Analysis: Google's decision to set up its European headquarters in Dublin is a major boost for the Government's policy to create a digital media hub in the State. The world's most successful internet search engine is undoubtedly one of the success stories of the tech boom of the late 1990s.

Unlike many innovative technologies developed during the dotcom boom, Google's founders developed a hugely popular piece of software that actually generated profits.

In a short time Google has created one of the most identifiable global brands, and it was no surprise that the Tánaiste and the Minister for Communications yesterday welcomed Google with open arms.

The kudos gained from bringing such a high profile project to Dublin will help IDA Ireland market the Republic as a global e-hub. It will raise the profile of other Irish technology ventures such as the Digital Hub and also help to dispel criticism of the State's €80 million telecoms contract with Global Crossing.

The telecoms downturn has meant that little of the telecoms capacity bought by the State from Global Crossing is being used.

But the decision to link Dublin to a global network has cut the price of international telecoms and paved the way for Google and other firms such as Microsoft, to base important strategic functions in the Republic.

Investment in global high speed telecoms and internet links was necessary to attract and retain investment at the cutting edge of the tech sector. But international capacity is just one part of the equation and figures published today in The Irish Times show Irish businesses and citizens face huge problems accessing the internet.

Just 3,300 digital subscriber lines - a technology that enables high-speed internet connection were ordered in 2002. In comparison, almost a million high-speed lines are in use in Britain, and almost 50 per cent of homes in South Korea already have high-speed internet.

Until now consumers and small businesses in the Republic have not joined the "broadband bandwagon" taking off in many other states. A combination of regulatory delays and high prices have slowed the uptake of new DSL technologies.

The irony of Google's decision to set up in Dublin will not be lost on Irish internet users, many of who have no access to a consumer-based service.