State faces huge economic challenge

Over the next two years, the State faces one of its greatest economic challenges. Either it believes in what must, at the moment, seem only a vague possibility and remakes itself - at considerable expense - into a digital powerhouse, or it maintains its present, so-far successful course of attracting inward investment and occasionally incubating indigenous companies.

The problem is that the future is clearly digital, at a scale even the experts are only beginning to realise. Not to opt for the transformation is to risk closing down the s State's hard-won prosperity. In the Republic as in the United States, technology companies are the high-performance petrol fuelling the economic boom. Fail to provide the sophisticated, ultra-fast Internet networks they will demand in the very near future, and they will move somewhere else. Not just the technology companies - all businesses will be looking for such environments. But create the environment, and the Republic should attract the next-generation companies seeking a European base. Build it, and they will come.

Perhaps no one in the higher ranks of Government demonstrates an understanding of this as well as Minister for Public Enterprise, Ms O'Rourke (although the Tanaiste is in the running, as is the Taoiseach himself, according to many in the Department of Public Enterprise). For Ms O'Rourke, moving the State forward into a high-technology future is, as she calls it, a "big idea" which has become a personal, not just political, issue.

"It's kind of a mission now," she says. "Well, mission might be a bit strong. I'm kind of evangelical about it now; I am. And when I came in here I wasn't a bit. I think it developed because I saw the potential. I'm very good for the big pictures, you know. Not for the micro kind of things. I can sort of leap on and see where people could arrive at. I saw where this could mean so much for Ireland."

The Minister speaks in rapid free-association - start with electronic commerce and suddenly you're hearing about the voyage of St Brendan or an amusing story about a conversation with s the Northern Ireland Secretary, Dr Mo Mowlam. But mostly there's a fervour about the possibilities for the Republic if the State can be catapulted into becoming an e-commerce centre.

To that end, a series of seemingly low-key but pivotal decisions were made by the Minister over the summer. To the casual observer, they seem disconnected and even obtuse. But line them up for, say, Silicon Valley technology analysts or editors of foreign computer publications and they are deeply impressed. Piece by piece, the Department is setting up the environment needed for a digital transformation.

First, Telecom Eireann's monopoly was ended and the telecoms market liberalised. According to the Minister, much of the instigation for the move came from the strongly-critical Forfas telecommunications report, which argued urgently for a competitive market to force the growth of high-capacity, high-speed data networks. Once the market was opened, "I said, now we could do a whole lot of work; many, many other things," says the Minister.

One of those things is a planned move to flat-rate Internet access - instead of paying phone charges for time online, Internet users would pay a monthly fee for unlimited use. "What's the point of having wonderful global technology if people can't use it? That doesn't benefit mankind," she says.

The Department's next move was to issue a framework document outlining the Government's position on encryption (the encoding of data to keep it confidential) and digital signatures (electronic techniques for authenticating that an Internet user is the person he or she claims to be). Not exactly burning issues for most people, but absolutely crucial for encouraging e-commerce. Most of industry demands access to encryption software and a non-restrictive environment for using it.

Along with the encryption document, the Department announced the formation of a high-profile Advisory Committee on Telecommunications, filled with top international Internet and telecommunications experts, as well as home-grown talent. One of the first suggestions from the committee was implemented this week, when the Minister announced plans to create "public/private partnerships" to spur investment in telecommunications infrastructure. Rather than leave companies to build up connectivity bit by bit, the decision was taken to co-ordinate the overall effort.

The plan is currently vague, with no clear idea of how the process might be overseen, or by whom. But the principle is intriguing - in a small state, says the Minister, the cost of creating such infrastructure is impossible for the State to meet. Yet, the urgent, efficient development of such networks cannot be left to the private sector alone.

There are also plans for a high-speed telecommunications "corridor" between Northern Ireland and the Republic, she says, and for tax incentives for venture capitalists to invest in new companies. Overall, "the overriding need is for business and people to be able to communicate with one another. And this is what these [developments] can do," says the Minister.

If the project is successful, Ms O'Rourke acknowledges that much of the credit must go to the special US-Irish relationship, reflected in the interest in Ireland of key Clinton officials like senior trade policy adviser Mr Ira Magaziner, here this week for the second time this summer, or the members of the telecoms committee. "They see that we're ahead, and that we want it. We really, really want it. So they want to match that, when they see the enthusiasm," she says.

Perhaps the most surprising element of the developments over the past few months is the speed with which they've happened. The nature of Government is to move slowly, but time is the greatest enemy for the kind of change Ms O'Rourke envisages.

"You have to be ahead all the time," she says. "There's no point in keeping pace with whatever's happening in other countries. You have to dream, think and articulate what isn't even believable in this industry."