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Ireland is the world’s largest exporter of software, a remarkable achievement for a country of 3.5 million people. The Irish government has adopted a policy for many years of actively encouraging this sector.
Effective protection of intellectual capital was accepted as vital, and since the early 1990s
Ireland has updated and strengthened its laws on patents (1992), software (1993), trade marks (1996), electronic commerce (2000) and has undertaken a massive revision of the laws of copyright and related rights (2000).
Incentives exist for multinationals to establish operations in Ireland. Some include low corporate tax rates, duty free access to EU markets and elimination of foreign exchange rates on transactions to Eurozone markets.
Ireland has attracted many of the world’s leading multinational companies to locate in Ireland. It has also been pleasing to work with our Irish technology clients and see some of them grow to become leading multinationals, such as Horizon Technology Group, Riverdeep and Iona. There are also many indigenous small and medium sized enterprises that are successful and growing in their niche markets, and beginning to expand out of them.
While the so-called Celtic tiger was roaring, there was considerable pragmatism in the Irish financial/venture capital markets. In general, those making investments were more judicious than certain of their counterparts abroad.
They did not make the same windfall gains but did not suffer the same catastrophic losses.
For this reason, the recent downturn in the US economy, while it will affect the rate of growth of the Irish economy, will be ridden out by many companies and their investors.
The general sense is one of cautious optimism. The absence of IPOs has been compensated to some degree by M&A activity, as well funded Irish companies acquire assets and subsidiaries, especially in the US, at bargain prices. It is more difficult now to obtain funding but the money is there for the right projects. Investors are applying criteria more strictly and fundamentals and common sense are back in fashion. IPOs have generally ceased to happen but money is being invested in funding rounds. Having a good or even a great idea is simply
not enough.
Those seeking funding need to have a comprehensive business plan, a demonstrably successful financial model, a good management team (with relevant experience) and, with rare exceptions, a clear ability to make a profit within a foreseeable period.
The deregulation of the Irish telecoms market has brought some of the benefits that can be expected from efficiencies enforced by competition, although not as quickly as had been hoped. The former state company Eircom is undergoing a retrenchment and appears to be reviewing its strategy by closing non-core operations and selling its mobile division, Eircell, to Vodafone. Its main competitor Esat has been acquired by British Telecom. Interesting times lie ahead.
The telecom market is regulated by the Office of the Director of Telecommunications Regulation (ODTR), with Etain Doyle as Director. Given the ODTR’s workload, decision-making is to pass to a board of three, to include Doyle.
ODTR activities have included licence competitions for telecommunications service providers and mobile telecommunications operators, as well as cable networks and allocating spectrum for Multi-point Microwave Distribution Systems (MMDS) operators.
Several matters have been litigated, often by the losing parties in competitions attempting to undo the ODTR decision and have a second bite at the cherry. The lack of progress in unbundling the local loop has attracted criticism from interested parties but progress on opening access to the existing infrastructure is steady.
The competition for third generation licences was to be announced by the ODTR earlier this year but had still not been published at the time of writing.
It seems that the delay stems from a policy difference between the Government and the ODTR. Although the licences will be awarded for fixed fees following a beauty parade rather than by auction the Department of Finance wishes to maximise the fixed fee.
However, the ODTR appears to favour a lower price for the licences, in the belief that a higher price, together with the expense of providing infrastructure, would result in a slower rollout of services and higher costs to end-users, meaning a lower take-up. The debate is on-going.
E-commerce
Ireland was one of the first countries in the world to enact legislation to dealing specifically with e-commerce. The Electronic Commerce Act 2000 provides the means for recognition of electronic signatures and certification service providers, both key to enabling e-commerce to function. The regime is generally one of self-regulation so as not to burden emerging e-businesses unduly. The ability of any state to access private telecommunications is a contentious issue. In a notable difference from the position adopted in the UK pursuant to the Regulation of Investigatory Powers Act, Irish authorities are not granted rights to the encryption keys to decrypt transmissions. There is only a right to obtain, in limited circumstances, the decrypted text.
Government policy is that Ireland should be at the forefront in this sector and it wanted to send a signal to the markets that Ireland should be seriously considered as a home for
e-commerce activities. In addition, by its investment in the Global Crossing project, two pipelines connecting Ireland with major cities in Europe and the US, the Government has provided bandwidth that is readily available and inexpensive.
