Paul Sweeney: Ireland has one of the worst levels of 4G availability in the world. This is largely because of the privatisation of Eircom.
Ireland is 75th of the long list of 79 countries (see graph below). We are below Thailand, Albania, Peru, Columbia, Panama, Morocco, Romania, Philippines and the UK, which is 54th. This list is in a report from the UK’s Infrastructure Commission on 4G and 5G.
Privatisation benefits Whom?
Telecom Eireann, the highly profitable, highly investing, state-owned company was privatised in 1999. Various new owners borrowed heavily to buy the company, then one the biggest and heavily investing Irish companies. They then dramatically cut investment and sucked as much value out of the company then called Eircom. They did this to repay the debt and to make fat profits for themselves.
They would have even stripped the copper from the wires if they could have got away with it.
It was raw capitalism at its worst, brought to you by your privatising government in 1999.
Ten years later the company was bust. Seventeen long years later, Ireland still has poor broadband, with 3G and 4G not-spots all over the country!
Irish elites favour privatisation. But Irish people rightly have a deep hostility to privatisation with very good reason. The privatisation of many state companies has made the elite even richer, in accounting, legal and stockbroking firms, in banks, investors and speculators but it has made fat losses for gullible investors too. Privatisation has done nothing to improve company performance – quite the opposite in some cases - especially the former heavily investing and profitable state telecoms monopoly, Eircom. It was facing competition and doing very well, till privatisation.
The number of substantial and mid-sized indigenous state owned Irish firms has been reduced too by privatisation though many still exist under foreign ownership and most are doing well. These include Aer Lingus, Greencore, Irish Life, Bord Gais Eireann and state banks ACC, ICC and the mutual TSB. Irish Ferries is largely Irish owned so far.
Industrial or enterprise policy fails to consider the merits of publicly-owned and thus indigenously entrenched commercial enterprise, tending to favour tax-induced foreign control of enterprise located here.
There is much controversy around the issue of water, sewage and charges. But one thing is clear: Irish people are strongly opposed to the privatisation of Irish Water. They are right to be. Charges are likely to be levied up, assets such as reservoirs, land etc. sold off and investment cut (even further than under state ownership before the new company was set up!).
Mobile connectivity is a necessity
The UK Commission’s central point is that mobile connectivity has become a necessity. “The market has driven great advances since the advent of the mobile phone but government must now play an active role to ensure that basic services are available wherever we live, work and travel, and our roads, railways and city centres must be made 5G ready as quickly as possible.”
Thus government must play a role in delivering 5G, it argues. Not just around universal service obligations, but on moterways, trains and towns and cities. It says the UK needs a digital champion to drive 5G broadband.
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The UK Commission explains that 5G means seamless connectivity. “Ultra-fast and ultra-reliable, transmitting massive amounts of data at super low latency. It will support the ever increasing requirements of the existing network and new applications as unknowable today as the 4G system we today take for granted did a decade ago.”
So how does Ireland fit into this? Where is our 4G, never mind investing in 5G? After the privatisation of Eircom our developemnt is hindered by poor broadband availability, in spite of hundreds of millions of public subsidies to private operators over the years since the debacle.
Ireland did auction our 4G spectrum auction in 2012 – ahead of the UK - awarding lots to Hutchison 3G, Meteor, Telefónica (O2) and Vodafone, with fees of €854.6m, out of which €450m went to the exchequer that year. This was better than almost giving it away as was done controversially in the past.
The National Competitiveness Council recently argued that we need more investment after the massive cuts in the public capital programme since the crash in 2008.
It said “We must prioritise the investment required to deliver the Government’s commitment to provide fibre based broadband services to all parts of the country. In particular, we need to accelerate through market reform and where necessary State investment the availability of competitively priced, advanced broadband services that offer significant upload capability (including widespread availability of symmetric services for enterprise), low latency and low contention ratios in all urban centres where they are not or will not be available in the short term.”
We Need Public Investment
In A Time for Ambition the TASC report on the need for far great public investment, we showed how such investment could be financed. This year, the first year of the new Government investment plan, the level of public investment is actually at a record 50 year low! We also called for an Infrastructure Commission (as have others) to ensure, amongst other things, that public investment never lets a housing crisis like this emerge again.
The National Broadband Plan (NBP) is the government’s plan for high speed broadband through a combination of commercial and State investment. It was launched in 2012 and is behind schedule. Private firms like Eir (the former Eircom or Telecom Eirean), state owned ESB and other firms are competing to win the contract to invest in broadband.
But with availability of 4G at around 44%, we have a long way to go. If Eircom had not been privatised, which enabled its asset-stripping, it is likely (though not certain) that Ireland would have been one of the leaders in broadband - for the past 17 years.
Paul Sweeney is chair of the Economists’ Network and authored “A Time for Ambition”.