Months after implementing a savage cost-cutting programme at Eircom's new media division, company chief executive Mr Alfie Kane has decided to embark on a new IT adventure.

Eircom has spent €20 million (£15.7 million) on a new state-of-the-art internet data centre that will host and manage the internal and external technology infrastructure of other firms. But just as the facility launches, the industry is in crisis, with several companies already in liquidation and many on the brink of bankruptcy.

However, in an exclusive interview with The Irish Times, Mr Alfie Kane said he was "quietly confident" the company would make a return on its investment.

"The basic rationale for the investment you explain by looking at the hosting business," says Mr Kane. "In the past there was massive hype, so it would be easy to conclude that the whole e-commerce and internet world was flash and there was no realism. But that would be a serious mistake.

"As we move to the future there is little doubt the internet is a very major development in terms of business and commerce and in peoples' lives," he said. "We're pretty confident the internet is here to stay, we're pretty confident that the Web-based business will evolve, and we're pretty confident that big and small business will become more Web oriented.

"There is a need for new (hosting) space," he says. "We already have about 100 customers we are hosting who are expanding.

"But we are moving up the value chain into hosting of managed solutions rather than just renting out a bit of floor. We will offer companies a turnkey solution." Mr Kane believes Eircom will recoup the investment within a four- to five-year period and has already sanctioned studies to evaluate the viability of implementing a nationwide hosting strategy. "This is a pragmatic approach. I don't believe this is the end of the story. We have buildings all over the country which have space available as modern telecoms equipment becomes smaller. So you can create virtual hosting centres related to this master centre in Dublin."

Adopting this strategy would see Eircom competing against Nevada tele.com, a Northern Ireland telecoms firm that has already announced plans for a data centre in the midlands. "I have to be quite frank. I'm not sure how anyone could sensibly build up this kind of strategy. You couldn't justify putting up buildings for this," he said.

Developing a regional strategy would complement the Government's aim to develop outside of Dublin and to make the Republic a premier e-hub in Europe.

"I encourage the continuing reinforcement of this vision... but we do need to focus more on the hard-nosed steps that help you take this vision to reality. Good basic telecoms service is clearly one element, and I believe Ireland has this. Hosting is another and broadband is a third, particularly broadband access."

Mr Kane does not accept criticisms that Eircom has stalled the roll-out of broadband DSL and the speed at which other operators can access its local network. He is also keen to downplay the suggestion that the takeover of Eircom may reduce its ability to invest in technologies because of the debt the company would inherit.