This Bill is an enabling one and its purpose is to empower the Minister for Finance to make moneys available up to a limit of £350 million for the development of the telecommunications services. There have been 13 earlier Bills since 1922 authorising the issue of capital required for the development of the telephone service.
The last such Bill was in 1977 and the Act passed in that year gave authority for the issue of a further £350 million. Some £270 million of that £350 million had been advanced by the end of 1980. The balance of £80 million will not meet the needs for this year, hence the introduction of this Bill. It is proposed to take advantage of this Bill to provide also for the capital needed for development of the telex, data and telegram services and to fund from the capital allocation certain expenditure met from the Vote at present. I will return to these points in more detail later.
The 1977 Bill was intended broadly to provide the funds estimated at that time as likely to be needed over a five year period, based on 1977 costs. This sum has not proved adequate for five years because of the effects of inflation and of the adoption of an accelerated telephone development programme by the Government in 1979.
The objectives of the accelerated five year development programme, spanning the years 1980-84, are:
—to raise the quality of the telephone, telex and data services for subscribers to the level in other EEC countries and maintain it at that level.
—to provide a fully automatic service, including subscriber trunk dialling, internally and internationally for all subscribers.
—to increase the rate of connections so that applications for telephones can generally be met on demand.
—to lay the ground work for continuing growth.
To achieve these objectives requires greatly increased investment compared with that envisaged in the 1977 Act. Last year over £123 million was invested in the development of the service and this year it is planned to invest £220 million. The reasons for a Bill being necessary at this stage rather than in 1982 as might have been expected in the ordinary course will therefore be clear.
In the debate on the 1977 Bill in the Seanad, a number of Senators suggested to my predecessor that the organisation of the telecommunications service should be reviewed, and questioned whether it was possible to operate a service of the size and complexity of the telephone service satisfactorily in the civil service. Some time after that, the Government appointed a review group under the chairmanship of Dr. Michael Dargan, to examine this issue and the group recommended that the telecommunications and postal services should be taken out of the civil service and responsibility for them entrusted to two separate State-sponsored bodies. That recommendation was accepted by the Government and the preparatory work for establishing these bodies is being pressed ahead vigorously. A Green Paper was issued last year and a White Paper will, I expect, be issued quite soon. Substantial progress has been made in the drafting of the necessary legislation. I am hopeful that the draft legislation will be introduced in the Oireachtas this autumn and that the State-sponsored bodies will be established in the first half of next year. But of course, as Senators will realise, it is not possible to be certain of this.
I have made this point at this stage because the new State-sponsored body for telecommunications will be expected to raise the necessary capital for development of the service and consequently this Bill does not provide for capital for about five years ahead as did earlier Bills. However, because it is not possible to be certain when the State-sponsored body will take over and in order to provide against unforeseen difficulties the new body might have in raising funds quickly, this Bill provides a margin for contingencies to avoid the need for further legislation. I would like to emphasise, however, that as I said earlier the Bill is an enabling one and the authority sought in this Bill will be drawn upon only to the extent necessary.
There is another development that also affects the amount of capital to be advanced under the Bill. As Senators may already be aware, the Government's 1981 Investment Plan envisaged that up to £200 million of the total capital programme of £1,700 million this year would be funded by the private sector. The aim is to fund in this way at least £100 million of the £220 million required for telephone capital purposes this year and whatever sum might be regarded as appropriate next year. For this purpose a new company, Irish Telecommunications Investments Ltd., were established recently and to the extent that this venture is successful in achieving what they were established to do, as I expect they will be, the need to draw capital from the Central Fund under the provisions of this Bill will be reduced. This factor has been taken into account in the amount of money being provided for in the Bill.
I mentioned at the outset that this Bill is intended to make funds available for development of the telex, data and telegram services. Previous Bills provided only for capital for development of the telephone service. Capital for development of the telex, data and telegram services was met from the Vote provision and not under the authority of the Telephone Capital Acts. That was done on the basis that the capital required for development of these services was relatively small and did not warrant separate capital provision being made for them. Telex and data services are assuming a more important role and can be expected to require more capital in the future. The time has come, therefore, to fund capital development of these services from a capital fund. In any event, from an accounting point of view, it is anomalous that capital for development of these services should be funded differently from that for telephone development. This Bill provides, therefore, that money for development of all telecommunication services — telephone, telex, data and telegrams — should be funded in the same way, and explains why this Bill is described as the Telecommunications Capital Bill when previous Bill were described as Telephone Capital Bills.
It is also proposed that all money spent on renewal of plant, such as telephone exchanges, should be funded under the provisions of this Bill. Heretofore, much of this expenditure was borne on the Vote. Renewals increase the life of the asset and, in general, involve expansion and modernisation. It is reasonable and in accordance with good accounting practice that all expenditure on renewals should be treated as capital, and it is proposed that all such expenditure should now be met by the moneys to be authorised under the terms of this Bill.
I propose to outline now the need for the funds sought under this Bill and to set out briefly what development is proposed over the period up to the end of 1984, the target date for achieving the objectives of the current accelerated telephone development programme.
Nobody will, I believe, contest the need for a massive development of our telephone service. It is generally accepted that the standard of our telephone service lags well behind that in our EEC partner countries and is an impediment to the efficient conduct of business as well as a deterrent to foreign firms to establish industries here. There is, of course, also a pressing need for telephones for social purposes, such as for the aged. The quality of our internal trunk call service still leaves much to be desired and the delay in meeting applications for telephones is much too long. These shortcomings clearly must be put right. In practical terms this means the difficulties in making trunk calls must be eliminated, the 10 per cent of subscribers who have only manual service must be given an automatic one, dialling of all calls must be made possible and the waiting list of over 90,000 for telephones must be eliminated so that, like other services, applicants can be given promptly the services for which they are prepared to pay. This, effectively, is what the current development programme aims to do.
Expressed in these short simple terms it may seem a relatively easy task to accomplish what the accelerated programme aims to do but any such assumption would be very wide of the mark. To get into a situation where these aims are met will involve
— the provision of some 500 new buildings,
— the replacement or extension of virtually all the existing telephone exchanges as well as the provision of many more new ones,
— at least doubling the size of the existing trunk network,
— carrying out cabling schemes in every area of the country so that service can be provided to applicants,
— installing some 450,000 to 500,000 telephones,
— converting all the remaining 450 manual exchanges to automatic working,
— extending subscriber trunk dialling to all of Northern Ireland and Britain and international subscriber dialling to all subscribers in the country,
— wiping out the existing waiting list for telex and data services.
This is an undertaking of unprecedented scale and involves expansion at the rate of about 14 per cent per year so that the total size of the network is doubled over the five year period. This rate of expansion has been attempted or achieved by very few other telecommunications administrations. But given the necessary capital, as the Government have committed themselves to provide, and given the degree of the commitment that is forthcoming at all levels in the Department at present, I am confident that the very ambitious programme targets will be met.
The cost of the five year programme covering the period 1980 to 1984 is estimated at £800 million at current prices. This sum will be spent under the following main heads:
— subscriber and local network development,
— local exchange development
— trunk development
— buildings.
It will be noted that provision for staff is not provided for separately but the appropriate staffing costs are included under each of the four headings that I have referred to. I will now outline what main work is proposed under each of these heads.
Estimated cost for subscriber and local network development over the five year period is £379 million. The aim over the five years 1980-1984 is to install between 450,000 and 500,000 telephones depending on the level of demand over the period, with the object of being in a position by the end of 1984 where applications for telephone service can be met promptly. This would involve installation rates of 60,000, 80,000, 100,000 and perhaps 110,000 to 120,000 a year in later years if the level of demand warrants that. While it is expected that there will be a continuing growth in demand, it is not possible to predict with confidence what the level is likely to be even in the medium term as demand is influenced by general economic circumstances. It is not possible to assess accurately either what will be the effect on demand of the more ready availability of telephone service. If about 450,000 telephones were installed over the five years the telephone density would be 28 per 100 of population at the end of that time. This would still be quite low by comparison with other EEC countries. It has to be borne in mind, however, that the level of income per head here is generally lower than in other EEC countries while the family size is bigger, so that in the medium term at any rate we probably will not have as high a telephone density in this country as in some of the more prosperous countries.
The size of the task involved in increasing the rate of connections from 41,000 a year, the highest achieved before last year, to over 100,000 in the space of three years or so cannot be over stressed. It is not simply a case of installing a telephone in the applicant's house. To provide a telephone connection involves the wiring of the customer's premises, the installation of the phone having a pair of wires from each telephone either in overhead or underground cabling back to the nearest exchange, having spare terminations in the local exchange to which the phone can be connected, and having adequate capacity in the trunk exchange and trunk circuit network to carry the extra traffic generated. The work involved in providing a telephone is broadly the same from one year to the next, which puts the size of the current task into perspective. Increasing the annual rate of connections along with lines described will require a very substantial increase in the local cabling network, whether by laying underground pipes and cables or by erecting poles and stringing wires overhead, all of which are highly labour intensive as well, of course, as being expensive.
A substantial number of extra staff will obviously be needed to carry out the programme. The staff are being built up as quickly as can possibly be done, but there are limits to the number that can be absorbed in any year — limits imposed by the accommodation available to house them and by the ability to train and absorb them productively into the work force. Over the last year 1,000 extra installation staff were recruited, adding to the 6,000 or so already on development and installation work. There is the problem in seeking to overtake the backlog of demand in a short time that the risk of over-staffing and of having to lay-off staff subsequently must be guarded against and this is being watched closely. I should add that contractors are being used extensively to supplement the efforts of the Department's own staff on the range of work on which they can be employed.
The estimated cost for local exchange development over the five year period is £160 million. To meet the demand for new subscribers' lines, additional automatic exchange equipment will be provided at virtually all existing exchanges. Over the next two years some 300 new exchanges will be provided or existing ones extended. These will include major installations at Ballyboden, Belcamp, Clondalkin, Crown Alley, Dolphin's Barn, Finglas, Terenure and Tallaght in Dublin, and at Athlone, Ballinasloe, Bantry, Carlow, Castleblaney, Cavan, Ceanannus Mór, Clonmel, Cork — ten centres — Donegal, Drogheda, Dundalk, Ennis, Enniscorthy, Galway — Shantalla and Mervue — Kilkenny, Mullingar, Naas, New Ross, Sligo, Tralee, Waterford and Wexford, to name but some of the bigger centres in the provincial areas. In addition, all the remaining 450 manual exchanges will, it is planned, be converted to automatic working by the end of 1984. The aim is to changeover almost 300 of them over the next two years but it is not possible to be certain at this stage that this can be done as the volume of work involved in conversions by way of overhaul and replacement of linework, changing of instruments and so on, is very great and staffing resources may be inadequate to cope with a peak of work of this kind over such a short period. However, every effort will be make to meet this target.
As the programme progresses, digital equipment will form the greater part of the equipment being installed. In all, subscriber exchange capacity will be increased by about 440,000 lines by the end of 1984 making it possible, in so far as subscriber exchange equipment is concerned, to give service to that number of additional subscribers.
In regard to trunk development the estimated cost over a five year period is £125 million. Development of the trunk network is an essential feature of the programme. The failure rate on trunk calls in the internal trunk network and on calls to Britain is much too high and is a source of frustration to users. These difficulties have been due primarily to congestion in the trunk network, caused by overloading of the existing trunk exchange capacity and by inadequate trunk circuit capacity on numbers of main routes. These problems must be eliminated if we are to reach the targets set in terms of call success rates. To do this will involve replacing or extending the trunk exchanges in most centres and substantially strengthening the trunk routes. Work on this is already well in hand.
For example, in Dublin, which is the hub of the trunk network, a new 4,000 circuit capacity trunk exchange was opened at the end of last year and is being brought into use on a phased basis. This will relieve congestion in the Dublin trunk exchanges and will enable numbers of badly needed additional trunk circuits required on some of the main trunk routes into and out of Dublin to be provided.
Installation of another exchange of the same capacity is in progress and should be ready for opening early next year while a new 8,000 circuit capacity digital trunk exchange is on order and should be ready for service next year. When these exchanges are available, all congestion in the Dublin trunk exchanges should be relieved and it will be possible to withdraw from service some obsolete STD equipment which is no longer fully satisfactory and is hard to maintain. These measures will result in a doubling of the existing trunk exchange capacity in Dublin.
Similar schemes are in progress or planned at many centres outside Dublin. For example, in Cork the installation of a major new trunk exchange is well advanced and it is expected the exchange will be opened later this year. Other centres where new trunk exchange will be opened this year are Athlone, Ballinasloe, Bantry, Ceanannus Mór, Cork, Donegal, Ennis, Galway, Kilkenny, Longford, Mullingar, Naas, Navan, Tralee, Tuam, Sligo. It is planned to provide new trunk exchanges next year at Dublin, Athy, Carrick-on-Shannon, Cork, Drogheda, Dundalk, Enfield, Ennistymon, Kanturk, Limerick, Mallow, Waterford, Youghal and Wexford.
About 5,000 new trunk circuits will be brought into service this year. These include circuits on the cross-Channel route, Dublin-Sligo route and Dublin-Arklow route, some of which are already in service. Among the trunk routes to be strengthened this year by the provision of new microwave radio links or new co-axial cables or by increasing the capacity of existing cables are the following:—Dublin-Cork, Dublin-Limerick, Dublin-Waterford, Dublin-Galway, Dublin-Athlone, Dublin-Navan, Sligo-Letterkenny, Galway-Athlone, Limerick-Tralee, Galway-Tuam and Dublin-Mullingar.
In addition it is planned to install a new digital microwave link network spanning the main trunk arteries throughout the country. As well as providing additional trunk capacity this new network will have the advantage of providing alternative trunk routes in the event of trunk cables or existing microwave links being out of order for any reason. Altogether, it is planned to increase the trunk circuit system capacity by about 30,000 extra circuits by means of microwave radio links, by over 20,000 extra circuits in coaxial cables and about 20,000 more circuits by extra underground cabling, and optical fibre cables.
The number of trunk circuits in use at present is about 33,000 and that puts the projected additional system capacity into perspective. Work on expanding the trunk exchange and trunk circuit system will, of course, be a continuing feature and the development work carried out over the next few years will have to be built on in the years after that. But the major work will be done over the next two to three years.
All of these schemes could not of course be planned or implemented at once and some are, naturally, more advanced than others. Improvements in trunk call performance are already beginning to become evident with the opening of the new trunk exchange in Dublin that I have referred to, and the pace of improvement will gather momentum from the second half of this year onwards. It is important, however, that it should be well understood that it is likely to be 1984 before a high quality trunk service is available in the country generally. Users of the service generally can be assured, however, that a high quality service will be available by then, and will be available well in advance of that for many of them.
Before leaving the trunk service there are some other aspects to which I would like to refer. These are the STD service to Northern Ireland and Great Britain and the international service. Calls can be dialled by customers at present to Belfast, Birmingham, Edinburgh, Glasgow, Liverpool, London and Manchester. Calls to all other areas in Northern Ireland and Britain must be obtained via an operator. There are difficult technical and other problems involved in extending subscriber trunk dialling to all areas in Northern Ireland and Britain and any extensions can take place only in cooperation with the British administration. As a result of recent technical developments, and in particular the introduction of digital exchanges, it is expected that it will be possible to find satisfactory solutions to the technical problems. Discussions with the British telecommunications administration have, therefore, been intensified and I am hopeful that a substantial extension of direct dialling to centres in Northern Ireland and Britain will be possible within the next two years or so.
International direct dialling is now available to subscribers in Dublin, Cork, Limerick, Waterford, Galway, Sligo, Drogheda, Dundalk, Athlone and Shannon Airport. New trunk exchanges now on order include the equipment needed to enable subscribers to dial their international calls and international subscriber dialling will be extended progressively in this way.
International traffic has been growing at a much faster rate than internal traffic and the existing international telephone exchange is being extended to cater for this growth. A second international exchange in Dublin is planned for 1985 but much of the advance work will be done in the period up to the end of 1984. A satellite earth station which will provide circuits for traffic primarily to North and South America is planned to come into operation in 1984.
The site for the earth station is at Midleton and preliminary work on the design of the earth station is in progress. This country has already shares in international communication satellites and is at present exploring the question of taking shares in a European satellite planned to come into operation in 1983-84. My Department are also keeping in close touch with the development of business satellite systems which are beginning to be used extensively in the United States.
Estimated cost of buildings over a five year period is £120 million. One of the basic tasks involved in achieving the service improvement targets set has been to provide the necessary accommodation for equipment, for staff, for training, for stores and for housing and maintaining the very large fleet of over 2,000 motor vehicles. A huge programme involving the provision of over 500 buildings has had to be undertaken. Virtually all the sites for these buildings have been acquired and by the end of this year work on about 400 of them will either have been completed or be in progress. To ensure that buildings would be made available in the shortest possible time the arrangements and procedures for processing their provision between my Department and the Office of Public Works and within the Office of Public Works were greatly streamlined with, I am happy to say, satisfactory results.
While improving the basic services is clearly the prime task and the main thrust of the programme is in doing this, other possibilities of improvements are not being neglected. I propose to refer to only a few of these to show what is being done.
A programme of installing payphones which allow callers to dial trunk calls as well as local calls is now under way. The first of these were installed earlier this year and the aim is to install them in all public call offices in the next two to three years, as well as making them available for rental to subscribers who opt for them. In addition, trials of a new type of payphone suitable for installation in supervised locations such as public houses, shops and hotels will take place over the next few years.
Kiosks are now being installed more extensively to meet the requirements of the public, particularly in rural areas and in newly built-up estates in urban areas. Altogether there are some 4,000 public telephones in kiosks and call offices. For many years it had been the practice to instal kiosks in rural areas only in replacement of call office telephones in post offices where the use likely to be made of the kiosks would justify this. For the past two years or so, kiosks have been provided in rural areas where there is no local post office but where the use likely to be made of a public phone would justify its provision.
In deciding whether a kiosk should be provided at a particular location regard is had to such factors as the number of private phones in the catchment area, whether there are churches, schools and shops in the area which would be likely to affect the use made of a telephone, as well as other local features. It is envisaged that the number of kiosks provided in rural areas will be extended gradually on this basis. A scheme is also in operation where local authorities can have kiosks provided at their request under guarantee against loss in areas where their provision would not be justified on the basis of the criteria used by the Department.
The provision of a public mobile radio telephone service is also proposed. A decision in principle has been taken to introduce it, the likely market has been surveyed and the technical requirements are now being examined. It is expected that the service will be introduced in Dublin late next year, and the extension of it other areas will be assessed in the light of experience in Dublin.
The telex and data services are assuming growing importance for the business community. The telex service is a particularly valuable one and telex density in this country is among the highest in Europe. Demand for the service continues to be high. Like telephones there has, regrettably, been delay in meeting applications and there is at present a waiting list of over 1,500, the number of machines installed last year being 770, which was a record. Steps have been taken which, if implemented, as I expect they will, should ensure that by the end of next year applications can be met promptly. The measures taken include extending one of the existing two main telex exchanges and installing a third one, expected to be opened next month, thus providing enough exchange capacity for a number of years ahead, the opening of sub-exchanges at Cork, Limerick and Waterford, the strengthening of trunk routes for telex and assigning extra staff to telex installation work.
Data services are also assuming a growing importance for certain sectors of the community. There is scope for improvement here too and the aim is to step up the installation rate over the next two years to a point where it will be possible to give a service that will meet applicants' needs. A new data centre was opened last year and this has capacity for further extension. A new data centre is planned for 1984-85. Last year access was provided for data subscribers here to Euronet, an EEC data bank, giving information on a range of subjects such as science and medicine; this year access will be given to similar data banks in the USA. The aim is to have a separate packet switched network for data in 1984-85.
Since funds for development of the telegram service are also covered by the provisions of this Bill, I propose to refer to that service very briefly. The telegram service here, like that in other countries, is a declining one and the question of discontinuing it will arise in the course of time, but this is still some way off. In the meantime, a high standard of service will continue to be given.
Development of the telecommunications services will provide substantial additional employment, both directly and indirectly. The telecommunications services themselves give employment at present in the Department to over 17,000 people and indirectly to some thousands employed by contractors who erect exchange buildings, manufacture and instal equipment, supply and lay ducts and cables, supply stores, and so on. This year it is expected that the investment of £220 million in the development of the service will enable some 4,400 more jobs to be provided, 2,000 of these in the Department, 2,000 in the building industry and 400 in ancillary industries.
The Department are naturally concerned that the maximum benefits should flow to the economy generally from the investment in the telecommunications programme. Already arrangements are being made that will result in the telephone exchanges needed for the programme being manufactured in this country. Much of the trunk equipment, whether in the form of multiplex equipment or pulse code modulation equipment is already being obtained from Irish manufacturers and much of the subscriber cable is already being made here.
The Department's policy is to order equipment and stores from Irish manufacturers wherever the price is competitive and the quality satisfactory. Altogether some 60 per cent of the stores used are obtained from Irish manufacturers and the Department are offering every encouragement to Irish manufacturers to supply the balance. For example, last year in association with the Irish Goods Council, the Department arranged a display of imported stores at four centres in the country. This attracted a lot of interest and already some of the imported products displayed are being manufactured here.
The Department have joined too with the National Board of Science and Technology, the Higher Educational Institutions and the manufacturing sector in a new Council for Telecommunications Research, Development and Training. The role of the council will be to improve relationships between Government and industry in the telecommunications area so that each will have a better understanding of the needs of the other, that action can be taken to meet their joint needs and that the country will be geared to take maximum advantage of the employment opportunities afforded by developments in the telecommunications and electronics area.
The financial position of the telecommunications services is that taking one year with another the services should pay their way. To enable this to be done charges for services have had to be increased at intervals in recent years. Investment in the services is therefore paid for by the users and in practice a significant part of the capital invested comes from within the services. About £70 million will be met from depreciation provisions over the next two years. The development of the telecommunications services is also being funded by the European Investment Bank and other EEC Institutions. Loans of £165 million have been made available over the past few years to the Minister for Finance and grants of about £75 million have been approved by the European Regional Development Fund for telephone projects.
Over a long period of years the telephone service operated at a profit. The seventies, however, was a period of exceptional difficulty for the finances of the services due to a combination of factors — high rate of inflation, high interest rates, economic recession and industrial action. A period of heavy investment in the service such as is taking place at the present time, and which will be continued over the next few years, will also make for a more difficult financial position.
In the short-term, investment in the infrastructure such as in buildings and more exchanges and trunk systems which are not used to capacity place a strain on the finances. However, according as more subscribers are connected to the network and increasing use is made of the expanded exchange and trunk and local cabling network, the financial position will improve. This improvement should take place on a gradual basis and the financial position of the services should be in a healthy state by the end of the programme period in 1984.
While the purpose of the Bill is simply an enabling one, I would like to stress the Government commitment to according development of the telecommunications services a high priority and making the necessary capital available. Telephone improvement schemes have a long lead time and it is essential that there should be an assurance of the continued availability of capital and that development of the services should not be subject to stop-go financing as it was in the past. The Government's good faith in this matter will be evident from the amounts made available last year and this year.
In addition, as I mentioned at the outset, an investment company has been established to help in financing development, thus easing the burden on the Central Fund and making it easier to provide the necessary finances. There is no reason, therefore, why the capital required should not continue to be made available. It is essential for the good of the economy and for our social development that it should.
Finally, I should like to point out that, when the current programme objectives are met, investment at a high level will continue to be necessary. There will almost certainly be a continuing high level of demand for telecommunications services in the years ahead and the system will have to be expanded to cater for this as well of course as providing for the growing volume of calls and for modernisation of the services. That expansion will, I expect, take place under the new Telecommunications Board which, as I said earlier, will be expected to raise the funds needed for development of the services.
I commend the Bill the the House.
