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Seanad Éireann debate -
Thursday, 14 Nov 1996

Vol. 149 No. 7

Telecommunications (Miscellaneous Provisions) Bill, 1996: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

I live in one of the pockets throughout the country where proper Eircell reception cannot be received and the service is non-existent. People in these areas who use these telephones while travelling in the course of their work cannot get reception at home. I have written to the manager of Eircell twice and he did not even do me the courtesy of a reply.

Reception for Teilifís na Gaeilge is not satisfactory in some areas. Any station will undoubtedly have teething problems and I am sure the service will improve in time, thanks to the use of modern technology.

I resent people continuously objecting to the construction of telecommunications masts. We cannot have a telecommunications system without masts and antennae, but some people protest on the grounds that these affect the environment. We want to be able to communicate. If there is an alternative way to achieve that, I will support it. If not, we must have these masts to sustain a proper service, especially in valleys and mountainous areas.

I am glad to see provision in the Bill for worker participation in the form of employee directors. Having workers involved in such positions will lead to greater communication with employees, which is of great importance to the company, the workers and everybody involved.

Senator Mooney referred to short wave radio. It is a matter which should be keenly examined because reception throughout the world for Irish stations is not good. He also referred to the situation in London. It is a pity that people in London cannot receive Irish stations properly. RTÉ Radio 1, which is now being broadcast via satellite, can be received on televisions in London and this is a great asset. A large number of Irish people who live in London want a link with home and RTÉ Radio 1 and 2 FM would be of terrific benefit to them.

Senator Cregan mentioned the good work of 96 FM and 103 FM, the two stations which work together to cover County Cork from Mallow, Cork city and Bandon. The terrific service which they give the local areas is a credit to everybody involved. I compliment them for their coverage of sport, music, local events, such as Scoraíocht, and the Houses of Oireachtas.

There have been many improvements to the telecommunications system over the years and a great deal of money has been invested in it. As the Minister said in the course of his speech, it is good that charges will be reduced in the not too distant future by up to 30 per cent. That is very welcome. When Minister Stagg says something, it will come about.

I compliment him and his senior colleague, Deputy Lowry, for the manner in which the negotiations were conducted. There can be difficulties with a share floatation or in seeking a strategic partner in the telecommunications area, and much negotiation and worthwhile work went into finding out what was best for Telecom Éireann. Having judged the market and received advice on it from experts, I have no doubt that the Minister made the wisest decision by choosing KPN Telia.

I welcome this Bill. It has my wholehearted support.

Fianna Fáil is opposing the Bill mainly on the grounds that the sale of a percentage shareholding in Telecom Éireann was a bad deal. Apart from that, we would agree with most of what the Minister said.

Ireland has an important role to play in the evolving and developing technological age. The Irish telecommunications industry is well positioned to make a valuable contribution to the international telecommunications industry, which is changing at a revolutionary pace. It can be to the forefront of the advanced technological changes which are taking place. It can play its part in contributing greatly towards the creation of further employment through the generation of new opportunities and the consolidation of existing jobs in this area.

Changes in information technology are proceeding at a great pace. Ireland and the international community must face the twin Challenges of keeping abreast of the changes taking place and ensuring people are provided with the necessary skills and expertise to deal with those changes. The Minister for Transport, Energy and Communications has a role to play in this regard, but there is also a grave onus on the Minister for Education to streamline our educational institutions so they can come to grips with the challenges they face. I am not certain that this has been done in the past. The Minister for Education published a number of papers in recent years, which were developed by her successors, that deal with the challenge of the information society and the changes it will bring to the international community. However, the Minister for Education has taken little action in setting down ways in which these changes can be harnessed and mobilised for the benefit of the people.

There are two areas which require urgent attention on the part of the Government. The first relates to the preparation and training of skilled people and the introduction of the necessary courses and programmes in our colleges and institutions which will enable young Irish personnel to be trained, and kept abreast of developments, in this highly sophisticated area. Second, whether through existing mechanisms or the new directorship, it must be ensured that people will be able to positively exploit the opportunities which will arise in the near future.

I am glad this legislation is being introduced by the Minister of State. When the initial debates took place in the Lower House on the establishment of Telecom Éireann and An Post, I recall the Labour Party, supported by the trade union movement, offered stringent opposition. If the Bill represents a change on the road to Damascus, it will not be the first occasion on which this has occurred. I welcome this because many existing institutions and organisations are not capable of exploiting the rapidly emerging opportunities in this area. These institutions were established to cater for the needs of a previous generation but, through no fault of the staff, who are of the highest calibre, their hands were tied behind their backs by outdated and antiquated legislation which did not provide mechanisms through which they could engage with emerging opportunities.

I want to pay tribute to Deputy Reynolds and Mr. Mark Killilea, the Minister and Minister of State in office when these exciting changes took place in the telecommunications industry. When I was first elected to the Dáil in 1973 I recall the difficulties I encountered while endeavouring to have telephones installed for constituents and dealing with the manual operation systems in the west. The Development of that part of the country was handicapped and neglected for many years because of the absence of a decent telecommunications system. In some respects, Deputy Reynolds and Mr. Killilea brought the Irish telecommunications industry into the 20th century.

The challenge for the new director, the Government and the Minister for Transport, Energy and Communications will be to ensure the further development of that industry into the 21st century. They must also enable it to flourish, expand, and develop and young people, particularly graduates, must be encouraged to exploit the new and exciting possibilities emerging.

I cannot allow this opportunity pass without paying tribute to the employees of Telecom Éireann. I have firsthand experience of the work they carry out in dealing with breakdowns, sometimes in varying weather conditions. As far as I am concerned, they work in an efficient and effective way. I place on record my appreciation to the many young people, recruited to Telecom Éireann a number of years ago, for the dedicated service they provide and the important work they carry out in sometimes treacherous weather conditions and on difficult terrain. They have succeeded in modernising an antiquated 18th century service and putting in a replacement comparable with its European counterparts.

Many other services can be developed in the future. Within the existing service, there are mechanisms by which it can be developed and expanded. There is also a highly motivated staff who have shown that they are capable of adapting to change. The director and the Minister for Transport, Energy and Communications have a responsibility to ensure the staff are trained and retrained to deal with emerging challenges. I am not certain the legislation provides for this. Perhaps I did not read the Bill closely, but it should contain a section to provide in-service training and language courses for staff. In the context of the modern telecommunications system, it is important that staff are fluent in foreign languages if they are to avail of opportunities abroad. This is not prevalent in the service at present.

I do not wish to deal with this matter in great detail. However, there is a necessity for the director or the Minister to invest heavily in the training and retraining of existing personnel to meet future challenges. This must be coupled with a commitment from the Minister for Education to put in place in our colleges and institutions an arrangement to fully exploit the opportunities in this rapidly expanding industry.

Information technology not only challenges young people within the education system but it also provides challenges for many others. Young and old people are now facing the prospect of dramatic changes in the entire global telecommunications industry. Many will discover opportunities and possibilities for enjoyment and recreation in new and exciting global information technologies.

The area of west County Clare where I reside has enjoyed the benefits of the MMDS system for a number of years. There have been some complaints but, by and large, the system has been a major success. In the past, a system of deflectors originating in Enniskillen was used which continually broke down. I do not wish to become involved in ongoing arguments about replacing the old system with its MMDS counterpart in other parts of the country and I can only attest to my personal experience.

People living in the remote part of the west Clare peninsula where I reside can now receive CNN, Sky, NBC Superchannel, etc., through the MMDS system operated by Irish Multichannel.

The local county football final between Cooraclare and Doonbeg was broadcast on one of the channels. Thus we have an international service providing the most up to date pictures from around the world in hourly news bulletins and local football matches. The service in the Limerick area broadcast the graduation ceremony in the University of Limerick and the nursing college in Limerick Regional Hospital. It is possible to use a modern sophisticated telecommunications system to transmit local football matches.

The MMDS system has worked satisfactorily in the mid west region and should work satisfactorily in other areas also. It is more reliable and effective than some of the older systems, which broke down frequently and needed a lot or maintenance and investment.

There have been many developments in satellite communications and mobile telephones in the past few years. The EU decisions over many years to liberalise telecommunications are forward-looking and wise. The changes which will take place in the next five years will prove that the investment of £2 billion made in our services since 1985 has been worthwhile. It will be necessary to continue investing if we are to derive maximum benefit from future opportunities.

The existing service provider needs to improve its customer relations and service. In spite of all the modern telecommunications systems in use it can still be traumatic for a person to have their telephone cut off automatically and without notice for overdue payment. The cost of reconnection is £30. It would be far more customer friendly to call the subscriber and to inform him or her that the service will be disconnected the next day unless the bill is paid. It would lead to a 100 per cent response with payment.

In the past with the manual system the local postmaster would telephone if a bill was overdue and the bill would be paid. There might have been complaints that the postmistress might have information other than the bill being overdue, but that is another matter. In far less sophisticated times, when we had a less than perfect telephone system, one would at least receive a telephone call to warn of disconnection. Given the developments in technology, I do not understand why it is not possible to do so nowadays. The accounts branch in Telecom Éireann should get the message that the customers are important — they pay the bills after all — and they should get a telephone call to inform them of disconnection if payment is overdue.

I understand that the Minister got a bad deal in the arrangements with KPN/Telia. The Minister could have got a better deal had he played his cards right. However, the decision has been made and it is not helpful to undermine the new arrangement for what it is worth. Perhaps we could and should have done better, but we have not. Let us make the present arrangement work and let us try to find a way to improve upon it in the light of experience.

I wish to raise the issue of the negotiations with the unions in Telecom Éireann on the percentage of the ownership for the employees under the new arrangement. I understand that 5 per cent was the figure considered for negotiation with the unions. No negotiations have taken place yet. The Minister should consider doubling that percentage.

The Labour Party changes its tactics so often.

I am in favour of worker ownership.

What about Fianna Fáil's inconsistencies? Nothing changes.

Acting Chairman

Senator Daly without interruption.

An amount of 5 per cent is too small. The amount should be left open because I presume the employees will want á sizeable share in the arrangements. An amount of 15 or 20 per cent would be more realistic. We may examine this matter further on Committee Stage. The Minister must enter into meaningful discussions with the employees on this matter. The question of tax liability on shared ownership also arises and we will discuss that also on Committee Stage.

I welcome the Bill, apart from the arrangements for the sale. Ireland has an ideal opportunity to make a worthwhile contribution to the development of the telecommunications industry. We can be to the forefront in the drive to break down the barriers to global communications. The challenges for the future will be exciting and the rewards for Ireland will be great. The prospects for job creation are very good, particularly for young people.

I welcome the opportunity to speak on this important Bill. Telecom Éireann is faced with overseas competition from companies such as British Telecom. We have to be realistic: this is a small country and this strategic alliance is of fundamental importance.

As regards the costs of this arrangement, the consortium is obliged to pay £183 million for a 20 per cent shareholding. This shows the importance and value of Telecom Éireann. This figure, together with the fact that the consortium will also have the opportunity of buying an additional 15 per cent, is of importance.

I am pleased that this money is being reinvested in the company. Some people would argue that the Government should take the money; but if we are going to have an efficient, modern telecommunications system, it is essential that there be continuous investment in Telecom Éireann. This Bill takes a realistic, common sense and practical approach to this issue.

The main reason I support this Bill is that the Irish people are maintaining a majority shareholding. Some parties in this House have proposed the selling off of the semi-State companies. I do not think this is wise, particularly in relation to sectors of important national interest such as telecommunications. It is essential that the Irish people have a say in the running of companies operating in such areas. The Bill specifies that the State will retain at least 51 per cent of the shares and I am happy as long as that remains the case.

I would like the Minister to clarify the position of the employees' interest in Telecom Éireann. What percentage, if any, of the shares will they be allowed to purchase? It would be wise for workers who give their life's work to this company to have the option of buying shares. This will make it more attractive for people who work in Telecom Éireann to use their initiative, enterprise and energy for the benefit of the company and the people of Ireland.

Staff in semi-State companies have always shown great pride in their companies. The workers in CIE always wore their uniform with pride. The same applied to postal workers. It is important that they continue to do so. It is my belief that the staff of Telecom Éireann have great pride in their company and if they are given the opportunity of purchasing shares as an incentive that would benefit the company, its staff and the Irish people.

I would like the Minister to address the question of the re-transmission of cross-channel stations through MMDS. I was unhappy with the Wireless and Telegraphy Act, 1988, and I remain unhappy with it. Senator Daly appears happy that people in County Clare receive a good quality reception on MMDS. However, in Laoighis-Offaly and parts of north Tipperary there is continuing unease and unhappiness regarding MMDS and, in particular, the cost of the system. The rate of inflation means nothing to the people who operate the system. The costs are continuing to rise. Customers receive regular demands and if they do not pay they are cut off. This is a terrible situation for people, some of whom live on modest incomes.

My understanding of the Radio and Television Act, 1988, was that the country was franchised for approximately £200,000. Ten franchises were awarded at £20,000 each. It is extraordinary that people have become multimillionaires for such a small initial amount of money. It is a licence to print money. MMDS is the wrong system and needs to be re-examined.

I object to the fact that the operators have the exclusive rights to re-transmit cross-channel television programmes. Ireland is a member of the EU which is supposed to promote competition. There is no competition in the re-transmission of these stations. This is not fair or right because people are entitled to choice. I have no objections to MMDS as long as there is competition. Local people who provide this service should have an equal right to re-transmit. People should be able to use their local community television service if they wish.

I am pleased at the outcome of the court case in Cork. I understand that the Minister has appointed a regulator to examine this, but I would like him to further clarify the situation. I am certain the Minister is trying to reach a satisfactory outcome on behalf of the consumers who have been receiving community television. People in the towns and villages of Ireland are entitled to choice and they are not getting it at present. People in local communities who showed initiative and enterprise and provided this service at very little cost found themselves outside the law as a result of the Radio and Television Act, 1988. Many of these people had High Court writs served on them, found themselves in court and in a situation where their private property could have been seized if they lost their cases. It was horrific for people who were members of the community and had taken the initiative.

I ask the Minister to make every possible effort because the community system involved people on low and middle incomes all across the country. Thankfully it is still in existence in some areas and I hope the Minister will allow it to continue in the interests of fair play, to ensure that there is choice and to prevent the wealthy having exclusive rights. That is why I am supportive of community television.

This Bill is of importance because over the last 15 years our communications system has gone from strength to strength and the alliance struck by the Minister will allow it to go a stage further.

Normally I would recap on the details of the Bill but as it is not long since we commenced dealing with it I propose instead to respond to the main points raised in the debate. I thank those who contributed — Senator Mooney, Senator Cregan, Senator Lydon, Senator Calnan, Senator Daly and Senator Enright. All contributions were positive with one exception. Senator Lydon was negative and gave us nothing but an ideological diatribe. I will deal with the points raised as best as I can.

Senator Mooney spoke in some detail about broadcasting frequency issues. He is an expert in this area. I fully support what he said but unfortunately the matter is not within the remit of my Department but that of the Department of Arts, Culture and the Gaeltacht. I undertake to the House to contact the Minister, Deputy Higgins, and bring to his attention the valid points made. I will also raise it, through that Minister, with RTÉ because what was said was valuable. There is already a Green Paper on this area and it is hoped to produce a White Paper and, ultimately, legislation.

The biggest issue raised was deflector systems. Under the Bill, the Minister's current powers will be transferred to the regulator. There is an understandable concern that this represents a washing of hands by the Government. This is a problem because people have legal rights over transmission and anyone doing anything to interfere with those rights has been served with High Court writs, as Senator Enright said. After the Bill is passed, there is a 90 day period before the director takes over the Minister's responsibilities. Within that period intensive efforts will be made to deal with the issue so that we hand over the problem to the director but a solution. There is no guarantee that we will succeed in that so I will not add a further promise to the list of promises from both sides which were mentioned in the debate in the other House. However, in that 90 day grace period, the Minister and the Department will try to find a solution to this vexed question which exercises minds on a regular basis.

I join with Senator Mooney and my senior colleague the Minister, Deputy Lowry, in condemning the incident in Donegal yesterday when vandalism to the tune of £70,000 was carried out on equipment belonging to Cable Management (Ireland) Limited. That is an outrageous act which could not be supported by any Member of this House.

The question arose as to the validity of the £500 million valuation of the tranche of Telecom Éireann sold to KPN/Telia. I am confident that the value of Telecom will grow in the coming years. The market is expanding and Telecom is transforming itself in readiness for competition. We are certain of the payments of £183 million and £200 million. I am confident that, because of the growth which will occur, the 60 per cent of profits over a certain level which will revert to the State will render the estimate of £500 million a conservative figure. The growth now becoming apparent means that this figure will be exceeded.

The Opposition said it was a bad deal but I did not expect them to say the Minister did a good job. It is easy to criticise any deal but a good deal is the best one can get. This deal is the best which the Minister and the Department could get in the open market, within the confines of what they were seeking. They were not looking for money only. The essential ingredient was someone who could bring a special expertise to Telecom Éireann which it did not have previously. The money was a side issue, which is not to say it was not important. This expertise is what the consortium has brought to Telecom.

Another question raised on both sides of the House was why Irish people were not allowed to take part in this investment through pension funds, credit union savings, etc. We did not want that money and Telecom Éireann did not need it. What it needed was the expertise which came with the money. We have set aside a portion of Telecom Éireann to be sold to KPN Telia, 35 per cent is the maximum stake it can buy. The Bill sets aside 5 per cent of the company for employee shareholding schemes. We have not had detailed negotiations with the unions on this issue but we have indicated that we will consider allowing the employees to purchase up to a 15 per cent shareholding. As far as I am concerned, that is a positive development for the company and its employees. That is all which is available because the State is retaining a majority shareholding. KPN/Telia can have its part, the workers can buy another portion, and the State will hold the balance. That is a good mixture for the future of the company.

Senator Mooney raised the important issue of the watchdog for consumer rights. The Director of Consumer Affairs has responsibility in this area and Telecom issues are within his remit. In addition, the Telecom Users' Advisory Group carries out a useful role on behalf of consumers and will advise the Director of Consumer Affairs also. One the question of cartels and price setting for mobile phones, the Competition Authority exists to prevent any such cartels operating in a way which is adverse to the interests of consumers and the community.

I covered the issues relating to RTÉ and local radio and will be taking the actions I indicated. Senator Cregan raised the question of further sales to KPN/Telia. The agreement provides for a maximum of 35 per cent to be sold to the consortium over a three year period and the Bill provides that the State must retain a majority of the shares. That allows an amount to be left for the employees.

Senator Lydon made a big issue of the tariff reduction, which in 1997 will reduce prices to domestic and commercial Telecom consumers by a minimum of 6 per cent and will guarantee a price reduction of 30 per cent over a five year period. The Senator said it was impossible to do this but he missed the point that a large volume of Telecom services are not in the competitive area. Price capping will force down prices in an area where there is no competition and where there is competition the cap will not be applied. Competition will play that role.

I thank Senators for their comments on the Bill and their generally positive attitude to it. The importance of the Bill cannot be understated. The availability of advanced telecommunications services is essential for the maintenance and enhancement of Ireland's competitive position. I outlined the main factors contributing to this at the commencement of this debate. Developments in telecommunications technology are increasing capacity, reducing costs and extending the range of services on offer. In addition, the growth of the services sector throughout the world requires more and more information transfers.

This is a significant opportunity for Ireland to achieve additional economic growth and job creation through the further development of the services sector. The rapid growth in employment in call centres is a prime example of what can be achieved. The availability of competitively priced advanced telecommunications will be necessary if Ireland is to continue to avail of these opportunities. The Government is committed to having a telecommunications sector in Ireland which will underpin further economic growth and job creation.

This Bill puts in place a number of important enablers for this by facilitating the transformation of Telecom Éireann through the strategic alliance, by establishing an independent regulator for the sector and by putting in place a new system for regulating telecommunications prices and tariffs. These enablers must be put in place as early as possible in order to facilitate the further development of the sector without interfering with the development and implementation of longer term solutions relating to regulation and liberalisation of the sector.

Question put.
The Seanad divided: Tá, 21; Níl, 16.

  • Belton, Louis J.
  • Burke, Paddy.
  • Cashin, Bill.
  • Cosgrave, Liam.
  • Cotter, Bill.
  • Cregan, Denis (Dino).
  • Doyle, Joe.
  • Enright, Thomas W.
  • Hayes, Brian.
  • Howard, Michael.
  • Kelly, Mary.
  • McAughtry, Sam.
  • McDonagh, Jarlath.
  • Magner, Pat.
  • Maloney, Seán.
  • Manning, Maurice.
  • O'Sullivan, Jan.
  • Sherlock, Joe.
  • Taylor-Quinn, Madeleine.
  • Townsend, Jim.
  • Wall, Jack.

Níl

  • Bohan, Eddie.
  • Byrne, Seán.
  • Daly, Brendan.
  • Dardis, John.
  • Farrell, Willie.
  • Fitzgerald, Tom.
  • Kiely, Rory.
  • Lanigan, Mick.
  • Lee, Joe.
  • Lydon, Don.
  • Mullooly, Brian.
  • O'Brien, Francis.
  • Ormonde, Ann.
  • Quinn, Feargal.
  • Roche, Dick.
  • Wright, G.V.
Tellers: Tá, Senators Cosgrave and Magner; Níl, Senators Fitzgerald and Ormonde.
Question declared carried.

When is it proposed to take Committee Stage?

Next week.

Committee Stage ordered for Wednesday, 20 November 1996.

When is it proposed to sit again?

At 2.30 p.m. next Wednesday.

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