CIE's broadband network could be worth £100m

Broadband elements of Iarnrod Eireann's signalling network could be worth about £100 million (#127 million), according to telecoms sources.

Yet, while CIE executives are considering selling the broadband, telecoms sources have stressed that significant additional investment would be required before it could realise such a sum.

On the system's potential to function as a telecoms rather than a signalling system, Iarnrod Eireann sources have claimed its fibre-optics were an essential part of a more complex system. They accepted, however, that the design "would have allowed for some possible expansion in the future, if needed".

It is still unclear why Iarnrod Eireann chose to build extra capacity into the system, which was designed in 1995. Only in March 1998, did the Minister for Public Enterprise, Ms O'Rourke, sign a statutory instrument enabling the transport group to operate as a telecoms company.

That statutory instrument enabled CIE to construct a separate broadband network for Esat Telecom. Sources familiar with the deal yesterday claimed Esat would pay about £37 million to CIE over 20 years to use the system.

Separately, others claimed the signalling system could amount to a broadband network into most of the key cities and towns in the regions, and a complete fibre ring within Dublin if upgraded. In addition, it could offer mobile phone companies access to signalling masts.

Large cost over-runs on the unfinished signalling project are already the subject of an investigation by the Oireachtas Joint Committee on Public Enterprise and Transport.

The committee's chairman, Mr Sean Doherty TD, yesterday said CIE's expenditure on broadband would be investigated "if it has any bearing at all, one way or the other, on what we're examining".

He added: "If this has relevance it cannot be ignored."

According to a study by the consulting group, PricewaterhouseCoopers, construction work on the signalling system has already cost £25 £40 million instead of the £14 million CIE planned to spend.

Sources familiar with the signalling initiative have claimed the cost over-runs were related to construction work on the signalling network, most of which took place after the Esat Telecom network was completed. The over-runs were not related to the procurement of fibre-optics, they claimed.

The transport group's broadband network comprises six fibre-optic pairs on Esat Telecom network and four fibre-optic pairs on the signalling project.

CIE executives are understood to be considering the sale of the four pairs on the signalling system. Alternatively, they may lease the system or spin its Group Telecoms division off as a separate company.

An internal memo, seen by The Irish Times, said: "The initial purpose of this cable was to support the communication requirements of the resignalling scheme. However, alternative fibre is now available through a commercial agreement with Esat Telecom over the routes."

This supports suggestions by Iarnrod Eireann and CIE Group sources that the transport company would use its capacity on the Esat network as substitute fibre-optics for the unfinished signalling system.

They denied claims that the Esat system was better suited to signalling. It is a continuous, or loop-structured, network, unlike the signalling system. Telecoms sources claimed breakages on the latter could not be surmounted and that it was always more appropriate for telecoms. Iarnrod Eireann sources said proposals to exploit the broadband commercially have never been put to CIE's board. While one described proposals to sell the system as "embryonic", telecoms sources believe there may have been an earlier plan.

Ms O'Rourke's spokesman said the Department of Public Enterprise was fully informed of the sophistication of the signalling network. It was also informed of the Esat system, which was seen as a source of income for the transport company.

A transport source familiar with the Esat project said there was pressure to roll it out because of a perceived competitive threat from an alternative network operated by Ocean, a joint venture between the ESB and British Telecoms.