He is a past master at headline grabbing. That 15-minute on peak call represents 3 per cent of total local calls. It was suggested that that was the average. The Deputy never denied that, never dissociated himself from the headlines. He knew from his own experience that to suggest that every local call takes place on peak and lasts 15 minutes was unrealistic. That is totally incorrect and has proven to be so. We heard also from the selective survey of an unrepresentative few hundred users back in August by the unrepresentative party now led by Deputy Harney that the bills of 97 per cent of domestic users would increase by an average of 28 per cent. We now know, admittedly based on limited but accurate information available at this stage from Telecom Éireann, that 46 per cent of domestic users have seen reductions in their bills. A further 42 per cent will see increases of less than 10 per cent on their bills for the September/October period. The reduction in volume was only 3 per cent in total, despite the scaremongering, and only 8 per cent for residential customers. This shows that ordinary people, although being careful, did not believe the central thrust of what was put forward by Deputy Noonan and others.
Also from that survey by the Progressive Democrats we were told that 80 per cent of small firms would face increases averaging 23 per cent. The reality from the data available at this stage is the complete opposite — 72 per cent of small businesses have experienced a reduction in their bills — again I emphasise as far as data currently available shows. These are facts, not fiction.
I now want to give the House an indication of my own thinking about the future of the telecommunications sector. I intend to take the necessary action to stimulate the development of this critically important sector without undue delay. I am predisposed to increased competition and to independent regulation; these two go hand-in-hand. I must also be mindful of the valuable assets and human resources which constitute Telecom Éireann and which are entrusted to my care on behalf of the taxpayers of this country.
My starting point is that top quality telecommunication services should be provided to those who require them on a secure but economically efficient basis at reasonable costs. It would be difficult to overstate the importance of success in this context.
We have come a long way in the past decade or more in equipping ourselves with a modern system; indeed we are ahead of many countries in this respect. But the rapid advance of technology leaves no room for clapping ourselves on the back. We must look forward.
It would be erroneous to think that there is no competition in the telecommunications business in this country. There has been considerable liberalisation already in the delivery of special services, in the provision of terminal equipment, in data transmission, in the provision of links between enterprises, in equipping procurement and of course there is effective competition in international traffic; in other words, in most areas apart from voice telephony. In June of this year the EC Council of Ministers decided to liberalise voice telephony within five years; there is a derogation for up to a further five years for some countries including Ireland. We cannot isolate ourselves from these developments. In fact these developments together with the pace of technological change in the sector mean that the traditional structure of the communications industry dominated by large monopolistic national companies is under assault and will have to change, because if it does not keep pace with developments it may well become irrelevant. We must control this change rather than let it control us.
It is clear that allowing increased competition is an important route to greater economic efficiency. It is also clear that independent regulation of the sector to ensure transparency and fairness is a necessary precondition to full competition. It should not be necessary for separate and competing infrastructure to be constructed where existing capacity is adequate. This means that co-operation and competition must co-exist and this can only happen if there is a neutral referee with adequate regulatory powers. I have already announced that the setting up of an independent regulatory authority is under urgent examination in my Department and, we are now examining this question with a view to having the appropriate structure identified and the necessary legislation prepared. As a first step, the relevant divisions of my Department have been reorganised so that the regulatory function can be operated separately from the functions which pertain exclusively to general policy formulation and to the shareholder role vis-à-vis Telecom Éireann. It is too soon in my consideration of this matter to be precise as to the role of the independent regulator but it will certainly encompass the oversight of fair competition between the market players having regard to the dominant position of Telecom Éireann and its ownership of the backbone infrastructure on the one hand and its universal service obligations on the other. The regulator would also have a role in relation to the general level of tariffs and quality of service in the context of seeing that competition is delivering the expected benefits.
It should be remembered that when there is only one big monopoly player the telecommunications business is fairly straightforward. As competition develops the complexities increase. When, for example, a mobile telephone user subscribing to a new competitor calls a fixed location Telecom Éireann customer, who gets what out of the revenue? In the opposite case, is the customer charged the normal tariff or the mobile telephone tariff which is much higher? Will new entrants to the telecommunications market be anxious to serve those areas where costs are higher? Telecom Éireann's exclusive privilege was conferred on it among other reasons "in view of its primary purpose of providing a national telecommunications service" and "because a viable national telecommunications system involves subsidisation of some loss making services by profit making services". I am quoting this from section 87 of the 1983 Postal and Telecommunications Services Act. This Bill would remove Telecom Éireann's ability to carry out these onerous duties which the Bill leaves intact, and at the same time — and this is another example of woolly thinking — confer these same duties on the director. This is a problem which will have to be addressed with great care. Ways must be found to spread the cost of the universal service obligation — which in my view should remain with Telecom Éireann — fairly throughout the whole market. I mention those issues only to underline the importance of the regulatory environment. Such issues are in contention in most countries and we can learn from their experiences. but we must allow ourselves the time window to do so.
I appreciate the need to sort out speedily the issues which collectively constitute telecommunications policy and I have started to put in place the departmental structures necessary to do so. I also am conscious that if I were to rush the fences and arrive at wrong answers as a consequence, I would be doing a major disservice to this nation.
I want to turn now to the question of Telecom Éireann and my role as shareholder. This State has invested very substantial sums of money through Telecom Éireann in providing an up-to-date digital telephone system. The staff of Telecom Éireann also contributed in no small way to this development. Despite well-known problems such as debt overhang, continued overstaffing and a heavy ongoing investment requirement, the company can have a bright future, but this will happen only if we face-up to the problems and take the necessary decisions. We cannot walk away from this investment, in the manner which would flow from the Bill before the House. Telecom Éireann is an organisation of value and we must work on enhancing that value, not undermining it. The recent rebalancing of the telephone tariff was one essential step in the process of strengthening the company and preparing it for the more competitive future. I want to repeat that it was an essential step but not an easy one. We took appropriate steps to alleviate worries in acute cases, for example, the free calls unit for beneficiaries of the free telephone rental allowance scheme, nationwide calls at weekends at local rates, the special provision by Telecom Éireann of assistance with freephone helpline facilities to the most critical helplines operating nationally and the instruction to Government Departments and agencies to provide efficient responses to telephone inquiries. I am examining a separate proposal to adjust the charges of leased lines so as to make them costrelated.
These are necessary steps towards preparing Telecom Éireann so that it can face competition with confidence. They are also rapidly putting in place a new cost accounting system to increase transparency and ensure a correct relationship between costs and tariffs in different segments of the business. This will also, of course, confine the scope for cross-subsidisation to those areas of the business where it is allowable as part of the universal service obligation. The subsidiaries and business units will have an arm's-length relationship with the parent and pay the going rate for services provided. I have been relating a set of measures which are preparing Telecom Éireann for the competitive future, introducing the appropriate type of regulatory framework and allowing the degree of competition to develop in step with developments in EC policy and in most of our partner countries. If and when these developments make it necessary or appropriate, I will bring forward the requisite legislation.
I will now turn to the Bill before the House. It would be contrary to the national interest, to the interest of Telecom Éireann and its staff and profligate in the extreme to abolish peremptorily the Telecom Éireann exclusive privilege with effect from a current date as is proposed in section 3. This would throw wide open the most profitable segments of the telecommunications business to a multitude of predators and put at risk our ability to provide a high quality universal service nationwide. I am not prepared to take this course and I do not believe this House is prepared to support it. On a technical point, Telecom Éireann's exclusive privilege is not, as the section describes it, one of "running a telecommunications system". That is a term borrowed from the UK's Telecommunications Act, 1984. As I said at the outset, much of the Bill seems to have derived its inspiration from that Act. There is nothing wrong with that but I should point out that the British Act is in seven parts and runs to over 100 sections and seven schedules. This is not surprising given the complexity of its purpose, but it is not good enough to tackle such an important task in the Irish context by lifting the most ideologically attractive sections, in some cases verbatim, and cobbling them together in isolation from consequential and supporting provisions.
It is wishful thinking to suggest that the director could, from day one, secure the delivery of this universal service, unless it were to be provided at the expense of the taxpayer by Telecom Éireann after it had lost the profitable end of the business.
There are many flaws in this Bill. They are so numerous that it would be extremely difficult to deal with them in any satisfactory way by amendments on Committee Stage. It would be far preferable for the House to leave me a clean sheet on which to write an appropriate Bill when it is needed.
Section 1 containing definitions is a confused piece of drafting. This may even be a generous description. It uses terminology like "Act" and "section" as if they were interchangeable, for example in subsections (2) and (3). Once again this is symptomatic of unstructured plagiarising of the UK Act. The section contains a tangled web of definitions which go all over the place. Definitions are normally contained in an Act to increase clarity. In this case, I am afraid, it is the exact opposite.
Section 2 dealing with the director looks at first glance to be pretty standard. However, it is curious that the Director of Telecommunications is to be a Government appointee but the Minister can sack him. The independence from the Minister of the director in the discharge of his functions is something to be taken seriously, as it is in the UK Act, for example by the clear separation of their respective functions. The section provides for the taxpayer to pick up the bill for the director and his office. If and when I move in the direction of a Telecommunications Regulatory Office, I intend that it will be a self-financing operation, charging for its services.
I have dealt earlier with the content of section 3 and I will not repeat my opposition to it.
I find section 4 difficult to understand and it appears badly flawed. It deals with the director's functions — I think. Subsections (1) and (2) set out things to be considered by the director in exercising his functions while subsection (3) seems to see those things as functions in themselves. The explanatory memorandum suggests the latter. This is simply bad draftsmanship.
If the latter is what is intended, then it would seem that some of the functions duplicate the work of the Industrial Development Authority and give the director a very wide remit indeed. This is not desirable. Subsection (4) is the most puzzling. The very idea of schedules of charges is anathema to competition. There is ample evidence in other economic sectors that the scheduling of charges serves as an invitation to operators to charge those charges leading to a failure of competition or worse a failure of the company concerned. There may, of course, be other functions associated with the regulation of the radio and telecommunications industry that could usefully be conferred on a regulator and I will take this into consideration when we come to assign functions to that office.
Sections 5, 6 and 7 are innocuous and deal with the further duties of the director.
Section 8 dealing with complaints about the telecommunications service is wideranging and general, but it could cut right across the role of the Director of Consumer Affairs and possibly that of the Ombudsman, both of whom are dealing with complaints in a satisfactory manner. I am not in favour of having separate consumer protection agencies for different sectors of the economy. This leads to proliferation, unnecessary cost and potential for inconsistency.
Section 9 dealing with licences is lifted from various parts of the 1983 Act and would not be contentious in the context of proper legislation for telecommunications. In relation to section 10, I cannot see what it adds to section 5 (3). The idea of making regulations appears for the first time in this section — without, alas, a general power to make them. The subject matter of section 10 (2) is already tightly regulated by national and international provisions regarding type approval.
Section 12 provides for a plethora of advisory committees. I counted no less than three mandatory advisory committees and there is scope for further optional ones. We all know that the Deputies opposite are seeking urgent ways of broadening their appeal, but I find it hard to believe that they are serious about this method of doing so. I might add that sections 12 and 13 give us a corresponding plethora of annual reports.
As I mentioned earlier, the proposer of this Bill has copied selectively and incoherently from the UK 1984 Act. I am pleased to note a curious twist from today's newspapers, where it is reported that British Telecom is following our example by introducing a nationwide weekend call at 10p, although in its case for only three minutes; not the ten minutes which we have given. This is a clear case of imitation being the sincerest form of flattery.
I am moving forward in a determined manner in the development of telecommunications policy. I have changed the relevant organisational structure in the Department to begin separating regulatory functions from other functions. We have settled the Telecom Éireann pricing package which was overdue, however unpalatable it might have been. Telecom Éireann was losing ground and its preexisting pricing arrangements left it very exposed to the loss of international traffic which, in turn, subsidised domestic traffic. It could not have faced the more competitive future unless this handicap was removed and that future competition is inevitable. Indeed, I expect to announce very shortly a tender competition for a second national operator in the mobile telephones business.
I am not prepared to take the drastic step of abolishing the Telecom Éireann monopoly in the peremptory fashion advocated in section 3 of the Bill before the House. Neither am I prepared to acquiesce in setting up a string of advisory committees appealing to every conceivable interest group in Irish society. I thought we had an end to that kind of appeasement some years ago. I set up one broadly representative Telephone Users' Advisory Group to provide independent monitoring of the effects of price changes, and that one group is quite enough.
In conclusion, I reiterate that it is far more responsible and reasonable to deal in facts, not fantasy, in relation to Telecom Éireann and its prices and their effects on consumers. The emerging facts speak for themselves. Indeed we should all stand back from that debate for a couple of months until the reaction to the price changes settles down and we can have meaningful information, cold analysis and especially the reports which will be made by the Telephone Users' Advisory Group which will be made public. I reiterate my outright condemnation of this Bill and trust in the good sense of Dáil Éireann to reject it.
