Vol. 491 No. 3
26 Mr. Stanton asked the Tánaiste and Minister for Enterprise, Trade and Employment the reason a major international company (details supplied) decided not to set up a mirror project operation in Ireland; the role of her Department and of the IDA in this matter; and if she will make a statement on the matter. [12235/98]
I was very disappointed to hear, earlier this year, that despite the best efforts of IDA Ireland, Microsoft had decided not to relocate its European Internet "Mirror Site" in Ireland.
The decision was taken because of concerns that real competitive conditions and the necessary industry infrastructure did not exist in the Irish telecommunications market. One important consideration for Internet service providers is the complex software facilities and contractual arrangements which allow individual providers to interrelate and to work together to enhance the overall level of service. In the case of Microsoft, there was concern that Ireland was not in a position to offer all of the necessary arrangements in this regard. A key element of any strategy to counter such perceived deficiencies is the attraction of major international players into the market. My Department continues to collaborate closely with all the relevant Government Departments and with the industrial development agencies in this regard.
The Government's recent decisions to sell Cablelink and to end the Telecom Éireann monopoly on voice telephony are important initiatives in the development of Ireland's telecommunications infrastructure. They will contribute in large part to removing any negative perception of Ireland from a regulatory standpoint as well as to introducing truly competitive conditions into the marketplace. The provision of such competition is necessary if we are to secure the improvements in the quality of service and the lower prices that will in turn enhance Ireland's attraction as a location for future investment by the major international players in the world of electronic commerce.
Would the Minister not agree that the Department is responsible for this debacle, for the fact that we have lost the opportunity to become a leading location for Internet projects in Europe? Is the Minister concerned about it? In her reply she used the words "earlier this year", but I understood that the Minister only became aware of the situation earlier this month. Can we take it that this information was known months ago? What has been done about it?
I do not want to apportion blame but the fact that we had a derogation from competition in voice telephony was a problem because major global players would not come into the Irish market simply to supply data telecommunications but wanted to be involved in voice telephony also. The fact that we had a derogation was clearly a problem. In addition, the decision of the Government to end that and also to sell Cablelink will allow further competition and enhance Ireland as a suitable location for this kind of investment. The IDA is involved in pursuing many projects. I became aware of this position well before Easter, in February or March. The Government has been active on these issues in recent weeks and announcements have been made. This Government has undertaken more initiatives in the area of telecommunications in a matter of six weeks than were undertaken in the past 75 years. Those changes are necessary to make Ireland an attractive place and to ensure we have the infrastructure and more global players in the Irish market.
Can I take it that the Minister is disagreeing with Mr. Kane, the chief executive officer of Telecom Éireann, when he says that Telecom Éireann, has the necessary infrastructure in place? Is the Minister concerned that Government policy to relocate industry to rural parts of Ireland is put at risk by the fact that Telecom Éireann's local charge structure dates from the 1950s? Has the Department done anything about this? Has the Minister been in contact with her colleague, the Minister for Public Enterprise, or is she buried in a hole trying to investigate Luas?
That is why I regret that previous Governments——
The Minister should not blame previous Governments. She is Minister now. The honeymoon is over.
In the space of six weeks we have decided to float Telecom Éireann, sell Cablelink and end the derogation Telecom Éireann had in relation to voice telephony. Those are major decisions in six weeks.
In the meantime the Minister is not bringing in parental leave.
They are the only decisions that will lead to the solution Deputy Perry wants. The Deputy asked whether I agreed with Mr. Kane. Clearly we lost this project for Ireland and it was lost for the reasons I gave.
Did the Minister contact him?
He does not report to me. I am not the line Minister for Telecom Éireann.
The Minister is in charge.
I am and have been doing extremely well as the Deputy will know. We have had a record year. I heard representatives of Telecom Éireann speak on this matter. The company felt we did not have the telecommunications infrastructure.
What does the Minister think?
I agree. I have to accept the company's analysis. It went to London for this project. I met the company in the past fortnight and I hope we can work with it to get other Microsoft projects into Ireland. I believe we can do so and the decisions made in recent weeks will help to bring that about. Ireland has invested enormously in telecommunications since the early 1980s. We have invested in the region of £2 billion but we have to continue to invest. It is a rapidly changing sector and we must have the most modern telecommunications system if we are to capture the kind of jobs that are available, particularly those that could be available for peripheral regions.
I agree with Deputy Stanton. I am delighted that many of the call centre jobs which depend on telecommunications are going outside the Dublin area. Not all are going outside Dublin, some will stay in the capital. However, in so far as we can, we want to encourage the movement of these jobs to the regions. They provide good opportunities for employment in the regions and the infrastructure can be there if we have the telecommunications infrastructure.
We all know that a project of this scale is not attracted to Ireland overnight. Can the Minister confirm that discussions with Microsoft started a considerable time ago at a time when it was clear that the infrastructure was not available? What resources did the IDA put into attracting Microsoft at a time when it knew the necessary infrastructure was not available? Does the Minister think it should have been doing so? The IDA did not suddenly discover that the structures were not available. When did the IDA start discussions with Microsoft? Was it wasting its time and giving a false impression that Microsoft was going to come to Ireland if the infrastructure was not available?
Even though the decision is welcome, did the Government decide to announce the end of the derogation on the deregulation of the telecommunications industry to hide its embarrassment that we lost Microsoft because of that derogation?
There is a misunderstanding. It is not a case of someone going to Telecom Éireann and asking it to bring all the telecommunications to one site. There are four major hubs in Europe — Amsterdam, Paris, London and, I think, Stockholm. It is not a question of one player. Telecom Éireann is linked to Unisource which is one player. One needs two if not three players on the site. All of Microsoft's European customers access its home page through Seattle. As one gets near Seattle it becomes quite congested. There are several different lines going in. We need competition. It was not just a question of Telecom Éireann going to a site and installing the telecommunications infrastructure. Microsoft wanted to make sure that other global players could access the Irish market. That was not possible until we lifted the telephony derogation.
The IDA knew that one year ago.
We have known this for about ten years. That is why it is regrettable that we did not lift the derogation earlier. It is regrettable that we had the derogation in the first place. We have made the right decision to ensure that we capture the kinds of projects that are available. There is nothing the IDA could have done. I do not know when discussions began. It may have been two or three years ago and I can inquire for the Deputy. There are ongoing discussions with all of the major players all of the time. Microsoft has a major operation at Sandyford. I am not sure if it has other operations in Ireland. The IDA holds continuous discussions with companies such as Microsoft to try to get new and additional business. I regret that we lost this project to London where Microsoft has its European headquarters. I hope and believe we will be able to get other projects from Microsoft and other companies. The decisions made on telecommunications will play a large part in bringing that about.
Denis O'Brien's personal fortune rose by £10 million or £11 million within minutes of the Government announcing the end of the derogation. Many commentators such as Matt Cooper in last week's Sunday Tribune are worried that we had a plan to which we were working. There may have been an element of media hype surrounding this matter. How many jobs were involved? Is the Minister saying that Mr. Alfie Kane was totally misinformed about the bandwidth capacity of his business or that he was lying or spoofing and not being serious about his business?
Not many jobs were lost because this is a computer which mirrors that at head office. What is important is the significance of the issue, that other players will join it and that Ireland will be seen as a hub for activity of this kind and will attract new business. One has to start small. Only a small number of jobs were involved in the initial stages, perhaps less than 50.
Forfás recently produced a report on what is needed in telecommunications. Some of the decisions are being made on foot of that report. The Minister for Public Enterprise has taken that report on board. It is an excellent report on what is required to ensure that we do not lose our competitive edge. I am giving the House the facts as they were given to me by the IDA which dealt with this company. I have also met Microsoft subsequently.
Is the Minister saying that Mr. Kane is wrong?
It is not for me to give details on others. Two Telecom Éireann representatives spoke on this matter. Ireland lost the project. We were in the running for the project and we did not get it. That is the truth. If others say otherwise they are wrong. We lost the project.
Does the Minister agree with the IDA chief executive, Kieran McGowan, who said that we are lagging behind and that thousands of jobs are at risk? Will the Minister respond to my question about the local charge structure which dates from the 1950s? Is this having an effect on the establishment of industry and business in rural Ireland?
I know of and share Kieran McGowan's views. He is happy with the Government's decisions on this matter. The Deputy is correct. Any extra costs on industry damage job potential and make companies located here more uncompetitive. That applies to domestic and foreign companies. We have had competition with the exception of voice telephony. It has worked extremely well and substantially reduced international call charges. We needed to go one step further to introduce competition for voice telephony. We will have that by the end of the year. This will result in two things. First, competition always reduces charges and brings about change faster than anything else. Second, it will bring in new major, global players. They will not come here only to handle data-based telecommunications, they also want to handle voice telephony. Radical decisions have been made in a short space of time and I am delighted they have been so overwhelmingly welcomed by the public. They will make an enormous difference in providing us with a modern infrastructure to ensure that we capture these projects in the future.
