Regional & Rural Development at the National Economic Dialogue

A background paper on ‘Regional and Rural Development – Economic recovery for the whole country’ was prepared for a breakout session at last week’s National Economic Dialogue (16-17 July, Dublin Castle).

It set out a few key questions:

  • What can be done to ensure that the benefits of recovery are fairly distributed throughout the country – urban and rural and throughout all the regions?
  • How can we maximise the contribution of both regional and rural development to both a strong economy and a fair society?
  • What are the key environmental and sustainable development challenges?

It will be interesting to see the priority given to regional and rural development given the competing economic and social priorities discussed over the two days. The summary of the discussions is due to be published later this week here.

The background papers for all the breakout sessions are available here.

Breakout 1 Competing Economic and Social Priorities (PDF)

Breakout 2 Economic Growth and Equity in Tax Policy (PDF)

Breakout 3 Putting People First – Economic and Fiscal Policy for our Demographic Outlook (PDF)

Breakout 4 Structural and Labour Market Reform – Opportunities for Economic Growth (PDF)

Breakout 5 Productivity and Skills (PDF)

Breakout 6 Regional and Rural Development Economic recovery for the whole country (PDF)

Breakout 7 Working for the best preparing for the worst (PDF)

Breakout 8 Being a Small Open Economy (PDF)

Pauline White

Next Generation Broadband Deployment – Lessons from Australia

As the Department for Communications, Marine and Natural Resources in Ireland prepares the National Broadband Plan Intervention Strategy, it is useful to consider some lessons which can be learned from elsewhere. The experience of Australia is instructive, in part illustrating some of the pitfalls.

  1. Ambitious targets with ambitious deadlines

In 2009 the Australian Government announced an ambitious programme to deliver fibre to the premises (FTTP) to 93% of Australian premises (residential and commercial). This was a very ambitious target given the country’s very low population density (3% compared to Ireland’s 67%). The remaining 7% of the population, in the very remote parts of Australia, were to be served by satellite and wireless technologies.

The original deadline for completion was within six years (2015). By the end of 2013 just 3% of premises were connected.

Following an extensive review in late 2013, a change in direction and new targets were announced[1].

  • Instead of 93% FTTP, it is more likely to be 22% FTTP, the exact technology (and therefore the actual %) will be determined on area basis.
  • Fibre to the node (FTTN) to 71% approximately of premises, with the remaining 4% and 3% fixed wireless and satellite respectively.
  • Lower speeds (50Mbps rather than 100+ Mbps download) resulting from the higher rate of FTTN connection rather than FTTP.
  1. Increasing costs – to the exchequer

The original plan in 2009, was forecast to cost AUD $44 billion (Australian dollars). In 2013, the estimated cost increased to AUD $73 billion – 65% greater than the original forecast.

  1. Higher costs – to the consumer

There is concern that the retail costs will be much higher than the cost of services currently available, estimated at an extra AUD $43 per month[2]. This will influence the take-up of next generation services. Broadband is now accepted as a basic utility and access to it is considered necessary for participation in society and the economy. However as the recent water protests in Ireland demonstrate, basic utilities should not be expensive. The concept of ‘Willingness to Pay’ is a key element of the pricing structure.

From an Irish perspective, it will be interesting to see from the trials of next generation broadband (in Cavan and Mayo for example), to what extent consumers will revert to a basic service at a cheaper price rather than paying extra for a premium product. It is also likely that the consumers in the pilot areas will be more receptive to paying for a premium service which they currently access, compared to those yet to experience the benefits of the premium next generation service.

  1. What are consumers looking for?

There is a declining value to additional broadband speeds. Part of the Australian review included an assessment of the growth in demand for faster broadband speeds. A key finding is that while the Willingness to Pay for speed may grow rapidly at low speeds (less than  40 Mbps download), for most people the Willingness to Pay is not expected to grow at all for high speeds (greater than 50 Mbps)[3].

A related finding is that consumers would prefer an increase to their current speeds quickly, rather than to wait longer to gain a higher level of speed. The Australian Government are now looking at prioritising delivery to those areas which are poorly served and this is consistent with the findings of the Independent Review. http://www.nbnco.com.au/content/dam/nbnco2/documents/soe-shareholder-minister-letter.pdf.

In an Irish context an increase in speed for example from 5Mbps to 10 Mbps is worth more to consumers than an increase from 20Mbps to 25Mbps. The Australian experience also suggests it would be preferable to rollout delivery to those areas with poor and inadequate broadband first.

  1. Don’t play politics with important infrastructure

In Australia, the different ruling parties have taken different policy positions on the rollout of next generation broadband. A change of Government can (and has in Australia) led to a change in policy on delivery and this can create huge uncertainly for investors as well as consumers. Given the scale of investment, the deployment of next generation broadband will generally take many years and beyond the lifetime of one Government. It is therefore important that Government policy is well considered and implemented consistently and not compromised by the electoral cycle.

Deirdre Frost

[1] https://www.communications.gov.au/sites/g/files/net301/f/Cost-Benefit_Analysis_-_FINAL_-_For_Publication.pdf, http://spectrum.ieee.org/telecom/internet/the-rise-and-fall-of-australias-44-billion-broadband-project/

[2] https://www.communications.gov.au/sites/g/files/net301/f/Final_Ministerial_Statement.pdf

[3]  p. 16 https://www.communications.gov.au/sites/g/files/net301/f/Cost-Benefit_Analysis_-_FINAL_-_For_Publication.pdf

Next Generation Rural Broadband – When and How Much?

On the 11th May, WDC attended the official launch, by An Taoiseach Enda Kenny T.D. and Ministers for Communications and Rural Affairs, of eircom’s Fibre To The Home (FTTH) rural broadband trial in Belcarra, County Mayo. This trial offers broadband speeds of up to 1Gb/s (1,000Mb/s) to rural residents and businesses and demonstrates the value of a fibre to the premises solution.

This is a far cry from the very basic broadband service which was made available under the State supported National Broadband Scheme (NBS) which in theory delivered up to 10Mb/s, but for most users, much less than this.

For most rural residents still trying to survive with basic, intermittent and inadequate broadband speeds, the announcement of a service delivering 1,000Mb/s in a rural area, must seem both frustrating and promising at the same time.

The Government have committed to a basic minimum of 30 Mb/s to all citizens under the National Broadband Plan. However rollout under this state funded scheme has yet to start, with the competition to award the tender to the successful applicant(s) yet to take place. Rollout will not commence until 2016, and all citizens are to be served by 2020.

A few days later, an Taoiseach and Minister for Communications unveiled another fibre to the building project, this time through the joint venture between ESB and Vodafone, called Siro. Siro aims to be Ireland’s first 100% fibre-to-the-building broadband network. This will focus on delivering fibre to the home to fifty regional towns across Ireland.

While both eircom and ESB/Vodafone are making commercial investments in fibre based solutions to urban centres, they are both positioning themselves as the preferred bidder to deliver on the planned Government funded National Broadband Plan to rural areas which will deliver the minimum speed of 30 Mb/s.

These announcements raise interesting questions for the Government funded scheme. While 30 Mb/s is the minimum target for all users, the pilot demonstrates that technically 1,000 MB/s can be delivered to very rural communities. The fibre to the home rural pilot raises the bar as to what speeds might be possible in rural areas. However these will not be commercially funded services and will require state support. The cost of such a fibre based solution and how much will be borne by the state is not clear.

The WDC welcome the developments delivering fibre based solutions to regional and rural locations. However key questions for users have yet to be answered such as when exactly will it be delivered? What speeds are likely to be available in rural areas (it is recognised that 30Mb/s is the minimum) and how much will it cost to fund?

Until the new services are delivered, businesses and citizens will continue to work with inadequate broadband, frustrated in their capacity to communicate with clients and suppliers alike and hampered in their ability to access online services. The priority now is to start rollout under the state funded scheme as soon as possible.

Deirdre Frost

Farmers in the West are getting older

The age profile of farmers in the Western Region is changing. Farmers are getting older and by 2010 for each farmer under 35 there were more than 10 farmers over 55 years of age. This changing age profile has implications for the type and amount of output from farms in the West.

The most recent Census of Agriculture[1] (2010) shows that more than half (56%) of the farmers in the Western Region (31,467) were over the age of 55, with 30% of these over 65 years of age (see Fig. 1). There is a higher proportion of farms in the older age categories now than in the last two decades. In 1991 50% of Western Region farmers were over 55, but by 2000 this had fallen to 44% before increasing again in 2010. While the number of Western Region farmers past retirement age is significant (16,838) the age profile of farmers in the region is similar to that in the EU where 30% of farmers are over 65 and only 10% under 35.

Figure 1: Farmers in the Western Region by Age Category, 2010

pie age fers2 15.04.15

 

There were only 2,999 (5%) farmers aged under 35 in the Western Region in 2010 and fewer younger farmers now than in either 2000, or 1991 (the previous agricultural censuses) when farmers under 35 made up 11% of farmers in the region (Fig. 2).

 

Figure 2: Age Categories of Farmers in Western Region 1991 to 2010

 combi bar age fers15.04.15

Farmers in the Western Region have tended to be older than those in the rest of Ireland (in 1991 43% of farmers in the rest of Ireland were over 55 compared to 50% in the Western Region) but the pattern of change is very similar with fewer farmers in the Rest of Ireland in older age categories in 2000 (37% in Rest of Ireland, 44% in Western Region) and in 2010 when 48% in the Rest of Ireland were aged 55 years and older and 56% in the Western Region.

As mentioned in a previous post, much of the structural change in agriculture occurred between 1991 and 2000, and this was associated with older farmers leaving agriculture and increased opportunity for younger famers to take over farm holdings. There has been less change in farm numbers and size since then and numbers in the older age categories have again increased.

Improved efficiency and productivity on farm tends to be associated with younger farmers with older farmers less likely to invest in their farms. With almost of a third of Western Region famers over the retirement age there are significant implications for the development of agriculture in the region.

 

Helen McHenry

[1] CSO, 2010 Census of Agriculture 2010

The Battle for Rural Ireland – RTE 1

RTE screened a documentary, The Battle for Rural Ireland, on 9th March 2015, to which Deirdre Frost contributed. Presented by Richard Curran, the programme highlights the challenges faced by rural communities and towns, both in the context of the recent recession and the outlook for further rural depopulation. Much of the projected population growth is to occur on the East coast.

You can watch the programme here (available until 30 March).

While urbanisation is not unique to Ireland, the programme shows the effects of population loss on rural areas, in terms of service provision and employment opportunities.

The Battle for Rural Ireland highlights some examples of innovative enterprise development and employment creation in rural areas but ultimately the need for stronger regional and rural policy is clear.

Deirdre Frost