Revamped Global Crossing deal designed to enhance Republic as e-business location

The State will get a crucial missing element in its broadband network - a €4 million "point of presence" (POP) facility to manage international internet capacity - after the Government renegotiated its contract with telecommunications carrier Global Crossing.

The POP will provide a second location for managing the bandwidth from Global Crossing's transatlantic cable to New York. The cable supplies 30 per cent of the State's internet capacity and connects directly to the internet's "backbone" or core structure.

The second point of interconnection will be based at Irish company Data Electronics' data warehouse facility in Park West, Dublin.

The second POP is crucial for offering "redundancy" on the network - the ability for operators to continue to supply bandwidth to customers if the first point has an operating failure, rather than having to switch the management of the supply to a location outside the State, usually a POP in London. Large multinationals, in particular, require the extra security of a second point of interconnection.

Mr Maurice Mortell, chief executive, Data Electronics, said the POP would be "a core piece of Irish infrastructure" and the contract was "a vote of confidence in us as a provider".

However, he said that while the second POP was a key step in the right direction, the State still did not have an international exchange - a neutral "peering" point where operators can exchange international internet traffic, which currently must be routed through London. Microsoft, among other companies, has argued strongly that the State needs an international exchange to become a globally competitive e-business location.

The single existing point of interconnection is operated by Telecity at Citywest in Dublin.

The second facility will be completed by November 4th and financed by Global Crossing. The company will also construct a fibre optic link between the two facilities.

The second POP was part of the original 1999 contract with Global Crossing but is understood to have been delayed by the downturn as well as problems in negotiating agreements with other operators.

The Government also negotiated a 40 per cent reduction in annual operating costs and other concessions.

The revamped deal is designed to lower corporate internet costs and provide additional services to businesses in the State.

The Government hopes the new terms will help make the Republic an attractive e-business environment.

The revisions to the original deal were concluded last week with the troubled carrier, which has sought Chapter 11 bankruptcy protection in the US after being badly hit by the downturn in the global economy and slow growth in the telecoms market.

Because of the new terms, the Government will also now offer short-term, one-year leases of capacity, with maintenance costs bundled in.

Under the original terms of the €126 million 1999 contract, the Government purchased bandwidth in bulk by negotiating 25-year leases at well below the then-going prices for connectivity.

The State has been selling that capacity at cost, but purchasers have had to agree to 25-year leases. However, steep drops in the prices of bandwidth since then meant the long-term leases and costs were less attractive to prospective purchasers.

Only about half of the total Government capacity is being used by five customers: Eircom, Chorus, Metromedia, WorldPort and the State's educational network, HEAnet.