Dáil Éireann díospóireacht -
Thursday, 3 Oct 1996

Vol. 469 No. 4

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

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

Mr. Morley

In my contribution last week I outlined what I saw as the faults in the Bill. When the debate adjourned I was dealing with the office of the director of telecommunications regulation. It is proposed that the director will be a full-time civil servant within the Civil Service appointed by the Minister with the approval of the Minister for Finance. It will be an independent office and the officer will be independent in the performance of his or her functions. Those functions relate to the licensing of apparatus for wireless telegraphy, broadcasting stations, telecommunications services and television retransmission services.

I want to focus on the retransmission of television services, particularly the so-called deflector system currently operating in many parts of the country. For the following reasons I hope the Minister will deal with this aspect of the business before appointing any director of telecommunications regulation. The programme for Government specifically states that "the Government will seek to allow competition between community television deflector systems and existing MMDS franchise holders". The decision given in the Cork case clearly stated that there was an obligation on the Government to have the possibility of licensing deflector systems fairly and impartially considered and that it was incorrect to give the monopoly to any one system, as was done in relation to MMDS at the time, without giving fair and open consideration to the other systems. There was a specific commitment given in Cork by the Taoiseach on this matter.

Clearly, a policy decision is needed here, and policy making is not the function of a civil servant. The Government should, therefore, act swiftly and fairly and deal with the many applications for licensing from deflector groups. It is most unfair to have community groups who operate those systems on a nonprofit making basis, with no financial resources, threatened with court action by large commercial companies who have a vested interest in this subject in the face of Government failure to comply with the High Court decision directing the Minister to examine their case for licensing and the Government's clear commitment in this regard. Perhaps it is the intention of the Government to direct the Director of Telecommunications Regulation to license deflector systems. If so, I would be glad to hear it, and the Government should make the appropriate announcement immediately and take all those community groups facing court action out of their pain. If it is the Government's intention to throw the responsibility entirely on the Director of Telecommunications Regulation, such a course of action squares neither with its own stated commitment on this matter nor with the community's expectations so assiduously fostered by members of the Government when they were in Opposition.

Mr. J. O'Keeffe

I cannot but comment on Deputy Morley's remark about community TV. I recall the monopoly licences granted by the Fianna Fáil Minister for Communications at the time, Deputy Ray Burke, in 1989 over my protests and my efforts since then to ensure that fairness and justice would apply in regard to community TV.

Éamon Ó Cuív

That proposal was originally adopted by Deputy Jim Mitchell and subsequently adopted by Fianna Fáil.

Mr. J. O'Keeffe

Licences were granted by Deputy Ray Burke, then Minister for Communications, in 1989, despite my protests and mine was a lone voice at the time on the issue. The complex legal and technical difficulties now arising are being tackled but we had to take into account the residue of that monopoly created by a Fianna Fáil Government. I continue to hope that a resolution can be found to these complex issues.

Before coming to the general issues of the Bill I would like to speak on the major technological revolution arising out of which telecommunications will have an increasingly important role to play in all aspects of modern society, particularly rural society. I am convinced that the problems of peripherality can be minimised, if not entirely resolved, as a result of these developments in technology. However, these problems of peripherality will not be dealt with unless the cost discrimination which exists at present is removed. This discrimination arises from the fact that rural Ireland is, in effect, subsidising the phone system through the payment of substantially higher charges for trunk calls. As a consequence, business costs are substantially higher in country areas. That makes a mockery of the "save the west" and other such campaigns — I notice my namesake and colleague on the Fianna Fáil benches nodding in agreement. A very necessary instrument of regional policy should be the standardisation, where possible, of the costs of essential goods and services across the country. A unit of electricity or a bottle of beer costs the same in Ballydehob as in Ballyfermot. Why, then, does it cost ten times as much for the resident of Ballydehob to phone a Government Department as it costs the resident of Ballyfermot? The same applies to the cost of a call to a hospital in Dublin, a business supplier or anyone else in Dublin. This is a legitimate question in the context of this Bill. Let me bring it further. Why does it cost the same citizen from Ballydehob three times as much to phone County Hall in Cork as it costs somebody from Cork city. The same applies to all other business and social calls. People in rural areas are charged a penal levy by having to pay trunk call rather than local call charges.

I will come to what I believe is the solution to that problem. It is clear that the cost of telecommunications services will be more and more influential in the future in determining the economic vitality of a region. We are in the early stages of a revolution in the way people use telecommunications channels. Looking ahead, there will be four main areas of use — the phone, the fax, electronic mail and electronic access to information sources. Growth in the last two will be enormous. Voice telephony could be a relatively small part of the total telecommunications usage within ten to 20 years.

When it comes to the cost of essential services and goods in peripheral areas there are both direct and indirect effects. Higher costs associated with telecommunications will deter businesses of all kinds from setting up and expanding. They also affect the quality of life in a region which, in turn, affects the economic and social vitality of a place. Accordingly, if we are to have a true regional policy, and if we are to make a solid impact on the problems associated with peripherality, telecommunications is the key. Cost structures must be levelled throughout the country and the ridiculous cost penalty which now exists, whereby those who live, work or holiday in rural Ireland are charged a premium, must be ended.

As a first stage, arrangements must be put in place to ensure that all county areas can make contact with their county town or city at local call rate. In west Cork we have the ridiculous situation whereby callers from Skibbereen, Bantry and Castletownbere are charged trunk call rates to contact Cork city.

The next immediate step should be to ensure that all persons contacting Government Departments can do so at local call rates. It very much adds to the sense of discrimination that arrangements have been put in place over recent years whereby callers from Dublin to a decentralised office in Cork city, Sligo, or elsewhere can call for the price of a local call. However, the caller from Ballydehob ringing a Government Department is charged trunk call rate. That is unfair and unjust. An arrangement must be put in place whereby callers from anywhere in the country to any local government office are charged local call rates. The problem will not be finally resolved until there is one flat rate for the country.

We already have it for Eircell. It is cheaper to ring County Donegal from west Cork on an Eircell telephone. By having one local call area, this discrimination against rural areas will be eliminated. The time has come to end the ridiculous subsidy rural dwellers are expected to pay for use of the telephone service. Only when this discrimination has ceased will there be the reasonable prospect of encouraging the development of service based industries and business in rural Ireland. In many ways, the development of that sector may be the solution to the problem of rural depopulation provided that cost penalty is removed. It has been done elsewhere.

Let us look at examples in other countries, such as the US where there are many remote areas, and compare what has happened over the years. The factors that affect remote areas are telecommunications, transport and energy. Regulatory authorities for transport were set up in the US as far back as the 1880s, for energy around 1915 and for telecommunications in the 1920s. Rules were laid down on standardised costs and they have been taken for granted ever since. The US approach has always been to facilitate areas which have not had economic development. There was a keenness to encourage development in those areas and the consequence has been that the least likely states, and the least likely parts of other states, have been the beneficiaries of exceptional development. Why can we not do that here?

We are great believers in European regional policy. I spent five or six years pleading the cause in Brussels and I continue to be all in favour of it. It has contributed to Ireland's financial well being. However, you cannot be an angel outside and a devil at home. We must be genuinely convinced of the need for a true regional policy in Ireland and no government in my time in this House has reflected on the need to put in place a regional policy which will ensure that the benefits of economic development are spread throughout the country. Due to the developments in telecommunications, this is becoming more important. If we follow what we say in Europe and implement it at home, we will have the beginnings, at long last, of a solution to the problems of remoteness and peripherality of rural Ireland.

I am delighted with the Bill. I am all in favour of competition. Again, from the point of view of the future development of the nation, there must be competition. It will happen anyhow so let us be ready for it. The Department and Telecom Éireann have brought enormous benefits to the country. There was a time when we did not have the technology or resources and had to rely on the State or a semi-State body to provide public utilities. They did so although they were limited by a number of factors. The Ceann Comhairle was complimented earlier on the time he spent in the Dáil. When I was first elected to the House one of the main requests I received from constituents was that I use my influence to get them a telephone. People were waiting 12 months, two, ten, or 15 years for the privilege of being connected to the telephone service. While that is no longer the case, the EU average is one out of two houses are connected but only one out of three Irish houses are connected. I am sure many of those without telephones are in rural Ireland where there is perhaps a greater need. There is still great scope for further development. I hope the changes taking place will facilitate further investment and development and that the technology which is now available will help to ensure Ireland is brought up to at least the EU average in the shortest possible time.

There is competition at all levels and in every part of the world. Ireland is no exception. As a result, competition will be the key and the customer will be king. It is important that Telecom Éireann, which has rendered such great service to this country, be in shape to cope with that competition and that is why the strategic alliance makes much sense. In so far as it will be in a very dominant position, I am glad there will continue to be State control. I am anti-monopoly generally but a private monopoly is worse than a State one. Therefore, I am glad the State will retain a majority holding and I want that to continue for as long as Telecom Éireann enjoys a dominant position in the Irish market.

This brings me to the question of worker directors which was raised by the CWU. An explanation has been given in this regard that the strategic partner, the KPN Telia consortium, which is buying 35 per cent must be represented on the board and that makes sense. Obviously, one does not want an overloaded board and consequently the number of worker directors will be reduced from four to two. The State, which has a majority shareholding, will have seven board members, the strategic partner will have three and there will be two worker directors.

I understand the points raised by the workers and the CWU in particular. I am a great believer in profit-sharing and worker ownership. I believe there is scope for investment by workers in the company whether by way of direct investment or redirection of salary over a number of years so the workers will acquire a share in the company. In that situation, one could have the view that such a shareholding of itself should lead to another directorship. In the same way as the strategic partners get three directors for their shareholding, is there any reason the workers, as shareholders, should not have some entitlement to an additional director? That might resolve the problem and should be considered.

I mentioned changes in technology and it is clearly only beginning. I see that Bill Gates, who is probably the richest man in the world at present, is hardly 40 years of age. The enormous success he has had with Microsoft is mind-boggling but I notice he has a 24 year old competitor, Mark Andriessen, who together with some friends has founded Netscape. He is introducing innovation virtually on a daily basis in his firm. In an interview he was asked about the future and what he hoped to do for the rest of his life. He said he could not even think about that; it was taking him all his time to get through his twenties. That is the pace of technological change and it will continue. It is important that we keep up, as far as we can, with those changes and it is particularly important that Telecom Éireann, because of its unique and dominant position in the Irish market, is put in a position where it can do so. That is why this Bill is timely and why I am enthusiastic about it.

I wish to refer to the question of the derogation and full competition. Normally we would have full competition on 1 January 1998. After some negotiation the normal reaction, whether it has to do with life assurance or anything else, has been to derogate as far as we can. We could have had a five-year derogation but I am delighted we are not going to avail of that five-year term. I would be equally happy if we were not going to derogate. As of now the decision to have full open competition by 1 January 2000 is the right decision unless there is any reason to shorten it. I am delighted we did not go for the full five years. My inclination would be to have no derogation but if there has to be one it should be as short as possible. Perhaps that deadline is the best in the circumstances.

Overall I am very much in favour of this Bill. We can endorse its provisions enthusiastically. In recent years Telecom has shown it can rise to the challenge and I have no doubt it can rise to the further challenges that will emerge in the future. I commend this Bill to the House. I commend also the point I made in relation to the level playing pitch for rural Ireland. I hope in the years to come we adopt a regional policy which will allow a level playing pitch for everybody no matter where they live.

Éamon Ó Cuív

I was interested to hear what the Deputy had to say regarding charges. He said much that I have been saying for many years on this issue. However, I am disappointed the Deputy did not propose amendments in relation to the powers of the director under section 7 of the proposed Bill. Unless we put an obligation on the director in fixing tariffs to ensure equity for all citizens we are handing away power. We can shout forever but we will have no power to change anything. That section of the Bill is deficient. It will not address the problem of the inequitable way in which telecommunications are charged for.

The original argument in favour of trunk call charges was based on the argument that it was more expensive for the provider — being the Department of Posts and Telegraphs and subsequently Telecom — to provide the service because it was using a manual system. With modern infrastructure it is as cheap for Telecom Éireann to provide a service from Cork to Dublin as it is to provide a local service, yet we persist in charging by distance rather than time duration.

A small number of examples highlight what the previous Deputy has said. We still have some exchange areas or group charge areas which have as few as 10,000 local subscribers, while the 01 area has 600,000 subscribers available at a local call charge. In many areas a phone call to one's county town or county council business is still a trunk call. Deputy O'Keeffe mentioned places in Cork. I could mention places in Galway. A call from Ballinasloe to Galway city is still a trunk call. In terms of cost this means if you telephone during the day on what is termed an A rate trunk call you will pay three times more for your three minute call then you would pay in the local call area. If you telephone a friend at night and spend 15 minutes on the phone you will pay nine times the cost you would pay if you were in the local charge area. However, if you need to telephone a Government Department during the day in Sligo, Longford, Letterkenny or Dublin from Cork, Limerick, Galway or Waterford the call is five times dearer. If you have reason to make a 15 minute call at night outside that area you are paying 18 times for 15 minutes what you would pay in a local call area.

Great play has been made about competition but it only works if there is not cartelism. In other words, the danger with the competition we will have because of the weakness of this Bill is that with which we are familiar when we go to change a few bob in a bank. Each bank will charge £2.50 even if you are changing only £10 through an ATM machine in the airport. We can have the same kind of competition here. The competition will be on the basis that those who are creaming it off will continue to cream it off. Let us enter into a friendly competition in the areas of maximum distribution of population.

It is interesting to compare the cost of telephoning Britain with making an internal trunk call. In the evening time you can telephone Britain for 24p a minute while a trunk call during the day to Limerick or Cork costs 22p per minute, a difference of only 2p. When we compare the day time charges to Britain at 29p per minute with internal charges at 22p per minute it is obvious that international competition has reduced the international charges but there has not been a consequent reduction in internal charges.

Since I took up this complaint about ten years ago there have been changes. For example some of the trunk call areas were changed and my own area benefited substantially in that we got a local call to Galway city. Other areas were not so fortunate. While there has been a reduction in the C rate to a B rate, for some reason in latter times Telecom Éireann has decided not to proceed further. What we need to write into this Bill is the ultimate goal to which the Deputy referred that is that all internal calls would be charged at the same rate for the same time, as on the Eircell system. Telephone calls from Dublin to Galway and Cork to Derry would cost the same. That is the logical way to go because the cost to Telecom Éireann of making the call when all the infrastructure is in place is the same. A number of phases have to be taken to get there. The first and most urgent is that the A rate trunk call should be made a local call, in other words all A rate trunk calls would become local calls immediately. That would be a great advantage for many people. At the same time the B rate trunk call should be made an A rate trunk call. That would be the first step in the right direction. A second step which could be taken relates to weekend calls.

While the weekend rate for trunk calls has been of great benefit to people in rural areas the time should be extended from ten to 15 minutes during off-peak periods. The reduced rate for trunk calls should not be confined only to Saturday and Sunday but should apply also from 10 p.m. to 8 a.m. on weekdays. These changes, which could be introduced immediately, would be a step in the right direction. It would then be possible to begin introducing a local call rate throughout the Thirty-two Counties, as already applies for weekend calls. I do not understand why we, as legislators, should not insist on this being done when we are being given the power to do so under the Bill. All telecommunications suppliers should be given a certain period within which to provide services on a Thirty-two County basis at a uniform cost. If we are serious about rural development and equity — and I certainly am — we should include a provision to this effect in the Bill and not leave this decision to the goodwill of people outside the House who might not hold the same view as us.

As someone who has been involved in rural development for many years, I have always said I would swap many of the Mickey Mouse grants offered by the numerous agencies for fair play on the issue of costs. I am a rural Deputy and the telephone bill for my office, home and Eircell amounts to approximately £6,000 per annum. I doubt any of my urban colleagues pay anything like that amount. All rural Deputies with constituency offices pay similar telephone charges to me. This indicates the scale of the problem, and unless we avail of the opportunity to include in the Bill a provision dealing with it, we will have lost the best opportunity we will ever have had to nail it down once and for all. Will the Minister consider putting down an amendment which will ensure uniformity in terms of cost? Given the size of the problem, the provisions dealing with capping are irrelevant. Increases in charges cannot be higher than the CPI but the company can persist with a system which is more relevant to the 19th century than to the latter part of the 20th century. For example, people can communicate with America on the internet for the price of a local call but they still have to pay trunk call rates for telephone calls between Cork and Dublin, Galway and Dublin etc.

The Bill states that the director shall be independent in the exercise of his or her functions. Of whom will he or she be independent? This seems to be the route we are taking in all legislation. The director will be independent and can do what he or she wants within the minimalist controls proposed in section 7. The director should be answerable to this House or the Minister and we should retain the power to direct him or her in certain fundamental directions. None of us is interested in fixing tariffs on a day-to-day basis but we have an interest in ensuring that the general policy pursued by the director as telecommunications evolve is in accordance with the wishes of the Members of the House. I would find it very difficult to agree a provision which states that the director shall be independent and not answerable to anybody, including the Members of the Houses of the Oireachtas.

Many Deputies referred to worker directors who have provided a very good service within publicly owned companies. Proposals have been put forward on how section 10, as proposed, could be amended. These proposals should be looked at seriously and we should not do anything to undermine the position of worker directors in these companies. During a time of rapid change it is very important that worker directors at all levels are represented at the board table. Given the multiplicity of unions, there are difficulties with the proposal in the Bill. Change can only be brought about with the goodwill of the workers. More and more people are beginning to realise that workers are a fundamental part of a company and that they become an asset only when they have a positive involvement in changes which need to be made. There will be huge changes in the telecommunications sector and the flexibility and goodwill of the workers will be necessary to keep up with competition. The Bill does not address this issue and I hope amendments will be tabled on Committee Stage to deal with it.

Other Deputies referred to the deflector system. The technology in communications, telecommunications, television communications etc. is changing rapidly and it is time this issue was dealt with. MMDS has not proved a successful solution to multi-channel television and has not been able to provide a service in areas serviced by the deflector system. Those of us who live in hilly areas know that MMDS is a non-starter — it is expensive, inefficient and not suitable. Given the developments in technology, the old arguments about using up bands etc. are no longer used. We are told the introduction of digital technology will make it possible to provide an unlimited number of channels in every country. This issue should be looked at again and the deflector system should be legalised. I understand that problems have arisen in relation to commitments given to MMDS companies and it is a pity these commitments were given. While a particular Government was not responsible for this, we must grasp the nettle and deal with the issue in a proactive and positive way. The problem will not go away as those people who do not enjoy access to multi-channel television would like to have access to it. I welcome the establishment of Teilifís na Gaeilge but I also believe people in rural areas should have access to the channels available in other areas.

Tá an Bille seo lochtach ar go leor bealach. Ní dhíríonn sé ar na fadhbanna a bhaineann le cúrsaí telechumarsáide sá tir, go mór-mhór nuair atá an-chaint ann go mbeidh iomaíocht i dtéarmaí telechumarsáide de. Níl soláthar ceart don iomaíocht sin sa Bhille seo. Ar ndóigh, ní iomaíocht sa chiall is fearr a bheidh ann ach is é a gheobhaimid ná cartels deasa a chuirfidh seirbhís thar chuimse ar fáil san ceantair is láidre ó thaobh daonra de agus fágfar na ceantair tuaithe ar an ngann-chuid mar a fhágtar i gcomhnaí iad.

Muna ndéanfar an Bille seo a láidriú beidh deis íontach chun seirbhísí cothroma cearta a chur ar fail do phobal na tíre uiligh curtha amú. Iarraim ar an Aire breathnú arís ar an mBille seo agus a chinntiú go mbeidh cothrom na féinne le fáil ag gach duine sa tír nuair a thiocfaidh sé chun seirbhísí telechumarsáide a chur ar fáil.

Muna ndéanfar sin níl ann ach amad-aíocht a bheith ag ceapadh Airí le breathnú amach d'iarthar na tíre nó do na hoileáin mar ag deireadh an lae is é an t-easnamh is mó sna ceantair sin ná easnamh bun-seirbhísí. Ní dhéanfaidh deontais bheaga nó scéimeanna beaga aon mhaitheas muna mbíonn na bunseirbhísí ar fáil ag muintir na tíre uilig.

Mr. S. Kenny

I welcome the opportunity to speak on this important legislation which will serve to protect and enhance one of the most vital parts of the semi-State sector. The purpose of the Bill is twofold: to provide for the establishment of an independent regulator for the telecommunications industry and to allow the sale of equity in Telecom Éireann which will, in turn, permit the formation of the equity based strategic alliance with KPN-Telia.

In the course of the last decade we have witnessed the most revolutionary and innovative change in telecommunications this century. For many people, including Members of this House, the mobile telephone has become a vital tool without which it is almost impossible to function. In addition, the advent of the internet has redrawn the boundaries of communications worldwide. This revolution shows no sign of slowing down and the tremendous change has resulted in many companies entering the marketplace to provide new and important communications service.

The main purpose of this legislation is to establish an office of director of telecommunications regulations. It provides for the transfer to the director of the functions of the Minister for Transport, Energy and Communications relating to the regulation of telecommunications.

I acknowledge the contribution Telecom Éireann has made to the communications revolution in Ireland. Telecom Éireann and its workforce have shown their commitment to the ongoing development of the communications sector by investing almost £2 billion over the last decade in Ireland's telecommunications sector. This investment has ensured that our telecommunications and telephone system are on a par with any communications system in Europe or the rest of the world. Telecom Éireann is to be congratulated for introducing such a first-class system. The company has shown that it is capable of coping with and responding to change in a proactive and imaginative fashion.

I am aware of the role that companies such as Telecom Éireann have played in contributing to the development of our economy. This Bill will facilitate the orderly transition to full competition and help Telecom Éireann to adapt to the new competitive environment. The decision by the Government to allow Telecom Éireann to involve itself in a strategic alliance with a European telecommunications conglomerate makes perfect sense. In this instance the Government has made the right decision to opt for liberalisation through restructuring the ownership of the company. It will open new markets and opportunities to the company. Telecom Éireann will become a much richer company and advance its stock of skill and knowledge by working closely with its new partner.

I wish to refer to the concerns expressed by the trade unions in Telecom Éireann about the ability of the workforce to continue to influence the strategic direction of their company. They point out that the restructuring of the board runs contrary to commitments in the Programme for Competitiveness and Work and the programme for Government to extend social partnership in industry. Serious concern has been expressed regarding a change in circumstances whereby the representation of workers on the board is altered from being one-third of the total board to one-third of the Minister's nominees. Section 10 of the Bill does not make provision for the representation of employee shareholders in the event of an employee benefit trust being established under section 8.

I call on the Minister to be flexible in negotiations with Telecom Éireann unions on this issue. The unions intend to put forward proposals to the Minister and I look forward to hearing the Minister announce that the question of worker participation on the board of Telecom Éireann has been resolved to the satisfaction of all parties involved.

Mr. N. Ahern

Our party spokesperson has informed the House that Fianna Fáil will vote against this Bill. In general, I oppose the privatisation of State companies unless there are specific reasons. Semi-State companies play a major role in the economy. They have a total turnover of approximately £4.5 billion and make a considerable contribution to the country's welfare. Up to £1 billion is returned to the Exchequer through income tax, PRSI and so forth.

The sale of 20 per cent of Telecom Éireann for £183 million is a giveaway. It represents a severe undervaluing of the assets of one of our major semi-State bodies. When we reflect on this sale in four or five year's time, it will be seen to have been an absolute giveaway. Only hindsight will prove my contention but that has been the case in regard to other privatisations of semi-State bodies in both the UK and Ireland. Shares of Irish Life and the Sugar Company, which at the time did not appear to be the snip this sale is, were seen in hindsight to have been sold too cheaply. The sale of Telecom Éireann will be the most glaring example of this.

There is no logic in what the Government is doing. It made the decision to seek a strategic partner and to sell part of the company. It advertised for partners and, one by one, the partners pulled out of the negotiations. The Government has ended up doing business with the only company that remained interested. The Minister has championed this deal but I believe that has more to do with his pig-headedness or determination than anything else. Having decided on a policy, he stuck to it and tried to put the best face forward. However, in being obliged to deal with just one bidder the Minister, in his heart of hearts, must be disappointed with how this matter has turned out, although he will not admit as much. He had to do business with just one partner because he had to stick with the course to which he had committed himself. If part of a State company is being sold, why must it be sold to foreigners? This must be a manifestation of a type of inferiority complex in the minds of some Irish people. Why can a company not be sold to the Irish public or to the pension funds of Irish workers? Why must we always behave as if we cannot do business at home or as if nobody here has money and we must bring in foreigners? The current position is that people living abroad can buy shares in a company which owns a portion of Telecom Éireann. In effect, people in Sweden or Holland can buy shares in the development of Telecom Éireann but Irish people cannot.

We are selling 20 per cent of Telecom Éireann. However, whether the portion is 20 per cent or 35 per cent, the deal is wrong and is bad for the Irish taxpayer. The Bill allows the Minister to sell up to 49 per cent of Telecom Éireann without referring back to the Dáil for further approval. Those who console themselves with the thought that we are only privatising 20 per cent of the company are living in a dream world. This is privatisation and we have seen with other companies that the only big and important step is the first step. Once it is decided to privatise or sell a portion of the company the principle has been established, after which there is no real argument.

It was amazing to listen to the last speaker, Deputy Kenny. If he were in Opposition he would have been thumping the table about a Government selling or privatising the jewel in the crown of the semi-State sector. Instead he talked about technology and ignored the fundamental issue, or at least it was a fundamental issue for people who label themselves members of the Labour Party or the left. I worked for 25 years in a semi-State company and, in many ways, that is where I arrived at my philosophy on these matters so I share the concerns of those people.

The notion that one can induce a foreign company to pay £183 million for 20 per cent of a company and that it will not try to seriously influence that company is a joke. Once a private company has invested its first £1 it is looking for reward and the rewards in this case will be delivered on the backs of the efforts of Irish employees in the future.

The notion that we are entering a strategic alliance with one of the giants in the telecommunications industry is a fallacy. While KPN/Telia are a fine company, they are not much larger than Telecom Éireann. The notion that KPN/Telia is vastly superior than Telecom Éireann in terms of technology is wrong. In recent years taxpayers have invested a fortune in the company and it can compete with the best telecommunications companies in the world. Perhaps the alliance will be beneficial in the future, but Telecom Éireann is linking up with a company that is only at a similar stage of development. Future technological development will have to be worked out between the two companies, we will not get it for nothing. The public has been short-changed and this is not a good deal.

I fail to understand how members of the Labour Party and Democratic Left can support this deal. The comments of many of their members in the past, particularly when Irish Life and the sugar company were being privatised, now ring hollow. This sale is being made on the cheap and will provide a quick killing for foreign companies, not for the taxpayers. Deputy O'Malley stated that taxpayers will not even benefit from the proceeds of the sale. It appears the £183 million will be kept within Telecom Éireann and the person who buys a 20 per cent share will at least get back 20 per cent of his or her money.

Very few speakers from the left contributed to the debate. I am familiar with the views of Deputies Sean Ryan and Kenny on the question of privatisation. Deputy Ryan and I worked for the same employer some time ago. I am shocked at the manner in which their philosophies have changed. Do the members of the Labour Party have any honesty? Deputy Ryan took credit for the £175 million which the Labour Party secured for Aer Lingus and TEAM Aer Lingus. Has he forgotten it was a Fianna Fáil Minister, Deputy Cowen, who did the spadework and delivered the deal at the Cabinet table? I accept we were in partnership with the Labour Party at that time, but the achievements were made with the co-operation of the staff of Aer Lingus and TEAM Aer Lingus and as a result of the efforts of the then Minister, Deputy Cowen. A number of Labour Party members prolonged the process because they were afraid to stand up to the shop stewards, some of whom did not understand that we are living in a changing world. If the Labour Party had given them the facts, matters could have been resolved much sooner. The northside six failed to understand the limits of what was possible. At one stage they were minus one because Deputy Shortall did a runner on a crucial vote on a TEAM Aer Lingus motion for fear people would know how she voted.

I am amazed and annoyed at members of Democratic Left and, in particular, the Labour Party for the manner in which they brazenly support this legislation. It conflicts with many of their hollow promises. The scene is changing in many semi-State companies and this has been talked about at union meetings for the past ten or 12 years. The Labour Party and Democratic Left created the image that they are the honest brokers, the protectors of semi-State employees. They conned the people prior to the 1992 election. I am sure Members will recall the sermon from the ramp at the airport when people fell hook, line and sinker for a number of false promises. Many of those people are now out of work or are working approximately 30 hours in March, 35 in April, 50 or 60 in July and are back on the dole for three or four months towards the end of the year. Many workers in Telecom Éireann, the ESB and CIÉ are bitter about the false promises of Democratic Left and the Labour Party. A total of 2,000 jobs are being shed in the ESB and a further 2,000 in Telecom Éireann. It is reported in this morning's newspapers that 800 jobs are to be shed in Iarnród Éireann and more in some of the other CIÉ companies. At least Fianna Fáil were honest with the workers, but for those who made the false promises, it is a case of watch what we do rather than what we say.

Many workers have been betrayed and some leading trade unionists have been brow beaten. Some workers voted for restructuring because they were bribed into selling their jobs. A person of 50 or 55 years of age who is offered a cheque for a large sum of money will usually consider only the short-term, accept the cheque and leave the workforce. Trade unionists, however, must protect the long-term interests of those who continue to work. Deputy Ryan stated that he had no difficulty with selling 35 per cent of the company, although it is incidental to the main function of the strategic alliance. It is amazing how the views of the Labour Party and Democratic Left have changed. A previous principle is now simply incidental to the strategic alliance.

Deputy Ó Cuív spoke about worker-directors, something which is close to my heart. The recognition of the role of the worker-stakeholder in State industry, through representation on boards of State enterprises, has made a unique contribution to necessary changes in recent years. A comparison with State organisations elsewhere demonstrates the value of the concept, and as it matures the benefits increase. In the light of such positive achievement, it is disturbing that the Bill will effectively deny the worker-stakeholder in Telecom Éireann 50 per cent of their representation on the board of the company. In his anxiety to sell off part of the public asset, the Minister is trying to quietly halve the worker-stakeholder interest in the Telecom Éireann board-room. It appears the three director vacancies to be filled by the new partners will be made possible by kicking out the worker-directors. Where is the equity in that proposal? What have workers done to deserve this? A sum of £183 million or 30 pieces of silver has turned matters on their head. Other speakers stated that the main union in Telecom Éireann has been negotiating with the Minister in this regard, but a compromise has not yet been reached. There is a danger that the agreement of workers about the deal could change unless this difficulty is resolved. Is the Minister bluffing? I fail to understand how the number could be reduced from four to two.

It is probably a case of softening them up by threatening to reduce the number to two, but that he will make compromise on Committee Stage by increasing it to three so everyone will be happy. On the basis of arithmetic, it is ridiculous how he has reduced the number to two. It would be ridiculous if they are that easily fobbed off by increasing the number of three to make everyone happy.

The situation in Telecom Éireann, and other semi-State bodies, is that the big unions take most of the positions on the board and the last place goes to an amalgam of the smaller unions. That is what happens in most companies. If we reduce the number, it could mean that the big unions will take everything while the smaller ones will be disenfranchised. Another rumour floating around semi-State companies is that worker-directors will serve a four or five year term, like the commercial directors, and will leave in turn so that only one or two will be elected at an election. That would be a disgrace, anti-democratic and would silence and push out members of the small unions. I accept that such a provision is not contained in the Bill, but it is a rumour which has been floating around. It would represent a very bad deal.

I understand KPN Telia is to get three places on the board for 20 per cent. When it requires 35 or 49 per cent, how many places will it get on the board? Will another worker-director have to move over each time the stake increases? The main union has made some recommendations. It has asked that the number go back up and suggested a Pat Rabbitte "baby chair" type solution where people could be on the board but could not necessarily vote. The minimum number should be three with that solution or another director for the worker-director shareholder. Reducing the number to two is not a genuine move but a tactic to soften people up.

Another suggestion from the unions — I do not like the sound of it and it makes me nervous — is that in future it would not have to be a worker-director on the board, that it could be an outsider or the general secretary of the union. That sounds very fishy and I am inclined to think I smell a rat. I wonder what deal has been done. Do some union officials see themselves appointed to the board as the price for their support for this deal? I feel very strongly about that. This issue is about the worker-director not the unions getting a general secretary, a leading light, a sympathiser or an outsider on the board. It is vital that it should be a worker-director who will muscle in. I hold a strong view on that and I hope there is no compromise. As of right the figure of two should return to three. Some means should be found to increase it to four — perhaps another place based on the shareholding — otherwise we will find that the big unions will take everything. It will be a case of might is right and the small unions will be pushed aside.

On the appointment of the director of telecommunications regulation, why is it that in most legislation we are taking away power from politicians and the Minister and setting up independent bodies? It is as if suddenly the politician, no matter what side of the House he or she is on, is crooked, that one cannot trust him with power and that one must have an independent body. It is about time all sides of the House pulled together and started a campaign to bring power back to the politician otherwise we will be reduced to the status of messenger boys. I do not know why this is happening, whether it is because of The Irish Times or senior civil servants, but most Bills propose the establishment of an independent body and take power away from the Minister.

In some cases the Minister may be afraid to exercise power and looks for a skirt to hide behind. We are doing away with our positions by giving power to everybody. Because we set up a body and take power away from the House, it does not mean that somebody will not do a favour for their mother or brother; it does not mean that suddenly life is straight and people are more honest. We need to cop on and stop setting up independent bodies in legislation.

Minister of State at the Department of Enterprise and Employment (Mr. Rabbitte)

I would like to thank Deputies for their contributions to the debate. I will briefly summarise the main provisions. The Bill provides for the establishment of the office of director of telecommunications regulation and for the transfer to the director of the functions of the Minister for Transport, Energy and Communications relating to the regulation of the telecommunications, radio communications and cable television sectors. It provides for the funding of the expenses of the director in carrying out his or her functions by means of a levy imposed on providers of telecommunications services and by the retention of fees collected by the director pursuant to the transfer functions.

The Bill provides for the regulation of tariffs, initially by the Minister and, ultimately, by the director of telecommunications regulation, for certain telecommunications services. It enables the issue and transfer of shares in Telecom Éireann and entry into agreements in connection with the sale and issue of equity in that company. It makes provision for the restructuring of the board of Telecom Éireann on the closing of the strategic alliance agreement. It amends the Postal and Telecommunications Services Act, 1983, in relation to pension matters and the regulation of tariffs. It provides for the repeal of certain provisions of existing legislation relating to Telecom Éireann arising from the strategic alliance agreement with KPN Telia.

I would like to reply to a number of points raised in the debate which has been disappointing in that few speakers choose to subject the legislation to any scrutiny but rather engaged in a great deal of rhetoric about every conceivable issue under the sun except the Bill before the House. Deputy Noel Ahern's speech was a fairly good cross section of that——

Mr. N. Ahern

Would it be the first time that happened?

Mr. Rabbitte

——dealing as it did more with Aer Lingus and other extraneous matters than with the implication of the revolution in communications. The MMDS issue was a good example of that having regard to the position taken by my colleague, the Minister of State at the Department of Tourism and Trade, Deputy O'Sullivan, at the time when Deputy Ray Burke introduced that Bill in the House in 1989.

I was also bemused by the bewilderment Deputy Seamus Brennan pretended to affect in terms of my position and that of my colleagues in the Labour Party on the issue of strategic alliance. Deputy Seamus Brennan should be aware that my colleagues in the trade union movement promoted the idea of a strategic alliance and for good reason if we are to stay abreast of developments in the communications industry, stay ahead of competition and compete in what is a global industry and maintain the optimum employment for those at work. It is interesting to note that Deputy Seamus Brennan claims to support the position of the CWU, the communications workers' union, on the issue of worker-directors but on little else.

Debate adjourned.