Eircom says State wasting money

Eircom yesterday accused the Government of squandering €170 million of public money amid a growing rift over the direction of the State's telecoms policy, writes Jamie Smyth, Technology Reporter

The firm, which holds a near monopoly over telecoms infrastructure in the Republic, also signalled that it may complain to the European Commission about State intervention in the market.

Eircom spoke out following the award of a contract to manage a new State-owned fibre-optic telecommunications network in 19 regional towns. The contract, won by Limerick-based E-Net, will enable Eircom's rivals to bypass parts of its network to supply services in many regional locations.

E-Net, which was founded by Limerick developer Mr Michael Tiernan, will market and maintain the State-owned network for the Government. It will be a profit-making enterprise, sharing the revenue generated from the networks with the State.

The firm expects to create 65 jobs throughout the 15-year lifetime of the management contract and provide indirect employment to another 55 people. One of its primary goals will be to provide better infrastructure in regional areas to attract more investment, Mr Tiernan said at the launch.

Ion Equity and PricewaterhouseCoopers recently raised €12 million for E-Net from ACT Venture Capital, Bank of Ireland and Anglo Irish Bank. The firm's chairman is Mr Eoin O'Driscoll, a former Lucent director.

The Minister for Communications, Mr Ahern, described the initiative as a unique public private partnership yesterday and said the Government would fund new fibre networks in 41 towns. He said the funding for these projects had been secured from the Department of Finance despite opposition to the project from some outside Government.

Mr Ahern said the new network and the management contract would both complement and extend very significantly the accelerated roll-out of broadband infrastructure to regional areas.

Eircom strongly rejected Mr Ahern's comments last night and accused the State of wasting taxpayers' money by duplicating its network in regional locations.

Mr David McRedmond, Eircom's commercial director, said State policy would undermine the case for future investment by private firms like Eircom. "We are already providing broadband to 60 of the 65 towns where the Government is planning to build networks. I think there is potential for another Global Crossing experience where the State ends up writing off millions of euro."

In response to Eircom's statement, a spokesman for Mr Ahern said the Government would make no apology for ensuring there wasn't a digital divide in the Republic in areas where firms didn't invest.