Tuesday 6 December 2016

Poor broadband service is crippling small Irish firms - as half of businesses selling nothing online

Published 09/08/2015 | 02:30

19pc of SMEs cite poor broadband as the biggest issue facing their business
19pc of SMEs cite poor broadband as the biggest issue facing their business

Despite numerous broadband task forces, broadband initiatives and now a national broadband plan, a fifth of Irish SMEs still say that poor broadband is the biggest issue facing their business in 2015, while a staggering 50pc of Irish SMEs say that they sell nothing online.

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The results of the Sunday Independent Business Owners Survey 2015 found 19pc of SMEs see poor broadband as the biggest issue facing their business in 2015. The survey also found that, far from feeling part of the knowledge economy, Irish SME's sell comparatively little online.

Just 7pc of respondents said that online sales make up more than half of their business, with a further one in ten saying that they sell between 20pc to 50pc of their products or services online. A third of respondents said that they sell less than 20pc of their goods or services online, while exactly half of respondents said that they sell nothing via the internet.

The most recent Akami State of the Internet report found that while average Irish broadband speeds are now among the best in the world, there is staggering inequality in internet speeds across the country. The Akami report for the first three months of 2015 showed that while the average broadband speed was 17Mb/s, ranking in the top 10 average speeds worldwide, speeds above 15Mb/s were available to just 21pc of the population. The vast majority of the Irish population, 69pc, have access to broadband speeds over a basic 4Mb/s, with more than a quarter, 27 pc, dealing with staggering slow speeds of less than 4Mb/s.

The effect that investment in high speed broadband can have on an economy is well documented. A report by Ericsson in 2012 showed that in OECD countries, an increase of 4 Mbps in broadband speeds had the potential to increase household income by €1,800 per year.

The impact of investing in high speed broadband is best illustrated by the Korean experience. Between 1995-2005 the government invested $900m in infrastructure for e-commerce, triggering private investment of $32.6bn. The result was that Korea has topped the world broadband leader board for more than a decade and by 2011 its ICT (information and computer technology) industry accounted for almost 12pc of GDP, six times what it had been before investment took place.

According to Eamonn Wallace of Ireland Offline, the last four government strategies on broadband over the past decade were "essentially a pile of nonsense". "The plan launched by former Minister Eamon Ryan was a complete washout, and our Inbox used to be full to the brim with people complaining about it. If you're not based in Dublin, Galway, Cork or Limerick, then your access to broadband has not really improved in the last number of years", he said.

Analysts believe that the problems to date involved comparatively low levels of investment, a lack of understanding by government of the capacity of high broadband to improve the domestic economy, and the privatisation of Eircom's infrastructure.

Wallace is more hopeful about the recently launched National Broadband Plan, which aims for all premises to have access to broadband of at least 30Mpbs, the minimum the European Commission has set for a viable service, by 2020. Wallace compares it in importance and scale to the rural electrification scheme which began in the 1950s.

"They are planning to bring fibre cables to every house in Ireland which is the only real solution, as the current service means that people are often so far away from exchanges that they don't have effective broadband. For those who are the first to get it, it will be great, but the reality is it could take a long time to cover the entire country," Wallace said.

Sunday Indo Business

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