Economy suffers as politicians stay well outside the broadband loop

He has had to tell international colleagues that he is embarrassed by Ireland’s connectivity problems, the lack of choice, the poor service and the excessive charges

AT some stage most readers probably have received letters or cards in the post from politicians making promises or seeking votes, but rarely, if ever, an email.

That small mercy may be only partly due to the fact that spam filtering on the internet is a damn sight better than that for old-fashioned snail mail.

But I suspect the real reason for the lack of online activity from our politicians is that they don’t even think of it or that they don’t believe the audience they seek out is online.

An innovative few sent mobile phone text messages canvassing votes on election day last May. Enda Kenny has a famous Bebo page and a few enterprising candidates have put pitches onto Youtube. But the modern, if rather basic, technology involved in internet use is beyond most of them, even if it is provided to them for free in Leinster House.

I wonder how many have broadband in their homes or rely instead on dial-up access to the internet as so many voters, to their frustration, still have to do even if they use the internet at home.

The politicians don’t seem to care particularly. The subject of broadband — its provision, cost and speed — has never been debated in the Dáil. Senator Shane Ross recently initiated a Senate debate in an effort to force the Government to make proper investment in a wider, faster, cheaper service, but was voted down swiftly. To his horror, he discovered that few of his colleagues understood and fewer again cared about the topic.

Yet good broadband provision is crucial to the development of this economy and is every bit as important as road and rail.

One of the main problems in attracting new foreign direct investment to the State is traffic congestion estimated to cost the economy about €1.5 billion each year. There have been stories of foreign investors deciding against investment in Ireland because of their bad experiences in getting from Dublin airport to their destinations.

It is not just their own inconvenience that persuades them — it is the knowledge that their employees would suffer the same congestion on a daily basis and that goods, if that’s what they trade in, would take ages to deliver.

The Government is committed to spending over €35bn on transport infrastructure over the next decade to deal with these problems. It understands the problem because its members face it every day, even if escorted through bus lanes in chauffeured cars. There are clear economic and social benefits to be derived from providing proper highways for the movement of people. But what about providing technological channels and highways for the movement of information to suit the demands of modern economies, companies and consumers? And not just adequate ones, but of a standard way higher than exists throughout the rest of Europe, at the very least?

Unfortunately, our broadband provision is nowhere near the level it should be. Don’t take my word for it. The boss of eBay in Ireland, John McElligott, described broadband here as “a disgrace”, “a mess”, “appalling” and “poor” in damning letters he sent late last year to the relevant ministers, Eamon Ryan and Michael Martin. He has had to tell international colleagues that he is embarrassed by Ireland’s connectivity problems, the lack of choice, the poor service and the excessive charges.

He is not alone in this. OECD measurements put Ireland near the bottom of the world’s most developed countries when it comes to penetration of broadband and the speed of the services delivered over it. And let’s not fool ourselves: this is a key economic indicator that doesn’t just measure the performance of the country but influences further investment decisions.

Those who defend the existing system say that despite early problems, broadband is now available to 90% of people in the country and has been taken up by 800,000 of them.

Try telling that to all of the people who have stories about getting a service supplied or who, if they do, find it is nowhere near as fast or consistent as it should be to do all the things they want to do.

The penetration is about average in the EU, but being average is no good when you consider this is now a 27-member union, including many apparently much poorer economies. Even closer to home, our services are way behind Northern Ireland, which has 100% availability, faster download speeds and lower prices.

The presence in this country of some of the world’s biggest tech companies — such as Microsoft, Intel and Google — gives us succour in that regard. There is talk now of Facebook putting its European operations here. If it does it would be used to support the argument that everything is all right with our technological services and that nothing dramatic needs to be done. Wrong, wrong, wrong.

It is the use of a system called transfer pricing and the low Irish corporate tax rates that can be applied to worldwide profits routed through Ireland that remains our major competitive advantage. But other countries are looking to copy our tax systems — it is an advantage that could be eliminated. And that doesn’t solve the internet problem for all of the domestic and small companies who want to be able to make and take orders domestically and internationally over a high-speed broadband connection at a reasonable price.

Irish-based businesses have major cost issues facing them. Our competitiveness is in decline by international standards and poor quality broadband does nothing to reverse the trend .

RESPONSIBILITY rests with the Government. Private companies will not offer the solution, despite the seeming abundance of offers from a variety of sources. One of the major problems is market failure. Eircom — the monopoly player — controls the exchanges and has made it difficult for other operators to locate broadband equipment in them, thereby allowing customers to switch providers. It has done a good job in frustrating the regulator in its efforts to open the market.

In any case the latest owners of eircom — the Australian company Babock and Brown — is a privately-owned operator looking to recoup its investment and make big profits. It, like previous owners since the State foolishly sold the transmission network, will not “waste” money in providing broadband to parts of the country that are difficult to access.

It has little incentive to invest in providing fast speeds or reducing prices in the national economic interest. The same goes for other private operators in the absence of an enforced “universal service obligation” as was applied for the roll-out of the original phone service.

All it would cost the State is €2 billion or so. The State puts a multiple of that amount — from the original sale of eircom — into the National Pension Reserve Fund, which now invests in assets all over the world. The best investment in the future of this country would be to take €2bn from it for investment in the world’s best broadband infrastructure.

Operators could then be allowed access to this and provide competition for services. The country needs something as big and brave as that.

The Last Word with Matt Cooper is broadcast on 100-102 Today FM, Monday to Friday, 4.30pm to 7pm.