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Analysis/Comment Last Updated: Dec 19th, 2007 - 13:17:15

Comment: Does the glacial adoption of Broadband in Ireland tell us more about ourselves than we would care to know?
By Michael Hennigan, Editor and Founder of Finfacts
Mar 3, 2007, 23:32

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The European Commission says that Broadband, i.e. high-speed, always on Internet connections are key to achieving productivity gains in the European economy. They also play an essential role in managing change in industry and the service sector – from health to inclusion, from regional development to the protection of our environment and promotion of cultural diversity. Broadband enables consumers to access new products and services such as voice telephony and television over the Internet. Businesses, too, benefit greatly from broadband deployment, as high download rates are necessary for business process integration, outsourcing, and efficient tele-working. Broadband facilitates critical updates of software, real-time messaging, SMS to email and fax to email services, technical support for customers and videoconferencing.

Ireland's economy is dominated by the business activity spawned by the significant facilities of the world's top high-tech, pharmaceutical and financial services companies - Intel, Microsoft, Dell, Hewlett-Packard, Google, Pfizer, GlaxoSmithKline, Eli Lilly, Citigroup, AIG, HSBC etc - and it's easy to conflate performance data with those of smaller indigenous counterparts and the large number of domestic service firms dependent on the foreign-owned sector. Some 92% of our annual exports are made by foreign-owned firms and we've no high-tech manufacturer/software company, that has more than $100 million in annual revenues.

In the Celtic Tiger period, only four Irish related companies have had significant success in terms of growth on an international scale - CRH, now the largest building materials supplier in the United States; Ryanair, Europe's largest low-cost airline; the Quinn Group, which has challenged entrenched operators in existing markets in Ireland and the UK and; Denis O'Brien's Digicel, which in the space of just over five years has launched in 22 markets and now has a payroll of over 4,000.

Last week, the European Innovation Scorecard 2006 was published and it provides broadband penetration (number of broadband lines per 100 population) rates for 2005. The average EU level  was 11% compared with 15% for the US, whilst Japan was above 16%. The range within European countries varied from 1% to 22%. (See pages 34 and 35 of report).

Denmark, Iceland and the Netherlands had  a 22% penetration rate and Ireland had a low rank of 4.4%.

The default spin is to first say that the survey is out of date and then say we've done blah-blah in the interval. Sure we have, as other countries have and on Thursday, March 1, 2007, telco regulator ComReg published an update.

Also on Thursday, Miles Lewis  Head of Sales, Yahoo! UK and Ireland, told the National Marketing Conference that: "The number of Irish people who have access to the internet is very poor when compared to other European countries.  A dynamic and ambitious economy, such as the economy of Ireland needs to ensure that it keeps pace with technological developments.  Ideally, when it comes to internet development and commitment, Ireland should be setting an example for the rest of Europe but instead it is lagging behind and while this has not significantly impacted the economy to date it seems it is bound to in the medium to long term.” 

It's easy to trot out a laundry list of reasons for us being retards in adaptation to modern technology - domination by former State telco, technical issues etc. while ignoring  an important factor.

It's not because Scandinavian countries and mainland European countries did not have similar roadblocks to what we have had, the slow adaptation to the Internet here supports the case that the glacial development of broadband in Ireland, reflects an apparent fact that quite a significant number of us are conservative and more resistant to change than some other Europeans.

Finfacts has been online ten years this month and it was understandable in the early years that some marketing folk would be afflicted with MEGO (my eyes glaze over) when having to endure a case being made for the potential of the web.

In the dot-com hysteria years of 1999 and 200, the First Tuesday franchise set-up in Dublin and soon hundreds of people would queue at the Temple Theatre building on Dublin's Temple Street, not to listen to semi-articulate pitchers looking for funding for some harebrained online project but to exchange business cards just in case this new phenomenon that was overhyped in the US, with its legions of self-important digerati and visionaries, could well catch-on.

In 2002, in the first full-year after the air escaped from the dot-com bubble, the online advertising market was virtually dead as the skeptics' doubts seemed to be confirmed.

In the interval, in reaction to developments in the markets of leading adopters of the online medium, such as the UK and US, there has been a slow but positive improvement in the Irish market. Online advertising was 1% of total advertising in Ireland in 2006 according to Initiative Media.

ZenithOptimedia expects the Internet to take nearly 9% of global adspend by 2009, but experience from the most developed markets suggests it is heading for well over 10%. The internet already attracts more than 10% of adspend in three markets (Norway, Sweden and the UK), and by 2009 it expects it to do so in ten markets (Australia, Canada, Israel, Japan, Norway, South Korea, Sweden, Taiwan, the UK and USA). The Internet has its highest share in the UK, where it will attract 13.5% of adspend this year and 21.5% in 2009.

In Ireland, advertising on television is regarded as a safe choice by many marketing folk and it does not require too much innovative thinking.

Ryanair and some of the banks were early pioneers here, in understanding the potential of  the web.

On Thursday, March 01, 2007, AIB Bank said that last year saw a record 33% increase in the usage of AIB’s website with over 40 million visits online.  33 million of these visits were to AIB’s internet banking service and 7 million were browsing for general information and purchasing financial services products.  With increased broadband penetration likely to fuel even more rapid take up, AIB predicts that this will reach 50 million online visits in 2007.

AIB says that buying online is not a new phenomenon and in 2006 13% of all AIB Personal Loans were taken out online. Already there is clear evidence that this is set to accelerate and last week AIB launched AIB Car Insurance online and over 5,000 quotes have been issued to customers, exceeding all expectations. AIB has seen sales of its travel insurance double since focussing it online and expects to sell 90% of travel insurance online in 2007. AIB predicts that within the next three years 25% of all its products will be sold online.

While the AIB online banking service originally attracted predominantly younger customers, the bank says that its appeal now spans all age ranges. It also attracts all types of customers from sole traders who tend to prefer to do their banking online over the weekend to personal customers who often choose to catch up on their banking affairs first thing on Monday morning.

However, despite the success of some banks in developing an online strategy, it is not uncommon to find some financial services marketing people to be skeptical about the web.

From my experience, the clear indicator of the still sideline role of the web in Irish business, is the default routine, when a report is published by a business or organisation.

The first priority is to get on a morning radio programme, but more often than not, if someone is motivated enough to want to read the report being discussed, it is not available online and may not be for hours or days, if at all.

It is not unusual to find communications departments with staff who are clueless about which are the main online services in various areas. The same can apply to public relations firms beyond the main players in the industry.

Even when success has been achieved in getting on a circulation list - "Is it spelt finfax?" - it may well be necessary to go through the rigmarole again when there's a mysterious disappearance from the list.

In the public sector, there are some that are very good - for example, the Central Bank, CSO and the Department of Finance while the Department of the Environment for example gets poor marks as does Dublin City University (DCU). In the private sector, among the Big 4 accounting firms, Ernst & Young and Deloitte are clued in but PricewaterhouseCoopers is in need of improvement. NCB Stockbrokers, property agencies Sherry FitzGerald and CBRE need to coordinate their PR with their website updatings, as do many other companies.

Last month, the Urban Forum, comprising Engineers Ireland, the Irish Landscape Institute, the Irish Planning Institute, the Royal Institute of the Architects of Ireland and the Society of Chartered Surveyors, launched a report, which forecast that Dublin will soon have a footprint the same size as Los Angeles with less than a quarter of its population. The report received extensive coverage in the broadcast media on the launch day but alas, it wasn't available online. An oversight or another Irish example of viewing the web as the poor relation?

When we report on a published report in our news service, we always provide a link to the publication if available or upload on our own server if we can get a copy.

It's easy to fall for a delusion by repeating some mantra ad nauseam.

Do we have for example the best educational system in the world or is the goal of becoming a world class knowledge economy in six years, really a pipe dream?

So why ignore the existing lesson from our adoption of broadband? 

© Copyright 2007 by Finfacts.com

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