Priority Questions.

Telecommunications Services.

Bernard J. Durkan

Question:

1 Mr. Durkan asked the Minister for Communications, Marine and Natural Resources the action he has taken, or proposes to take by way of legislation or otherwise, to address the issue of the apparent failure of the regulatory system as transposed into Irish law to meet its stated objectives in the wake of the disconnection of thousands of telephone and broadband subscribers resulting in damage to public confidence and business; if he or his office has been in touch with the relevant regulators prior to or since the decision to grant major price increases to both gas and electricity suppliers at a time when all international indicators were for a price reduction; if his attention has been drawn to the need to restore public confidence in the regulatory system by way of urgent investigation into the circumstances surrounding these events, the introduction of legislation, if necessary, or by directive to address the issues involved and to ensure against any recurrence; and if he will make a statement on the matter. [33833/06]

Minister for Communications, Marine and Natural Resources (Mr. N. Dempsey)

The telecommunications market in Ireland is fully liberalised and open. Statutory responsibility for the regulation of the electronic communication sector rests with the independent regulator, the Commission for Communications Regulation, ComReg, under the Communications Regulation Act 2002 and the Regulations transposing the EU Regulatory Framework for Electronic Communications Networks and Services. It is not, nor will it ever be, a function of the regulator to become involved in contract debt disputes between two companies.

As the Minister with responsibility for policy in the sector, I am concerned about the disruption and inconvenience caused to so many customers and I have asked ComReg to examine how, in light of the recent situation regarding Smart Telecom, this could best be prevented from happening in the future. All options will be considered, including legislation if necessary.

In the context of energy tariff increases, both the Electricity Regulation Act 1999 and the Gas (Interim) (Regulation) Act 2002, responsibility for the regulation of electricity and gas tariffs lies with the Commission for Energy Regulation, CER, which is the independent energy regulator.

The CER undertook a rigorous examination and consultation process in advance of publication of it decisions on the tariff increases. The CER has published its decisions in detail. Together with the Electricity Supply Board and Bord Gáis Éireann, the CER has made a full presentation on these deliberations to the Joint Committee on Communications, Marine and Natural Resources.

The scenario in early October that gave rise to cheap gas on the wholesale markets was atypical. Overall demand, including heating demand, was at a low level given the mild start to the autumn and supply levels were very high because the new Langeled pipeline from Norway was being tested at maximum capacity at a time when such flows were not needed. Long-term contract prices are more relevant to the cost of consumer energy bills than short-term day trading prices, as prevailed in early October. Despite some easing of gas prices in recent months the overall view of regulators, analysts and suppliers is that costs will remain high at least until next year.

The regulator has indicated he is open to reviewing tariffs should there be a significant and sustained downward trend in costs on the wholesale markets.

Mr. Durkan

I thank the Minister for his admission and his willingness to take action regarding the outage in the telecommunications area. Will he elucidate further, with a view to setting a precise deadline and timetable to deal with that situation whereby innocent subscribers became the victims and where the delivery of services either was not properly anticipated or people were not made aware of negotiations taking place and were arbitrarily left without a service? Will the Minister give an undertaking that it will not happen again and that he will take the necessary action to prevent it?

I am concerned about the function of the regulator re gas and electricity price increases. The Minister should also be concerned about it. I presume he is aware that if this trend continues and these prices are left in place for the next 12 months, there will be large-scale loss of manufacturing jobs, in addition to jobs in the services sector, especially in the transport area. Is the Minister also aware that from last May the international indicators on energy prices clearly implied that production was up and that countless people were talking up the price of gas and oil? There was a reason for that.

Will the Minister give an undertaking to the House that before this goes further, he will order an inquiry into the information that led to the dramatic price increases in gas and electricity and will he relate that to the information which I know he has because he reads some of the same e-mails I receive? Will he carry out an examination of the impact on those industries that are now crying out for action?

Will the Minister order a further review of the price increases and the reasons therefor? If, for example, it is shown that there are good and compelling reasons for a reduction in the area, will he authorise it or order it, or would that require legislation?

Mr. N. Dempsey

The legislation that is in place gives responsibility for price increases to the independent regulator. The reason the legislation was put in place was to prevent interference from the political system in the price of gas and oil with the aim of ensuring a level playing field for anybody who wanted to enter the electricity and gas markets. We have gone down this route because of EU legislation and directives.

I agree with the Deputy that other options existed at the time which we might have taken, but we did not take them and we cannot reverse out of the one we are in at present. It is not open to me, as Minister, or to the Government, under the current legislation to direct the regulator in any way on prices. The regulator has spoken for himself. He came before the relevant committee, which I commend for taking action and requesting his presence, and he explained in detail how he arrived at his decision.

It is probably good from the point of view of soundbites to refer to immediately reversing the price rises, but that is not a realistic option. The price of oil and gas has increased substantially since this time last year. The Deputy is correct that the price has now begun to fall. Oil and gas are internationally traded commodities. BGE depends on imports from or through the UK for 86% of its supply. It would be a help if we had our own supply of gas.

An Ceann Comhairle

The time for this question has concluded.

Mr. Durkan

May I ask a brief supplementary?

An Ceann Comhairle

No, we have already spent seven minutes on this question.

Mr. Durkan

We are all friends here.

An Ceann Comhairle

I want to remain friends with everybody and ensure that everybody gets the same time to put questions.

Mr. Durkan

It was with that in mind that I asked the Ceann Comhairle that question.

Fuel Prices.

Thomas P. Broughan

Question:

2 Mr. Broughan asked the Minister for Communications, Marine and Natural Resources if, in the context of the 34% price hike in gas prices and the near 20% increase in electricity prices, he will introduce legislation to establish a consumer panel within CER to ensure consumer needs are adequately taken into account by the regulator in energy pricing policy, and as recommended in the recent Deloitte & Touche report in the electricity sector; the measures he is recommending to the Department of Finance and the Department of Social and Family Affairs to tackle the growing level of fuel and energy poverty in society here; and if he will make a statement on the matter. [33724/06]

Mr. N. Dempsey

Under EU regulations on the internal energy markets the Commission for Energy Regulation has a direct legal obligation in regard to electricity and gas consumers. These include the requirement to protect the interests of final customers and to take account of the needs of vulnerable customers. The regulator is also required to ensure that all customers are supplied with electricity and gas of a specified quality at reasonable prices.

I welcome the stronger focus on consumer protection as part of the move to liberalised markets. The interests of customers are now better safeguarded within the regulatory regime. In carrying out this function the CER regularly engages with customers and customer representative organisations.

The CER had intended to develop specific consumer panels for the gas and electricity sectors. This proposal has been superseded by the establishment of the National Consumer Agency, NCA, by my colleague the Minister for Enterprise, Trade and Employment. The agency's remit is to represent and progress consumers' interests across all economic sectors. It is also envisaged that the agency will provide a strong consumer voice in the regulated sectors, including energy.

The CER is working closely with the NCA to set up appropriate arrangements, including a memorandum of understanding on information sharing and consultation and co-operation. The CER is also establishing a dedicated consumer complaint handling team that will handle all complaints about energy suppliers. These are positive steps forward in the interests of energy consumers and I commend the CER and the NCA for their collaboration to date.

Addressing fuel poverty is a critical aspect of the Government's energy policy as outlined in the Green Paper. Support is provided through several programmes, including the SEI warmer homes scheme and low income housing programme, the household benefits package for electricity and gas allowances and the Department of Social and Family Affairs's national fuel scheme for fuel allowances as well as social welfare rates and other benefits.

The impact of high electricity and gas prices was recognised by the Government in last month's announcement by my colleague, the Minister for Social and Family Affairs, Deputy Brennan, concerning the introduction of improved household benefits, which will protect 340,000 people from energy price increases.

The Deputy can tell his constituent that we are not facing that era again. Recently, the Government, which has increased the amount of payments to old aged pensioners substantially, increased the fuel, electricity and gas allowances for elderly people. The Deputy can assure his constituent that the Government is cognisant of the effects of high prices on the elderly and those who are less well off.

It is simplistic to say the Government can ignore solutions or the fact that oil and gas prices are increasing. As outlined in the Green Paper, I am interested in reducing the ESB's prices and introducing more competition to the market to compete with the ESB and encourage it to slim down, be more effective and produce cheaper electricity. I hope the Deputy will support this measure.

Mr. Broughan

Would the Minister be prepared to introduce a statutory——

An Ceann Comhairle

We have gone over the time. I have ruled on Deputy Durkan, so I cannot allow Deputy Broughan to continue.

Mr. Durkan

He did.

An Ceann Comhairle

This ruling is the same.

Telecommunications Services.

Eamon Ryan

Question:

3 Mr. Eamon Ryan asked the Minister for Communications, Marine and Natural Resources the revisions he intends to make to the construction of the second phase of metropolitan area networks to ensure cost effective last mile connections for the end user and a backhaul connection from the MANs to the broader telecommunications network. [33854/06]

Mr. N. Dempsey

The second phase of the metropolitan area networks, MANs, programme will give rise to the construction of open access, high-speed fibre broadband networks in more than 90 towns. Some 22 networks are already under construction and the remaining MANs will commence later this year and early next year. As in phase one of the programme, each network includes a co-location facility situated near Eircom's local exchange. In addition to facilitating last mile connections, the co-location facility allows service providers adequate space to house their equipment.

In designing the second phase networks, the local authorities were asked to identify all businesses in the towns and estimate their likely demands for telecommunications services. This exercise will help to identify the potential end users of each network. Connections to these users are included in the network designs.

Backhaul is available to all the MANs through Eircom's network. Some MANs are also connected to alternative backhaul networks where they are available. My Department is currently exploring options to enhance competitive backhaul connectivity.

Mr. Eamon Ryan

The first phase of the programme is not working. It has cost approximately €80 million and its reported annual turnover was cited as €3.5 million in April, a poor return on a State investment by any measure.

From presentations to the relevant committees by the operators of the MANs, it is clear that a different system is needed. According to Mr. Conal Henry, the chief executive officer of E-Net, the operators need to connect directly to the buildings through which the MANs run. I have heard nothing different today. The cost to isolated areas in County Donegal, for example, means there is no effective and competitive backhaul network.

Companies like Smart Telecom are pulling out of the broadband business and Eircom announced 100 new broadband roll-outs today. Why are we spending €170 million to duplicate fibre already in the ground without a return? The Minister must consider taxpayers' interests rather than an ideological commitment to this project. Are we getting value for €170 million and why are we digging up roads to put down fibre optic cables that are already there or in a neighbouring road? Will the Minister change the project before the Committee of Public Accounts examines the matter in a year or two and determines it was a mistake, that we built something based on a positive idea and that it did not work? As the MANs are not working, what will the Minister do differently?

Mr. N. Dempsey

The Deputy has amazed me because he normally examines all sides of a proposition before making statements on it. He sounds like a spokesman for a well known company that has opposed the MANs from day one because they would provide it with competition in various places.

The programme will not pay for itself in one, two or three years. It is a long-term investment, as was the investment in the Atlantic crossing that connected us to international broadband services. The PAC examined the crossing and decided that the investment of €80 million was a good one. It has not repaid the State since it started operating.

The MANs programme does not duplicate fibre in many places. Indeed, the programme is providing fibre to many places that would never have had fibre otherwise. We started the project because there was no roll-out of broadband by the incumbent. Instead of taking the incumbent's route of copper wires, we decided to put in place fibre optic cable, which is the cable of the future. In five to ten years, we will be trying to complete a full fibre optic network. Whether this will be done by the State, the telecommunications companies or a combination is open to debate, but it is the direction we must take if we want the type of broadband roll-out referred to. I am sure the Deputy is anxious to have this done and I urge him to be more careful in his assessment of the programme. It is not meant to have repaid the State by this stage and it will not do so for another ten or 15 years. It is not in direct competition with DSL or copper-based lines. Rather, it is providing a future-proof network.

An Ceann Comhairle

Deputy Eamon Ryan must be brief.

Mr. Eamon Ryan

I checked the time, a Cheann Comhairle. I believe we have a couple of minutes.

An Ceann Comhairle

There are 50 seconds.

Mr. Eamon Ryan

I am not standing here on behalf of Eircom. I would never have sold Eircom. I would even have bought back Eircom. However, I recognise the reality that Eircom still holds all the cards and that the Minister's attempt to set up an independent network will not make any sense unless one can go the last mile and unless there is a backhaul network. The Minister is doing neither and he has not answered that pertinent question here.

The Minister stated in September that he is now looking at some other new innovative ways, possibly using the private sector, to provide broadband connection. Can he give a brief outline of what they might be?

Mr. N. Dempsey

If I conveyed the impression that I was accusing Deputy Ryan of being a spokesman for Eircom, I am not and I accept his bona fides in that regard. I also accept that MANs Phase I is not perfect and will not be perfect, and the issue of backhaul must be addressed. The issue of the fibre to the kerb must be addressed also. If Deputy Ryan was focusing on those particular issues, I do not have a significant difficulty with that but the MANs project will not be, as he described it, a waste of taxpayers' money. I accept that there are issues with MANs which need to be addressed and they are being addressed.

Departmental Investigations.

John Perry

Question:

4 Mr. Perry asked the Minister for Communications, Marine and Natural Resources if, further to the decision by the Ombudsman to investigate the way the lost at sea scheme was handled, he will authorise an internal investigation into the scheme, including into the issues of the way files on a boat (details supplied) came to be misplaced and into the reason no assessment of costs was carried out prior to the introduction of the scheme; if he will ensure that his Department co-operates fully with the Ombudsman’s investigation; the measures taken to address the issue following the Ombudman’s report in May 2006 that the scheme, which saw 75% of funding being allocated to a single constituency, was deficient and flawed; and if he will make a statement on the matter. [33725/06]

Minister of State at the Department of Communications, Marine and Natural Resources (Mr. Browne)

The lost at sea scheme was introduced in June 2001, following consultation with the fishing industry representative organisations, to enable qualifying applicants under the scheme to receive replacement capacity in respect of fishing boats lost at sea between 1980 and the establishment of the Fishing Boat Register in 1990. The closing date for receipt of applications was 31 December 2001.

In January 2003, over 12 months after the closing date, an application under the scheme was received in the Department from a particular applicant, the subject of Deputy Perry's question.

In December 2004, the Office of the Ombudsman wrote to the Department indicating that it was examining a complaint from this applicant on their application under the lost at sea scheme and seeking specified information. The Department provided full information and documentation required.

In February 2006, the Ombudsman wrote to the Department stating that she was going to carry out a formal investigation into the application and requesting certain files, which the Department duly provided. On 13 July 2006, the Ombudsman invited the Department to comment on the statement of complaint. The Department returned comments on 31 July 2006. It is clear that the investigation by the Ombudsman is ongoing and that the Department has fully co-operated with the investigation at all times. For obvious reasons, it would not be appropriate for me to require the Department to initiate an internal investigation while the Ombudsman's investigations are still ongoing. However, I will give serious consideration to the Ombudsman's report on the conclusion of her investigation.

Mr. Perry

How can the Minister of State explain that senior civil servants expressly stated the view, in announcing this scheme, that it would open the floodgates? How is it possible that two persons, both constituents of the then Minister, Deputy Fahey, received 75% of the funding allocated, which was a substantial amount of money?

Does the Minister of State agree with the Ombudsman that the scheme was seriously flawed? The Ombudsman wrote that, accordingly, her office reverted to the Department requesting it outline how it proposes to deal with the matter.

There were 120 files and eight files which the then Minister, according to a handwritten note from him, wanted ring-fenced. Of the six files where there was payment, four were from within his own constituency.

This is a serious matter. It is a complete cover-up. Never in the history of the State has such a report issued from the Ombudsman clearly indicating the compliance of the Department and of senior servants in a cover-up on this scale.

Mr. Browne

There was no cover-up. Some 67 applications were received and six were successful. The Ombudsman wrote on behalf of a specific applicant and we in the Department have fully co-operated with the Ombudsman's request for information, files and documentation.

I can assure Deputy Perry that the Ombudsman's investigation is not complete. Deputy Perry stated in his question that it was complete but it is still ongoing. I can assure the Deputy that our Department will continue to work in co-operation with the Ombudsman. There is a perception that the Ombudsman is investigating the scheme. The Ombudsman is investigating the specific allegation that was made by one applicant and we are co-operating fully with the Ombudsman in this issue.

Mr. Perry

The Ombudsman is investigating the allegation that this scheme was, as she has stated, seriously flawed. It was closed down within 24 weeks. The Byrne family lost a father and a son and three members of the crew, and it was quite extraordinary that the Department did not have the file on this.

There were 120 files. Senior civil servants advised the then Minister, Deputy Fahey, that he should not have announced this scheme, but he wanted this scheme to be ring-fenced to between six to eight files and 75% of the funding allocated went to two of his constituents.

This has been in the public domain time and time again. Is the Minister of State saying that when the Ombudsman reports this matter will be dealt with decisively? This scheme was dealing retrospectively, from 1980 onwards, with vessels lost at sea. It was quite extraordinary that the Department did not have a record of one of the biggest losses off the Irish coast; the family had not been contacted and the announcement was concealed. This case must be dealt with decisively. It is extraordinary that we must go to the Ombudsman to deal with this case when the Minister should be dealing with it.

Mr. Browne

The Ombudsman made a request on behalf of a specific applicant to the Department. We did not ask the Ombudsman to investigate it.

When the Ombudsman, who is the most independent person in the country, is investigating a complaint, it would not be for me to carry out an internal investigation at the same time. What I am saying to Deputy Perry is that the Ombudsman's investigation is ongoing, we should wait until her final report is available to the Department and, as I stated at the outset, I will give serious consideration to Ombudsman's report when it becomes available to me.

Telecommunications Services.

Thomas P. Broughan

Question:

I agree with the Deputy that the situation that emerged on 2 October, whether it is addressed by legislation or regulation, should not happen. I am not sure whether a 24-hour notice would do much good in similar circumstances and, therefore, I will maximise the notice customers will receive of being cut off.

Everybody following the telecommunications industry knew there had been signs for some time, and more frequent signs in the three or four weeks leading up to the cut-off, that there was a major problem. Smart Telecom also knew that. We all beat up on Eircom occasionally but, in this instance, Smart Telecom was also not a shining knight. This is an industry and one company owed another money. I do not care who owes money to whom but I care if customers are cut off as a result, and that is what I want to address.

The Deputy referred to local loop unbundling, number portability and so on. These are matters for the regulator and they have been legislated for. Talks are ongoing between the regulator and the industry to ensure they are rolled out as quickly as possible.

Dáil Éireann debate - Thursday, 19 Oct 2006