Broadband rollout ‘single most important investment’ for job creation

29 Mar 2012

Pat Rabbitte, TD, the Minister for Communications, who has identified the intrinsic link between digital infrastructure and job creation in the 21st century

Communications Minister Pat Rabbitte, TD, has clearly grasped a point that his predecessors in times of plenty have failed to grasp. He said today that the nationwide rollout of fast broadband in Ireland over the next three years will be the single most important investment needed to secure future jobs in the local economy.

I could wallpaper my house with the column-inches I’ve filed trying to make this very point as regulatory bungling, sweating of assets and poor investment decisions frustrated an already bad situation.

Despite Ireland’s prowess at winning global internet investments, local firms are out in the cold because of poor broadband infrastructure and few of them are trading online. And why would they if up until now there had been no leadership at State level aimed at making Ireland a digital leader.

The result: €3bn is spent online every year by Irish consumers and 70pc of this flows out of the country to overseas websites. Less than 70pc of Irish firms have websites, and of these only 22pc are capable of e-commerce. This is 2012, not 1999. Again, bravo.

Ireland has competition. Today UK Chancellor George Osborne stated clearly that he wants to make the UK the technology centre of Europe. The UK has the advantage of a strong domestic economy which according to Boston Consulting Group is the most internet-dependent economy in the world. Globally, the internet economy will be worth US$4.2trn by 2016, we need to move fast if we want a share of this. Let’s be honest, over the past decade we’ve barely laid the groundwork. Infrastructure is key.

Ireland would be wise to hold on to the vast success it has had attracting global tech investment and move away from being a two-speed digital economy. Superfast broadband everywhere will lift all boats.

Last summer Google executive chairman Eric Schmidt was in Dublin and was scathing about the broadband mess Ireland found itself in. Schmidt said at the time: “You are behind on fibre to the home and you guys are late with respect to 4G rollout. France, Germany and the UK are already ahead of Ireland with respect to citizens and businesses connected to the internet. You just need to do it.

“There are many things that the Government can do, but the thing is it is hard to work with telecoms providers to get more broadband. But these are the roads of the future. There are very few things that are better use of your money that serves the citizens of your country.”

The roads of the future – where are they?

As Eircom – the incumbent operator which should be the jewel in Ireland’s infrastructure crown – slides towards examinership today, there’s a poignancy about what Minister Rabbitte told students at a UCC conferring ceremony in terms of his conviction that this infrastructure will be key to their employability in the coming years.

If I was to sum up the last decade in terms of the digital imperative of ‘Ireland Inc’ it has to be two words ‘errant stupidity.’

While you had excellent agencies like IDA Ireland and Enterprise Ireland bringing in global giants like Google and entrepreneurs trying to build businesses, official Ireland was drunk on property booms, the media didn’t write about geeks and students were dissuaded from taking up engineering or technology courses. Now we have a skills shortage at a time of high unemployment. Well done official Ireland, you failed.

During the past decade Minister after Minister poo-pooed international league tables showing the divide that was emerging between Ireland and other OECD countries in terms of broadband quality and quantity. Often they cited our ‘unique geography’ as an excuse. It wasn’t good enough, even they knew it.

In 1999 the State made €7bn out of the IPO of Eircom, which at the time was debt-free. Within weeks investors, mostly ordinary people, were burned. In 1999, Eircom had 14,000 employees. Imagine what could have been done with €7bn in terms of infrastructure today.

13 years later today Eircom is to apply to the courts to enter examinership. It has about 5,000 employees and is €3.7bn in debt. Did I mention that this should be the jewel in the infrastructure crown? Oh yeah, and it had seven owners in 13 years. Bravo.

So where do we go from here

At the UCC conferring ceremony Rabbitte outlined what has long been needed – the cooperation of a range of telecoms companies on a three year strategy.

The process is going to involve two phases – the telecoms industry will be freed up to accelerate their own investment plans and roll out faster internet over fibre, cable, wireless and mobile technologies.

The second phase will see the Government be prepared to invest where the market is likely to fail to ensure superfast broadband in every corner of the country.

Rabbitte’s core project – the plan to put industrial strength 100Mbps broadband into over 650 schools could be a key demand aggregator in this respect.

“Firstly, during April the Cabinet will consider industry’s recommendations on a range of areas where private sector investment needs to be facilitated.  

“My Department has pulled all these ideas together by listening to the companies whose CEOs have participated in a Next Generation Broadband Task Force, which has been meeting since June last year under my chairmanship and which has now completed its work.

“I have been very encouraged by the investment plans I have heard about, from mobile companies who can’t wait to take advantage of new mobile spectrum we are about to auction, from the main cable player which is rolling out faster speed products in many urban areas and from the “traditional’ telecoms companies who see great potential for fibre roll-out.

“In the Task Force there has been a great deal of straight talking about what needs to be done by the State so as to facilitate speedy private sector investment.  

“We have agreed targets – the numbers of consumers and businesses that the companies aim to meet.  In return, we have clarified what can be done to stimulate demand for new services and to remove planning and other barriers that delay the build out of telecoms networks.  

“We have also sought to find a consensus view about the best use of Ireland’s spectrum and teased out the role of state companies that have large land holdings and extensive infrastructure in facilitating broadband build out,” Rabbitte told the graduating students.

Appalling mistakes as regards to Ireland domestic digital economy have been allowed to occur over the past decade.

At a time of financial turmoil some of those graduating students Rabbitte spoke to today may be forced to emigrate, while those with the right skills will surely be snapped up by multinational companies and start-ups hungry for their abilities.

It is poignant to think, however, how self-sufficient many indigenous firms could be today if a decade ago the country had stayed the course in creating a knowledge economy and society, how e-commerce and entrepreneurship may have saved companies and jobs sooner and opened up more international opportunities.

Well the game isn’t over, a turning point is approaching and with a sensible grasp of the digital imperative Rabbitte may be proven right – how broadband rollout will be the single-most investment needed to secure jobs in Ireland.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years