Mr. Aidan Dunning:

I thank the committee for the invitation to attend this meeting to discuss the development of broadband infrastructure in Ireland. As the Chairman indicated, I am accompanied by officials from the Department: Ms Kathleen Licken, assistant secretary; Mr. Kenneth Spratt; Mr. Aidan Ryan, technical adviser; and Ms Finola Rossi, assistant principal officer.

The Department has circulated to committee members a copy of the Government's recently published national broadband document, Delivering a Connected Society - A National Broadband Plan for Ireland. The plan, launched by the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, on 31 August last, will be the main focus of my opening statement. The Minister's target, as outlined in the report, is that at least half of the population will have high-speed broadband by 2015. The specified targets in the plan for the remainder of the population are to be implemented over the lifetime of the Government.

We have circulated to members the report of the task force on next-generation broadband, published last May. The task force was chaired by the Minister. The report and the deliberations of the task force helped inform the content of the plan. The importance of high-quality broadband as enabling infrastructure for economic and social development is accepted at both domestic and international levels. International experience and research support the view that high-speed broadband, in particular, is a key requirement for growth and jobs.

In a study completed for the European Commission, the McKinsey Global Institute estimated that the Internet accounts for an average of 3.4% of GDP, and as much as 6% of GDP in advanced economies. The study notes that SMEs with a strong web presence have been shown internationally to grow twice as quickly and export twice as much and create twice as many jobs as those with a minimal web presence. The Internet is, therefore, critical for business growth and development. It has a positive impact on many other facets of modern society, including entertainment, education, e-health and e-government. Widely available high quality broadband can also assist with regional and rural development.

Before outlining the key elements of the national broadband plan, I will refer briefly to the current position on broadband provision nationally. Considerable progress has been made in recent years on both the coverage and speed of national broadband infrastructure. The improvement is reflected in the fact that, over the past five years, the number of broadband subscriptions in the country has increased from approximately 600,000 to almost 1.7 million. Some five years ago, basic broadband speeds of between 1 Mbps and 2 Mbps were the norm. Now, typical speeds of up to 10 Mbps are becoming the norm, with speeds as high as 150 Mbps in some areas.

It is estimated that private investment in broadband infrastructure across all platforms over the past five years amounted to some €2.5 billion. This investment has greatly improved the quality of broadband infrastructure. For example, investment by UPC has resulted in availability of over 100 Mbps already to some 35% of the population. These figures are set to rise, with UPC recently announcing the introduction of 150-Mbps services and expecting to expand the footprint over which these services are available.

Eircom has indicated a commitment to major fibre-based investment, which will significantly improve fixed-line fibre-based broadband availability to significant segments of the population. Other service providers also have invested to improve the coverage and speeds of their broadband offerings. Investment in mobile broadband has led to an exponential increase in the number of mobile broadband subscribers from 45,000 five years ago to almost 600,000 at present. Wireless broadband solutions are particularly important for Ireland given our low density of population and high percentage of rural population, which makes the provision of high-speed-fixed-line broadband in these areas very costly. Notwithstanding these positive developments, there remains an unacceptable digital divide between rural and urban areas. A key commitment in the national broadband plan is to tackle this divide decisively.

As joint committee members are aware, there is no national State-owned telecommunications company in Ireland. As alluded to, the private sector has invested significantly in broadband infrastructure with very positive outcomes. On foot of various Government decisions, the taxpayer over recent years has also funded targeted investment, largely in areas where there was evidence of market failure. It is estimated that approximately €300 million of Exchequer investment in broadband has occurred in the last decade. This has included measures such as the fibre-based metropolitan area networks, MANs, which have greatly improved available broadband infrastructure in approximately 93 cities and towns; international connectivity projects, including Global Crossing and Kelvin, which have facilitated access by Ireland’s enterprise sector to international trading opportunities via new sub-sea cables; the national and rural broadband schemes, which have ensured basic broadband coverage for virtually every premises in the country; and the 100 Mbps to second level schools project, which will deliver high speed broadband to every second level school in the country by 2014, thereby enabling students to acquire and engage with the digital world, which is crucial to the modern economy.

A central feature of the State interventions is that they have been strategic and targeted in nature. Where the market and private investment can provide, there is no need for State funding, especially in the current very difficult fiscal climate. In any event, such intervention would generally not be permissible under EU state aid rules. This principle also has guided the Government’s approach to Exchequer-funded investment under the new national broadband plan. As the Minister put it in his foreword to the plan: "Notwithstanding the constraints imposed on the Exchequer at present, Government will intervene where – but only where – it is evident that the market will not deliver.” The national broadband plan is a clear expression of the central importance of broadband infrastructure to the achievement of wider economic and social objectives. The plan was formulated following a comprehensive consultation process. A central element of this process was the next generation broadband task force, which was established and chaired by the Minister. The task force included high level industry experts and considered a wide range of issues through five working groups which examined appropriate targets for broadband speed, demand stimulation, the removal of barriers perceived to hamper investment, spectrum policy and the potential role of State entities in facilitating the roll-out of high speed broadband. The task force published its report in May of this year and was itself subject to a public consultation process. This report was very valuable in informing the thinking that went into the consideration and final content of the national broadband plan. The plan itself was launched by the Minister on 31 August last, just three months after completion of the task force report.

The central commitments in the plan relate to the availability of high speed broadband throughout the country. In summary, these commitments are that 70 Mbps to 100 Mbps will be available from the commercial market operators to more than half the population by 2015, at least 40 Mbps and in many cases much faster speeds to at least a further 20% of the population, and potentially as much as 35%, which will include smaller towns and villages, and a minimum of 30 Mbps for every remaining home and business in the country, no matter how remote. Implementation of the plan will improve radically the quality of Ireland’s broadband infrastructure. It is an investment in Ireland’s future. This improvement will have an impact on all areas but will be especially pronounced in smaller urban centres and in rural areas. In this way, the digital divide to which I referred earlier will be decisively addressed.

While a significant element of the commitments will be delivered via private sector investment, the plan includes an indicative investment by the State of €175 million where intervention is necessary to ensure the targets will be met. This is likely to be focused mainly in areas of low population where there is no commercial case for investment by the private sector. The plan also addresses other areas that have an important impact on the provision of broadband infrastructure, namely, stimulation of demand for broadband, barriers to the provision of broadband infrastructure, spectrum policy and the potential contribution of infrastructure owned by State entities to the roll-out of high speed broadband. Implementation of the plan will be progressed urgently given the priority attached to it by the Government. A key milestone in this regard will be the completion of a formal mapping exercise to determine the exact position in respect of existing and planned broadband services throughout the country. As members will appreciate, this will be a major exercise on which the Department will require outside assistance, including from the commercial broadband operators. The outcome of the mapping exercise will inform the procurement process for State intervention. Key factors will be to ensure no gaps with regard to the coverage and speed targets set out in the plan, as well as optimal value for money for the State, including guarding against unnecessary investment in areas where the industry will deliver the targets. State intervention will also require EU state aid approval. The final level of intervention will be determined following the public procurement process when a competitive tender process will be concluded. In addition, the other elements of the plan will also be progressed by direct initiatives and cross-Government action. In this regard, it is the objective to publish a national digital strategy by the end of this year. This will be an important element in the drive to stimulate demand for broadband. A particular target will be small enterprise and the SME sector generally, in which the current level of online presence is unsatisfactory and may be hindering the sector from availing fully of trading opportunities.

The national broadband plan aims to change radically the broadband landscape in Ireland by providing the framework necessary to ensure the delivery of high quality, high speed broadband infrastructure. The key, of course, will be delivery on the commitments, and the plan sets out a strong framework backed by Government to ensure this.