EIRCOM’S ANNOUNCEMENT that the economic downturn had forced it to review its investment in next generation broadband is a disappointment for consumers and a setback for the Government. It is hardly a surprising development. Last year the Government rejected Eircom’s request for a €150 million State investment to support the company’s €500 million plan to provide a faster broadband service to 70 per cent of the population.
As Minister for Communications, Eamon Ryan, then remarked: “We privatised a highly profitable, debt-free, heavily investing Eircom and the result on prices, services, and broadband has been disastrous”. Few could disagree.
Eircom is now carrying a huge debt burden, some €3.7 billion, and is losing market share. Its Australian parent, Babcock Brown is in even worse shape: it is struggling to survive. It means Eircom is not well placed to deliver what the country needs: a high-speed broadband service. Already, the company is under pressure from the communications regulator, ComReg, to invest €200 million to reduce the high number of faults on its network. As yet, the company cannot say how much it might be able to invest in next-generation broadband. For the Government, this uncertainty is a serious setback for its plans to develop the infrastructure required to support a knowledge-based economy.
The National Broadband Scheme announced by the Government in January means that next year every part of Ireland will have access to a basic broadband service. The 10 per cent of the population living in remoter rural areas will benefit, thereby reducing the urban/rural internet divide. But because those areas will rely largely on mobile broadband technology, the connection speeds will be relatively slow, and dependent on how many users access the service at any one time. For personal users, low speed broadband may well be adequate. However, for most businesses first-generation broadband will not suffice.
Eircom’s uncertainty about its investment commitment presents the Government with a serious difficulty. Given the parlous state of Eircom’s finances, and that of its Australian parent, Eircom’s financial capacity to deliver is in serious question.
Access to high-speed broadband is a key requirement for modern business, and a critical factor in national economic recovery. The Government will have to reassess matters if, as seems increasingly likely, Eircom is unable to deliver on its future investment commitments.