A national imperative

7 Jan 2004

One of the reasons e-business has been slow to take off, it could be argued, is that it is a concept we find it difficult to grasp and put a tangible value on. The same woolliness could be said to apply to another well-worn term, broadband, which has long been portrayed as essential to Ireland’s future economic prosperity. Part of the reason for our apparent ambivalence towards broadband is the failure so far to put a value on it. Until now.

A report entitled Ireland’s Broadband Future, published last month by the Information Society Commission (ISC), goes some way towards remedying this situation. In the foreword to the report, Dr Patricia O’Hara, chairperson of the ISC’s Broadband Working Group, which commissioned the study, acknowledges the credibility problem that surrounds the issue. “…The Working Group is concerned at what it perceives to be a lack of clarity and understanding about the significance of broadband infrastructure to Ireland’s continued growth and competitiveness…”

The report is emphatic that the economic impact of broadband will be very significant. In bald terms, it finds that if broadband is adopted at a rate similar to that seen in the US it could result in the creation of just over 85,000 jobs (net) in the first 10 years. But given the openness of the Irish economy, it is noted that this figure might be even greater. These jobs would translate into a “conservative valuation” of €851m annually to the economy.

The impact of broadband will also have a substantial impact on the standard of living of Irish citizens – what the report terms the ‘consumer surplus’ effect. The benefits will be accrued in a number of ways: for example through internet shopping, the ability to access digital entertainment and the reduction in commuting costs as a result of teleworking. The report projects that if (and it is a big ‘if’ admittedly) broadband penetration reaches 90pc within 20 years then the consumer surplus would amount to €1.2bn annually in today’s money or approximately 1.2pc of GNP.

It also projects that consumer spending utilising broadband services could be in the region of 2pc of total consumer expenditure within a few years. Annual consumer spending on access to broadband services, TV and movies, education, telemedicine and online gaming would reach €400m, a figure that could treble once online shopping and other potential revenue sources are included.

But that’s not all. The document also highlights the savings that could be accrued in the delivery of government services were broadband to be deployed as part of an integrated ICT strategy. While no overall figure is given due to the lack of hard data on which to base calculations, the report estimates that one area of particularly heavy government expenditure – health – could achieve huge cost savings.

Based on the findings of research done for the US healthcare market, the report predicts that a comparable expenditure on ICT here in Ireland would reduce the public health system’s €9bn budget by close to €150m in 2004.

The discussion of the monetary benefits of broadband make up only a small part of this detailed 92-page report but O’Hara clearly feels it is a make or break issue. At the launch of the study in the Government Buildings in central Dublin last month, she observed that since the publication of the Government’s ‘New Connections’ document two years ago, which made broadband a major strategic objective of Government policy, she had discerned a worrying trend. “We’ve begun to see an element of complacency about broadband. We wanted to create a sense of urgency about broadband as a national imperative.”

She described ‘Ireland’s Broadband Future’ as “a landmark report” that for the time measures the importance of broadband to Ireland. “This report shows that widespread availability of affordable broadband services is crucial for Ireland’s competitiveness, and our slippage in international rankings is worrying … Broadband delivers tangible benefits in terms of jobs, GNP growth and welfare.”

Her words were echoed by Minister of Communications Dermot Ahern TD, as he prepared to unveil his €140m plan to bring broadband to small towns around Ireland: “We believe broadband is the single most important infrastructure for our future development. We can wait no longer for the market to provide it.”

By Brian Skelly