COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 10 Dec 2009

Chapter 23 — Metropolitan Area Networks.

Mr. Aidan Dunning (Secretary General, Department of Communications, Energy and Natural Resources) called and examined.

Vice Chairman (Deputy Darragh O’Brien)

We now will consider the 2008 annual report of the Comptroller and Auditor General and appropriation accounts, Vote 30 — Department of Communications, Energy and Natural Resources, chapter 23 — Metropolitan Area Networks.

I draw everyone's attention to the fact that while members of the committee enjoy absolute privilege, the same privilege does not extend to witnesses appearing before the committee. The committee cannot guarantee any level of privilege to witnesses appearing before it. Further, I remind members of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside of the House, or an official either by name or in such a way as to make him or her identifiable. Members are also reminded of the provision within Standing Order 158 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister or the merits of the objectives of such policies. I welcome Mr. Aidan Dunning, Secretary General of the Department of Communications, Energy and Natural Resources, and I call on him to introduce his officials.

Mr. Aidan Dunning

Thank you. I am accompanied by Mr. Frank Sheridan, inland fisheries division, Mr. Kenneth Spratt, communications policy division, Mr. Brian Carroll, finance and planning division and Mr. St. John O'Connor, energy division, and also colleagues from the Department of Finance, Ms Stephanie O'Donnell and Mr. David Denny.

Vice Chairman

They all are very welcome. I ask Mr. Buckley to introduce the Vote and chapter. The full text of chapter 23 can be found in the annual report of the Comptroller and Auditor General or on the website of the Comptroller and Auditor General at www.audgen.gov.ie.

Mr. John Buckley

The Department of Communications, Energy and Natural Resources spent €488 million in 2008. This was offset by the receipt of €237 million in income, the bulk of which related to broadcasting licence fees.

There was one chapter in my annual report on this Department and it related to metropolitan area networks, which are networks of high-capacity fibre-optic cable laid in urban areas. The rationale for their provision included perceived market failure a situation where private investment was limited following the privatisation of telecommunications services in 1999 and the dot.com bubble, which ended in 2000. Only in Dublin had there been a significant investment in fibre-optic cabling by that stage.

Under the programme, networks have been or are under construction in more than 90 towns across the country with a capital cost of around €180 million. In mid-2008, the take-up of the infrastructure was low with five networks having no wholesale customers and five others with only one wholesale customer. Development of the networks was suspended in late 2007 in respect of those networks not commenced by then. A review report completed in mid-2008 concluded the following: work already contracted should be completed and any networks not commenced shelved pending a full examination; and while recognising spare capacity had been created, this should not become a driver of future telecommunications policy and the investment should be considered a sunk cost.

In regard to the pattern of uptake the situation appears to have been influenced by at least two factors. First, perhaps unsurprisingly, urban centres with high population coincide with networks with higher take-up by communications companies, although more work would be necessary to separate the relationship between population and the type and level of economic activity sited in a particular town. Second, lack of competition in the area of onward communication channels appeared to have influenced the take up by communication companies. A tentative conclusion may be that the take up was related to pre-existing demand from a critical mass of population or centre of economic activity and that the provision of metropolitan area networks would not of itself drive or induce universal broadband use or exploitation. The Accounting Officer will be in a position to outline any wider adjustments to the Department's strategy which flowed from its review of the programme outturn.

Deputy Bernard Allen took the Chair.

Chairman

I thank Mr. Buckley. I call on Mr. Dunning to make his opening statement.

Mr. Aidan Dunning

Thank you, Chairman. In the time available to me, I want, first, to address some issues arising from chapter 23 on the MANs and then to highlight key features of the account for the Vote.

In 2002, investment in the MANs was decided on by Government in response to the need to provide high-speed broadband open-access networks in regional towns and cities. Phase 1 of the programme cost approximately €78 million and Phase 2 €98 million, a total cost of €176 million, of which some €88 million is funded by the EU. As a result, 92 towns across all regions now have high-capacity fibre networks available on an open-access basis to all service providers.

Paragraphs two and five of the conclusions of chapter 23 reference the unlikely prospect of a monetary payback for the State's investment and refer to the costs as being "sunk costs". It should be noted that in addition to a monetary return from the MANs for State investment, there is a wider economic return to the State.

As indicated in the value for money and policy review of the Phase 1 MANs conducted by the Department, the development agencies support the MANs. The IDA is unequivocal that the MANs have provided their client customer base with much greater choice, service and better process when it comes to broadband connectivity. The infrastructure, coupled with the products and services made available on the network by e|net, have contributed significantly to the competitiveness of regional centres in Ireland and their attractiveness to foreign direct investment.

The financial return to the State from the MANs is twofold — financially, through revenue sharing and, infrastructurally, through enhancements to the MANs, which remain in State ownership. Phase 1 has returned €325,000 in respect of the year to 30 June 2009 to the State and will pay a minimum revenue share of €845,000 annually in future years. The phase 1 assets, which remain in State ownership, have been enhanced, with investment by e|net of approximately €10 million between 2004 and April 2009.

Paragraph 3 of the conclusions references low demand for the MANs. It should be noted that the rolling out of future proofed networks tends, in the early years of such networks, to feature excess capacity, which may be viewed as under utilisation but is consistent with an approach of putting infrastructure investment in ahead of demand. While take-up by service providers of the phase 1 MANs was slow in the initial stages there has been significant improvement in this regard over the past five years. At the end of September 2009, 154 customers, representing 36 service providers, excluding Eircom, were using 24 of the phase 1 MANs. An analysis carried out by e|net showed an estimated 570,000 people relied on the MANs' services for some form of communications services. Total income generated has increased from €613,000 to end April 2005 to an estimated €9.4 million to end April 2009.

In the wider broadband policy context since the inception of the MANs programme, the demand for bandwidth has increased dramatically and this increase is expected to continue. Optical fibre is the only medium currently capable of meeting this demand and almost all broadband service providers, including DSL, mobile, cable, wireless, are increasingly turning to optical fibre to backbone their networks. The Department is of the view that service providers will continue to bring optical fibre closer to their end users. Thus, the MANs will be well placed to serve the needs of service providers and their end users for the foreseeable future and help meet the demand for high-speed broadband.

The contract for management of phase 2 MANs was signed in July of this year and 42 of the phase 2 MANs will have been handed over to e|net by end 2009 with the remainder being handed over by the second quarter of 2010. The interest, albeit at this early stage, is encouraging. Seven of the phase 2 MANs are currently being utilised by service providers and more than ten corporate customers have connected to them.

Developments at international and EU level highlight Ireland's vision with the early deployment of fibre under the MANs programme. A variety of recently published documents are evidence that the MANs are a solid investment in the right technology. It is undoubtedly true that some of the MANs in smaller centres of population have generated little business. The bulk of revenue is yielded by the larger centres of population. This is hardly surprising but, even in the smaller centres, the MANs should be viewed as valuable infrastructure for the future. In summary, the MANs are an important component of our regional economic infrastructure; play an important and increasing role in driving higher speed broadband into the regions; and have attracted strong support from the development agencies and regional and local authorities.

I refer to the account for the Vote. I would point first to the savings made in my Department's administrative budget in recent years. Total spend in this category was €40 million in 2007, €31.6 million in 2008 and an estimated €26 million in 2009. This partly reflects a transfer of some functions but also represents a major reduction in the staffing resources in the Department from 339 at end 2007 to an estimated 272 at end 2009, which is below the recommended McCarthy report limit. Notwithstanding this, the Department has continued to implement a wide array of important projects and provide high level policy advice in the complex areas of energy and communications, in particular.

As regards programme spend in 2008, expenditure of almost €56 million was undertaken on communications, multimedia development and the information society. Most of this expenditure was on broadband development, including the construction of phase 2 MANs and the national broadband scheme, NBS. A total of almost €68 million was spent in the energy sector. Almost €65 million was provided to Sustainable Energy Ireland in 2008. This was mainly for the implementation of energy efficiency programmes and the promotion of alternative energy sources. Schemes which were funded include the greener homes scheme, the warmer homes scheme and the pilot phase of the home energy savings scheme, which has been rolled out and mainstreamed this year.

Other programme expenditure in 2007 included €267 million on broadcasting, of which €201 million was paid in grant aid to RTE in respect of the revenue from the sale of television licences. In addition, grants of €36 million and €5 million were provided to TG4 and the Broadcasting Commission of Ireland, respectively. Approximately €10.5 million was transferred into the broadcasting fund, which supports new, innovative programming in the broadcasting area. More than €34 million was paid for the administration and operational costs of the central and regional fisheries boards and the Loughs Agency. More than €11.5 million was paid out in 2008 under the salmon hardship scheme. Under the natural resources heading, more than €18.5 million was spent, of which €5.9 million was grant-in-aid to Ordnance Survey Ireland. In addition, €4.5 million was spent on mine rehabilitation, €3.9 million on the national seabed survey and €2.8 million on various geoscience initiatives.

With regard to internal audit, I confirm that my Department has an internal audit unit, which operates in accordance with a written charter. Its annual audit plans are approved by me and by an independent audit committee. These audits may cover any area of activity involving public funds within the remit of the Department. The audit committee's written charter has been signed by me as Secretary General and the chairman of the committee. The committee is headed by an external chairman, with three other external members and one internal member. This composition complies with the recommendations of the Mullarkey report. Internal audit reports are circulated to the Comptroller and Auditor General and representatives of the Office of the Comptroller and Auditor General meet the committee annually. The audit committee considered 12 audit reports in 2008. The audits were in the following areas: corporate, five; communications-broadcasting, two; natural resources, three; and energy, two. I have circulated the committee in advance of the meeting the 2009 annual output statement of the Department. I thank the Chairman.

Deputy Michael McGrath

I welcome Mr. Dunning and his colleagues and I thank him for his opening remarks. Given the State has invested €180 million in addition to EU funding in MANs, a significant investment by any measure, what was the background to undertaking the initiative? What research was carried out in regard to the identification of the towns selected for the first two phases? Why was this technology platform selected? The reason I ask about the selection of the towns is phase I provided for fibre optic cable to be laid in 27 towns and the work was completed in 2005, but there has been no uptake four years later in five of those towns. The investment in the five towns was approximately €5 million. What research was carried out on need in those areas?

Mr. Aidan Dunning

Two more towns have been lit under phase 1 and, therefore, only three towns are not lit. The Deputy needs to go back to the landscape in the telecommunications investment sector in 2002 when there was little investment in broadband. The Government parties were rightly concerned about this, given the accepted importance of broadband as a key part of economic infrastructure and, therefore, they decided at that time on a significant initiative, primarily aimed at access to networks, which was regarded as the major problem. The 27 towns for the phase 1 networks were chosen after a call from local authorities for applications for the intervention. As I understand it, they were subject to independent evaluation and then the towns were approved by the Government and the roll-out commenced on them from 2002 onwards.

There is a substantially higher number of towns in phase 2. They were selected on the basis that any towns with a population of greater than 1,500, which did not have a DSL connection, were eligible for inclusion under this phase. As the Comptroller and Auditor General pointed out, while we have contractual commitments and we are rolling out phase 2 broadband in 66 of these towns, the work has been paused in regard to the remaining 88 towns on foot of a review, which we did ourselves. The matter of further roll-out of MANs is under consideration.

Deputy Michael McGrath

Were the local authorities the drivers of the selection of towns for phase 1?

Mr. Aidan Dunning

The local authorities were invited to submit applications to the Department in 2002 and, on that basis, an independent assessment was done on that. Arising from that, the 27 towns were chosen.

Deputy Michael McGrath

Who conducted the independent assessment?

Mr. Aidan Dunning

North Central Evaluators and Peter Bacon Associates. That informed the decision-making process.

Deputy Michael McGrath

Under phase 2, have MANs been completed for 66 towns?

Mr. Aidan Dunning

A total of 59 are complete and Kinsale-Mahon is to be completed. That is a contractual commitment, which we will complete in tandem with work on a sanitary services scheme there.

Deputy Michael McGrath

To what extent have those towns been signed over to e|net?

Mr. Aidan Dunning

Some 30 have been signed over to date. As part of the contract, there will be a gradual signing over of more towns as the phasing roles out.

Deputy Michael McGrath

I represent Cork South-Central and I live in Carrigaline. Along with Ringaskiddy and Passage West, Carrigaline was one of the towns selected for phase 2 and the work was completed in 2006 or 2007. We all welcomed the investment at the time, albeit with apprehension regarding the huge inconvenience and disruption that would occur with roads being dug up. Many people commented at that stage that they could not obtain access to broadband and there are others who still cannot do so. This is despite the fact that the roads in front of their houses were dug up in order that fibre-optic cables could be laid. Home owners and businesses are still unable to obtain access to broadband and they find this difficult to understand.

I accept that the issue relates to the level of take-up among wholesale providers. We recently received a letter from e|net, which I welcome, in which some information regarding the status of the projects in our constituency was provided. The company indicated that the MAN in this instance has been transferred from the Department to e|net. Why has it taken so long to achieve this? Works would have been completed in some of the phase 2 towns up to two or three year ago. What happened in the interim?

Mr. Aidan Dunning

The contract was not signed until July of this year. We were not in a position to hand anything over to e|net until it had been signed. The negotiations were extremely protracted because we were obliged to ensure that there would be a good outturn from both points of view.

We are extremely heartened with regard to the response we received in respect of Cork. We received a communication from Cork Chamber of Commerce recently. The MAN in Cork, and not just that at Carrigaline, is being widely utilised. The results of the survey are tremendously supportive of what the MAN has done, in terms of the competitiveness of individual enterprises in Cork — that is, enabling them to trade better and supply market services — and in the context of costs. We have obtained good feedback from Cork and other parts of the country as well.

On the Deputy's specific question, we were not in a position to transfer responsibility for the Carrigaline MAN until the contract was signed. As far as I am aware, it was one of the first handed over after that.

Deputy Michael McGrath

So none of the phase 2 towns was handed over to e|net until the contract was signed.

Mr. Aidan Dunning

An interim arrangement was in place — this would not have been as strong — with a separate service operator, whereby the infrastructure would have been administered on a care-and-maintenance basis. The infrastructure would have been available for use by service providers under that arrangement. When e|net, this was also proven in respect of phase 1, takes over the infrastructure, it is in a much stronger position to market it, sell it and roll it out. There are early indications that this is also the case with regard to phase 2.

Deputy Michael McGrath

So even though the final contract was not in place until this summer——

Mr. Aidan Dunning

Magnum Opus was the company we used in respect of interim management, primarily on a care-and-maintenance basis.

Deputy Michael McGrath

Was that company in a position to enter into arrangements with wholesale operators?

Mr. Aidan Dunning

Yes, that would have been the case.

Deputy Michael McGrath

To what extent did that happen in respect of the 59 towns in respect of which work has been completed?

Mr. Aidan Dunning

As it was sought, it would have been dealt with and facilitated. We believe arrangements would have been entered into in respect of some five or six towns.

Deputy Michael McGrath

What is the position in respect of the 59 phase 2 towns?

Mr. Aidan Dunning

We understand that eight towns are in utilisation as of now. However, we are in the very early stages of e|net's stewardship of the new phase of MANs 2. As already stated, the contract was only signed in July of last year. We hope that the level of utilisation will increase. Many of the towns in phase 2 are small and one of the findings of the phase 1 evaluation was that there was a difficulty in terms of demand and usage in the smaller towns. There will be a greater challenge in phase 2 in the context of rolling out the infrastructure to some of the small towns. Nonetheless, we are determined that this infrastructure can, to the greatest extent possible, be rolled out.

There are other factors which influence whether there will be take up of a phase 2 MAN. These include the economic situation; the circumstances relating to industrial development; and whether there is a need for MANs. It must be more in mind that MANs are primarily directed at the commercial and business sector rather than the domestic sector.

Chairman

Are towns such as Tuam, Shannon, Castlebar and Mallow included under the new programme?

Mr. Aidan Dunning

Some of the towns the Chairman refers to are under consideration for the next phase of MANs. However, they are not included in phase 2.

Chairman

Why was Ennis, which was supposed to be the new technology town, not included?

Mr. Aidan Dunning

Many of these towns already had broadband provision. It was stipulated at the time that towns with populations of 1,500 plus which did not have DSL connectivity should be included under phase 2.

Chairman

Did all the towns to which I just referred all have such connectivity?

Mr. Aidan Dunning

Yes, they would have had it.

Chairman

Was it for this reason that they were not selected?

Mr. Aidan Dunning

Due to the fact that the stipulation at the time was that towns with populations of over 1,500 and no DSL connectivity should be included, the towns to which the Chairman refers were not suitable. I accept, however, that some of these towns are seen as critical hubs in the context of the national spatial strategy.

Chairman

That is why I am puzzled. All of the towns to which I refer are identified in the national spatial strategy as towns where growth would occur.

Mr. Aidan Dunning

Exactly. That is why these towns and some others are being subjected to quite forensic capital appraisal in respect of the possibility of including them in a further phase of MANs. The latter would be phase 3.

Chairman

I am puzzled by the fact that they were excluded in the first instance.

Mr. Aidan Dunning

As already stated, there would have been a view that they already had sufficient broadband coverage.

Chairman

Will Mr. Dunning outline the findings of the value-for-money study carried out in respect of the Department of Communications, Energy and Natural Resources?

Mr. Aidan Dunning

The study was quite laudatory in respect of much of what we did in respect of the MANs. It states that we drove competition in the regions. It also states that we encouraged further investment by the incumbent, Eircom, in these areas and that, in general, ours was a positive intervention in respect of——

Deputy Thomas P. Broughan

It is fair to say that it was an extremely expensive stick to hold over Eircom?

Mr. Aidan Dunning

I do not believe so. When the MANs were initially being rolled out, there was a concern with regard to the level of investment in broadband, which was pathetic. There were 3,000 subscribers in 2002, whereas there are 1.3 million now. I am not stating that is Eircom's fault and I do not want to get into situation where the Department is——

Deputy Thomas P. Broughan

I accept that it was a policy decision.

Chairman

It is my fault that the discussion veered in this direction. However, the points I wish to raise were relevant in the context of the questions posed by Deputy Michael McGrath. Is it not correct that the value-for-money report also indicates that Department of Finance guidelines were not followed when the network was planned and built? It states that careful application of the Department's rules would have prevented many of the problems, that broadband was offered to towns that were too small to warrant the investment and that towns earmarked as growth centres over the coming decades will not have access to a high-speed Internet link.

Mr. Aidan Dunning

That is true. Those were some of the findings in the report. We have paused phase 2 of the MANs in order that we can apply the capital appraisal guidelines and also a more forensic appraisal in respect of future MANs.

Chairman

Mr. Mark Fielding of ISME is on record as saying that the selection of towns represented political cronyism gone mad. How does Mr. Dunning react to that allegation?

Mr. Aidan Dunning

I am going on the situation as set out on the papers at the time. It seems to me there were quite clear criteria with regard to phase 1 and phase 2. Phase 1 invited local authorities to apply for this intervention and this was subject to an independent evaluation by the companies I mentioned. With regard to phase 2, a decision was taken, because there was perceived to be a very serious deficiency in broadband in many towns, that the criterion would be a population of 1,500 plus and no DSL and it followed from that. The conclusion of the value for money study was that a MAN, metropolitan area network, would be put in place — a top of the range, high specification infrastructure which can deliver enormous speeds, which is their great strength for the future. However, it is clear that in the case of some of the smaller towns the demand has not materialised for this type of intervention at this juncture.

A total of 92 towns have these fibre-optic rings around them. They are a very important part of the economic infrastructure of these towns. This economic infrastructure is part of a jigsaw and it has to be seen in tandem with the other infrastructure put in place such as regional roads, public transport or whatever. From our engagement with these towns and with the local authorities I know they are all extremely happy to have a MAN. IDA Ireland has indicated the policy in terms of what this can do for attracting industrial development to an area. I am not saying there have not been problems. As regards the level of take-up, only three phase 1 MANs have not been lit up. The challenge in phase 2 will be greater because of the number of small towns. We do not have anywhere the size of Cork, Galway or Waterford in phase 2. This will be a significant challenge for e|net in terms of rolling out the service.

My fundamental point is that if this country is interested in rolling out next generation access and network into the regions, fibre-optic is the key and these are fibre-optic rings. Already we are seeing many service operators — 35 to date. Recently there has been a very significant contract between Vodafone, the mobile operator and e|net. This will enable Vodafone operating a mobile broadband to drive fibre closer to the user. The potential exists in all the towns to utilise this infrastructure.

As I said in my opening remarks, I have been dealing for a long time, from when I was working in the Department of Finance, with the argument about whether infrastructure should be installed ahead of demand. This could be seen as a classic case where this has been done in many towns. While I cannot guarantee that the 92 towns will be lit up by next year, I can say that the MANs are a valuable piece of economic infrastructure at the disposal of the towns and at the disposal of the industrial agencies. The developments and the feedback to date show the potential that can arise from it.

Chairman

We will return to it.

Deputy Michael McGrath

Just to elaborate on that point, I would subscribe to the general principle of putting the infrastructure in place ahead of demand but only on the premise of a reasonable expectation of that demand materialising. It seems to me that the take-up in phase 2 is of major concern, that as of now, only eight towns out of the 59 have taken it up and given the scale of the State investment of €98 million, this raises serious questions about the selection criteria used for identifying those towns if only eight out of 59 have taken it up. How many of the remaining 51 are at an advanced stage in negotiations between e|net and wholesale operators? How many can reasonably be expected to come on stream in 2010? Is Mr. Dunning prepared to make any estimate?

Mr. Aidan Dunning

To be candid, it would be very difficult to make an estimate in terms of numbers. To date, e|net has taken in charge approximately 30 of the 59 and the other 29 are still operating on a care and maintenance basis. I could not give an estimate, therefore, as to how many more will have a wholesale customer next year or in the future. All I can say is we have had good feedback from a number of small towns. For instance, a significant bio-pharmacy and research enterprise was announced earlier this year by the Tánaiste for location in Claremorris. The MAN in that small town was very important in this regard. The MAN on its own will not turn all these towns into major industrial centres but it is an important addition to the economic infrastructure of an area.

Deputy Michael McGrath

Are they close to concluding arrangements with operators in more towns or is demand now at a standstill? A total of eight out of 59 is a very poor return on the investment to date. Where stands the prospect of further towns coming on stream in the short term?

Mr. Aidan Dunning

We are not aware of any imminent developments. The onus is very much on e|net under the contract to take the ball and run with it, so to speak, in terms of marketing the infrastructure in these towns. The Department liaises very closely with e|net regularly. We keep an overview of its activities. One could look at the case of small towns and decide that only seven out of 59 have been lit to date and this is a poor performance in the context of €98 million in expenditure, but one has to view this as a very long-term project. This infrastructure will be there for the future. It is clear other aspects will influence the demand in the towns, including the demand for industry and the economic situation generally. I am not really in a position to be able to say to the Deputy that there will be ten towns next year but now that e|net has taken over stewardship and is actively and proactively marketing these MANs, the prospects are stronger.

Deputy Michael McGrath

How much ongoing dialogue is there between the Department and e|net?

Mr. Aidan Dunning

It is regular ongoing dialogue with formal meetings and informal discussions.

Deputy Michael McGrath

Will Mr. Dunning give some details of the nature of the financial agreement with e|net in terms of the payback to the State and how that works with regard to the towns which e|net has taken over? There has been mention of a minimum payment back to the Department. If e|net does not engage with any wholesale operator in respect of an individual town, is there still a payment by e|net to the Department or how is that structured?

Mr. Aidan Dunning

It is important to understand in terms of the MSE concession agreement that the service concession fee comprises a revenue share representing a progressive percentage of fibre sales, subject to a minimum annual amount. From the 11th year of concession agreement, there is a bonus revenue share representing a fixed amount of gross fibre and lit fibre sales and a variable amount which is agreed annually comprising infrastructure reimbursement. The annual revenue of share minimums are €245,000 each year from year one to year five and thereafter a minimum——

Deputy Michael McGrath

Is that under phase 1 or phase 2?

Mr. Aidan Dunning

Under phase 1.

Deputy Michael McGrath

Is this for all of the towns?

Mr. Aidan Dunning

Yes, for phase 1.

Deputy Michael McGrath

Is that the total figure?

Mr. Aidan Dunning

It is the annual minimum shares, €245,000 from year one to year five and thereafter a minimum payment of €845,000 is due for year six to year 15. As I stated in my opening address, e|net has invested €10 million from its own funds into the infrastructure which remains in State ownership. This is the general position with regard to phase 1.

Deputy Michael McGrath

I wish to deal with phase 1 for another moment. A total of 24 out of 27 towns are now active. Will those payments increase as they are just the minimum payments?

Mr. Aidan Dunning

Yes, but the revenue share is also a percentage of the overall revenue. It is either the minimum or a figure of 10%, depending on which is the higher.

Deputy Michael McGrath

And in respect of phase 2?

Mr. Aidan Dunning

Given the nature of the towns involved in phase 2, very small towns, the minimum revenue share in that area is smaller than it is in phase 1. It includes a revenue share mechanism whereby the Department will receive 5% on all service revenues up to €5 million, 10% on service revenues between €5 million and €10 million and 20% on service revenues above €10 million. This revenue share payment is subject to an annual minimum payment to the Department of €25,000. The revenue share payments to the Department are subject to indexation every three years.

Deputy Michael McGrath

The minimum payment is €25,000.

Mr. Aidan Dunning

Yes.

Deputy Michael McGrath

Is that in respect of all of phase 2?

Mr. Aidan Dunning

Yes.

Deputy Michael McGrath

How much is being received?

Mr. Aidan Dunning

This has only really started——

Deputy Michael McGrath

What is the expectation in 2010?

Mr. Aidan Dunning

Given that we are only starting, I expect overall revenue will be quite small in 2010.

Deputy Michael McGrath

What would Mr. Dunning define as small?

Mr. Aidan Dunning

The minimum payment may well be what accrues, but until we see the final revenue share, we cannot be certain of this. I have to be clear — I have said it already and have been open about it — these are small towns and the contract provides that, in addition to the revenue share which could, as I say, potentially yield significant amounts to the Exchequer over a period of time, a small operating subvention is paid to e|net in managing the scheme in 59 towns.

Deputy Michael McGrath

In respect of the investment of €98 million in phase 2, the immediate expectation in terms of income to the State is that the figure will be just €25,000 per annum and we have no basis for believing this will increase significantly in the period ahead.

Mr. Aidan Dunning

I have every confidence that it will increase if one considers the position in respect of phase 1. As I said, the reality is that broadband policy requires high speeds and bandwidths which the MANs are ideally situated to leverage. As broadband is rolled out to the regions, I am very confident that the MANs will be used by more and more service providers in these towns and that the income that will accrue to e|net and indirectly the State will ergo increase. The Deputy is implying that these are stranded assets that will never be used, but I do not think that will happen.

Deputy Michael McGrath

The system in eight towns is operational. Is the income stream from this factored into the figure of €25,000?

Chairman

Mr. Dunning expressed his opinion. Is it based on a business case, study or assessment that the Department has carried out?

Mr. Aidan Dunning

No, because we have only started to roll out the MSE into these towns it is too early at this stage to make what one might call a very comprehensive assessment of the likely revenue yield from the phase 2 MANs. However, as I said, at a general level we are confident — recent trends have shown this to be correct — that broadband policy in general will require higher bandwidths and speeds which will be facilitated by usage of the phase 2 MANs.

Chairman

Has the State taken all the risk in this?

Mr. Aidan Dunning

I do not think so. The State has invested in infrastructure on the basis of putting infrastructure in place in these regions ahead of demand. The State has taken a view that over time this is the correct intervention to make in putting these towns in a position where they will have a strong economic broadband infrastructure. It is a policy decision that was taken. In this way it is no different from items such as group water schemes, regional road projects or public transport which I have mentioned.

Deputy Michael McGrath

Why was the decision taken to split the revenue 50:50 with the local authority, given that the investment in the roll-out of schemes was 90% by the Department and 10% by the local authority?

Mr. Aidan Dunning

It is only for the first five years that it will be 50:50, after which it will revert to being 90:10 to the Exchequer. The view was taken that to incentivise the local authorities which needed to borrow to fund their contribution and which probably were not as strong financially as the Exchequer an incentive be provided; ergo the ratio is 50:50. However, as I said, that will terminate after five years and reverts to 90:10 to the Exchequer.

Deputy Michael McGrath

How did Eircom respond when the work was being done and the scheme was being rolled out across towns? Was there evidence that it improved its infrastructure in these towns and competed more aggressively?

Mr. Aidan Dunning

We are of the view that it has led to Eircom being more aggressive, particularly in the larger towns in rolling out investment. It may take a different view and claim it was going to do this anyway. Certainly, we are of the view that it is more than a coincidence that there have been significant improvements in some cases in relation to Eircom's investment in the areas where the MANs have been put in place.

More generally, looking forward as distinct from looking back, there needs to be a widely collaborative approach to investment by the incumbent and other service operators. Rather than it being a case of them and us, we can optimise and obtain best value for money from the investment, whether private or public, if we work closely together within the regulatory system set down by ComReg. Obviously, Eircom is engaged in a process of some change, with new owners expected early in the new year who have indicated, I think, quite a strong interest in investment, which we would support, as would all other service operators. We do not see the State and taxpayer as being central in the investment in broadband generally. Primarily the taxpayer thrust indicates market failure.

Deputy Michael McGrath

Would Mr. Dunning say the principal purpose of the scheme was to make broadband available for business end users rather than home users? What is the evidence from IDA Ireland of the extent to which it has enhanced these towns in terms of their marketability and ability to attract inward investment?

Deputy Darragh O'Brien took the Chair.

Mr. Aidan Dunning

At a general level — I have some specific figures also — IDA Ireland has indicated that it has been a very big positive in trying to sell these towns. Obviously, more generally it is like everybody else operating in very difficult circumstances. However, it has made it clear — admittedly, these figures date back a few years to better times — that in 2007 towns which had a MAN improved their level of foreign direct investment quite considerably vis-à-vis earlier years. There was tangible evidence in that regard.

Deputy Michael McGrath

To what extent is Mr. Dunning advised that fibre optic cable will remain the key platform for broadband for business in the years ahead? I am asking about the durability of this investment and its relevance in the next five, ten, 15 or 20 years. I understand it is difficult to predict in terms of developments in technology, but given the scale of the investment, it is based on a long-term investment to achieve a return over time. To what extent is it the technological advice that fibre optic cable will remain the key platform for broadband?

Mr. Aidan Dunning

All of the indications domestically and internationally are that fibre absolutely is the key. For instance, in places in the Far East, including Japan, South Korea and Singapore, they have invested very heavily in delivering fibre to the home. It is much easier for them to do this because they are densely populated countries which means the cost per head is much lower than in somewhere such as Ireland where the population is dispersed. The view is that fibre is crucial. It almost seems to have unlimited capacity in terms of what it can do in regard to bandwidth. I go back to the earlier example of mobile phone operators who are collaborating with the MANs in order that they can secure greater broadband capacity from the mobile technology by leveraging the demands. These are future-proofed investments in future-proofed technology.

Deputy Thomas P. Broughan

Under the heading of competition in the energy markets, the Department's annual output statement indicates that one of the Department's objectives is to enhance competitiveness. Are officials in the Department of Communications, Energy and Natural Resources aware of this output statement?

Mr. Aidan Dunning

Absolutely.

Deputy Thomas P. Broughan

In that case why did one of the Department's officials attend the Ireland versus France association football match on Saturday, 14 November as a guest of an energy company, namely, the ESB?

Mr. Aidan Dunning

That particular incident has been the subject of a parliamentary question. The individual in question received an invitation from the ESB and attended the match. The value of the hospitality received was, however, well below the limits allowed under the ethics legislation and I am satisfied that no conflict of interest arose.

Deputy Thomas P. Broughan

Would the official have been a guest of that or any other energy company on a number of occasions?

Mr. Aidan Dunning

I am not aware of him having been so.

Deputy Thomas P. Broughan

Has the Secretary General ascertained whether he was?

Mr. Aidan Dunning

We have ascertained that two other individuals received invitations to the match but declined them.

Deputy Thomas P. Broughan

Was that the total number of people who might have accepted an invitation to such a function?

Mr. Aidan Dunning

Three people received invitations to the match between Ireland and France. One of them accepted but the level of hospitality was well within the limits set out in the guidelines.

Deputy Thomas P. Broughan

The Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, told me that officials are covered by the Ethics Acts 1995 to 2001 and the Civil Service codes of standards and behaviour. The Department has issued a personnel notice on the practice relating to the receipt of gifts and hospitality. This is a very sensitive area and if we are serious about having competition in the energy and communications markets would it not be best practice for none of the officials in the Department to associate with an energy, communications or broadband company outside of a business context? The Department is very small but it is very powerful in the area of enabling policy. Is this not symptomatic of a cavalier attitude towards the regulation of these markets, which are critical for our economic development?

Mr. Aidan Dunning

I do not think so. The record of what has happened in the energy market in recent years shows the Department cannot be accused of favouritism. The current energy market is totally unrecognisable from what it was like ten years ago when the ESB was the only incumbent. We now have a series of energy suppliers, including the ESB, Bord Gáis, Viridian and Scottish and Southern Energy. They have all been facilitated, in the interests of consumers, by policy initiatives and the activities of the regulator. There is no question of a cavalier attitude in the Department. The individual to whom we have referred took a decision late on Saturday to accept the invitation and so went to the match. No conflict of interest arose and the record shows the Department operates totally objectively in the way it discharges its duties in all areas.

Deputy Thomas P. Broughan

I may be straying into policy areas but there has to be a clear barrier between regulators and those who are regulated.

Mr. Aidan Dunning

When I became aware of the existence of this circular, which dates from before my time in 2003, I decided to review it. We are doing that and, in the interim, we have issued a notice to all staff saying that no hospitality should be accepted.

Deputy Thomas P. Broughan

The matter was brought to my attention by a public-spirited citizen who felt it was inappropriate.

My next question relates to the grant to RTE and I am aware of the development of digital services. However, yesterday we debated budget 2010 and today there will be a vote on its provisions for the pay of public servants, who account for almost half of RTE's income. Does the Secretary General have any concerns over the level of remuneration granted to a significant number of workers in RTE? I understand voluntary cutbacks were requested by the Secretary General but the highest paid person in the organisation appears to be earning in excess of €600,000. There is a plethora of presenters — perhaps 20 of them — who earn upwards of €300,000 or €400,000. The media have suggested it is an issue for Cathal Goan and the board but is it not also one for the Secretary General of the Department? Does he not think that, given that the service provided by RTE is significantly funded by the nation, the massive remuneration earned by subcontractors to the station is totally out of kilter with the reality faced by everybody else, including Deputies and civil servants? Does the Secretary General intend to bring the issue to the attention of the director of RTE and his board?

Mr. Aidan Dunning

RTE faced a very serious financial situation last year, which it continues to face, and there has been a catastrophic drop in its commercial revenue. However, I acknowledge that it has introduced a heavy cost-cutting programme to take in excess of €70 million out of the cost base and RTE was probably the first public sector body to implement pay cuts across the board.

Deputy Thomas P. Broughan

Given the pressure RTE is under, is it appropriate that Mr. Pat Kenny earns almost four times what the Taoiseach earns? RTE is funded by the Department of Communications, Energy and Natural Resources and is shown under subhead C1 in the accounts.

Vice Chairman

I ask Deputy Broughan not to focus on particular individuals in RTE but to ask his questions in broad terms. Nor is it fair to ask the Secretary General to comment on an individual.

Deputy Thomas P. Broughan

According to my understanding of subhead C1, Mr. Pat Kenny earned €1 million, which is a very significant portion of the income of the whole station.

Vice Chairman

In that context I will allow the question.

Mr. Aidan Dunning

It is not appropriate for me to comment on individual cases. The running costs of RTE are a matter for the board of the company. RTE should be commended on what it has done to achieve financial stability. It has taken a considerable amount out of its cost base in difficult circumstances. Pay cuts, agreed by the unions, have been introduced across the board.

Deputy Thomas P. Broughan

Is Mr. Dunning concerned that commentators such as Mr. Vincent Browne suggest salaries are skewed because there is no effective competition in this area of the market? Why did the Department and the board not take a tougher stance on such salaries, given there are no other platforms?

Mr. Aidan Dunning

The Department has no direct role in setting salaries as they are an operational matter for the management of RTE. The Department is concerned about the financial sustainability of RTE and public sector broadcasting in general.

Deputy Thomas P. Broughan

We recently held a debate on taxi drivers and on competition in that industry. The radio and TV industries are ones in which competition is effectively controlled, formerly by the BCI but now by the Broadcasting Authority of Ireland. If we decided to set up a TV or radio station tomorrow we would not necessarily be allowed to do so. In other businesses, such as taxis, anybody can start up.

Mr. Aidan Dunning

I will not comment on the taxi business but it has always been the view that the broadcasting sector should be subject to some degree of regulation. The new Broadcasting Act provides for that. The Broadcasting Authority of Ireland, BAI, fulfils that role. The landscape for broadcasting has changed dramatically from that of 15 years ago. Instead of a monopoly there is a series of excellent local radio stations, private radio stations operating nationally and there is also TV3. That change arises from regulation.

Vice Chairman

Deputy Broughan is asking whether the Department monitors the level of salaries in RTE given that there is not much competition in the Irish market. How do these compare with their counterparts in the United Kingdom which have a wider audience and much greater competition?

Mr. Aidan Dunning

The Department does not see itself as having a role in individual salaries at any level.

Vice Chairman

I am talking about the levels of salaries.

Mr. Aidan Dunning

We do not get involved in that.

Deputy Thomas P. Broughan

The Department is interested in a competitive market but this is a strictly regulated market, unlike other markets. The Oireachtas Joint Committee on Transport, of which I am also a member, received legal advice to the effect that certain things could not be done in the transport industry yet they can be done in the communications industry. Are there restrictions to competition which result in inflated salaries in RTE?

Mr. Aidan Dunning

The BAI is the regulator for competition. If issues arise they are a matter for it in the first instance.

Vice Chairman

It came before this committee earlier this year.

Deputy Thomas P. Broughan

I debated the legislation for the roll-out of digital broadcasting with Deputy Noel Dempsey who was then Minister for communications, involving the famous MUX. Where does that stand now? RTE has five or six digital channels but I am not sure anybody listens to them or even knows where they are on the dial. What is happening and what are its implications?

There was a lengthy debate in the United Kingdom about the next settlement for the BBC and its future. The BBC prepares multi-annual budgets for four or five years. Will the roll-out of digital have a significant impact on the disbursal of the licence fee and will it have implications for the licence fee as the UK broadcasting industry seems to think?

Mr. Aidan Dunning

The starting point for digital terrestrial television, DTT, is the Minister's and the Government's commitment that analogue switch-off shall happen in 2012.

Deputy Thomas P. Broughan

Some isolated households, some urban households and certain parts of the country, for example Wexford, pick up Welsh signals. Will many households be affected by that switch off?

Mr. Aidan Dunning

This involves several factors. RTE is required under the Broadcasting Act to provide DTT to free to air services that are currently available. That must be in place well in advance of analogue switch off so that people who get RTE 1 and 2, TV3 and TG4 continue to receive those stations. That is a statutory requirement. It is building out the network and has made very good progress. Parallel with that there is a question of building a commercial digital terrestrial television entity. Unfortunately that has not moved quickly.

The Department is not involved in that process. The BAI is overseeing it. We are concerned, however, because we want analogue switched off so that we can get the digital dividend that will arise. That will be significant due to the amount of very good spectrum that will be available for broadband and other purposes towards 2012. We have a policy interest in this but are not part of the process of negotiations. The negotiations with Boxer did not proceed. The BAI is in negotiations with the OneVision group to establish a DTT offering. Hopefully those who may lose overspill will be able to get some of those channels through the commercial offering.

We understand that the Welsh signal, from which there would have been significant overspill in Wexford and Wicklow, was switched off last August or September. There do not seem to be many people aggrieved about that. I do not know whether that is because UPC and Sky have moved into the gap and have picked up new customers. This is overspill that people received free because of their location. The key to providing a good DTT product is to try to get the DTT over the line. This is not just the free to air ones which are fine and good, I do not wish to imply that they are not, but also the channels that are available on overspill. Negotiations on that are continuing.

Deputy Thomas P. Broughan

As this and the other platform are rolled out, would Mr. Dunning expect a much more competitive environment to ensue which will have implications for all current operators?

Mr. Aidan Dunning

That could happen. RTE and the others must position themselves, consider this and decide what it means for them. Public sector broadcasting is funded through the licence fee and there is no process to change that. It is a dynamic area, like telecommunications in general, and we must be pretty nimble and monitor this closely to see whether the funding arrangements in place are adequate for the future. The Minister has signalled that this issue is on his mind for 2010 and beyond.

Deputy Thomas P. Broughan

When does Mr. Dunning expect Corrib gas to flow through the pipes? I will make a political comment. The Minister who used to sit on this side of the House with me, always made the point that we are on the end of a pipeline from Russia. I hope, however, that we will not be.

Mr. Aidan Dunning

Corrib is a matter for the developer, Shell, rather than for the Department. In 2009 the offshore pipeline was laid from the wellhead to the shore. An Bord Pleanála has, however, recently ruled that it is unhappy with the safety of the onshore pipeline. Shell and its partners must consider that decision, which I understand it is doing, and decide how to respond. I could not say what impact, if any, that is having in respect of the first gas from the Corrib.

Deputy Thomas P. Broughan

It is already late. It was due this year.

Mr. Aidan Dunning

It is later than we thought it would be. There have been delays from the start. Shell had a success, if one wants to put it that way, in getting the offshore pipeline laid. It is an important piece of work done but An Bord Pleanála has indicated that it cannot accept the onshore pipe in its current format. Its permission is important and has to be.

Deputy Thomas P. Broughan

Corrib gas is a billion dollar resource. The expiration of last season was disappointing because the hopes of people in the Department for our offshore assets have not been realised. Do any concerns remain following the Corrib protests? One issue that always comes up, apart from the local one, is that the State gave it away. We still do not have a robust enough mechanism, and in respect of these accounts, we should again be in a position to——

Vice Chairman

This is a policy issue and the Deputy cannot ask Mr. Dunning to respond in respect of it. The Deputy can comment.

Deputy Thomas P. Broughan

Is it correct that there has been a small change?

Mr. Aidan Dunning

In 2007 the Minister amended the licensing and taxation terms. If we enjoy success in this area in respect of licences issued after the date to which I refer, there will be a higher return to the State. With regard to earlier licences, the level of return is 25%, which is twice the normal corporation tax rate that applies. Regrettably, we have not been hugely successful — to put it mildly — in respect of the fields that have proven to be lucrative. The Kinsale field is nearing the end of its life. We hope gas from the Corrib field can be brought ashore as soon as possible.

There is an important context to this matter, namely, our reliance on gas. I do not know if people realise that we import well in excess of 90% of the gas we use. Over 60% of this is used for electricity generation. This gas comes through two quite reliable pipelines that run here from Europe via Scotland. It is important that we should try to be more self-sufficient in this area.

Deputy Thomas P. Broughan

Is it correct that the position would be worse if we did not have the Corrib field?

Mr. Aidan Dunning

The Corrib field will be important going forward.

Deputy Edward O’Keeffe

There was substantial expenditure in respect of broadband and some 92 towns throughout the country have been provided with broadband services. However, I am concerned with regard to the areas with a high density of population and rural areas — particularly those where industrial development and small business activity is taking place — which do not yet have access to such services. Mr. Dunning stated that "The bulk of revenue is yielded by the larger centres of population". I accept that, but what is going to happen to people who live in other areas?

Mallow and Mitchelstown in my area have been provided with broadband services. However, I am one of the two Dáil Deputies who does not have access to broadband. I am not making a case for myself in this regard, rather I am making one on behalf of a small business which is located near my home and which provides employment for 21 people. This business does not have access to broadband services and it cannot access wireless broadband because high tension power lines are located directly over the premises in which it is located. The area in which I live has a high population density.

Mr. Aidan Dunning

The national broadband scheme is the intervention on which the Government and the Minister decided. It has been put in place and implemented in order to deal with the specific issue of poor penetration and low coverage of broadband in rural areas, even those with comparatively high levels of population. This is being rolled out to over 200,000 customers throughout the country on the basis of electoral districts and it will make a major difference when it is completed, particularly in the context that it will bring good broadband services to these areas.

Due to technical issues relating to line of sight, etc., there will always be a certain number of businesses and houses for which even the national broadband scheme may not be able to cater. The Deputy may be aware that under the rural development programme, which has been enhanced by the EU, moneys are provided in respect of broadband provision. We are working with our colleagues in the Department of Agriculture, Fisheries and Food and the EU in respect of leveraging a scheme whereby we might attempt to reach the final homes and businesses which cannot be reached in any other way. I would not underestimate the difficulty of developing such a scheme, particularly in view of the fact that we are talking here about houses scattered throughout various parts of the countryside. However, we are very much on the case. We recently obtained state aid approval from the European Commission in respect of the intervention we might have in mind with regard to this problem. The objective is to try to have, as far as is possible, 100% availability of broadband.

Deputy Edward O’Keeffe

Is it not the case that the real difficulty relates to whether copper wire or fibre-optic cable should be used? I do not understand the technicalities involved but there are inefficiencies relating to the former. Many of the lines that were installed 40 or 50 years ago are now well out of date.

Mr. Aidan Dunning

As I informed Deputy Broughan, this is an extremely dynamic area and I would not underestimate the ability of technology to deal with some of these issues. There are actions that can be taken to improve the quality and efficiency of some copper wires. As the spectrum relating to the mobile technology that is primarily being used in respect of the national broadband strategy is expanded and as the technology improves — like the Deputy, I am not as technically proficient as I would like to be — there will be enormous scope for improvement. The coming years could be quite exciting with regard to developments in this area.

Deputy Edward O’Keeffe

There is first-class mobile coverage in the area of my constituency to which I refer. However, the wires there are copper rather than fibre optic and they were put in place, mostly underground, 50 or 60 years ago. It is a very progressive area.

Mr. Aidan Dunning

When the Deputy is referring to mobile technology, is he referring to that relating to mobile phones?

Deputy Edward O’Keeffe

Yes.

Mr. Aidan Dunning

Mobile broadband technology is also developing apace. The number of mobile broadband customers throughout Ireland has increased astronomically. These people are extremely satisfied with the product. As already stated, the national broadband scheme is very much based on a mobile broadband product. The early feedback from customers who have taken up this product is positive. I do not know the particulars of the Deputy's situation. However, I hope that mobile broadband technology might provide a solution. As stated earlier, we also intend to roll out a rural broadband scheme.

Deputy Edward O’Keeffe

I thank Mr. Dunning.

Deputy Thomas P. Broughan

I am delighted by the growing links between the North and South. In that context, the Northern Ireland Minister for Finance and Personnel, Mr. Sammy Wilson, MLA, for his sins, commented on the impact NAMA could have in that jurisdiction. Would the Republic be better off if it had the North's equivalent of the Department of Communications, Energy and Natural Resources? A recent survey shows that Northern Ireland has ten times more fibre-optic cable in place than the Republic. It also shows that the North has 98% broadband coverage. As Deputy Ned O'Keeffe suggested, broadband coverage in this jurisdiction should be 100%, regardless of whether one lives in Mallow or the Ring of Kerry. I accept that there are difficulties involved.

Mr. Dunning referred to the Vodafone deal. However, the major problem with microwave technology relates to the cost. I have an iPhone but it is extremely expensive to obtain web access on it. The reality is that the metropolitan area networks are nothing but a glorious white elephant. They were put in place to hold a stick over the incumbent, Eircom. The policy has been a complete disaster and we should never have sold the incumbent. In addition, we should have retained the network. What was done would, in the context of the road network, be akin to selling the interurban routes. It was a disaster.

Mr. Dunning appears to be stating that when Singapore Technologies Telemedia, STT, becomes the dominant partner in Eircom, the MANs will be backed into STT and that we will finally have a national broadband network as a result. Broadband speeds on the northside of Dublin are disgracefully slow, while Deputy Ned O'Keeffe does not even have access to broadband.

Mr. Aidan Dunning

I certainly do not envisage the MANs being backed into STT. Until a policy decision is taken, the MANs will remain open to all service providers on an open access basis. I apologise if I gave any other impression.

Deputy Thomas P. Broughan

Mr. Dunning stated that he wants to put the assets together.

Mr. Aidan Dunning

What I said was that I want to see collaboration across the board. That is different to referring to backing the MANs into STT. Collaboration is the way to go. Ireland is a small country and there are many service providers operating here. We must, therefore, maximise the value of the investment and collaboration can assist in that regard. There may be a role for the MANs to play in that regard. The latter are already collaborating with Vodafone.

Deputy Thomas P. Broughan

Why did the Department not conclude a deal with the incumbent in the same way its Northern Ireland equivalent did with BT?

Mr. Aidan Dunning

Over a number of years, the record of the incumbent was not very strong in terms of investment. We do not want to go back there. We are looking forward.

Deputy Thomas P. Broughan

I am sure Mr. Dunning will agree that it is a mess.

Mr. Aidan Dunning

I do not agree.

Deputy Thomas P. Broughan

Parts of the country do not have broadband access. Broadband speeds on Dublin's northside are painfully slow and it is torture trying to access newspaper websites each morning in order to update oneself on what is happening.

Mr. Aidan Dunning

All the international figures show the increase in penetration in Ireland is at the top level in recent years. I agree with the Deputy that we are coming from a very low base. We were slow starters and at a very low base but if one sees the offers being made at the moment across various platforms by various service providers, one will see very high speeds are being offered now. There has been major improvement. The price at which it has been offered has been kept very competitive because we really have competition now. We did not have it in 2002. I cannot agree it is a mess. There has been significant improvement and we have to build on that for the future.

Vice Chairman

Deputy Broughan commented on Internet access by mobile phone. Some areas do not have broadband and the cost to the consumer of accessing the Internet by mobile phone is nearly extortionate. What is the Department's view on that? How is it monitored? Anyone relying on a mobile phone to access the Internet would incur significantly larger bills that he would if he were using broadband.

Mr. Aidan Dunning

One area in which the Department is directly involved concerns the NBS, which is run on a mobile platform — I accept it may not be relevant. The monthly payment under the contract is €20, plus a connection fee of €49. That is not extortionate.

Vice Chairman

A user who is accessing the Internet by mobile phone will incur a cost far in excess of €20 per month.

Mr. Aidan Dunning

There is a huge number of mobile operators.

Deputy Thomas P. Broughan

Pre-paid customers are completely crucified.

Mr. Aidan Dunning

I will bring what the Deputy said to the attention of the regulator, who has a role in this.

Vice Chairman

Thank you very much. I call on Mr. Buckley to make his final remarks on chapter 23, which pertains to metropolitan area networks.

Mr. John Buckley

Looking at the metropolitan area networks, it is a question of what general lessons may be learned from what we have been dealing with. It is a matter of striking a balance between urgency and cost-effective investment. An element of effectiveness is a timely response to problems on the part of State institutions. However, urgency should not obviate the need for detailed planning. We could speculate that if town selection was based on some sort of structured analysis — and pre-set criteria — it might have been more possible to predict the towns where investment would be effective. Second, it might have also identified and eliminated those which ultimately had no take-up. In this respect, the current pause affords an opportunity to think about how this might be done better.

There is clearly a relationship between the regulatory changes in telecoms markets and State investments, which are designed to enable development. This is a very complex relationship. From an effectiveness evaluation point of view, this may have to be looked at over a wider timescale. That is something we will take another look at in a number of years.

Vice Chairman

I thank Mr. Buckley and thank the delegation for attending. Is it agreed that the committee note Vote 30, which concerns the Department of Communications, Energy and Natural Resources, and dispose of chapter 23 on metropolitan area networks? Agreed.

The witnesses withdrew.

Vice Chairman

There is no further business. At our next meeting, on Thursday, 17 December, we will resume our consideration of special report No. 64 of the Comptroller and Auditor General, Drug Addiction Treatment and Rehabilitation.

The committee adjourned at 1.25 p.m. until 10 a.m. on Thursday, 17 December 2009.