INCREDIBLY, using the internet became a majority sport in Ireland for the first time this year, according to a shocking study released by ComReg last week. Why did it take Ireland so much longer . . . the US reached this milestone seven years ago . . . to adopt a technology that other parts of the world have long taken for granted?
Usually, Eircom gets the blame. Usually, that's where the analysis stops. But other factors . . . from traffic congestion to a lack of credit cards . . . may be even more to blame than the dreaded former monopoly.
According to Limerickborn John Herlihy, Google's top man in Ireland, the ability to buy things on Amazon. com and other ecommerce websites lured many Americans online. In order to make Amazon work, however, there needed to be efficient systems to pay for items and to have them delivered quickly.
The US had a high proportion of people with computers, credit cards that made payment possible and secure, services like FederalExpress or UPS able to deliver faster than the postal service, and a road network that allow them to reach their recipients the next day. Amazon even offered to pay the shipping for orders costing more than $50.
Ireland is behind not just because Eircom has been slow to offer the high-speed pipes to the internet or let other companies do so, but because the other infrastructure deficits meant there were fewer reasons to want to be connected in the first place.
That may help explain what is surely the most surprising finding of the survey, carried out by consultants Amarach for Comreg. Asked why they didn't use the internet, more than 40% of those questioned said they simply had "no need for it".
Eircom spokesman Paul Bradley said more needed to be done both by industry and the government to raise awareness of the benefits to be derived from internet services. "We do see the need to continue to push relevance and demonstrate to people the value of it, " he said.
One Eircom initiative is the introduction of pay-as-yougo kiosks in shopping centres and other public locations.
So far it has installed 120 of these coin-operated machines at 51 locations around the country, which it hopes will entice users who don't yet have internet connections at home and, in some cases, may not have computers.
"At the end of the day there is still only 50% PC penetration. If only half the homes have PCs that's going to affect your [internet] penetration, " said Bradley.
"That is the key issue, " agreed Peter Evans, BT Ireland's product director. He believes that a lack of awareness of technology and a lack of adequate training in the use of PCs put a lot of Irish people off buying computers.
"It's definitely not a price thing. You can buy a computer for as little as 350. It's just fear of technology and lack of awareness of technology, " he said.
Evans said government has a role to play in alleviating that fear by investing more in community-based training programmes and trying to boost overall IT literacy, particularly among older people who were not exposed to computers or the internet during their formal education.
For younger people, weaned on social networking sites such as Bebo and Myspace and seduced by the power of the web to deliver music downloads and entertainment, the appeal is obvious. Bebo, for instance, claims to have over 800,000 Irish users, most of them under the age of 25.
Attracting internet users above "a certain age" has been more difficult in Ireland, a fact borne out by the research. It shows that 72% of under-24s using the internet, while less than half (44%) of those between 25 and 64 are internet users, and only 11% of people over retirement age.
Gary Power of advertising agency Saor Communications said the market for what are known as "silver surfers" remains untapped.
"They have no mortgages they don't have to work any more. They're pensionable and they are doing a hell of a lot more travel, " he said.
Power said a host of online businesses had much to gain from targeting the over-50s, provided of course that they can be convinced to connect in the first place. Power said services such as home-delivery shopping and online travel sites were obvious starting points.
For the businesses providing such services, however, there are inherent difficulties in operating in Ireland.
The lack of broadband internet services outside the main cities, and often even within them, continues to be a problem.
Indeed the Amarach survey, compiled from over 1,000 interviews with Irish consumers, indicates that one in three home internet users who have dial-up internet connections have applied for broadband and have been told by the company they contacted . . . in most Eircom . . . that it was not available in their area.
For internet-based businesses operating in Ireland there are more fundamental issues to deal with.
"The postal service, let's be frank, just isn't good enough and the prices are not competitive, " said John McElligott, managing director of Ebay Ireland.
He said that for an Ebay user to send a four-kilogramme package from Dundalk to Manchester would cost 33 through An Post. If the person were willing to travel across the border to Newry, though, it would cost just £7.50 ( 11.15). "A lot of our customers take a weekly trip, " he said.
John Herlihy, European director of online sales and operations for Google, said logistics in general are a huge challenge for e-commerce in Ireland. Herlihy said much of the debate around internet usage has centred on broadband availability but, for online retailers and other ecommerce businesses, there were more fundamental issues to worry about.
"I see other areas such as the ability to distribute goods efficiently and cheaply, particularly of Dublin, as a much bigger barrier to e-commerce. You can build advantages such as free shipping into offers in the US , where you have bigger population and scale, but it's much harder to do it in a market the size of Ireland, " he said.
THE UNUSUAL SUSPECTS:
Who's really to blame for Ireland being on the wrong side of the digital divide?
1. TRAFFIC It takes longer and so costs more to ship and deliver down Ireland's overcrowded roads, making e-commerce less attractive. In a survey out by an international shipping firm, Dublin ranked 19th out of 20 international cities, just ahead of Calcutta. It took 57 minutes to move a 5kg package five kilometres through Dublin traffic.
2. COMPUTERS Surprisingly, just over half of Irish people have a computer at home.
3 AN POST Shipping from the Republic can be three times as expensive as shipping from Northern Ireland. That's "not competitive", according to Ebay Ireland managing director John McElligott, another factor that has hindered the development of e-commerce.
4. ADDICTION TO CASH Cash usage in Ireland is more than double the European average, according to the Irish Payment Services Organisation, and credit card penetration is low. You can't use cash on the internet.
5. THE BANKS Irish banks make it harder to shop online by failing to offer debit cards that use the universally accepted Visa or Mastercard systems. Bank of Scotland will be the first, to be launched next year.
6. GOD We're an island. As Google's John Herlihy points out, building infrastructure such as distribution centres to support e-commerce operations is not viable for large players such as Amazon in a small market such as Ireland.
7. THE BRITS The fact that you have to convert from euro to sterling is a pain for many, and Britain looks unlikely to join the eurozone any time soon.
The currency exchange was cited in recent Amarach research as a barrier to Irish consumers buying goods from the UK, the nearest distribution hub for many e-tailers.
8. THIEVES Fraud continues to be a concern for many Irish consumers in their online endeavours. In a survey carried out as part of the Department of Communications' IT security campaign, only 39% of Irish consumers said they felt confident about using their credit cards online.
9 THE GOVERNMENT The migration of government services online has been ad-hoc.
Services such as the Revenue Online Service have been hugely successful. Others, such as the ongoing project to digitise land records in the land registry, have not been delivered as speedily as could have been hoped for. When 42% of non-internet users say they see "no need" for using the internet, clearly part of the reason has to be the lack of services that would benefit them.
10. THE LAWYERS Sorting out rights issues for music, video and other online entertainment content has proven unusually tricky in Ireland .
Apple's iTunes music download service, for instance, launched in the US in 2003, across Europe in 2004 but was not available in Ireland until 2005 because of a dispute over royalties with the Irish record industry. It could be worse; iTunes still isn't available in New Zealand.
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