Broadband urgency as Ireland hurtles towards a damaging digital divide

2 May 2012

Ireland's Communications Minister Pat Rabbitte

The stakes have never been higher. Ireland’s Communications Minister Pat Rabbitte today confirmed the National Broadband Strategy that will be published in July will contain capital spend (capex) targets for the telecoms industry and the Government, which will shore up any shortfall. But will this arrest a looming digital divide that will hurt Ireland’s economy?

Today the Government launched the report of the Next Generation Broadband Taskforce that identified the hurdles Ireland faces in bringing next-generation broadband speeds to every part and parish of the country.

Let’s be very clear about one thing – there is an intrinsic link between job and business creation and broadband.

While Rabbitte said every part of Ireland will have broadband by 2013 and will meet EU Commissioner Neelie Kroes’ targets of high-speed broadband for every citizen by 2020, it is what happens between those seven years that will matter most to Ireland’s economic future.

While the industry and Government have achieved what they say is unprecedented levels of co-operation, it is what the industry itself confirmed today that I find most worrying. According to industry, more than 50pc of Ireland’s population will have access to at least 70Mbps by 2015.

That leaves at least half the population that won’t have what will be international standards of broadband by that date.

Jobs will only be sustained in businesses that have embraced the digital economy and the most likely source of job creation outside of inward investment will be new business creation. Thousands of two-to-three-person strong companies in every part of Ireland will have as potent an impact on employment in the next 10 years as any other form of economic upheaval.

You snooze – you lose

Rabbitte today confirmed this is still a far from ideal situation. Quoting Boston Consulting Group figures, he said 3.4pc of GDP in Ireland comes from the internet economy. The European average is 6pc. The UK – which has 7pc of its GDP coming from the internet economy – is celebrated as the most internet-dependent economy in the world.

What Irish firms who have yet to even embrace the internet in any form – that’s 21pc of them – don’t realise is UK firms in particular are eating their lunches. And why shouldn’t they if they are bright enough to embrace digital – if you snooze you lose.

“Adoption (of broadband) isn’t what it should be,” Rabbitte admitted.

I would counter that if availability had been greater and sooner, the picture would be vastly different. Yet for more than a decade now, digital technology has not been a national imperative. Notwithstanding Eircom’s troubles and several changes of ownership, we built an excessive housing supply when other capital projects would have served the nation better and aggregated demand.

But that’s the past. What about the future? Well, Rabbitte described the work of the Next Generation Broadband Taskforce – which consists of policy makers and the CEOs of 10 telecoms players in Ireland – as a “unique experiment in partnership between industry and Government.”

He said broadband growth in Ireland has risen from 475,000 seven years ago to 1.65m subscribers today.

“The industry has assured me that over 50pc of the population will have access to between 70Mbps and 100Mbps speeds by 2015. Seven hundred households currently have access to 100Mbps through cable and fibre.”

But he acknowledged that the next category – people who will have a minimum of 30Mbps by 2018 – will be the most problematic to resolve.

Stimulating broadband adoption critical

“Adoption isn’t what it should be – 20,000 SMEs in Ireland are not online and 21pc have never used the internet. The challenge for the taskforce is to make it easier to invest in the rollout of broadband, encourage citizens and businesses for better uptake and address infrastructure deficits.”

The overall report contains 42 different recommendations of the taskforce. This goes out to submission to the public today and in July the final strategy will be published.

Among the pertinent stumbling blocks identified is access to existing State fibre infrastructure – ducts run under the nation’s motorways for this purpose but access has been an issue – as well as the co-operation of various local authorities.

If there are local authorities reading this, I have only one question for you to bear in mind: do you want jobs to be created in your community?

If the answer is yes then your focus should be on facilitating access and deployment of dark fibre and next-generation radio towers. Allow this to happen and the nation can take meaningful strides towards reversing the 14.3pc unemployment rate – businesses in your community should see themselves as global first, local second.

Demand stimulation – also identified as a priority in the report. It will happen a lot more naturally if people are not only aware of the e-business and social regeneration possibilities open to them, but that the infrastructure exists.

Major projects like the 100Mbps connectivity for every secondary school in the country by 2014 will be invaluable in stimulating local demand.

Ireland could achieve a global advantage in the broadband stakes

The key difference I noted was the optimistic tone of Rabbitte, who said Ireland, if it rolls up its sleeves and offsets a damaging digital divide, could actually gain competitive advantage globally.

That’s actually a different kind of language to expect from a communications minister in Ireland. Since taking office, Rabbitte has rarely shied away from the fact the situation is bleak and will get worse if not addressed.

I asked him if the plan to be unveiled in July will contain not only the capital expenditure plans of the various operators but what the Government itself is prepared to invest to support access in communities most in danger of the digital divide.

“Yes,” he replied. “It will have to. There are (economic) constraints but there are priorities and (broadband connectivity) has to be close to the top of the nation’s priorities.”

Last October, Rabbitte said the State will be accessing the funding from the EU’s €40bn Connecting Europe infrastructure budget to invest in ultra-fast broadband. More than €9bn of the €40bn Connecting Europe framework will be available for telecoms projects.

As well as Rabbitte, the members of the taskforce include Dana Strong, CEO, UPC Ireland; John Shine, deputy CEO, ESB; Paul Donovan, CEO, Eircom/Meteor; Robert Finnegan, Hutchison Whampoa/3 Ireland; Jeroen Hoencamp, CEO, Vodafone; Aidan Dunning, secretary general, Department of Communications; Minister of State Fergus O’Dowd, TD; Sean Bolger, CEO, Imagine; Tony Hanway, CEO, Telefónica O2; Conal Henry, CEO, E-net; Colm O’Neill, CEO, BT Ireland; and Katherine Licken, assistant secretary, Department of Communications.

Strong said the industry and Government have developed a “healthy and unifying vision” for broadband in Ireland, and as well as UPC’s €500m investment in fibre, she pointed to Eircom’s plans to serve more than 1m households with next-generation broadband by 2015. “There’s a lot of investment happening in the industry,” she pointed out.

Another member of the taskforce, E-net’s Conal Henry, said the real test of the taskforce’s mettle will be the move from analysis of the problem to the actual capex and delivery itself. “The stakes have never been higher. How a country competes in this century will be defined by the relative quality of its digital infrastructure and those countries that build first will reap a long-term economic benefit.”

But the last word to Rabbitte: “Just like we had to find the wherewithal to roll out high-speed broadband to every secondary school in the country, in terms of gaps in our infrastructure we will have to back up our commitment with investment. Otherwise, this is not meaningful.”

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