I move that the Bill be now read a Second Time. This is the fifth Telephone Capital Bill since the transfer of services in 1922. Funds for the development of the telephone service, that is, for extension of the system as distinct from its operation and maintenance, are provided by Telephone Capital Acts. These Acts authorise the Minister for Finance to issue out of the Central Fund such sums, not exceeding a stipulated amount, as may be required for development of the telephone service in accordance with Estimates approved by the Minister for Finance. Moneys so provided are raised by means of terminable annuities extending over a period not exceeding 20 years. Funds provided by Telephone Capital Acts represent an investment by the State in the Telephone Service. The security to the State for the capital investment is represented by the assets of the service consisting of plant, apparatus and property generally forming the telephone system. The annual capital charges in the way of interest and depreciation are a charge against the earnings of the service.
The present Bill provides for a sum not exceeding £1,000,000 which amount will, it is anticipated, suffice for requirements for a period of about five years. This provision together with the moneys provided under the four previous Acts—£1,750,000—will bring the total amount provided by the State for telephone development since the transfer of services to two and three-quarter million pounds. It was anticipated that the amount of £500,000 provided by the Act of 1936 would cover expenditure for four or five years, but the increased rate of development following on the reductions of charges in July, 1936, necessitated unprecedentedly heavy outlay for additional plant and apparatus. During the five years previous to the reductions of rates, the average yearly expenditure on Capital Works amounted to about £52,000. The capital expenditure in the year 1936-37 rose to £117,438; in the year 1937-38, to £268,000, and the programme of works for the current financial year will involve about £300,000. The amount provided by the Act of 1936 will be shortly exhausted and the present Bill is therefore necessary in order to provide further funds.
The following figures indicate the growth in telephone subscribers, traffic, etc., during the past two years: Number of subscribers, on 30th June, 1936, 23,400; on 30th June, 1938, 26,400—an increase of 3,000, number of telephones in use on 30th June, 1936, 36,700; on 30th June, 1938, 40,500—an increase of 3,800; number of exchanges on 30th June, 1936, 755; on 30th June, 1938, 793—an increase of 38; number of local telephone calls for twelve months ended 30th June, 1936, 26,000,000; for twelve months ended 30th June, 1938, 29,400,000—an increase of 3,400,000; number of trunk telephone calls for twelve months ended 30th June, 1936, 2,400,000; for twelve months ended 30th June, 1938, 3,200,000—an increase of 800,000.
The following represent the main heads of capital expenditure during the corresponding period and the approximate outlay under each head: Extension of automatic system in the Dublin area, £81,500; provision of new subscribers' circuits, £107,000; extension of inland trunk system, £82,500; laying of new cross-Channel cable, £27,500; underground cabling in city and town areas, £48,500; additional equipment in manual exchanges, £4,000; buildings, extensions and alterations, £6,000.
The extension of the automatic system in Dublin covered the installation of new automatic exchanges in Crown Alley and Clontarf, also the closing of the Drumcondra and the Dundrum manual exchanges and the transfer of the subscribers' circuits served from them to the Crown Alley and Terenure automatic exchanges respectively. During the financial years 1924-25 to 1935-36, inclusive, the average annual expenditure on the provision of subscribers' circuits was £24,600 approximately. For the two years ended the 31st March last the average figure was £53,500 and it will probably reach £65,000 for the current year. The extension of the free mileage area from one to three miles has added materially to the cost of new subscribers' circuits in rural districts.
To cope with the growth in inland trunk traffic it has been necessary to provide a large number of additional trunk circuits. The increase in circuit accommodation and the introduction of the up to date "carrier" system on the main trunk routes has materially improved the standard of the service both as regards expedition and quality of transmission. There has also been a considerable increase in cross-Channel traffic particularly after 7 p.m. when the low night rates operate, and to provide for this it has been necessary to lay a new submarine cable of the most modern type between Howth and Nevin, North Wales, and to arrange for the provision of a second similar cable, the laying of which is about to commence. When these cables are fully functioning, 16 cross-Channel telephone circuits will be available for public use and a first-class service will be ensured.
The financial position of the telephone service is shown by the annual commercial accounts. A profit was made for the first time in the year 1931-32. This profit increased yearly to 1935-36 when it reached £105,702, but following the reduction in tariffs, it fell in the year 1936-37 to £73,833, and it is expected that the accounts for the year 1937-38 will show a further fall. The financial position, however, is regarded as satisfactory. Although expenditure is growing by reason of extensions of equipment, increased staff costs, etc., revenue on the other hand is increasing steadily. The revenue position is in fact much more favourable than was expected when the rate reductions of July, 1936, were decided on. Revenue will continue to grow, but as capital expenditure must, in order to meet growing public needs, continue on a high level for some years to come, with increasing annual charges for interest and depreciation, the profit on the service is not likely to show any upward tendency in the near future.
As I have already said, the sum of £1,000,000 now budgeted for is expected to meet requirements for a period of about five years. With the degree of development which will by then have been reached, it is hoped that unless something unforeseen occurs it will be possible subsequently to effect a very material reduction in the rate of capital outlay. For the five year period, however, it is not likely to be possible to keep expenditure below an average of £200,000 a year.
The heads of major expenditure contemplated for the five year period and the approximate allocations are:—£230,000 for automatic exchanges—this includes the provision of additional equipment in the existing automatic exchanges in Dublin—provision of a new automatic exchange in Dun Laoghaire to serve the present Dun Laoghaire, Blackrock, Foxrock and Dalkey areas; new automatic exchanges in Cork and Dundalk, and possibly also in Waterford, Galway and Sligo; £50,000 for a new central trunk exchange in Dublin—this will be necessary to replace the present Crown Alley trunk exchange which is reaching the end of its useful life and is not capable of extension—£220,000 for new subscribers' circuits; £45,000 for new overhead trunk circuits; £53,000 for new cross-Channel cables; £200,000 for underground cabling of certain main trunk routes on which overhead lines are overloaded; £60,000 for extensions of equipment in manual exchanges and installation of additional "carrier" circuits on main trunk routes; £80,000 for underground work in city and town areas; £15,000 for buildings, including extensions and alterations.
With the exception of the Erris Peninsula, County Mayo, an area which is at present under special consideration, no important or extensive locality throughout the country is now unprovided with telephone service. As regards the smaller and more remote villages still unserved by reason of the cost which would be involved and the negligible traffic which would arise, the solution of the problem of providing service economically may ultimately be found in some form of rural automatic equipment. This type of apparatus, which is about to be tried experimentally in a group of small exchanges in the vicinity of Dublin, may also enable continuous service to be afforded at the smaller exchanges throughout the country where from considerations of cost the hours are now necessarily restricted.
