In late 1998 the Government commissioned a high level advisory committee on telecommunications to analyse Ireland's suitability to become an e-commerce hub of Europe. The committee identified a number of potential impediments to achieving this objective. One of the more significant challenges as identified by the group was the lack of high capacity international bandwidth to and from Ireland at internationally competitive prices. To rectify this, the then Department of Public Enterprise and IDA Ireland issued a call in early 1999 inviting providers of international bandwidth to make submissions on the provision of international connectivity into and out of Ireland. The project aimed at ensuring availability of state-of-the-art competitively priced international telecoms connectivity to facilitate the development of Ireland as a significant centre for e-business. A number of large international cable operators submitted bids which were reviewed by a multidisciplinary team hired by the Department of Public Enterprise. A contract was signed on the 2 July 1999 with Global Crossing to provide Ireland with 25 year indefeasible rights of use for 160 STMs of competitively priced managed bandwidth connectivity to New York and 26 European cities for a cost of €94 million payable over two and a half years. To deliver this bandwidth, the company constructed two new build submarine cables to link Ireland to its transatlantic and pan-European global communications networks and brings the capacity from the landing stations to two points of interconnection to the global network in Dublin over two geographically diverse routes.
Under new extensions to that agreement, my Department has secured links to 40 European centres and to additional cities in the USA and Asia. These extensions were secured at no additional cost to the original contract. In addition, to maintain the competitiveness of existing routes significant reductions in the annual operating charges on all routes have also been negotiated. A process to resell this contracted capacity to telecoms operators in Ireland was initiated, with the intention of recouping the investment and ensuring that the benefits were passed on to the Irish market. All licensed telecommunications operators in Ireland were invited to acquire capacity. The Government reserved the right to retain a certain amount of this capacity for strategic research purposes and bandwidth was transferred to HEAnet to upgrade its communications network and facilitate its research programme. Initially, the resale process was oversubscribed. With the downturn in the telecoms and related markets, interest waned. A number of companies have ceased to trade and have been unable to honour their contracts-bids to purchase capacity. To date, contracts are in place for 80 of these STMs and a total of €29.8 million has been collected. IDA is currently preparing to proceed with legal action to recover the remaining debt of €12.9 million.
Since signing the contract demand for bandwidth has shifted towards wavelength and IP products. Through negotiations, my Department has ensured that the Government's bandwidth is now available as IP and wavelengths. With the economic downturn companies are also less willing to enter long-term contracts for managed bandwidth so my Department has negotiated that bandwidth products may now be made available on a lease basis. The market value of the bandwidth is currently being established by experts recruited by IDA Ireland. My Department has also recruited a sales agent to assist in selling and leasing the remaining bandwidth.