Government wastes €200m on failed broadband interventions

"The two interventions the Committee made in the building of fiber optic 'Metropolitan Area Networks' (MANS) and supporting new Group Broadband Schemes have both failed and have cost the Irish taxpayer over €200 million.

"The MANs project in particular has been a spectacular waste of public money. The first phase of MANS were built at a cost of €85 million and it became immediately apparent that the scheme was not working. The company Enet, which was given the responsibility of managing traffic on the new networks only, had a turnover of €3.6 million to the year ending April 2006. Despite this spectacularly poor return on the states investment the Government continued to plough a further €118 million into the second phase of MANs, digging holes around the country to lay fiber optic cable which will never be lit up.

"The problem with the MANS concept is that the fiber optic rings did not have either a 'last mile' connection to the customers' door, nor a backhaul network which could provide a cheap connection to the rest of the country. Unfortunately Eircom still hold all the cards as they own the only effective fixed line telecoms network around the country. We have spent a fortune duplicating those assets without providing a real rival to the private monopoly provider.

"The Governments 'Group Broadband Scheme' which was meant to provide broadband access to more remote areas has also been a failure. Grant aid of €5.9 million was offered to service providers approved under the scheme but only €1.4 million has actually been taken up due to a lack of demand for the services. Once again the reliance on a very expensive Eircom 'backhaul' network to connect the scheme has been the problem.

"While our numbers of broadband customers has increased in the last two years we are still lagging behind on international rankings. There is no incentive for Eircom to provide more innovate and cheaper products when it can simply continue to maximise profits by sweating its assets from their existing product line. We need to introduce real competition into the market to make it work. We should set the mobile phone operators, the television cable companies and Eircom into direct competition with each other to get cheaper, faster and more integrated broadband services into the Irish market.

"The Government should have adopted such a strong regulatory approach rather than doing what it knows best and handing €200 million to the construction industry to dig holes around the country. They have thrown good money after bad and have left us without the broadband services our industries need if we are to continue to thrive in a new knowledge economy," concluded Deputy Ryan.