Watchdog defends 77m broadband risk
Yet the taxpayer’s watchdog yesterday defended the risk taken by the Government five years ago in the costly venture aimed at providing high speed internet and telephone lines.
The Department of Communications is taking court cases against three companies refusing to pay 11 million owed in fees for use of the high-speed international connection.
To date, the department has only recouped 32 million of its layout and the IDA are still trying to sell almost half of the capacity on the fibre-optic lines to the private sector, and has downgraded the value of the remaining capacity in its annual accounts from 23 million to just 2 million.
The Bermuda-registered company which operates the cable, Global Crossing Ltd, is currently in examinership in the US but is expected to get the all clear in the coming week.
While initial demand for the capacity exceeded availability, the economic downturn then set in and the internet bubble burst leaving the State with loads of connectivity to sell and nobody wanting to buy it.
But Department of Communications secretary general Brendan Tuohy insisted yesterday that the 77 million investment had to be measured over its 25-year lifespan and its overall value to the economy.
The department is highly optimistic about making up the shortfall through the sale of future assets, he confirmed. The Government set up the link as a necessary infrastructure investment for the country becauseand as the private sector was not going to do it, he argued.
The market will pick up and the demand for bandwidth globally is growing, Mr Tuohy said.
“You have to say: this is so important an issue that if we don’t do it we run the risk of damaging the economy,” he said.
The court cases are being taken against Chorus, World Port and Global Voice for 11 million owed to the department from contracts signed when the link was set up.
Chorus has paid 2.2 million to date and owe another 4.1 million.
Notably, Mr Tuohy’s upbeat view on the project was backed up by the Comptroller and Auditor General, John Purcell, who said his reporting of the deal is not an implicit criticism of the venture.
“It is appropriate there should be some risk in this area,” he said.
