I remind delegates that members of the committee have absolute privilege but the same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. With that usual warning which we do not anticipate will apply to this presentation, I ask Mr. Gallagher to make his opening statement.
Broadband Infrastructure: Discussion.
Mr. Damien Gallagher
I thank members for inviting us to come before the committee. We are delighted to present on the topic of supporting indigenous industries through an effective broadband infrastructure. I will introduce the delegation. Mr. David Hennessy is chief technical officer. I am director of projects in 3 Ireland.
I will give an overview of 3 Ireland. Hutchison Whampoa is our parent company. We are one of the largest companies in the world, with multi-dollar market capitalisation. We have operations in 57 countries and over 230,000 employees worldwide. Hutchison Whampoa has interests in a number of different industries in ports, property, retail, energy, infrastructure and the part we are interested in, telecommunications. We are the largest company on the Hong Kong Stock Exchange. Regarding ports and related services, we operate container ports and manage about 13% of the world's traffic. Two of the large ports we operate are Felixtowe in the United Kingdom and Rotterdam in the Netherlands, two of the busiest ports in the world. We are also involved in property and hotels. We run quite a lot in Hong Kong and mainland China and manage approximately 16 million sq. ft. of investment properties worldwide. We are the largest health and beauty retailer, with 19 retail brands and 7,900 stores in 33 countries. One retailer of which members may be aware is Superdrug. On energy and infrastructure, we are the largest infrastructure provider in Hong Kong and the largest world investor in Australia in power supply.
The area about which we are here to speak is telecommunications. Hutchison Whampoa has a track record in telecommunications, having owned Orange in the United Kingdom. It decided to sell the company for £19 billion sterling and invest the money in 3G networks, the up and coming networks in the mobile telecommunications world. Hutchison Whampoa has always been an innovator, looking at new ways to generate products and business. The 3 group, of which we are part in Ireland, operates in 11 markets worldwide. We have 25 million customers worldwide, 20 million of whom are 3G customers and the other 5 million of whom are GSM customers. We were the first to launch 3G technology worldwide and we are the global leader in mobile broadband. We have 2.5 million mobile broadband subscribers across our markets in 11 countries.
We have been in Ireland since 2003 when we successfully got a 3G licence from ComReg. We built out the network. We have spent more than €530 million to date and created more than 250 jobs. We launched services in 2005, which means we spent two years building out the network. We have tripled our customer base in the past 12 months We have more than 400,000 customers, 150,000 of whom are mobile broadband customers. Our services can be bought in more than 500 locations throughout Ireland. Therefore, we have a wide spread.
Our entry into the market is driving change. We were the fourth operator into quite a stagnant mobile market. We have driven change in many ways not only in mobile broadband but also in the voice side by bringing out value for money services, innovative services such Skype on handsets and allowing Skype calls for free. We have been innovative in examining new technologies and bringing value to businesses in Ireland. We created 250 new jobs and 170 additional jobs are being created via our NBS project. Those jobs are not only in 3 but with subcontractors and people supporting the roll-out, such as marketing companies, etc.
If it were not for our entry into the market with a 3G licence, 3G would not exist in Ireland to the extent it does today. We entered a market which was dominated by GSM operators. We were not the only operator with a 3G licence but having a 3G licence was our only way to target the market. We rolled out the 3G network from the start. We met our commitments to ComReg in the roll-out and we launched 3G services not only on handsets but on mobile broadband using 3G technology.
The mobile broadband market in Ireland has more than 308,000 users. We are the largest provider in that market. Mobile broadband is probably one of the fastest growing development areas in telecommunications. A report released yesterday in Britain, Digital Britain, puts a large emphasis on not only fixed and digital TV but also the other third element of the UK's strategy for digital Britain, namely, mobile technology based on 3G and on HSDPA. In Ireland we are probably ahead of the game in that we have kick-started a project that will do what the UK Government seeks to do in the future. The key to the 3G technology and mobile broadband is the speeds. Broadband speeds have increased twentyfold since our entry into the market in 2005.
With regard to 3 coverage, on our voice side of the network we have 99.7% mobile phone coverage and on our existing network we have 88% broadband coverage. With the national broadband scheme and our covering the final 10% of premises in the country, we expect to increase coverage up towards 98%. That would make us the largest 3G service provider in the country within the next 12 months.
An interesting aspect of what we are discussing today is how to encourage small and medium-sized enterprises, SMEs, and industries to establish in rural Ireland and benefit from doing so. Our operation in Sweden supports indigenous industry. Some 3.5 million households have broadband connection in Sweden, of which 1 million have mobile broadband connections. Sweden is cited as being ahead of everyone else. Some 152,000 rural SMEs have mobile broadband connections in Sweden. 3 Sweden has 250,000 customers. Some 50% complement existing broadband and for 50% mobile broadband is their main broadband supply. Since launching in Sweden in 2006, there has been a 35% increase in rural based SMEs as business customers. This is a real possibility for Ireland. Broadband is being rolled out to all users. Many industries can be set up using broadband technology.
The key to delivering broadband is to deliver the best experience in town and country. We have examined how to implement first-class and leading broadband solutions. The only difference between that and fixed-line connection is that it just happens to delivered over mobile, wireless technology. Mobile broadband without a doubt is emerging as the technology of choice worldwide for first class connectivity, speed of roll-out and cost effectiveness to consumers. Mobile broadband is developing more quickly than other technologies and just as the mobile replaced the fixed line for phones, the same will happen in the case of broadband. The mobility aspect is a major advantage. Today in Ireland there are more mobile connections than there are people. It is difficult to find a person who does not have a mobile. We are seeking to deliver world leading technology throughout the country to ensure there will be no digital divide between those living in urban and rural areas. Our products are unilaterally priced throughout the country. Everyone can avail of our value broadband and mobile service. Unilateral speeds and capacity are delivered nationwide. Regardless of where one lives, one will get the same quality of service.
3 mobile broadband has advantages for Irish businesses. It will enable rural businesses to compete with their urban competitors and competitors worldwide. It will open up a worldwide market in broadband. It will increase efficiencies within their business through fast Internet access. Businesses can have voiceover IP-Skype, which is cost effective and supports businesses. We are the first and only business in the mobile space to launch free Skype calling, which is a key benefit. If one is running an SME and transacting business in Ireland or abroad, one can avail of Skype, which is offered free and allows one to communicate with one's offices regardless of where they are based. Voiceover IP as a technology is used by 44% of corporates and more than 30% of SMEs. We allow voiceover IP on our network with no restrictions, but not all operators do that. Fast access to CRM systems, accounting, sales systems and on-line packages is available on the Internet. Many services can be enabled by broadband, including instant messaging, e-mail, file sharing, download music and video conferencing via television. Many services can be obtained by way of broadband connection. New products are being introduced by different companies all the time and the key requirement is to have a broadband connection.
The key to supporting industry in terms of speeds and capacity is the deployment of the technology with a clear road map. That is the key to the success of any service. In 3 we have always taken account of the road map, namely, future developments and to what stage technology will have developed in five years' time. When choosing a vendor, we choose one that has a clear road map and will allow us upgrade and give better service to our customers over a longer period. Speeds have improved and improved capacity is essential to supporting and driving rural industry. What we have introduced and are rolling out in our network is Internet high speed access and ethernet technology. This will allow us move forward to the higher speeds as we progress in terms of the roadmap. Ethernet and fibre backhaul will provide speeds comparable with fixed broadband services. That is happening. We have more than 140,000 customers and there is no doubt there is much replacement of DSL technology with mobile broadband today.
With regard to the future of Internet high speed packet access, I-HSPA, we are the first country in the world to roll out this technology in 3. It is a solution for effective and high quality coverage. It will remedy the rural versus urban divide. It is a first for Ireland. It is cutting edge and innovative technology with a clear roadmap. It is the first step towards long-term evolution, LTE, or 4G. We are at 3G and we are looking at developing to 4G. In terms of the roadmap, technology is developing at such a pace that speeds of 50 MB-plus up to 100 MB LTE will support our network with the roll-out of I-HSPA which will support this development with a simple upgrade to the software. It will enable SMEs and indigenous businesses to locate in rural areas. The key is the provision of increased capacity.
With regard to broadband growth rates, we believe our entry into the market, launching a product that was cost effective and value for money at €19.99 and offering 15 GB data, stimulated the market and pushed it forward. Looking at mobile broadband as a percentage of total broadband, in the first quarter of 2007 there was no mobile broadband; it was at 0%. By the fourth quarter of 2008, it accounted for 26% of Ireland's household broadband connections. That was phenomenal growth in under two years and the figure is increasing each month. If members look at the chart I have supplied, they will see that mobile broadband continues to grow at rates that significantly outstrip the market. From the first quarter of 2007 to the last quarter of 2008 there was a 142% growth rate versus a growth rate for DSL or fixed line broadband from 8% to 15%. There has been phenomenal growth in the mobile broadband space.
Earlier we described how 3G technology has made a big difference. Two or three years ago one could operate at 384 KB a second. We have moved to a technology called HSDPA which increases throughput up to 3.6 MB a second. We are rolling out 7.2 MB and, early next year, 14.4MB. The road map goes all the way to LTE 100 MB a second. It is a global standardisation and ETSI, European Telecommunications Standards Institute, approved.
The national broadband scheme provides scaleable services for communities. We are required to provide the service for all residents and businesses within the national broadband scheme coverage area. Full network deployment will be completed by the third quarter of 2010. We are spending €223 million over five years. It is a huge investment by 3 Ireland. There is a €79.8 million contribution from the Government and the European Union. Over 170 jobs have been created and, undoubtedly, broadband availability will lead to economic benefits in each region.
Members are aware of the benefits of broadband for rural communities. It connects the unconnected. I am from a rural area in Ireland that cannot receive broadband; therefore, I understand that. It will make a big difference in communities where people must drive five miles to get a broadband connection. Broadband will improve business efficiency and enable employees to work remotely, which is important. Many services are now available on-line. Most people book holidays, flights, pay car tax and so forth on-line. Many Government services are also on-line. Broadband will stimulate economic development in rural areas, particularly in the tourism sector in which we envisage a major opportunity to advertise cycling tours and so forth on the web. It could generate increased visitor numbers. It will enable SMEs to develop further and establish themselves in rural areas. It will also enable the development of alternative enterprises within the farming community and allow it to sell its produce on-line. It will open the world to rural areas.
What more can we do to stimulate growth and help industry? The Government has proposed a one-stop-shop where all broadband providers can have access to publicly owned ducting. We are very supportive of that initiative. The review of the national and local planning guidelines with the delivery of broadband to be placed under the Planning and Development (Strategic Infrastructure) Bill will be helpful. As part of the national broadband scheme, we visited every council in Ireland. We met the county managers and planners and the top priority of all development plans is broadband. They want broadband and we can deliver it. A change to the Planning and Development (Strategic Infrastructure) Bill would help in that regard by including broadband as a strategy that is needed for the country.
The delivery of broadband is a key element in our economic recovery. Many entrepreneurs get their start in recessions. With the advantage of a widely available broadband connection they can be assisted. The ComReg consultation on spectrum refarming will be key to the provision of a balanced spectrum for all operators. To refer to the Digital Britain report released yesterday, we are ahead of Britain because we are already rolling this out. Britain's target date is 2012, while ours is 2010. The one thing that will help is the refarming of the spectrum to operators to achieve higher speeds and capacity. There is also the issue of a regulatory framework that supports and rewards the commitment of the private sector to investment in the next generation broadband infrastructure. A key element is Government funding to the private sector to encourage it to invest, as we have done in the national broadband scheme. The figures show we have invested a great deal. This is to the benefit of rural Ireland.
To summarise, 3 Ireland is delivering first class broadband solutions for Irish businesses. It is the world's first operator with Internet high speed packet access, I-HSPA, technology and to introduce Internet infrastructure into the equation, which will improve customer speeds and experience. We are already supporting indigenous communities with high speed broadband, cost effective services and new innovations such as free Skype calling. We are a leading telecommunications business owned by one of the largest companies in the world, a company with a strong record in innovation, not only in telecommunications but also across the four other key parts of its business which I mentioned. 3 Ireland has a proven track record in other markets where mobile broadband is revolutionising the broadband market for consumers and businesses. Mobile broadband is the solution of choice. It is developing faster than other technologies. Just as mobile phones replaced fixed line telephones in many instances, we envisage the same happening with broadband because of its flexibility. Its mobility is a major advantage. As there are no fixed lines in the house, one can use it anywhere in the house. One is not tied to a particular location.
I thank the committee for listening.
I have looked at the map which shows the level of coverage and lack of it in some places. The company clearly has a long way to go. Let us look at the east coast first. Coverage in County Wicklow is very poor. There is coverage in counties Louth and Meath but as one travels south, coverage is sparse. Along the western seaboard, up to County Donegal, there are large white areas. I am not sure what Mr. Gallagher means by the statement that full network deployment will be completed by the third quarter of next year. Does he mean there will be not just telephone coverage but also broadband coverage in all these areas?
On the main corridor from Dublin to Belfast, a couple of miles from where I live on the Cooley Peninsula, there are huge patches where there is no coverage. On the other side, in south Monaghan, a mile or two from that corridor, there is also no coverage. When these areas do not have coverage, what chance have the struggling entrepreneurs in places such as south Donegal? Will Mr. Gallagher give specifics on the targets for these areas? How realistic is it to try to achieve them in the third quarter of next year? Is the company having serious problems getting access to the public infrastructure to roll this out? Where is the bottleneck? Is it a cost issue in negotiations between the company and the Government? What is the obstacle to giving 3 Ireland access to that public infrastructure?
Mr. David Hennessy
The target is to have coverage delivered to all houses in the national broadband scheme area by September 2010.
Broadband.
Mr. David Hennessy
Broadband coverage, yes. Broadband coverage and mobile phone coverage will end up being the same thing and if there is broadband coverage available, there will be mobile phone coverage available. We will be required to provide full coverage by September 2010.
These maps showing 88% broadband coverage refer to 88% of population. The target is to have 100% of population covered by the end of this scheme. Some of the large tracts of white areas on maps are mountainous areas such as the Wicklow Mountains, the Comeragh Mountains and the Macgillycuddy's Reeks. The requirement is to provide coverage, not for those geographical areas but for the households. There might be a number of niche households but we must provide a service for each and every one of those households. In order to do that, we must build almost 400 more base station sites around the country. There is a 22-month programme to complete that and we are progressing well with it. We are quite confident of achieving the full coverage by September 2010.
Another minor point to note is that if there are extremely remote locations, for example, two or three houses at the top of the Wicklow Mountains, then a satellite solution will be provided under the national broadband scheme to those extremely remote locations. By and large, it must be a terrestrial solution using I-HSPA and it must be delivered by September 2010. At that point anyone anywhere in the country should have equal access to broadband.
I accept that there are massive difficulties in mountainous areas but I hope Mr. Hennessy is not trying to cod us. In areas of south Monaghan, like Inniskeen just south of Carrickmacross, just west of Dundalk and Kilkerley where there are large flatlands, where the nearest mountains are the Cooley Mountains on one side and the Wicklow Mountains 100 miles away, mountains are not the problem. There are blackspots in those areas. I could cite examples on the west coast, but let us not pull it all over the place and let us just look at one example. What is the problem in those areas? Why are they not being covered? Obviously, there is a technical issue. I do not know what it is.
Mr. David Hennessy
The reason they are currently not being covered and the reason for the national broadband scheme in the first place is there was not any commercial imperative for people as it is expensive to cover these areas. We have approximately 800 Node B sites or base station sites providing 88% broadband coverage at present. We will require approximately 400 additional sites to cover the remaining 12%.
Previously, for us, but also for other operators or for Eircom in the fixed-line arena, it was just too expensive to cover these areas. Through the national broadband scheme there is State intervention which will bridge that gap and allow us cover these areas. To achieve coverage in these areas where, as the Deputy correctly stated, there are no mountains, one needs a larger density of sites. In order to achieve coverage of those areas, we must get busy and build many of these sites in the next 18 months.
Is there Government funding to Hutchinson 3G, along with the company's own investment, to achieve that?
Mr. David Hennessy
Yes. We have put together our tender in a business case. We sought a level of subsidy, we won the tender and we are getting that level of subsidy. We are satisfied and we are required to do it now.
That is good news for my constituents and many others. What did Mr. Hennessy state was the bottleneck in public infrastructure?
Mr. David Hennessy
First, I compliment the Department of Communications, Energy and Natural Resources on there now being an initiative to get a co-ordinated approach to operator access to public infrastructure because previously there was very little co-ordination across all of the State and semi-State bodies. ESB has a fibre network, CIE has a great deal of property around the country on which, for example, BT runs its fibre network, and there is also the National Roads Authority. Previously, I guess the challenge was that there was no joined-up approach. There was no one-stop-shop where one could access this type of infrastructure, whereas now there are initiatives and kick-off meetings have taken place with the Department on co-ordinating this type of approach where operators can utilise or access this land or ducting on the same terms, irrespective of who owns the infrastructure or land. There have been steps in the right direction. Historically, the dots were not joined up. Previously, it probably was not a priority.
I welcome the delegates. Correct me if I am wrong, but I think Carlow has the highest percentage of broadband roll-out in the country at over 73%. Many in my constituency of Carlow-Kilkenny were broadband orphans. I live under the Blackstairs Mountains and if one does not have broadband, one is at a complete disadvantage and living in a dinosaur age. One must have broadband.
Broadband is particularly important for those who have been made unemployed. For instance, 44% of architects are now unemployed. An architect can sit at home and can design house plans for Rotterdam, Antwerp or wherever in the world his or her client wishes. If architects have broadband, they can download and send their drawings and they can create employment. This is what we must look at. There must be no digital divide in this country, particularly at a time of deep economic recession.
Let us look at the positives, as there are enough gloomy statistics out there. There are very positive statistics here. I welcome the advance of mobile broadband. I agree with Mr. Hennessy that the Government should be providing access for all broadband providers to publicly-owned ducting. That is a good idea. In particular, I would favour a review of the national and local planning guidelines for the delivery of broadband to be placed under the Planning and Development (Strategic Infrastructure) Act 2006, to fast-track the development of broadband. This is a relatively small rural country with a dispersed population. If we do not provide broadband, we will be at a serious disadvantage to our competitors who are looking for the same amount of work throughout the European Union.
I welcome the free Skype. It is good and ever greater numbers are using it. With voice over Internet protocols, one can download CDs quickly, which is fantastic. To have 30% of small and medium-sized enterprises using voice over Internet protocols is key.
This is essential for those of us who live in rural areas who represent rural communities and those working remotely such as architects, small and medium-sized enterprises, owners of small companies or the farming community. As Mr. Hennessy stated, we must connect the unconnected and that must be done as speedily as possible.
I have one technical question. Can Mr. Hennessy explain the ethernet because I do not understand it? In addition, what are 3's average broadband speeds?
Mr. David Hennessy
Ethernet is backhaul technology. One could divide the technology into two parts: from the base stations which are transmitters out to the end-users, it is I-HSPA, which is what we are deploying on that interface; and from the base stations back to the data centres connecting into the Internet, we are using this technology called ethernet. Ethernet is a technology that has been around for a long time, but it has been primarily or almost exclusively used within computer networks and LAN networks. Previously, we would have used a technology called ATN, which was more tailored towards telephone networks.
Under this scheme we are moving away from our previous telephone network type technology and towards a more IP Internet type of technology. It is just a more efficient backhaul and something which facilitates a much better Internet experience.
I thank Mr. Hennessy. What are 3's broadband speeds?
Mr. David Hennessy
On a radio network, the closer one is to the base station the better the speed. It is the people at the edge of the coverage area who would receive a lower speed because of the link between the modem and the base station.
We have committed that at the edge of cell, the users will achieve a 1.2 Mbps download speed and a 200 Kbps upload speed. This is running over a technology which is based on a maximum of 7.2 Mbps download speed. When one is at the cell's centre, one can obtain speeds of up to 7.2 Mbps. These will decrease as one moves towards the edge. The absolute minimum specification for all users is 1.2 Mbps.
Average speeds are very much dependent on the dispersion of users within the cell and each site will have a different average. We expect that the average will sit somewhere between 2 Mbps and 3 Mbps. Under our contract commitments, from July 2010 we will move from the 7.2 Mbps technology to a 14.4 Mbps technology. There will, therefore, be an upgrade of the technology. We have also made a commitment that people at the edge of cell will receive a minimum of 1.6 Mbps at that period. The average will rise to somewhere between 4 Mbps and 5Mbps. However, I do not know what will be the final figure in that regard.
I apologise that I was not present for part of the presentation. When discussing rural broadband, the impression is given that the 12% of homes, etc., to which services cannot be extended are located in the mountains or in rural areas. That is not the case because there are rural areas adjacent to large urban areas such as the greater Dublin region where people cannot access broadband. These individuals might be able to access it by satellite if they cut down some trees or paid someone a fortune to provide it. However, this does not represent access to broadband. Members are aware of what is happening because this is a major issue for some constituents. The matter is often presented in terms of it only being people who live high in the mountains who cannot access services. I live in Navan town, which is part of the greater Dublin region, and people who live two or three miles from its centre cannot access broadband. We must wake up to the fact that this country is way behind when it comes to the provision of broadband services.
What will be the consequences if the target of September 2010 is not met? I am sure our guests would, from a business point of view, like to achieve that target. What will happen if they do not achieve it? Is it a realistic target? Is there any way it could be moved up or must we accept that it is set in stone? This is a massive issue for those who operate small businesses and those who want to work at home. Everyone knows it is much more cost-effective to allow certain members of staff to work from home. It is extremely frustrating for some people that in 2009 they still cannot access decent broadband services. It does not make sense that they cannot do so.
I must admit that, having used it, mobile broadband is quite good and our guests state that it will replace the fixed-line equivalent. However, problems arise when the network is busy. One will not have difficulties with fixed-line broadband regardless of the number of customers in an area or the number of people using the service. If a large number of people are using mobile services at the same time, however, the service becomes much slower. How can such problems be overcome? Why are our guests of the opinion that mobile will replace fixed-line broadband? Is there a way to circumvent these difficulties? Our guests stated that they are going to construct hundreds more stations. Will this provide a solution? Getting access to the network can be a major issue.
I am not au fait with terminology relating to speeds, etc. How does the speed of broadband in Ireland compare to that which obtains in other countries? I discussed this matter with several colleagues, including Deputy Coveney, and I was informed that, apart from the issue of coverage, the speed that will be achieved here will be way behind that which obtains in other European countries. Will our guests indicate their views on this matter, particularly as the committee is interested in discovering how Irish businesses can compete with their counterparts elsewhere?
There is unilateral pricing across the country and that is fair enough. How do the prices offered by Hutchinson 3G Ireland Limited compare to those of its competitors in Ireland and with service providers in other European countries? The presentation states that Hutchinson 3G Ireland Limited provides a first-class, world-leading broadband solution.
I accept that a higher cost attaches in respect of providing services to the areas to which I referred. If such services were provided to these areas, would the subsequent running or maintenance costs also be higher?
Our guests referred to the fact that infrastructure is not available to them. Are they in a position to indicate the level of infrastructure that is already in place but which has not yet been lit? I understand that a great deal of money has been spent on many Government projects. Infrastructure is already in place in my area and in others throughout the country but it is not in use, which is crazy. Our guests may not be concerned with regard to this matter but the committee certainly is because it represents a bad use of money.
Mr. David Hennessy
The MBS contract covers 25 of the 26 counties. Dublin is the only county that is excluded. It was not our intention to state that it just relates to mountainous areas, it actually covers entire swathes of the country. The mountainous areas on the map are coloured white to distinguish them from other areas.
With regard to failing to achieve the target of September 2010, the contract contains significant penalties. I will not get into the details in that regard because there are many different scenarios.
Once we know they are there, that is fine.
Mr. David Hennessy
The Deputy asked whether the target date could be brought forward. The answer is that it might be possible. The greatest challenge we face is that of the 389 sites we are building, some 200 are greenfield sites. As a result, the latter are subject to the planning process. In counties such as Kerry, for example, there is a 1 km exclusion zone. It is difficult to find sites that are not within 1 km of houses where our equipment can perform the functions required of it. Kerry County Council will refuse planning permission for all of our sites as a result of its 1 km policy and, therefore, we will be obliged to take the matter to An Bord Pleanála. As a result, there is a nine-month timeframe in play. There are various idiosyncrasies in different counties. Utilising the strategic infrastructure aspect of the planning process could be the best way of bringing the date forward. I do not know exactly how matters would turn out. As stated, however, one of the major challenges revolves around planning.
With regard to how we manage congestion, under the scheme we are committed to providing aspect to all customers. If cells reach a certain level of utilisation, we are required to upgrade them and we cannot allow speeds to degrade. We are obliged to maintain the service. It is a five-year contract and under its terms we must continually report to the Department that the relevant speeds and upgrades are being achieved.
I do not have any comparative data on pricing. However, the set-up cost for our service is €40 and the monthly cost thereafter is €20. This is an extremely competitive price.
Mr. Damien Gallagher
Things really kicked off for 3 Ireland in May 2007. Over a six-month period, we went from zero to 50,000 customers. One of the reasons for this was that we considered the position of all our competitors, fixed and mobile. We did not just look at what our mobile competitors were doing, we examined the position across the entire spectrum. We introduced pricing that was by far the best in the market. We also considered the 15 GB cap — in the context of how much data could be obtained — and we went with the best in the market.
When we say we stimulated the market, what we mean is that other operators began to take notice of our activities and realised that they had to compete. Our product is as competitive as that offered by other companies. It is more competitive than many others and is equally as competitive as some. I do not believe other companies are undercutting our prices or giving better value.
Mr. David Hennessy
The Deputy's final question relates to the ongoing running costs of the network. The number of sites drives the cost. There are rent, power and transmission costs and, as a result, there is an ongoing and increased running cost in maintaining a network in rural areas.
Mr. Hennessy stated that the company has a responsibility to upgrade cells if they become oversubscribed. How quickly is it expected to do so?
Mr. David Hennessy
We are required to do it before they become oversubscribed. We must, therefore, monitor the level of utilisation and deal with the matter before it becomes a problem. There are agreed thresholds. For example, if a cell reaches 70% or 80% utilisation, we must carry out an upgrade.
What is the comparison in terms of speed with networks in other countries?
Mr. David Hennessy
This is specifically a rural broadband scheme. Most other countries do not have this kind of ubiquitous access to broadband in rural areas. There are many reports regarding speeds in Finland or Korea. However, these speeds relate to urban areas and do not include rural aspects. Rural broadband must be delivered over a wireless technology. The technology we are using is undoubtedly the most suited to achieving this. I do not know how the speeds compare.
The data relating to other countries generally relates to speeds for urban areas.
Mr. David Hennessy
Yes.
Mr. Damien Gallagher
Like Ireland, Britain has realised that 10% or 12% of the population will not be able to access the urban-type facility because the fibre is not in place. The British are considering a project similar to ours. In conjunction with colleagues from 3 UK, I met representatives from the British equivalent of the Department of Communications, Energy and Natural Resources who expressed major interest in putting in place such a project. That is what they are looking at.
I thank Mr. Gallagher for his positive presentation. It is nice to hear buoyancy in a presentation in the current circumstances. I do not have the problem faced by rural Deputies regarding broadband. 3 has been a welcome addition to the market. Mr. Gallagher stated the company has created more than 250 jobs but later in the presentation he referred to creating more than 170 jobs. How many people are employed by 3 currently?
Mr. Damien Gallagher
In our day-to-day business, separate from the national broadband scheme, we have created more than 250 jobs since we entered the Irish market. Under the NBS, we have had to employ an additional 36 people, who have been in place since we were awarded the contract. We are still filling a number of vacancies. BT, our subcontractor, created another 50 jobs as part of the scheme. In addition, employment was created in building on sites, subcontracting and marketing.
I thank Mr. Gallagher for his presentation, which contained a great deal of good news, but I am reminded of the phrase, "A lot done, more to do". The committee undertook a comprehensive tour of the south east and the Dublin commuter zone and access to broadband for SMEs was one of the issues raised consistently. Does 3 provide a business specific service, particularly for small and medium-sized enterprises, not only in accessing connections and so on but also in providing ongoing support? Does the company have a central base to provide that?
Mr. Damien Gallagher
We do. We provide a service for businesses and we supply additional equipment to businesses that can generate a secure wireless LAN. If one employs five, ten or 15 people, one can buy a service from us and distribute it to all one's users within the business. We have a technical support centre to address issues that customers may have. Our business customers have a dedicated account manager that they can come to with issues.
Is there a charge for that?
Mr. Damien Gallagher
No, it is an additional support service. I refer to our business value voice packages and Skype. Business customers with 3 get Skype free as part of the service. It is an added value. Our package offers SMEs many added value services.
Many people to whom we spoke do not know where to source this service. Will 3 undertake an information dissemination exercise?
Mr. Damien Gallagher
Absolutely. As part of the scheme, we will get in touch with all householders to let them know the service is available in their area. We will do that throughout the roll-out of the contract and people will be informed. We have a large footprint through our retail outlets and they will also target the areas where we are turning on services to let people know they are available. We will have billboard advertising and so on to ensure everyone is aware the service has come to their area.
Mr. Gallagher stated 3 would need approximately 400 additional base stations to provide the coverage required and good progress was being made. What progress has been made? How many of the 400 stations are in place? Will Mr. Gallagher comment on the level of opposition to the locations of the base stations? Is that driving the company's desire to have these projects included in the strategic infrastructure Bill? What is his view on local opposition to them? Will 3 be able to meet the guidelines on locations for such stations? It has been reported they should not be sited near schools or areas where children are at play.
Deputy English touched on the fixed versus mobile issue. Even where 3 succeeds in providing broadband in a remote area, there will still be a relative performance issue, which might drive an SME to a better performing area.
Deputy Morgan referred to blackspots and Mr. Gallagher indicated 3 may have to provide the service to some households via satellite. Can he estimate how many will have the service delivered in this way? Will there be an additional cost for that service?
Mr. David Hennessy
The progress to date has been positive. We must have 48% of the area switched on by Christmas and we are confident of doing that. Many sites are going through the planning process. It takes four or five months to obtain full planning permission and, therefore, from now on we will see the fruits of our labour. We are pleased with progress to date. As part of the contract, there are co-location guidelines and we are encouraged under the contract to co-locate base stations with existing infrastructure wherever possible. Due to the nature of some of these areas, infrastructure does not exist and that is driving the requirement for the 200 new sites. From a Government perspective, we have been encouraged to use existing infrastructure while, from a planning perspective it is much easier to use it and, from a commercial perspective, it is much cheaper.
We have met the planners, county managers and the public representatives of 26 local authorities. The welcome for, and interest in, this scheme has been fantastic. Historically, there has been a negative attitude towards mobile telephone masts in some regions. People are not considering what we are building to be such a mast. They see this as a solution to the provision of broadband where they cannot access it. We hope we do not run into the issues that were raised in the past. We are conscious of them and we are working hard to engage with local authorities and communities because we are as aware of the contentious areas as anyone else. We want to minimise those issues.
I refer to the performance of fixed versus mobile broadband. If fibre was accessible by every house in the country, it would give a better performance. Cable is available to every house but it is unable to support broadband and that is why Eircom cannot deliver broadband into some areas where it delivers fixed lines. The issue is whether a fibre or wireless solution should be used. It is not practical to use fibre for every household as it would cost too much based on current rural demographics. I do not know how much but a significant amount of fibre would be involved at a cost of billions of euro. The conclusion, therefore, is a wireless solution must be adopted. One then has to decide which is the best wireless solution. The old services are Wi-Fi and WiMAX while the new services are HSDPA and LTE. The entire industry has moved in the direction of the new services. All the major suppliers are moving away from WiMAX solutions. With regard to not having a proprietary solution, Ireland is part of a global road map and we have chosen the right solution.
With regard to performance, every modem, handset, computer, base station and equipment manufacturer is moving in this direction. We will see evolution and progress in this area in the years to come. While performance will not be the same as with fibre, it will be as good as can be got.
With regard to black spots, the tender we put together was to cover the whole country, but we know that on the other side of the hill there will be two houses in a black spot. Up to a maximum of 5% of houses in the 10% of the households in the country included in the scheme can have a satellite solution, but everyone else must have a terrestrial solution. There is no differentiation in terms of cost for those people. They will still pay the €49 install charge and €20 per month, just like everyone else. They will also achieve the same specification.
Do I understand correctly that up to a maximum of 5% of people can have a satellite solution?
Mr. David Hennessy
Up to 5% of the 10%. The scheme extends to 10% of the population and 5% of that 10% can have a satellite solution.
If 7% of that 10% required a satellite service, would that be a problem?
Mr. David Hennessy
We would suffer penalties then. We would be required to provide the service for those people, but would suffer penalties for not delivering the full terrestrial solution.
I remember reading a submission that suggested there were over 12,000 houses and premises that would not be able to access broadband and that were excluded from the national broadband scheme. What will happen to them? It has been said they are in areas that already have a substantial service and that trying to serve them might give rise to an unacceptable level of market distortion. What will happen in that situation? Is there any proofing done for rural areas?
Like Deputy English, I come from a rural area where there seems to be nothing going on. Young people are focused on better broadband and know this is what they want. France has telecottage and similar type industries. Many people here want to work from home but cannot because of the significant digital divide between rural and urban areas. Is there any mechanism to future proof broadband provision in rural areas to ensure there will not be further division, in terms of a digital service, between urban and rural areas? I do not understand the technicalities, but Mr. Hennessy obviously is a technically-minded person and next year may come back to this committee to talk about so many more megabytes that will be available. However, can we assure rural dwellers that his company will facilitate them with a better service, however the technology is modified? Will this better service be available to them as the roll-out continues?
There is a difference between 100% of the geographical area being covered and between 100% of residents having access. Members of this committee visited the southern part of the country, including Deputy O'Keeffe's area, to see the situation. We also visited sites in the commuter belt around Dublin, which serves approximately 2 million of our population. Even in the commuter belt, not everybody had access to broadband, including in better-off areas.
I live a long way from the islands as I come from the midlands. Will people in places like the Aran Islands, Tory Island and other islands have broadband access? Our culture lives on in those islands despite the fact that over the years there has been very significant depopulation. Will people on the islands have broadband access so that they can remain on their islands and contribute to communities that are very much part of what we are?
I will talk about rural Ireland because that is where I come from. I live between Mallow, Mitchelstown and Fermoy and am part of a family farming business there that cannot access broadband. I am well positioned between the 025 and 022 landline areas and have tried constantly to get connected through Eircom, but nothing has happened. I am told there is not enough fibre optic provision to reach me. The scheme we are talking about now uses copper, but there is only so much distance in copper.
To take up the point made by the Chairman, the lack of broadband provision is holding back the development of small industry in rural areas. If something is not done and if somebody does not come to the rescue soon, all those areas will die out and everything will end up in the Dublin commuter area. Only two Deputies in Leinster House do not have access to broadband and I am one of them. I do not know who the second one is, but I know there are only two of us. That should be in the Guinness Book of Records. I do not want to personalise the issue or do not know how Mr. Hennessy can assist me, but my area is in a progressive part of the country. It is a lowland area where there is no interference, but there is no 086, 087 or 088 mobile service on any day. We do not have broadband and that is an impediment to the development of the area.
I have one further question. What contingency plans does the company have for when it encounters problems? For example, there may be planning permission problems or the problem of the 1 km exclusion zone. Are there any contingency plans to ensure the target for the third quarter of 2010 will be met? Mr. Hennessy indicated long-ongoing planning permission problems could be dealt with through the Strategic Infrastructure Bill. What plans exist to ensure the company can still achieve its target despite any obstacle or impediment?
Mr. David Hennessy
Within our organisation, we have loads of plans. In terms of planning issues, our target is to have all full planning applications made by October this year, so that if we are refused permission for some sites or where permission is granted and goes through An Bord Pleanála, we still have a nine-month period to turn it around and get it on air by September or quarter three 2010.
I will look into the situation with regard to Deputy O'Keeffe's area. I am almost certain the area north of the Nagle Mountains, Castletownroche or wherever, is in included in the scheme, but will need to double check it.
May I ask one more question? Senator Ryan raised the issue of public objections to masts being erected. In many stations around the country the company has added on to masts. What is the safety position in that regard? When I go to public meetings on this, all hell breaks loose. We often blame the Green Party members for that. However, at a recent meeting a Fianna Fáil man spoke on the issue — because the local election was about to take place — and he nearly brought the school down when talking about the safety factor. What is the up-to-date position with regard to the safety of masts?
Mr. David Hennessy
The Department of Communications, Energy and Natural Resources issued a report in late ——
Nobody believes in those reports.
Communities are concerned. Like Deputy O'Keeffe, I have been at many rural community meetings on this issue, particularly where somebody has tried to put up a mobile phone mast near a school. There are conflicting bodies of evidence on the subject. I would like to know what is the latest information on the effects of non-ionising background radiation on local communities. We know the effects of this non-ionising background radiation on younger children, whose brains and skulls are not fully formed until they are older. We have the medical evidence on that.
Have there been any advances in knowledge on this area that will help people come to terms with the fear of having a mast in their area? In particular, what is the situation in the case of co-location, where a number of antennae or dishes are attached to one mast? That makes sense from a planning point of view, but from the community point of view it is a concern. Is there information available to calm that fear rather than sweep it aside?
While this company may not have done this, I am aware other companies have. I have attended public meetings where companies were very hostile and got the community's back up. It is not good for a company trying to deliver a service to find the community with its back to the wall unwilling to budge an inch. There are genuine fears in communities and that must be taken on board, particularly where masts or antennae are to be near nursing homes, hospitals or schools. Perhaps the company should look for a better location in that situation. We are not dinosaurs trying to impede progress because progress is necessary in broadband for a modern knowledge-based economy such as Ireland's. However, some local authorities have exclusion areas, particularly if there is a protected view, a special area of conservation, a national heritage area or whatever the category might be according to the local authority planning guidelines.
We need to hear some hard facts about the medical evidence regarding the impact of non-ionising background radiation on the health of local communities. If this information was in the public domain it would dispel much of the fear. Some companies — not Hutchinson 3G Ireland Limited because I have never debated with the company at a public meeting — have a very arrogant attitude which is neither good from the point of view of the company nor from the point of view of the local community. The fast-tracking infrastructure needs ducting, particularly in towns, but in the case of a rural community this might have an effect on a view, on public health or on farm life. We need to know the facts and it is no good hiding behind obscurantist referencing and detail from the World Health Organization. Rural people are very cute, they want to know what is going to happen if they have a lot of dishes and antennae co-located in a local area. It is a simple request for decent information.
I ask Deputy Morgan to be brief because I do not want this discussion to open up.
I will be brief and I accept this is a contentious subject. I would expect Mr. Hennessy and Mr. Gallagher to give us the answers on this matter. However, I think an area that could be referred to the Oireachtas Library research service is the subject of non-ionising background radiation to see if more information could be provided. Whatever information is available may well dispel rather than uphold any concerns.
Mr. Gallagher focused on the issue of the broadband service in rural areas, which is an issue I also raised, in comparison with Britain. He also referred to Finland and other countries. I refer to the situation in Ireland being compared with Britain, France, Spain and those countries nearer to us and where one presumes there is a modern service. I suggest the Oireachtas Library research service could investigate this on behalf of the committee. I do not mean to be offensive to the gentlemen but I suggest we get some objective information on the subject.
The available research divides on whether there is a problem. This is the difficulty for communities as people read the research. On the question of these installations and their effect on children, I believe Hutchinson 3G Ireland has in the past approached sports clubs such as football clubs with a view to locating masts on their grounds. I ask for the delegates' comments.
Mr. David Hennessy
I do not wish to get into a debate on the health effects.
That is not the role of this committee and I will not allow it.
Mr. David Hennessy
However, I take on board Deputy White's comments about arrogance and engagement with communities and this is something we——
It might be a barrier to the company's success.
Mr. David Hennessy
I agree. We regard our engagement with communities as being a real factor to our success. We have located masts on numerous sports grounds. We have installed flood-lighting into sports grounds. We always deal with the local committee of the sports club and they decide whether to go ahead or not. Sometimes the issue becomes contentious where the club decides to progress with us but some of the locals are not satisfied with that arrangement. The big challenge for us in allaying the fears of people about health effects is trying to prove a negative — trying to prove that something does not cause an ill-effect. It is not possible to prove something to be untrue. We can argue that television signals have been around for 100 years and have been broadcasting at levels and there has been no proven link but it is very difficult to prove there are no ill-effects. We direct people to ask for information from bodies such as the Department of Health and Children, the Department of Communications, Energy and Natural Resources, the International Commission for Non-Ionising Radiation and the World Health Organization. These are groups with the best interests of people at heart. We do not wish to bamboozle people with information but rather want to reassure them that the bodies responsible for ensuring the regulations are correct do not have issues with these technologies. This is the challenge we face.
Members of the committee travel abroad regularly to conferences and meetings and we often travel through tunnels in Italy and Holland. In the Lee tunnel in Cork my mobile phone reception will break down midway through the tunnel. Why is the service so much better in Holland and in Italy than it is in Ireland?
Mr. David Hennessy
The Dublin Port tunnel is fully covered.
I have never been in that tunnel.
Mr. David Hennessy
The Jack Lynch tunnel in Cork——
I call the Jack Lynch tunnel the Lee tunnel.
Mr. David Hennessy
The Lee tunnel?
Yes. As late as this morning I rang a person who was in the tunnel and he said, "Hold on now, I am going to break down." There was a breakdown in the centre of the tunnel in both directions. I have been in a car with three political people from this Irish Parliament in a tunnel in Holland and Italy and there was no problem with them using their mobile phones whereas in Ireland that would not be the case. There is a big job of work to be done on infrastructure.
On the question of coverage, if one is driving around one loses coverage from one's own network but others would have coverage in the same area. If one is travelling abroad the phone constantly moves onto different networks. Will this ever happen here in Ireland?
Mr. David Hennessy
We have an arrangement with Vodafone, so if one travels outside the 3G coverage area the phone transfers to the Vodafone network and this explains the difference between the voice coverage and the broadband coverage here. We have that type of arrangement and Meteor has a similar arrangement with O2. We are also competitors.
Business is business.
I thank the delegates for their submissions which have been most interesting and they have fielded some forthright questions. Mr. Gallagher and Mr. Hennessy have assisted the committee in its deliberations. The issue under discussion was raised with the committee in 2008 when members visited towns throughout the province of Leinster, the commuter belt as it is referred to, and in early 2007 when we visited towns along the Tipperary, Waterford and Cork borders. It was a very important issue in those places. We met a wide representation of rural Ireland in every town we visited. They told us that the provision of an effective broadband infrastructure was essential for rural development, especially in the rural hinterlands. There is a target of the third quarter of 2010 but the members and I wish to emphasise to the delegation that the needs of the people must be met as soon as possible.
Broadband will allow people to work from home. I refer to the telecottage industry in other countries. I saw people working in Kiltimagh a few years ago. This industry facilitates small rural indigenous enterprises and helps breed life into rural areas, as Deputy O'Keeffe said. It connects them to the rest of Ireland and the world without having to up sticks and move out of their local area to earn a livelihood. This is what the committee wants to see happen. I hope the company's contractual commitments will be achieved. I thank the delegates and their support staff for their attendance.
The joint committee adjourned at 11.30 a.m. until 10 a.m. on Wednesday, 24 June 2009.