Tuesday, 22 November 2011
I thank the Cathaoirleach for allowing me to raise the matter of Ireland availing of the opportunity to provide tier 1 international connectivity to the south west by ensuring a connection is made to the Hibernia Atlantic Express cable being laid from the US to the UK and on into Europe. Ireland was not initially involved but there is an opportunity to provide a link which would give international connectivity to the Atlantic corridor region and allow it to become a serious location for data centres. Technology actions such as this, which are needed to support the development of a smart economy, were identified in a 2009 Government report, the Knowledge Society Strategy. It stated:
Direct access to an international IP backbone is needed in the southern part of Ireland akin to the Kelvin project in the North. The Government should first assess the possibility of interconnection to an existing submarine cable at the nearest point.
Reduced latency on international IP links would make Ireland a more attractive location for data centres and associated foreign direct investment. Such investment would capitalise on and complement the Kelvin project in the North. This would also make it attractive and feasible to locate data centres outside Dublin.
Although we need a strong centre around the capital, this would provide opportunities for areas outside Dublin. Cork has received some foreign direct investment, but this type of connectivity is needed if we are to develop cloud computing and other such data centres in the area.
Initially, the Hibernia Atlantic Express consortium was to provide the link but then the issue came up that the Government might pay for it. The Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, has addressed this matter in the Dáil and met with Hibernia Atlantic Express on it. He was concerned about rules governing state aid and the costs involved. Other high level meetings have been held between the Minister and the consortium along with the Minister for Agriculture, Food and the Marine, Deputy Coveney, and Cork Chamber of Commerce. While I was not privy to these high level meetings, I would hope some way could be found to ensure connectivity to this tier 1 cable.
While it is a private consortium, it is providing exactly what is needed in the region. We will never get this type of connectivity at this cost if the State were to do it itself. It provides an ideal opportunity to get connectivity for the south west. The follow-on benefits of such a move in Cork and the south west have been well-documented. It is important whatever consultations have been held are in the public arena and if the issue of costs and state aid have been circumvented.
I thank Senator Clune for raising the important matter of international communications connectivity. I am also glad to have the opportunity to highlight the factors that must be considered by the Government before any decisions to intervene in commercial markets can be taken.
I am well aware of the Hibernia Atlantic Express project and welcome any investment such as this project that would lead to improved international connectivity. There have been significant investments by various market players in recent years, all of which have added to Ireland's international connectivity capacity.
The electronic communications market is, and has been since its liberalisation, a commercial competitive market. Accordingly, the State can only intervene in the market in limited circumstances, for example, where the market is failing to provide services. In such circumstances, the State intervention would only take place following state aid approval from the European Commission and a public tender procurement process. In addition, any such assistance would have to demonstrate that value for money would occur. Accordingly, proposed projects must meet the tests of capital appraisal. Affordability is another key consideration, particularly in the current acutely difficult fiscal climate.
Nonetheless, I recognise the importance of electronic communications infrastructure to national and regional economic development. Cork city has a significant presence of electronic communications infrastructure. There are plans to roll out additional backhaul infrastructure which would help in making Cork even more competitive in the provision of backhaul services. A direct connection into Cork would enhance the region's attractiveness for FDI, foreign direct investment.
The international connectivity market is, however, a commercial market. Any proposed intervention would have to avoid distorting the market and avoid undermining investments made by other market players. It would be unfair to intervene in the market in a manner that would cut across those who have invested private funding in the building of international connectivity networks.
While I welcome additional international connectivity to the island from other countries, no deficiency in connectivity has been brought to my Department's attention. The existing network owners have significant capacity available while other consortia are in the process of planning transatlantic connectivity with connections to Ireland.
The next generation broadband task force, chaired by the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, and of which I am a member, is considering how best to facilitate the roll-out of next generation broadband across Ireland. While several issues are being considered and progressed, the matter of international connectivity is not one which is a cause for concern.
While I would be glad to see direct international connectivity coming into Cork, my Department cannot undermine investments already made or other possible private sector investment by an intervention in this commercial market. If in the future a decision is taken to intervene in the market, the Department will abide by the various laws and rules governing state aid. The Department will also be required to ensure any intervention warrants the Exchequer funding required and the procurement process is open to any party that might have an interest.
I thank Senator Clune for raising this important topic and I am glad to have had the opportunity to clarify the important matters raised.
The Minister of State claimed there is no deficiency in connectivity in the area. However, a 2009 Forfás report on competitiveness in the south west stated:
... quality and cost of broadband services remains a significant issue. In particular, international backhaul from Cork city and other large urban centres in the region including the Tralee-Killarney hub is at least 25% more expensive than from Dublin or comparable UK regional cities ...