JOINT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES (Sub-Committee on Information Communications Technology) debate

Telecommunications Services: Presentations.

Chairman

I welcome Dr. Ricky Richardson, an acknowledged authority on the emerging fields of e-health and telemedicine. He lectures frequently on the subject and his opinions and views have been sought by various media worldwide. He is chairman of the United Kingdom e-Health Association and chairman of the pan-European e-health working group of the European Health Telematics Association, EHTEL, a European Commission funded body mandated to promote and implement e-health and telemedicine activities across the European Union. He was elected to the governing body of the EHTEL in March 2002. He was co-founder of the International e-Health Association and sits on its medical advisory board.

I thank Dr. Richardson for travelling from the United Kingdom to assist the committee and give us an insight into his valuable knowledge of e-health. Before proceeding to the presentation, I draw attention to the fact that while members of the committee have absolute privilege, this same privilege does not apply to witnesses appearing before the committee. While it is generally accepted that witnesses will have qualified privilege, the committee cannot guarantee any level of privilege to witnesses appearing before it. I ask Dr. Richardson to confine his presentation to around ten minutes, after which my colleagues will ask a number of questions beginning with Deputy O'Donovan.

Dr. Ricky Richardson

I thank the committee for giving me the opportunity to share experience from other parts of the world. Before doing so, I will explain what e-health means. For the first time, we are seeing in the health sector what I call "unfamiliar bedfellows". We need new skills in the health sector which differ from traditional ones. We live in an information rich age and this process is accelerating. In the presentation, members of the committee will see a black and white image of a television 50 years ago alongside a recent picture showing a television screen on which news is breaking. In 50 years there will be human colonies on Mars.

The essential question in respect of e-health is who will be the primary care physician in an e-health enabled health care sector. The answer is e-patients, that is, patients empowered with knowledge who are able to make more choices in respect of where and from whom they receive health care services and how it is delivered.

What does e-health mean? Although there are many different explanations, I will focus on mine. I first started working in this field 15 years ago and spent five years at Harvard Medical School developing its international telemedicine programme. In those days, I thought e-health was simply a delivery mechanism which functioned in a similar way to an ATM in terms of banking. E-health is a means of moving the interface point of the service out of the traditional space, a hospital, into the retail and home environments. At the same time, it is also much more complicated than this.

E-health has four or five critical aspects, the first of which is clinical applications. These are tele-consultations which were previously known as telemedicine, an expression which will die out quickly as it is only one part of one clinical application of e-health. The second clinical application is clinical decision making support software. I work as a paediatrician in Great Ormond Street Hospital in London. I have a computer on my desk which, when I question it, gives me information such that I can make a better decision on the management of the patients I look after.

Vital signs monitoring services, often driven by call centres, can look after the vulnerable in our communities, namely, the people with chronic disease who consume, on average, 60% of health care budgets. Home care is rapidly developing as a means of looking after elderly and vulnerable people in the community. These are all clinical applications of e-health.

The second pillar is the use of the worldwide web and e-learning tools to deliver personalised health care continuing medical education to doctors, nurses, allied health care professionals and everybody in the health care environment. In the United Kingdom, we recently launched the NHS university, a virtual university, to deliver personalised health education to 1.3 million people. This is health care professional education.

The third pillar, the use of the media to deliver health care messages relevant to populations, is an under-utilised process. We know from experience in Malaysia, Queensland, New Zealand and elsewhere that one can change health care demand profiles of populations if one provides appropriate public information using the media. In Malaysia, for example, we barraged 100,000 members of the general public with information on health matters relevant to their communities using radio, television, the Internet and newspapers. We then measured their health demand profiles prospectively over five years and compared them with a matched control group in a different part of the country. While one cannot eliminate all the variables, one can eliminate most of them. Members of the informed group behaved completely differently from the control group. They self-treated conditions for which they would have previously attended the doctor, used pharmacists, established online patient association chatrooms, which was a surprising finding, and when they presented to the health care service providers, they were focused and acted appropriately. This had a massive impact on the cost to providers of delivering services.

The last pillar is what I describe as the lifetime health plan. Again, this evolved from experience elsewhere in the world. The concept is that one gives a foetus an empty shell electronic file at conception, that is, when the mother's pregnancy is first recognised. The file accumulates and records every health incident the individual in question encounters from conception to death. One logs off when one dies or perhaps not if one believes in the afterlife. One also adds the genomic fingerprint data of the individual, the socio-economic journey he or she makes through life and their lifestyle patterns, environment and education. This provides one with an extremely rich personal dataset which is dynamic and growing for each individual. One then depersonalises the data, clusters it into populations and uses it as an epidemiological tool to predict health care trends in populations. When one sees adverse health care trends emerging, one eliminates them with e-prevention strategies, which we are beginning to do on the pan-European level with the assistance of the Commissioner for Health and Consumer Protection, David Byrne, an Irishman who is driving the process to get a pan-European epidemiological tool under way.

All these pillars come within the ambit of e-health and each heralds a major reform in the delivery of health care services. Once one has an e-health enabled health care system, one can introduce national e-prescribing, e-booking services and similar initiatives. There are, therefore, four pillars of e-health, each of which must be developed concurrently. This can only be achieved using broadband and must be introduced on a national basis to derive benefits in terms of health budgets. We cannot do it without broadband and we have to do it on a national basis to get the benefits, in terms of health budgets. The area of e-health is very complex. It touches all of the stake holders I have listed here. It is not simply a veneer over an existing system, it is a transformational change - and that requires careful handling. It is also important to put it in perspective. We are all looking for cost containment in the way we deliver health care. We are living much longer than we used to which has an impact on the cost of keeping elderly people alive.

Many of the diagnostic and treatment procedures that were previously only available to in-patients are available on an ambulatory basis. If one wants an MRI in the United States today one does not go to a hospital, one goes to a shopping mall because that is where the radiology centres are located. Disease patterns are changing all over the world. IT is making a significant impact. Patients are hungry for information about health. There is a shift in responsibility from the provider towards the patient for maintaining ourselves in a state of wellness. What is happening is that the management of knowledge is shifting the way we expect and ask for health care services.

Here is a slide by Jean-Claude Healy who is the head of the health directorate of the Commission. It is a very good one. IT is regarded as a gadget in the bottom block. It is regarded as a Trojan horse in the blue one. We have seen networks developing and this is where we see complete integration happening. The manufacturing industry went through this S-shaped curve in the 1980s, the financial services in the 1990s and in the public sector we are here today. We are emerging from the gadget mentality. We are seeing the development of networks and e-health solutions being applied and we will have complete integration very rapidly.

I do not have to remind the committee of the traditional health care delivery model with teaching hospitals at the apex and the patients at the bottom of the pile. It was conceived by the Egyptians 6,000 years ago and it has not really changed very much since. We expect patients to come to us as we sit in our ivory towers which is an abomination, because health care is a service which should be delivered to the consumers. The future health care models are very different. The first thing one will see is that the pyramid is inverted and the teaching hospital component is now replaced by clusters of specialists irrespective of physical location. Their knowledge can be distributed through e-health and telemedicine, both to the health care professional body and also to the e-patients themselves. Many of the services that were previously only available in these buildings have now moved into the retail environment.

In the UK, Boots, the chemist chain will offer X-ray services in its 1,400 retail outlets next year. That X-ray will be one fifth cheaper than the same X-ray sourced from a hospital because there is no overhead. Once one can dissociate the taking of the study from the reading of the study using digital technology one obviously places the taking bit where the people go. We are seeing a whole explosion of services moving out from hospitals and clinics into other environments; the retail environment, day care surgery, health kiosks within the project in Singapore. The community hospitals will back to e-enabled cottage hospitals, as it were, where the primary care physicians will be able to look after their own communities in their own facilities but are backed up by access to the knowledge base which exists here.

Informed patients who have access to the web are now driving the whole thing. They have access to interactive digital health channels and they want direct access to patients. The demand is changing and it is changing because of knowledge sharing. Globalisation impacts on health care. We have already discussed how the services are moving into the retail environment, what I call shopping mall medicine. We are seeing a plethora of health on-line websites, some of the content of which is dubious but there is a hunger for it. District, general and regional hospitals will eventually become obsolete as we move the services out. There are analogies with the banking world. ATMs were initially installed inside the high-street banks but they are now everywhere.

Chairman

Sorry.

Dr. Richardson

Yes, I have finished.

Chairman

Sorry, did Dr. Richardson say obsolete?

Dr. Richardson

Yes, I did. We will see a similar state of affairs to what took place in the banking world when ATMs migrated from inside the banking hall to the high street. Hundreds of thousands of high street banks closed down because an essential transaction that was previously only available inside that space moved out. Exactly the same thing is happening to the health care sector. Panic about more beds is a complete nonsense because it is against the European and global trend. I am sure Ireland is no different. We are starting to see epicentres of medical excellence emerging throughout the world whose expertise is niche, like the Cleveland clinic, for example, that is now available to the global patient community. We are beginning to see the development of managed clinical networks which address all patients in a country with a singular disease state. We are moving from location-specific care to patient and disease-specific care. The hospitals of the past used to draw patients from the physical location of 5-10 km but e-hospitals of the future will address global patient communities and populations previously inaccessible to health care services; the shipping industry, the airline industry, hotel resorts, multinationals exploring for oil in Brazil, the military and space travellers.

I sit on NASA's deep space medical support programme and we are designing the specification of technologies that will have to be developed to support the manned mission to Mars which, if the committee is interested, leaves in 2015. If members want to go, please give me their names afterwards. Mars is a fascinating environment. It takes six months to get there. One must live there for six months for the planet to be in the right position to come back and it is a six month return journey implying a minimum 18 month return trip. They are sending eight astronauts on the first mission; five boys and three girls. We may have a cyber baby. Who knows? The impact of this is very significant. It has a huge impact on practices and training as well as on how people are paid in the health care sector and what kind of young people we want to attract into this area. It is important and delightful that patients are now being included in the decision-making process.

I have three or four more slides. Who will be the primary care team of the future? It will be e-patients, patients empowered with knowledge. They will drive this process in the future. We will see web communities. We have already started to see patient associations using each other as a resource on the European scene. We are looking at using pharmacists, a long under-utilised resource in the system. The family doctor will change and become more like a wellness guardian.

This is the history of IT in health care. In the 1980s this surge was driven by technology companies with gadgets selling into what was essentially a virgin and ignorant market. The doctors all sat on the fence or resisted. In the 1990s we had a few disasters. They were not technical disasters, they were process change disasters. No-one understood what the implications of an e-health enabled health care system would be. There was some disappointment and money was wasted because systems were obsolete. There were no standards and so on. Why are we at this point today? We are here because of globalisation and how it has affected the health care sector. We are here because health care economists are looking at the macro picture. They are looking at dismantling bricks and mortar and that makes a huge difference to national budgets. We are here because patients love the fact that the service is coming to them and broad bandwidth is required to do this. We are here because the medical profession is beginning to accept it. I am a physician so I can say this; we all know that doctors are arrogant, bigoted, refractory, avaricious, conceited and, essentially resistant to change, but we are not stupid and when we see a tidal wave of reform we want to control it. The control opportunity has gone. That is why we need additional skills to manage this process.

The first transmission of medical images was in 1967 between Logan Airport in Boston and Massachusetts General Hospital and we have been through a series of evolutions over the past 30 years. What we are doing now is understanding that e-health is a generic term that captures clinical applications, health care professional education, public health information and epidemiology, as I have described.

I will finish with a few slides about the European Commission because Ireland is a member of the European Community. David Byrne, Commissioner for Health and Consumer Protection, has a mission statement to free up medical services across Europe and make them, irrespective of location, ubiquitously and equitably available across the whole community, that is 550 million people. It is not an easy concept to appreciate. He is also driving e-health and telemedecine as an essential platform to deliver this mission. There is no other way. There are many barriers, mostly regulatory and remunerative, and those are being addressed. New technologies are being developed and we hope some of them will come from Ireland which has a history of innovative IT solutions.

The issues in Europe are similar to those in any other country. We have an ageing population. If we believe Eric Lander, chairman of the Whitehead Institute and one of the lead investigators in the human genome project, our grandchildren will probably live to be about 120 years old. If we add to that statement that today 49% of us over the age of 85 have some kind of degenerative disease similar to Alzheimer's, we are looking at a time bomb. It makes the possibility of compulsory euthanasia at 65 quite attractive.

We also have the problem of candidate countries. I was in Romania a few weeks ago which still has orphanages. They still use a wooden plough and a horse so when they join the EU in 2007 they will make demands for health care services which may destabilise the current provision in member states such as yours and mine that have them in abundance. How do we deal with that? How do we prepare for these excessive demands which will destabilise what is effectively a federal health care system in Europe? The solution is to drive the point of care outwards, to make health care a service available to everybody, wherever they are physically, and use e-health as a core platform. We are already starting to see patients and health care professionals migrating across borders in Europe.

I will give the committee some examples from other countries before I finish. Where are we today in Europe? We are over the revolutionary phase; we are into an evolutionary phase. We are into the most difficult phase of implementing e-health, taking into account the pillars to which I referred. Although most countries including Ireland, especially the Southern Health Board, much to Ursula O'Sullivan's credit, have been pioneering some of the teleconsultation applications, we are not really using the web as a tool to disseminate health care professional education yet. We are doing a little bit of public health but not very much with the general public and we have not even started with the lifetime health records as I have described. We are starting to see the emergence of a few national programmes of e-prescribing, e-nursing and so on.

In the UK the Government has committed £60 billion, a large sum of money, to reform the NHS over the next ten years. That is an example of one government in Europe that has committed substantial amounts of money and much of that will be spent on IT enablement, e-health. The consequence in the UK is that there will be a national e-prescribing and e-booking service. Everybody will have an electronic health record. There will be massive uses of home telecare vital signs monitoring and e-nursing. Patients will have more choice. All of the things to which I referred earlier are being implemented, the money is there.

In Malaysia they started this process ten years ago. They recognised that the four elements of e-health were teleconsultation, disseminating health education for health professionals, public health information, and the lifetime health plan. They decided to implement it over a 20 year period. It cannot be done in five years when elections are due, one has to take a much longer view and luckily in Malaysia they have a Prime Minister who is a visionary, a megalomaniac and also happened to be a doctor so he was able to drive it through.

Centum city is the first cyber city to be built and I did the health master plan for this as part of a Harvard Business School commission. Pusan in South Korea is the third largest port in the world and we are building there an epicentre of medical excellence which will be linked to other epicentres in the US, in Europe and Australia because Pusan sits within two hours flying time of six billion people. These people may not have disposable income to spend on health care services today but they will in ten years time. This is a long-term play but it is being set up as an e-health institute and centre with links around the world to other epicentres.

We are doing work in developing countries.

Chairman

I will have to stop you there because time is short and I want to thank you for your excellent presentation. It is certainly visionary and I have no doubt that my colleague the Minister for Health and Children, Deputy Micheál Martin, would be delighted to meet you and to hear your views on the future. I invite my colleague Deputy O'Donovan to ask a number of questions on the presentation.

Deputy O’Donovan

On behalf of the committee, I welcome Dr. Richardson. As the Chairman has said, he has given us a visionary presentation. There are a couple of issues which arise. In Ireland for the last decade or more the cost of health care has been the Achilles' heel of a number of governments, including this one. In the UK in the past ten to 20 years the overall costs in health care have been crippling but pumping in more and more money, whether in Ireland or the UK seems not to be the answer. How does Dr. Richardson think that e-health can reform this? In Ireland when it comes to Governments and the Exchequer, the finances are the important thing. The problem for our Minister and Cabinet is how to save money by going the road of evolution into e-health care.

The size of our broadband, according to several submissions we heard yesterday, is lagging far behind much of the rest of Europe. What size broadband would Dr. Richardson suggest our hospitals and our GPs should seek to acquire, and how would that compare with other health systems? Maybe Dr. Richardson is not in a position to answer this but how does Ireland compare in e-health services to other countries, particularly in the developed world of Europe and the US? Are we still lagging far behind in broadband technology here, which it appears we are?

One final point, which came up in the course of Dr. Richardson's presentation: I represent a rural constituency in the south west, which might be like parts of Wales or Scotland, remote from urban centres, where there is a debate about local hospitals. Dr. Richardson mentioned that he can see the time coming when not alone will regional hospitals become obsolete but the district hospitals. Politically, that is a hot potato for some of us. Could Dr. Richardson enlighten us a little more in that regard? If I were to go to my constituency in the morning and say that the Bantry or Mallow hospital will become obsolete and that we should think outside the box, how would I get that message across to my constituents?

Dr. Richardson

The Deputy has asked me four questions. I will answer them in order. The first is on economics. If one addresses e-health on a national basis one can prove that it is possible to reduce the overall cost because macro-economists have done the sums. Of the cost of people being in hospital 60% is the cost of the hotel accommodation and the overheads. If one can drive the services out of the hospitals and clinics and make them available at street level and in the home, with home care, and accessing specialists virtually for consultations which prevent people having to travel for four hours to Dublin to see an oncologist, one can save substantial sums of money in overall national health care budgets. In doing so one has to accept that the current model of hospital as the point of exchange for health care will have to change. The service will have to be driven out of the hospital. I have already given the example of Boots doing X-ray services for one fifth of the price of the same X-ray in a hospital. It is the same X-ray, it is read somewhere else but the price is so much lower simply because the overhead of the hospital is not included in the price. There have been good studies in Queensland, New Zealand, Malaysia and in parts of the United States that amply demonstrate the efficiencies in budgets that can be achieved if one develops an e-health system nationally.

The second question concerned broadband. In Wales they are putting in a 30 megabyte broadband network to connect all hospitals. In due course, all GPs will have the same broadband width access. As I have said to the British-Irish Council meeting which I addressed in March, the first thing if one wants to go down this route, is to put in a broadband network. It is the conduit that makes everything possible, not just healthier provision, not just the clinical applications such as teleconsultations, but the educational aspects are very important. As part of the NHS university in the UK, we are planning to deliver standardised health messages to every school in the country by linking all the schools with a broadband access so we can give standard messages to pupils on matters such as sex education, alcohol and so on.

What is happening in Europe today is that there are fragmentary initiatives of e-health, including telemedicine. There is good experience of this in the Southern Health Board. Radiological images are now being moved to neurosurgical centres. However, it is fragmented. I did the national strategy for Wales some years ago. What is needed here is a national strategy to be developed and then implemented in line with the health care reform programme. I have been to some 76 countries advising Governments on health care reform, so I have some experience of what works and more importantly what does not work. What is necessary is to develop an e-health strategy for the whole of Ireland. Critically, it needs to involve the senior clinicians at the very beginning. Projects that I have worked on that have failed were those in which the clinical community were not involved. It does not simply mean the medical community but also the nursing community, as they are the most affected by these changes.

There is a great opportunity for e-health in Ireland. In European terms, the population is relatively small at 3.5 million people. There are scattered communities where the time taken to travel between A and B causes difficulty. There are excellent medical resources in Dublin, Cork and Galway which need to be disseminated throughout the country by using video conferencing and other forms of dissemination. There is also a wonderful educational programme that can be distributed around the country. Establishing an e-health institute would be an exciting prospect and could be used as an exemplar site for the rest of Europe. I know Mr. David Byrne would be in favour of such an initiative. Europe is desperately looking for exemplar sites because they need to see it working in another European country so that it could be adopted elsewhere. Ireland has a rich IT industry that could be an opportunity for those companies to develop innovative solutions that can be tested and then sold across Europe.

Chairman

I thank Dr. Richardson for his presentation. I understand he addressed the Welsh Assembly this week and has been travelling much. The sub-committee appreciates that he took time to come to our Parliament to share his vision and views.

I welcome Mr. Jerome Morrissey of ICT Ireland-IBEC. I must draw attention to fact that members of the sub-committee have absolute privilege but this same privilege does not apply to witnesses before the sub-committee. It is generally accepted that witnesses will have qualified privilege. The sub-committee cannot guarantee any level of privilege to witnesses appearing before it.

Mr. Jerome Morrissey

I intend to talk about the case for broadband in schools. As a preliminary, I will say something about the present state of broadband in schools, the numbers and ratios of computers in schools, and their location, and how much the lack of broadband may influence the integration of ICTs into the curriculum in Ireland. I may then say a little about the kind of school teaching that will go on if broadband is available and if we approach what should be a digital literacy curriculum in schools.

I am presenting a preliminary look at some of the statistics which have come back from a national census of schools which we did. We got results from more than 83% of schools. The survey is not analysed yet but it is a completely up to date picture, and it shows that there are about 67,000 computers out there. If we extrapolate upwards to 100% of schools, there are probably 84,000 computers. The survey makes it clear what has happened since 1998. We were lucky that we conducted a very extensive survey in 1998, in 2000 and in 2002, so we are able to see what progress has been made, where it has been made, where the needs are and where the lax or slow approaches are.

As can be seen from the survey figures, when my centre was established in 1998 the ratio of pupils to computers in primary schools was 37, a European high at that stage, and in 2000 it came down to 18. At present the figure looks like 18.5, going by the new results we have. At post-primary level the ratio started at 16, went down to 13 in 2000 and is now down to 9.4. There is a national policy objective to get the ratio down to five to one in post-primary and nine to one in primary. We are probably on the road.

The survey supplied a piece of information which, though not altogether relevant, may be of interest to the committee: additional expenditure provided by schools through fund-raising, parents' contributions and commercial sponsorship has amounted since 2000 to €13.7 million. That is the amount reported. For obvious reasons not all schools answered the relevant question, but the information provided probably indicates that at parent and community level there is a real belief in the power, value and significance of ICT in schools.

The survey further shows that the computers to pupil ratios in disadvantaged schools started at a strong level in 2000 and have remained as strong. I was worried in case the ratios might have dropped, that the schools might not have been able to maintain them, but that does not seem to be the case. The issue is more about using the computers, and perhaps for pupils in disadvantaged areas it is more an issue of having access to skills out of schools.

At post-primary level, the survey shows that in terms of average PC ratios and numbers of computers, the vocational schools are probably leading the way in terms of physical plant, so to speak.

Regarding the location of the computers in schools, there are some stark contrasts. In primary schools, 50% of computers are distributed in classrooms, whereas in post-primary schools the comparable figure is 6.8%. The reverse is the case when it comes to computer rooms, with very few of these in primary schools and most post-primary schools having them. These findings obviously reflect the way the curriculum is organised. A teacher in a primary school is in a classroom all the time. The international tendency is to put computers into classrooms, but over the past three years there has been an increasing push to have computer rooms which are well equipped and facilitated with broadband so that pupils can work in these rooms on their own time. In a way, the lack of broadband contributes to maintaining the existing situation.

While almost 75% of classrooms have computers, fewer than half of those would be connected to the Internet. That clearly indicates that there is no broadband, and that the schools simply use ordinary phone lines. The number of networked computers is obviously very high in post-primary schools because in these schools they would at least have an ISDN line. What I am trying to say is that the availability of broadband will also drive networking in schools.

Internet connectivity is the core of what we are talking about this morning. The survey shows that 73% of primary schools still have only an ordinary home telephone line for computer access. There is an ISDN line in 85% of post-primary schools, and some have a number of ISDN lines. That is much the same as it was in 2000. Connection via DSL is, disappointingly, very low, and the satellite connections are projects we are sponsoring on the west coast for access in disadvantaged and island areas.

In general, there is no broadband in Irish schools. There is no bandwidth coming into schools, and that is reflected in the use of online activities. One of the graphs supplied shows that the average number of hours spent online per month in primary schools is 14. The figure in post-primary schools is 56. In 2000 the figure in primary schools was 8 hours per month, while the post-primary figure has risen only marginally since then. The usage is tiny. The key reason is non-availability. There is no access to computers, and where there is access, it is slow. It is a bit like having to crank up an old car with a starting handle. It takes a long time, and teachers do not have to time to do it. We need high-speed access permanently.

The use of the Internet is interesting. Some of the details supplied are not immediately relevant, but it is important to consider them. Close to 100% of schools have e-mail. As for the types of Internet use, the category which comes highest is that of "teachers finding teaching resources". Teachers want access to the Internet to find such resources. A growth area in terms of usage is that of pupils themselves learning, finding resources, doing research - and if we had broadband, that element of Internet use would grow enormously, with greater access.

How do schools feel? They say that their aims are for all pupils to have a basic level of ICT skills, to integrate ICT into curriculum subjects, to use ICT to support students with special needs and to ensure that pupils with no computers at home are not disadvantaged. These are all very laudable, important aims, and the availability of broadband would play a huge part in addressing them. Faster Internet use is rated by almost 60% of schools as a critically important school requirement, along with Internet access on more computers.

That paints the picture as it currently is. How do we rate internationally? In 1998 we were fairly highly ranked, and we are still doing well on computer ratios. However, the utilisation of ICT in schools is not really about ratios, about having banks of computers. The most recent research coming from America, where there is a plethora of technology in classrooms along with massive school access to bandwidth, indicates that the issue is about access, about usage. We cannot provide usage if we do not have bandwidth. It is always a risk: providing lots of computers unconnected and disjointed in schools is not the answer if broadband is not available.

The figures supplied show that on the Eurobarometer we are under the EU average for ratios, though we are doing well. We come last in the EU on the provision of broadband connectivity to schools. The EU average is 32%, with Sweden, Denmark and Finland at 60% or above, and Ireland at zero rate. It is probably no accident that the Scandinavian countries, which have in their school environments the highest access ratios, the highest number of PCs, the highest connectivity and the greatest use of ICT technology, are also the most technologically advanced countries. Where do we go from here? We need more equipment. We must ensure that broadband connectivity is provided not merely to schools but to each classroom, and that there are computers in each classroom. We must enhance our ICT teaching skills and how the technology is used pedagogically in the classroom. We must integrate it into the curriculum and, last but not least, we must provide digital resources. Access to relevant, curriculum-based materials is of crucial importance.

The other main reasons for broadband are video and multimedia applications, on-line learning, individualised materials and virtual learning environments. The idea of a virtual school exists in various parts of the world, and it will happen here. There will be a great deal of collaboration, and schools in remote and disadvantaged areas will be able to have mainline discussions, exchanging information and projects with schools all over the world. All those things are happening on a small scale at the moment, and we wish to make it a little more regular. We obviously want to use broadband for the professional development of our teaching staff.

By digital literacy curriculum, I mean that the next wave of the information society is not simply about being fed with doses of information through all the different channels. It is about the individual being active and participatory, taking the digital technology, for example, a video camera and a computer programme, and making his or her own resources. Digital literacy is about using technology, creating one's own product and being one's own editor, evaluator, producer and publisher. That is the way all our lives are going. We must produce this kind of know-how, pushing access to those technologies in the first instance and guiding our students through a digital literacy programme. If we do that, young people will learn and acquire knowledge and information under the guidance of the teachers, but at their own pace and in their own style. The resulting educational attainment will be varied but massively enhanced. There will be new pedagogies of teaching and learning as a consequence.

Chairman

Thank you very much for that presentation. The document you put before us today will be very useful and helpful to us. We acknowledge the role you have played regarding schools and the ICT area in recent years. SenatorKenneally will have some questions for you about connectivity and its cost.

Senator Kenneally

I too welcome Mr.Morrissey and thank him for his presentation and for giving us such up-to-date information, which will obviously take some time to disseminate.

A few points spring to mind on which he might expand. He mentioned how far advanced we were a few years ago. An OECD report showed that we were the first country in the world to have 100% of schools on line. He mentioned that our broadband connectivity is now 0%. It seems that we have gone from leading to last position. Why have we slipped in that way?

Mr. Morrissey

The Senator is absolutely right. In 1999, we were rated number one, since 100% of our schools were connected to the Internet. That was absolutely accurate, but the level of connectivity was primarily at PSDN rate. Many countries in Europe were the same, but in the meantime they have all moved on, providing broadband in various guises, be it DSL, satellite or leased line. All those facilities and telecommunications services are available to schools around Europe. We do not have them yet, and that is the problem. If the Government made €40 million available tomorrow morning to provide broadband to Irish schools, 60% of those schools could be provided with it only by satellite. Despite all the talk about the availability of DSL, fewer than 20% could currently get it. It is a question of availability, and the telecommunications industry will obviously not provide broadband at a loss. It obviously sees no business case for providing it to schools, so something must be done to enable them to have access.

Senator Kenneally

Leading on from providing access, what speed is required in the various schools? I know that it will have to be delivered to schools in different ways depending on their geographic location. It will also be delivered to homes. What speed or band width would be needed for students in the home? What should it cost - not so much in schools, for that will not cause great difficulty - but in the home? In one of yesterday's presentations, someone spoke of a survey that had been carried out. When the price was at a particular level, it was estimated that there would be a very high take-up. As the price rose, the take-up was expected to fall. I suppose that is natural. Perhaps Mr. Morrissey has a view on what the cost should be.

What is being done in this country to enable student-led learning? We have target pupil to computer ratios of nine to one in primary schools and five to one in post-primary schools. Is that sufficient? Mr. Morrissey has told us that they have achieved a ratio of three to one in Denmark. Should we move to where, in every classroom, in every school in the country, there is a computer on every desk, rather than pupils going into the computer room for between half an hour and two hours every week?

Mr. Morrissey

I agree with you.

Senator Kenneally

I am interested in what is available through this medium. I am no expert, but, as far as I am aware, if one accesses the web, one will find very little about the Irish curriculum on it, perhaps downloading material from America, the United Kingdom or elsewhere. That can be developed, particularly regarding our own curriculum. Many parents will have had the problem that a teacher in a particular school is weak. There is no question that there are poor teachers, just as there are some excellent ones. One's son or daughter can be unlucky enough to get a poor teacher, and there is nothing one can do about it. If something were available on the web which a student could access to learn from someone else, perhaps some of the better teachers could download such material or be available on line to answer questions. Very bright students can be bored because no one else is keeping up with them, and it might be more challenging for them too if that were available. Is enough being done in the Irish educational establishment to provide such information on the web for access by students?

Mr. Morrissey

I agree with the Senator on the point about ratios. In January 2000 the aspiration of nine to one for primary and five to one for post-primary was set. Things have moved on internationally, and that is probably the best answer to the Senator's question. It would be much easier now to say that students should have access to ICT at all times. It is no longer about a fixed computer on the desk but about portable equipment, PDAs, laptops, tablets and all the rest. One can see many initiatives around the world, for example, in America, where whole classes or schools are being provided by state authorities with laptops at a reduced rate. All this talk about ratios will fade away in time because of access to cheaper portable ICT. In the same context, we must really bridge the gap between home and schools. It also answers another of the Senator's queries. I am particularly worried about schools in disadvantaged areas, where there is still no access locally and people will not have the skills. Hewlett Packard has sponsored a digital villages initiative. It put computer rooms into flats complexes in the city, which are being utilised to a fantastic advantage. In terms of disadvantage, we must look at these kinds of outreach, which are always available, day and night. In regard to parents, obviously broadband should be available to homes at a very reduced rate. I do not know what that rate would be but €20 to €25 a month would make a huge difference.

In terms of learning resources, we must have relevant learning resources. There is a great deal of international research indicating that teachers and students will not bother wasting hours going into the Internet to find relevance among all kinds of databases. At this point we are trying to make Scoil Net into that type of an activity. That has not been the case up to now but we have a major project with RTE in the development of relevant interactive multi-platform resources, which will target serious topics in the primary and post-primary school curriculums. If there is not that type of relevance, which is sharply targeted, interesting and attractive, one will not enable self-directed learning. We must provide that type of facility where people can learn anywhere, progress and take their qualifying examinations without having to follow the pace of everyone else.

Deputy Broughan

I thank Mr. Morrissey for his presentation. When the Government took office in 1997 there seemed to be a clearly defined ICT programme for schools under the former Minister for Education and Science, Deputy Martin. The figures looked well in 1998. Does Mr. Morrissey think we need a major initiative, not just by the Minister, Deputy Dermot Ahern, but by the Minister for Education and Science, towards the ideal of having a computer on each desk which is always on connectivity? Is there a national priority? It will mean profound changes in regard to educational spending. The bulk of spending currently is on teachers' salaries. This will obviously be a major ongoing cost. The children we had here yesterday had the Eircom bill for their school. Obviously there will be major consequences in this regard.

I take it Mr. Morrissey would support hypothecated attacks on the industry by the Minister if it was a way of realising some of his funding. He also referred to pedagogies of learning and that perhaps education will be transformed in the way people will continue to learn in the future.

Deputy Coveney

There seems to be a trend in all the presentations which states the obvious, that is, that without broadband people cannot access the full potential of the Internet, e-learning or whatever they use the web or connectivity for. Perhaps that explains the relatively low usage in Irish schools in the number of hours per month. There seems to be a very clear issue that we need to connect to broadband to allow schools get the full potential out of accessing the net for all sorts of reasons. Currently there is 0% connectivity compared to other countries. The excuse seems to be that 60% of schools would need satellite connections to be connected because they are in the regions in rural areas. Finland, Sweden and Denmark seem to be leading in this regard even though they have equally sparse populations, particularly Sweden and Denmark, and Norway is not that much different. They are clearly using technologies to span the gap.

Would Mr. Morrissey agree with me that it is no longer an excuse to say that satellite technology is not affordable or available, because it is both? There is a product available for €65 or €70 a month which gives direct access via satellite. I presume Mr. Morrissey would recommend that we should push the Minister to ensure all schools get broadband access via whatever media is required for their area, regardless of whether it is via wireless, satellite or cable link. It should be affordable given that the technology exists.

Mr. Morrissey

I agree with the Deputy. We have an aspiration to have at least two megabytes into each school to enable all the multi-media applications schooling will need. To reply to the question about pedagogies, changing and teaching styles, broadband - not broadband per se - is just the foundation block. One needs to have it and to forget about it. One must then focus on resources, the styles and methods of teaching and on the way pupils learn. Our primary school curriculum, which adopts a child-centred constructionist principle, including access to resources when they are needed at home or in school, will enable self-directed learning to a great extent. This is not about broadband. It is about getting it in there and forgetting about it. It is also about concentrating on how one can effectively use it in the teaching and learning environment. The resources to which people referred must be in place. If resources which are seen to be relevant and totally focused on the curriculum are not in place, neither teachers nor pupils will use them. This is a fact, except in the broader notion of research.

In regard to policy, the Department of Education and Science is currently developing a new policy on ICT, which I believe will be available sometime in the autumn. This will follow on from the blueprint because the existing policy will run out at the end of the current year.

The Deputy is correct is regard to the spend. It is music to my ears that there may be a levy available because approximately €20 million or €30 million a year, or perhaps more, will be needed to provide broadband to schools. It is an extra expenditure. There is also the issue of maintenance which has not yet been tackled. Technical support at school level has normally been carried out by the schools themselves.

Chairman

I thank Mr. Morrissey for his excellent presentation, which will be very helpful to us. We know what is coming through following the session yesterday - there must always be connectivity at affordable rates. I am sure when we meet the telecoms companies we will have a great deal to say to them as the sessions progress.

I welcome Mr. Brendan Butler and thank him for coming. I draw his attention to the fact that members of the committee have absolute privilege but the same privilege does not apply to witnesses appearing before the committee. It is generally accepted that witnesses would have qualified privilege, but the committee cannot guarantee any level of privilege to witnesses appearing before it. The committee is aware that ICT Ireland is a key player in policy-shaping, representing all Irish business and not just multinationals, but also indigenous business and entrepreneurs. Perhaps Mr. Butler will confine his presentation to approximately ten minutes, which will be followed by questions from Deputy Ryan.

Mr. Brendan Butler

I thank the sub-committee for the opportunity to make a brief presentation. My colleague, Michelle Quinn, is an executive with ICT Ireland.

We want to approach the issue of broadband from three perspectives. The first of these concerns business and its needs in terms of broadband roll-out. The second concerns the public, and schools in particular, in terms of their requirements for broadband. That has been debated and we caught some of it. The third issue concerns the question of the role of Government in terms of broadband roll-out.

I presume that in presentations the committee has had already broadband has meant different things to different people. We do not need to go into any definition other than to say that what we are trying to do is to provide Internet access and online facilities at a faster speed than currently available to large sectors of society. The benefits and potential of broadband do not need any explanation. The stated position of the Irish Government is that it wants Ireland to be seen as a world leader in ICT and e-business. Clearly broadband has a huge role to play in bridging the divide that currently exists.

On the business platform, it is recognised and accepted that, mainly through Government investment, international broadband connectivity out of Ireland is quite good and is regarded as satisfactory in terms of business requirements. Many industry representatives would say it is less expensive to do business online Dublin to New York for instance than to do business from west Cork to Dublin. Therefore the business issue mainly focuses on what is happening in Ireland rather than the international perspective.

There are two key issues for business and the other two strands. These are access to broadband and cost. Some progress has been made, particularly in the past three to six months, in terms of access and cost. The increasing roll-out of DSL is welcome and has been of particular benefit to smaller companies.

In terms of the public and schools we see the current deficit as critical to us achieving Ireland's position as a world leader. Our understanding in terms of PC penetration and Internet access in the home is that just over 30% of Irish homes have PCs. The position in countries such as Denmark, Sweden and Finland, which are the world leaders, is at least double that, as mentioned in previous presentations. We are now flat at just over 30%, and have been for two or three years. In this area standing still is really falling behind or a step backwards. This is a critical issue and is one on which the committee has already had debate in regard to the education system.

In regard to Government there are three issues - infrastructure, the 19 town initiative and the question of e-government and the provision by individual Departments and Government agencies of on-line services where people can conduct their business on the Internet. There is an ambitious plan set out by the Government in the New Connections document but we sense that there is some significant slippage already in terms of the targets it sets. We are concerned about that.

Another area in which the Government has a significant role is regulation, both its quality and quantity. Depending on which part of industry one is talking about there are mixed views on the regulatory framework and how effective it is. Several important directives coming through the EU over the coming months will be critical in terms of the operation of the telecoms market and broadband.

We all know and have a broad vision of where we want to go. What are the barriers and what is stopping us getting there in terms of business, public and education requirements? I have mentioned some of the issues but another real one is the question of demand and supply and which comes first. It is clear that none of the operators will provide any additional services unless there is a commercial return. The structure of the telecoms market is such that we would be foolish to try and put telecoms operators in a position where they would provide services that would lose money. They will simply not do it and we need to face that.

What telecoms operators are saying in terms of extending their services is that they have to be satisfied there is an appropriate level of supply. We see DSL roll-out in places where there is demand and where there are large population developments. In those circumstances the operators are prepared to provide the service because they see a commercial return. The issue concerns how to generate demand in a way that makes it attractive for new competitors to come into the market and for existing service providers to roll out their services more effectively.

The 19 towns issue is significant and provides a window of opportunity to see how we can stimulate demand. There is still a great deal of work to be done in terms of the 19 towns. We will have a framework, like a motorway, around these 19 towns but we will not have any slip roads. We have not decided yet how we will get from having the network connected to having it in the homes, schools or businesses. I know there is dialogue at the moment between Government and telecoms operators on that issue. The outcome of this could be significant in terms of our future direction.

Our view in ICT Ireland is that we are slipping significantly behind advancing economies. That is of major concern in terms of the type of country we are trying to develop. Our industrial base is made up of companies in the ICT sector. The pharmaceutical, bio-technology and financial services companies tend to operate at the top levels of broadband and information technology. We have the problem in the schools about which we have spoken and the fact that we are not using the enormous potential of broadband in the education system. Also, in terms of PC penetration rates in the home we will have to try to find ways to stimulate increased demand.

We need to realise there are substantial differences between the needs of the business community and an ordinary home owner. We have the target of every home having five megabytes of broadband in the medium term. I honestly do not think many homes will need anything like that. The previous presenter suggested two megabytes for schools and yet we have five megabytes for every home as an aspiration. We need to be realistic and to move in stages. There are many intermediary technologies like DSL that can make a substantial difference but which are a long way from providing two or five megabytes. In recognising that there has been some progress we need to be realistic and accept that the situation, even compared to broadband roll-out 12 months ago, has improved, particularly for certain parts of society. The business and small business community would say that the roll-out of DSL has been particularly beneficial, if a little pricey.

Our view is that we need to move towards a range of applications in terms of broadband that would include other aspects such as wireless. We also need to move towards a range of providers and to attract new people into the system rather than having just the existing operators. What we really need is a substantial increase in demand so that we can get a much broader penetration. These are just some brief thoughts from ICT Ireland in terms of the issue we were asked to address.

Deputy Eamon Ryan

Thank you, Mr. Butler. The experience for a small business would be different from a large business which can get access to a global crossing and a fixed line and have this super connectivity. I am sure that business is well served at present. Is there difficulty on a regional basis, particularly for smaller businesses within the country? Do ICT members find difficulty once outside the main urban areas? Is that an issue?

Is the price issue a major difficulty in terms of our competitiveness? Mr. Butler has said that while there is a welcome roll-out of some DSL services it is still pricey. Are we uncompetitive at current pricing arrangements? What extent of broadening out is needed? I take the point that we may not need a five megabyte connection in every household.

In terms of developing an e-economy and being as effective an e-business country as possible, what level of roll-out is necessary? Is it sufficient just to supply main businesses and main schools or is a much broader roll-out required for a proper economy?

In regard to the regulatory system and the market, the key question is does Mr. Butler believe it is a competitive market? Is there full and fair free access and competition? I know that IBEC is in favour of competitiveness. Are there any simple and immediate solutions in terms of regulating for more competition that IBEC would espouse?

Mr. Butler

In terms of regional differences, the answer is yes, there are significant differences in terms of what is available in a major city as against what is available in other parts of the country. I mentioned the roll-out of DSL which is an improvement but currently there are 1.9 million telephone lines in Ireland and 7,000 have been upgraded to enable them to handle DSL and that is expected to grow to one million by the end of the year. Half the country should have access to DSL by the end of the year but depending on location, there could still be no access even to that basic technology.

The Deputy's second question was about costs. From an SME and business point of view, the price of just over €50 including VAT per month is certainly uncompetitive with most economies. In Korea the costs are approximately €20 per month and in Germany it is €25. Irish costs are about twice that and it depends if one can access the service.

That is a prohibitive cost for domestic users. It is a problem for small business because they really want this technology available and some of them are prepared to take the hit. It would be interesting for the committee to talk to the service providers to see what the uptake has been on this new DSL.

In terms of levels required, it is almost impossible to answer. Five megabits is a very nice target to aim for over ten or 15 years. We are at the other end at the moment, with the exception of the very big companies who have particular arrangements that are at the cutting edge. Small business and home users are very much at the other end.

There are a range of steps that can be taken over the next five years to improve the situation. New technologies are coming on stream all the time, such as wireless technology. There may be new technological advances over the next year that will allow us to improve the situation substantially. It will not require a huge amount to move up to a situation where a domestic system is five or ten times faster and that is all that many users would require.

In terms of competitiveness in the sector, some new players are entering the market. There will not be full competition in the system unless there is a necessary level of demand. The question is always which comes first. Put in the infrastructure and the demand will follow. If that is the chosen route then the Government will have to pay for it. The other route is to try to stimulate demand by introducing methods to increase the number of PCs in the home, for example. That of itself will create extra demand and out of that there is the existing system whereby the providers would make the technology available.

The bottom line is that prices are coming down in the telecoms area much faster than in general where prices are rising. Telecoms prices in Ireland are coming down, particularly in terms of the emerging technologies. It is vital that in terms of the appropriate level of regulation there should be much better dialogue between the service providers and the Government. That has been missing until very recently. Last October the telecom providers' delegation met the Taoiseach and the Minister of State, Deputy Hanafin. Out of that meeting emerged a process whereby a broadband strategy is being developed and a report is expected in the coming weeks. That has only happened in the past six months. It is vital that agreement is reached between the Government and the telecoms providers as to the way forward.

Deputy Eamon Ryan

As a former small businessman, I find your argument about price is correct; it will not make or break a company but the problem with Irish business is that in every cost area there is a small thing which is €200 or €300 more than the competitors pay and we are then not competitive. The same applies to insurance costs. When all these costs are added to the telephone and other bills we are not competitive.

This committee deals more than other committees with regulators such as in the area of aviation and other areas. It seems that the line from Brussels is not that competition will be set by demand but that competition is being introduced by regulation, by European directive. The European Union has decided that there are certain universal service providers at present but that over a fairly tight time frame, each nation is required by European directive to regulate to introduce greater competition and not to wait for demand to address that situation. Would Mr. Butler agree that is the case?

Deputy Broughan

I thank Mr. Butler for his presentation to the committee. Is it not fair to say that IBEC is very lethargic in this area? Deputies receive briefings month after month on all kinds of subjects. These briefings often lacerate the Government about the level of inflation, increased fiscal expenditure and the deficiencies in the roads programme. There does not seem to be the same urgency emanating from IBEC and from business organisations. There is clearly a huge deficit. Even on the question of demand, if we do not create the demand in the first place, how will that additional business be created? I do not see where IBEC is coming from and I wonder why it has not been much more pro-active in dealing with this issue by demanding that the Government would take this as seriously as the roads programme, for example, and the problems IBEC has about benchmarking in the public service. How can we be serious about competition in this area and a quick roll-out of the most up-to-date upgraded facilities if the main business organisation does not go out to bat and take serious action on this issue?

Deputy Coveney

I want to hear IBEC's view on one matter. Mr. Butler outlined the areas of the country where there is not sufficient demand to attract service provision because it is not economic for the telecoms providers. If we take the speedy roll-out of services to those areas seriously, it is probably unrealistic to expect to stimulate significant demand over a short space of time. What is IBEC's view on how those areas can access broadband? As other governments have done in sparsely populated areas such as Canada, for example, should the Government advertise a competition for a contract by an operator to provide wholesale solutions into areas of the country which have not got sufficient demand to attract private investment? The Government would have to pick up the bill for the cost of providing solutions in areas such as Connemara, west Cork or wherever. From there on, the company concerned would supply the infrastructure and competition could be introduced for the supply of retail services to those areas, based on that existing infrastructure. Further infrastructural investment would not be required, having been paid for already by the taxpayers, essentially. Is that the type of solution which is envisaged for those areas, to roll out broadband quickly, or is the only proposed solution on the basis of promoting a demand in those areas? In some areas of Ireland, that will never materialise in sufficient quantity.

Mr. Butler

In terms of the EU regulation, the Deputy is correct - that is the model emerging from Brussels. However, I believe we are beginning to question that model in Ireland in terms of a number of areas, not just telecoms but also in relation to energy and other programmes. It is our view, for a variety of reasons, including the scale of Ireland, that the broad brush approach which Brussels is taking may not be very suitable. We are concerned, across a number of fronts, at the direction of the European model in this respect.

With regard to Deputy Broughan's question about the overall thrust of IBEC in relation to this issue, the Deputy must be right. From our perspective, we see this as patently obvious. In each of our documents, we have had telecoms infrastructure in our top two or three priorities. We may not be screaming and ranting about it to the same extent as other issues, such as inflation at present, but it has always been a major policy platform. The Deputy's concern in relation to the strength of lobbying on the issue probably arises from the fact that we considered it so obvious as not to require us to lobby as intensively as on other issues. However, the point is very well made and it is a matter which we can address. I assure the Deputy that it is and always has been a priority issue for us.

With regard to areas which will probably never have enough demand to make the service commercially viable, I have absolutely no idea as to how that will be solved in terms of the existing arrangements. Looking back on the history of regional development in electricity or transport, particular decisions were taken at the relevant times and particular approaches were adopted. At the end of the day, it was the State which took the bill as such arrangements could not be operated on a commercial basis. The same position probably applies in relation to the existing technology for telecoms and broadband roll-out in those areas. In the final analysis, if such development is to be promoted in remoter areas, I believe the Government will have to write the cheque. I cannot anticipate anybody else doing so - it would be commercial suicide.

Senator Kenneally

In his presentation, Mr. Butler mentioned, on at least two occasions, penetration in the home, which he described as being very flat, at 30%. He put forward that aspect as a means of creating the extra demand needed. I recall a project in Ennis a few years ago, when every home was provided with a computer and there were stories that, in some cases, the equipment was never taken out of the box. Has Mr. Butler a view as to the reason we cannot create the extra demand, the lack of interest?

Mr. Butler

There are probably two or three strands involved. The cost factor is still prohibitive. Although the cost of PCs has fallen considerably in recent years, one still cannot install a decent home system for less than €1,000. There are also ongoing costs if one wishes to access the Internet. In terms of what is really working in the home with regard to using the Internet it relates to relatively simple things such as booking flights and holidays. People are quite comfortable with that - it is very efficient in terms of time and there is usually a cost advantage. One has to identify areas in which people will see an increasing need for computers in the home, whether for educational purposes, children's games or accessing facilities and services.

One possible stimulant would arise if much more interaction with Government had to take place on line, such as applications for passports, driving licences and so on. There is a planned roll-out of many such services. Many people are fed up of queuing at motor tax offices, the passport office or the registry of births, which may take up most of a day, particularly for people in regional locations. If there were more reasons for using PCs and the Internet, that would help.

About three years ago, the Swedish Government introduced a system whereby, by agreement between employers and trade unions, if a person purchased a computer in the workplace for home use, a form of tax benefit was applied. Over a period of two or three years, the PC penetration rate in Sweden almost doubled as a result of that type of incentive. While there may be an initial cost, one can imagine the saving to the public services if much of the very labour intensive and costly activities could be done on line. The investment by the State in supporting such an initiative would be repaid many times over.

Chairman

I have been considering a scrappage or incentive scheme, which I have not yet discussed specifically with my colleagues. I would like to see the computer companies, software developers, telecoms companies and various service providers coming together, in conjunction with Government, to formulate a package to put a computer into every home where it is needed, with an appropriate incentive to encourage that. Perhaps a service provider might offer a package on the basis of the customer signing up for five years, as happens to a considerable extent in the United States with regard to video and so on. Is that the type of approach to which Mr. Butler was alluding, in terms of promoting computer penetration into homes, backed by the relevant services, including a training package?

On another question, we are at the bottom of the international league in terms of reports. In relation to Government intervention, it has been mentioned already that we need to generate competition, increase availability and reduce costs. What is Mr. Butler's view of current developments such as the ESB's new loop, the involvement of CIE in the area of fibre optic cable, new developments by An Bord Gáis, satellite links and so on? In the US, the government decided that, if telecom companies were not prepared to do the job, it would make alternative arrangements. Is it not the case that one telecoms provider in this country is holding up progress in the roll-out of broadband?

Mr. Butler

In terms of what we can do about PC penetration, ICT Ireland is currently in discussion with Government with a view to identifying some initiative to stimulate PC penetration. I am not sure if it will come to anything, but it is a major priority for us. There is a commercial benefit to the members of ICT Ireland in that, if we do increase PC penetration, more computers and greater Internet access will be required. It could be a win-win situation.

Chairman

Perhaps Mr. Butler can take the ideas which I and other members of the committee have outlined, consider them and come back with some attractive packages of proposals.

Mr. Butler

Yes, we will be glad to do that. In terms of competition, it has been identified already that there are new players coming on the scene, perhaps not as fast as elsewhere. One has to look not just at the telecoms market in Ireland but internationally. The vast majority of telecoms companies internationally are in terrible difficulty, mainly because of the huge sums of money they have paid out. The problems in the market at present and the behaviour of particular operators are not necessarily connected with the situation on the ground in Ireland. Similar problems can be seen anywhere in Europe at present, mainly because of the debt overhang that exists for the major players.

There may be one or two other companies in the group and many other players are coming into the market. However, at present, the market share of the four big companies is so considerable that they would have to be brought along in order to deal with current problems.

I thank the Chairman for the opportunity to present to the committee. I would like to discuss the Atlantic technology corridor, something new which the Taoiseach launched some two weeks ago. The Atlantic technology corridor is an action orientated, industry led initiative which comprises the major businesses in the technology sector, both the information technology and the medical technology sectors, in the counties Galway, Limerick and Clare. Towns such as Galway, Limerick or Ennis do not have the critical mass to build a cluster of activity around technology companies. However, there are 100 kilometres between Galway and Limerick towns and the concept of the Atlantic technology corridor is to model ourselves as something like Silicon Valley. If there is enough activity and critical mass in a region, it will become a world-recognised corridor.

Much research has been undertaken in this regard. There are 270 technology companies in the corridor employing over 20,000 people. The initiative is industry led and the Atlantic Technology Alliance is working closely with local universities and third level institutions and with all of the national development agencies.

With regard to some of the focused initiatives under way, the Atlantic Technology Alliance wants multinationals to talk to each other and work with smaller local companies to begin collaboration and networking between such companies. The Atlantic Technology Alliance is concerned that we need to evolve rapidly from a low skill manufacturing base to a knowledge based economy. We are losing a lot of jobs in the low skill manufacturing area as companies move to eastern Europe and our costs rise at the low skill end. We need to move up the food chain and get into knowledge based industry.

We also want to ensure that industry begins talking to and conducting more research with the universities. In that regard, we are trying to increase the exchange between industry and university research.

A major priority in regard to infrastructural deficits is broadband telecommunications, one of the major deficits. We are trying to create a world class cluster of activity on the west coast. Obviously, while road infrastructure and air access are priorities, broadband telecoms are fundamental to a knowledge based economy. The ability to create, distribute and exploit knowledge and information is the essence of a competitive environment and knowledge economy.

The deficit of broadband infrastructure and the cost to implement it is significantly reducing the volume of industrial activity in the regions. Broadband telecommunications are essentially the 21st century equivalent of rural electrification. Broadband access at a low cost will drive enterprise and economic activity and begin to pull companies closer together. The more it is available, the greater will be usage.

In terms of the man on the street, whom members referred to earlier, DSL technology is available but broadband access must be offered to every household for around €25 per month. For smaller companies higher speeds are required in the 2 megabit to 5 megabit category. These too must be cost effective. Larger companies need much more broadband access and higher capacity.

As an industry led initiative, we also want to try to stimulate the market, which is the reason we are seeking to pool our telecommunications purchasing power to drive down costs in our region, the west coast and outside Dublin generally. We believe a duopoly is being operated here. Two companies provide general access, both of which offer services with price variations of only 10% to 15%. We need to break this cartel and drive competition to ensure broadband access becomes much more affordable. It is well known that the costs of getting from the west to Dublin is the same as getting from Dublin to New York. Those who require broadband access on the west coast will pay twice as much as their competitors in Dublin, not to speak of Finland and Sweden where prices are a fraction of those charged here.

The way to break the duopoly and drive competition is to force new players on to the market. While the Government initiative on metro rings is exciting, these rings will have to be interlinked with fibre. The potential of the ESB to undertake this work has been mentioned. We need to get the dark fibre lighted up with connections between the metro rings and the national network. The most critical aspect of the process will be the last mile, in other words, bringing the metro rings and fibre into companies. By breaking up the cartel in broadband provision, working in close partnership with the Government and combining purchasing power, we would drive down costs and increase demand.

Prices for broadband access should not vary across the country. While national issues must also be addressed to drive down costs, companies in the west should not have to pay a penalty in terms of access to broadband because they are not located in East Point in Dublin.

In summary, cost-effective broadband access is an imperative, while the telecommunications infrastructure must equate with Dublin in terms of availability, cost, levels of competition and capacity. In addition, the duopoly of service providers is not a competitive business environment, does not fulfil business needs and must be broken up. We also need to utilise the carrier neutral infrastructure owned by commercial enterprises which are not using it. Much of it is already in place underground and we need to figure out a way to use it. I hope that a partnership between industry and the Government will ensure it is freed up and utilised.

Chairman

Our deliberations will last for several days, during which we will invite all the major players, including a number who would be able to advance the breaking of the cartel to which Mr. Shanahan referred, to address the committee. We will also invite ComReg to appear before the committee in the near future.

Deputy Coveney

I thank Mr. Shanahan for his interesting presentation. He is one of the few speakers to remain within the ten minute time frame, which is excellent as it gives members more time to ask questions. The concept of clustering has worked in the case of the Atlantic Technology Alliance. Because there is not a critical mass of companies in the Galway or Limerick regions to attract the kind of investment the group desired, the two regions linked up, which makes a great deal of sense. Mr. Shanahan stated there were some 270 technology companies in the cluster. How is broadband service being provided to these companies? Is this being done via cable or are there also wireless element of the service?

A price of €25 per month has been cited repeatedly as a requirement to ensure Ireland is competitive. Yesterday we heard it cost €27 per month to provide a wholesale service. Obviously, there must be a margin between wholesale and retail prices. Why does it cost telecoms companies here more to provide a broadband service than their counterparts in Scandinavian countries, which like Ireland are sparsely populated? Services there must also be delivered across wide expanses, yet the cost of providing them here appears to be more expensive.

The main service provider argued the reason its retail figure is around €50 per month is that it must add a margin to the €27 per month it costs to provide a broadband service. How do we ensure that the wholesale cost of providing broadband will attract other retail providers into the market and thus stimulate competition, while also sufficiently low to allow us to move towards the desired cost of €25 per month? While it is fine to demand a service for this price, it will not come about unless it makes commercial sense or the Government provides a subsidy or premium to the service providers.

In relation to Government intervention, Mr. Shanahan made a good comparison between investment in broadband and electrification. One could also make the comparison between the provision of broadband and a national telephone network. What role should the Government have in terms of promoting competition and providing broadband services to areas which do not have the critical mass of Mr. Shanahan's cluster along the Atlantic technology corridor?

I ask Mr. Shanahan to respond to a question I asked the previous speaker, namely, whether we should apply a model whereby the State advertises a competition which requires the bidding companies to provide infrastructure solutions, whether satellite, wireless or cable, in areas such as Connemara, County Donegal and west Kerry, for which the Government pays the cost. This would mean the company would build sufficient infrastructure to allow retail solutions to develop on the back of such infrastructure. Is that the kind of solution you think the Government should be looking at, at this stage, or do you think we should be attempting to cluster different parts of the country, as you have between Limerick and Galway? Unfortunately, there are still areas where the critical mass does not exist to allow that to happen.

In relation to the duopoly that you talk about which everybody realises is still in existence, what can the Government do to increase the pace of breaking up that duopoly and introduce more competition into the marketplace? I will have one or two supplementaries to add later.

Mr. Shanahan

The Deputy had queries in regard to four issues. The first was in relation to the current connection technology of the companies. Depending on the location of the company, it is invariably cable-connected direct cable access. There is quite a discrepancy between multinationals who can command a fairly significant premium in terms of service and lower costs because they are negotiating on a global basis. What we find is that all telecoms providers go for the cream - they go for the multinationals. They put a lot of fibre bandwidth into the multinationals and try to charge them more in price. If there is a large indigenous SME down the road they are being charged a lot more than the multinational, which leads to serious pricing variation and consequently service variation as well. Most of the industrial estates have fibre rings in them and have fibre access. Most smaller companies outside the industrial estates are reliant on DSL. However, DSL has not been rolled out fast enough for these companies so they are mostly using ISDN. Some of these companies have a wireless capability as well. Wireless technology is moving ahead and will be able to reach some of the more rural companies.

In terms of the cost of the DSL service, cost is based on the efficiency of your business and how efficiently you can actually roll out a service. The costs in Ireland are derived from carriers who have existing infrastructure and overheads, which may or may not be as efficient as companies offering the same service in Finland and Sweden. It is important that we get a standard of operating costs from some of the Scandinavian countries and compare them with Irish companies to see if their cost base is comparable on a similar country basis. In Scandinavia they have believed in a knowledge based economy for quite some time and have been very successful at it. They believe that if you provide knowledge-enabling technology, business and the economy will flourish thereafter. That initiative tends to drive down costs. I would not look at an Irish cost model as a barometer. I would check it against international standards.

In regard to clustering, the question was asked as to how we can get telecommunications to smaller companies that may be outside these clusters. It is important that the Government gives a certain amount of enabling investment. I believe DSL should be accessible to every company and every home in the country. That enabling technology needs to be delivered at a reasonable price to companies. If there are satellite companies outside the standard that would require more bandwidth than DSL like 2-5 Mb then we need enabling investment to get them off the starting blocks. We need to give them the infrastructure they require to develop and they will be able to handle the prices. I see this as being akin to giving a grant for jobs. That is one way. Obviously, clustering has a lot of benefits because, as companies begin to communicate and talk to each other, they will begin to collaborate over time and begin to spin out new ideas and opportunities. Clustering is the best form of developing a growth economy but for those companies that are outside a significant cluster, having the bandwidth to communicate with that cluster is very effective also.

In terms of breaking up the duopoly, I think it needs fairly immediate action. This metro ring concept the Government has started needs to be finished. We need to finish the network and consequently roll out the metro rings. We need to get them connected to the national fibre rings and come in with a partner that provides the access. We could perhaps have an international competition to drive the access so as to ensure a common price throughout the country. The other competitors are going to have to match that price over time, which will lead to real competition. The Government has made a great start on the metro rings but it needs to be driven hard. I cannot overstress this issue. We are all aware that the technology sector is taking a hammering at the moment. Much of the reason for this is because of a downturn in the economy and so on, but one of the major issues is that we are losing low-skilled jobs. They will go, irrespective of whether the world economy recovers or not. We have to get more knowledge based jobs into the economy and to do that it is critical that we provide them with the enabling technology.

Chairman

I wish to ask Mr. Shanahan, as I asked Mr. Butler, what he thinks the Government should do with its buying power now? Should it do what he is doing, bundle its buying power to promote competition as he has done in the Atlantic technology corridor? He did not say if he is happy with the prices he has achieved as part of a cluster. Would he advocate that his own organisation should purchase capacity on the ESB loop and the MENs and depending on the way it is going to be connected? Would he see himself moving in that direction and away from the current telecoms who are not offering the competition and who are, as has been pointed out, offering rates now because they are being forced to do so by ComReg?

Mr. Shanahan

Absolutely. Our intention is to pool our telecommunications purchasing power. As I said, we have 270 companies, many of which are multinationals who have a lot of telecommunications purchasing power. We are going to pool that and offer it to a low cost operator. It looks highly likely that will be an alternative operator. The metro rings are in an ideal position for us to use if we can solve the last mile issue and if we can solve the backbone we will put our telecommunications infrastructure on there. We set up a group and we are starting to negotiate with the metro rings and telecoms operators other than the duopoly.

The Government must be serious about regionalisation. I accept that it has started to move the Civil Service out of Dublin and that the IDA is touting a regionalisation strategy. We have to enable broadband throughout the country. If industry is committed to putting our telecommunications on to a lowest cost provider to drive down competition, I think the Government should do the same thing. It should go out and look for an alternative provider and help us drive the competition down. With Government and the industry working in tandem we could certainly shake up the market in a fairly short time frame.

Chairman

I will ask Deputy Coveney to round up in a moment. We were in the United States in January and saw the work that was done in a small county called Grant County where the local electricity company, PUD, invested &dollar;120 million over a six year period in bringing fibre cable to all the 40,000 homes there, including those in a rural setting. They were able to do that because they were cash rich. We are of the view at this stage that no one size fits all. There was another case in the United States in Idaho where they put in a new loop and it became a field of dreams because nobody came to it and nobody bought it. That is why I asked about capacity, or whether the Government, with the ESB, which has invested between €35 million and €40 million with support from the EU, could do it. In order to drive competition some major customer has to take up the capacity to drive down the prices for the other people to come to that market or supplier. Are we on the same wavelength?

Mr. Shanahan

Absolutely. The only way to drive down competition is to move your business to the lowest priced competitor.

Deputy Coveney

I agree with the last point. As Mr. Shanahan knows, the management of the fibre rings as they develop is being offered, probably in the next few days or weeks, to an independent management company. The concept now seems to be that the management of the fibre rings and the provision of that infrastructure will be separated from the retail service provisions coming from those fibre rings. It seems that this has to happen because the infrastructure was sold with Eircom and the State no longer has control over it. This is rather like selling the national electricity grid with the ESB, if we chose to sell the ESB. It now seems to have been a huge mistake.

Is it the Atlantic Technology Alliance's view that we need to set up a new infrastructure around the country to force the present owners of infrastructure to open up in a more competitive way? In other words, we are saying that if they will not open up their infrastructure to a range of potential retail service providers we are going to provide the infrastructure ourselves through extending the rings and giving out contracts to provide solutions in other regions. This would operate like the electricity grid which is managed independently from the retail service providers and if one can do that one can provide a very competitive wholesale price for significant competition within the retail sector to emerge. Is that the kind of direction in which we should be going or should we continue in the role which we have been following over the last six to eight months, of encouraging competition in the provision of infrastructure within the retail market?

Deputy Broughan

I want to add a tiny point to my colleague's major point. The presentation makes a powerful case on the current stranglehold on this service area and the idea of the regional structure is very exciting. Speaking as somebody who tries to represent the Dublin region, I believe we need to have every corner of this country covered by every service and resource available. I have no time for any kind of regional imbalances. I presume the Atlantic Technology Alliance is going to expand north to areas such as Mayo, and south to areas such as Clare and west Cork, and so on. Is there a case, on Deputy Coveney's point, that there should be a strong regional element to the management of the new shadow grid that we are establishing for the Atlantic corridor?

Mr. Shanahan

I would like to home in on the geographical definition of our corridor. Deputy Broughan is right in that it does extend geographically north and south. We are trying to focus on the Galway-Clare-Limerick area to set it up, get it going, and demonstrate that we have a world class cluster in that area but there is no doubt that we will expand north and south of that.

To return to Deputy Coveney's question, and Deputy Broughan's supplementary on the infrastructure, we believe that a carrier neutral infrastructure is critically important, particularly in the backbone around the country, the metro rings, and the backbone that links those metro rings. Competition could open up from that point to the last number of miles, depending on access, so there would be serious competition for the services, where the Government would own the carrier neutral infrastructure and any carrier could buy that, at a price. That would drive down the prices. There would be real competition in the last few miles because one could hit it with DSL, wireless, whatever technology was available. We probably did sell off the Crown Jewels when we sold off the Eircom network and now we are trying to recover that by building another network which is required because unfortunately it has caused this dichotomy in pricing around the country and businesses are being penalised.

Chairman

Thank you for your most informative presentation and for your answers to our many questions. If we need to talk to you again the consultant and the clerk might engage with you and with Mr. Butler.

Sitting suspended at 12.30 p.m. and resumed at 1.45 p.m.

Chairman

We will now hear a presentation by Ms Frances Buggy.

Ms Frances Buggy

We are firstly trying to change broadband from being perceived as mere infrastructure - cabling, nuts and bolts, routers and so on - so that for "broadband" one will read the word "enablement". Of all the various types of infrastructure that could be rolled out in the country, broadband has the highest multiplier effect, that is, the widest-ranging effect for money spent. The areas in which it has most effect happen to be the areas in which Ireland stands in most dire need. They include e-learning and blended learning delivered by third level institutes. With regard to the latter, I regret the threat that appears to hang over the €10 million Higher Education Authority fund for the development of a national e-learning platform, because e-learning is a method by which people can indulge in lifelong learning, career change and augmentation and correct some of the social inequities that currently exist. It is my understanding that the Higher Education Authority cannot go forward with the provision of an e-learning platform because that €10 million is under threat.

The preliminary remarks in the supplied presentation are mostly about trying to change a mindset with regard to broadband. The social inequities as they currently apply to women and to other groups exist because of socio-economic and socio-cultural factors rather than anything to do with technology per se. Broadband can however, if deployed properly, redress the balance regarding some of these issues through lifelong blended learning and improved spatial planning, so that one gets more out of every investment rolled out, particularly in the education area.

That roll-out should be supply-driven rather than demand-driven. The rural electrification scheme was not demand-driven, but supply-driven. People were able to access newspapers and steam radio before electrification. Unfortunately, the same is not true of broadband. Broadband is necessary for the increasingly large file sizes it takes for people to be participants in business fora, social fora and so on. There is no substitute for it. Dial-up as a technology has been responsible for the inhibition of Internet access in this country, and that is verified by the stagnation of Internet penetration rates at about 40%.

After electricity was rolled out on a supply-driven basis, TV became possible. I will not go into what might happen when broadband is fully accessible by everybody on an affordable basis. It is proven that it will have a radically changing effect on the worlds of work, business and education. It can re-design the world of work in a way that perhaps is more friendly towards work-life balances, so that one might realistically work on a secure broadband connection from home for part of the week. This is not ghettoising women in a part-time work scenario or a remote e-work scenario. It is a means whereby women do not have to make the choice between family commitments and career progression, because they can be full-time people contributing all their skills and capabilities to the science, educational and technological workplace. All of this is facilitated by realistic broadband as distinct from some of the less adequate connections currently in play.

Regarding infrastructural recommendations, some of the ideas I have outlined in the material supplied are to do with the company that will be managing the municipal area rings, of which there are six in the south east. One suggestion might be that the company be given the rights, perhaps via ComReg, to have full access to the infrastructural maps of the commercial tele-companies in order that further duplication of infrastructure is avoided and scarce resources are maximised. The company could have access to that on an honest broker-confidential basis which would not compromise the competitive position of either tele-company.

Another idea would be to focus on the area of broadband that is not DSL. DSL will be available only to people within 2.5 kilometres of an exchange. Currently it is said that about 88 of the 440 exchanges are enabled. That is not true, because the exchanges listed in the public press as being enabled do not in many cases allow for people to ring up and be connected. Many such statements are currently aspirational rather than realistic. The focus should be on solutions that do not rely on people being less than 2.5 kilometres away from an exchange. In that way one can address some of the disparities between rural users and urban users, between agricultural and industrial users. Women mostly access the Internet at home, because there are fewer women than men in the workforce, and decent bandwidth is generally available only in the workplace. Clearly there is a need to focus on something other than distance from an exchange.

A supply-driven ethos will be far more successful, as has been proven, than waiting for the tele-companies to react to demand. Demand cannot be created where there is no understanding. Most of the population does not know what it is missing. People kick up about broadband only when they have had it and it has then been withdrawn. Waiting for demand to create economic clusters is not going to happen. One can however stimulate demand by having a critical mass of retailers and service providers in the Irish marketplace which attract large volumes of consumers and SME transactions - transactions being the key word. People will not go on-line merely to read content.

They want to avail of active online services which stimulate interest whether one is male or female, including e-learning, blended learning, work-life balance, e-working and e-health issues. Broadband could revolutionise the health sector, particularly the primary care and diagnostic sectors and where it is necessary to monitor people in the home over a long period.

Chairman

I will ask Deputy Brady to pose a few questions. We have had very good presentations on e-health, including one today. Everyone seems to be saying the same as you. Perhaps you might take questions from the members.

Ms Buggy

I have one more remark. I recently attended the EdTech 2003 international conference held in Waterford. It became obvious to me there that the various institutes of technology and universities are adopting a fragmented approach to the deployment of e-learning, with many duplicating investment from their own scarce resources. They could be buying WebCT or Blackboard as course management material and are all paying a licence fee of about &dollar;25,000 or &dollar;20,000 per annum for that. I link it with the call for e-learning from the Higher Education Authority and the €10 million funding. That would secure a national e-learning platform to which all our educational institutes could subscribe. They would simply use the platform and deploy their own courses independently, instead of having to do their own show. Each one currently duplicates spending.

I ask members to pay particular attention to that area and seek a more cogent solution, especially since a 36% drop in the number of school-leavers is on the horizon. Third level education must aggressively adopt blended and lifelong learning strategies to remain profitable.

I invite Ms Catherine Walsh to join us here. Ms Walsh is a senior citizen, and we are asking her to express her views on the experience of such people interacting with computer technology and how broadband can affect their quality of life. I thank Ms Walsh for coming all the way from Cork.

Ms Catherine Walsh

National high speed broadband would provide all-day access for senior citizens, a major factor as peak time costs of access are prohibitive, whereas peak times are the optimum times for our access to the Internet.

I am 75, live alone and have been on-line for five years. Therefore, I speak from my own experiences. Retirement means saying goodbye to responsibilities of family and work. As we get older, lack of stress and enjoyment of leisure time is the name of the game. I was a single working mother of five since the age of 33 and had to take early retirement on health grounds at 55. My ten grandchildren, aged 23 to 11, all live in Cork. Therefore, they were the beneficiaries when I was the first in the family to get a computer. Later, their parents were bullied into buying their own family computers by these kids. Through the computer, I enhanced my image as a "geek grandma" who is now a "computer guru" of whom they boast to their friends. I like that as it bridges what could be a big generation gap, technologically speaking. Having set them all up with Yahoo e-mail, I am constantly in touch with them. Mostly teenagers now, their physical presence is erratic because of their new lives but through e-mail I remain in constant touch for advice, stories and news of their latest heart throbs and heartburns. It is a great bridge between the generations. I do not have to feel redundant to their needs because they know I am always there for them. One feels useful, which is very important as one ages.

I like to write e-mails in the morning, having downloaded inbox mail. I pay peak time rates for this. Why not do so after 6 p.m., outside peak hour rates? Because, as an oldie, I like to watch TV from 6 p.m. to midnight. TV is my important link with the outside world also. I love it and it keeps me abreast of everything globally. Thus, I can chat and discuss current affairs and soaps with folk. It makes me feel part of the world. It is a sacred time and, unfortunately, clashes with cheaper on-line time.

With broadband at a reasonable rate, peak time would be no deterrent to getting the maximum out of the Internet as it overcomes time zones in other countries. I have many chatfriends in the US, the UK and other countries but because their chat times are usually around mornings when they get up and meet in the chatroom for coffee, it bars me from participating except on Saturdays and Sundays when the low rate operates. Again, the TV precludes evening chat. These safe moderated senior sites have many other factors - discussion boards, health information etc. - which make them ideal browsing sites for oldies like myself. The UK's Age Concern has many daytime moderated discussions in its chatroom. Many of its members have the advantage of broadband, so time is irrelevant. Also, WebTV, which is very popular in America, enables chatters in other countries to be on-line constantly.

There is another great bonus in the chat rooms. I have two hearing aids which preclude me from lots of social activity. In a chat room, deafness does not matter. I know chatters in wheelchairs after strokes, whose voices are gone, and with cancer, whose lifeline it is to the outside world. This is invaluable for the disabled of whatever age.

In the morning, I read the newspaper on-line in my dressing-gown as I breakfast and listen to the radio. It means not having to dress and go to the shop. Living alone, it means that if I am unwell I can still read my newspapers online. However, I pay peak time rates while doing so. As one ages, shopping becomes a hassle and, as one ages, one gets obsessive about being independent within the home, which is very important. For me, the great boon is on-line shopping with Tesco. Instead of trudging through rain and cold with a trolley and bags and aching back, I sit in my kitchen and order on-line for delivery during a two hour slot of my choice. It is delivered into my kitchen - bliss. Again, I do this during the day at peak time rates as it is more convenient.

The Irish health website, www.irishhealth.ie, recently won an award for its editor, Fergal Bowers, which was well earned. For me, it is a premier site because it is Irish and a nice sense of community is building there. I would say it is the only lively, interesting site on the Irish scene. Its discussion boards and weekly newsletter bind us all together. For senior citizens especially, who are getting a bit rusty around a lot of edges, it is an invaluable source of information. In the discussion boards we can give and request advice for various problems. It has very interesting and controversial health and national topics also where one can blow one's top and know someone is listening - we oldies like to retain a semblance of dignity by blowing our top anonymously. I could browse there for hours but can only do so on Saturdays or Sundays because of off-peak rates operating then. How I would love to browse there to my heart's content during the day. It makes one feel part of a living, breathing community and that is so important when one leaves the workplace and becomes a bit isolated by retirement, ill health or disability.

Mental health problems such as depression etc. have many support chat sites. Carers of those with Parkinson's disease, Alzheimer's and Lou Gehrig's disease and others have many chat and discussion boards where carers get invaluable help and support. Broadband would facilitate access to such support sites when the peak rate factor would otherwise be a deterrent.

I was agoraphobic when I went on-line. Through my loyal chatfriends in the US website, I was supported during the bad depressions and, finally, because I loved them so much and wanted to meet them so badly, that desire generated by my computer, bless it, enabled me to say "Yes" to an invitation from Australian Public Broadcasting and RTE that I travel with their TV team across America by Amtrak train from New York to San Francisco to meet these dear friends in upper New York State, Wisconsin, Denver and San Francisco. It was surreal - I felt like Thelma and Louise - and all thanks to the Internet. My dearest friend, Shawnee in Wisconsin, is 84 next week and has WebTV. My friend, Annella, in Texas will be 94 in July. Four years ago she was refused renewal of her driving licence so she bought a computer and learned from a CD ROM, arriving into our senior chat site all excited. I was the one who welcomed her and she is a constant presence there now as she is housebound but what troopers those Americans are. Never say die.

That is my contribution. I want to add that there is a lot of emphasis in the Department of Health and Children on making older people as independent as possible so they do not end up in nursing homes. This has kept me alive. It has helped me through a lot of illness and I am a part of the world. Having shopping from Tesco brought into one's kitchen is a very practical help to people living alone, the elderly and the disabled.

Chairman

I thank Ms Walsh for her presentation. It gives us an in-depth view of how a senior citizen feels and reacts to the use of computers and the Internet. How many senior citizens use the Internet or have a system in their own home? How many others in the community are involved in this tremendous discovery you have made in recent years? Are there many in community associations becoming involved in chatrooms and Internet use? What price should one pay per month for the service?

Ms Walsh

Chairman

I thank Ms Walsh for her attendance. I wish the committee to note that Frances Buggy who appeared before us is an independent technology consultant and she addressed digital divide issues, in particular those highlighted through her membership of the Forfás Women in Science, Engineering and Technology Forum. She has over ten year's experience in ICT.

I welcome Mr. Peter Finnegan. I draw your attention to the fact that members of this committee have absolute privilege but this same privilege does not apply to witnesses appearing before the committee. It is generally accepted that witnesses would have qualified privilege but the committee cannot guarantee any level of privilege to witnesses appearing before it. I ask Mr. Finnegan to make a ten minute presentation and Senator Kenneally will then ask questions.

Mr. Peter Finnegan

I am accompanied by Ryan Meade who is the project co-ordinator on our Dublin.ie initiative who can answer technical questions about levels of broadband access. We have circulated a presentation and backup material which includes a report on the commitments to ICT made in the Dublin city strategy and submitted to the Department of the Environment, Heritage and Local Government. It also includes some information on an initiative in Paris which is the provision through the public realm of wireless access to broadband within the urban area.

The Dublin City Development Board is a strategic planning partnership and there is a similar board in every county in Ireland. Its activities are provided for under the Local Government Act 2001 and within that context it has agreed an economic and social strategy for the city of Dublin which in our case is called Dublin - A City of Possibilities. We regard ICT as central to that and to the 15 themes in the strategy. We have named one of those themes as creating a connective and informed city and I wish to speak about that theme.

The vision is to ensure that by 2012 every citizen has access and an ability to use and manipulate information by using ICT. We have also actively participated with the chamber of commerce initiative to ensure that Dublin becomes a city of e-excellence. The tool for driving that agenda is a web portal called Dublin.ie. We are developing a number of initiatives such as broadening the democratic base in the city.

There is also some information on a Chinatown on-line initiative in which we are involved. All themes of the strategy are centred around directories of services, organisations and calendars of events. It also involves creation of marketplaces, such as in the family theme area, the creation of a marketplace in child care facilities and services. I refer to the creation of an initial basis of information with regard to crèche and other facilities for children in the city. Dublin.ie is, fundamentally, an attempt to create a local roundabout on the worldwide web in a manner which puts the power of entry and content management in the hands of citizens. In that way, we are trying to provide reasons for citizens to use the web. The previous speaker outlined reasons which are very much related to the need to communicate and establish links. We are trying to build upon the reasons community and voluntary organisations might wish to communicate with their members, using the web for that purpose.

We are trying to build up a level of usage that will create pressure on the infrastructure. In the strategy, we are critical of the degree to which broadband has not been rolled out sufficiently, either nationally or, more particularly in urban areas, into the home base and is not available at an affordable price. We are trying to generate a level of pressure in the system as a means of raising the infrastructural issues. Currently there are 50,000 individual visits per month on the website, which has been in operation since April 2002. The e-mail facility has more than 10,000 users, which is significant for a timeframe of within one year.

As a strategic driver of change, we are dealing with issues of integration of public service delivery to citizens and social inclusion. In relation to the digital divide, we are looking at the use of ICT to overcome some of the social inclusion issues in the city and the use of entertainment and fun as a way of drawing in people who, traditionally, have been alienated in this regard. There are also issues with regard to participation, including giving citizens the power of creating documents on the web; diversity, learning and the creation of a series of neighbourhoods with their own information base.

As a follow-on from e-public service and e-business, we are trying to develop a new area, citizen e-space. This is complementary to what is happening in national policy under REACH. Before funding was granted by the Department of the Environment, Heritage and Local Government, this initiative was subjected to intense scrutiny by CMOD in the Department of Finance with a view to ensuring that it was complementary and did not cross into the territory covered by the REACH initiative. It was found to be complementary in terms of bringing citizens into a space which could generate pressure on the public sector to provide more public services on-line and promote a new engagement by the commercial sector with citizens.

This development is not confined to Dublin city, although it is being initiated there. We have consulted our colleagues in other development boards about the concept of citizens on-line as a national network of county-based portals or local roundabouts on the web. We believe that the framework developed in Dublin should be made freely available elsewhere in the country. There will, of course, be costs involved in putting it in place and assimilating local information needs. Through linkages between the various portals, information of national or regional application could be shared. In that regard, we are currently talking to people in counties in the Border regions, including district councils in Northern Ireland, with a view to using INTERREG and PEACE II funding to support the roll-out of the initiative in that area. We will also look at other areas of the country.

We are setting out to create on-line services that are relevant to the everyday life of the city or country dweller and to use technologies within the culture and reach of everyone, including the use of television access, which has been successful in some countries as a means of bringing Internet technology into the home. This is particularly important in the context of disadvantaged communities, in which one tends to find television sets but no computers. Education and training in the use of technology is important. We are looking towards a long-term sustainable model, without the necessity for large-scale organisational back-up, putting the tools for information up-date into the hands of community groups and citizens.

What have we been doing to date? We have been creating the reason to access the web. We have obtained funding support from the Department of the Environment, Heritage and Local Government, under the initiative support in a competitive tender. We have developed a software framework with an easily used content management system, providing an events diary, directory of services etc. We are providing a citizen's e-mail facility which, I believe, is the first in this country and one of the few existing in Europe. We are mobilising community participation, particularly through the organisations in Community Forum, of which there are 800 listed in the community services directory and of which approximately 80 have websites on-line, using the free web space available within the Dublin.ie initiative.

We are extending that facility to schools, particularly through the Comhairle na nÓg initiative. By September, we hope to have approximately 100 schools coming on-line in the city network. There is an issue to be addressed in that regard as to the affordability and range of broadband access to schools, which is currently insufficient. We are creating web building capacities which can be used by citizens and community groups. We are developing a marketplace infrastructure around that to allow for linkages between people of a similar interest and to bring the public sector and commercial interests into that marketplace.

We are also putting pressure on the creation of means of access. That involves exploring the potential for the use of the television set, to which I already referred. We are also looking at the use of wireless broadband as a means of cheap and rapid roll-out of broadband in urban areas. We have considerable information on this already, working with our colleagues in Dublin City Council. Building on the fibre optic networks in public ownership, one could very quickly turn on a wireless infrastructure to give access at virtually no cost to the citizen. It would definitely solve the problems to which the last speaker referred and could be applied very rapidly in urban areas at relatively little cost. I have included the example of the Paris experiment in the material circulated and there are similar projects in London and Manhattan.

Being conscious of time constraints, I will move on to refer to a number of issues and concerns, including the requirement for viable broadband or equivalent access reaching beyond business, which is the area traditionally catered for by broadband. We argue that public funds have already been spent on the industry roll-out of broadband, but that has not extended into the home. There is a need for public realm usage at affordable rates, including the use of television and wireless, to which I have referred. There is also a need to activate the very good proposals in the Government action plan New Connections, published in March 2002. In that regard, the idea of community champions, working within communities, is particularly important. The detail of that remains to be spelled out. We, like other boards throughout the country, are anxious to see that happening.

There is a need to create stronger links with REACH and the Information Society Commission and to identify potential ongoing funding to support the roll-out of this initiative nationally. Lastly, and perhaps most importantly in policy terms, there is a need to change our planning conditions to provide, as we said in the strategy and in the current review of the Dublin city development plan, that all new-build systems should provide the IT broadband infrastructure in the same way as electricity and water are currently provided as baseline services.

We have appended some screen shots to the material circulated in relation to some aspects of the website. In particular, I draw the attention of members to the e-democracy site, a document which, in terms of activating more involvement of civil society, reflects the various levels of democracy operating at European, national and local levels. I thank the committee for the opportunity to make this presentation.

Chairman

I thank Mr. Finnegan for that very informative presentation. Many of his views are not dissimilar to those of some members of the committee. We refer to this as the extra pipe that must go into every household. I am glad we are of one mind on that because when members of the committee visited Silicon Valley and San Francisco earlier this year, we came up with a number of ideas and that was one of them. It could be said that broadband is to be the new utility. Senator Kenneally will ask Mr. Finnegan a number of questions and we will then move on to the next session.

Senator Kenneally

I welcome Mr. Finnegan and thank him for his presentation. At the end of nearly two days of submissions - Mr. Finnegan is, perhaps, 15th on the list - two common themes are coming through to the committee, one, which was referred to earlier, concerned access in rural areas and its cost, which is not a factor in Dublin, and the other is in regard to the way broadband can be used as a tool, particularly in the context of education, health, community based initiatives, social inclusion and so on. While it is only a tool, we are learning how much can be done with it and this has been a common theme in our discussions.

I was surprised to hear Mr. Finnegan's comment on wireless access in the Dublin area. The committee was told yesterday by a representative of the south-west authority that fibre optic is the Rolls Royce of broadband. However, it was not feasible to bring that type of technology to the area he represented which mostly worked through wireless access. I would have thought that Dublin and other urban areas would be totally focused on fibre optic. Therefore, I am surprised that Mr. Finnegan referred to wireless access. Perhaps he will explain that.

Mr. Finnegan stated that in 2012 Dublin will be a city where everyone will have the ability to manipulate information as a means of communicating with each other. How is it proposed to bring that about? There is clearly a cost factor involved. Who will pay for that and how will it be driven? In Ennis some years ago computers were purchased for every household but in a lot of cases they were not taken out of their boxes. What mechanism does Mr. Finnegan have in mind to try to achieve this noble aspiration by 2012?

What would be a fair cost? This is a question we keep coming back to and is something that must be got right. If the cost is pitched too high, people will not be encouraged whereas they will if the cost is reasonable. However, it must be borne in mind that somebody must make a profit from this. Does Mr. Finnegan have a figure in mind as to what would be an acceptable cost?

It was suggested by another speaker that if more public services were available on-line, it would encourage increased home ownership of technology. What is the experience in Dublin? Mr. Finnegan mentioned the library service in the document presented to the committee, which seems an ideal way to access library books or other services on-line. Is that a tool used in Dublin at present or are there plans to use it?

Deputy Broughan

I welcome Mr. Finnegan, a long-term colleague of mine in the community sector and now, speaking as a Dublin city councillor, as a director of the Dublin city development board. Mr. Finnegan has taken some outstanding initiatives recently and there are some interesting developments at present, including the fact that all community development projects across the five boroughs in the city are being brought together under the city development board.

I would like to ask what may be a difficult question. The city council is a player in the market relating to the provision of telecommunications infrastructure, not just an interested observer or simply providing e-government or e-development at local level. It is a player in the market, and this is a position which arose in the context of the relentless digging up of roads. The area represented by Deputy Brady and me saw its roads dug up 68 times in a single year when the main global crossing and 360 networks Internet cable connections were being laid - a similar situation arose on the south side of the city. The city council inserted its own cables in the streets and charged for those. It has been said that the charges for the cables are driven more by trying to balance the city budget than by the promotion of cheap broadband access to people in the city such as Ms Walsh.

Does Mr. Finnegan have responsibility, as the city council's effective economic director, for investigating the charging mechanisms and the broadband infrastructure which the city owns and which could perhaps be released more cheaply to telecommunications providers? That might answer the criticism that the city council is influenced by narrow budgetary constraints rather than by the good of developing Internet access everywhere.

I strongly support Mr. Finnegan in regard to planning. It is extraordinary that in my constituency a new urban district of 15,000 housing units, called the north fringe of Dublin city, is to be built. At planning stage, representatives such as myself had to ask An Bord Pleanála why the three massive developments involved, being developed by Shannon Homes, Gannon Homes and Ballymore Homes, are not ensuring that high-tech broadband infrastructure is installed. We missed the bus on this issue and it is now up to An Bord Pleanála to rectify the matter. That is regrettable but I welcome the fact that there is now a different attitude.

With regard to disadvantage, a particular problem of urban districts, has Mr. Finnegan a fundamental strategy to enable progressive and dynamic seniors such as Ms Walsh to get on-line? What should we do to develop this? Mr. Finnegan mentioned wireless. In a hotspot such as Coolock we could easily change to wireless. The Digital Hub Development Agency Bill is making its way through the Houses and will come before this committee again. Colleagues have asked about bringing digital hubs to Cork, Limerick and other parts of the country. Does Mr. Finnegan have additional initiatives in that regard?

I congratulate Mr. Finnegan on what has been achieved, as outlined in the review of the portal presented to the committee. It is very impressive and I wish him further success.

Mr. Finnegan

In my reply, I am drawing from my previous job experience in which I shared a similar path to Deputy Brady in Telecom Éireann, or Eircom as it is now. With regard to cities, the problem remains the last mile. At one end of our strategy we are concerned with the provision of broadband for economic and enterprise activity. Urban areas are fairly well covered, in that while there may be issues regarding cost the coverage is there, but getting the system into homes and communities, and doing so in a way that makes economic sense, is the challenge. My personal opinion from what I have gathered in my involvement with the chambers committee and from my knowledge of the field is that it does not make a lot of commercial sense for the telecommunications companies to take broadband into homes unless there is a high volume of usage and it is generating a high volume of revenue. In that context - I link this to the issue of the public realm in Dublin - there is a lot of fibre optic and a lot of the main equipment in the ground belongs to the public sector - in this case, it belongs to the local authority. There is also material that belongs to the Garda and other public interests.

It would not be impossible to construct a wireless system off that at relatively little cost. We have done some initial guesswork on this in the city of Dublin and we reckon there are about 200 access points. We could, for example, activate those covering the entire city extremely well with 11 mb of access for between €500,000 and €750,000, which is not a huge amount. That needs to be examined in more detail and my colleagues in the IS department in the city council have been pursuing that, particularly in the context of the vast volume of capacity that is going into the digital hub. How can we link that from the digital hub to the rest of the city?

I will not comment on the charging rates. It would neither be appropriate nor my place to comment on Dublin City Council's charging rates, except to say that charges at the moment, as I understand it, are geared at business. My interest is in the citizen, the community. I believe we could construct a wireless system that could be run by the public sector at virtually no cost to the community. The commercial interest could be protected - as it needs to be protected - only by opening that sector up to citizens' use in the post-5 o'clock period or for people who register. There is a subset on the Dublin.ie portal which allows people to register and be identified as a private user, a community group user or a business user, and that is one way to sort it out. The technical details of that need to be worked out and I believe it is feasible to do so.

In regard to experimentation, in Paris, Manhattan and London this is being done - in Paris they have gone further than experimenting. Hotspots are created as part of the public realm so it is not impossible for Dublin, Waterford or Limerick to do that, although it may be difficult in other parts of the country because of the geographical spread of rural counties.

I am familiar with the Ennis experiment. Giving access is one thing but having the material there, the computer or TV set, to use it is another. It is true that the Ennis experiment did not yield the result that was expected. One reason is that there was no local motive for people to get involved. What we are trying to do through this kind of initiative is create the local reason for people to become involved in ICT. If I am running an under-15 soccer or Gaelic football team and I need to get information to people on a Thursday or Friday evening about the match that weekend, I have to make 15 or 16 phone calls. I hope I can get people in or get answering machines. However, if this system operates I literally send an e-mail to the 15 users in which I post details of the team and match details. People have ready access and the responsibility is for them to do that. It is possible to build in systems which would give automatic notification when new material is added to a particular website run by a club or team. Our current system allows for that.

That is a practical usage that will bring people into the system. Once they are involved it makes sense for them to use public sector and other services. That is part of the problem in regard to getting public services on-line - it is happening at a slow speed. That is due to the cost of getting the back-office systems changed to make the front interface work. It is a chicken and egg scenario. If there were millions of people clamouring to renew their motor tax on-line there would obviously be a financial imperative and a reason for changing all motor tax systems to an on-line environment. However, if people are not clamouring for it you tend to put it down the list of priorities in terms of budgeting issues. It is about getting people to use the web for everyday matters and that in turn will generate an audience that will make demands on the public sector to speed up the delivery of public services on-line and ensure that a broader range of people have access to it.

In relation to the area of disadvantage, we are currently collaborating with the Dublin employment pact. I am looking at the effect of the digital divide in terms of disadvantage in the city and the broader metropolitan area of Dublin. We should have results on that in the late autumn or early winter of this year. One thing is clear - we have seen this happen in primary schools, particularly in RAPID areas - the standard of homework that is expected in primary and secondary schools is enhanced by Internet access. A child from a low-income family without Internet access at home does not have the same opportunity as other children in the system. That needs to be rectified. In that context - it is a much broader policy debate - there is a case for the Government generally to look at the provision of the tail-end equipment. In the Nordic countries people were provided with computers and this should be considered here, particularly in the context of disadvantaged communities. An intermediary step would be to look at the television as a box that can be alternated at a very low cost, to extend it to computer use. There are initiatives in Dublin that are relatively small-scale, but they are growing, which involve companies like IBM providing computers for communities. That could be extended, particularly with Government support. I think I have covered most of the issues.

Chairman

If the consultant or the clerk wants further information, we would be grateful if you would provide assistance.

Deputy Broughan

I have a brief supplementary in regard to the area of local government. What is the situation in the city and elsewhere in relation to e-procurement? It does not seem to be evident on a national level.

Mr. Finnegan

To be frank, I do not have an answer to that.

Chairman

I thank Mr. Finnegan for appearing before the committee. I am sure my colleague will be able to get an answer to that question in another forum.

I welcome Mr. Joe Macri from Microsoft and Ms Una Halligan from Hewlett-Packard. I draw your attention to the fact that members of this committee have absolute privilege but this same privilege does not apply to witnesses appearing before the committee. It is generally accepted that witnesses have qualified privilege but the committee cannot guarantee any level of privilege to witnesses appearing before it. This is information of which we have to advise the witnesses.

I will start with Mr. Macri, general manager of Microsoft Ireland. We are grateful for his attendance and would like him to share with us his views on broadband, the future of the Internet and so on. Will he give us a ten-minute presentation and then I will ask Ms Halligan to do likewise, after which we will have a question and answer session?

Mr. Joe Macri

Thank you, Chairman, and members. We are thankful for this opportunity to appear before the committee. This is an incredibly important subject for Ireland and for Microsoft. As members are aware, Microsoft has been in Ireland for over 18 years. We have more than 1,700 employees based in Sandyford across three divisions of operations, product development, sales and marketing. It is a very important base for us because we have built the business over the past 18 years and during that time we have invested significantly in the economy. Almost every year we invest over €500 million in the economy, either through tax payments or in the supply chain. We represent about 5.5% of the country's exports and about 2% of gross national product. This is an important country and an important subject, and we thank the committee for this opportunity.

I want to share our views on three areas. The first is on the relationship between innovation and adoption and deployment. I am sure the sub-committee has heard the discussion about whether one rolls out the infrastructure first or waits for the applications. The second is on the applications and, more importantly, the benefits of those applications and, third, some of the barriers to adoption. I will also offer our recommendations on these topics.

There has been a clear trend in the market over the past 30 to 40 years of technological development which began with a wave of innovation. When the PC was first developed IBM developed the architecture, Intel developed the chip and Microsoft developed the software. It took a couple of years for that device to take off until the arrival of the killer application, one which fundamentally changes people's lives and how they do business, and that drives mass adoption. We have seen this trend over the past 30 years through the graphical user interface and more recently with the Internet. The technology around the Internet has been in place for over 20 years but it was not until the killer application of web browsing and e-mail usage that we saw mass adoption.

Today there are several innovations of which I will focus specifically on broadband. The technology is here and the question is, does one wait for the application or does one deploy the infrastructure? Our proposition is that one has to deploy the infrastructure first so that when the applications come around that change people's lives, be it Ms Walsh's life or another's, we see mass adoption. That is one clear and strong recommendation to the sub-committee.

Today we are in what we at Microsoft call the digital decade, where almost everything we are talking about, be it content or how we do business, how we play, how we live or how we are governed, is becoming digital. There are three key parts of the market. I am sure the sub-committee has heard most of this but I will try to summarise our thoughts on it. From the citizen's perspective, we talk about enhancing the experience. Broadband gives a much richer experience, whether browsing the web for information, downloading music videos or on-line gaming. As the sub-committee is aware, Microsoft has a number of properties, including the X-Box, which is a critical part of our business. In the US there has been significant adoption since the roll-out of that technology in the past four months.

From an educational perspective we talk about the connected learning community whereby the pupil has access to the same set of resources at school and at home. How do we connect the home with the school in terms of a learning experience? This can be enabled by the broadband infrastructure. From a vocational perspective, as Ireland is moving up the value chain and aspires to continue to move up, it is moving from reliance on a manufacturing base to a knowledge economy and the concept of adult life learning. How broadband facilitates that is another key application in the market.

Business is focused on two things, how to reduce cost and how to make more sales. They are the two fundamental ways of improving profit and broadband already shows significant benefits in both those areas. From a productivity perspective - I noted the question earlier on e-procurement - we at Microsoft have saved tens of millions of dollars, or an aggregate of hundreds of millions of dollars, in setting up an infrastructure with our supply chain and using e-procurement. That could not have happened if we did not have a broadband infrastructure, at least with our suppliers, to enable it. From a new services point of view the biggest issue facing most corporations, be they banks or software companies, is how to provide a better service to customers. The use of on-line media for customer care is being developed as we speak and will provide a service in the future.

Microsoft is a major investor in the market. There are two key issues to focus on. The first is broadband coming into the country from the US or into Europe. From that perspective we have the infrastructure. We are positive about the investments the Government has made in the past three or four years. The issue for today is within the country and connecting up the physical infrastructure. Ireland significantly lags in that area. However, there is an opportunity for the Government, which should be commended for its provision of on-line services. The league tables show that Ireland ranks about second in the EU in terms of the provision of on-line services but we are almost the last in terms of using those services because consumers and businesses do not have access to them. Government is no different from business, it has to look at productivity gains. There is a shortfall in Exchequer funds so how does one use systems like e-procurement to make savings in the running of the Government and plough those benefits back into the market?

Hewlett-Packard will talk more about e-inclusion, so I will leave that subject aside. Regarding the benefits of broadband, a well-respected research group, Gartner, has done several studies across the world on broadband. It has published a report, The Payoff of Ubiquitous Broadband Deployment, and if the sub-committee does not have a copy I will be happy to provide it. It identifies six economic benefits from the roll-out of broadband, including GDP growth, business growth, whether new or relocated, promotion of jobs in both the high-tech and the traditional sectors, increased tax base, facilitating business, independent of location, and the extra bandwidth facilitates increased network security. Those are very clear benefits from the deployment of broadband.

The barriers are clear and I have heard comments on some already today in this sub-committee. The first is cost. The best example we came across is in Korea where two thirds of homes have broadband at &dollar;20 for two megabits per second, roughly 16 times the price performance we have here. They show in that market that if the cost comes down deployment will follow. That is a critical issue.

I have touched on access. While great services are being provided we do not have access to them because Ireland ranks third lowest in western Europe in terms of PC penetration in the home and ICT in schools. There have been some developments in the latter area but a significant amount of work remains to be done. The biggest barrier is perception among the public of what broadband is and what it can offer, and among policy makers on what we should be doing. We should have more people like Ms Walsh promoting broadband because hers was a very clear message.

Our recommendations fall into three areas. The first is citizen access. Before I go into this I should touch on another key debate, namely, the responsibility and the role of the private sector versus Government in terms of making investments. At one extreme, there is the view of open market forces, let competition take over and then it will all happen. At the other extreme is total and absolute Government intervention. We do not subscribe to either extreme. We are in the middle in believing that there has to be a partnership with the telecommunications companies and, more importantly, with the broader ICT sector, including hardware and software vendors and content vendors. Government and the ICT sector can form a partnership to apply advantages such as discounts for disadvantaged people, group purchase schemes for individuals and literacy for the public IT area.

I have dealt with physical access and I would like to put forward an idea on this because there has been talk about regional and rural access, as well as building. We are investing in the metropolitan area network, taking our broadband backbone to 19 cities. It can be extended by mandate or request on the part of Departments, schools, universities and libraries to hook up to the network. In Canada the libraries have done this and there is a very good case study on this. One can then open up that network to the local loop, or the last mile, as it is called, to have broadband delivered to the home. A good way to open up physical access would be to take a three stage approach. The critical question is what is the role of the incumbent versus Government intervention. This is an important debate to have. In the educational sector, we applaud the Government's views that are currently publicised, around the notion of free broadband to schools. It is an important factor. How one delivers it is up for debate. Extending teacher training is another critical area. Another area we have seen in South Korea is where they have promoted, and in some cases, mandated the uses of the Internet as a resource for homework. We see these as good examples.

Chairman

I thank Mr. Macri for his presentation. The sub-committee is aware of his involvement in Ireland. In January, we visited Seattle, the home of Microsoft, and also Ephrata, the capital of Grant County - a very rural environment. There we saw the local utilities company, PUD, embarking on a six year programme of &dollar;120 million to bring fibre optic cable to every homestead, farm and business in the county. We gained good experience of what is happening in that area.

We had a choice of destination between Grant County in the snow or South Korea. We were aware of the importance of both, but we chose Seattle and then San Francisco's Silicon Valley. I thank Mr. Macri for referring to South Korea. We are aware that 12 million people are now computer literate there as a result of investment by the South Korean Government and the telecommunications companies.

I invite Mr. Martin Murphy and Ms Una Halligan of Hewlett-Packard to begin their presentation.

Ms Una Halligan

I am the government public affairs manager for Hewlett-Packard and introduce Mr. Martin Murphy, managing director of HP in Ireland. I will give a brief overview of HP and refer to its "e-inclusion", while Mr. Murphy will talk on the broadband issues and their general benefits.

HP, on its sales and support side, has been located in Ireland for more than 30 years. In 1995 we came to Leixlip, in the constituency of the Minister for Finance, Deputy McCreevy, where we built a factory on 250 acres to manufacture ink jet print cartridges for worldwide distribution. We have more than 4,000 employees in Ireland since the Compaq merger last year; 2,000 of those are on the Leixlip site. We are not just a printer company, as we have a number of other businesses such as sales and service. At the Leixlip site we have the HP International Bank and customer solutions. The European Software Centre - the old Digital-Dell - and Compaq in Galway are now also part of our domain. I will come back to some of the e-inclusion issues later.

Mr. Martin Murphy

The main issues I wish to address are: why broadband and is the discussion relevant? I will talk about some of the benefits that broadband will bring to Ireland Inc. and give examples of the services where we are working on projects that will be of interest to the sub-committee. The New Connections report, published last year, clearly stated that Ireland would position itself as a leading location for e-business globally and build a knowledge-based economy based on the principles therein. Our view is that 15 months later, that proposition is still valid and more important than ever. It is not an optional discussion for Ireland going forward.

I ask members to look at the next slide in terms of Ireland Inc. and consider why it is important. I have taken this on a number of fronts. If we look at Ireland as a competitive location, as Ms Halligan has mentioned, we have five significant businesses here. We also have in this current financial year taken over the operation of a significant data centre in CityWest. With that, we have taken a 100 km fibre optic ring which is confined currently to the Dublin area. Having the infrastructure here is important to us in term of the decisions we will make around investments for HP to go forward.

As new businesses in the HP community look to come into Ireland, Ms Halligan and I have to go back to the corporation and fight the case for coming to Ireland and not another country. This has been accentuated recently with the new members coming into the European Union, who are offering equally competitive locations to Ireland. We have to go back into the corporation to build the case that makes Ireland competitive and attractive for HP to invest. We have been successful in doing that and continue to do it. Anything that gives us a competitive advantage over any other location is something that is important and fundamental to us going forward.

There has been much discussion on e-government going back over several years. There are some good examples of e-government projects that have been executed here. Fundamentally this broadband infrastructure that we are talking about will be a critical success factor to the successful deployment of e-government. We cannot have e-government without it.

Empowerment of citizens is a key area. Fundamental to successful e-government will be citizens going out and using the services. Citizens from all walks of life - from disadvantaged communities to rural areas - need to be brought on-line using these services and this will drive the uptake.

This programme and the one announced by the Government for broadband roll-out will provide a level playing field for all of the regions in Ireland to offer and compete. It will not be just a discussion confined to Dublin, Cork, Galway and Limerick. It is a discussion with all regions being able to compete on a equal footing and all citizens getting access to these services on the same basis.

The final point on the slide about the importance of broadband is that it promotes partnership. Real success will be achieved by meaningful partnership between Government and industry to bring this technology on stream. This is an area that has not had significant debate. I do not believe it is a telco or Government or industry conversation. It is a partnership between all those players to bring this technology to bear.

There are five reasons HP thinks this is an important conversation. If we look at the services - Mr. Joe Macri has already alluded to this - what will drive infrastructure and bring it to life is services. "The killer application", as Mr. Joe Macri has called it, which has driven various waves of technologies is here. One of the "killer applications" that is significant to the economy is what I call quality of life or lifestyle. If we look at a business like HP, one of the big benefits we can offer our employees is flexibility which we cannot offer them today. Going forward, we are working in an environment where we want our employees to be able to work from home, to not necessarily travel into the city centre to work. They should be able to work in remote locations, live where they want to live and still work for a big corporation like HP without making the journey by car. The benefit is here. The benefit is the lifestyle that people working for HP and companies like us want to have and we want to be able to offer it to them. Broadband will allow us to offer them that lifestyle and that capability.

If we take these points, we have covered e-government. The services are there and the ability of the citizens to have their information held in one central location, to order a birth certificate, a passport, a driving licence, a social welfare payment. Whatever that service is from Government, it will be huge benefit to our citizens. Una Halligan will talk a little more about how we are doing some things, making that facility available, particularly to disadvantaged areas, because this is not a conversation about big business, nor about people who can afford to have this. It is about what we have to do to contribute and drive this forward.

I have chosen two other areas I believe are significant. Health care is one. We are all too familiar with the health care debate. Broadband can deliver advances in health care which will be of enormous benefit to the Irish economy. If we look at the investment in health care, and the difficulties citizens have in simply getting access to services, we believe broadband will assist. To give an example: a person living in the west who needs an X-ray will not need to come to Dublin but can have it done and transmitted to a specialist, reviewed and then sent back to the person's local health centre. The person can thus have the result without the trauma of travel.

In education, we are working on the largest project in Northern Ireland, where we will connect more than 400,000 users in the education sector, primary schools users and pupils. To put that in context, that is more than three times the number of users in the Hewlett-Packard Corporation. That project will allow us to deliver e-education, an e-curriculum. It will allow those students to do homework online, their parents to check and validate that homework on-line, and their teachers to work with the parents in driving the students through the education system. That is a very significant project, and a very good example of what we should do in Ireland to drive that agenda forward.

Deputy Broughan

Is Mr. Murphy talking about every one of those children's households being on-line?

Mr. Murphy

It will be part of that project, absolutely. We can discuss that further later. Without going into any more detail on that, there is the big business side of it too - our need to do business, our need to attract employees and to continue to offer Ireland as a location of choice and HP as an employer of choice. There is a significant amount of activity going on in HP, driven by Ms Halligan, covering areas around bridging the digital divide, which is where big companies have a huge and important role to play.

Ms Halligan

When we look at the broader range of broadband, there is no point to it if it will make the digital divide grow wider. Those who can afford it - both in areas of education and in the local communities - will go ahead, but what happens to those who are already disadvantaged and cannot have it? One of the things in which HP is very involved is bridging the digital divide, promoting inclusion, and through our citizenship programmes we have a vision whereby we use technologies to go into these areas. We have done quite significant work in Ireland to date, and our presentation shows where we have put our resources. Peter Finnegan mentioned IBM, but I will not blame him for that: in fact, HP has been very much involved. We have nine digital community centres in inner-city Dublin now, for example in Fatima Mansions, Dolphin House and other areas where Dublin City Council has given over to the community two-bedroomed apartments within all the complexes, and HP has kitted them out and networked them. We have also put in a co-ordinator, so that there is somebody there to deliver the programmes. The interesting thing about these is that they work on the basis that the adults get their programmes in the morning, but the kids come in to infant school and have homework clubs in the afternoon, and then the senior citizens use the complexes in the evenings. We are trying to get the whole community involved.

We picked this part of Dublin because it is around the digital hub area. We have also put in 13 schools in that area, so the kids are learning within the area, coming home to the homework clubs; the parents do not feel left out because they too are getting classes, and even the grannies and grand-dads are getting involved in the evenings.

We also have 60 disadvantaged schools in rural areas. I mentioned that we are now established in Galway. Therefore, part of our philanthropy budget is going there. Before that we were more or less confined to Dublin, Kildare, Meath and Louth - all around the site in Leixlip, and concentrating on disadvantaged areas. To get equipment from HP, one of the criteria is disadvantaged status, as defined by the Department of Education and Science, or else location within the BMW area. Therefore, there is no question of such equipment going to places which do not need them. We found in particular that not only were many of these schools unable to raise funds for PCs, but neither were they able to get the technical support. Therefore, HP does the networking for them, and they get all the equipment they need - printers, scanners, digital cameras and so on.

We have carried out other projects too. The project in Quarryvale was directed at asylum seekers. We have done many projects with the long-term unemployed and in the Youthreach area. It is a small amount in comparison to the need, but it is about seeing and recognising that if one does not make these facilities available to the disadvantaged areas, one would really be in a one-horse race, which we would feel would be unfair. That is the reason for our involvement in this area.

Chairman

Thank you. I ask Deputy Coveney to put questions about Microsoft to Mr. Macri, and Deputy Eamon Ryan might put questions to our two guests from Hewlett-Packard.

Deputy Coveney

I am trying to get my mind back to the Microsoft presentation because I am still in HP mode. I agree with almost everything said by Mr. Macri. I have been lucky enough to hear presentations before from people working with Microsoft, and they have been saying the same thing consistently for some time, and have played a part in pressurising the Government to make some progress in this area.

Regarding the issue of location in Ireland, if Microsoft were currently looking from outside at Ireland as a destination for potential investment, would it be confirming my fears by saying that Ireland is no longer as competitive as it once was? From a taxation point of view we are obviously competitive, but from an infrastructural point of view I suspect we are now very uncompetitive. Second, within Ireland, does Microsoft see it as a viable proposition for a company such as itself to locate outside Dublin with the infrastructure that exists, and if so, where? I suspect that Microsoft's locations would be very limited, perhaps involving only Cork and Galway.

I would be interested to hear Microsoft's views, as a producer of technology - whether it be the X-Box, software, operating systems or whatever - on the Government's target of providing five megabytes of capacity per household. Some of the people who have been speaking to us have said that is rather nonsensical, that we no not need anything like that capacity going into houses. Microsoft is presumably looking down the line with regard to innovation and technology, and providing interactive entertainment and information systems into people's households, whether through the television or a computer screen. What level of capacity or bandwidth does Microsoft think the Government should currently target for households and schools? It is important that we get a handle on that from the providers of the technology. There is no point in us planning to get half a megabyte into houses if what we need is five, four or three megabytes. Similarly, if we do not need that type of capacity, then we should not try to achieve it.

In relation to the connectivity between Ireland and the international community, there is some concern outside Dublin that the two access points into Ireland both come into Dublin, one via Wexford and the other directly into Dublin. There has been a great deal of concern that we might require another access point, to somewhere like Cork or Limerick or Galway, to provide the necessary kick-start or incentive or security of supply to another part of the country, if we are serious about regional development and decentralisation. Would Microsoft subscribe to that view, or does it think the existing international connectivity, if you want to call it that, is sufficient - if we put in a proper backbone of infrastructure around the country, between Dublin and Cork and Galway and so on?

I had one other question I wished to ask concerning the solution for getting more computers into homes. I agree that it must be supply-led rather than demand-led. If we are to require demand to pick up to justify investment from a commercial point of view, we will wait a long time in many Irish regions because of their relatively sparse populations. Is the only way for that to happen in the timescale necessary for Ireland to remain competitive if the Government gets involved in infrastructural provision, perhaps requiring private companies to find regional solutions and paying them to do so rather than simply promoting competition for regional infrastructural provision? In other words, the Government must lead it and pay for it in certain areas. That would kick-start demand afterwards, for people would very quickly realise the opportunities available through broadband access once they had it.

Mr. Macri

On the first two questions about location, the Deputy raised the theme of competitiveness. That Ireland is losing its competitiveness is a fact. It is well documented and understood across the world that that is the case. The focus of debate on competitiveness has primarily been on wage costs, which are an important factor but not the only one. The Institute of Management Development Research recently published a report showing that Ireland has dropped in competitiveness in the world forum over the past three years. The factor driving our lack of competitiveness is infrastructure, and that is very clearly articulated in its report. We see that, and it very much influences our thinking.

I will return to the question of Microsoft and how we respond to it from the point of view of location. It is fair to say that what we have invested in this country is relatively safe. We are not sitting here saying that we will pack up tomorrow because of broadband issues and leave the country, going to another. We are facing an issue to which Martin Murphy of Hewlett-Packard alluded, namely, that we are running a risk with future investments. That is where the risk lies rather than with current investments. Regarding other parts of the world, it is fair to say that the Irish Government is very focused - in some respects, quite rightly so - on eastern Europe, but we believe that the biggest risk is in China and other parts of Asia, mainly because the issue is not simply cost but the depth and breadth of technical expertise being developed in such countries. For example, we intend to relocate a significant part of product support to India, purely because the bandwidth exists in people with skills.

We do not view the eastern European threat to Ireland as being that significant, for, although countries there may offer similar tax breaks, from an infrastructural point of view there is a major problem. There is also the notion of cost to closure, so it is not as simple as uprooting and going to a different country. The most visible example that I can give is that, when we made the decision to develop the X-Box, we did not even consider Ireland. It was not even on the radar regarding location. We went to Hungary but eight months later closed that facility and went to China. There is a much bigger issue when one gets into that end of the manufacturing spectrum.

On the regional question of whether we would consider relocating outside Dublin, there are two answers: yes and no. Yes, because, when it comes to offering flexibility in working and having more regional locations, a broadband infrastructure would facilitate corporations such as Microsoft in having regional locations outside Dublin. No, because we tend to focus our operational and other hubs in a major part of the country concerned, and, rightly or wrongly, Dublin is that from the perspective of the supply chain and the physical movement of goods. It is about physical rather than electronic infrastructure.

That leads me back to the next question regarding the Government target of five megabits per second. I have a very strong view based on experience. When the first PC came along, the one before the 286, it ran on DOS and was a very slow, cumbersome machine. Once people experienced that, their appetite increased for more. Then came the 386, the 486 and the Pentium. There were better screens, faster disks and more memory. With technology, people consume, get used to it and then want more. The same applies to DSL and broadband. DSL is a good transitional technology, and we believe it is important to support the local incumbent as well as whomever competes with it in the roll out of that technology to get people introduced to it. Having said that, to deliver properly on future benefits - I am talking not of 20 years hence but three to five - five megabits per second is a very realistic figure to achieve. In some cases I would argue for an even higher one. We must find a balance with the short-term today, use the current technology to get people using it and then ensure that we invest for the future in infrastructure to allow new applications, be they video-based or on-line gaming, which would consume such band width at five megabits per second.

Regarding regional development, as to whether we need another cable coming into Ireland and whether it had to be Dublin or could be somewhere else, let us say that we put a secondary port in Galway. I am not an expert on Internet peering, but I am told that, as long as the pipe between Dublin and Galway is in place, as long as one peers from one site to the other, it adds no incremental cost to the business user or consumer. Therefore, it is irrelevant where the pipe comes in. It is all right for the pipe to come into Dublin and for there to be a second pipe going to Galway or Cork. There is no disadvantage to businesses in those cities as long as the way the peering works does not add any incremental cost, and that is critical. It is evolving, and I know that there are some changes there.

If I understood the final question, it concerned Government intervention. The Deputy talked about PCs in the home and whether the Government should lead and pay for that. If we look at where it has been——

Deputy Coveney

It is the recognition that, in certain regions of the country, it will not happen at all if the Government does not pay for it, at least in the short-term.

Mr. Macri

I fully support that. If one leaves it purely demand-led, one creates the digital divide. If one leaves it to industry, rightly or wrongly, though we make philanthropic efforts in certain parts of the world, the reality is that one will create that divide. There must be Government intervention. Having said that, I would argue for incentives rather than paying in full. If industry could come together with the Government and decide on discounts for group-purchasing and the disadvantaged, there would be a very good response from industry to the Government. It is a partnership-led approach.

Deputy Eamon Ryan

Unfortunately, having listened to Microsoft, I am now in a Microsoft rather than a Hewlett-Packard mode and will have to change the software again.

I was interested to see the slides. I am a Green Party Deputy and love to see companies based in Ireland creating employment. Then I look at the car park and I am horrified. I was very interested in teleworking. To me it makes a huge amount of sense that we do not use so many resources, in both time and concrete, in catering for certain types of travel and work behaviour. I am slightly concerned that teleworking is brilliant in ideal and theory, but in practice, I have seen very few examples where it is working strongly. I am concerned that people may miss out the social aspect of the office and that companies, while talking it up, like having employees in their sight almost every day.

In Hewlett-Packard's experience does it work? Are there examples of it working in other countries or other parts of the Hewlett Packard network? In that respect the key connection is to the home. For what sort of connectivity would Hewlett Packard be looking in those circumstances? Can it give us a bit more detail on teleworking and why it thinks it works?

Second, I was interested to hear that in three to five years we will need possibly five megabits of connectivity at home. In the roll-out of infrastructure three to five years is tomorrow. I would be very pleased if we had a network in three to five years. If we are making decisions about which way to go and we want to get there in three to five years we do not have any choice in what we start doing now. What applications does Hewlett Packard see coming down the line in that timeframe? It might not know which is the killer application yet, otherwise it would be busy working at it bar nothing else. However, in the technologies it is developing are there new applications which require that slightly higher bandwidth? If it brings up discussions with the telcos they will say there is no need for that capacity above something like a DSL connection. Are there new technologies coming through which, in Hewlett Packard's view, may be in use in three to five years' time?

On the concept of the digital divide, I am glad to see Hewlett Packard, and I am sure, Microsoft as well, doing their bit to try to point in the right direction. It is such a large issue around the development of this technology that it is difficult for any one company to have a significant effect on it. What are the key things the State has to do to redress that digital divide, provide infrastructure or education, or restructure Government services?

I have one further question for Microsoft. It argued about the Government using these new loop networks and possibly using other fibres to connect Government communications, including libraries, schools and so on. Has Microsoft any view on how the Government could make the last mile from the loops outwards, particularly for that type of communication?

Mr. Murphy

Teleworking is already working for HP in Ireland. There are two reasons for this: we have a huge mobile workforce that needs to be flexible, working around Ireland, travelling, selling, and repairing computer systems. In the same way as having a company car, teleworking is essential to enable those people to do their jobs effectively. On the other side, as Joe has said from the Microsoft perspective, HP continually challenges itself and one of the areas in which we see ourselves being competitive in the market is that we are an employer of choice. In real terms that means we can offer flexible work practices to male and female employees, people who want to work part-time or flexi hours, or from home. This will distinguish HP in the market as it is able to cater for and accommodate the needs of the workforce of the future. As I said in my presentation, quality of life and lifestyle are important parameters for everybody in today's world and for us to continue to be an employer of choice we need to be able to offer that kind of flexibility to our workforce. We not only need to be able to offer this capability to employees for whom it is almost a job necessity but we need to broaden that base and be able to offer it to all our employees.

In answer to the second question, as an executive of a company in which many employees work from home, currently we work with an ISDN based system which has severe limitations in terms of capability. As Joe Macri has said, history has shown that when we have five megabits we will look for more because more applications will be there. Take the analogy of the TV set: we started with black and white, went to colour and now we have flat screen, wide screen, etc. Next year it will be something else and we will need that as well. If we provide it the demand will be there. In the knowledge economy five megabits is the type of speed we need to have now, from a business perspective.

That brings me to the last question about new applications in three to five years. Applications like online banking and the Revenue Commissioners' on-line system, which allows people to make tax returns on-line, will drive this. Companies such as Microsoft and HP are also actively involved in areas such as on-line gaming and they are the killer applications that will drive this technology. This will be a reality in the next one to three years which will drive the need to have the type of bandwidth speed we are talking about.

Ms Halligan

The question was what the State could do to redress the digital divide. Deputy Ryan mentioned infrastructure but to a large extent access is the priority. It is fair to say that if one provides broadband to one school all schools will get it but access to broadband is not what matters. If one looks at children today in primary schools or the home, we find that they know more about the PCs than the teachers do. Therefore there is a divide between the teachers and the pupils. Children take to PCs and become digitally literate very quickly. Those coming in from primary schools in a middle class area or any area where the PCs are available start off with that advantage. Therefore it is necessary to start putting the access to hardware into pre-school at the same time that children in disadvantaged or advantaged areas have it.

One of the ways in which that can be done is to look at the content and how we teach. Anyone who has children in second or third level education will say that they do much of their work off the web, particularly at third level. By the time a journal is published the students have got it on the web. Therefore, to a large extent they are doing their exams off the web. One of the difficulties we have is that most teachers come from the humanities. It is quite difficult to get teachers who are passionate about science and technology in schools. The uptake of science in schools has declined. We need to make e-learning part of the curriculum in order that teachers are comfortable with it and it becomes part of every school. It will no longer be a case of the school having a computer room where the children go for an hour a day, but part of the teaching for every child. Once that becomes the norm it will be the norm in all schools, not just the advantaged schools. It is like taking away the chalk and talk and replacing them with a new method of teaching.

Once that is done, Government has to respond on the basis that this is the new way we teach children, and therefore all children will have access.

The way it can be done in the interim is to try to use the model we are using. I agree that HP cannot do it on its own and companies such as Microsoft, IBM and Intel would be involved. The model we use at the digital community centres in Ireland was started in Africa. We found in Africa that we were trying to run before we could walk, as we did not have the infrastructure, even electricity, the broadband and ISDN lines. The model we are using in Ireland has proved to be very successful and we have taken it and used it in other parts of the world, including eastern Europe, where one has a community environment which is supported in every way. It is supported by giving funding for teaching - be they literacy or spreadsheet programmes, depending on the needs of the community. It is bringing the centre and part of learning to the community. They only have to walk outside their door. We have a co-ordinator who knocks on their doors and tells them that this centre is for them. It is free and it meets their needs. It is taking away to a large extent the fear or the sense that it is only for the rich as it becomes part of the community. Once the children see that they can do it, the parents see they are not afraid and then the grandparents. It then becomes a social need. One is driving the demand but also making it a norm, as opposed to something that is unique.

Chairman

There are time constraints. I know we have some people from Cisco Systems and we must finish in this committee room in the next 25 minutes. Would Mr. Macri like to answer that question briefly?

Mr. Macri

There were three steps: first, the Metropolitan Area Network; second, the Government using MAN, which can be done in isolation from the local telco provider or in partnership - that is open for debate at another time; Government has no choice but to work with the incumbent on the last mile as the infrastructure is there and we have to leverage that.

Chairman

I thank the delegations for their presentations and for their support of the local communities. I wish them well in their business ventures. I welcome Mr. Phil Smith and Mr. Yogesh Desai from Cisco Systems. I must draw attention to fact that members of the sub-committee have absolute privilege but this same privilege does not apply to witnesses before the sub-committee. It is generally accepted that witnesses will have qualified privilege. The sub-committee cannot guarantee any level of privilege to witnesses appearing before it.

Mr. Phil Smith

The sub-committee will be glad to know that I have not got a presentation, as such, as there probably have been enough today. The sub-committee will have heard in a number of discussions the passion and desire people have for some sort of delivery in the area of broadband. It is particularly interesting from our perspective as we sit as a networking company in the centre of many of these kind of debates all around the world. I sit on the UK Government's Broadband Stakeholder Group and have done so for several years, as well as being involved in many other areas.

The important thing to stress from a Cisco perspective is that we have always been held up as a paragon of use of applications. We happen to be a network provider, but much of the benefit we derive from the use of high speed applications is for our business benefit. That is important for us. We quantified it last year that it saved us - and these are tangible savings around investment, travel time, hotels and expenses, etc. - &dollar;1.9 billion in a single year. That is a significant percentage of our expense base. As a result, we are passionate believers that if one delivers the kind of capabilities we can deliver to our organisation to a broader community - be that SMEs or citizens - then one is able to drive these types of advantages. This may not be to the degree we have delivered them in our organisation - &dollar;1.9 billion is a large revenue company, yet some of the benefits we gained are applicable. There may be benefits that citizens could accrue that we could not.

Those benefits are right through the way we run our business, the way we communicate with our partners, the way we educate our employees. Some 85% of all our training is done on-line and it is all guided and curriculum based. It is driven for individual employees. If it is appropriate for any members of the committee to come and see how people use teleworking or communicate with their colleagues, we would be more than happy. Seeing it can make it more real.

I suspect our number for teleworkers is somewhere in the 90% plus region, even people who seem to be in static jobs normally. Much of this is about quality of life by delivering access when people want it and actually manning the operation at a much more flexible time. It is like a super extended version of flexitime. We have calculated we get an hour per day out of employees by using teleworking. Not that it is necessarily an exploitative means, but people use it at times when other times they would be travelling or sitting in traffic jams.

Chairman

There were many presentations on the benefits of it yesterday and it was superb.

Mr. Smith

It is also compelling. It is an attractive prospect and interesting to see how Cisco has done this. As an organisation we are therefore big evangelists of it.

The other thing from sitting in the centre of networks is that we have learned, as one looks around the world, that there seems to be a pattern appearing of how broadband deployment happens. We are investing in some research this summer with Oxford University which has given us some resources to look at the patterns of broadband deployment and how those will be articulated. We would be happy to share that research with the sub-committee.

Basically, we see in many countries, the delivery of things such as national research networks as an initial hub within the country and then the extension of that out to education and then the capitalisation of that from SMEs and others in the area. If one looks at places such as South Korea, Canada and some of the states in the US, many of them have followed this similar pattern - not exactly the same but they have many similarities. Looking at some of those examples, it is important that the State provides some of the flexibility for some of the organisations to do that. In the UK, the Cumbria region has the Lancaster University deliberately aggregating its spending with the local libraries and schools to create a minimum two megabits for every SMB in the area and ten for every school. All Governments, including the Irish Government, have realised that this aggregation of spend has some advantages. The drive of the Broadband Stakeholders Group in the UK is to find mechanisms for aggregation of that spend and vehicles through which it can then be deployed to act as a catalyst for the rest of the deployment. It is important to recognise that the ICT spend is an area about which people have talked much in the US and its effect on productivity and GDP and so on. It tends to be very US-orientated which can be a little disarming for the rest of us in different economies. We did some research looking at this in the UK, and again, I would be happy to share that research with the sub-committee. It was done by an economics boutique and was not something I was necessarily a specialist in myself. They found, looking at the period from 1992 to 2000, that the investment in ICT in the UK actually contributed to 25% of the output growth in the UK over that period and the labour productivity numbers over the period improved by 47% directly as a result of ICT investment. That does not mean it is broaband per se; what it means is that the investment in productivity tools was in very tangible things that gave real economic return. That is a substantial study, about 40 pages long, and I am more than happy to share the findings with the committee. The interesting part about it is that it was not just technology companies like ourselves which gained, because that is another criticism people have; it was actually manufacturing industry that gained more - 47% growth in labour productivity came as a result of ICT investment. Financial services obviously gained substantially as they typically do, and so did a number of others. There are some very interesting facts and figures there.

We have also invested in a professorship in e-democracy, because we are particularly keen on examining the relationship between government and citizen in terms of the way services can be delivered. We will happily share with the committee the outcome of this research. We are looking at the intimacy that can be grown between government and citizen, something which can potentially transform the whole democratic process.

The final point mentioned related to community-based work. We have done a great deal of work in communities as an organisation, but we see a big drive for community-based engagement, alongside public investment, or sometimes as a result of public investment driving much of the interaction which speeds up the need for broadband. Some communities have been created in south London which are using broadband technology to reduce the cost of providing public services to those communities themselves. It is a very interesting way of taking the technology further. The important aspect is that these people are not simply using DSL, for example - they have some DSL but they are using much higher-speed technologies to deliver video and other services.

The one thing the Broadband Stakeholder Group in the UK recognises is that broadband is very much a journey. It is something that starts potentially with DSL. We are talking about very successful people, like Fastweb in Italy for example, who have tens of thousands of subscribers joining the service monthly, and they are delivering video on demand, Internet and telephony. Significant numbers of our subscribers still want DSL, but the subscribers who want to progress to the higher services like video surveillance and education in training collaboration then move on to higher technologies as those become available within the areas. That is an interesting set of perspectives, I hope.

Chairman

Thank you for that overview.

Deputy Broughan

I thank Mr. Smith for the presentation. He said he was a member of the Broadband Stakeholder Group in the UK. It is very striking that it is only in recent weeks or months that we have such a group in this country. In Ireland we seem to aim for all the targets which Mr. Blair's government seems to have laid down with the e-envoy and so on. From Mr. Smith's experience in the UK and a similarly sized economy in the UK, say Scotland for example, how do we compare? We have the gut feeling that we are slipping behind, both in e-government and obviously in infrastructure.

I would also like to know how Cisco, with its experience, would define the Irish broadband or telecommunications market. This morning we heard a passionate denunciation of the market as a cartel or duopoly or maybe a monopoly with a soft number two company, and after that practically nothing. What kind of a market is it, and what should the Minister for Communications, Marine and Natural Resources, Deputy Ahern, do, and what should the Taoiseach do in order to get out of this situation as soon as possible?

On households, and the arrival at the last mile, how does Cisco see the future in terms of the kind of hardware and resources we might give to households? I did not get an opportunity to question the Microsoft representatives, but Mr. Macri made the point on discounts, for example. Should it be perhaps a simple transfer of resources to the most disadvantaged families, to give them an opportunity to get whatever equipment they want as the situation changes? What might the optimum situation be in this regard?

Mr. Smith made a very interesting point on the journey, the development of this whole economic culture, so to speak. We are reminded regularly of the fundamental relationship between this industry and all the culture connected to it, and our GDP. Obviously we have had massive growth on one level, but on other levels we wonder about sustainability of the core of the economy. Mr. Smith mentioned what has been happening in Cumbria and Lancaster. That is totally lacking in regard to education here. Dublin City University has some contacts with the second level schools for example, but Mr. Smith seems to be talking about something more meaningful. In this very district of Dublin where we are now discussing the issue, TCD, our famous, ancient university, along with all the associated educational bodies could be driving something, which they clearly are not doing.

Deputy Coveney

I thank Mr. Smith and Mr. Desai for attending today. This is the last presentation today and there is almost a brain drain at this stage. It is very interesting that Cisco is the first networking company, so to speak, to come before the committee. We have heard many users, whether they be senior citizens or students or pupils in secondary schools, or teachers - and also representatives of small companies, right up to those from the much larger companies like Microsoft and HP.

Given that Cisco has a great deal of international experience as a company in many different countries, I am very interested to hear its view on the marketplace in Ireland. I would be very surprised if it did not see a similar marketplace development - starting from where we are now, going where we need to go - in other places, and we would like to hear of the barriers that were there, and how people got over them, and the role that a government plays and needs to play in getting over those barriers. We might hear Cisco's views on the role of the private sector too, and the promotion of competition and so on.

For example, how does one get over the problem of supplying broadband capacity to regions in the country which clearly do not have the critical mass, in a short space of time to attract private investment? Clearly the State has a responsibility to invest in such regions.

Being slightly parochial for a moment, our hopes were raised in Cork several years ago that Cisco would make a very large investment there in a research and development facility, and that did not happen. Perhaps that was because of a downturn internationally or perhaps because Ireland is not as competitive now as it perhaps was some time ago.

What is Cisco's updated thinking, so to speak, on broadband provision solutions for Ireland, whether it be wireless, cabling or satellite? Clearly it is a bit of everything, because there is no single means to solve everything. I would like to hear Mr. Smith's views on that, because Cisco is directly involved in such provision.

Mr. Smith

Regarding the Broadband Stakeholder Group, in terms of its position in the leadership, that may be the leadership position Ireland may have had intellectually, but perhaps has not realised. The establishment of the Broadband Stakeholder Group as in many other countries was taken in the UK as a political imperative, so the fact of its being a political imperative is very important. A number of goals were set, particularly in electronic service delivery in the UK relating to the planned 2005 delivery of government services. The Broadband Stakeholder Group is acting in a similar way in the UK, asking that it become the most competitive environment in Europe for e-business and broadband deployment. Given Ireland's history of early investment in education in the 1960s, something perceived as driving much of the benefit we see now in the new millennium, we are sad to see that it is not right at the forefront of this. It seems to have dropped off very quickly. When I came here two or three years ago, there were very positive discussions about significant broadband deployments, which we believe would have catapulted Ireland up the attractiveness scale. Now, when one examines the OECD graphs, one sees that Ireland is trailing right down at the bottom.

Even on a psychological level, the effect is significant, and that is unfortunate. Even if the reasons are real, Ireland looks like it is trailing Poland, Iceland and other countries that should not be anywhere near. That has an overall psychological effect on Ireland's attractiveness for potential industries. In such places as the west midlands in the UK, we have seen something surprising given the density of the population. Advantage West Midlands, which is the regional development agency for the area, is already seeing a lack of inward investment, with people citing the lack of broadband access for SMEs as a disadvantage, since they want a connected supply chain. The loss of small organisations which want to be connected as part of a bigger one probably has some resonance here. They are definitely citing that, for Advantage West Midlands has seen it in the surveys that it carries out regularly. I do not know whether such work has been conducted here, but the issue is certainly starting to appear in the psyche of large organisations. Whether for telecommuting employees or simple access to the supply chain, it is a very important component.

From the perspective of delivering Irish broadband and the present incumbents, there is no doubt that the market is not as competitive as some of the bigger ones. Some of the terms used, describing a limited duopoly, undoubtedly do not create the kind of climate that raises the level of competitiveness. A good example can be seen in such places as Jamaica, which is very different, though the population is similar, standing at 3 million. It has Cable and Wireless as its incumbent, and the prices for access are gigantic, running at thousands of pounds for a basic connection. Despite current pressure from industry to deliver better services, incumbency still makes people sluggish.

We know that in the UK, BT has taken a long time to bring its prices down, though they are still probably attractive from an Irish perspective. The pressure to bring down prices has taken a long time to work, and much of it has had to be brought to bear by the Government. Undoubtedly, a great deal of pressure has been exercised through the Broadband Stakeholder Group, which is an industry collaboration body but has been lobbying the Government, the Department of Trade and Industry and others to make it more competitive. When one examines very rural areas such as Jamaica and its ability to overcome hurdles and compares it with Ireland, which is obviously a much more open economy but still has a limited set of competitors, there is no doubt about the attractiveness of introducing a catalyst which would either encourage the incumbents to do more or collaborate in a process which might be put in place to deliver a different kind of network.

From a last mile perspective, it was interesting that, when I did some work recently on an international committee on broadband with some people from the United States, it seemed there were two main drivers of broadband. One was the war, since people were continually streaming video on to their desktops. Despite the problem they had with Internet issues surrounding 11 September 2001, people now expect to be able to drive video to their desktops. They need not be very high-quality or take up megabits, but the expectation is that they can continually watch some news in the background.

The other driver was wireless, which was mentioned. In the US, and now also in the UK, we are finding that wireless - so-called WiFi or wireless LAN, a very low-cost, end-user, demand-driven technology - is absolutely behind the demand for broadband. People are able to network around their house, sharing videos, copying files and so on, and suddenly finding that the connection into the backbone is now the limiting factor. It is interesting that WiFi is delivering them 20, 30 or 50 times more band width than the DSL connection. Now they can run video locally but not remotely. Some of the wired communities have started to collaborate, something also true of New Zealand, where an Internet radio mechanism is being used to create a new media cluster based on young people exchanging music, developing video and so on. For that, they need higher band width. There will be some user - and demand-driven need for higher band width, but what must we do to achieve that?

There is an argument that, if the Government could catalyse the delivery of services to local schools and so on, one might be able to prompt communities to connect to them, whether for homework or for other reasons. That is an important catalyst, and if one can get a publicly funded broadband POP in every school, one has the chance of delivering services to it. We have done some work in that area with UK schools, and we would be delighted to share it with and introduce the committee to those at the Department for Education and Skills with whom we have been working. We have done something called "colour IP", whereby we have given schools boxes with colour on the back so that they know that a video port is purple and a voice port green. Now we are finding that home users are saying that they would now like a green port because they would like video from school. We have tried to simplify matters and make it easier for people to understand how broadband can be deployed in the school and then to individual houses in the district.

I referred to broadband as a journey, and there is no doubt about that. The delivery of DSL should be encouraged, but our concern is that DSL should not be considered the end of the story. There is a danger that many Governments will assume that, because they have DSL, that is the end. Most users of broadband talk about such things as video and surveillance. DSL will typically deliver about 500 k. A typical video with a reasonable specification which we would use would be about 1.5 Mb, or three times that size. With high-definition television, people are now used to more than 6 Mb. One really needs to be in the range of five to 10 Mb. The joint committee for broadband on which I sat defined broadband as two things, one being speed high enough not to limit the applications one is using, which might be the case with DSL, and the other a platform on to which one can build applications not limited by the scope of the platform itself.

It is useful to return to our experience. We could not deliver e-learning around our organisation in the current manner without a platform to do so, meaning we would have to invest in separate pieces of infrastructure in Dublin and Scotland. However, we have an infrastructure that allows that to be delivered. If someone wishes to switch on an application, he or she does so immediately, and the infrastructure delivers it to them. The journey is about how we take matters from where they are today. The Cumbrian example is interesting. The university was connected to the high-speed UK National Research and Education Network. It was used to that kind of delivery and knew that, if it aggregated its capability and budgets with local schools, libraries and job centres - which is no mean task - it could get a significant improvement in service for itself and others around it with a cost advantage. That was quite clever thinking.

Chairman

Thank you for that excellent presentation. I would like to ask our consultant to engage with you in the areas which you have mentioned. You have answered many questions today that we have been asking ourselves, and we have been getting similar answers from other people. I am sorry to cut you short even though we delayed your appearance before the committee, but we must vacate the room.

The joint committee adjourned at 4.20 p.m. until 10 a.m. on Tuesday, 24 June 2003.

JOINT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES (Sub-Committee on Information Communications Technology) debate - Thursday, 5 Jun 2003

Telecommunications Services: Presentations.

Dr. Ricky Richardson

Dr. Richardson

Dr. Richardson

Dr. Richardson

Dr. Richardson

Dr. Richardson

Dr. Richardson

Dr. Richardson

Dr. Richardson

Mr. Brendan Butler

Mr. Butler

Mr. Butler

Mr. Butler

Mr. Butler

Mr. Butler

Mr. Butler

Mr. Butler

Mr. Butler

Mr. Butler

Mr. Butler

Mr. Butler

Mr. Pat Shanahan

Mr. Shanahan

Mr. Shanahan

Mr. Shanahan

Mr. Shanahan

Ms Frances Buggy

Ms Buggy

Ms Buggy

Ms Buggy

Ms Buggy

Ms Buggy

Ms Buggy

Ms Buggy

Ms Buggy

Ms Buggy

Ms Buggy

Ms Catherine Walsh

Ms Walsh

Ms Walsh

Ms Walsh

Ms Walsh

Mr. Peter Finnegan

Mr. Finnegan

Mr. Finnegan

Mr. Joe Macri

Ms Una Halligan

Ms Halligan

Mr. Macri

Mr. Macri

Ms Halligan

Mr. Macri

Mr. Phil Smith

Mr. Smith

Mr. Smith

JOINT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES (Sub-Committee on Information Communications Technology) debate -
Thursday, 5 Jun 2003