Warning over broadband future

The future of broadband in Ireland has been plunged into doubt because struggling Eircom cannot commit to rolling out the technology, it was warned today.

The telecoms company refused to disclose the scale of its debts or confirm any plans for future investment in the high-speed connection when hauled before an Oireachtas committee.

Fine Gael’s communications spokesman Simon Coveney said the lack of any assurance was deeply worrying, as there is a perception that Eircom’s owners are “broke essentially.”

The former state-owned firm, now owned by Babcock Brown Capital, was key to driving the whole broadband project, which was critical to the future of the Irish economy, he insisted.

When Mr Coveney pushed senior executives for answers about future investment in the technology, they couldn’t give any details about upcoming plans.

Pat Galvin, Eircom’s public policy chief, said the company was coming to the end of a three-year, €1bn “investment cycle” but could not confirm any further investment after that.

“Given changing circumstances, before we can say what we can do over the next three years, we need to understand where the market is going,” he said.

Pressed several times about the state of the firm’s financial situation, Mr Galvin said: “Our debt is manageable... We are meeting all obligations facing us in relation to our debt.”

Mr Coveney said the Government was now relying on a company with huge debts to build a service that was essential to Ireland’s survival the other side of the recession.

Eircom was “saddled with enormous debt”, has a massive $433m black hole in its pension fund and yet is key to the future of high-speed broadband access, he said.

Outside the meeting afterwards, Mr Coveney said the emerging picture on the future of Irish broadband was deeply worrying.

“I think we got proof of that today,” he said.

“When I asked for the specifics and how much is going to be spent, what’s the financial commitment to rolling out, we couldn’t get an answer to that.

“We’re essentially relying on a company that has massive debts to be the key player in solving Ireland’s next generation broadband challenges. That is of huge concern.”

Asked what the solution was, the Opposition front-bencher said: “My preference would be for the state to buy back Eircom, but unfortunately the state is broke too.”

The Joint Committee on Communications, Energy and Natural Resources also heard assurances from Eircom that it would retain public payphones at key locations such as tourist hotspots and isolated locations, such as populated offshore islands.

The company is removing almost half the number of public phone kiosks around the country because it says they don’t make enough money anymore.

Paul Bradley, Eircom spokesman, later said the company will be spending around €300m a year over the coming years on all its activities, including broadband.

The telecoms firm was continuing to invest, meet its costs and was making its debt payments on time, but there was little scope for investing in a new high-speed fibre-based broadband network, he said.

“It’s always been difficult to make the business case for putting fibre into people’s home to deliver very high-speed broadband,” he said.

“We think we can deliver higher speed broadband and we will continue to develop higher speed broadband products, but in the current economic environment it is only becoming harder not easier to deliver faster speeds. ”