US embassy cable - 05DUBLIN1090

C O N F I D E N T I A L SECTION 01 OF 03 DUBLIN 001090 
 
SIPDIS 
 
E.O. 12958: DECL: 01/31/2015 
TAGS: PREL, TINT, SENV, TRGY, EINV, ENRG 
SUBJECT: CODEL BOUCHER WRAP-UP: IRELAND'S DEBATE ON 
TELECOMS COMPETITION AND ENERGY GOALS 
 
REF: DUBLIN 1030 
 
Classified By: Political-Economic Counselor Mary E. Daly; Reasons 1.4 ( 
B) and (D). 
 
1.  (C) Summary: The August 22-23 visit of Congressman Rick 
Boucher (D-VA), which focused on information technology (IT) 
and energy, exposed conflicting views on the level of 
competition in Ireland's telecoms sector, as well as concerns 
about Ireland's ability to meet Kyoto commitments.  Irish 
Government officials described Eircom, the national phone 
company, as "luddite," resisting competition and advances in 
telecommunications for its own benefit.  Representatives of 
Eircom and mobile operator Meteor, however, dismissed the 
need for Government regulatory actions to make the telecoms 
market, particularly the internet, more competitive.  Despite 
the debate on competition, U.S. IT firms said that Ireland 
was an ideal location for their European hubs, due mainly to 
the quality of the Irish work force.  Regarding energy, 
Government officials told Congressman Boucher that Ireland 
would be hard-pressed to meet Kyoto targets, even as the 
country sought greater reliance on renewable energy sources, 
especially wind.  A representative of GE separately briefed 
Boucher on Ireland's first offshore wind farm, which could 
meet energy needs for several thousand Irish homes.  GOI 
comments on difficulties with Kyoto commitments point up the 
irony in Irish public criticism of the U.S. decision to 
remain outside the Kyoto regime.  End summary. 
 
Visit Overview 
-------------- 
 
2.  (U) On August 22-23, Congressman Rick Boucher (D-VA) met 
with U.S. subsidiary firms and Irish Government officials to 
discuss information technology (IT) and energy. 
(Representative Boucher is a member of the House Energy and 
Commerce Committee, serving on the 
Telecommunications/Internet and Energy/Air Quality 
Subcommittees; he is also the co-founder of the House 
Internet Caucus.)  The wide-ranging discussions focused on 
competition in telecoms and Ireland's attractiveness to IT 
firms, on one hand, and Ireland's Kyoto targets and wind 
energy initiatives, on the other. 
 
--------------- 
IT and Telecoms 
--------------- 
 
The GOI: Eircom is Resistant to Change 
-------------------------------------- 
 
3.  (C) Eircom's leadership is "luddite," resisting rather 
than embracing advances in the telecoms industry, 
particularly the internet, according to Eamon Malloy, 
Assistant Secretary for Telecommunications in the Department 
of Communications, Marine and Natural Resources, and John 
Doherty, Chairman of the Commission for Communications 
Regulation (ComReg).  They told Congressman Boucher that 
Eircom, facing little competition in the late 1990s, had 
charged prices that were five times the EU average and had 
slowed broadband's roll-out rather than cannibalize its own 
56k dial-up service.  The Government's efforts to introduce 
competition had lowered prices and improved services, and 
ComReg intended to compel Eircom to finalize local loop 
unbundling (LLU) by year's end through action in the Irish 
courts (reftel).  Malloy said that such measures reflected a 
Government strategy to make Ireland a knowledge-based, 
technologically savvy economy, in which cutting-edge telecoms 
services played an integral part.  In contrast to Eircom's 
emphasis on fixed-line broadband, Malloy cited the 
Government's focus on wireless technologies both for 
hard-to-reach rural communities and for urban Irish, 
especially as the latter "were socially disinclined to sit at 
home with a computer." 
 
Eircom: Complaints about Lack of Competition Unfounded 
--------------------------------------------- --------- 
 
4.  (C) Eircom CEO Philip Nolan took exception to criticism 
that Eircom had stifled competition in the telecoms sector, 
resisted LLU, and impeded the development of broadband in 
Ireland.  He explained to Congressman Boucher that Eircom had 
overseen the fastest digital subscriber line (DSL) broadband 
roll-out in Europe since 2003, with 90 percent of the country 
likely to have broadband access by March 2006.  He added that 
the remaining 10 percent were rural areas to which Eircom 
could not extend broadband service in an economically 
feasible way.  Nolan rebuffed complaints about the pace of 
LLU, pointing out that the United States was moving away from 
unbundling requirements in order to give fiber-optic network 
builders, like Verizon, more incentives to expand service. 
He also attributed Ireland's low ranking in Europe for 
broadband penetration to lack of consumer demand, noting that 
nearly half of Eircom's new household broadband customers had 
canceled their subscriptions in favor of cheaper charges 
through 56k dial-up.  Nolan predicted that the on-line gaming 
industry would drive demand for fixed-line broadband service 
in Ireland, especially as wireless technologies could not 
provide comparable gaming experiences. 
 
Meteor: Competition Level Is Just Fine for Mobile Operators 
--------------------------------------------- -------------- 
 
5.  (C) Whereas Eircom dominates the internet market, mobile 
phone operators work in a competitive environment, 
Representative Boucher was told by Robert Mourik, Regulatory 
and Public Affairs Manager for Meteor, a Western Wireless 
subsidiary that has operated since 2001.  Mourik explained 
that Vodafone, O2, and Meteor controlled 50, 40, and 10 
percent, respectively, of Ireland's market (boasting nearly 4 
million cell phones), with Hutchison's "3" having launched 3G 
services in July.  Eircom departed the mobile market in 2001 
after selling its mobile operations to Vodafone, but had made 
a euro 420 million offer in August to buy Meteor, a bid that 
requires approval from the Competition Authority.  Hourik 
pointed out that Meteor opposed measures proposed this year 
by ComReg and endorsed by the European Commission to 
introduce more competition by requiring Vodafone and O2 to 
open their networks to Mobile Virtual Network Operators 
(MVNOs) (which would hurt Meteor, given its already small 
market share).  Hourik said that Meteor was pleased with the 
level of competition among mobile operators, and he argued 
that ComReg's action was an attempt to secure a regulatory 
foothold in a largely unregulated market. 
 
Ireland's Key for IT: Human Capital 
----------------------------------- 
 
6.  (SBU) Despite debate on IT competition, representatives 
for Google, Yahoo, PayPal, and Dell told Representative 
Boucher that Ireland was an ideal location for their 
respective European headquarters, due mainly to the quality 
of the country's human capital.  The Irish work force was 
young (with a national average age of 35), well-educated 
(with virtually free college education), IT-literate, mobile, 
and culturally hip.  Google and Yahoo also highlighted the 
ease of recruiting multilingual staff for their 
Europe-focused services from the large pool of European 
immigrants (100,000 since mid-2004) and from Irish who had 
worked abroad during Ireland's economic troubles in the 
1980s.  Dell cautioned, however, that the Irish education 
system was not producing enough graduates with technological, 
science, and engineering skills to enable Irish IT firms to 
move up the value chain in the face of rising labor costs. 
To reverse this trend, Dell recommended that the Irish 
Government create incentives to make those fields more 
attractive to top students, who typically compete to enter 
sectors with "guaranteed" high-salary potential, such as 
medicine and law. 
 
------ 
Energy 
------ 
 
Kyoto: Challenges with Targets 
------------------------------ 
 
7.  (C) Ireland will be challenged to meet its Kyoto 
commitment to cap greenhouse gas emissions at 13 percent 
above 1990 levels by 2012, Martin Brennan, Director General 
for Energy in the Department of Communications, the Marine 
and Natural Resources, told Congressman Boucher.  Brennan 
noted that Ireland's emissions were falling, but still 25 
percent above 1990 levels, and he commented that Irish 
participants in the Kyoto negotiations had not sufficiently 
considered the impact of Ireland's "Celtic Tiger" economic 
growth on emissions trends.  To achieve the 2012 target, 
Ireland aimed to reduce current emissions by an average of 
9.2 million tons per year through more efficient energy use 
and less dependence on carbon-intensive fuels.  One specific 
goal was to increase the contribution of renewable energy to 
gross electricity consumption from 6 percent currently to 12 
percent by 2012.  To that end, the Irish Government was 
hoping to exploit the potential of wind energy, as Ireland 
was Europe's windiest country. 
 
Wind: An Offshore Success 
------------------------- 
 
8.  (SBU) The Arklow Offshore Wind Park, jointly launched in 
May by GE and Airtricity, an Irish firm, demonstrates the 
value of wind as a renewable energy source for Ireland, 
Congressman Boucher was told by Dan Pearson, GE Commercial 
Operations Leader for Offshore Europe.  The Arklow Park, 
Ireland's first offshore wind facility, is located five miles 
off Ireland's east coast and consists of seven 3.6 megawatt 
turbines, featuring the world's largest off-shore rotors 
(roughly twice a jumbo jet's wingspan).  Pearson noted that 
the Wind Park's predicted output of 85 gigawatt hours/annum 
was sufficient to power 16,000 Irish homes.  GE also has 
planning permission to construct more turbines at the site; 
the only hurdle, according to Pearson, is Ireland's power 
grid, which requires upgrades to accommodate additional power 
generation.  Pearson said that the Irish Government could not 
consider privatizing the state-owned grid without such 
upgrades and that the failure to pursue upgrades might lead 
GE to consider linking the Wind Park to the UK grid, only 40 
miles across the Irish Sea. 
 
Comment: Ironic Environmental Views 
----------------------------------- 
 
9.  (C) The views expressed by Irish energy/environmental 
officials point up the irony in Irish public/media criticism 
of the U.S. decision to remain outside the Kyoto Protocol. 
Irish public opinion, as in other European countries, 
characterizes that decision as an example of American 
unilateralism that accounts for failures in global greenhouse 
gas reduction efforts -- even as GOI officials concede 
difficulties in Ireland's attempt to meet its own Kyoto 
targets, and as the United States makes strides in overall 
emissions reductions.  Just as ironically, the Arklow Wind 
Park is precisely the sort of new environmental technology 
that the USG has advocated as an essential complement to the 
European emphasis on emissions trading schemes and regulatory 
emissions limits. 
 
10.  (U) Congressman Boucher did not have an opportunity to 
clear this cable. 
 
 
KENNY