I move: "That the Bill be now read a Second Time."
The purpose of this Bill is, briefly, to empower the Minister for Finance to make available capital moneys up to a limit of £350 million for the development of the telecommunications services. This Bill differs from earlier Telephone Capital Bills in two respects. Telephone Capital Acts provided for capital expenditure on the telephone service only. This Bill seeks to make provision for capital expenditure on telegram, telex and data services as well as providing the capital required for development of the telephone service. The second difference is that Telephone Capital Acts sought to make sufficient funds availble to cater for five years; the present Bill, however, seeks to make provision to advance funds for a shorter period.
Before dealing with the changes from earlier Telephone Capital Acts, it might be helpful if I were to explain briefly how the telephone service is financed. Expenditure on the telephone service is broadly of two kinds. One is expenditure on the day-to-day operation of the service and on the maintenance and upkeep of existing plant. This expenditure, which is normally balanced by telephone revenues paid into the Exchequer, is met out of moneys voted annually by this House.
The other kind of expenditure on the telephone service is capital invested in development works such as the provision of new telephone exchanges, trunk routes, underground and overhead cables, and the installation of telephones for subscribers. The moneys required for these works are issued out of the Central Fund by the Minister for Finance on the basis of annual allocations of capital to my Department as part of the public capital programme. These moneys form an increasingly significant part of the public capital programme. The moneys have been made available under the authority of Telephone Capital Acts which are enabling Acts empowering the Minister for Finance to issue moneys out of the Central Fund for this purpose. The capital provided in this way and the interest payable on it are repaid in the form of annuities extending over a period of 25 years, provision being made for these repayments annually in subhead G of the Department's Vote.
The practice heretofore has been that all expenditure on the telegram, telex and data services, whether on day-to-day maintenance or development, has been met out of moneys voted annually by this House. A distinction has not been made between the method of funding maintenance and of funding development of these services because the annual development costs have, in general, been relatively small. While the capital sums needed for development of the telegram, telex and data services are still small in relation to the costs of telephone development, they are significant enough — up to £15 million over the next two years or so — to warrant making provision for them as a capital expense and it is proposed that the funding of capital expenditure on these services should now be brought into line with that for telephone development. It is anomalous that the funding of a new telex exchange or of a new data centre should be treated differently from that of a new telephone exchange and this Bill includes provision to bring them into line.
There is one other accounting change to which I should refer. That relates to the treatment of renewal of existing plant and equipment. Much of this expenditure at present is borne on the Vote. Replacement plant and equipment increase the earning potential and life of the assets. Moreover, in the case of telephone exchanges, for example, an old exchange is simply not replaced by a new one of the same kind. The new one provides modern facilities and usually makes provision for growth for a period beyond the capacity of the equipment being replaced. Normal commercial accountancy procedure is to treat such replacements as a capital charge and it is proposed to bring expenditure on renewal of telecommunications plant and equipment into line with commercial practice. The effect is not significant — about £5.5 million would be transferred from Vote to capital in the current year on this basis — but it is desirable, nevertheless, that good commercial accountancy practice should be followed.
Telephone Capital Acts were normally intended to provide the capital needed for a period of about five years ahead. On this occasion, however, provision is not being made for such an extended period, the reason being that, as Deputies will be aware, it is planned that responsibility for operating the telecommunications services will be vested in a State sponsored body expected to be established next year. The new body will have powers to raise its own capital and will be expected to do so from the outset. However, it is not possible to be certain at this stage when exactly the new body will be established and it is regarded as prudent to make provision for any possible delay that might arise in establishing the State sponsored body and for any difficulty the new board might have in raising quickly the capital it required. This Act would simply empower the Minister for Finance to make issues from the Central Fund; it would not require him to do so and the amount for which authority is now being sought will be drawn on only to the extent necessary.
Deputies will also be aware that it is planned to have telephone development to the value of £100 million financed from private sources this year. This is not covered by the provisions of this Bill. The aim will be to raise funds in this way also next year; the amount will be dependent on overall requirements and particularly on the success of the arrangement this year.
There have been 13 Telephone Capital Acts since 1922 making provision for the advancing of capital for telephone development. The last such Act, in 1977, provided for advances of up to £350 million. This sum represented the estimated cost in 1977 terms of meeting capital requirements during the period from mid-1977 to mid-1982 for the programme of work then envisaged.
At the end of last year, advances made under the 1977 Act amounted to about £270 million and the balance remaining will not be sufficient to provide for this year's investment programme. The need for a new Act now, rather than in 1982, is due to two factors — the acceleration of the telephone development programme announced by the Government in July 1979, and which is being implemented as rapidly as possible, and the effects of higher costs since 1977. The acceleration of the programme has given rise to a demand for capital substantially in excess of that envisaged when the 1977 programme was being prepared. For example, the amount spent last year was over £123 million and the approved allocation for this year is £220 million.
Despite prolonged industrial action in 1978 and in 1979, which drastically restricted the work that could be done in those years, the programme of work then envisaged has been overtaken and the foundations laid for much more rapid progress in the period ahead. The current targets are to make 80,000 connections this year and 100,000 connections next year. At present, about 90 per cent of subscribers have an automatic service, this will be increased to 96 per cent by the end of 1982 and most of the remainder should have it by the end of 1983 or certainly early in 1984.
The local distribution network throughout the country, comprising mostly underground cabling in built-up areas and overhead cabling elsewhere, was considerably expanded. But, of course, very much remains to be done to get into a position where applications for telephones can be met promptly, as envisaged in the current accelerated development programme. This is the major area of difficulty in meeting the objectives of the current programme.
In the period since the 1977 Act was passed many new automatic telephone exchanges were installed and over 60 additional automatic exchanges were provided in replacement of manual exchanges at various centres throughout the country, including Letterkenny, Roscrea, Edenderry, Bailieborough, Rathdowney, Knock, Kingscourt, Newcastlewest and Kiltimagh. Major extensions and replacements of existing automatic exchanges were carried out or are in progress at several locations in Dublin including Shankill, Beggars Bush, GPO, Santry, Belcamp, Blanchardstown, Rathmines and Ballyboden. In all, new equipment was installed at about 175 locations by the end of 1980.
The quantity of equipment installed in automatic exchanges for connecting subscribers' exchanges lines was increased by 22 per cent. About 2,500 extra trunk circuits were added to the system last year alone and additional trunk equipment provided at numerous centres. Direct dialling of calls to over 50 countries has now been made available to over 60 per cent of non-coinbox subscribers in automatic areas and direct dialling of calls to selected centres in Britain and Northern Ireland is now available to all non-coinbox subscribers in automatic areas.
The number of international circuits, not including those to Britain, was increased by over 33 per cent. New telephone buildings and extensions to existing telephone buildings were completed in about 120 centres.
Because of the integrated nature of the telephone system, the full benefits of numbers of schemes already completed will not become evident until complementary works have been carried out. Many main and complementary projects are in progress on which heavy expenditure has been incurred but these will not be completed for some time yet.
In introducing the 1977 Telephone Capital Bill my predecessor envisaged the use, at least on an experimental basis, of electronic exchanges. Since then several telecommunications administrations have decided to use digital electronic exchanges. Following international competition in 1979, the Department selected two suppliers of this equipment last year, namely Telectron Ltd. of Dublin, providing French-designed equipment, and L. M. Ericsson of Athlone, providing Swedish-designed equipment. The equipment is to be delivered under long-term agreements providing for manufacture of the exchanges here to the maximum extent practicable as quickly as local manufacture can be arranged. The first deliveries of these exchanges from both suppliers are expected to be in service later this year. Digital exchanges will be the main type installed in the years ahead.
I do not have to tell Deputies that much remains to be done to improve the standard of our telephone service. There are still significant problems in the service, particularly the comparatively large number of subscribers having only a manual service, the unsatisfactory quality of the STD service in many areas and the big waiting list for telephones. However, improvements are beginning to be experienced already and will be more evident with the passage of time, but it will take up to the end of 1984 before these problems are resolved in the country generally.
Before I deal with the work programme for the coming years, there are some general aspects of telecommunications to which I propose to refer. Telecommunications, and in particular the telephone service, which provides the basic infrastructure for all telecommunications services, have an economic and social importance for society that was not always appreciated. An efficient and developed telecommunications service is an essential adjunct to the industrial development needed to provide jobs both in the short and long terms. New jobs will be needed to provide for the growing labour force and also to replace job losses in some of the older declining industries. Many of the newer industries are at present and will be in the future in electronics and computer areas which will make much heavier demands on our telecommunications services than the older industries. In addition to an increased demand from business and industry there is also a growing demand by private residence subscribers. I might add that pressures similar to those being felt here are being experienced throughout the world in countries undergoing the rapid development stage of telecommunications as we are.
Telecommunications are a capital intensive industry and it has been noted in studies of the telecommunications service on an international basis that for each £1 of income it is necessary to have £3 of capital invested in equipment. This is the reverse of most manufacturing industries where the capital invested in the equipment is the order of one-third of the annual turnover. From a financing point of view, therefore, telecommunications are more appropriately compared with capital intensive activities such as housing than with manufacturing industry. The fixed assets of the Department's telephone business at the end of 1980 were £455 million while the income for that year was £155 million.
At present the average capital cost of connecting a new subscriber to the local network is approximately £1,100, and this does not take into account the additonal investment necessary to increase the capacity of the trunk network to cater for the extra trunk call traffic generated. This heavy investment in the existing network explains, in part, the difficulties of modernisation. The life of telecommunication plant can be up to 40 years and any new equipment must be compatible with older equipment.
At present it is necessary for countries with highly developed telecommunications services to invest from 1/2 per cent to 1 per cent of their gross national product in telecommunications just to keep pace with modern developments. In our case, however, we will have to spend over 2 per cent of our gross national product per year for a few years to raise the quality of the service to an acceptable standard and to meet existing and expected demand for telephones. After the development period the investment requirements will drop to the normal level, but a relatively high level of investment will be necessary on a continuing basis.
In the telecommunications service the average investment in land and buildings on an international basis is about 5 per cent. In practice sites and buildings accounted for up to 22 per cent of the capital investment of £123 million here last year. This year the figure is expected to be 27 per cent and gives some idea of the size of the building programme that has had to be undertaken by the Department in building up the infrastructure of the service to the desired level. Altogether some 500 sites and buildings are being provided in the current development programme at a cost of about £120 million. These buildings are required for new trunk and local telephone exchanges, for extension or replacement of existing exchanges, for conversion of the remaining manual exchanges to automatic working, for staff headquarters and for staff training centres, for stores and for motor garages.
This development is necessary to meet the stated objectives of the current five year programme, which are:
Raising the quality of the telephone, telex and data services for subscribers to the level in other EEC countries and maintaining it at that level;
Providing a fully automatic service, including subscriber trunk dialling, internally and internationally for all subscribers;
Increasing the rate of connections so that applications for telephones can generally be met on demand;
Laying the groundwork to cater for continuing growth.
I will turn now to deal with developments in the period ahead. The current development programme covers the period 1980-1984 and is estimated to cost over £800 million at 1980 price levels. Well over half of the total sum of £800 million will be invested in 1981 and 1982 with a gradual levelling off of expenditure in the rest of the period. About £80 million of this £800 million will be advanced under the Telephone Capital Act, 1977. The sums required are clearly substantial by standards of this country, but it may be helpful in appreciating how capital intensive the telecommunications service is if I say that, despite the much more developed state of the services there, investment on telecommunications in Britain has been running at the order of £1.5 to £2 billion pounds a year over the last ten years or so and will apparently continue at this level at least. The £800 million will be spent under the following main headings:
subscriber and local network development,
local exchange development,
trunk development and
buildings.
Under the subscriber and local network development programme proposed the number of connections will be increased from 60,000 last year to 80,000 this year and to 100,000 next year. In the years after that the rate of connections will be further increased to 120,000 a year, if the level of demand in the meantime should warrant this. These rates of connections, if achieved, should on the basis of present forecasts of demand effectively eliminate the waiting list by the end of 1984.
I should like to stress two points in relation to this. The first is the enormous task involved in increasing the rates of connection as proposed. To provide a telephone connection involves the wiring of customer's premises, the installation of the phone, having a pair of wires from each telephone, whether in overhead or underground cable, back to the nearest exchange, having spare terminations in the local exchange to which the phone can be connected, and having adequate capacity in the trunk exchange and trunk circuit network to carry the extra traffic generated. The work involved in providing a telephone is broadly the same from one year to the next. It will be realised therefore that increasing the annual rate of connections from a little over 40,000, the highest rate achieved before last year, to 120,000 is a major undertaking. In particular it will require a very substantial increase in the local cabling network, whether by laying underground pipes and cables or by erecting poles and stringing wires overhead — all of which are highly labour intensive as well, of course, as being expensive. I have made this point before and repeat it now because there seems to be a fairly widely held view that increasing the connection rate of new telephones is a relatively simple task; it is not.
The second point I would like to make is that it is hard to forecast with confidence what the level of demand is likely to be over a five-year period. Demand is affected significantly by the general state of the country's economy which, in turn, is dependent on the state of the world economy and particularly that in the main countries with which we trade. A further uncertainty in assessing the demand for telephones is what effect the more ready availability of telephones will have. However, what is clear is that, based on experience, there will be a greatly increased demand for telephone service in the years ahead. For example, in the three years, 1969 to 1971, the annual rate of application was 25,000; in the years 1974 to 1976 it was 37,000 a year; and in the years 1978 to 1980 it was 57,000 a year and still growing. A growth trend can be expected to continue for some time and development plans are on the basis that it will do so.
Connections on the scale envisaged will bring the total number of telephones in service to 800,000 by end 1982 — 23 telephones per 100 head population — and to over one million by the end of 1984 or 28 per 100 head of population. These figures will still leave this country lowly placed in the European league table for telephone density but there are factors such as the bigger family size in this country which may always leave telephone density in this country lower than in other advanced countries.
To reach the figures I have quoted it will, as I said, be necessary to expand greatly the subscriber underground and overhead plant network throughout the whole country, both urban and rural areas. In addition to that provision must also be made so that a high level of connections can continue to be made in the years immediately following the current programme period.
To meet the demand for new subscribers' lines additional automatic exchange equipment will be provided at virtually all existing exchanges. Over the next two years, some 300 new exchanges will be provided or existing ones extended. These will include major installations at Ballyboden, Belcamp, Clondalkin, Crown Alley, Dolphins Barn, Finglas, Terenure and Tallaght in Dublin and Athlone, Ballinasloe, Bantry, Carlow, Castleblaney, Cavan, Ceanannus Mor, Clonmel, Cork — ten centres — Donegal, Drogheda, Dundalk, Ennis, Enniscorthy, Galway — Shantalla and Mervue — Kilkenny, Mullingar, Naas, New Ross, Sligo, Tralee, Waterford and Wexford, to name but some of the bigger centres in the provincial areas. All the remaining 450 manual exchanges will, it is planned, be converted to automatic working by end 1984. The aim is to change over almost 300 of them over the next two years but it is not possible to be certain at this stage that this can be done as the volume of work involved in conversions by way of overhaul and replacement of linework, changing of instruments and so on is very great and staffing resources may be inadequate to cope with a peak of work of this kind over such a short period. However, every effort will be made to meet this target. As the programme progresses, digital equipment will form the greater part of the equipment being installed. In all, subscriber exchange capacity will be increased by about 440,000 lines by the end of 1984 making it possible, in so far as subscriber exchange equipment is concerned, to give service to that number of additional subscribers.
The development of the trunk system to enable the volume of traffic offering at present to be carried without difficulty and to handle the normal traffic growth as well as that generated by the increase in the number of customers is a major objective of the programme. The new trunk exchange opened at Adelaide Road in Dublin recently, which will be brought fully into service on a progressive basis over the next few months, will allow of several thousand extra trunk circuits being brought into use on the main trunk routes to and from Dublin city. This should greatly improve the standard of STD service on these routes and, indeed, has already brought substantial improvements on some routes, but it will not eliminate altogether the congestion being experienced in the Dublin trunk exchanges and on the routes to and from Dublin. That will have to await the opening about the end of this year or early next year of a further exchange being installed in Dublin at present and the provision of a digital exchange on order to be installed next year.
Almost all existing trunk exchanges will have to be supplemented and most trunk routes will have to be strengthened during the period of the current programme ending in 1984. Action is in train to do this. Naturally, some schemes are more advanced than others. I have referred to trunk exchange development in Dublin already. New trunk exchanges are expected to be opened at the following centres outside Dublin this year:
|
Ballinasloe |
Longford |
|
Bantry |
Mullingar |
|
Ceanannus Mór |
Naas |
|
Cork |
Navan |
|
Donegal |
Tralee |
|
Ennis |
Tuam |
|
Galway |
Sligo |
|
Athlone |
Kilkenny |
It is planned to provide new trunk exchanges next year at:
|
Dublin |
Ennistymon |
|
Athy |
Kanturk |
|
Carrick-on-Shannon |
Limerick Mallow |
|
Cork |
Waterford |
|
Drogheda |
Youghal |
|
Dundalk |
Wexford |
|
Enfield |
About 5,000 new trunk circuits will also be brought into service this year. These include circuits on the cross-channel route, Dublin-Sligo route and Dublin-Arklow route some of which are already in service. Among the trunk routes to be strengthened this year by the provision of new microwave radio links or new coaxial cables or by increasing the capacity of existing cables are the following:
|
Dublin-Cork |
Sligo-Letterkenny |
|
Dublin-Limerick |
Galway-Athlone |
|
Dublin-Waterford |
Limerick-Tralee |
|
Dublin-Galway |
Galway-Tuam |
|
Dublin-Athlone |
Navan-Mullingar |
|
Dublin-Navan |
Many other smaller, but nevertheless important, routes will also be strengthened. Altogether, it is planned to increase trunk circuit system capacity by the end of 1984 by about 30,000 extra circuits in microwave radio links, over 20,000 extra circuits on coaxial cables and about 20,000 more by underground cabling, multiplex equipment and optical fibre cables. The number of trunk circuits in use at present is about 33,000 and that puts the projected additional system capacity into perspective. Work on improving the trunk exchange and trunk circuit system will, of course, be a continuing feature, and the development work carried out in the next few years will have to be built on in the years after that, but the major work will be done over the next two to three years.
As I mentioned earlier, calls can be dialled by customers to selected centres in Northern Ireland and Britain. The centres are Belfast, Birmingham, Edinburgh, Glasgow, Liverpool, London and Manchester. Discussions have been taking place with the British Post Office for some time past on extending direct dialling to all areas in Northern Ireland and Britain as any extension can take place only in co-operation with the British Post Office. There are difficult technical problems involved for which it had not been possible to provide acceptable solutions. As a result of recent technical developments, however, and in particular the introduction of digital exchanges, it is now expected that it will be possible to find satisfactory solutions to the technical problems. Discussions with the British Post Office have, therefore, been intensified and I am hopeful that a substantial extension of direct dialling to centres in Northern Ireland and Britain will be possible within the next two years or so.
International direct dialling is now available from non-coinbox lines for about 60 per cent of all subscribers, having been extended to subscribers in Cork, Limerick, Waterford, Galway, Sligo, Drogheda, Dundalk and Athlone over the last two years or so. New trunk exchanges now on order include the equipment needed to enable subscribers dial their international calls and this year it is expected the facility will be made available to users in Bantry, Ceanannus Mór, Donegal, Kilkenny, Longford, Mullingar, Naas and Tralee. This facility will be extended to other centres according as new trunk exchanges are installed in the centres switching their trunk traffic.
With the spread of automatic service there will be a run down of telephone operating staff over the next few years but there should be no overall redundancy of full-time staff.
International traffic has been growing at a much faster rate than internal traffic and the existing international telephone exchange is being extended to cater for this growth. A second international exchange in Dublin is planned for 1985, but much of the advance work will be done in the period up to the end of 1984.
A satellite earth station, which will provide circuits for traffic to North and South America and part of Africa, is planned to come into operation in 1984. A site for the earth station has already been acquired near Midleton, County Cork, and preliminary work on the design of the earth station is in progress. This country has already shares in international telecommunications satellites and is at present exploring the question of taking shares in a European satellite planned to come into operation in 1983-84. My Department are also keeping in close touch with the development of business satellite systems which are beginning to be used extensively in the United States with a view to assessing the scope for their use here.
Difficulties in acquiring sites and in having buildings erected quickly have in the past been a main cause of slowing telephone development. Measures taken over the last few years and currently being taken should ensure that in about two years these are no longer a barrier to progress. Virtually all the sites for the 500 buildings needed have been acquired and by the end of this year work on about 400 of these will either have been completed or be in progress. I have already referred to the cost of putting right deficiencies in accommodation. This expenditure is, of course, essential and is being well spent.
I propose now to refer to a number of other developments that will have an impact on the quality of service. The first is the introduction of trunk dialling payphones. A small number of trunk dialling payphones have been in experimental use in selected public call offices in Dublin and provincial areas for some time with satisfactory results. Payphones providing this facility are now being installed in the busiest public kiosks in Dublin and at other centres throughout the country. The aim is to instal them in all public call offices over the next two to three years and they will be made availble for rental to subscribers who opt for them. In addition, trials of a new type of payphone suitable for installation in supervised locations such as public houses, shops, hotels, and so forth will take place in this period.
There are at present approximately 38,000 coinboxes in the country, including over 4,000 public telephones in kiosks and call offices. About 30 per cent of all calls via telephone operators are made from coinboxes. The new payphones providing the trunk dialling facility will therefore have a dual benefit in enabling callers to make their calls more quickly and in reducing the demand for operator assistance, thus helping to secure the benefits that should follow from extension of the automatic service.
Policy in regard to provision of kiosks in urban areas is that they are installed only where they are considered likely to pay their way and existing facilities are regarded as not meeting the need for public telephone facilities. However, the need for more kiosks in expanding urban areas is recognised and numbers of additional kiosks are, for example, being provided in the Tallaght and Clondalkin areas at present. The needs of other housing estates in the country generally are also being reviewed.
Since 1969 kiosks have been provided in rural areas in replacement of call office telephones in rural post offices where the use likely to be made of the kiosks would justify this. The stage has now been reached where all but about 300 of the call office telephones in rural post offices have been replaced by kiosks. A programme is being drawn up at present to replace these call offices by external telephone kiosks over the next few years.
In addition, kiosks are now being provided in rural areas where there is no local post office but where the use likely to be made of a phone would justify its provision. In deciding whether a kiosk should be provided in such cases regard is had to social and demographic factors, such as the number of houses in the catchment area, the density of private telephones and whether there are churches, schools and shops in the area which would affect the use likely to be made of a public telephone. The number of kiosks being provided in rural areas is being extended gradually on this basis and this programme will be continued.
A scheme is also in operation whereby local authorities may have kiosks provided at their request under guarantee against loss in areas where their provision would not be justified on the basis of the Department's criteria.
A decision in principle has been taken to introduce a mobile public radio telephone service as soon as possible. A survey has been carried out to determine the likely size of the market. The technical requirements are now being examined and an order for the necessary equipment will be placed as soon as possible. The service will be introduced initially in the Dublin area and will be extended later to other centres, if the demand warrants this.
There are numbers of other new services that it is proposed will be offered to customers in the course of time, but in the short term the priority must be to improve the basic services and it is proposed to concentrate resources on doing this.
As in other countries, the telegram service is in decline and this trend is expected to continue. It is unlikely that any major capital expenditure will be incurred in development of this service over the next two years or so. The telex service is expanding rapidly and there is a waiting list of some 1,500 for it. A new telex exchange is being installed in Dublin at present and a number of sub-exchanges are being provided at key centres outside Dublin. It is planned to meet some 2,000 applications this year and the aim is to get into a position by the end of next year where there will no longer be delay in meeting applications for telex service.
There is also a growing demand for data services and here too it is proposed to increase the rate of installation substantially this year and next year so that it should be possible to respond quickly to applications. A service enabling data users to access data banks in other EEC countries was opened last year and this year a similar service will be opened to the United States and Canada.
Turning to the financial position of the telecommunications service, the general principle is that, taking one year with another, the services should pay their way. The charges for the services have had to be increased at intervals in recent years to maintain income and expenditure reasonably in balance. Investment in the services is therefore largely paid for by the users. For almost 40 years until the 1971-72 financial year the telephone service operated at a profit. The period since then has been one of exceptional difficulty for the finances of the service, due to a combination of factors — high rate of inflation, high interest rates, economic recession and industrial action.
A programme of rapid expansion in a capital intensive service such as telephones normally results in a temporary worsening of the financial position. A return on the investment of some £120 million in buildings will not, for example, begin to be received until the exchanges for which they are required are brought into use or the staff to be housed in them are recruited and even then only a partial return is usually received as buildings cater for requirements for many years ahead. A rather similar situation applies to telephone exchanges and trunk circuits. Where therefore, a major expansion of the basic infrastructure is undertaken over a short period a temporary worsening of the financial position is inevitable. However, as the development programme proceeds the financial position will improve. The connection of big numbers of additional subscribers to the network will yield substantial extra revenue from connection and rental charges as well as generating extra call traffic. The improvement of the trunk network should also lead to a growth in traffic. The financial position of the service should therefore improve on a gradual basis and should be much improved by the end of the programme period in 1984.
In practice an appreciable part of the capital invested comes from within the service. Of the capital required over the next two years, about £70 millions will be met from depreciation provisions. Over the past few years loans amounting to almost £165 million have been made available to the Minister for Finance from the European Investment Bank and other EEC institutions for development of the telephone service. Grants of about £75 million from the European Regional Development Fund have also been approved for telephone projects. These loans and grants have, I need hardly say, been most welcome.
The development programme will have a dual effect on employment. In the first instance an improved standard of telecommunications service should enable existing business and industry to function more effectively and should be helpful in attracting foreign industrialists to establish industries here, both of which should lead to extra employment.
It will also facilitate this on-going effort to attract more industry to the more remote parts of this country and advance still further the Government's stated policy on decentralisation.
