making this happen in a lot of cases but it’s been slow to happen.”

There are many challenges to be faced as Ireland looks to transform itself into a high-tech, knowledge-based economy. The good news is that we are 10 years into the journey and that much has been achieved on a number of fronts. But the test for the next five years is sustaining the momentum and not repeating the mistakes of the past in areas such as broadband. The Government should perhaps think of amending its last election slogan to be the new rallying call for our high-tech ambitions: ‘A lot done but not always well; a hell of a lot more to do’.

By Brian Skelly