I welcome from Satellite Broadband Ireland, Mr. Kevin Ryan, chief executive officer, Mr. Seán Óg Brennan, chief technical officer, and Ms Orla Thornton, marketing manager, and from Grant Thornton, Mr. Brendan Foster, partner. I thank them all for their attendance. Before we begin, I draw their attention to the fact that while members of the committee have absolute privilege, this same privilege does not apply to witnesses appearing before it. 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 House or an official by name or in such a way as to make him or her identifiable. I call on Mr. Kevin Ryan to begin the presentation.
Broadband Technologies: Discussion.
Mr. Kevin Ryan
I am chief executive of Satellite Broadband Ireland and I am delighted to be here and to be given this opportunity to speak to the committee on how new and developing broadband technologies can contribute to a developing economy. I wish to start off with some background information on Satellite Broadband Ireland.
Satellite Broadband Ireland was created by myself and my partner, Seán Brennan, in 2008 in a response to the serious lack of availability of a cost effective rural broadband solution. We looked at the statistical trends affecting rural populations and communities and found that rural Ireland was being left behind either because of its proximity to the nearest exchange or its geographical remoteness in Ireland.
From 2007 onwards, this trend was starting to turn. We witnessed wireless technology beginning to penetrate rural locations as a first initial step in getting broadband to these isolated areas. Satellite broadband services at the time were only really able to match entry level DSL solutions of around 512 kB. Historically, a satellite broadband solution had a poor track record with high latency, intermittent signal quality and very slow download-upload speeds. This was compounded by the fact that for a two-way satellite broadband service of 512 kB, one could expect to pay in the region of €3,000 for the hardware and installation with monthly rates running around €500 to €600. For this reason, a satellite solution was primarily targeted towards the business customer only, excluding the normal residential user. We quickly realised the potential in this niche market and the significant gap that existed between what was required by the typical residential user in rural Ireland versus what he or she could expect to get from his or her local broadband provider. The reality is that approximately 40% of the Irish population live in a rural location with the majority without a proper broadband solution. According to the statistics at the time there were approximately 886,300 broadband subscriptions with mobile accounting for 127,500 — approximately 14.4% — compared with now where it has increased to 1,443,350 broadband subscriptions with roughly 466,969 mobile — approximately 32.4%.
Having studied these trends and penetration results for broadband in rural Ireland, we turned our attention to the emerging broadband technologies that could service these rural areas with a viable broadband service. We found that satellite was the only real immediate solution for meeting this problem head on in a satisfactory timeframe of approximately five years. In the early part of 2008, we spent a considerable amount of time looking at several satellite service providers and their product offerings across Europe and how our fellow EU partners were dealing with similar rural broadband issues. Our attention was quickly focused to Eutelsat's new Tooway Satellite broadband service.
In August 2007, Tooway was first launched in mainland Europe with its introduction into Germany. Since then, Tooway has quite literally taken off across Europe, with Spain, Italy, Switzerland and France among others taking large orders to satisfy their rural broadband demands. Eutelsat is Europe's leading direct-to-home, DTH, satellite provider with 29 satellites in a geostationary orbit around earth. Eutelsat's financial results for 2009 showed strong growth with revenues increasing by 7.2% to €940.5 million employing in excess of 600 in 27 countries.
Having already made the decision to trial the Tooway service in the early part of 2008, we began a lengthy research and development process to validate this satellite service in Ireland using varying sized satellite dishes and accessories to ensure complete coverage on the island of Ireland. We spent the next six months validating signal strengths in remote locations and perfecting installation methods. Since completing these successful exercises, Satellite Broadband Ireland was proud to be the first to sign contracts and introduce the Tooway service to Ireland with the first installations of the service in December 2008. Since the first installation, our Tooway service has now successfully been installed in all counties covering the most rural locations from west Cork to the most northerly points of Donegal.
Having started the residential installations, we concentrated on opening other revenue streams for our company. It was around this time that 3 Ireland was awarded the national broadband scheme, NBS, by the Department of Communications, Energy and Natural Resources. With this announcement, we realised there was a part to play in the roll-out of a national broadband scheme for our superior satellite broadband service. As the committee undoubtedly knows, the national broadband scheme consists of delivering a universal broadband solution to 223,000 houses in its lifetime to the end of 2013. We quickly seized upon this opportunity and worked towards developing a tailor-made package combined with an excellent service commitment with our European partners, Eutelsat, for this project. This required a considerable investment of personal time, money and energy into ensuring we got exactly what was required to be delivered under the guidelines and technical specifications already agreed for the NBS.
For us to be successful in our proposal, it meant lengthy meetings at various locations in Europe and meeting with Eutelsat executives to ensure we could meet the deliverables for a satellite solution delivery under the scheme. From the time of negotiating this unique satellite service to the current time, this contract was the single biggest individual broadband contract in Europe where it could realise a potential of up to 5% of customers on satellite which would also make it the biggest satellite broadband contract.
Having completed our proposal on which we worked for several months, we collaborated with 3 on the delivery of our comprehensive and robust satellite broadband solution to be utilised for its national broadband scheme. Following several meetings with directors of 3, along with Analysis Mason who are working as technical consultants on behalf of the Department of Communications, Energy and Natural Resources, we were successful in winning the satellite broadband service agreement to deliver broadband to the more rural and remote locations within the NBS areas. Since this success in obtaining potentially the single largest satellite broadband contract in Europe, we commenced installations at the end of July 2009.
As individuals and entrepreneurs, we have worked tirelessly from day one to make our company a success. From the early days of starting a company in a shed at the back of a house to where we have brought it today, our growth has surpassed all our expectations. Every day is a learning experience and we have great plans for where we want our company to go. We want to expand our service offerings in the Irish marketplace to be able to offer our customers more than just broadband and we aim to become a one-stop national telecommunications company able to deliver services guaranteed anywhere in Ireland. We plan to introduce to our customers additional value-added services such as television and Internet telephony — all through the same satellite hardware.
Our company's vision started off over a casual conversation and now, in less than two years, it has developed into a fully operational Internet service provider with significant growth potential. Currently, we employ 30 full-time and part-time staff and predict these numbers to increase significantly in 2010. We always have had a vision for this company and what we could achieve, and we are carefully and methodically working to this strategy to achieve our goals and realise our dreams. Starting a company in any country at any time is a challenge, but starting at the height of a global economic downturn was not what we planned or hoped for. These challenging times did not act as a deterrent but rather focused our minds and made us more determined as entrepreneurs.
Since we began operating we have received nothing but fantastic support from the likes of Ms Christine Charlton, who heads up the county enterprise board in Westmeath. We have more recently become clients of Enterprise Ireland as our strategy for growth continues with our ambitions to move our company into markets abroad. The support from these agencies is invaluable to us and companies like ours and will enable us to grow and develop well into the future.
It is imperative that funding levels to agencies such as the county enterprise boards are maintained, and even increased, to deliver upon the promise of generating more innovative companies in Ireland, which is the cornerstone of the innovation cycle here. Without the funding lifeline we received from our local enterprise board, we would not be where we are today. I implore the committee to keep these funding doors open.
The supports from financial and banking institutions is also critical to companies wishing to help Ireland reposition itself as a European leader for technology and innovation and get itself out from this economic downturn. I refer to recent Government publications such as the report of the innovation task force and the strategy for science, technology and innovation which outline clearly steps to help enable Ireland become a world leader. For instance, the aim of the report from the innovation task force is that by 2020 Ireland will have a number of large, world-leading, innovation intensive companies headquartered in Ireland, with a global footprint, and the innovation task force agreed six fundamental principles where the entrepreneur and enterprise must be at the centre of its efforts with the availability of smart capital being fundamental to enabling these companies to start, grow and transform.
Currently, in Ireland there are thousands of budding entrepreneurs who have either started a company or are researching an idea that could develop into an enterprise, and we critically need the support of the committee, which has responsibility for enterprise, trade and innovation, to ensure the support and available finance is available when needed. As an entrepreneur starting out, we found at first hand that there is no availability of financial support, aside from the enterprise boards and Enterprise Ireland. I refer to the banking and lending institutions in Ireland today where they have restricted all lending to viable companies looking for their support. There are mixed signals on financial support from the banking sector. On a local level, they appear favourable to business cases, but once it moves up the decision chain, the door closes firmly. Constantly, I hear statistics being thrown out about banks not refusing lending or applications for lending increasing. What is not reported is that banks are informally telling companies not to apply as an application will in all likelihood be refused. This is the reality of doing business in Ireland today.
Satellite broadband and satellite technology is constantly being improved and is growing at an incredible rate across Europe, with technological advancements taking place at a phenomenal rate. There are other similar stories where satellite broadband services are being used to bridge the rural digital divides that exist, for example, Swisscom in Switzerland. We also have been in consultation recently with the Northern Ireland Assembly, the Welsh Assembly and the House of Commons where we presented to an audience of lords and MPs the benefits of satellite playing a role in digital Britain. Last week we returned from a fact finding mission in the Balkans where we were looking to understand their broadband needs and capabilities.
How satellite broadband technology can play a role in future in developing the Irish economy and other economies is fast becoming evident. As part of our company mission and overall philosophy, we aim to pass on these advancements in our service to all our valued customers while all the time maintaining a competitive pricing structure. Notwithstanding the significant advances we have made in the past 12 to 18 months, Satellite Broadband Ireland is not satisfied with resting on its laurels.
All current and future customers of the company will continue to reap the benefits of using the latest technologies as our technological partner, Eutelsat, prepares for the launch of the KA-SAT satellite in late 2010. KA-SAT, once in a geostationary orbit above the Earth, will be able to provide significant benefits to all current and future Satellite Broadband Ireland customers in the following ways. It will increase standard download speeds from today's speed of 3.6 Mbps to a starting service of 10 Mbps, with further increases up to 40 to 50 Mbps shortly after commissioning. The upload speeds will also increase from the current speed of 384 kbps to minimum 1 Mbps and beyond. The monthly allowances will also multiply. Triple-play service, giving additional added value with services such as IPTV and VOiP, will be readily available to all customers.
As part of this launch, Eutelsat has already confirmed an investment of between €7 million and €10 million in a ground satellite hub station in Cork, linked by fibre to nine other similar satellite hubs throughout Europe, including Helsinki, Madrid, Turin and Paris, to name just a few. KA-SAT is a revolutionary new satellite which will provide new higher speeds using its 80 spot beams directed across Europe with two beams being dedicated to the island of Ireland. This means we will have dedicated and reusable bandwidth for the Ireland market as compared with traditional satellite coverage maps which meant that as Ireland was the furthest westerly country, the signal, strength and quality of service necessitated the use of larger satellite equipment to obtain a consistently strong signal.
Satellite Broadband Ireland's current customer base is a mix of residential users and small to medium business owners spread throughout rural Ireland. As part of our company's ethos in delivering broadband to all parts of unserved areas, we commit to giving broadband or one's money back. Aside from the national broadband scheme's commitment to bring a broadband connection to 223,000 buildings throughout rural Ireland, there are additional customers who will still be without a broadband connection. We can deliver a guaranteed solution, regardless of whether one is connected to a phone line or how far one is from an exchange. Satellite Broadband Ireland also strongly believes that the roll-out of a broadband service will help to continue the strong entrepreneurial spirit that is a unique asset of the knowledge economy in Ireland and we will help secure a sustainable future for its firms and entrepreneurs outside urban areas. The company is strategically placed in Mullingar in the heart of the midlands and is only too aware of the lack of service offerings in the marketplace for those who cannot access standard broadband, whether from an exchange, wireless or through a dongle.
As the committee will be aware, creating an exemplar smart communications network in Ireland is part of the Government's strategy contained within the national digital development plan and it is essential that every person in Ireland, regardless of his or her geographic location, should have access to broadband. As a company within the sector we are delighted to be part of supporting this network. The digital economy underpins the future of our economy and our competitiveness as a country and now is the time to create this vision and turn it into a reality. As a country, we need to foster enterprise and innovation and encourage creativity in the digital space for social and economic benefits. However, we must take this foresight now and invest in this sector in order that it will grow. The digital revolution represents a considerable opportunity for Ireland. For us to support the development of our smart economy, we need to have the technology to back this up which will enable us to work from any location in the country, whether in a capital city or on Achill Island. We have started providing this service and we believe the factors that historically inhibited people from setting up companies in rural Ireland or perhaps working from home are now slowly being eliminated, thus contributing to the development and encouragement of the entrepreneurial spirit in Ireland.
When we started the company, regardless of the challenging times, we had one goal in mind, which was to become Ireland's leading provider of rural broadband in Ireland. From day one we have looked for every opportunity for our company and have been proactive in seeking these out. As part of the next stage development of our company, Enterprise Ireland will be fundamental to assisting us in our goal to develop into European markets through providing support and international contacts within the digital sector. The work in which this Oireachtas joint committee engages with the Department of Enterprise, Trade and Employment is very important in supporting companies such as ours in growing into businesses that will succeed and win, not only in the Irish market but further afield. New and developing technologies such as satellite broadband and other multi-platform approaches to broadband in Ireland, can all contribute a great deal to developing the economy. However, without the drive from this committee, the Department of Enterprise, Trade and Employment in supporting these businesses such as ourselves and the Department of Communications, Energy and Natural Resources in driving the digital strategy forward and investment in the infrastructure from us and other platform providers, this will not be achieved. We all need to continue to push the broadband agenda forward to secure Ireland's competitiveness and develop the economy within the European marketplace.
I thank Mr. Ryan for his positive contribution. It is lovely in times of difficulty to hear about a company which has enjoyed wonderful success over a short period. I attended a conference where someone spoke of the lack of opportunities in different areas and referred to the electrification of the country. When electricity was delivered to an area, it provided a great boost and a great opportunity. The same applies to broadband. If one does not have access to broadband in one's area, one is at an enormous disadvantage. It is lovely that SBI has had success. The concentration of many similar companies in this sector when they set up, especially in the early stages, is on urban areas and large centres of population and it was a concern that many parts of rural Ireland would be neglected. It is great that this company is picking up the slack and giving everyone on the island an opportunity to access broadband rather than concentrating on the main centres of population.
Mr. Ryan mentioned the lack of financial support and he paid a compliment to his local county enterprise board and to Enterprise Ireland. I do not want to get into the nitty gritty of the company's finances but I imagine to achieve what the company has in such a short time has involved significant investment. How has the company managed to succeed in such a short time? When will people be given an opportunity to buy shares before the company floats?
The Deputy used to be a bookmaker and, therefore, Mr. Ryan should be careful answering that question.
Mr. Kevin Ryan
The Deputy is correct. Without financial support, my partner, Seán, and myself have invested a great deal of our own money in the company. We have accommodating wives and they saw the reality of our dreams. We have had to curtail personal interests to realise our dream and to bring the company from where it began to where we are today. Christine Charlton of the Westmeath County Enterprise Board has been encouraging and she did as much as she could within the board's remit to help us. We are now with Enterprise Ireland. It has been a tough, hard slog for the past two or three years but we have come through the tunnel and we are on the up now. We are not the only company out there. Many people have had ideas that were just as good but they did not get the break.
With regard to financial institutions, on the basis of discussions Mr. Ryan has had, are they not interested in the sector in which his company operates or do they feel it is too risky? Do they not have the funds to lend?
Mr. Kevin Ryan
I do not know. There are a few reasons. Our branch manager has been supportive but once an application goes beyond his remit and is sent to Dublin, the bank has a big bucket in Dublin to deal with many different projects. Our sector and the green sector are two growing sectors in Ireland and given the opportunities that exist in both sectors, the financial institutions should get behind us.
Mr. Brendan Foster
On the ground on behalf of Grant Thornton, I act for privately held businesses and it is always difficult for start-up companies to access initial capital from financial institutions because they do not have a track record and there is an emphasis on trying to provide security against an unproven business or management team with perhaps an excessive emphasis on personal guarantees and charging the family assets, the kitchen sink and everything that goes with it. Once companies get up and running, credit is available, although clearly less is available nowadays and all lenders are lending on less favourable terms than previously with more scrutiny being applied to the various applications. When people apply, they must be prepared to give much more information and to have a longer lead-in period before they can access finance.
We are all tired of hearing about the NAMA situation and the recapitalisation issue but that process needs to be completed before we can get capital flowing back to the SME sector. It is happening on a day-to-day basis. We are engaging with the various financial institutions but it is problematic. Lenders are being more selective with more scrutiny, more margin and cost associated with it and more emphasis on personal guarantees, which is problematic. From an entrepreneurial perspective, people say if one starts one's own business, one should be prepared to sacrifice all one's personal assets but that can be at a significant cost if failure by entrepreneurs is punished. We do not have an opportunity to deal with personal cost in Irish bankruptcy legislation, which is to be addressed on the Government's agenda through the personal debt issue.
Mr. Ryan has dealt with Christine Charlton of the Westmeath County Enterprise Board and Mr. Frank Ryan in Enterprise Ireland. County enterprise boards in general are curtailed. The committee recommended 15 to 18 months ago that they should be allowed to support companies with more than ten employees. Our argument was there was a lacuna between EI and the county enterprise boards and companies dropped through the net because nobody was available to assist them unless they were export-oriented, which SBI is. That is why EI has taken a view on the company, which now has 30 full and part-time employees, and if it breaks into other markets, its staffing will increase. As Mr. Ryan said, the future is the green technology movement and his sector.
What are the most important factors in the context of financial assistance, incentives, taxation measures and so on if the committee could grant SBI two wishes to give it a boost from here on to ensure the company grows? What were the most important requirements when the company set up and what are they now two years later?
Mr. Kevin Ryan
On a personal level, it was our commitment and belief in our product and in what we were doing.
We take that as a given. I refer to external factors.
Mr. Kevin Ryan
Mentoring and the availability of expect advice was critical. The enterprise board has mentoring facilities. Grant aid is also important. The Chairman is correct that we quickly outgrew the enterprise board and then there was a gap before we made the leap to going abroad.
If the company did not go abroad, it could have gone out of business.
Mr. Kevin Ryan
Absolutely.
The company was left suspended in mid-air, as it were, with nowhere to go.
Mr. Kevin Ryan
Christine Charlton and the enterprise board did as much as they could but there was a point when we felt we were alone for a short period. We then had to make a conscious decision to go further afield and to get into export-oriented business. Grant aid and mentoring are important when starting out. It is not all about throwing money at companies. It is about giving them the right advice and the tools to make the right decisions at the right times. We were very lucky. We had a few people around us who could give us the right advice and help us make the right decisions. It is important to put money in at the right time but it is also important to have the right advice.
Would you support the recommendation of the joint committee, which we put to the Minister, that county enterprise boards should have greater autonomy and be permitted to go beyond the ceiling of ten employees?
Mr. Kevin Ryan
Yes, absolutely. The committee will have gathered by now that I am a great fan of the county enterprise boards and of what they do. Curtailing their ability to help companies is not helpful. There should be a link between what they do and what Enterprise Ireland does.
I too congratulate Mr. Ryan and his colleagues. It is good for this committee to see exactly what is being done by companies such as his. The Chairman organised a visit by committee members to several counties, particularly in the south east. We visited several county enterprise boards. It was good for us to see the work being done. Members of the Oireachtas tend not to know about the nitty-gritty of what is happening. I come from a totally urban constituency and I have experience of county and city enterprise boards. They play a huge part in encouraging companies such as Satellite Broadband Ireland to develop and grow. Mentoring is a huge part of that.
In my constituency, which includes both inner city and some suburban areas, there are pockets where broadband is not available and the choice of provider is very limited. Advertisements give the impression that there is a huge choice but, in fact, there is not. Has Mr. Ryan thought about selling his product in urban areas? How would he get into that market?
Mr. Seán Óg Brennan
Mr. Kevin Ryan mentioned the arrival of the new satellite next year. One could talk all night about next generation speeds, fibre-optics, fibre to the home, fibre to cabinet and so on. The basic problem in Ireland is that everyone does not have a decent service. These days, people want to use social networking sites, communicate with friends and family, look for a job or price a car. These are the small things people need nowadays. Our next satellite, which launches next year, will have a high speed service all over Ireland. We have a service all over Ireland at present but at only 10 mg speeds. Unfortunately, the market looks for high speeds. As Deputy Brady has said, many people do not have an adequate service, even in city centres. They have the speeds but they are highly contended. The networks currently available in Ireland cannot support high speeds when there is high contention. We need new technologies.
We also need to look at all platforms. It is not the case that some platforms might not be good enough or that other platforms might be better. Any platform is good enough if it works. We will bring our services back into the urban areas and compete with ADSL, wireless, fibre and so on because we will have the network in the sky to do that.
Eircom land lines were causing problems of access. Have we got over the problems presented by the height of buildings, signals not being received and so on?
Mr. Seán Óg Brennan
Line of sight is an issue for wireless.
Yes. Have we got over that?
Mr. Seán Óg Brennan
The latest thing is WiMax, which is being widely advertised. It still works on line of sight and is a very expensive service. All these services are looking at urban markets because they need vast amounts of customers to pay for them. That is one of the solutions people will have to consider. Satellite is a turn-key solution to an individual. It is not a network. The network is already built. It is in the sky and available to everyone. We talk about the roll-out of networks and spending Government money on projects to make networks available so that people can have data services through broadband, but we must look deeper and further. We cannot depend on the old DSL or fibre, which is now unaffordable anywhere in Europe. Every country in Europe has this problem. It is not unique to Ireland. We will take our service to other countries in which the same problems are experienced by the same percentage of people. Ireland is not backward, by any means.
People do not realise that the Eircom to the cabinet network is one of the best in Europe. Unfortunately, bad copper was installed a long time ago and the network now cannot take some of the speeds we need from the cabinet. That is why we need other services such as wireless, mobile communications and satellite. All platforms must be looked at. We are delighted to say the Government did that with us and approved us. We are the first satellite company to be approved by a Government agency. This was helped by the national broadband scheme. People need to realise this is a fantastic scheme. We are fitting satellites in Achill Island, for example, and people have communications there. Because phones are very expensive we have programmes such as Skype, or VoIP services. It is all about giving people a chance to access cheaper communication.
There will be problems with all networks, whether cable, wireless or satellite. Some buildings might not permit satellite dishes, for example. The trick is to use all platforms wisely and make sure they are available to everyone in the country.
I am sorry for being late but it is nice to be here to hear a success story from Mullingar.
That is why I invited the witnesses, Senator. I know they were successful.
It is one of your best decisions, Chairman. I have known Ms Orla Thornton for a long time. Her reputation precedes her.
When I was Chairman of this committee we did an insurance inquiry. It was a difficult challenge and we spent four and a half years at it. The members of the committee played a huge role in reducing the cost of premiums by as much as 45%. Today's delegates are professionals in their field. We are the ordinary lay people who are the conduit, under the stewardship of our Chairman, to the Cabinet. I would like the delegates to come back after a week or two and let us know what they need to transform their industry. The Government may then make a decision to do that. We are lay people but we can be a conduit. If the delegates come back and tell us what they want they will get all the respect they deserve and we will do our utmost, under the chairmanship of Deputy Penrose, to ensure that the Government makes the necessary changes to allow this enterprise to advance and to push Ireland forward.
Mr. Kevin Ryan
I thank Senator Cassidy. Our team will be delighted to come back with submissions.
I welcome the delegation. Their presentation was excellent and a great promotion for their company. Last year, 3 Ireland spoke to the committee about the roll-out of broadband and the challenge facing it. We got a sense that approximately 5% of what it did could not be serviced by wireless and that satellite would be required for it. I presume Satellite Broadband Ireland has got the contract for that percentage and the delegates represent that company.
Mr. Kevin Ryan
Yes. That is correct.
Are other companies in the same area? Who are Satellite Broadband Ireland's competition? Are they making inroads and how competitive is the delegates' company?
When it spoke to the committee, 3 Ireland said that servicing the other 5% would be more expensive than wireless. Could the delegates say something about the cost of their service? How costly is it compared with wireless? Are there opportunities for taking over from wireless or fixed line service provision? Would satellite be too costly for that?
The village of Oldtown in the rural part of my constituency has not been able to get a broadband service and good businesses are incapable of developing there because of this. Perhaps this would be the solution for them.
With regard to the advantages of a satellite service compared to a wireless or fixed line service, does Satellite Broadband Ireland's agreement with 3 Ireland preclude it from taking any of the customers 3 Ireland could service?
Mr. Kevin Ryan
I will focus first on the cost of satellite services compared to wireless services. A satellite service is very expensive. A wireless service can erect masts at various locations throughout the country which can service 500 or 1,000 users. A satellite service involves putting a satellite into space and expensive equipment and modems. Therefore, satellite service is significantly more expensive than a wireless service. People can go into any store such as Meteor or 3 and purchase wireless service for €19.99 per month and be up and running straight away with perhaps an initial set up charge of €49. However, people who want a satellite service must pay in excess of a €500 once-off installation cost. That said, when we first entered the market, the cost was several thousand euro. This has since been reduced to €500, which is a fraction of what it used to be. We do not intend to stop at that and hope to reconsider prices on a constant basis. In the current climate, price is critical for customers. Currently, the cost of satellite service is prohibitively more expensive than a wireless service and will remain so.
What is the most significant element of the cost?
Mr. Kevin Ryan
The most significant element is the modem, which remains very expensive because of the technology used. A satellite dish is also required along with cabling and the necessary ancillary parts.
Can the service be dovetailed with television satellites?
Mr. Kevin Ryan
Yes. We plan to offer triple play services so that customers can receive television and IP telephony through the same dish. Without getting into the technical details, we have developed an offset head which will mean we can point a service at two different satellites so that we can get television from one and broadband service from another. We are developing these innovative measures to provide customers with the best possible choice. Everybody wants value for money.
Mr. Seán Óg Brennan
With regard to expense, we are talking about costs from the network to the home. The network places a satellite in space, which might cost €400 million or €500 million, but when one compares that with networks here such as Fiver or the wireless network being rolled out by 3 Ireland currently, which involves 191 greenfield sites and 450 masts in total, including those on the tops of buildings and public enterprises throughout the country, the satellite system is not that expensive. The problem with regard to satellite is that we do not have enough customers. Everything gets cheaper the more customers there are. If we can buy the kits to which Mr. Ryan referred — the modems, satellite dishes and so on in bulk — like mobile or ADSL companies which provide routers free of charge to homes, the costs for satellite service would not be any more expensive.
The most important thing to note is the monthly charge. Our monthly charge for the satellite service for the national broadband scheme is €19.99 per month. That has not been done before anywhere in Europe. We are the first company in Europe to provide the satellite speed we are providing for €19.99 per month for the national broadband scheme. This is not subsidised by the Government. We are delivering this directly to the customer. The significant cost involved in providing the service is the initial charge for the equipment, but that has always been the case with technology. Therefore, it is about the number of customers. The national broadband scheme is fantastic for customers currently. Anyone getting satellite service now through the national broadband scheme will pay €49 for a satellite dish and €19.99 per month for the service — small money. We would like to see this continue in other environments.
Money is available again to Ireland from Europe for communications. Broadband is still an issue and the national broadband scheme will not cover the whole country, but we must move on. With the new satellite launched, we expect that if we can get more customers we will provide equipment at approximately €49 directly from our office. That is the way we see things going.
Mr. Kevin Ryan
With regard to the question on competition in the marketplace, there are several companies. When we entered the market a number of companies were providing satellite broadband for approximately €2,000 or €3,000. We probably entered for that reason and we felt there was not a value for money service. There are still some other companies providing a service, but we are finding significant demand for our service. Our service is far cheaper and is a superior service. There is competition, but it is not real competition.
Over past years in France, the telecom industry was an important contributor to employment, particularly home based employment. Many years ago I spoke at a rural development conference in Kiltimagh, where six or eight jobs had been generated that involved dealing with Korea, Japan and other countries. What contribution can Satellite Broadband Ireland, SBI, make to growth in that area? That type of micro technology and industry has not really taken off in Ireland as it did in France and central European countries. Does SBI have a contribution to make in that regard or has it given any thought to this?
In my area, Ballynacargy, broadband is a major issue. Eircom provided a great central spine for broadband, but many of its stations need upgrading. Eircom has not got the money to do that. How does Mr. Ryan envisage SBI can contribute to an area like mine, where there is need for high speed broadband but where there are only 300 or 400 people in the area? It is an area of low density. Mr. Brennan said earlier that the way to reduce prices was to increase customers. That is how to reduce the price per unit. SBI should try to get to the rural areas mentioned by Deputy Power. Many of us are rural based, although Senator Ryan is Dublin based. However, his constituency has a huge rural hinterland, including Balbriggan and Oldtown. How can we ever solve the problem for those areas?
Mr. Kevin Ryan
There is general consensus within the sector that a proper network will require collaboration with Eircom, wireless operators and satellite technology. To roll out a next generation network to ensure there is 100% broadband coverage, a certain amount will be fibre, some will be future proof services such as wireless LTE and some will be satellite. A blend of all the operators in the marketplace today will be required to play a part in rolling out broadband and providing a guaranteed solution for all parts of the country. Countrywide broadband is coming, but the issue is confused by various demands for things such as 100 MB speed. We could all be happy with 5 MB, 10 MB or 20 MB speeds if these could be guaranteed. We should concentrate on this rather than get caught up in the argument and demanding 1 Gigabyte like Singapore. Let us do first things first and walk before we run. We should aim to get to 10 MB, 20 MB or 30 MB speeds first. To do it properly will require collaboration between Eircom, wireless operators and us.
Mr. Ryan's company has provided 30 jobs and it probably started off with two or three.
Mr. Kevin Ryan
We started with two.
Some of us have been in that same situation. What is the employment potential?
Mr. Kevin Ryan
Given the right circumstances and funding and the right opportunities, we plan to add at least another 20 jobs in our own area of Mullingar and County Westmeath. We plan to expand into Europe. We have already met the Welsh Assembly in Cardiff and the Northern Ireland Assembly in Belfast. We have been to the Balkans and to the House of Commons. We are telling them all the good news story that satellite can play a part in a national digital strategy. We are looking to get into all these countries and these sectors. We will keep our base in Ireland.
What has been the reception from all those places? We invited the company to attend here because we knew it had been to all the other parliaments.
Mr. Kevin Ryan
The reception was very constructive. The people we met in London were very keen to see how it had rolled out. They have to wait and depend upon what government will be returned in the coming weeks but they have a universal service commitment to roll out a broadband service of about 2 MG. I think it was 1 MG in Ireland. When we first entered this marketplace, the perception of satellite was that it was unreliable, expensive and slow. We have worked tirelessly in recent years to meet the Minister, Deputy Eamon Ryan's group and to reiterate the fact. It is the same with regard to all technologies such as mobile, laptops, cars, everything, in that they migrate, become smaller and faster or bigger and better. All technologies get better over the years and satellite is just one of those technologies.
I thank Mr. Ryan for attending the meeting and assisting us in our deliberations. An excellent and efficient national broadband network is a fundamental requirement for any vibrant economy trying to compete and grow and we have to focus on this. It is as essential as the ordinary utility. Deputy Power referred to electricity, transport, water and sewerage networks. We need the same level of penetration of broadband as, without it, we are at a severe competitive disadvantage.
The company is in the market of green technology, which will probably be one of the massive growth areas in the next five to ten years. We compliment the company for being in the vanguard of this development and for taking chances. This is the reason the people involved are risk-takers and entrepreneurs. All the committee can do is try to prepare the ground and put in place an economic environment that will be of help in the future.
Instantaneous communication across the country and across the globe has given us all much easier access to markets and a platform from which to advertise this country's skills, commodities and products. This is a new age. When some of us were in primary school this was a pipe-dream that never entered the equation. It opens up society in a myriad of ways and allows people to work from home which is an extremely important aspect with tremendous advantages, not least, environmental advantages. A person working from home does not need to use a car to go from A to B. I am a rural person and I know it allows services to be based in rural areas and allows the information and entertainment industries — Senator Cassidy is an expert in that area — to be delivered directly into people's homes. I refer to downloading music of all types. I am sure Foster and Allen will be in all homes——
Television direct marketing three or four hours a day has huge potential.
There is potential for schools and local community organisations. This is the future. It is one of the most promising developments for rural regeneration, for micro-industries and micro-enterprises from Malin to Mizen Head. As Senator Cassidy said, we will urge the Government to do everything possible to speed up the provision of blanket coverage. That is our aim and it is the Utopia. Every town, village and townland needs to be covered so that opportunities for jobs can be enhanced in all those towns and villages throughout the country.
I compliment Mr. Ryan for his entrepreneurial skills and risk-taking in a very difficult environment. As Deputy Power said, one of the reasons Mr. Ryan was invited to address the committee was that he had addressed the Northern Ireland Assembly, the Welsh Assembly, the House of Commons. This is a success story of our own and it was important to hear Mr. Ryan. He has outlined in comprehensive detail what was entailed, what it took. I am sure there was many a worrying day and night as a business takes off but everything must go through an incubation phase. It is good to see a young Irish company, a success story, as Senator Cassidy remarked, as there have not been too many of those. It is important to be positive about what is being achieved.
I note the announcement yesterday of 300 jobs in another area. Ireland has an advantage in the area of information technology. The company has the advantage of technical skills and know-how that will bring us another step along the way towards addressing serious problems which are also global. If we can make our contribution, it will be a significant advance.
I invite Mr. Ryan to make any further submissions which he may regard as being very important — Grant Thornton is always alive to possibilities in the areas of incentives or taxation — because this committee is very eager to interact with people like Mr. Ryan to get a better idea of what might be required, in particular, what might be the little booster at the acorn stage and how to nurture a company along to the oak tree stage which is probably when Mr. Ryan will retire to a sunny clime, allowing someone else to worry about the company. As Deputy Power said, it will probably be a case of the company going public and fools like us will take a chance and buy into it. I say that in jest. Mr. Ryan deserves praise for his courage, innovation and entrepreneurship. I remind Mr. Ryan that any submissions for future budgets should be available in June and July. Ministers for Finance do not just concentrate on the budget in November or December. The earlier an idea is submitted, the better.