I move that the Bill be now read a Second Time.
This Bill is the tenth Telephone Capital Bill to come before Dáil Éireann since the transfer of services in 1922, and the fifth since the War. Its purpose is, briefly, to authorise the Minister for Finance to advance further moneys, up to a limit of £30 million, for continued development of the telephone service. The advances will be made as required over the next five years approximately.
Expenditure on the telephone service falls under two heads. Ordinary day-to-day operation and maintenance are paid for out of moneys voted annually by the Oireachtas under the Vote for the Department of Posts and Telegraphs. Extension and development, on the other hand, are covered by funds provided under Telephone Capital Acts.
These Acts empower the Minister for Finance to issue out of the Central Fund sums, not exceeding a fixed total, for development of the telephone service. The issues are made on foot of annual Capital Works Estimates 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. The moneys required for repayment of the sums borrowed are provided annually under sub-head G of the Post Office Vote.
The Telephone Capital Act, 1960, authorised the Minister for Finance to issue a total of £10 million for telephone development. This amount, together with a balance on hands from previous legislation, made some £10,805,000 available for expenditure. It was intended that this would last about five years. Owing to the rapid rise in the public demand for telephone service, however, the planned rate of expansion proved inadequate, and it was necessary to approve increased capital allocations each year. Expenditure during the three financial years ended 31st March last amounted to £8,250,000 leaving a balance of £2,555,000. This balance is insufficient to cover the capital programme for the current financial year which is estimated to cost £4½ million.
The amount of £8¼ million approximately which was spent in the last three financial years included some £4½ million for subscribers' lines and installations, over £1 million for exchanges, £2 million for trunk routes and the balance for buildings and stockholdings. During this period, 45,000 new subscribers' lines were connected to the system, 44,000 miles of new trunk circuits were added and over 230 kiosks were erected. These additions represented increases of 45 per cent, 70 per cent and 60 per cent respectively over the additions made in the three preceding years. Subscriber trunk dialling was extended to most of the major automatic exchanges and this facility is now available to 73 per cent of all subscribers. Additional cross-channel circuits were provided— we now have over 260 as against 24 in 1946—and direct transatlantic telephone circuits were established between this country and North America. During this period also a very considerable amount of engineering work developed on the telephone side of my Department in connection with the setting-up of the Irish television service.
The provision of the direct transatlantic circuits possibly merits special mention. Up to 1962 all our overseas telephone traffic was routed through and controlled at London. On 1st July, 1962, a direct route from Dublin to New York was established to carry traffic to North and South America, Canada and parts of Asia. Not only has revenue been sufficient to cover the annual charges, but a handsome surplus was shown in the first year of operation and an excellent standard of service was given. The number of circuits was increased last month from two to four. The additional circuits will enable an even speedier service to be given to the public and it is expected that revenue will continue to be more than sufficient to meet the rental charge.
The expansion and development of the service generally which I have briefly described was, of course, far greater than that achieved in any previous three year period and in normal circumstances my Department could point to it with some satisfaction. The circumstances in the past few years, however, were anything but normal. There was an unprecedented increase in demand for telephone service, as will be illustrated by the following figures. Applications for new telephones, which numbered 6,700 in 1953 and 10,600 in 1958, are expected to reach 16,500 in the current year. Between 1953 and 1958 the traffic rose from 92 million calls to 120 million, and it will be of the order of 178 million in 1963. This spectacular growth and the inability of the developing service to keep pace with it, resulted in enlarging the waiting list for telephones. A more serious consequence was that our trunk and exchange equipment became inadequate to cater satisfactorily for traffic during peak working hours.
These deficiencies became most apparent during the Summer of 1963, when delays in effecting calls were common on many routes, and when even the automatic system suffered serious congestion at times. These deficiencies did not grow overnight, however, and their causes were many. The principal cause was the severe shortage of capital during the 1950's, when the telephone service was afforded a low priority in the allocation of the limited finance available. Development planning was therefore necessarily restricted to short term measures, sufficient to keep the service going rather than to cater adequately for growth and maintain necessary reserves of plant. The consequent depression of spare capacity of lines and equipment coincided with the steep rise in public demand which I have outlined.
Long-term planning, and expansion of plant in advance of actual need, are especially vital in the telephone service. The provision of a large auto manual exchange involves years of work in acquiring a suitable site, erecting a building and installing equipment and necessary outlets to other centres. Moreover, trunk and local cables have to be ordered many years ahead to ensure that necessary spare circuits will be available when required by people who, when this planning should be taking place, may be a long way even from thinking of setting up their homes. It is possible by short-term planning and by using up existing spare equipment without replacing it, to keep capital costs at a low level for a time, but unless public demand falls off—an unlikely contingency at the present stage in this country—a situation eventually develops in which there is a major hold-up on all fronts. This situation was encountered last summer when peak public demand high-lighted the shortage of trunk circuits and exchange equipment. As a result subscribers experienced irritating delays and difficulties in completing calls.
Another general cause of complaint during the summer months was delay in securing a reply from exchanges, and particularly from Dublin trunk exchanges. The equipment shortages to which I have referred and the difficulties which they created led to an immense spate of calls to the trunk exchanges from subscribes who experienced problems in dialling their own calls. Not merely did this enormously increase the load of calls reaching operators, but the operators themselves, to whom I wish to pay special tribute for their untiring and patient efforts, had the same difficulties as subscribers in completing calls through the overloaded network.
The explanations I have given for failure to give a sufficiently satisfactory service in 1963 would be misleading if I did not add that by no means all subscribers had trouble with calls and the best proof that the needs of the public were met in very large part is the fact that the record number of 175 million calls were effected during the past year. The vast majority of these calls were made without trouble or delay. It is estimated that in the case even of calls controlled by operators, which are obviously the most difficult section of the traffic handled, more than two out of every three were connected without any delay and more than four out of every five within 15 minutes. Naturally, my Department is not satisfied with the standard recorded in these figures, and will spare no effort to improve it, but the factual picture which they give is far more favourable than the general impression which many people may have formed of the state of the telephone service.
I have mentioned capital starvation over the years and the huge increase in public demand as the principal reasons for the defects that exist in the telephone service. There were other factors also that hampered the Department in its efforts to make timely provision for necessary expansion of the system. Delivery terms for telephone equipment became longer and more uncertain. At the same time, industrial expansion at home and abroad created a tremendous demand for skilled personnel, especially in the field of electrical engineering, and my Department was in consequence unable to recruit engineers in the numbers desired.
I have considered it necessary to cover the past in some detail but my real concern is, of course, with the future.
My Department is now faced with the task of bringing the telephone service up to a satisfactory standard in the shortest possible time, and of establishing adequate reserves of plant capacity to cater for future growth. In order to give the House a general picture of the amount of work involved in this, I should explain that up to 1963, apart from the main co-axial routes connecting Dublin, Cork, Limerick, Waterford and Dundalk and Sligo two radio links and a few short runs of cable, the service was dependent on open wire circuiting. Plans were laid in 1959, 1960 and 1961, which are now maturing, for the bringing into service of high capacity underground cable and radio links to serve Dublin-Wicklow-Arklow, Waterford-Clonmel, Waterford-Wexford-Enniscorthy, Carlow-Athy-Portlaoise, Limerick-Rathkeale-Tralee-Killarney-Listowel and Limerick-Athlone-Galway. These schemes range in cost from about £100,000 to £250,000 each.
Further plans for which contracts are at the moment under consideration include co-axial routes from Dublin to Ceannanus Mór, from Cork to Bandon, Cork to Youghal and Limerick to Tipperary. Other trunk schemes approved and in hand amount to some £2 million and schemes approved in principle will come to about a similar sum. Examples of the increased circuiting provided in schemes recently completed or approaching completion are Dublin-Arklow, 100 per cent increase; Waterford-Clonmel, 100 per cent increase; and Limerick-Tralee, 200 per cent increase.
All the additional circuiting to which I have referred as recently provided or due to be provided shortly, was planned and ordered a considerable time ago, and major projects now in the planning and design stages will not mature in the form of working circuits for several years. This is something which my Department cannot control. As I have said on several occasions the design, procurement and installation of this sort of equipment is an extremely slow business. Of the orders for stores and works which are at present with contractors for execution more than 2¾ million pounds worth are outstanding for more than a year, 1½ million pounds worth over two years and £185,000 worth over three years.
The £30 million capital expenditure provided for under the Bill now before the House represents our estimate of the cost of the works programme which it is hoped to carry out in the next five years or so. It is an ambitious programme, which will cost almost as much as has been spent on telephone development since the foundation of the State.
It envisages the following main tasks: the connection of 115,000 new subscribers' lines, the conversion of some hundreds of manually-operated exchanges to automatic working, the opening of an auxiliary trunk exchange in Dublin, the erection of 600 street kiosks, and the expansion of trunk circuiting in order to overtake arrears, to establish a no-delay service and to cater for expansion. It also includes the provision of a new cross channel link.
In round figures the principal expenditure heads will be: £16¼ million on subscribers' exchange lines and apparatus, £7½ million on trunk circuits, £4¾ million on equipment of new exchanges and extension of existing exchanges, £1 million on buildings and £½ a million on increased stock-holdings.
This brief listing of the objectives of the programme naturally gives no picture of the magnitude of the problems to be overcome in order to achieve them. The hundreds of new exchanges required involve the acquisition of sites, each of which must for technical reasons be selected within a restricted area, and the design and erection of buildings. Cables for subscribers' circuits must be laid throughout the length and breadth of the country and each cable must be designed throughout its whole course to give the number of circuits estimated to be needed by future subscribers. The most skilled engineering planning is involved in provision of trunk needs. Technical possibilities are constantly changing in this field and in order to get satisfactory results our engineers must keep abreast of all modern developments that might suit our requirements and conditions.
Many Deputies will be aware that while some years ago all telephone circuits consisted of pairs of wires erected on poles, later developments enabled equipment to be fitted to these wires which multiplied the speech channels. Later still, our main backbone trunk network was laid in underground cables equipped to give hundreds of speech channels. In recent years the circuits on shorter distance routes have been provided in cables, both aerial and underground. In the cross-channel service the number of circuits was multiplied many times over by fitting newly-designed submarine repeaters, of which those Deputies who visited the recent Scientific Exhibition at the RDS will have seen an example. More recently still, the development of micro-wave links which have been used on the Athlone-Galway and other routes has opened up new possibilities and they are likely to be used extensively in future on many routes which hitherto would have had to be served by underground cable. The types of automatic exchanges becoming available have also shown radical developments and more can be expected.
From the outline I have given of the works programme ahead, it will be clear that substantial increases in engineering staff will be needed. To ensure that the necessary quotas of trained personnel will be available in the different grades is one of the major problems confronting the Department. There is a general international shortage of electrical engineers and we have been unable in the past to get all those we need, although I may say that in our efforts to recruit them we have cut formalities to the absolute minimum. It is, of course, possible that the recruitment situation may improve but we cannot count on this or defer other action in hopes of it.
We have examined, therefore, what can be done to ensure that development will not be impeded by shortage of engineers.
As a first step it was decided recently to set up a new sub-professional grade in the Department to take over some of the routine work at present done by professional engineers and release them for the higher technical work which is more properly their task and for which they are qualified. The relief that can be provided in this way is, of course, limited. In addition, therefore, it has been decided in principle to introduce a scheme of scholarships whereby a number of young men will be selected annually to attend full-time day courses of study to enable them to acquire professional engineering qualifications. Some of the scholarships will be offered for competition among serving sub-professional staff while the remainder will be offered for competition among Secondary School Leaving Certificate holders.
This scheme will not, of course, bear fruit for some years and in the meantime the Department will adopt whatever practical short-term expedients are open to it to meet the situation. In particular, it is hoped by giving out as much work as possible to contractors to reduce in some degree the pressure on the Department's own staff resources and the possibility is not excluded of giving part of the work of planning as well as execution of major jobs to contractors. Despite these various measures we must face the possibility that shortage of professional engineers may in some degree hamper progress. At the workman level we have been building up the force steadily and the Estimate provision of 2,860 for the current year is 50 per cent greater than that of five years ago. Much still remains to be done, however, and special action has been taken to step up the rate of intake especially of youths to be trained for the skilled grades, and to intensify training. I am happy to say that we have received very full co-operation from vocational education committees in providing the additional courses which the increased intake necessitates and we are deeply grateful for this.
As a five year period is needed to bring the service to the desired state of efficiency and to cater fully for traffic and for persons requiring telephones, Deputies will appreciate that in the earlier years of that period all demands on the service cannot be met in full. The most urgent item in the development programme is to expand the trunk network which suffered more than any other part of the system from the capital restrictions of the past. I have directed my Department to give special priority to this work, even though the connection of new telephones for a large number of applicants will have to be deferred in consequence. I am fully satisfied that this is the proper course to follow in present circumstances. It will be an unpopular course, but it is the only one that offers a reasonable prospect of eliminating quickly the possibility of conditions of congestion such as occurred in many sections of the network during the summer months of 1963.
I feel that Deputies generally will acknowledge the prudence of this decision, but I would like them also to accept the implications of it, which are that the waiting list in many areas will continue to grow for some time ahead. I cannot usefully say how long this will go on but according as essential works are completed from district to district, it will be possible to resume the connection of individual subscribers.
On the same subject, I should like to emphasise that my direction to concentrate intensively on trunk work will affect some applications for telephone service which, on the basis of earlier policy, would have been met within the next few months. Many of these applicants were advised of their prospects at the time and will now be disappointed to learn that they will have to wait somewhat longer. It is with great regret that I find that the general situation which has developed has made it impossible to fulfil the hopes held out to these people originally. I hope they will be induced to be as patient as possible by the assurance which I now give that there will be no avoidable delay in giving them service. The planned programme I have been describing will, when under way, enable the waiting list to be rapidly reduced.
Completion of the programme is going to tax the capacity of the Department to the limit. I do not wish to leave anyone in any doubt about this. On the other hand, as I have explained, much work has already been done in advance of this Bill in the way of planning and ordering the equipment needed for the programme. The work to be done in the remainder of this year, and next year, and indeed even further ahead depends in large degree on decisions already taken and orders already placed. Delivery dates of some specially engineered equipment may be as long as three years. For new exchanges to be provided in future years we have already acquired 37 sites, we are in active negotiation for acquisition of another 27 sites and a further 34 sites have been selected for acquisition.
Moreover, 41 buildings for major exchanges are already completed or in course of erection or are at the planning stage. In Dublin, a new main stores headquarters building is at the tender stage which will enable the most efficient stores handling methods to be introduced and plans are advanced for centralisation of engineering staffs at present scattered in buildings throughout the city.
I would like to say a word about the financial position of the telephone service. In the commercial accounts prepared in respect of each financial year, the revenue earned by the telephone service is shown as income. Against this is charged expenditure incurred on the operation and maintenance of the service, interest on the total capital employed, and the provision in respect of depreciation and superannuation. Having provided for these charges the telephone service heretofore has shown a surplus of income over expenditure and has never involved any levy on the taxpayer. If the existing rate of return on capital is maintained over the period covered by the Telephone Capital Bill, the telephone service will, over the same period, have contributed over £11 million from its own resources by way of depreciation provision and surplus revenue, and will in addition have contributed £9.25 million approximately to the Exchequer by way of interest on capital, thus substantially reducing the net draw on the Exchequer towards meeting the capital outlay provided for in this Bill.
In conclusion, I may sum up by saying that the task we are setting ourselves is a difficult one but difficulties are there to be overcome and we shall overcome them in one way or another. Our ultimate aim is to have a fully automatic service and a reserve of plant and equipment that will enable new subscribers to be given telephones on demand and all calls to be connected without delay. The present programme will not carry us as far as this but it aims at eliminating the waiting list and providing a thoroughly satisfactory call service. If we succeed in this programme, and I have no doubt we shall, this capital sum will have been well spent. The day is gone when the telephone was a luxury service. An adequate communications system is now an essential requirement for the expansion of all business activities and my Department is aware of the contribution it must make towards facilitating the many forms of public development on which the country depends, not to mention social activity and the convenience of individuals. The moneys to be provided under this Bill will enable these responsibilities to be met and I recommend the Bill to the House for approval.