I move that the Bill be now read a Second Time. This Bill is the eighth since the transfer of services in 1922. Its purpose is, briefly, to authorise the Minister for Finance to borrow further moneys up to a limit of £6,000,000 for continued development of the telephone service. The money will be borrowed as required over a number of years.
As Deputies are no doubt aware, expenditure on the telephone service falls under two broad heads. The ordinary running expenses on day-to-day operation and maintenance of the system are met out of moneys voted annually by the Oireachtas under the Post Office Vote. On the other hand, expenditure on extension and development of the system—for example, on the erection of new exchanges, the provision of additional trunk lines and the installation of subscribers' telephones—are met out of funds provided by the Minister for Finance under the Telephone Capital Acts.
These Acts empower the Minister for Finance to issue out of the Central Fund sums not exceeding a stated amount for the development of the telephone service. The issues are subject to estimates of expenditure being submitted to and approved by the Minister for Finance. The Acts also authorise the Minister for Finance to borrow in order to meet or repay the issues from the Central Fund and for that purpose to create terminable annuities extending over a period not exceeding 25 years. The annuities are paid annually in six-monthly instalments out of moneys provided in subhead M of the Post Office Vote.
The total amount authorised to be raised under the previous Irish Telephone Capital Acts to finance works carried out since 1st April, 1922, is £16.75 million, of which £16.33 million approximately had been expended up to March 31st last. Of the latter amount some £12.6 million still remained to be repaid on that date.
The last Telephone Capital Act, that of 1951, was for £8,000,000 and was intended to cover a broad programme of works comprising new and extended exchanges, additional subscribers' installations and trunk circuits, new buildings and additional kiosks and call offices. Of the funds authorised to be raised by the 1946 Telephone Capital Act a balance of £1,057,000 odd remained at 31st March, 1951, making, with the £8,000,000 authorised by the 1951 Act, a total of £9,057,000. Here is how over the five years to 31st March last the bulk of that money was spent:
Subscribers' installations and underground development schemes |
£3,335,000 |
Rural Call Offices |
376,000 |
Trunk Circuits (including underground trunk cables) |
2,332,000 |
Exchanges—new and extended |
1,218,000 |
Buildings |
403,000 |
Reserve stocks of engineering stores |
910,000 |
TOTAL |
£8,574,000 |
In the five years, much has been done; over 35,000 exchange lines and 50,000 telephone stations have been provided and the total number of exchange telephones in service is now 120,000 approximately as compared with 86,000 odd in 1951. Local calls increased from 69,000,000 in 1950 to 88,000,000 in 1955 and trunk calls from 9.4 million to 13.7 million.
In 1950, trunk call delays were the rule rather than the exception. The outstanding development in the meantime has been a great increase in the capacity of our trunk network, particularly of our main trunk routes. The works carried out include completion of the southern coaxial trunk cables from Dublin to Cork, Limerick, Waterford and Athlone; the provision of the northern trunk cable to Drogheda and Dundalk; the laying of a third trunk cable, to be completed this month, to Mullingar, Longford, Carrick-on-Shannon and Sligo, with a branch to Athlone; the erection of extra wires and the installation of carrier equipment on hundreds of other routes. Altogether the mileage of trunk circuits in service has been increased from 45,000 miles at the end of 1950 to some 92,000 at the end of 1955. In other words, trunk circuit mileage has been more than doubled in 5 years. The corresponding increase in the total number of trunk calls has been 46 per cent. approximately. Although it cannot be claimed that long delays have yet been entirely eliminated, no-delay services have been provided over a great part of the system and the trunk services generally have been greatly improved.
It may be of interest to mention that the handling of trunk calls has been considerably expedited over a large number of routes by the introduction of a degree of trunk mechanisation, whereby the operator at the originating exchange is able to dial a call through one or more intermediate trunk exchanges to the called subscriber without the assistance of another operator. For example, an operator at Sligo can dial directly to a subscriber at Cobh via Dublin and Cork exchanges.
In Dublin, a new trunk exchange opened in 1952 at St. Andrew Street, Dublin, has greatly facilitated trunk working and improved the service for Dublin subscribers. In the city and suburban area, new automatic exchanges have been established in Upper O'Connell Street, Finglas, Priory Park (Blackrock), Dundrum, Foxrock, Clondalkin—Tallaght, Sutton —Howth, and Whitehall and extensions have been carried out at all existing exchanges. Outside of Dublin, automatic exchanges have been provided at 21 places including Dundalk, Waterford, Athlone and Mullingar. In most of the larger provincial centres magneto switchboard equipment has been replaced by modern operating suites. Altogether over 530 extensions or renewals of switchboard equipment have been carried out at various exchanges.
Continuous 24-hour service has been introduced at 78 exchanges where the service was formerly restricted and the attendance at 305 other small exchanges has been increased by 14 hours weekly in each case. 97.5 per cent. of our subscribers now have continuous service.
The rural call office scheme for providing a telephone in every rural post office has been completed, apart from two offices which are in course of being provided. Although the use made of these telephones is, in most cases, small, they do provide a valuable means of communication in areas that would otherwise be isolated. In cities and towns, over 230 additional kiosks were provided during the period in question.
Although the number of telephones being installed is now greater than ever before, we still have a waiting list. It may well be asked why there should be such a list so long after the war, when most other shortages have disappeared. The first point to be noted is that the problem is not one peculiar to us. Most countries still have waiting applications for telephones, our nearest neighbour having no less than 360,000.
The difficulty in providing telephones everywhere promptly lies in the fundamental necessity to forecast for several years ahead what the likely requirements will be, to plan for exchange and underground cables, and to order the equipment and have it installed well in advance of the treatment of individual applications for telephone service. The experience in most countries has been that public demand for telephones has been outrunning the capacity of the telephone industry and administrations to meet it except after some delay.
In common with most organisations requiring staff for engineering and electronic work, we have found it difficult to recruit and retain an engineering staff sufficiently strong to expand the system at a rate sufficient to overtake demand which has now reached a level of about four times what it was immediately before the war.
Let me give some figures to show how steeply demand has been rising in the last few years. In 1954, the number of applications received was 16 per cent. greater than in 1953; the 1955 demand rate was 25 per cent. greater than in 1954; for the first five months of this year, it was some 17 per cent. over the corresponding figures for last year and about 44 per cent. greater than it was two years ago. The bulk of the increased demand is for private telephones. It is obvious that to cope with an increasing demand of this magnitude more staff is required and an increase in the rate of development entailing a substantial increase in the level of capital expenditure on the service. This brings me to the financial position of the service and to its capital needs for the next few years.
For many years past the telephone service has been run, on the whole, at a profit. In the current year, the margin of profit would virtually disappear if pre-July 1st charges were to remain unaltered. This is not surprising when it is considered that wages, costs of materials and total annual expenditure on the service are on average respectively about two and a half times, three and a half times and six times what they were in 1939. On the other hand, telephone rentals are only about 50 per cent. and call charges, as recently revised, about 66 per cent. overall greater than the 1939 rates. Our rates compare very favourably with those in other countries.
The small increases in rentals and call rates as compared with the much greater increases in money incomes have undoubtedly put telephones within the reach of people who could not afford them pre-war. Moreover, the great increase in residential building schemes, often at fairly considerable distances from main shopping centres and places of employment, has stimulated demand for private telephones.
This demand is welcome in so far as it indicates more telephone consciousness among our people and so long as we have the capital resources to satisfy it. Telephone development, however, requires heavy capital investment per subscriber. Apart from the subscriber's instrument and his individual pair of wires to the nearest exchange, the whole complex system of lines, cables and exchanges must be maintained and expanded in step with growth in subscribers' lines and call traffic if bottlenecks resulting in congestion and delays are to be avoided. The capital investment in the system has grown from £57 per telephone instrument in use in 1938-1939 to £125 in the past financial year.
In considering the future capital needs of the telephone service, we are faced with the unpleasant facts that capital is very scarce and that it is also abnormally dear. The funds for telephone capital development must be raised by the Exchequer which is unable to meet all the demands upon it for desirable capital expenditure. The needs of the telephone service must, therefore, be weighed against those of the other capital services which are also financed through the Exchequer, such as housing, sanitary services, hospitals, agricultural development, etc. As Minister responsible for the telephone service, I am, of course, concerned that its claims be given full weight.
On the other hand I do recognise that, since there is a serious shortage of capital, I cannot reasonably expect telephone development and particularly the extensive installation of private telephones, which now constitutes a very large part of the increased demand, to be regarded as of such overriding importance that the needs of the service should be met in full at the expense of the other capital services to which I have referred. After careful consideration, it has been decided, subject to the approval of the Oireachtas, to provide telephone capital funds for the next four years on the basis of the average rate of expenditure over the past few years, that is, at £1,500,000 a year. The present Bill is, accordingly, for £6,000,000.
The £6,000,000 will not be sufficient to meet completely, on the basis of recent demand, the anticipated needs of the service over the next few years. That is to say, we cannot go ahead to install all the subscribers' lines that could otherwise be provided, to undertake all the underground development schemes required in built-up areas to meet and anticipate application for telephones, to install all the exchange equipment we otherwise would to extend automatic working or to provide all the additional trunk lines we would endeavour to provide if there were no capital shortage.
The amount of work to be done under all these headings will be limited by the amount of money available and the works programme will have to be adjusted accordingly. New schemes that can be postponed without materially affecting the standard of service to subscribers will be postponed. Thus, manual exchanges will not be converted to automatic working if a reasonable standard of service can continue to be given on a manual basis. Ways and means will be sought of postponing other costly schemes, such as major trunk underground schemes.
Expenditure on the provision of plant for new subscribers will have to be related strictly to the amount of money available for the purpose. We shall have to do the best we can on a restricted programme based on a capital allocation of £1,500,000 a year commencing in the current financial year. Our efforts will be directed towards reducing and keeping the level of capital costs within this figure in a manner that will cause least inconvenience to all concerned. By and large, there should be no material variation in the volume of employment given.
The following programme indicates under broad headings how the £6,000,000 is likely to be spent. It is in rather general terms as it is important, if we are to make the best use of the limited money available, that there should be a considerable measure of flexibility in carrying it out:
Exchanges—new and extended (including buildings) |
£1,250,000 |
New automatic exchanges will be provided at Drogheda, Dublin, Sligo, Limerick, Galway, Longford, Naas and a number of other places. There will also be heavy expenditure on extensions of existing exchanges. Provision is being made for commencing the erection of a third trunk exchange at Dublin and for a satellite automatic exchange at Cork to relieve the existing exchanges. As I have already indicated, it is proposed to defer the planned conversion to automatic working of manual exchanges in cases where there is no compelling need for conversion.
Trunk Service |
£1,450,000 |
Additional equipment will be installed on the southern and northern trunk cables in order to maintain a sufficiency of circuits for no-delay working on these backbone routes. The trunk programme will include the installation of a considerable amount of carrier equipment and on shorter routes the erection of aerial cables and physical wires. The general aim will be to improve the standard of trunk service that obtains at present on routes where there are delays but assuming that trunk traffic will continue to increase at the rate realised in recent years, it is unlikely that, while capital shortage persists, it will be possible to get much nearer our long term objective of a no-delay system than we are at present. Indeed, it may not be possible to avoid a temporary deterioration of service on some routes.
Subscribers' Installations and Underground Development Work |
£3,300,000 |
It would be mistaken policy to devote an excessive amount of the limited capital available to subscribers' installations and associated work at the expense of exchange and trunk works. The result would be to create a need for additions to exchanges and additional trunk lines that could not be met—in other words, the intake of new subscribers would exceed the capacity of the system. The expenditure under this heading is therefore limited by the necessity of maintaining a balanced programme.
A large part of the expenditure will be on underground cabling schemes in the cities and larger towns but mostly in Dublin. The Dublin underground has posed one of the most difficult problems with which our engineers have had to deal. A complete recabling of the whole area has had to be undertaken and contractors have been employed to supplement the Department's own efforts. However, cable laying and jointing involves highly skilled work and takes a considerable amount of time. The main scheme has now been under way since 1954 and although it has been more than half completed, much still remains to be done, particularly in outlying suburban areas. Even if there were no financial difficulties it would be a considerable time before all areas could be reached, but the work will now take longer to complete because the necessity of keeping expenditure within certain limits compels us to reduce the amount of underground relief work which is at present being carried out.
Outside the larger centres, underground difficulties are not so serious but the capital cost of long rural lines per subscriber is disproportionately high and it may be necessary to restrict the amount of work of this kind which is undertaken. The number of new subscribers' lines connected is not expected to show any great variation from the numbers connected in former years but in view of the rising demand for service a bigger waiting list can hardly be avoided.
In short, the £6,000,000 will be used to meet all essential needs, to give a reasonable standard of service and to provide for a reasonable measure of development including the installation of approximately the same number of new subscribers' telephones as we have been installing in the past.
I do not think the House will have any hesitation in providing more money for telephone development. It is money well spent and, while I am sorry that more funds cannot be made available for the purpose, we in the Post Office cannot expect to be unaffected by the difficult financial situation in which the country finds itself.