National High Speed Broadband Infrastructure: Presentations.

In the preparation of a report to the joint committee, the sub-committee is inviting groups and parties who have an interest in the area of broadband and the delivery of e-government, e-business and e-commerce functions through the national broadband infrastructure to make presentations to the sub-committee. The work of the sub-committee will add value to the process as parties to the broadband debate will have a formal opportunity at parliamentary level to fully inform the debate on the issues at play in the delivery of a national broadband infrastructure, the cost to users and the potential to deliver government, business and commerce functions. Sessions will allow for each person or group taking approximately 30 minutes. The presentations of ten to 15 minutes will be followed by a discussion. We will hear presentations from Ms Saidbh McCarthy and Ms Elizabeth Nelligan on the gender perspective; from the Disability Federation of Ireland on the disability perspective; from IAWS/Axia on the Canadian experience; from Dr. Sarah Skerratt on digital divide, digital delay and rationalisation; from ComReg on the work of the regulator as it applies to broadband; and from Enterprise Ireland on the Irish experience and need for broadband.

I draw attention to the fact that members of the 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. Furthermore members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or any official by name in such a way as to make him or her identifiable. I call on Ms Saidbh McCarthy to begin.

I thank the Chairman and the committee for inviting me to contribute to the broadband debate. It is a welcome opportunity. I will speak on gender aspects of the national high speed broadband infrastructure. In this presentation I want to cover the area of gender strategy and ICT policy; the gender consideration which we need to take into account in developing and employing a broadband policy and initiative; the opportunities available; my suggestions and thoughts on this roadmap; and a summary of where we are at present and where we can be. For the purposes of this presentation, when I speak about broadband I am interchanging broadband and access at the same time. I am not differentiating between the need for access to the ICT infrastructure and broadband specific access. I hope that makes sense.

On gender equality and ICT policy, ICT policy generally does not take up gender specific initiatives. Therefore there is not a gender specific component to ICT policy as it is generally deployed. In the ICT sector generally, it is usually advanced as a sub-set of disability and other marginalised groups. Where we look at issues surrounding marginalised groups, whether that be from a perspective of race or disability, we do not specifically look at the gender components or women specific issues within that. There is a great deal of work being done by the gender strategy unit of the Department Justice, Equality and Law Reform but it does not have an ICT specific policy. Therefore, there is no consensus among the gender and ICT groups as to what the priority areas for action should be. What we really need is a convergence between the gender strategy initiatives and the ICT initiatives, both of which are doing excellent work in their own way but are not coming together in an area to define priority actions.

The gender considerations I want to consider today are in the areas of access; capacity and skills; equitable content, both economic and social; and the public sector provision of services. In the area of access, the technology costs hinder the penetration to individuals and in some cases to the community. The cost of entry - buying a PC, getting fixed-line installation and signing up to the Internet - can be prohibitive to many households in this country. Even if one has a PC and a fixed telephone line, the ongoing costs are unrealistic. There are now flat-rates available, but at €60 per month that is too much for many households. Without a flat-rate or an "always on" cost, the potential for out of control costs inhibits the uptake for many households. It is too frightening for the household to take up the opportunity to have that Internet access.

Access issues are further exacerbated by the urban-rural divide. Where there is community based access with a kiosk, whether in a library or community centre, it is also inaccessible. If one lives in a rural area and has mobility issues, whether because one cannot physically get around, because of age or because one is a carer in the home, not having access in the home or in a local community can be a real problem. There is, therefore, a urban-rural divide.

The capacity and skills issue relates to the use of such technology, even if it is available. It concerns women in the home, women with little knowledge of English, as all services on the Internet are provided through English, and women with low levels of literacy and lack of access to technical education, such as single mothers who leave school early or older women who left school early or left the education system before technology skills were taught, with the result that they have been excluded from the knowledge network and economy. While that is going on, they are further alienated from their partners and families. Their children gain access through schools while their partners have access to and use the Internet at work. These women are at home without access and they are inhibited from doing anything because of their lack of technology skills.

I refer to economic and social considerations. Airline ticket purchases account for 67% of e-commerce transactions in Ireland and, if one is not on line at a basic level, one cannot take advantage of the ability to purchase Ryanair tickets, or whatever, more cheaply on the Internet. One must call into a travel agent. If one wants to go back into the workplace, one cannot search for a job on the Internet or e-mail one's CV. These are basic facilities that most of us take for granted, as we can do them anytime, but, if one does not have Internet access at home or is inhibited in terms of the use of technology, one cannot do that.

If one decides to go back into the workplace, one cannot avail of on-line training if one does not have Internet access at home. This is also taken for granted as something normal that can be done all the time. I refer to access to consumer rights and issues. On-line banking, for example, is a valuable facility for those living in rural areas but, if one does not have Internet access, one cannot avail of on-line banking or go to a local branch to undertake normal transactions that we all take for granted.

Technology competency as a tool for employment is an important consideration. If women are returning to the workforce, most employers expect them to have, at a minimum, a basic competency whereby they can turn on a PC, log in and use the Internet. Such a competency is similar to a literacy or numeracy skill that is taken for granted, but women will not possess it if they do not have Internet access at home or elsewhere.

A common assumption about economic considerations for access is that teleworking opens up opportunities for women and the child care issue can be managed at home. Specific considerations must be take into account in regard to teleworking. It works extremely well for middle class women who work for large employers. It is appropriate to consider teleworking if one has the space and infrastructure to do so. If one does not have the space, a phone line or cannot afford it, teleworking is as remote as anything else. Equally, not all small to medium enterprises can afford to set up a teleworking infrastructure for their employees. That is not necessarily a feasible option for them. As a result, it is more of an exclusion issue because if one has space and access and works for a large multinational company, teleworking is terrific. It is fantastic for me as a single mother because I can work from home but if I lived in a one bedroom flat with three children, it would not be a feasible option. Those are economic considerations.

I referred to social considerations, such as making an on-line hospital appointment. This presupposes that public service facility is provided through our health services, which it is not. However, presumably, it will be in the near future. Another consideration is helping one's children to understand the world around them. Most children use the Internet for their school work and a mother should be able to work with her child on the Internet and help the child to understand what he or she is doing. There should not be a divide between people who can sit down and work with their children and help them do their homework and those who cannot. A child who comes home to a mother who cannot help him or her on the Internet is similar to a child who cannot get help from his or her mother with maths or English homework. That is an exclusion issue.

Virtual networks can provide huge support for home carers and homemakers. If one has mobility issues and cannot get out, whether it is because one is caring for people in the home or looking after small children, the provision of a virtual network that can provide support is hugely valuable. The other good aspect of ICT is communication with remote family members. Most members will have received digital photographs. If a family member is living in Australia and a new baby is born there, it should not be the case that some people have access to such technology while others do not. Gender considerations relate to economic and social inclusion. There should not be exclusion issues.

I refer to public sector policy on the provision of services. The Government should lead by example. Policy makers have not realised the full potential of ICTs in gender development. No work is being done on the convergence of gender strategy and ICT policy and, therefore, no enabling framework is in place. No initiatives are targeted towards women. Current ICT models for Government delivered services remain restrictive. They are restricted to digitising currently available information so that one can obtain certain information, or forms are published on line that already exist and existing manual processes are automated to make them a little better. However, that does not change the way services are delivered or the interaction between the citizen and the State.

There are fragmented initiatives but no cohesive strategy. Nevertheless, the CAIT initiative was extremely valuable. It involved community-based projects and networks within communities that could apply for funding to deliver access. It was an excellent initiative but, unfortunately, it has been disbanded, although it is exactly the type of initiative that is needed now. Creative thinking and new approaches are needed for community-based initiatives.

If gender specific policy initiatives are adopted, we can create the enabling environment that gives women economic empowerment and allows them to fully participate in the knowledge economy. The sub-committee will hear a great deal about the knowledge network during its various sessions. Women's social empowerment through ICT will revolve around whether they have access and capacity, particularly in education, health and basic social services.

Women comprise the majority of the poor in Ireland. This is not unique to Ireland. They are more vulnerable and more powerless than men. We are trying to address that. Equitable access to ICTs and the capacity and skills to use that access are critical to many women. That will make a huge difference. Access should be deployed through broadband and putting the infrastructure in place is the first step. Women need to be involved in decision making regarding the development of the new technologies, therefore, they need to be involved in the deployment and development of content and policies so that they can participate fully.

The initial provision of access and content in technological deployments in many different areas is the key to demand. The infrastructure must be put in place to give people access. It is correct that the public sector should develop the content to drive demand but, when the initial content and access is in place, the follow through usage is generally driven from the ground up by the community and the individual. A means for people to get on line should be put in place. They should be given something that they can do initially, when they will come through with the follow-up content and make the best use of that.

The current broadband infrastructure is to be welcomed. What is being done in terms of metropolitan, wide and local area networks is fantastic, and the VSAT initiative, which has been ongoing in recent years, is a terrific visionary roll-out and is exactly what we should be doing. However, without gender consideration on the content and services, it will not be enough. It is not just about the roll-out of fibre-optic cables but about the content and what it can be used for.

We need tactical and strategic initiatives. From a tactical viewpoint, I refer again to community access initiatives under the CAIT scheme. These are important because they are from the ground up. Strategically there is the public services broker and REACH, and I am sure members are familiar with both those initiatives. They are looking at the longer-term delivery of e-government services to citizens. Without these two approaches taking into consideration gender initiatives, women will continue to remain on the wrong side of the digital divide.

That said, Ireland is technologically vibrant and is committed to gender equality. We have terrific initiatives in the Departments of Education and Science and Justice, Equality and Law Reform. Both are signed up to the Beijing principles, and have a national development plan for women, which includes ICT initiatives. We are in the unique position of being able to fulfil both the tactical and strategic programmes which we need to do to have a fully inclusive knowledge society and economy.

We have all the complexity without the scale. Ireland is a small country geographically and in terms of population - 5 million - but has everything a large country has, such as health services, education, the poor and the rich, and the need to find jobs for people. We have everything but on a smaller scale. That is good because it means we can do more and quickly.

We can emulate. There are great gender initiatives in Sweden and South Korea, where they connected 1.5 million households. In Canada - the committee will hear from someone from Canada later - they have a specific women in technology initiative which is overseen by the equivalent of a Minister of State and which examines the gender and technology aspects.

We can do the same or we can innovate. Ireland is in a position to be a leader. We can establish prototype ICT models, build partnerships between NGOs and the public and the private sectors - the latter needs to be brought into this debate - focus on research and innovation, and set aggressive targets on penetration and accessing usage. These can be achieved with the true convergence of infrastructure, content and service provision. These three factors must come into play. If we do that, we can secure an inclusive society which will maintain our competitive advantage through the ICT economy.

Ms McCarthy's presentation was enlightening and not unlike one we received at the opening session from a lady called Nana Luke, representing Telework Ireland in Clare. If Ms McCarthy wishes to communicate with the Clerk to the Committee, he will send her Ms Luke's presentation. It would be no harm to do that and to make contact with her because she does a great deal of work in training housewives and people who are stay at home parents - I had better not say "housewives" because I am a house husband - to prepare for the market and get involved in the ICT business.

I was interested in what Ms McCarthy had to say about the CAIT programme. I am sure the committee agrees with Ms McCarthy that this was an excellent programme introduced by Senator O'Rourke when she was a member of Government and which has now ceased. I have no doubt that it will be one of the recommendations of the sub-committee that this programme be reinstated.

Ms McCarthy effectively said that we must have access and connectivity at affordable prices, and training for people staying at home. I agree with her in what she said about the child on the mother's lap. The Clerk and I had a discussion on this over the weekend when we were representing the committee at a conference in Greece on renewable energy. It is important that children be taught how to use the computer at an early age. I am sure colleagues will agree with many of the points Ms McCarthy made. They are music to our ears because that is what we want to incorporate in our report.

Has Ms McCarthy any views on how we could make a computer system available to every household, especially those unable to afford one? I am not just concerned with access and connectivity but with hardware as well. We are developing an idea of a scheme whereby computer companies and service providers would introduce a system of specialised discounts to every household that buys a computer system and the service provider would provide a service to the households that buy the systems. I am interested to hear Ms McCarthy's views on that.

On the cost of entry in terms of physically getting the computer into the household, there are others who have greater expertise in this area than I have. The considerations of women in the home are that account must be taken of what we call the footprint. If one lives in a small estate, it is not practical to have a large computer. The size of equipment should be reduced and we should opt for something small, such as a laptop.

The system Telecom Éireann put in place when it installed telephones, where it owned the handset and a person paid rental on it, is not an unreasonable mechanism to use for computers. It allows people to upgrade them. The problem is, if a person ends up with out of date equipment, his or her children will ask why they cannot have a proper new computer like everyone else. Service providers could use the Telecom Éireann model, which is in effect what people continue to use today where one leases the handset. I do not know if the committee has any thoughts on that but that would appear to me to be the most effective mechanism or at least an easily deployed and inexpensive one.

There are many initiatives examining smaller and more robust connectivity or a piece of equipment to connect which has a more limited use but is applicable in the home, such as for basic Internet searching and facilities. Some Irish companies are working on this at present. Perhaps it is something we could examine.

I was interested in the presentation and can understand what Ms McCarthy is talking about. We have a computer in a small shed at home. Without it, my wife, who is at home with the children, would feel very isolated. If she did not have the ability to receive e-mail from her sister in Australia or to connect to her former work colleagues, she would feel even more isolated than we tend to make people in the home feel. Ms McCarthy is right about the importance of this.

There is a long-term economic basis to this as well. The State spends a fortune educating people to develop certain skills, yet for that period of their lives when they might have to leave the workplace for a while, they are required to give up everything and the State loses their expertise. If they stay away from the workplace for a certain period, it can be intimidating to return. There are hugely important issues for the State, and it should not allow them to happen in the interests of fully empowering the knowledge economy. What Ms McCarthy said is very important.

To what organisation is Ms McCarthy attached? I did not catch that at the beginning.

There was some confusion about it. I am not with an organisation. My work background is consultancy. I was a consultant most recently with IBM and, while working there, began to focus on the digital divide issues from a global perspective. Many multinationals work on what they call community relationships and what they can give back to communities. I spent a great deal of time on this, which is how I ended up working in ICT with associated specific gender initiatives. In the past six months I have made some submissions and proposals to the Departments of Education and Science and Justice, Equality and Law Reform on practical steps that need to be taken in this area. This is why the Clerk asked me to speak to the sub-committee.

How do we get this message across to the Government in its decision-making activities? I would have thought one way would have been through the partnership process in which the National Women's Council is one of the social partners. That might be one way in which Government decisions or investment could be affected. I was interested to hear of organisations seeking gender equality provision in the State which have used the partnership process. Etain Doyle of ComReg is very influential and will make a presentation to the sub-committee later. I do not know if Ms McCarthy has made any presentations to ComReg requesting it to take into account in its decision-making gender issues and the need for inclusive policies. Have presentations been made to ComReg and, if so, what was its reaction?

No, I have not made representations to ComReg although I have spoken to Etain Doyle about this on an informal basis many times.

This goes back to one of my initial points. I have made submissions to the National Women's Council which is focused on gender strategy, poverty reduction at the most basic levels and bringing women in from the margins, while Etain Doyle's area relates to more ICT-specific initiatives. These two areas are not coming together which is what needs to happen. I am not sure where that initiative should reside and perhaps this forum can help decide that. I suspect it should be in the gender strategy unit of the Department of Justice, Equality and Law Reform. A specific ICT strand should be built in as a subset of that unit.

The problem I have with the Department of Justice, Equality and Law Reform is that we are adding a fourth ministry with responsibility for ICT issues. In addition to the Minister for Communications, Marine and Natural Resources, there is the Tánaiste, another influential woman who has some responsibility in this area, as does the Government Chief Whip, Deputy Hanafin. Many Departments are involved. If I understand Deputy Hanafin's brief correctly, perhaps she could be able to pursue this agenda.

This speaks to an issue that is not gender-specific in that there is huge fragmentation when it comes to responsibility for ICT initiatives generally. Broadband roll-out is a matter for the Department of Communications, Marine and Natural Resources, but one reason there are issues to be addressed is that responsibility for the provision of contents and services is not clearly defined. It depends on what is involved. If an issue relates to schools, it is an education matter, while if it relates to hospitals, it is a health issue. It depends on the issue and I accept the Deputy's point, but I do not know if pushing this back into the Information Society Commission will help.

As an aside, much of the work being done on this internationally - not domestically - for the World Summit on the Information Society which will be held at the end of this year is being done on the gender-specific issues which are needed. We are not doing anything specifically on these matters in Ireland and Deputy Hanafin is responsible for this area. Responsibility could possibly be split between the Departments of the Taoiseach and Communications, Marine and Natural Resources for the WSIS. Perhaps we need to begin looking at the policy initiatives domestically and then take a lead internationally. I do not know if that addresses the question.

Yes, it does.

I know we are under time pressure so I will be brief. I welcome Ms McCarthy, who I am sure will correct me if I am wrong in saying that there has been some progress on women's knowledge of and access to IT. This is due to basic reasons such as the percentages of people in employment and the numbers of women taking college IT courses. Schools IT access has improved and, although much remains to be done, it is as active a field in girls schools as boys schools.

These are steps in the right direction, but it is because an increasing number of women are involved in careers as opposed to choosing not to be. Ms McCarthy is right to target women who, for whatever reason, leave school early and are either at home or do not have access to a computer at work or elsewhere. She also made the point that many people do not have phone lines to their houses, let alone access to a computer.

We had a submission from a community worker who is also a garda who said that he had a vision of the use of community centres as IT hubs for the people. In the short-term while we link people's houses, they could have a centre to which they could go and be free of the hassles of work or home while accessing information they need for study or other reasons. What are Ms McCarthy's views on that?

It is not ideal. The ideal is that everyone would have a quiet, almost isolated place at home where they would have cheap broadband access and a choice of services at affordable prices. This will not happen overnight and certainly not in rural areas. However, almost every rural area has a community centre of sorts, whether it be the local GAA club or whatever. There are possibilities in this and, while there may be problems with access and child care, we should seriously examine this option.

The Chairman's idea about a scrappage scheme which would shift computers from industry to home use would certainly work and we have examples of that in Cork. Hardware could be moved from industry to community centres and computers could be networked in a more controlled way. Does Ms McCarthy think this could be a positive step towards improving gender balance and IT access?

On community centres, I made a submission to the national development plan for women specifically recommending that the exact environment suggested by the Deputy be created. Nobody thinks we will get everyone on-line at home in the morning. That is not even appropriate in certain circumstances for various reasons. However, we can create centres where women can come to work and gain access and which have child care facilities next door. This creates a space where women can work, have a child care facility beside them and interact with others, which is always valuable. What is really important about all this is that we need these economic initiatives to get women back into the workforce and to maintain their technology competencies.

The idea would be to have a space where small and medium enterprises could buy hours. This would overcome the problem whereby small businesses cannot always afford teleworking or to give everyone laptops and so on. It would provide a space where businesses could rent hours, where an infrastructure would be in place and women could work while having child care facilities beside them.

What about a combination of an affordable Internet café, child care facilities and social interaction? For example, if a single mother with three children who lives in an apartment complex wanted digital photographs of a new baby or someone's birthday sent home from Australia, she could access that information while having someone care for her children. This is probably what Ms McCarthy is talking about in practical terms when she speaks about linking up gender strategies with ICT strategies.

I thank Ms McCarthy for the excellent presentation. In the context of her work experience with IBM, are such computer manufacturers progressively working to arrive at a mass market solution by placing a computer in every home? The handset was an excellent example.

The short answer is that companies will always try to reduce costs. Computer manufacturers are in the business of having a disc today and buying a new one next year, which is not a bad thing. This is the way the business works.

There is a great deal of potential in the scrappage idea, which is excellent. However, we should not call it scrappage. We should talk about recycling or re-using which are good.

I may have given the wrong impression. We suggest that some computer manufacturers, together with service providers, should provide a package at a special price. It may need Government incentives but there should be a partnership arrangement so that computers can be placed in the 65% of households that do not have them. We should be able to make them available not just to women but to people who are not in a position to access them.

People have been talking for years about joining up telecommunications, television and other services and who would win out. If there were flat rate access, it would make sense to attach the phone to the computer. Is there a physical version of a phone being attached to a computer?

Absolutely. Almost all the technology is available. Much work has been done on bundled physical equipment. The regulator can speak about many issues relating to connectivity, including whether one should have a facility to connect in a number of different ways - wireless, satellite or whatever. However, work remains to be done. It will always come down to how much it will cost and how much the Government is prepared to do in terms of access.

I leave members of the sub-committee with this thought. At the end of the day, 38% of households in Ireland have a PC and 12% of women in the home use them. It is not always about the physical equipment. Much of what is needed must be done in the area of gender specific content and ensuring it makes sense. This should include the removal of barriers and inhibitors to making people feel technologically comfortable.

I thank Ms McCarthy for that important statistic. I thank her and Ms Nelligan for attending.

I welcome Mr. Brian Boyle and Mr. Don Bailey from the Disability Federation of Ireland. I remind members that we will receive a copy of Ms McCarthy's presentation after lunch. Perhaps Mr. Boyle and Mr. Bailey will confine their presentation to 15 minutes because we are under a time constraint.

Mr. Don Bailey

I am pleased to address the sub-committee. It is important that all avenues are available to us to communicate and interact with society. The structural problems are very slow in allowing us to do that. Broadband access will allow us to communicate much faster. We will need conventional access but broadband will make things much easier.

When the DFI was invited to make this presentation, it contacted the Centre for Independent Living. This group resources itself and its peers to integrate and lobby for improvements. The technical know-how at our disposal is based in the Central Remedial Clinic. My colleague, Brian Boyle, will go through the technical aspects of the presentation. As a disabled person, all I want is the bells and whistles to work and integration to happen more quickly. It is very important from a disability point of view that this should happen as soon as possible. I will now hand over to my colleague, Brian Boyle, who will go through the presentation in detail.

Mr. Bailey has outlined to some extent the benefits access - not just broadband access but access in a more generic sense - can offer to people with disabilities living in Ireland. I want to reflect on the future possibilities envisaged by people with disabilities. From my experience, they have flirted at the margins of the potential ICT can offer as a tool for access. This has been the focus in recent years. It has been reflected in particular in some of the participative projects run by both the DFI and the Centre for Independent Living and supported by the Central Remedial Clinic.

Much of our experience is outdated at this stage. The notions of teleworking and telecottaging have been superseded by the notion of e-work to try to encompass not just people working as individuals at home, but people working in small community settings. The potential for people with disabilities is that, first and foremost, it helps to surmount the obvious barrier in terms of participation - transport.

Along with the difficulties experienced as a result of transport, one aspect to be avoided with the home office is the social isolation experience, especially of people with a disability living in rural communities. The provision of an individual isolated home working environment is not often the easiest solution. There have been projects and initiatives that have examined the provision of telephone and Internet provider access for people with a disability living at home. Feedback has tended to reflect the fact that there is a marginalising quality to the experience.

There is a need for a cultural change within the workplace to a more flexible approach. This must not just be in terms of employment or making the workplace friendly for a person with a disability but also allowing the flexibility to support someone who may need a working environment that may not be nine to five, Monday to Friday or in one location.

As a cornerstone to employment and the creation of a larger workforce, the notion of distance education provides a model for equality of participation. This has been demonstrated in other countries. The UK has embarked on a process of providing distance education, on an "anywhere anytime" policy, not just for people with disabilities but for a larger group of marginalised people. Rather than just looking at education in itself, distance education can provide people with more flexibility in how they access occasional training and workplace educational support. This is one of the immediate benefits to be gained by people with disabilities. Going back to what the previous speaker said, much of this does not just depend on providing an access framework but on providing relevant content which has been researched, made applicable and, to some extent, directed and mandated by specific representative groups of people with disabilities.

This underpins the provision of the potential to participate equally in a knowledge community. It is not simply about providing access but about providing layers of access. First, people must have an opportunity to access information, second, the information must be relevant and empowering and, third, there must be a network and community which provides support to be able to debate that information and formulate future planning.

One of the areas that has promised most potential to people with disabilities is distributed services, as I have called it. This comes down to the notion of on-line shopping and on-line community living as a way of providing a more equal participative model for people with disabilities. I outline this with the caveat that it must be borne in mind that providing access to a person with a disability in home is not just a simple solution. There are isolating effects that must be ameliorated.

The notion of distance or tele-medicine has been experimented with in some European countries. In the Irish context, the infrastructure for it does not exist. People do not have access and there is no structure whereby they can access their general practitioner or specific services from home. The potential exists and it is one of the most desirable avenues people with disabilities would like to take.

Within the activities of daily living, access to personal management and daily shopping services has promised a great deal. Some of the experiments and initiatives, such as Tesco Online, have come to fruition to some extent. Accessibility of services that most of us take for granted, for example the booking of holidays, transport and accommodation, offers huge potential in terms of providing people with disabilities with the same level of access to services that the rest of us have.

Under the banner of e-government there are benefits to be gained in terms of Government transparency and increasing the participation of people with disabilities. There is a sense, especially in rural communities, that people with disabilities do not have a voice or an avenue for their voice. Providing a forum for participation both locally and nationally makes a huge difference. Having access to information that is updated on a regular basis makes a difference. This allows more direct input into policy-making as opposed to working through specific action groups.

Within e-commerce, providing a broadband structure that works for people with a disability, is affordable and has relevant and manageable content can produce citizens who have more autonomy in terms of their personal and financial management. It certainly provides an opportunity for people with disabilities to become involved more directly in the procurement process for services and assistive devices or for technology that may be of support to them in accessing the home, community or work. At present, limited opportunities exist for a variety of reasons. Many people with disabilities suffer from the same type of social disadvantage as other marginalised groups. A systems change is required to create an e-commerce culture in which people with disabilities can participate.

There are some miscellaneous benefits. A broadband network will provide better opportunities for people with disabilities to support each other through the use of new communication technologies. It will support groups. There is a social dimension in terms of using technology, especially newer synchronist technologies such as conferencing that depend on high-speed and broadband access. A broadband network will also provide access to recreational pursuits and to engaging with people online at a social or recreational level. The focus should be on providing a platform that provides equality of participation within a range of services.

There are some limitations at present. Poor infrastructure has been reported. As the previous speaker said, cost is prohibitive. For people with disabilities, a flat rate of €60 or €48 a month is prohibitive. There is a gulf to be bridged in terms of demonstrating to many people what may be good value for money, the reason a person with a disability should get broadband access or what is to be gained from the costs incurred.

There are technology barriers in terms of hardware, software and content. It has been assumed in recent years that providing a person with a disability with a computer is a liberation in itself. That is often not the case. It is a key necessity not only to provide people with the computer hardware but also to provide them with software that will support them, whether they have a literacy, physical or sensory difficulty.

There is a lack of training and experience. I am critical of the type of training and experience that has been provided to people with a disability to date. On the flip side, I commend the CAIT initiative for addressing that gulf. There are attitudinal barriers to surmount and social implications in terms of providing access and how empowering the process will be.

In terms of future trends, the notion of having wireless, anytime, anyplace, anywhere access is key. We must seek more ubiquitous access and more flexibility in terms of access, not just within the home environment but also at a community level. There should be a move to a design for all to try and providing a seamless approach to the design of hardware, software and content. There is a move to a design for all, a new accessibility model in the design of virtual environments, whether in home or community settings. There is also a recognition of the community benefits that can be offered to people with disabilities in providing them with access.

I welcome Mr. Boyle and Mr. Bailey. Telemedicine was spoken of earlier and it may be helpful to get the transcripts of a couple of presentations to this committee. One was by a lady from the Southern Health Board and the other was by a doctor from the United Kingdom. They spoke at length about the steps they are taking and the advances they are making in that area. It may be something at which the witnesses would be interested in looking.

I had written down a question, but the witnesses have answered it to a certain extent. It related to whether cost would be a factor, and the witnesses confirmed that it would.

Quite a lot of people who are living on their own have access to telephone rental allowance. I am sure the witnesses would like to see that extended to the provision of broadband when it becomes available. I am sure that will be examined.

A very simplistic notion occurred to me when I was thinking about this. I was listening to a lady on the radio as I was driving here from Waterford this morning. She was actually from my own city. She is an elderly lady who was bemoaning her lack of access to carers. One of the points she made was that the loneliness she feels is worse than hunger. It strikes me that the same is true for a lot of disabled people. They are on their own during the day, to a large extent, and not enough people visit them. If they had broadband access and a lot of their neighbours did not, it might encourage their neighbours to visit them. Perhaps it would be for the wrong reason, but at least it would tackle the problem of loneliness. It may be simplistic, but it just occurred to me.

In the field of work, we are supposed to aspire to 3% of disabled people working. Some are very good at achieving that, some are not. The witnesses made the point that transport is a barrier. With the technology that is available, there are more possibilities for people working at home - not only people who are disabled, but able-bodied people as well. Is that something that the witnesses feel people with a disability would welcome? Do they prefer to be part of the community or would they prefer to have the opportunity of working from home, which is obviously less inconvenient for them. A lot of firms are making it possible for their employees to work from home. Are companies throughout the country being as helpful to people with a disability in that respect? If such people want to work from home, are they attempting to make it easier for them?

On the issue of telemedicine, there have been piecemeal initiatives that have worked very well. The South-Eastern Health Board and the North-Western Health Board have been very progressive in installing a video conferencing network to support professionals working at a distance, but also to link with services like the Central Remedial Clinic in Dublin, to provide disabled people with access to centralised services in their own localities. Such services may be more specialised and may not be provided at a local level. I commend those initiatives and there are entities that have demonstrated good practice over the last number of years.

On the issue of free telephone rental, the extension of this to cover broadband will certainly work at one level. Access to hardware and software will also help. With reference to the point made about the "scrappage" deal, it is an unfortunate choice of phrase. An organisation called the Cristina Foundation, which is an international body, has adopted what it calls the "re-utilisation" of technology. The Central Remedial Clinic has been in negotiations with the Cristina Foundation over the last few months to try to start a similar model here. As an organisation we would welcome a way of re-generating the technology that exists.

Does the witness remember the scrappage deal for cars? If one traded in one's car one was given £1,000. We are trying to develop a similar model where even if one does not have a car, one still gets a discount when buying a computer package. We are developing that throughout the three or four days we will be here.

Some international models exist for that, like the Cristina Foundation. They would be useful.

If the witness had something of that nature perhaps it could be passed on to us, perhaps through e-mail. We would be thrilled.

Of course.

Deputy Ryan, did you have a question?

Sorry, I was just going to hand over to my colleague on the last two issues.

I beg your pardon.

Mr. Bailey

I am one of the 2% of the public service who started 20 years ago, in 1982, but I was glad to get a job in the Civil Service - in agriculture. When I came to Dublin from Dundalk I had no place to stay. I had no form of transport to get to work. It is an indication that simply providing people with a job does not necessarily help if they have nowhere to stay or no way to get there. I was handing my money to a landlady for bread and breakfast for over five years before I resolved the problems of transport and accommodation. That tells me that the infrastructure surrounding the provision of employment must be in place.

In working at home the disabled should be recognised as social animals, as we all are. There is no reason we cannot mix working at home and working in an office with our colleagues. That is often a significant objective, and one that should be encouraged. We do not want to stay marginalised outside the community. Until the infrastructure is sound enough to get us to work easily every day, that might be a good option to adopt.

The last speaker gave us a figure for the level of use of technology by women in the home. Is there any indicative figure for the level of usage among the disabled community that tells us whether the level of usage is higher or lower? What is the key usage at the moment? Do educational courses exist which people can tap into?

The statistics on the use of technology by people with disabilities are very vague, especially in this country. There has been no concerted examination of what the technology usage by people with disabilities is, outside particular contexts. The Department of Education and Science has statistics on the use of technology by people with disabilities within mainstream education and that is the best guide at the moment. My feeling is that access by a person with a disability is often lower. This is because of the social cost and the lack of proper access to training and technical support, a fact which has been underestimated a great deal over the last number of years. I have forgotten the last part of the Deputy's question.

Are there any educational courses available that people can tap into?

Educational courses do exist. The National Training and Development Institute runs home tuition courses, mainly based around ECDL. In addition, FÁS runs centre-based courses that have been developed for people with disabilities. FÁS also runs an Internet college which it has been promoting as a model for home tuition. The accessibility of that is questionable, however, and it probably requires a bit more work. One of the difficulties for organisations such as the National Training and Development Institute is that they have been using old technology to deploy education. Much of their educational resources and materials have been around CD-ROM-based technologies. In the CRC, more recently, we have started a small project linking four special schools using IP technology. It means we have built a virtual learning environment to try to test a framework that would provide students with a disability, in a special education centre, with the opportunities for peer collaboration outside their own school. So far that has been fairly successful. Hopefully, it will at least be a starting model for other people interested in providing access to education.

I think my colleague, Senator Kenneally, touched on this. At a previous presentation a senior citizen, Ms Catherine Walsh, argued that a vital and life-improving benefit of broadband was that senior citizens could keep in contact with each other. Would you say that applies in your case, for example, where people with disabilities are able to support each other by being able to communicate? I believe Don Bailey is very much involved in the credit union movement, as well as on-line banking, Would you see people with disabilities being able to use on-line banking, if they had access? We will finish at that question.

Mr. Bailey

Peer support and advocacy among the disabled or any marginal group is important because many of us do not have the access that I have. Many people need support, even to access Government or social services. Peer support and advocacy is therefore very important among this group.

The credit union movement and on-line banking are important. The credit unions, unfortunately, made a slight faux pas in the last couple of years in attempting to introduce technology. I use Internet banking the whole time. I find it good, especially for utilities, because most of the banks are not very accessible and the showrooms at Bord Gáis, the ESB, etc., are becoming more difficult in terms of ease of access. They have so much stock on display that it is difficult for a disabled person to get around the aisles with ease. It is often difficult to get the person one wishes to speak to as he or she may be occupied elsewhere. Internet use is therefore important for providing access to banking and other services.

I would like to give an illustration in the context of the support people with disabilities can provide for each other. Several years ago I was involved in installing e-mail access at some of the country's Cheshire Home institutions - linking up with a number of similar international organisations. The benefits were phenomenal to the extent that a widower, for instance, with a disability who had to leave his home and move into a Cheshire Home and a more supportive environment, re-married after a year's relationship on-line with a lady of similar mind. This was a transforming experience, not just for the two individuals involved, but for the groups with which they were involved.

I thank the witnesses for their presentation. It was very important for the committee because we want to ensure our report includes all groups in society. We are enlightened by what you have said. We will suspend the meeting for 15 minutes.

Sitting suspended at 11.30 a.m. and resumed at 11.45 a.m.

I welcome the delegation from the IAWS and Axia which comprises Mr. Cameron Milliken, Mr. Tom Tynan, Mr. John Tyrell, Mr. Eugene Murray and Mr. Bob Hansford.

I would like to draw witnesses' 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. I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or any official by name in such a way as to make him or her identifiable.

I remind witnesses that this is a sub-committee of the Joint Committee on Communications, Marine and Natural Resources and that some members have had to attend an urgent meeting of their parliamentary parties. This fact will not stop us from proceeding, however. I understand that some of the witnesses have travelled long distances. I ask Mr. Milliken to commence the presentation.

Mr. Cameron Milliken

I thank the Chairman. My name is Cameron Milliken and I am the honorary counsel general for the Government of Ireland in Alberta, with responsibility for trade and politics. Part of my mandate is to find companies in Alberta that wish to invest in Ireland. I have discovered that the Government is looking for broadband solutions. I happen to know the president of Axia, which is the leading broadband company in Alberta, because he was the president of a major integrated oil company, Husky Oil. I know him through the oil industry, just as I know many of the people on the board, who are shareholders in Axia. It is a very honourable and reputable company, which has done a great job by building a new supernet in Alberta. Many people around the world are familiar with the supernet, as it has received a great deal of publicity. I have explained who I am and why I am here. I will be happy to answer any questions.

I do not have any questions at present. How does Axia intend to arrange its presentation?

Mr. Bob Hansford

We will move the presentation around, if possible.

There will be 15 minutes for the presentation.

Mr. Hansford

That is fine.

After the presentation, Deputy Eamon Ryan and other members of the committee will ask questions. It is important that we include Axia's presentation in our overall report at the end of these public hearings.

Mr. Hansford

I am Bob Hansford and I am the president of Axia Broadband Services Ireland. I am also president of Axia IP Services, which was involved in the Alberta supernet contract. Axia is interested in Ireland from a number of perspectives. I will go through the slides I have brought with me, highlighting some of the main points. The first slide contains a quote from the New Connections report, which was produced by those involved in the Government's information society project. One of the goals outlined in the report is to bring Ireland into the top ten in Europe in terms of broadband connectivity. While Axia applauds the goal of achieving a top ten position and avoiding the difficulties that are currently being faced in terms of broadband connectivity, it does not see any reason Ireland cannot adopt a leadership role.

The basic value proposition that Axia is putting forward is startling in some respects. The sub-committee will have heard from numerous parties that this is an onerous, expensive and complex task. Axia says, essentially, that a ubiquitous broadband solution that places Ireland in a leadership role within the EU can be found for less money than is being spent at present. This is quite a dramatic claim and we will talk a little about why we make it and how it might apply to Ireland.

The second slide gives some information about Axia. Mr. Milliken has mentioned Axia's pedigree and background. It was partnered with Cisco and Microsoft in its successful bid to win the key role in the Alberta supernet. We are acknowledged experts in helping people and government organisations to perform better through using IP tools and high speed broadband connections. We believe it is important to have a local presence and an understanding of the local situation when we consider new supernets, which we are doing all over the world. We are not trying to carbon copy the solution we had in Alberta into other jurisdictions but trying to use the lessons, the power of principles and experience we gained in Alberta to meet unique circumstances in each of the jurisdictions in which we have an interest, of which Ireland is one.

We carried out an investigation in the past year to 18 months and were very pleased to be able to make an arrangement with IAWS to develop jointly Axia Ireland, the full name of which is Axia Broadband Services Ireland Limited. I will shorten it for the purposes of the meeting to Axia Ireland.

IAWS is an ideal partner for us because much of what we will discuss relates to how a broadband solution, which is comprehensive and addresses every location, village, town, school, health care facility and Government office, regardless of where they are located in Ireland, touches in many ways on the areas in which IAWS has its roots, particularly the co-operatives, which are critical to IAWS society. Many of these are in rural areas that do not have adequate broadband services. We believe our solutions will solve these problems.

Alberta supernet is essentially a network that connects all 422 communities in Alberta and within which our solution connects every school, health care facility and government office. This amounts to approximately 5,000 individual locations throughout the province. Once the network to serve government or public agency locations is in place, we are able to use it to meet private needs by piggy-backing on its capabilities.

We are not trying to create a replacement for competition. We divided the network into two parts, one of which consists of 27 major urban areas, namely, the main centres in Alberta where we already had effective competition, the other comprising the 395 communities which did not have effective competition. Obviously the 27 areas were the larger cities where the markets were sufficient to attract competitors. In these communities, supernet has no role in the private sector, in other words, it is simply a government services network. Outside these 27 communities, we open up the network to allow other users, besides government, access to it.

To give the committee an idea of the power of this from an economic standpoint, the monthly price for 20 megabits of service in Alberta before the supernet was in the region of Canadian $10,000. An equivalent service on supernet available to government is about $700 a month, which equates to €450. This is 20 megabit both ways and allows anybody to connect anywhere in the province.

I will now address the services concept. The network is more than simply connections; it is about the ability to communicate with other locations. It is not, therefore, confined to running a wire into one's house, but extends to the issue of with whom one can communicate using the wire and what are the charges. It is important when solving the broadband deficiency here that one examines the kinds of services provided, not just the speed of the final link into a house. Our services connect every location in the province to every other location. Every school and hospital, therefore, can talk to every other school or hospital, regardless of location. It is an integrated, seamless network.

The other important point is that the network is controlled and monitored from a central point to allow us to make dynamic allocations, changes and moves as the needs of users require. There is a dichotomy between the urban and rural network or core and extended network. We have set up points of presence in each of the rural communities. These are places where independent businesses, such as Internet service providers, wireless access providers, telephone companies and cable television companies, can connect their facilities to the Alberta supernet. One issue we found particularly interesting in the IAWS example was that this is the kind of business opportunity that co-operatives might find extremely attractive. They understand local markets, are respected businesses in the local area and know how to provide services on a co-operative basis. We believe many of the co-operatives which make up the IAWS will be interested in taking on the challenge of examining the possibility of developing a business to provide local access in each of the rural communities throughout Ireland.

Alberta's goals for the supernet are consistent with the goals in Ireland, of which I am aware, namely, to eliminate the digital divide between urban and rural locations, avoid business limitations forcing new businesses to locate in exclusively urban areas and allow them to consider more rural settings, to improve the quality of life and participation of all citizens across the economic and social spectrum and to establish Alberta as a first mover advantage. The last point is extremely important because once this network, not just broadband access solutions, is in place, one is able to deploy applications which will save the Government money. A report in a Sunday newspaper was brought to my attention in which it was stated that Ireland loses about €400 million per year through non-electronic payments.

I read the article in question in theSunday Business Post. I assure Mr. Hansford that when the Department of Finance and the Information Society Commission appear before the committee we will quiz them on this report.

Mr. Hansford

I applaud the Chairman's intention. This is the tip of the iceberg or even smaller. Adopting applications in every sector of society, particularly in the areas about which the Government is most concerned, namely, health and education, the big drivers of Government cost, offers significant savings to Ireland. It is a way to begin to do two things, namely lower the unit costs of delivering health and education services to citizens and improve the quality of those services delivered to residents wherever they are located in the Republic. It is a considerable advantage.

My point is that the network, not simply the access points, is the key. Modern communications allow one to converge voice, video, data and image communications into a single pipe that can be delivered quickly, efficiently and cost effectively. It is the key to the success of deploying the applications we discussed. I will close with a quote from our chairman, Jonathon Chambers. He stated, "We have created competition where the size of the market would not otherwise support competition." This is a key point because our business model creates competition in small communities where otherwise there would be none. We do that by being absolutely neutral and by not being aligned with any carrier. If we have business conflicts with a supplier, we will not encourage people to enter into these markets because they will be afraid to compete with Axia. Our business model provides absolute neutrality so that a co-operative, for example, can enter the market without fearing that Axia, as the operator of the network, will be competing with it at some point in the future. I have completed my part of the presentation and I would like to introduce the next speaker, Mr. Eugene Murray, who is a former member of the executive committee of RTE. He has advised Axia in recent months about trying to understand the Irish perspective. It is appropriate to allow him to comment on the next series of slides, which deal essentially with the Irish view of the Alberta solution.

Mr. Eugene Murray

I am aware of the time constraints and will spend just 20 or 30 seconds on each slide to get through the presentation quickly. I acknowledge that this committee has been doing a great deal of work in this area for some time. Some of the information I will be giving will not be new to committee members who are very familiar with certain details. I will not spend too much time on the macro-issues.

It is obvious from Ireland's standing in the OECD that we face major challenges. Not only are we behind, but we are also losing ground because other countries are advancing rapidly. The major industrial agencies, such as Forfás and IDA Ireland, recognise this and are pushing forward to try to make the framework outlined in New Connections work. The development of a national broadband infrastructure is particularly important for the regions and the diversification of industry outside Dublin and the east coast. There is a market deficit at present, unfortunately, and the market players will not deliver through broadband. Many companies argue that DSL provides an adequate solution, but this is denied by all knowledgeable experts. New Connections clearly states that speeds above five megabits per second are needed in the home, an objective that is supported in a number of independent reports.

Broadband stagnation is a phenomenon that accompanies the market failure to which I referred and is related to the way in which the market is structured. The Competition Authority has stated that the major industry players do not have an incentive to drive forward the broadband agenda because of the legacy systems from which they are trying to maximise their returns at present. The existing market players will accommodate any major new initiative or demonstration of leadership with the aim of establishing a new structure.

We all agree that we face a challenge which involves putting in place high-speed facilities, catching up with the EU and our other trading partners and establishing a planned framework to get us from where we are now to where we want to be. In other words, the Government must intervene to bring forward the broadband agenda. A solution is needed. Mr. Hansford has outlined the Axia proposition as it works in Alberta. It involves taking the framework that the Government has put in place and developing it further, focusing particularly on the issue of the Government as an enterprise customer. The Government's existing buying power in the area of telecoms needs to be leveraged and a strategy similar to that which is working successfully in Canada needs to be adopted.

As a major enterprise customer, the Government should be placed in the role of aggregating its purchase power to build a base load of IP broadband infrastructure across the country. The adoption of the proposed structure will ensure that the interests of the network operator are aligned with those of its customer, the Government, and that the type of savings to which Mr. Hansford referred earlier can be delivered. I will not go into detail on the slide that relates to methodology, other than to say that the network operator should be a non-conflicted party and should operate in the interests of the major client. The operator's strategy should be determined by public policy.

The documentation that has been provided to the committee includes a map of Ireland's broadband backbone network. It is important that we recognise that there has been significant investment in telecoms infrastructure throughout the country. Somebody once described it to me as being like a series of roundabouts without connecting roads between them. The solution that is needed involves taking advantage of the significant investment that has taken place and linking up the communities with a proper market structure and a proper process.

I would like to ask about the interesting map, which the sub-committee has sought for some time. What is its source and how was it developed?

Mr. Murray

We can supply the sub-committee with the background information in that regard. The map came from IBEC, the ICT section of which produces a map each year. A new version is coming out in the next week or two and a copy of it can be forwarded to the clerk of the committee. As I am conscious of the time, I will complete my analysis of the documentation quickly.

Mr. Hansford

Perhaps we will allow other members of the delegation to speak at this point. I wish to introduce Mr. John Tyrrell and Mr. John Tynan, who we are pleased to have with us. Mr. Tyrrell is the director general of ICOS and is very familiar with the circumstances of co-operatives. He is also on the board of the IAWS. Mr. Tynan is one of the IAWS's senior executives in Dublin. I invite Mr. Tyrrell to take this opportunity to make some comments about his perspectives on this solution.

Mr. John Tyrrell

As Mr. Hansford said, I am the director general of ICOS and a member of the board of the Irish Agricultural Wholesale Society Limited, which is the representative organisation of agriculture and food co-operatives in Ireland. It is clear that co-operatives have a major interest in improving communications. Many of them are using the Internet to communicate with members. The monthly statements supplied by dairy co-operatives to their members are accessible on websites. Store account details can also be provided on-line to those purchasing feeds and fertiliser, etc. The co-operatives are interested in developing this means of communication quickly. It is clear that this gives an opportunity for the co-operatives to provide commercial information on a timely basis, so that people can access it. I encountered an example of this when I met some Australian dairy farmers at a conference in Paris. They were able to show me how they can access certain information on a website, such as their account details or the amount of milk produced the previous day on their dairy farms in northern Australia. Such an example can be followed here.

There is a significant possibility that Irish co-operatives will be able to become involved in such initiatives. The map that has been shown to the committee indicates that the distribution of broadband in rural areas will be a significant issue for the co-operatives. I am aware that a number of co-operatives throughout the world have become involved in the detailed development of broadband services in their countries. Fonterra, which is the major co-operative in New Zealand, is significantly involved in the roll-out of broadband into rural areas. We certainly believe there is a strong interest among co-operatives in developing this means of communication. While they have access to the Internet at the moment, speeds are inadequate and improvements are needed.

Mr. Tynan

The shareholder base of the IAWS, which was established in 1897, is 52 or 53 co-ops on the island of Ireland, North and South, as a result of which we have a unique perspective.

Mr. Hansford

I have a couple of observations, after which we will be happy to entertain any questions. The final three slides reinforce some of the messages we have conveyed in our presentation. I apologise, I was trained as a theologian and philosopher and have had a lifelong struggle to try to cut down the number of words I use when I write. This is as short as I could get it. Having observed Ireland over the last year and a half, there is absolutely no doubt that the implementation of broadband is a desirable end. It will be of advantage to the country and increase the viability of economic progress. It will ensure the continuation of Ireland's economic vibrancy. It will contribute to the integration of society and will allow development to be moved away from its core in Dublin. It will level the playing field in terms of location and will be of huge benefit to Ireland.

Our contention is that there can be a solution, particularly for the Government's needs as the enterprise or exemplary customer, for less than it is costing today. There are all kinds of ways in which to look at this, but that is the fundamental message we are conveying. Once this network is in place for Government it can be expanded to benefit other users. We are absolutely convinced that if Ireland chooses not to move forward on implementing its vision of new connections or a similar vision in which a public infrastructure supported network is put in place to meet broadband needs and lead innovation, it will end up spending more money over the next five years. This is because there are huge savings opportunities. This €400 million is only the tip of the iceberg. Savings of hundreds of millions of euro are available in every category of Ireland's operations, which it will harvest only if it solves this problem. There is a risk of being penny wise and pound foolish - if the aim is to make short-term cuts in expenditure, Ireland may miss a huge opportunity to put itself in the position of leader in the future in terms of reducing the cost of Government service delivery.

I thank Mr. Hansford for his presentation. Is Mr. Hansford's preferred method fibre cable, wireless or satellite?

Mr. Hansford

The network will accommodate all kinds of transmission media. It is not dependent on a single medium, although we have a preference for fibre cables because they are so scaleable. If Ireland is successful in this and implements e-education applications, for example, every classroom in every school could have a video connection to augment the instruction, help with remote education and assist in developing understanding. If the network is to be put to that kind of use there will be perhaps ten or 20 times as much use as is expected today. We can accommodate any kind of technology.

Is Mr. Hansford proposing to lay a fibre-optic network and sell the service to individuals?

Mr. Hansford

No, we are proposing to acquire or build a network for the Government that would connect perhaps 5,000 locations of Government services. Once that is done we will allow others——

Mr. Hansford's proposal is conditional on the Government's being the major customer or anchor tenant, as we call it.

Mr. Hansford

Yes.

I advise Mr. Hansford that the committee members have travelled to Washington State to see the roll-out of the broadband infrastructure to 40,000 rural homes in Grand County. A total of $120 million is being invested over a six-year period. We are familiar with what has been achieved in the USA and we are also aware of Canada and where it ranks in the world.

Mr. Hansford's model incorporates a co-operative approach. Perhaps some of the IAWS people will have questions for him on this account. Did I read somewhere that there were legal challenges with Bell Canada, for example, regarding some problem with Mr. Hansford's company or another company? Could he tell us the percentage of the population which is now using his system in Canada? Can he provide hard numbers as regards the savings that were made? What are the comparisons?

Mr. Hansford

There were no legal challenges, although we did have a dispute with Bell, which was our partner. It was a contract dispute and has since been resolved. We did need to apply for regulatory approval in order to implement our solution and we were able to secure that from the Canadian regulatory body which approves communications. Our solution is not a standard carrier solution - the company is an out-sourcer to the Government in that respect.

There was a question about savings. We are still in the process of evaluating, in conjunction with the Government of Alberta, those applications that are best deployed. The network is in the process of being built. We have a three-year commitment of which about 18 months remain. I would say the network is 40% to 60% complete today, but that does not mean that 40% or 50% of all people are now using it - it refers to construction. The number of people actually using the supernet today is still quite low. A number of schools, for example, are using it and are very satisfied with it, but the big take-up will occur once the network is more fully completed.

And also if the Alberta Government becomes the major user of the system.

Mr. Hansford

That is correct, although it does not have any obligation to do that.

Is there a danger that if Axia were to build a network here in Ireland, it could become a "field of dreams" such as happened in Idaho, where the network was put in place and there were no customers?

Mr. Hansford

The key difference between what the Chairman is describing and what we propose is that we would never get into a "field of dreams" situation. We do not build speculative networks; that is not our business. We build networks designed specifically to meet needs that are defined and accepted by our customer. For example, in Alberta the Government provided the capital for this network, so that was not a risk for us. We are the network operator and we get paid for that. Axia is not a risk capital arbiter like a normal carrier and as a result we do not have the same motives. Part of the problem with any carrier is that objectives are divergent. The carrier's shareholders want governments to pay as much as they can make it pay for a service. The customer wants to pay as little as possible and there is a dichotomy of interest. That is not the case with us.

MANs was mentioned, which of course must go further with the LANs. I presume Axia will be tendering for the management services entity - MSE. There is unlit fibre in the ground already that needs to be illuminated. Looking at the map, there may already be sufficient fibre. Is it Axia's to try to win that contract, manage the network and let it spread out from there?

Mr. Hansford

We think that the initiative to which the Chairman refers is an excellent first step, but it is not an adequate step to meet the national needs and there are a number of aspects which would have to be examined if we were to provide a more comprehensive solution. Certainly we are interested in and will be pursuing that but it is a slightly different model from what I am describing today - a national solution for a national customer.

I apologise for being late for the start of the presentation. There are many meetings taking place today.

For the record of the committee and for the report we will be producing over the next month or so, it is important to try to crystallise what Mr. Hansford is proposing. There are a few key principles I have picked up, which have a lot of merit. Mr. Hansford may correct me if I am wrong on any of these points.

He is proposing that the Government would, through a tendering process, invite companies such as his to make proposals on how best to solve the roll-out problem nationally. No one fixed solution such as wireless, satellite or, probably most importantly, purchasing existing infrastructure would make up a major element of any proposal. The idea would be that the Government would effectively create a competition to invite tenders from companies such as Mr. Hansford's to state the problem and provide a costed solution. Then the Government would assess those proposals to put in place a management entity for a new infrastructure in the country, which would be in the ownership of the Government as opposed to the ownership of that company.

One of the great mistakes we made when we sold Eircom was that we did not retain the infrastructure. I do not have a problem with the principle of privatisation generally, but we have lost crucial State infrastructure of strategic importance and now we are trying to cope with this through regulation.

We would put in place a company, which would act effectively on behalf of the Government and be paid by the Government, to manage a new rolled out service, presumably starting from the fibre rings and then moving outwards. Once that was in place for Government services, there would be the possibility of getting revenue back by offering a wholesale product.

The company which won the tendering process would be restricted from any form of retail activity and therefore a conflict of interest would not arise. Other service or retail companies could then compete on the network, which would effectively be owned and managed by the Government or somebody on its behalf. In areas of high population levels and high demand, the Government would effectively have an income because competing service providers would purchase infrastructure at wholesale prices. In areas where that was not possible, the Government would effectively have to pick up the tab because the company would be providing the solutions there but probably would not be providing the kind of wholesale product which would be in huge demand. Although in these areas it would be in demand by maybe one or two operators, the company would not be making the same revenue returns for Government. It is understandable that the Government would have to pick up the tab for some of the more isolated regions to ensure fair play across the country. Is that the kind of model we are talking about?

Mr. Hansford

Essentially yes. I would make a couple of observations. One is that we had a standard rate across any part of Alberta. On subsidisation, we do not charge less in urban areas and more in rural areas. There is one wholesale rate.

The opportunity to get returns from urban areas is presumably higher because there are operators and service providers which are purchasing at wholesale rates the capacity to use Axia's infrastructure. For example, in Cork, Dublin and Limerick service providers will be looking to buy up capacity on that infrastructure so they can offer services, but they may not wish to do that in Dingle or Connemara. Therefore, it is effectively costing the Government more in those regions, but then they are taking from the likes of Dublin, Cork and Limerick.

Mr. Hansford

Our solution in Alberta was as follows. We were asked what would happen if we did not have a co-operative in a place like Dingle, for example, which wants to provide local service, or we do not have a wireless service provider which wants to provide access? We answered that while that could happen, we should not try to solve a problem that had not arisen and create an infrastructure and a solution which allows new entrants to come in. Five years from now, if there are communities in which no one has come in, we know specifically that we have a challenge and we may have to intervene and create a new policy solution, but it is only for those areas where the private market has not responded.

The key page from Mr. Hansford's presentation is entitled "Broadband Stagnation". He makes the point that without an unexpected new competitive threat, there is no incentive for the existing operators to move ahead at pace. They are being pushed by the regulator as opposed to being pulled by market demands and that has been the big problem in Ireland.

Does Mr. Hansford envisage effectively buying up most of the existing infrastructure held in private hands or, alternatively, competing directly side-by-side with another infrastructure?

Mr. Hansford

We do not want to create a new competitor where competition is not working. There is no reason for the Government to intervene in a competitive market which is working. We want to buy assets wherever we can. We have no interest in building. We will build if we have to, but we have no interest in building and it is a last resort for us. We would much rather buy assets from one of the existing owners, whether that is ESB, Bord Gáis, Eircom, Esat, a local cable company or whoever. However, if those owners will not offer those assets on reasonable commercial terms, then we will build. We will buy the asset rather than build it wherever it is offered at $1 less than what we can build it for. If the owners choose, for whatever reason, not to be reasonable in their cost, terms or conditions of sale, then we will have to build. If we did so, there would be a duplication of assets. Our experience in Alberta has been that there is very little of that because in the final analysis, the owners will recognise it is in their interest to make reasonable commercial deals.

Has Axia considered leasing assets? Has it considered leasing and operating the capacity of the MANs which the Government is putting in place in conjunction with the local authorities?

Mr. Hansford

We have not looked at that. If we did not win the MSE role, those assets would be assets we would look to use as part of this solution. We will use assets wherever it makes economic sense to use them.

The roundabouts will not be the problem. The motorway will be the problem. Given the extent of the network Mr. Hansford wants, is there not a difficulty going to existing asset holders like the ESB and Bord Gáis, in that they do not provide a broad enough range of road network to reach all the co-operatives or Government locations Axia wishes to service? We are talking about dealing with existing telcos which will be reluctant to sell any assets to a company they see as a competitor. These telcos get a lot of their existing revenue from Government contracts. Even if it is just Government and co-operative business, that is still a big chunk of their pie. When assets are being purchased in Alberta, is it from existing telcos?

Mr. Hansford

This is an interesting point and the Deputy is absolutely right. When we were in the negotiating phase, we had a public procurement to which there were ten respondents, of which we were one. The others were telephone companies of one sort or another. Prior to the contract, not a single telephone company would admit it would ever sell any assets to us. They said our model would not work because they would refuse to sell any assets to us. We had an incumbent telco in Alberta called Telus, which was formerly owned by the province of Alberta and privatised about six or seven years ago. It said, on the record, that it would never sell its assets. We have just bought $50 million of assets from Telus.

What technology does your company have that makes it a better manager of the assets than existing telcos?

Mr. Hansford

We are a better, more knowledgeable company, in terms of the leading edge IP technologies. Obviously, the telephone companies are more expert in traditional telephony than we are. Although I am old and have been in that business a long time, most of our staff have only ever dealt with the new IP, digital converged communications arena. Axia is more qualified in that area than the traditional telephony companies.

In terms of going the last mile from a local co-operative centre, Government office, library or school being accessed by the network in Alberta, is there one technology which is becoming the best mode of making that final leap to the residential or small business provider? Does the "piggybacking" on the network by outside users require regulatory reform from the state regulator to insist on certain access rights to the local network?

Mr. Hansford

No. In Alberta we have a regulatory environment which permits any entrant to come in and use non-licensed frequencies. It has proven that the wireless technologies are very popular in providing that final mile for rural connections. We provide all the connections for schools, hospitals and Government services. In a small community, if there are three schools and a hospital, we connect the schools and the hospital. We then have a point of presence that is open to anybody and wireless service providers are providing ISP services within that. In Canada we did not need regulatory change to do that although it may be necessary in Ireland.

Most of what I wanted to ask has already been asked.

If the owners of all the fibre cable in the ground at the moment do not make a reasonable commercial offer to the company, at a dollar less than it would cost to build the network, the company will have to build. That would necessitate digging up virtually the whole of Ireland. How long would to take? Give that we are so far behind at the moment and are in a catch-up situation, that has to happen very quickly.

The other matter concerns rural communities. Axia seems to propose providing a network that will go so far and give the opportunity for Government and businesses to operate across Ireland. Mr. Hansford said earlier that if no commercial operator provided a service in a rural community, the issue could be re-examined in perhaps in three or four or five years time. What is the experience in Alberta in this regard? A private operator entering the market will have to get a return. Mr. Hansford seems to be suggesting that individual users in remote rural communities will pay far more for this service than a person in Dublin or Cork. We have been hearing suggestions from others about the equalisation of costs throughout the country. I get the impressionthis will not happen from what Mr. Hansford has said.

Mr. Hansford

That is not our experience. Our actual experience is that we have had a higher level of interest than we expected from companies. Our experience exceeded our expectations. In one community in Alberta where there are 500 residents, we actually have two competing ISPs. The key question is whether we have a competitive, service provision environment. That is what determines what the rates will be. The rates will be whatever the competitive market determines them to be. We need to ensure we do not create a monopoly situation, where the monopoly supplier has the ability to raise those rates above cost. Our solution deals with that.

There may be communities in which there may be no interest from an independent operator, but we do not know how many, what the disparities might be or what our experience will be. Our recommendation is to go 97% of the way towards dealing with the problem and then deal with the reality of solving that last 3%, rather than delaying a solution until there is 100% certainty about what is to be done.

We have people in Alberta who choose to live long distances from any community. There was a debate about whether the public service has an obligation to provide high-speed Internet service to a hermit who is living in a cabin 100 miles from the nearest community, and whether it is right to make taxpayers pay for that. We said there was no such obligation. We serve within the city limits of the school. A community is any place that has a school, a hospital, a Government office or a library. If there is not one of these, for the purposes of this programme, it is not a community. There are summer residence communities in Alberta, where people go to their cottages, meeting the population test, but they are not full-time communities. There must be a school, Government office, library or health care facility in the community. If one of these exists, we will serve within the city limits around that area.

What about a church?

Mr. Hansford

We do not have any of those in Alberta. I jest.

I thank the representatives of IAWS and Axia, Mr. Hansford, Mr. Murray, Mr. Tyrrell, Mr. Tynan and Mr. Milliken. The discussion was very informative. I wish them luck in any public private partnership applications that may arise. It was important for the committee to get your perspective on how this country should roll out broadband.

Mr. Murray

Chairman, can we leave another document with the committee? It has supporting information which the members might find useful.

Absolutely. I hope that if we need to clarify any matters, you will be able to assist the committee.

Mr. Hansford

Certainly. Thank you.

The committee will suspend for a few minutes to allow Dr. Sarah Skerratt to prepare her presentation.

Mr. Milliken

I thank the committee on behalf of Axia and IAWS for allowing us to appear before it today.

Sitting suspended at 12.41 p.m. and resumed at 12.45 p.m.

I welcome Dr. Skerratt. I understand you are involved in ICT for rural areas and that you specialise in the digital divide.

Dr. Sarah Skerratt

I thank the committee for its invitation. I understand I have ten minutes to make my presentation and 20 minutes to answer questions. I will deal with extracts from the research project but I can discuss other facets of the project should the need arise. I will explain the alternative title, "Taking discs into Sligo. . . ", as I go through the presentation. It is an alternative to another title, "An Evaluation of the roll out of Broadband to Regional Communities".

The two objectives of the six week study, which was funded by the National Institute for Regional and Spatial analysis, were, first, to examine how rural broadband is addressed by the Government and telecommunications companies and, second, to examine the expectations and preparedness for broadband within the rural sector of the north west. This area, which is shaded in red on the slide, will be the focus of today's presentation. Over the six week period, I approached the following sectors for interview: education, health, agriculture, tourism, SMEs and foreign direct investments, teleworkers and the voluntary and community sector. We then looked at local and regional government development bodies, business organisations, lobbyists, telecommunications companies and consultants in broadband, particularly with regard to bringing broadband to rural areas, and the local rural population.

During the period of my research, I came across a peach of a quote. One is delighted when one is researching a topic to see it reported in a newspaper. Deputy Marian Harkin said: "A "digital divide" exists between the east and west of the country and is affecting development here". Although this did not affect the way I, as an objective academic researcher, approached people, it gave me data that there was a digital divide worth investigating.

Are there digital divides? I looked at three different levels. The first was the national level. I was told by interviewees that there is a national divide between east and west and Dublin and the rest. An interviewee spoke of the "frustration and humiliation of being in a location where we are hampered". Another comment was that there is a split between the south and east of Ireland and the north and west in terms of infrastructure provision and also within the M50 ring and outside it. Comment was also made about the digital hub and why it was located in Dublin. If telecommunications is supposed to be independent of location, why locate it in a central point and not elsewhere? It was another example of Dublin getting the best of the telecommunications infrastructure.

There are digital divides within the north west region. First, there will never be ADSL beyond five kilometres outside major centres. This is recognised. Something which came across strongly to me, as a foreigner conducting research here for six weeks and having researched broadband and telecommunications in the United Kingdom and other parts of Europe, is that broadband was always used in the same breath as DSL. People thought of broadband as DSL and since they would not get DSL they believed they would not get broadband. The five kilometre limit refers to people's understanding that they must be within five kilometres of an enabled exchange in order to benefit from broadband. They believed they would never get it outside that limit because the telecommunications companies would not go any further.

There were also mixed feelings about the national spatial strategy's prioritisation of gateways and hubs. One interviewee said it would suck all the enterprise into metropolitan areas even though that was not the original intent of the strategy. The comments from interviewees echo what I found in my desk study of policy documents in the National Development Plan 2000-2006. There is reference to addressing remote rural areas through reaching out to them through telecommunications infrastructure. However, in the national spatial strategy there is a reference to "creating a critical mass and sucking entrepreneurs into that area" in order to make provision for them. This apparent dichotomy is recognised by those living in the north west. Even if one wants to get beyond the five kilometres of an enabled exchange, I am informed there are split lines and poor quality copper in rural areas. Even if one wanted them to carry higher speed services this would not necessarily be possible. I was informed that it does not make sense for telecommunications companies to invest in the north west because there is not the critical mass, the population density.

Several times I was given the example of Birmingham and I could not understand why people in the north west would want to equate themselves with Birmingham in the United Kingdom for any reason. I looked up the population densities and the census figures. Birmingham has a population of about 1.5 million and the west midlands has a population of approximately 5 million. I understand the population of the Republic of Ireland is in the region of 3.9 million. Given that the same population size in Ireland is spread over a much greater area, the telecommunications companies will not be interested. There is some hesitation even in Birmingham, so how can they be involved in Ireland? How will they have an interest in the north west region?

A third reason I was told the Digital divide exists is because broadband is not seen as infrastructure. Again this was echoed in the policy documents, which I am happy to discuss after the presentation. The words I can repeat here in this context are: "frustration", "personal affront", "anger" and "injustice" at not having this infrastructure, which is seen as a basic utility. Telecommunications are just as important as roads, rail, airports and skills availability. We should not think of them as a special case, as only applicable to e-commerce and e-business. They are part of the basic infrastructure and it is time that was recognised.

What happens if counties Leitrim and Sligo do not get broadband? I do not know how well this cartoon shows up on the screen, but it reads: "Information super highway closed for resurfacing". It is a cartoon from an e-business handbook and it echoes the sentiments expressed when I was interviewing in these two counties. During the interviews I asked what would happen if broadband was provided, but the interviewees turned this on its head and said they would tell me what would happen if they did not get it. This is our scenario.

Those in rural areas expressed a number of concerns, including how their area will develop if broadband is limited to being within two to three miles of an enabled exchanged. If we keep focusing on enabled exchanges, if we keep defining community in the way outlined to by the previous presenters, then there will be those who will not be reached by this technology.

Concern was also expressed about the development of rural areas, especially in County Leitrim, which was described as the forgotten county with an infrastructure deficit. How will it fare? I was also told that returners will not locate here if there is no broadband. Counties such are Leitrim are looking for returners; they are looking for replacement industry. How will people who are used to a telecommunications infrastructure provision locate there if it does not exist?

It was outlined that foreign direct investment has two minimum requirements, a minimum of two national operators for high speed telecommunications and resilience to the network, so that if the network fails it is automatically instantaneously re-routed to another network. If the north west cannot prove resilience and competition between two providers it will not get FDI. All other things being equal, it will locate elsewhere.

There will be a loss of business and competitiveness within Ireland. I was told people follow the bandwidth and that they will be branded as out of fashion and out of time rather than more modern and contemporary. They will be seen as on the periphery of Europe, which will have a negative knock-on effect. The country will lose competitiveness internationally. I was told Eastern Europe is leap-frogging Ireland. The final point here is that Ireland will lose competitiveness because the philosophy seems to be that if FDI comes here the infrastructure will be built, rather than first building the infrastructure as a means of attracting FDI. It is a reactive rather than a proactive stance, which will be to the detriment of the north west.

A number of key provisions must be made regarding the north west. First, there needs to be strategic vision, thinking and behaviour by local government. I was told local government appears to accept with some deference the vision from the centre that getting broadband in one's local authority is seen as a feather in the cap, even where there is uncertainty about what to do with it. Second, there is a need for informed technical specialists at local level and a shift from the parochial mindset towards a more strategic approach. I was told there is little point in dealing with hypothetical problems when real ones need to be addressed, such as leaking school roofs and refuse collection. Some are unable to think strategically because of other constraints.

There is a need to think beyond the metropolitan area networks so that people can become excited about the momentum generated by the need to connect the last mile. Becoming focused on metropolitan areas will increase the rural digital divide. There is a need to raise understanding, awareness and demand to demonstrate the relevance of broadband. Providing it will not ensure its use. There is also a need to build around what people do and how they operate. They need to be shown what they are missing. They need practical demonstrations of what is possible with broadband. In this context, there is a need to continue examining cross-Border initiatives and options, especially as they relate to the Border region.

The final point made to me concerned the need to examine ICT in education, particularly curriculum relevance. I was told school teachers are not prioritising ICT because it does not have a curriculum relevance. They need to be shown it can help them better deliver the curriculum and that it can enable them to access resources. There was astonishment among many interviewees that ICT skills are not part of the curriculum at primary and post-primary levels, especially as these could be enabled and followed through by broadband provision.

It is evident to me that remote rural areas will not get DSL. By remote I mean those beyond the 3.5 to five kilometre radius of enabled exchanges. That 3.5 kilometres refers to the length of line, not the distance as the crows flies, so it can be less than 3.5 kilometres. Therefore, there is a need to address alternative technologies that pick up that last kilometre, or first kilometre, as it was suggested to me it should be termed.

There needs to be demonstration of relevance of broadband and of how it can allow people in the north west to reclaim the local. We should not be looking for one "killer appliance". There is an obsession among mobile providers to look for that, but as this technology will affect many people in many different ways there will not be one.

There is a need to look at the community as the key driver. In my research in the United Kingdom we tend to see champions as individuals who champion broadband for their community. However, my early research here is picking up on communities as champion communities. We need to look at the resources and capacity of those communities and build on their momentum. There is a need to generate critical mass among themselves, even on a virtual basis. I interviewed people in the region who did know each other but who were articulating the same needs and demands. I started to get them to meet through a seminar and in other ways. There is a need for that to happen more, even on a virtual basis.

Half way through my interviewing I was given an illustrative example of a man who works on behalf of community organisations in north Leitrim. He lives approximately 35 kilometres from the town of Sligo and he zips up his files on his computer, drives the 35 kilometres to the institute of technology, puts them onto the system there, e-mails them, picks up any files, zips them and drives home. That is more reliable and faster than doing it from his modem at home. That is the reality of life in the north-west in terms of digital and analogue.

Thank you, Dr. Skerratt. I want to advise members that we will incorporate Dr. Skerratt's full report into our final report in the appendices.

One of the people working on the website which was the most active in lobbying for broadband on a national basis was based in the north-west. From talking to that person I am familiar with some of the needs.

Can I ask Dr. Skerratt about her academic background? Is it in geography or sociology, and for whom does she do this research work? Also, how do communities become champion communities? How do they lobby for getting alternative technologies that will cater for the first mile? What are communities doing to ensure they are ahead of others? How can they begin to lobby for their needs, and does Dr. Skerratt have any examples of communities which have done that successfully?

Dr. Skerratt

I did not take time to outline my background because I was conscious of the time constraints. My background is in geography and then social anthropology, and I focus on social-cultural aspects of information and communication technology, uptake and appropriation in terms of how people make the technology fit them and why some people use it while others do not. I am not being prescriptive in any way. I am based at the University of Newcastle-upon-Tyne. I am part of a multi-disciplinary team in the social informatics group.

I carried out this research because I wanted to build up my own understanding, on an international basis, of the extent to which broadband is being appropriated, or not, by rural communities. I approached the National Institute of Regional and Spatial Analysis for a visiting fellowship. It funded me to carry out the work with a view to developing a report based on my findings in Ireland but also on comparative international work.

The question as to how communities become champion communities is a challenging one that I am in the process of investigating. As I mentioned, there is a contrast for me, coming here, to look at champion communities rather than champions. The examples I have in the United Kingdom are of individuals who have a vision, are able to think strategically, be reflective and say, "I don't like how it is now. I have a vision of the future that we are entitled to, and I will get us there", and who brings the community with them by hook or by crook.

I am having to look at a new set of players, so to speak. I do not yet know what makes a champion community other than the need to be visionary, but we also need those who will see it through. In our research experience in the UK we find that visionaries move on because they get frustrated by the inertia of normal people at ground level who are taking slower to realise the vision. It is necessary to have that mix of people who are articulate enough to engage with those involved in policy, reflect on their own state, say they want it to be otherwise and write that in a way that is acceptable to people who may fund them. That mix within a community is needed. The jargon is social capacity and I am currently trying to unpack it because it is very much the European level of policy and rhetoric that we do not want to simply provide project money but build local capacity.

What is that local capacity? Fundamentally, it is an ability to reflect on one's current state and say that it could or should be otherwise. It is also a matter of having a mix of people who will put that into some kind of shape and cast it in the form of aims, objectives, approaches, outcomes, deliverables, work packages, or whatever, in order to draw in funding.

Should political parties not have an input?

Dr. Skerratt

There will be those who are advocates for individuals who otherwise do not have a voice or could not articulate it in a forum that is required.

Dr. Skerratt is very welcome. There are people who are saying now that it should and could be otherwise. Dr. Skerratt pointed out that in population terms, Ireland is of similar size to Birmingham and surrounding areas. Deputy Ryan said there is now a realisation among political parties that there must be change in this area, but how can it be implemented? Should the State pick up the tab in certain areas? Dr. Skerratt was present for the previous presentation, which outlined a vision of how it could possibly work, but there are other counter-visions also.

From Dr. Skerratt's experience to date, both in the United Kingdom and Ireland, does she believe the only realistic solution to providing broadband link-up to rural areas here, which do not have the critical mass that will attract private investment for financial and profit reasons, is for the State to invest or to put incentives in place to bring in private investment on a subsidised basis?

Dr. Skerratt

I would hesitate to say there is one way, but from our experience in the United Kingdom, I would say there is a need to build alongside the initiatives at ground level. In the UK we are used to a ground-swell, and it is well publicised in the press. We regularly see people who say they have a right to broadband but, surprisingly, I have not yet seen that ground-swell in Ireland. It could be the case that I missed it in the six weeks I have been here. I came across one community, Ballinamore, in County Leitrim, where there is this need for broadband. The details are contained in the full report. The people there are bidding for existing funding, which is coming in alongside a solution that they are already seeing as appropriate to their needs.

If there can be some kind of intervention to support initiatives that fit, they are more likely to be owned by the community - I realise this is very jargon-laden - and therefore will last beyond the period of funding. If it is a case of stepping in again, say by providing two years' funding for a project and then it all goes, one will be in the same position as is the case now, but if initiatives start to come through and the Government is able to come in alongside, with funding or other forms of capacity, there is more likelihood it will continue beyond that intervention.

That is a general answer, but Dr. Skerratt is right. There is no one solution. It is our job to try to find a combination of solutions that will finance or incentivise it and so on.

Dr. Skerratt

In the UK we are finding that project-based examples are all very well. They are flagships for two years but what do we do when the money runs out? Expectations have been raised, people may have been employed and then it is gone. It is about getting initiatives in place, putting in seed money but also building something that will be there for the longer term. That is where the community ownership has to come in. If it is an idea they are already running with, it will last longer.

I agree with one of the comments made by Dr. Skerratt earlier in her presentation as to the reason the digital hub has to be in Dublin. I do not understand this country. We pay lip-service to decentralisation but, when an opportunity arises, we continue to locate services in Dublin, which is ridiculous. When will people get the message that we must move away from this approach?

Having listened to the various presentations, I am convinced this can be done in the west of Ireland. People in the north-west and other areas feel that, much as they were forgotten when it came to roads, rail etc., they will also be forgotten when it comes to broadband. They do not realise that it can be delivered there but I believe it can.

Dr. Skerratt

I agree. On a slide I did not include in the presentation I asked people to describe counties Leitrim and Sligo as a context for broadband infrastructure. The main comment I received was that these counties were the window sill of Europe. If we are on the window sill, we are only looking in at the coal fire and the nice cosy image inside. That is how we are perceived, how we believe we are perceived and how it often feels in infrastructural terms. Leitrim is described as the forgotten county because it is bypassed. Studies of the north-west include counties Donegal, Leitrim and Sligo. However, they focus on Donegal and Sligo and Leitrim is bypassed. There is a sense of having been forgotten.

There is also an issue of whether broadband is considered as infrastructure. If it is, this raises the issue of universal service obligation and the rights to that, just as we have rights to electricity and voice telephony. This will be a crunch point. The first time broadband as infrastructure was referred to was in December 2002 in the Information Society Commission's report, Building a Knowledge Society. Before that, telecommunications were referred to as infrastructure but broadband was not referred to as integral infrastructure. In that document it was called the enabling infrastructure. It was also, for the first time, labelled as the determinant of economic development. These words represent a key shift and, if acted upon, will have implications which will be felt widely throughout the regions.

I thank Dr. Skerratt. She can rest assured that the sub-committee will address the area of the digital divide and will make strong recommendations about rural communities and the last or first mile. I was delighted to hear Dr. Skerratt use the term "the first mile", which is the American phrase. When we visited Silicon Valley recently with PricewaterhouseCoopers, tremendous emphasis was placed on the first mile and the fact that the customer must come first and not last as telecommunications companies would have people believe. I thank Dr. Skerratt for her presentation which was informative. If we need further information, we will ask for it.

Sitting suspended at 1.15 p.m. and resumed at 2.20 p.m.

I welcome Ms Etain Doyle, Mr. John Doherty, Ms Isolde Goggin and Mr. Gary Healy from ComReg's office. I draw attention to the fact that, while members of the sub-committee have absolute privilege, this does not apply to witnesses appearing before it. It is generally accepted that witnesses would have qualified privilege, but the sub-committee cannot guarantee any level of privilege to witnesses appearing before it. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

Ms Doyle and her colleagues will be aware that this is the third day of meetings of the information and communications technology sub-committee. We had the pleasure of their company some months ago when An Post appeared before the main committee and they were kind enough to give us some assistance at the time. This is the third day of our modules. We hope to finish the public sessions next week and we will then compile a report. We would like to hear Ms Doyle's views on the area of ICT, the roll-out of broadband and her role in that. I would also like to hear from the other two commissioners.

Ms Etain Doyle

I thank the Chairman. We were pleased to receive the invitation to attend today. As the sub-committee will be aware, we have been doing considerable work in the area of broadband and have brought with us copies of our major report of last September on the future delivery of broadband, a copy of our statutory strategy statement issued at the end of May and our quarterly TTE data. We do not want to shower the sub-committee with paper, but it is an area of considerable interest to us.

We have a presentation for today which takes account of the sub-committee's wishes. It is divided into six sections. Mr. John Doherty will take the first two sections giving the legislative framework and the current state of play. I will cover sections three and four which concern supply and demand. Ms Isolde Goggin will cover our work programme in this area and we will then come to the conclusions.

I will refer to the conclusions briefly so that the members will have in mind the type of issues against which the sub-committee can judge our presentation. We will be trying to demonstrate the following. The supply of broadband has been slow but is now improving. It is a key national priority to make further progress on that.

We have concerns about competition which is extremely important. it has been very important in other countries in driving out broadband in terms of both platforms and services. We think convergence, in particular, mobile developments, may help in this area.

We believe that demand needs further stimulation and that price is still a concern for most of those involved. In demand, it is necessary to segment the markets. One needs to look separately at the needs and issues of large companies compared with those of small ones and the needs of different companies within this small area and those of the residential market. While SMEs, for example, use the Internet, the challenge is to move them from that level into e-business and e-commerce. Regarding the residential challenge, one of the major issues is awareness. I will now pass over to Mr. John Doherty to begin the presentation.

Mr. John Doherty

To give a context to what we do, I will quickly cover the legislative framework. In terms of key EU and national regulatory objectives, ComReg promotes competition and the interests of consumers and contributes to the development of the overall EU internal market. This is changing now and we are in the throes of working with Government in terms of the changed EU regulatory framework which begins on 25 July. There will be fewer directives - down from 22 to five - and there will be greater reliance on voluntary action by market players. We are now beginning to regulate markets rather than technologies where historically there might have been a focus on technologies. There is to be much greater compliance with competition law. This will link the threshold for regulation to competition law, the concept of dominance and increased interaction between all the so-called national regulatory authorities, the competition authorities and the European Commission.

As the sub-committee will be aware, the ministerial directive of January 2000 set out objectives for national broadband towards which we have been working. The slide in the presentation shows a general interaction on key relationships within the legislative framework. It shows how ComReg, Government, the Oireachtas and committees like this one interact in terms of policy development, initiatives and directions, the interlinking of this with the European Commission overall and, through the European regulators group, trying to develop a common approach as far as one can be adopted across Europe. That is by way of background.

Considerable progress has been made in the overall telecommunications market in Ireland since liberalisation, but like every other market in Europe and worldwide, progress has slowed since the economic dip began in 2000. The other licensed operators represent about 21% of the market in Ireland. There have been some good success stories and progress continues to be made, but it is definitely affected by the present economic climate.

There are approximately 3.1 million subscribers in the mobile phone market, which amounts to about 80% penetration. It is at the top level within Europe and is very successful. On the emergence of competition to Eircell/Vodafone, Vodafone and O2 have about 96% of the market and Meteor has between 4% and 5%. As the sub-committee will have seen from the competition we held for 3G earlier in the year, Hutchinson Whampoa, one of the other major operators, is entering the market.

There is huge development in text messaging. Ireland is one of the leading users of text messaging. The market has grown from 1.1 billion messages in 2000 to more than 3 billion in 2003.

We have launched the 3G campaign to which I referred. Vodafone launched its offering at the end of May and by the end of the year we expect all three operators to be in play.

It is important in the context of broadband to understand that there are a number of different delivery mechanisms and we have tried to encapsulate some of these. Lines used by high end SMEs and large corporate clients provide a business solution that is generally available nationwide. There are approximately 22,000 retail leased lines but only 5% of these were in excess of 2 megabit. With regard to DSL, coverage is increasing but there is limited take-up. Price has played a role in that. Approximately 50% of all lines in Ireland are DSL enabled. Eircom has about 70 exchanges and expects that to grow to 110 by the end of the year while Esat BT has 38 exchanges. The number of DSL lines installed to date is approximately 3,800.

Cable plays another smaller role in this market and one of the issues Ms Doyle and Ms Goggin will touch on later is that, unlike many of the other markets in which there is competition, cable plays a less significant role in this market. Take-up has been limited by network roll-outs and both companies have suffered significant financial difficulties in the recent past. Cable modem subscribers number 3,000, which includes CaseyCablevision in Dungarvan.

Other solutions include wireless. It is still a developing technology. Fixed wireless access has been taken up by 5,300 residences and businesses and also includes wireless LAN. Small satellites, especially with Esat connections, are useful in rural areas. When the bundle of technologies that will enable Ireland to move on broadband are examined, each of the elements must be examined because they will all play a role. None of them will be exclusive and wireless has a role to play. In addition, 2.5G or GPRS and 3G services will be rolled out later this year.

Overall, the take-up of DSL is beginning to grow. Ireland is coming from a low base and the OECD ranked us 26 out of 30. The SME sector is an important subset within this. There are approximately 9,000 SMEs and 90% employ fewer than ten people. Cable is not significant in the short-term in Ireland, but half of all telephone lines are DSL enabled. The combination of affordable pricing and innovative marketing is needed to drive the mass-market. If we want to move further up the OECD table, we must address these various markets.

Following a slow start, DSL availability is improving steadily. There is no doubt that there was a slow start but, if members read the graph of the number of exchanges in mainline DSL enabled in the UK and Ireland, Ireland is showing significant growth. The gap between Ireland and other countries is closing. If both Esat BT and Eircom adhere to their existing plans, the difference between Ireland and the UK will be halved within the next 12 months. Progress is being made following a slow start.

There is nothing unusual about this experience in DSL. It is an issue generally but it is not unique to Ireland. The slow take-up has been common in most other markets and, if anything, the graph shows we are beginning to move upwards from a low base. At the end of March, there were 3,850 installed DSL subscribers in Ireland, which equates to 0.25%. This must be put in context. DSL prices were high previously and it has only been provided since the end of April at a price commensurate with what people are willing to pay.

Subscribers hail mainly from the business community, as the take-up by residential customers is still a problem. Smaller budgets and lower awareness of the benefit of broadband are constraining higher consumer take-up. Not only must one get the price right but consumer awareness must increase so that consumers understand what broadband brings. Internationally lower prices supported by full marketing campaigns have been instrumental in boosting consumer broadband take-up. Price, knowledge and training need to be aggregated so that people will take up the product.

Ms Doyle

Mr. Doherty has outlined the framework and I will move on to supply. This slide is busy but it shows a range of broadband access technologies that are potentially available together with both the advantages and disadvantages. DSL is being rolled out and the disadvantages are availability and the length and condition of the line. Technology is improving all the time and the UK began, like us, at 4 km and moved to 6 km from the exchange. The original technology used for DSL was large and pretty expensive and now there is what is known as "pizza box" technology, which is much smaller. It can deal with a small number of lines but is appropriate for smaller exchanges. As we discuss these, six months or a year can result in changes in the technologies.

On cable, Ireland has operators with extensive experience and customers are used to cable but the problem is that cable networks are expensive to upgrade. Countries that upgraded during the best period up to 2000 did well on this front. Satellite is available nationwide. It is good for broadcast and involves low installation and set-up time but it can be expensive. However, it has been a solution for a number of people in more remote areas and in areas that have not been covered by other services.

There are national licences available for fixed wireless access but the take-up has been more limited. The cost to the customer, premises and equipment can be expensive in the higher frequency bands. It is cheaper in the lower bands and we are working on that. Ms Goggin will tell the sub-committee more about that.

Mobile technology is used by most consumers. There are 1.6 million PSPN lines in Ireland but there are 3.1 million mobile telephones. Mobile technology has come out of nowhere in the past few years but people feel comfortable with their mobile telephones and, with the additional functionality provided by 2.5G and 3G, in particular, this will be another source of broadband availability that could be overlooked but should not be.

I refer to optical access, fibre-optic cable and wireless optical. Fibre-optic has been available for a considerable time. Digging issues and costs are considerable. Wireless optical is newer but it is also a technology that needs to be examined. A range of technologies is available.

The next slide refers to people who were asked, if they had to have one of these technologies, which it would be and we are trying to ask in relation to what. It takes a minute to download a 60 page document and it may well take longer if the lines are congested and so on. It only takes 28 seconds on an ISDN line, 7 seconds on a cable modem, 1.8 seconds on a leased line DSL and, as one gets into higher capacities, one hardly notices the time taken to download the document.

The slide highlights the time involved if one were using a digital camera and sending photographs over the Internet to a family member or as a sales pitch. It does not make sense to send photographs on a dial-up modem. From a business point of view, it can be seen how quickly one needs to move up the scale and, from a domestic point of view, one needs to be pretty sophisticated before one moves up the scale or has access at home for teleworking.

We have seen where we are. How is it that other countries are where they are? Competition between alternative networks was a key factor in spurring network roll-outs. Broadband penetration is highest in the cabled central European countries - Sweden, Belgium, the Netherlands, Austria, Denmark and Switzerland. Many of these will be seen on the OECD slide which shows us way down the line. It is interesting to note that Germany is a main exception. Deutsche Telekom owned the cable assets in Germany until earlier this year. Therefore, this type of pressure was less there. This is also the case in Portugal.

In some of the larger countries where the incumbent was slow to react to the threat from cable operators, broadband is beginning to take off. In the United Kingdom, BT was relatively slow to react until early last year when it suddenly noticed there were several hundred thousand subscribers to NTL and Telewest cable modems. It also came under pressure in different ways. Spain and France would be in the same position.

The smaller peripheral markets show little evidence of much inter-network competition. Portugal, Finland and Ireland would be in this category. The question for us and these other countries is to what degree has missing out on the short window of opportunity for investment, between the liberalisation of markets in 1998 and the slowdown in capital markets, made in terms of making it more difficult to get up that that curve than might otherwise be the case.

Looking in more detail at the Irish market, there is the incumbent with a large residential base, which owns the bulk of the fixed line infrastructure and can be strongly focused on maximising value from existing investments. The other licensed operators are largely Irish subsidiaries of global telecommunications players, although there are also some interesting Irish-based companies. These mainly work in the high-tech multi-national companies end of the business. Esat BT has a broader range of business.

Most of these companies have some fibre-optic infrastructure in Dublin, mainly serving the large business parks. They are working in a constrained funding environment with a high degree of focus on maximising free cash flow. We list a few. The fact that a company might not be on the list should not be taken as a view on our part. It is important to include the mobile operators with 2.5G, and in particular with 3G, in the broadband market. We list the numbers of subscribers.

The cable operators in their current configuration are in a constrained funding environment and are concentrating on digital roll-out, but there is a certain amount of innovation and new technology coming down the line which may mean that, in time, they may contribute more to this area. A number of other players are involved in fixed wires access, satellite, wireless LANs and so on.

They are the operators. Looking at the other side, we have a highly dispersed population and it presents a challenge. The Government has given considerable assistance in many ways to the regions to counterbalance this. Some 30% of the population lives in the Dublin region, 20% in the major towns and 50% in rural and other areas. Telecommunications is a volume and network business and counteracting that is quite a challenge. The more recent census figures show that the level of concentration in the Dublin area in particular is growing.

What do we do about this? This is a chicken and egg situation. Some can prefer to wait until there is greater certainty in the business case. Do people really want this? How do we handle this? If everyone waits until someone else does something, it is likely that we will get nowhere. There are operators and customers. The operators want profits but customers have proven that they will not pay more than a certain amount for these services. A concentrated effort across all of them is needed to make it work.

In that context, as we all know, Ireland's DSL charges have been reduced. The purpose of this slide is to show our prices relative to those operating in other countries. We show the monthly rental a person is charged for a DSL product. Esat BT is a little cheaper than Eircom. Likewise there is a connection fee charged upfront and we have taken that over a period of years to give an amortised value. We are just behind Denmark. However, the Danish figure is cheaper than ours because it also bundles in the ordinary line rental. When dealing with the Irish figures, it would have to be taken into account that people would be charged their ordinary line rental as well. The good news about this slide is that, had this been done before April, we would have had to have had a special graph for Irish prices to show them at the top level they were at. We are now within the graph but the prices are not in the cheapest place or anywhere like that.

Moving to the demand side and looking at the different parts of the market, Ireland has at the most about 1,000 large corporations depending on what size cut-off is used, about 90,000 small and medium-sized businesses and 1.3 million households. Obviously the large corporations want much more sophisticated and high capacity than the SMEs or the residential market. The concerns for the large corporations are high bandwidth requirements, reliability, security and choice of providers. Even in our most recent survey, there are still some issues turning up among the high bandwidth users, although it is much better looked after than when one comes to the next areas. SMEs have come a certain distance and I will deal with those further. Price, usefulness and unfamiliarity are still issues in the residential market

Looking at the SMEs in more detail, 60% of them use 56K ordinary dial-up. However, 40% use ISDN and a very small number use leased lines and wireless local loop. Those using leased lines would tend to be companies involved in specialised business needing this. Most SMEs use their connections for simple activities such as communications, e-mail, transfer of files and basic e-commerce transactions. Some 46% of SMEs have a website. There are issues, however, in moving from that basic level to the next level. There has been a huge growth in ISDN channels. In the absence of DSL, that is what small businesses have gone for. There are issues for SMEs in moving from ISDN up to the next level as their Internet usage becomes more sophisticated. Many have fewer than ten employees, which means they will not have a specialised IT manager and so on which much larger companies would have. Nevertheless, as one becomes more sophisticated, broadband makes sense and we have a comparison which shows that the ISDN per minute charge means that the costs for SMEs who use the Internet a great deal rise very quickly and they might be better off on a DSL connection. We give an example of a company. We have taken this from one operator's website but there would be others as well.

In the residential market, most homes that have computers also have the Internet. It depends on the survey used but a study we had done by MRBI last year suggested that something like 60% of Irish households have computers and, of those, about 40% have the Internet. If one is looking at broadband, one needs also to examine the computer penetration.

On the residential side, our most recent survey, which was done in May this year, asked people how interested they were in getting a broadband ADSL service. Some interest was expressed by 42% but there is a significant issue of awareness of the product. Some 44% said they did not know anything about it and had never heard about it, 43% knew a little and 13% knew a great deal. One could do half full and half empty on this. The 43% and 13% can be added together so that it can be said that 56% know something, or the 44% and 43% can be added together and it can be said that almost 90% have very little understanding of what this is about. Either way, in terms of moving Ireland on, we need to deal with those figures.

Given the lack of awareness, is it surprising that there is little demand at current price levels? We have noted that there are about 3,000 subscribers at the end of March. We also noted earlier in the presentation that there has been an increase in the orders, mainly coming through from business, over the past month or two since prices have been reduced. As can be seen from these graphs, there is much lack of knowledge of what this is. People do not have a price expectation. When asked if they would buy at the Eircom pricings the number of people who were fairly interested was pretty low. When asked what they would pay for an ADSL service one could say that 65% did not know what they would pay, which comes back again to awareness among consumers.

Are consumers clear about what is different about the broadband experience and that one can have voice and data calls at the same time? A child can be on the Internet and his mother can be on the telephone at the same time. People talk about increased speed, which may lead some to think this will be rushed, but if one has increased speed one's connection is more relaxed and under less pressure. One is not saying to oneself, "this document will not download in time for me to be out of the house." Paradoxically, increased speed means more time, as always-on means one does not have to turn on and disconnect. One can have the time on the Internet without feeling watched and connected.

Looking at this in Ireland, we have many of advantages with which to move forward. Many qualities make us well-placed. We are IT-savvy, English-speaking and we have a high spend on entertainment services and recreation consumption. Our Gameboy targets are unmatchable anywhere apart from Japan. We also go to the cinema and use video retail. These are all things on which to build.

I will ask Ms Goggin to talk about our work programme and how that fits into broadband.

Ms Isolde Goggin

This is a quick run-through of our work programme for the rest of the year in so far as it affects the broadband area. Going back to the objectives outlined by Mr. Doherty earlier, we have the objective of promoting access products, specifically access products or wholesale products. This is where the incumbent, Eircom, is obliged to make part of its network accessible to other operators so that they can get access and provide products. Competition is then introduced at the retail end.

There are partial private circuits, to which I will return, and wholesale line rental, the area where, if someone wants to take their calls from an alternative operator, he or she can get a single bill from that operator which covers line rental and the call cost. That also feeds into other areas and products.

FRIACO, flat rate Internet access call origination, is a wholesale product with which one can get access to the Internet that is always-on. One is not metered because there is a flat rate. We hope that will be in the market as a retail product by 27 June. It is intended to benchmark the Irish sector against key indicators of price of products and services in the OECD to see how we are doing in competitive terms.

In consumer awareness terms, we want to develop the carrier pre-select regime to make people aware of alternatives for choosing which operator through which to get their calls. We have a function in complaint management, which is in the current framework and will also be in the new framework, as Mr. Doherty mentioned. Lately, we have been doing much work on implementing the universal service obligation directive and we have just issued a response to consultation a week ago on the transposition of the directive, which is due to happen in the next month or so.

The areas of innovation and investment are interesting for the area of broadband and access to broadband. We have been working to get new products into the market, particularly radio products, as there are many areas which do not have the high density which drives cable or fibre access. There are areas of scattered population where a single point to point radio link may be more suitable and cost-effective for broadband access. When we talk about convergence here we mean that, historically, the telecommunications sector meant fixed in one box, mobile in another and broadcasting in yet another whereas now, there are products which mix these up. This result in the use of terms, such as "nomadic" or "portable" services, which is similar to having a PC and getting Internet access from a wired hot spot. It is not exactly mobile access in the way we understood it because one cannot use the facility in motion but it is not exactly fixed either. It is a hybrid, which is where terms such as "portability" and "nomadicism" come from.

There is also convergence between broadcasting and mobile, with people downloading video clips to 3G phones. There is convergence also between broadcasting and fixed, with operators offering triple play between telephony, Internet access and cable television, all in one pipe. We do a lot of work on that and on releasing bits of the spectrum so that operators, particularly small niche operators, can come on stream to offer innovative services and broadband services, though not necessarily on a massive scale involving the whole country. In terms of regulatory certainty and professionalism, Mr. Doherty mentioned the new EU regulatory package, which has to be implemented by 25 July, a month from tomorrow. It may cause us to wake screaming in the middle of the night. Fitting that into the framework has been a big part of our work.

Particularly important points for broadband access include leased lines, where we have 22,000 lines, or 95% of them, under 2 mb. That is small in European terms. We have many leased lines at the lower end of the spectrum, not the big 34 mb or 155 mb pipes. We have been working for a long time on the quality of service offered to other operators, as this is how one gets other operators into the market. One gets access for the other licensed operators to these circuits. There have been issues of service delivery and quality over the years but we have worked very hard on that and now delivery is up to the best EU standards.

Partial private circuits, which I mentioned earlier, is the most efficient way for some operators to configure their leased lines. They would tend to have many leased lines from Eircom in different parts of the country and partial private circuits means they can configure this in a more cost-effective way. Part of the partial private circuit is the access network, the local network between one and one's exchange, and pricing for that has been a matter of dispute between us and Eircom. I cannot say much about it as it is sub judice at the moment. We asked Eircom to submit a price for those circuits but that is now subject to court proceedings. It is the same basis for pricing as the local loop unbundling. We had directed a price of €14.67 for that unbundling, but were in court today on the issue. It seems we may be able to go ahead on the basis of reverting to the old price of €16.81, which would allow us to make progress on the PPC, but that is not confirmed as yet.

Local loop unbundling was the result of an EU regulation which required the incumbent to open up its local access network for competitors. We developed a process in which Eircom was required to publish an offer and meet requests. It was a very slow process but it finished in 2002 and Esat BT now has 38 exchanges unbundling and offering services. As I said, there is also the issue of pricing.

The DSL product, or the digital subscriber line, is where one has one's existing copper wire and can offer higher speed services over it. The wholesale pricing is approved by us. When we had a high price of over €100 a month the demand was low. As Mr. Doherty said, the price has dropped since the end of April so we will see the effect of that on demand and in the statistics.

Regarding licensing schemes for spectrum, again we have done our best to be innovative and allow in niche operators rather than putting up barriers to entry. The 3G mobile is the larger scale mass market product from Vodafone, O2 and Hutchison. We have fixed wireless access and wireless LANs, all of which again are radio-based products, which are almost overlaying the existing network and getting new services out. FRIACO is not a broadband product - it is narrowband - but there is an issue of people in transition in terms of getting them used to using narrowband before they move on to broadband. The expected delivery date is 27 June.

Ms Doyle

I hope we have managed to demonstrate some of the points. If we have missed anything or there is another angle, we would be interested to listen to the debate on the issues. Supply of DSL has been slow in Ireland. It is improving but we should not yet take our foot off the accelerator. Ireland is at 50%, while major European countries were at 70% of lines in December 2002. We need to keep focused on this aspect but, at least we are making significant progress. If we take it that there are 800,000 lines, and even if we allow for just 20% working - we believe the figure would be much higher - clearly 20% of the lines are not currently demanded. We need progress on the demand side.

We have concerns about competition, both in terms of platforms and services. The market is fragile and, without these services, we cannot expect it to grow. Managing competition is extremely important. Convergence with other types of broadcasting and mobile platforms can be helpful.

The demand side needs further stimulation. Awareness of what broadband can do needs to be dealt with. Price is of concern, both for businesses and residential users. We are better off now than we were previously but more needs to be done.

In looking at the markets, large businesses' concerns, including those of SMEs and the residential sector, are different. The SMEs are the most important from the point of view of jobs and growth in the economy if the number of companies working in the internationally traded sector are to grow. In the past, if one wanted to buy an airline ticket, for example, one had to go to the local travel agent who only competed with another local travel agent in a conveniently located spot in the next town. One now has an opportunity of buying tickets on the Internet from anyone internationally. The same is the case in respect of insurance brokers and many small businesses. They are becoming part of the internationally traded sector. If other people are further up the learning curve than they are, they have a serious issue.

It is not a matter of looking at a broadband statistic; it is a matter of looking at a much bigger economic issue in terms of SMEs. On the residential side, we need to increase the awareness of the benefits of broadband and we may need to elaborate on the benefits. We need content, e-government, e-business, things that people want to do and use on the Internet, so that we can make this progress.

I thank the members on behalf of the commission. Mr. Healy and his staff contributed greatly to the development of this presentation and we look forward to answering members' questions.

I thank Ms Doyle and her two colleagues.

Much of the information is interesting but perhaps it has been replicated in terms of what we have heard over the last three sessions regarding the various demands for broadband services. However, there are key questions on how best to proceed. The committee does not need to be convinced of the benefits of the service. We have been hearing a lot from different sectors, not just residential business, but also about the Government and public needs for broadband services, including e-health and so on. Many organisations have been telling us how far behind we are in this regard.

In relation to the percentage of the fixed line business, the 20% held by new entrants is fairly static over the last two years or so. We were given a breakdown of the share held by small firms in the mobile sector. What is the position regarding the percentage held by the fixed line market? Is it concentrated among one or two operators or is it across a broad spectrum of new entrants?

My main question relates to the powers of the commission, but it may be difficult to answer because there is a case currently going through the courts. A presentation this morning addressed the potential for developing an alternative network, with possibly the backhaul lines being provided, using the ESB, Bord Gáis and Iarnród Éireann as the motorway network, so to speak, for any broadband network. Obviously there are the local loops, which were described as the roundabouts for a potential future network. There are a range of different technologies to get from there to the first mile into one's house. What authority has the commission to try to ensure competition by creating such a possible potential alternative network? Would the European Union have a difficulty if the State developed such an alternative network to bring competition to the market?

I would like to mention that we began late, therefore, we exceeded the time limit for the presentation, which was interesting. I apologise to Mr. Flinter of Enterprise Ireland and I hope he will bear with us.

The crux of the questioning must be the role of ComReg and what can be done, whether the commission has sufficient powers, how it has performed to-date and if changes in policy are necessary to help it do a better job. As Deputy Ryan said, we do not need convincing as to the need and value of broadband roll-out. We are hopelessly non-competitive in international terms although things are slightly better now than they were 24 months ago. We aremaking some progress but it needs to be more rapid.

I have specific questions in relation to the wholesale line rental. Am I correct in saying that prior to the introduction of a retail product, a whole product needs to be introduced at the same time? We are talking about introducing FRIACO and a new product, supposedly to come on stream by 7 June, or is it a later date in June?

Ms Goggin

It is 27 June.

Will a corresponding wholesale product be available and, if so, at what price, or is that the subject of a court hearing at present? Perhaps we could get information on how the wholesale price compares with other European countries. I fear that we are being asked to come up with what is a fair wholesale price, based on the cost to the operator of supplying it, as opposed to being based on the cost of its provision in other countries. In other words, if there is inefficiency within BT or Eircom, for example, surely we should be setting prices based on international standards rather than on the cost of providing the service to a company in Ireland. I would like to explore this aspect in more detail. The essence of the argument here is price, access and choice of services for consumers. In order to facilitate this, the regulator is trying to promote competition and so on. My first question relates to the wholesale price, which is crucial to competition in the retail sector. What has been done to date, what have been the frustrations and how successfully will a wholesale price be introduced within the next three days, before 27 June?

We will take answers to Deputies Ryan's and Coveney's questions now.

Ms Doyle

I will begin in reply to Deputy Ryan's question and will ask Mr. Doherty to come in on some of the details of the wholesale, rental and FRIACO aspects.

On the question of the share held by new entrants, Esat BT, WorldCom and Cable & Wireless are much bigger than many of the other companies. Some of those companies produce and publish accounts giving details of the information while others are small and do not. It would not be appropriate for me to give more information other than to say that there are a couple of big ones and the rest are quite small.

In terms of networks, Eircom, as the incumbent provider, is required to provide what is known as interconnection. This means that it must allow other networks connect with its network. Obviously, a new network, whether ESB, AURORA or whoever, must be able to connect with the vast bulk of customers who are still on the Eircom network. The price at which they can make that connection is controlled by our office. The Irish base and connection price is one of the lowest in western Europe.

In reply to whether other networks can be built and connected, the answer is "yes". There are other issues involved which are not controlled by our office, for example, planning permission to dig, rights of way, duct sharing - which might lower costs - and connections of other types that may be appropriate. Partial private circuits, PPCs, about which Ms Goggin spoke, are among the kinds of connections which we have been working on over more recent years. However, progress is not that quick and the price of PPCs is one of the things affected by the current court case. In terms of what we can do, it is in those parts of the business that we are largely involved.

The second question asked whether we have sufficient powers. We have noted a few times that it is quite easy for an incumbent to delay, which costs other companies quite a lot of money. Anything which can increase our powers in that area and put us in a position to make the incumbent suffer at an earlier stage is of help to us.

Has there been any example over the last year of abuse of the regulator's powers in order to push things along? I accept that the more power the regulating body has the more effective it can be. The regulator has existing powers relating to inspection of premises without notice, or with short notice. Is there an example of the regulator using these powers?

Ms Doyle

There have been quite a number of occasions where we have used authorised officers to enter premises and to take away papers or to get information. A lot of the time it is not so much a question of getting information that is there but rather of requiring information to be developed. If we want local loop unbundling it is not a question of going in and finding the loop. It means working with Eircom and the other operators to develop the product. That is the way with which it is dealt. We obviously use authorised officers but they are not appropriate to that particular event.

We use things like warning notices about breaches of licence. If they are not respected, they can be followed by taking people to court. Taking people to court can be a distraction from other activities. However, the bigger the deterrent, the quicker we can get action.

I will pass over now to Mr. Doherty on the wholesale and FRIACO products.

Mr. Doherty

I will start with FRIACO, which is already split into two elements. In February of this year we agreed a wholesale price which is the second lowest in Europe. The launch of the retail offerings of that product will take place on 27 June. We expect that in the next couple of weeks at least two retail products will be launched based on the wholesale offering of last February. In that context we have one of the cheapest wholesale rates, which should result in a relatively competitive consumer level price for FRIACO.

What is that wholesale rate?

Mr Doherty

I think it is €12.99, the second lowest in Europe. Out of the 19 countries included in this particular basket, only one is lower - the United Kingdom.

Looking at the costings on DSL, if the standard line rental is included, it emerges that Ireland has the highest line rental in DSL in Europe. When the additional line rental charge is included, Ireland is above Denmark and significantly above other European competitors.

Mr. Doherty

We are talking about two different products.

They are different, but DSL is an always-on similar product and it happens to be broadband as well.

Mr. Doherty

One gives a lot more potential usage. One is basically a step up from the cable-modem access.

Why would we be one of the cheapest in Europe on narrowband FRIACO and the most expensive in Europe on broadband FRIACO, DSL?

Mr. Doherty

There is a range of different factors involved. It is like comparing apples and oranges. One is a retail price - what we are referring to in the DSL offering add-on. In this case there is no doubt that Eircom has offered a competitive rate and it has produced a wholesale rate offering. DSL is a dissimilar service in many ways. It allows voice and data over the same particular line. One cannot have that with FRIACO. FRIACO is very much the nursery slopes towards DSL. When we get up to DSL level the offering is at 512k or 256k. It is a different animal.

It uses the same copper wire and the same network. It does not use different infrastructure.

Mr. Doherty

It uses very different infrastructure. We could get into a technical discussion but it does use a completely different configuration.

It uses the same network and the same copper wire.

Mr. Doherty

It uses part of the same access network but you cannot use FRIACO and do voice calls at the same time, which is possible with DSL. One cannot have the same ratio of usage. There is quite a lot of differences between FRIACO and DSL. The Minister, in a policy directive, required that a FRIACO retail launch be available within the six month period. We are close to that now.

Mr. Doherty mentioned that there would be two retail offerings in the next year. What price can the public expect from the universal service provider and the other providers?

Mr. Doherty

This is for the service provider operators to determine.

Can you inform the committee what price we can expect to see?

Mr. Doherty

I am not trying to avoid the question but it is very much for the operators to fix there own price.

Can Ms Doyle answer the question? I do not want an argument. I am asking a question and expect an answer.

Mr. Doherty

We would expect to see a price in the low €30 range but it is for the operator to determine what to set.

Is that correct Ms Doyle?

Ms Doyle

It is indeed. One of the operators has indicated that it intends lodging on 27 June and one of the things it will announce is its pricing and structure. As Mr. Doherty says, we believe it will be in the low €30 range but we are not in a position to give the exact information.

That is in the low €30 range, always on.

Ms Doyle

Yes, for FRIACO.

That is not for a DSL or broadband product. This is just for analogue line rental. Does the regulator have any say or control over the mark-up being offered or is it just involved in promotion of competition? If one has a wholesale service at €12.5 which then offers to the consumer in the low €30 rate, there is a high mark-up of 250%. Is that the norm across Europe? Mr. Doherty is nodding his head.

Could we have that on the record, Mr. Doherty. We cannot record a nod of the head.

Mr. Doherty

Yes. My apologies, Chairman.

Is it the norm that on a differential between a wholesale price and a retail price, there is a mark-up of between €12.50 and the low €30 rate?

Ms Doyle

Perhaps I will outline what are our powers in this area. We will look at the wholesale price from a competition point of view. To start with the DSL product, we have to ensure the difference between the wholesale and the retail price is such that there is not a margin squeeze on the new entrants to the market. While the difference between the wholesale price may represent a piece of copper wire, one has to add to that the marketing, the billing, the costs for the other operator——

I accept all of that.

Ms Doyle

We will supply to the sub-committee details of the wholesale price, both for FRIACO and for——

We must recognise that during the past six to nine months much has been achieved by your office in terms of rate reductions.

Ms Doyle

Yes. We shall supply those figures to the sub-committee. Essentially we are concentrating on margin squeeze. Most of our work is on the supply side and on the wholesale end of things. We shall supply exact figures to the sub-committee and if there are any further questions we will be happy to deal with them. There is quite a big gap.

I accept that. It was not a criticism. You cannot be expected to control competition and new entrants into the markets. If we are looking at that type of figure, the mark-up between wholesale and retail——

Ms Doyle

Would be significant.

——appears significant.

Ms Doyle

It would be significant. This is not a question of buying bags of sugar and selling them. There are a lot of things the other operators have to do which are included in their gross prices before they are in a position to charge retail prices. We will be happy to provide figures for that.

I need to carry through my questioning. Still on the wholesale issue but moving on to DSL products, the document states, "wholesale pricing approved by regulator". What figure can service providers expect for wholesale pricing in relation to the DSL product and how does it compare with the analog product? We are not comparing like with like but the whole purpose of this series of meetings is to make a broadband service available to people's houses and businesses. Therefore, what is needed is a competitive wholesale broadband pricing structure in order that we can get competition on the retail side of a broadband roll-out.

Ms Doyle

The ordinary line rental costs the retail consumer approximately €22 per month, including VAT and so on. The wholesale product we had determined for raw copper, which is currently before the courts, was €14.67, which is an efficient price. The price Eircom had sought for that was €27. The DSL wholesale price is €25 while the retail price is as shown on the slides behind us. In our paper on local loop unbundling, which we do not have with us today, the price we had in mind would have worked out at third highest in western Europe. A couple of countries had prices which were higher than ours for the local loop unbundling. It appeared to us, having regard to the dispersment of population in all of those issues, that was where the figure came from. I have to be careful because the issue is before the courts and I do not have privilege. I am trying as best I can to answer the Deputy's question. We can set them all out on a table for the sub-committee. Had I realised the sub-committee needed them I would have done it in advance.

Perhaps Ms Doyle would send a table on wholesale and anticipated resale, based on average mark-ups experienced in other European countries.

Ms Doyle

It is difficult to say what the operators will do on retail. We are aware that one operator has indicated it will launch on 27 June. If Eircom were to launch it would have to give us 21 days' notice and it has not yet done so. Therefore, we know that any launch that Eircom may do of FRIACO is 21 days away. We are not trying to conceal anything from the sub-committee. We simply cannot have that information because it has not come to us.

Perhaps we can move on. Some other Deputies are offering. I shall take Senator Kenneally, followed by Deputy Brady.

I apologise to the delegation for having to leave in the middle of its contribution as I had to raise a matter in the Seanad. Many of the questions I had jotted down have already been dealt with. Given that technology is moving so fast, I wonder if there will be other developments. Given also that the country is behind everybody else in this area, is there a danger that by the time all the infrastructure is in place it will be obsolete?

I would be interested to hear the delegation's views on the introduction of other technologies into the market to promote broadband. I refer in particular to a couple of consultation documents, 0313 and 0363, which refer to the possibility of CDMA, one EVDO, which is used in the US. Moving on from that does the delegation consider that the use of the spectrum, which is already allocated to various licence holders, should be maximised by the use of these emerging technologies, with perhaps too many processes and procedures being put in place? It has come to my attention that there are some products on the market in some hot spot areas which are using unlicensed spectrum. How can a proper service be guaranteed in the future if it is unlicensed? Why not allow a licensed spectrum for this purpose?

I wish to make a few comments on Eircom, of which I am a former employee. Eircom has approximately 80% of the market for fixed line telecommunications. However, it is probably not well known that the company has only 55% of the overall market, when mobile is included, and 38% of the revenue. It is naive to believe that forcing a company which has invested in the infrastructure of the telecommunications network to sell access to that network at below cost price would encourage investment. The approach followed by the regulator will act as a disincentive to competitors to invest in the network because they can sit back and piggyback and wait for Eircom to invest on a cherrypicking basis for a fraction of the building costs.

We will take those two questions and afterwards we will call Deputies Broughan and Eamon Ryan to finish.

Ms Doyle

I was about to suggest that Ms Goggin would take the question on the technologies and I will deal with Deputy Brady's questions.

Ms Goggin

Regarding the possibility of something coming along to make certain technologies obsolete, this is exactly the problem. Who knows? That is why we try to facilitate as many technologies as possible getting into the market, such as in the spectrum case, rather than picking a winner and saying this is exactly what will happen. We want to facilitate different methods of competition, whether that is by putting in new methods of access or using the methods that are there already. There are many interesting developments, with one member mentioning e-video, which is used in the US, but there they would historically have a different approach to spectrum management compared to the EU, which is very cut and dried. In the EU, frequencies and power levels tend to be assigned while the US is more of a pioneer in spread-spectrum technology, where one basically blasts this out over the spectrum and one has a code at the other end which allows one to extract one's signal and clean it up. That can result in many people using the same spectrum at the same time. Even if it got to the stage that causes interference, we believe our licensing schemes and licence-exempt areas mean those problems do not exist at present but we will be keeping an eye on this going forward.

We have given some licences on a first come, first served basis, where an operator gets a spectrum until it is all used up. That is why we are trying to have an approach which makes this as easy as possible for those with new technologies to come in.

We were asked if we have too many procedures. I do not know about that but we have certain legal obligations regarding consultation before acting. We have users of the spectrum whose interests and views may be useful when considering something like this and which we may take into account. We do our best to do so in a reasonably succinct way but sometimes issues come up which we must put out for consultation and we have to take on board the different views that are out there. There is always a possibility that some technological leap forward may occur but our view is to try to facilitate as many alternatives as possible.

What about the hotspots and using unlicensed spectrums?

Ms Goggin

We have some licence-exempt spectrum. I am not sure about the question.

It is suggested to me that there are some products on the market, particularly in hotspot areas, where broadband services are using unlicensed spectrum.

Ms Doyle

Yes, there are quite a few operators using unlicensed spectrum for wireless LANs. One of the schemes we announced, and we are looking at a large number of expressions of interest in it, is a first come, first served licensed spectrum scheme in 3.5 band which would give people like that absolute control over their spectrum. By definition one cannot have that if one is using unlicensed spectrum. A number of companies which have been involved in wireless LANs in the unlicensed spectrum have indicated that they would be interested in the scheme. Currently there are legal and technical issues in moving this on but we think we are solving those issues and we hope to have this scheme available very shortly. That would provide an appropriate move from, as was said, the nursery slope up to the next category. Is that what the Senator concerned about?

Ms Doyle

I have had many conversations with Deputy Brady. It is true that Eircom has approximately 80% of the fixed line and the figures he gives for the amount of the voice market, if one takes that as a market, would not be incorrect. The situation going forward, which Ms Goggin has been dealing with in detail, is that the EU has identified a number of key markets and we are currently examining those. In those markets the fixed line market is taken separately from the mobile market. If one looks at the situation, we all know that it costs more to make a call on one's mobile, yet people to a vast extent make calls on their mobiles. They do not see it as a substitution product directly for their fixed lines, as if they did they would go home and make a call from those fixed lines.

I put back up the chicken and egg slide and I have to be careful in this area regarding what I say. There are court proceedings in this area and Eircom has taken a case against COMREG on the price of local loop unbundling and therefore the arguments I might make here may need to be made in another forum, as the committee will understand.

Eircom has tried selling DSL at a high price because it felt it had put that amount of money into developing it but nobody would buy. If Eircom remains a company selling only basic voice, the mobile companies are already doing more exciting things and will continue to do so. One might say we will not do anything unless we get a large return, but there is a problem in the prices people will pay for these services. That may be what Eircom has to do if it has a growing vibrant future. It cannot be sold at this stage at those prices. That is the chicken and egg issue and we and it have to move on.

We are conscious of the court matters which are sub judice. We are 25 minutes over so I know Deputy Broughan will be brief.

I thank COMREG for its excellent presentation, which gives us much food for thought. I know competition and supply are its key responsibilities, but regarding the Government's role on the demand side, is COMREG disappointed that the e-Government programme seems badly behind and that the Reach project does not seem to have been tendered successfully yet? To take Ms Doyle's last point on the high cost of DSL product, obviously if content is lacking, particularly in doing business with central and local government, then surely that is a major deficit on the demand side? I know this is not her responsibility but does Ms Doyle find the e-envoy, Deputy Hanafin, disappointing? Does the project need to be driven more strongly?

I will cite the Latin phrase quis custodiet ipsos custodes? Who guards the guardians and who evaluates COMREG? Ms Doyle made an interesting point that when markets were good, from 1998 to 2001, things did not happen in this economy and in telecommunications infrastructure. COMREG itself was very slow on third generation, was it not? How do we evaluate how COMREG performed? I accept these issues of narrowband and broadband and so on are very complex.

I hope I did not show too much frustration but it is frustrating, given what we have heard in our last three sessions, that we have the lowest wholesale rate in terms of certain services using the same network. There are different technologies but I imagine the main cost is the legacy cost in the provision of the network. How come we have the highest DSL price in Europe, yet while using the same network we have one of the lowest prices in Europe?

Can we in future put in place a requirement that the DSL service is universally provided? We had a long discussion earlier today about regional imbalance and the difficulties of regions outside the main metropolitan centres. How do we address that? How do we deal with areas with split lines which cannot get services, even close to me? How can we ensure that DSL is universally available, even in cities?

The message we have received, having spoken with the industry itself and other people, is that DSL is not the product we should be investing in over the long-term - three to five years. As I interpret it, the message this committee has been getting consistently is that we need to operate at a higher level of broadband than DSL, having regard to anticipated requirements for a higher bandwidth service in a few years. Does Ms Doyle share that opinion?

Ms Doyle

If I may reply to Deputy Broughan's question first, it may be easy for us to comment, from a position outside the system, on e-Government or the Reach programme. A person might have a different view from inside the system. I am aware, for example, that the Revenue Commissioners' programme has worked very well. I am also conscious of a number of initiatives, including an invitation by the Minister for Communications, Marine and Natural Resources to telecommunications operators to participate in a committee with that Department to look at the demand side. I believe that committee will report relatively shortly.

There has been a great deal of concentration on the supply side - I will come back to Deputy Ryan's question in a moment. We also need to look at the demand side, in terms of providing the content which people actually want. However, not having been on the inside of such programmes, I would be slow to say whether there may also be other issues involved in that regard.

On the question as to who guards the guardians and what did not happen, as regards 3G, the office started in 1997, under my predecessor. At that stage, Ireland did not even have a third mobile licensee in the market and we had a legal obligation to meet that. Members of the committee may recall that that ended in a court case, with the result that we were not in a position to start running 3G until that had been disposed of in the Supreme Court. We started preliminary work on it. I presume I do not need to recite the difficulties which arose in that regard. However, we were ready, at a certain time, to deal with the competition; it took somewhat longer to fix the fee.

In terms of actual roll-out, Ireland is now among the leading countries in that regard on 3G. In a number of other countries, the companies paid very substantial fees and they did not have a competition, as we did. Part of the competition concerned the speed of roll-out. The period 1999 to 2000 was, more or less, when Ireland started rolling out ISDN in a big way, moving us into LLU. We did not have the legal powers to do it until 2001, but we were working on it during the previous year.

As to whether we are measured against anybody, we do some internal benchmarking and there are quite a few international reports on benchmarking. In particular, the European Communities produce an annual implementation report, published around September - October, for which the process is currently about to start again. We will arrange to have a copy of the report made available to the committee in time. I believe a great deal is known about our activities.

On networks and pricing, this may be a very simplistic explanation - please tell me if it is too basic. Eircom, or any telecommunications network, is made up of a core network and an access network. The core network in Eircom is relatively efficient. When one applies efficiency co-factors to it, one will come up with rates that are relatively low. As to the access network, one is dealing with issues such as a dispersed population. Accordingly, even when one applies efficiency factors to it, there is a relatively higher cost arising from a dispersed population in the Irish context. I am speaking in very broad terms in this regard. One may find that one's access costing is higher, relatively speaking, than one's core costing.

Does that not apply equally to the DSL network, which is not going to isolated rural areas, but mainly to built-up areas?

Ms Doyle

The pricing is operated on a standard basis, having regard to the whole network.

Does that mean, effectively, that we will have a high DSL price because of the likely cost of providing the access network?

Ms Doyle

This price issue is in court - I have to be very careful about what I say. However, we do not have geographic averaging. If I may, I will pass the question on universal provision - the universal service obligation - to Ms Goggin.

Ms Goggin

The question was whether we can require DSL to be universally provided. The short answer at the moment is "No". There is a universal service directive in the new package to come into effect on 25 July. That provides for the designation of the universal service provider, which has to provide certain things, including what is called functional Internet access. No greater detail than that is given - there is no indication of what speed is intended. The general interpretation appears to be in terms of an ability, in the universal service, to have narrowband Internet access. The commission is, as it were, the guardian of the scope of universal service and it plans to have a review every two or three years. The scope of the package now being issued includes access at a fixed location, functional Internet access and certain other matters with regard to pay phones and directory inquiries. Possibly, in two or three years, the commission may look at the situation again in terms of assessing whether, realistically, that is enough to ensure functional Internet access.

On the issue of pricing, under the universal service obligation is Eircom or any other operator required to offer a product at the same price in rural and urban areas, such as the cost of a telephone line? They are currently obliged to provide that at the same price in Connemara as in Dublin. If DSL is rolled out into more sparsely populated areas, will there be an obligation on Eircom to provide that at the same price in such areas as in more densely populated areas? Will that be enforced by the regulator?

Ms Goggin

In general, there is a requirement on the universal service provider to have a geographically averaged tariff. Universal is currently in a somewhat strange position. We have universal service under the existing directive - the new directives have not yet been transposed. The Minister has certain obligations regarding the scope of the universal service - he has to confirm it. We have to await transposition before we make a proposal to the Minister and, when he gives his consent, we impose the obligation on the dedicated universal service provider. There are still a few hoops to go through and this is part of the big process of changing over to the new regulatory framework.

We carried out a consultation earlier this year and have issued a response to that process outlining how we believe matters will develop, depending on the detail of the transposition and so on. What we are saying, essentially, is that the cost of line rental and charges will be geographically averaged. For the initial connection, it may not be reasonable to expect the operator to bear the cost in every case where there is a very high cost of connection. In such situations, we will discuss a reasonable approach. After transposition, we will enter into negotiations in that regard.

Is it expected that installation in rural houses will cost more than in the city, in very crude terms?

Ms Goggin

I would expect that, in very rare cases, there would be some other method of funding the cost of installation.

Ms Doyle

A question was also raised with regard to split lines. This matter is discussed in the most recent paper published by the office - our report on universal service obligation. We are approaching a situation where we will have enough information to come to some conclusions in this regard. In terms of comparisons between Mayo and Dublin, it would not be a matter of having a different rate for Mayo but, depending on the distance from the exchange, there may be issues with regard to access. It is not a question of better or worse situations for Mayo, Cork or Dublin, as the case may be. The position is that distance from the exchange may give rise to some issues. We will supply a copy of a paper we have prepared in that regard.

The question as to what size pipe we may need has been the subject of much debate. The question of whether we should go to five megabits immediately was also raised. We can take steps in terms of regulatory issues and we have examined where we are. If one were to opt for five megabits, one would have to deal with significant expenses. The slide before the sub-committee relates to what people expect to pay for an ADSL service. It is a chicken and egg situation once more. Although one may have a certain level of development, one should not say that it is the only level of development as it is something that will be moving on constantly. Nobody is making an investment in the expectation that the ADSL equipment being put in place is fine and will do us forever. The times for investment are shortening.

We have gone well over time. I have many questions which I will ask the clerk to send to Ms Doyle's office for answers and these can be included in the overall report.

I will ask one question now. I am alarmed by the survey that was conducted and I would like more details of it to be sent to the sub-committee. It is alarming to find that there is a lack of public awareness of this issue. I do not know the reason for it, but perhaps the responses to the commission's survey indicate why it is the case. What needs to be done to make people more aware of the Internet and its use?

The sub-committee is alarmed by the finding that there is a lack of demand. This is disturbing because people, especially users, who have appeared before the sub-committee have sought access and connectivity at affordable prices. We will have a serious problem if measures are taken to deal with these issues but the lack of awareness and demand shown in the survey remains. I invite a final comment from Ms Doyle on this issue. Perhaps the commission would provide details of its survey for examination by the sub-committee in advance of its final report.

Ms Doyle

The slide before the sub-committee indicates that 43% of respondents to the survey know "a little" about broadband and 13% know "a lot" about it. A significant number of people are covered under the category of 13% of the 2 million adults in Ireland. This figure is even bigger when one adds the additional 43%. These levels of awareness need to be translated into encouraging people to telephone a company to ask it to provide this service. If one does not have a PC, one might be somewhat slower in doing so. I have heard anecdotally of people who have bought a PC and ADSL service together. One may not be very Internet-literate and, consequently, somewhat unsure of how one will use one's PC.

Copies of this year's survey are available. Last year's survey showed that many people said they were interested in broadband but did not really understand it. It will help if we can get more schoolchildren onto the Internet. The survey shows that the proportion of people in the younger age groups who are Internet-savvy and want more is much greater than the proportion in the older age groups. People in the AB category, such as professionals and wealthier people, are much more interested than those in other categories. I agree with the Chairman's point that one should analyse the various groups individually and come up with measures to encourage them to use the system.

The sub-committee will appreciate any help given in this area. Secondary school students attended a meeting of the sub-committee to tell it where the future lies. I am sure Ms Doyle will acquire some information of assistance when she reads the transcripts. I thank Ms Doyle, Mr. Doherty, Ms Goggin, Mr. Healy and the other members of staff present for attending this meeting, for their interest in the work of the sub-committee, as always, and for the excellent work they do in the Commission for Communications Regulation. We hope the prices mentioned by Mr. Doherty will slide even further.

Ms Doyle

I thank the sub-committee.

We will suspend for two minutes to allow Mr. Dan Flinter and his colleague to take their seats.

Sitting suspended at 3.55 p.m. and resumed at 3.57 p.m.

I welcome Mr. Dan Flinter, chief executive officer of Enterprise Ireland, and Ms Jennifer Condon. They are more than welcome. I apologise to them on behalf of the sub-committee for the fact that their attendance has been delayed. Their slot was supposed to commence at 3 p.m. and it is now almost 4 p.m. I thank them for their patience. The sub-committee is anxious to hear their presentation and perhaps they would inform us about ICT and broadband matters. I ask in particular for an analysis of the difficulties that exist in Ireland, given that it is ranked 27th by some and 18th by others in the world in this area. What needs to be done to improve on this ranking?

Mr. Dan Flinter

I thank the Chairman for his invitation to make a presentation to the sub-committee. My colleague, Ms Jennifer Condon, will assist me in making the presentation. She is the national software and informatics director of Enterprise Ireland and can give a particular insight into some of the issues in which the sub-committee is interested. I am conscious that the presentation should not take up too much time so, with the agreement of the sub-committee, we will quickly go through the hard copy of the presentation which I have circulated. This should take about ten or 12 minutes and we will be happy to respond to any questions that may be asked thereafter.

We have identified on the bottom of page one of the circulated material what we think we should deal with. I will begin by speaking about the role and client base of Enterprise Ireland. I will also speak about the organisation's strategy. My colleague, Ms Condon, will speak about the issues about which we hear from companies and which are important to them. She may also suggest some conclusions.

The role of Enterprise Ireland is to work specifically on the needs of indigenous companies. It is very focused on firms that are owned and controlled in Ireland. Its efforts are increasingly focused in three areas - the commercialisation of publicly funded research, the business development of individual companies and the international marketing capacity of such companies. I hope to return to these issues shortly. Enterprise Ireland has ten offices throughout the country and 34 internationally. It is represented in about 30 countries.

The information on the bottom of page two represents an overview of the clients with which Enterprise Ireland works. Approximately 3,500 companies in manufacturing and internationally traded services are within the statutory remit of Enterprise Ireland and it is responsible for them. These client companies have an annual turnover of about €24 billion and just under half their output is exported. There is a significant export orientation. The client companies are involved in many sectors and are regionally dispersed.

I am conscious that the detail on the map of Ireland on page three of the presentation may not be that clear in the electronic format available to the Chairman. I will make two observations about it. The map implies that there are no companies in the mid-west region, which is clearly not the case. The relationship with clients in the region is managed by our colleagues in Shannon Development.

Our clients are regionally distributed. It is perhaps relevant that, proportionally, a smaller number of them are located on business parks or industrial estates. Whereas the large international companies tend to congregate on large industrial estates or business parks, the vast majority of our clients tend to be located for historical reasons on stand-alone locations. This has implications for the availability of telecommunications.

With regard to distribution, the figures do not show any surprises in terms of employment, except perhaps with regard to one aspect related to international services. To give members a sense of the changes in this sector, average employment in international services in 1991 was about 150,000 and 3,500 were employed in internationally traded services on the indigenous side. The latter figure now stands at 15,000. In a ten year period, therefore, employment in this area increased by a factor of four, making it an important area of growth and development which now accounts for 10% of indigenous industrial employment.

The United Kingdom continues to be an important export market. In the five years preceding 2002 the United States was the most rapidly growing market for Irish technology companies and the country to which most Irish companies exported for the first time. This was no longer the case last year.

I wish to share with the sub-committee a sense of the change which is occurring. We are experiencing rapid growth in new technology sectors and substantial growth in sectors such as prepared consumer foods. A long-term structural decline is occurring in the clothing sector while the textile industry per se has almost disappeared. Ten years ago clothing employed 10,000 people. This figure has declined to around 3,000 and, while some companies will survive, the sector as a whole will be under continuous competitive pressure. There are also challenges in the commodity foods area.

I turn now to strategy because this influences the views we wanted to express to the committee. I noted earlier that the work of Enterprise Ireland has shifted considerably in the past three to four years. A growing part of our activities comes under the heading of commercialisation of publicly funded research. A significant level of expenditure is being invested in basic research through Science Foundation Ireland with the objective of commercialising intellectual property for exploitation in Ireland. To achieve this, at least two other steps must be taken, namely, we must invest in applied research in the universities and assist colleges in commercialising such research to ensure technology is used by companies, be they new start-ups or existing firms.

The presentation also covers what is called a traditional business development agenda and the issue of assisting companies to enter international markets. On the commercialisation of publicly funded research, our focus is on commissioning research and technology of interest to industry in the universities, research institutes such as the NMRC and, increasingly but at a lower level, the institutes of technology. We are also working with colleges to build up the capability to sell intellectual property to industry to avoid research remaining within the academic arena and not being exploited. The logic of taxpayers investing in applied research is that it generates intellectual property which can be brought to the marketplace.

The main trend in business development is that an increasing share of our funding is being committed to companies in the form of equity or preference shares, especially focused on funding near to market research and development, which in other words is the development of products which can be brought into the marketplace.

The focus in the area of internationalisation is on helping companies to gain access to buyers internationally. There are variations in the international market. The German market, for example, is extremely difficult, whereas changes are beginning to take place in southern Europe where the large system integrators such as telecommunications operators are beginning to return to the market in search of new products. Germany and France are difficult regions, whereas Portugal, Spain and Italy are beginning to open up again for some of the companies with which we are working.

Our insight is influenced by four elements. The broadband agenda in which the committee is especially interested is essential to ensure researchers and universities have ready access to collaborators internationally. It is an important piece of infrastructure which is relevant to our considerations. Broadband is fundamental to the normal business of companies in transactions. For example, with the large international multiples expecting Irish companies to engage with them electronically, if the infrastructure needed to do this efficiently is not available, Irish companies will be placed at a competitive disadvantage.

For some sectors broadband infrastructure is critical. Need, therefore, varies depending on the type of company. If we are serious about trying to develop a digital media sector as a key instrument in expanding the Irish software sector to a new level, the absence of broadband at a competitive cost will leave us at a significant disadvantage.

Broadband is also an important item on the regional development agenda. Irish companies face a particular problem because they tend not to be concentrated on industrial estates, although some are. The vast majority of our clients operate independently in locations with few other companies, which creates an additional challenge in terms of distribution and access to the network.

These four points are derived from our experiences and the strategy we pursued. Ms Condon will discuss the remainder of the presentation, after which we will be happy to respond to comments from members.

Ms Jennifer Condon

The next slide examines the feedback we received from our client companies about their requirements for telecommunications. In this context, I will divide the client companies into two sectors: the traditional companies that are looking at e-commerce and Internet trading as a way of doing normal business and the high-tech companies for which information technology and high bandwidth are the core of their business. Always-on Internet is a fundamental requirement for the first block of companies. They cannot depend on dial-up access at slow speeds for a fundamental business channel.

Many of the companies in the traditional sector are of small and medium size and deal with significantly larger and better resourced clients. The second batch of companies is the high-tech companies - characterised by the software industry - which require access to higher bandwidth services, ranging in terms of access from two megabits per second upwards.

In talking to companies and asking them what issues they had with telecommunications services, cost emerged at the top of their agenda, both in terms of installation cost, which can be particularly important for regional or rural based companies, and operational cost. Another issue for our companies was the availability of guaranteed service levels from the telecommunications operators and providers. Obviously, as one invests more of one's business or business channel in dependency on one's telephone lines, ensuring the quality of one's telecommunications service is fundamental. As Mr. Flinter has already mentioned, regional availability outside the mainstream centres is also important. These are the views clients have expressed.

I will address some of the issues we see on the demand side. About two years ago we invested in establishing a dedicated e-business unit to address in particular the development of demand and develop an understanding of the services among our client base. Without delving deeply into all the activities of the unit, the initiatives we took included the provision of funding to companies for pilot projects in the area of e-business and e-commerce development. From these, we have developed case studies which are especially useful in spreading the word and educating the wider traditional company base.

We have also developed an electronic virtual network in which companies can engage with experts and other people who have had experience in developing an e-business environment in their companies for questions and answers and a support service.

A few weeks ago we announced a new scheme to provide help to small companies to buy in outside expertise to assist in formulating a strategy for the development of their Internet procurement and sales. The unit also issues a weekly electronic magazine.

In terms of the regional development agenda, we have invested in the development of a number of technology hubs in Cork, Waterford, Galway and Sligo. The intention of the project, which is ongoing, is to provide a focus for the development of a high-tech industry in a number of regional locations. A fundamental feature of such centres will be top class bandwidth available to companies. We have worked with the county and city councils on the development of the important metropolitan area network project. As Mr. Flinter stated, as part of our strategy to develop new high-tech sectors, we have also invested in the development of a digital media incubator in the digital hub. We have also made a commitment to our on-line services and have made significant progress in this regard. A number of our financial products and transactions can be conducted in full with our clients on-line and we expect to roll out the rest of our services on-line in the next few years, thereby setting an example.

Unbundling the local loop and solving the last mile issue are fundamental for our small companies in gaining access to always-on Internet. This is a priority for us and must occur sooner rather than later because people cannot delay their entry into on-line business. The second priority is the availability of a national broadband backbone, particularly the potential this offers for developing competition in the marketplace, which will also be a factor in developing choice for companies and driving down price. It will be particularly important to examine the use of alternative technologies in the regions and niche areas in order to overcome the last mile problem and accelerate the availability of local loop unbundling in some areas which otherwise would be at the end of a long progression.

Before Deputy Coveney contributes, I ask Mr. Flinter to express our sincere gratitude to Colm McGinley from the Enterprise Ireland office in San Francisco and Silicon Valley for his help to the committee in January in setting up a number of appointments and opening up so many doors for us. He and his staff were excellent.

I thank Ms Condon and Mr. Flinter for their patience today. They are busy people and have waited patiently for an hour. I have a number of questions, primarily on competitiveness. I am interested in the geographical locations of the businesses in which Enterprise Ireland is involved and impressed by how well they are spread across the regions.

Exports account for almost 50% of the combined annual turnover of the companies in which Enterprise Ireland is involved. The organisation's stated aim, to promote international expansion among Irish companies, is in line with our exporting tradition. While this is laudable, its consequence is that we must compete on an international stage. How competitive is Ireland, particularly when compared with other European companies producing similar products?

Enterprise Ireland is in a good position to try to gauge the difference between a company in Dublin and one in, for instance, Roscommon or Clonakilty. What degree of competitive disadvantage obtains with regard to a company based outside a business park in a regional town and a company operating in a location such as CityWest?

With regard to the level of service choice, is it the experience of Enterprise Ireland that only one provider of fixed line business, namely, Eircom, or perhaps BT to a certain extent, is available, or are we seeing results from the provision of a wholesale service? In other words, is there competition for service provision to Enterprise Ireland's clients? What percentage of its clients are linked up to broadband? This figure would provide a valuable gauge of quality Irish businesses in Ireland, many of which are linked to Enterprise Ireland. This information does not appear in the presentation.

I am pleased Enterprise Ireland is investing resources in helping companies develop an IT strategy. This should be taken on board in our national strategy. For example, we could consider the possibility of investing resources specifically in helping institutions and companies develop IT strategies. This would be compatible with current trends here. An illustration of how this could be done would be to assist companies in planning for the correct bandwidth access in order to avoid circumstances in which a business which may require five megabits in four or five years acquires DSL. I ask Ms Condon and Mr. Flinter to expand on the issue of formulating strategies.

What monthly price for always-on broadband access for business do we need to attain? Canada and Scandinavian and Asian countries offer this service for between €20 and €27 per month. Is Enterprise Ireland working with any providers of broadband or IT infrastructural services?

Mr. Flinter

We have not been able precisely to calibrate the relative advantages or disadvantages of a company located in Dublin, for instance in CityWest, or one in another area such as Roscommon. It is reasonable to assume the company in Roscommon will be at a disadvantage on two levels. It may not have access to broadband or will get access later than a company in a large business park. One can see the difference, for example, in the west Cork business park in Clonakilty which has broadband. Companies located five or six miles out the road from the park will not have access to broadband or will gain access at a later stage.

As soon as I mentioned the business park in Clonakilty I realised it is connected. The problem, however, is that a business located next door will not be connected.

Mr. Flinter

Companies located in a rural community, rather than a business park, will probably not have always-on broadband access and when they gain access, it will be at a higher cost. While we do not have the data to show the difference location makes, as regards broadband access it is, initially, almost a black and white position - companies in business parks will have access, those outside them will not - and secondly, when the latter get access, it will almost certainly be more expensive. A large number of the emerging young technology companies tend to gravitate towards business park type locations. We must remember that a substantial proportion of our current clients are not located in these kinds of sites. I ask Ms Condon to comment on the issue of choice.

Ms Condon

The issue of choice varies significantly. Without doubt companies in the major centres have a choice of service, while for those outside of such centres, circumstances have not really changed. In many cases companies have remained with a particular service provider and have had few options to move their business elsewhere.

Mr. Flinter

On the Deputy's third question, we do not have data on the degree of broadband connectivity because we do not have access to such information. It is reasonable to conclude that young technology companies based in larger urban areas will - in fact, must - have connectivity. However, we do not have data on a geographical basis to give the Deputy a precise calibration. While it may be possible to obtain some data, we do not have it to hand now.

I would be happy to provide to the committee further detail on the assistance we offer to companies. I will give an idea of what we are trying to do. Often, particularly for small SMEs, the first issue is that they do not know what they need. By giving them access to what is effectively free advice, usually from the private sector but with support from ourselves, we can help them define what they want and then have it commissioned. We are in learning mode in this regard at present, but we have about 100 applications for support in that area, with a deadline that was very recent. We have extended the deadline to make room for more companies to come in and we will be learning quite a bit over the next number of months about how well this will work.

On the issue of pricing, we must aim towards having a price that is at the minimum within the medium range of what is available and ideally closer to the lower end of what is available in our competitor countries. Otherwise we are creating competitive disadvantage for Ireland. We already have a competitive disadvantage due to our island status - for companies transporting normal products there is a cost involved in getting the product to the marketplace - so we must find competitive advantage in other areas. We must aspire to a national strategy that drives price down to a point closer to the lower range of what is available internationally. That is not easy on a geographical basis but that is what the aim must be in terms of the overall strategy.

Ms Condon referred to a strategy statement we published a couple of years ago. A key part of regional development is the development of new sectors because some of the older sectors will decline. The textile sector will not survive in Ireland over time. If we want to sustain development in Sligo, Donegal or Galway we must see new sectors developing. If the technology is not there to support those companies we are tying our hands behind our back from the point of view of regional development as well as national competitiveness.

A question was asked about service providers. Do we have——

Ms Condon

We do not have any company acting as an infrastructure service provider. We have client companies who are producing products for deployment by service providers and a strong cluster of companies providing technologies for mobile and wireless operators.

Mr. Flinter

The area in which there is encouraging strength, although the companies are very small, is that of mobile communications. There is a growing cluster of companies, not only in Dublin but elsewhere, selling and developing products mainly to the international mobile telecommunications market, but we do not have service providers as clients of the organisation.

I thank Mr. Flinter for the presentation. I remember when the legislation establishing Enterprise Ireland was going through the Oireachtas. Some improvements were made. Does the organisation still represent companies with less than ten employees?

Mr. Flinter

The primary orientation is towards companies with more than ten employees. Normally the relationship with companies with fewer employees will be through the county enterprise boards. The exception is emerging technology companies, for which we are usually the primary interface from the point of view of economic development.

Mr. Flinter has made a strong case that it is in the remit of Enterprise Ireland to maintain our competitive position. We certainly need a major national strategy in this area. We get the occasional report from Enterprise Ireland on this matter. Has the organisation actually brought this matter to the attention of the Government? Has it been trying to get the message across again and again that over the last three or four years, we have lost competitive edge in these areas although we were doing well previously? We have now been bypassed to some extent.

Like Deputy Coveney, I noticed that Mr. Flinter was talking about IT strategies. Is he disappointed that so far, due to constraints in this area, areas such as e-procurement do not seem to have developed as rapidly as in other economies? I remember visiting some companies which Enterprise Ireland had assisted in the Silicon Valley area outside San José. Companies that are based in Dublin and Cork obviously need the most advanced broadband infrastructure possible, which we clearly do not have.

I also welcome Mr. Flinter and Ms Condon. We were given the example of the competitive disadvantage faced by a company in Roscommonvis-à-vis one in Dublin. Let us imagine a company in the manufacturing sphere. While it is not a technology-based company, in order to compete it needs access to technology which it may not have - it is to be hoped it will have access to this technology in the future whenever the structure is put in place. Does that mean that Enterprise Ireland would not look as favourably upon this company at the moment because it may not be able to make such a success of things due to the lack of suitable infrastructure?

Moving up the chain to the more technology-based companies, Mr. Flinter mentioned the networks that had been developed in Waterford, Cork, Galway and Sligo. Does this mean that at present, Enterprise Ireland normally only supports companies in the high-technology field if they are locating in those areas? I presume this includes Dublin.

My final question relates to the competition we are facing. One of the slides showed the decline in the textile industry - we are losing jobs in that area. Lately, however, we have been losing some of our technology jobs to India, which is a lower cost economy. I was interested to hear on the British news the other evening the problems being faced in this regard in the United Kingdom. Does Mr. Flinter have any comment on the competition we are facing in this area?

Mr. Flinter

Maintaining competitiveness is hugely important. There are two things that drive the behaviour of companies. One of them is to do with demand in this country, whether it is e-government or retailers demanding services that require connectivity. However, what drives them most aggressively is international demand. If they do not follow the demands of international customers they will be out of business or find themselves at a severe disadvantage. The more traditional companies face the bigger challenge in this area because those in technology companies tend to be alert to the agenda and are able to specify more clearly the deficiencies in the current facilities, particularly in terms of price, availability of "always-on" services and so on. The real challenge is faced by the companies in more traditional industries, in which skill sets are not very well developed to deal with these issues. That is an area on which we must work harder. Our views on this issue are known in a number of quarters and are quite often conveyed through the work of Forfás, which seeks to represent the activities of all the development agencies in that regard.

We do not put a company at a disadvantage if it does not have skill sets in this area. Our responsibility in dealing with existing manufacturing companies is to do something about the issue rather than refusing to engage with them on that basis. We need to do more than we are currently doing in this area and help firms to specify what they need. More of that activity could be helpful for firms.

Deputy Broughan asked whether we would only support technology companies in Waterford Cork or Sligo and the answer is no. Companies tend to set up mainly in those locations because universities or institutes of technology are located there. To give an example, we expect to support about 60 new high-potential start-ups this year, most of them in high-technology areas and many in ICT. They will tend to be set up in the larger urban areas because those who are starting them are located in those areas.

However, some interesting technology companies are not based in those localities and we are happy and keen to support them. They tend to congregate. For example, 75% of indigenous software companies are based in Dublin and, of those, about two thirds are based in Dublin 2 or Dublin 4. Such companies are not interested in being located in CityWest They want to be in the city centre. That is an interesting feature of where they want be, whereas large international companies locate themselves on the periphery of the city. There may be sociological reasons for this but that is where they want to be. They tend to be close to urban areas as opposed to the periphery of towns. We are happy to work with emerging technology companies wherever they are located but the nature of the promoters tend to be that they are found in those locations.

On the issue of India, there is huge growth in the software sector there, particularly in terms of writing code. Few jobs in the indigenous software have been lost to India. That has not been a major trend up to now. Some activities in the indigenous software sector will migrate to lower cost locations but the evidence so far is that has not been the case. It may be relevant in other sectors or to large multinationals but we have seen no evidence so far. However, it is a rapidly growing industry with huge growth in supply. One of the crucial elements in Ireland is that the supply of young graduates continues in that area in the long-term. That is an important resource in addition to having the technological infrastructure to which we referred.

Is Mr. Flinter concerned about the lack of young people pursuing third level courses in this field?

Mr. Flinter

I am. It is a big issue for the country as a whole in terms of the number of people who are pursuing programmes in engineering or the sciences. There has been a severe reduction in demand over the past number of years. The impact will be felt in two to three years' time. A significant supply is currently available. This is as good a year as ever to recruit engineers and there is still a significant supply of Irish people overseas whom we are keen to see coming back. However, if, for example, a five year horizon is taken, we will have a serious problem because of the reduction in the number of graduates in engineering and the sciences who will become available to industry or will participate in research in universities.

A critical part of that is the influence on the mindset of young people of the teaching of maths and physics at second level. They are the key disciplines that schoolchildren need to be taught, particularly at second level, if they are going to study engineering and the sciences at university and the institutes of technology. It is a concern for us that there has been a significant reduction in demand, which will affect supply in two to four years' time.

Mr. Flinter said it is an essential requirement for high-tech companies to have as strong a band as possible always on. Of the 3,500 companies he mentioned, how many fall into that category and for how many is infrastructure provision not as important? Enterprise Ireland is an important State agency advising the Government in terms of policy. What is Mr. Flinter's opinion on DSL prices, as Ireland's is one of the highest? What would he say to the Minister in this regard? What would he advise the Minister, ComReg or anyone else whose ear he would have regarding the capacity that is needed? Should policy decisions be made on the basis that we only have ISDN and we need to move to DSL before a higher capacity system is introduced or would his advice be if that approach is adopted, Ireland will always be playing catch up and will be in the second division all the time and that it is necessary to become competitive to get into the first division and make the jump to becoming a leading nation?

Mr. Flinter

Of the 3,500 companies, between 700 and 800 need deep broadband capability and the remainder need it to carry out the commercial activities of their businesses. I may be out by a few hundred but the figure is of that order. Approximately 20% are in the space that need it and, given the direction in which we are going, that share will increase, if anything, because all the new entrants are involved in high technology rather than traditional sectors.

On the issue of price, it is easy for us to outline the strategy but it is much more difficult to decide it. However, we must aim to bring it down to international competitive levels and to the lower quartile rather than the international average. The Chairman and I may have different views on this and, if we have, they will be revealed but it is important to want to go to the first division. There is a great phrase to describe economics which is that in the long-term we are all dead. Having a first division solution may take three years and, in the meantime, companies may not have survived. It is important that we should have good DSL solutions because companies can use that technology.

The first division is important for a limited number of companies. We are trying to achieve a balance. That may be a cop out in terms of a response to the Deputy's question, however, it is important to make DSL work for companies over the next three to five years.

Ms Condon

The availability of always on Internet access at a reasonable cost and speed is a fundamental requirement for the vast majority of our companies. We need to be imaginative about the consideration of newer or alternative technologies in terms of moving us from where we are to where we aspire to be. In that context fixed wireless and satellite technologies have made no impact here in terms of deployment and in terms of resolving the last mile and regional access issues, in which I am particularly interested.

I refer to the dedicated e-business unit on which Ms Condon said she had done a number of case studies. Could the sub-committee have a copy of them? We would like to include them in our report.

Ms Condon

I would be delighted to.

Ireland is dominated by knowledge-based industry. We have moved on from manufacturing socks and underwear. Broadband is vital. We are aware of the capabilities of Enterprise Ireland's representative in San Francisco but in regard to marketing overseas, is it evident that business is being lost because of the impediment created by not rolling out broadband? Would Ireland fare better in terms of marketing if broadband was rolled out fully? Would more added value businesses be attracted to the high tech industry here?

Mr. Flinter

The competitiveness of Irish companies could be improved and, therefore, the pricing and quality of our infrastructure could also improve, which would give the companies the basis for winning more business. This is particularly relevant, for example, to companies who are in the mobile technology area where their credibility as a supplier is enhanced if they come from an environment in which they are supported by high quality technology in terms of both the telecommunications infrastructure and the university research system.

Credibility has grown but it will be put at risk if the infrastructure is not strengthened when a buyer looks at Ireland or a specifier comes to Ireland. Significant investment is involved. For example, recently 24 specifiers from southern Europe were in Ireland. There was a huge emphasis on getting them into the country to meet 55 Irish firms. We want to get the best possible value for our money when they do come in. If their credibility about Ireland is affected, then the chances of them doing business is affected as well. The more we can enhance the infrastructure and its pricing, the more Ireland will be seen as a credible supplier of technology solutions and products internationally. Therefore, companies can perform better in the marketplace.

Mr. Flinter, when you see reports which say Ireland is No. 27, No. 29, No. 17, or No. 18, does that make you cringe?

Mr. Flinter

To be honest, there is a schizophrenic type of view of the problem. On the one hand, it is disappointing when it is like that. On the other hand, it creates the impetus for all of us to look for a better solution. We have got to be focused on that and on improving performance.

By having the infrastructure in place?

Mr. Flinter

Exactly.

On behalf of the sub-committee I thank members of the delegation for attending and for their assistance. The presentation has been enlightening. I would be pleased if they would send on the other information. If we need to contact members of the delegation to help us formulate and complete our report, the clerk or his staff or our consultant will do so.

The sub-committee adjourned at 4.45 p.m. until 10.00 a.m. on Tuesday, 1 July 2003.