The relatively muted response to the Government's proposed sell-off of Cablelink appears to underline a change of political mood towards the commercial State companies. The Labour spokesman on Broadcasting, Mr Michael D. Higgins, has criticised the sale of the 25 per cent stake owned by RTE because " it completely prejudges" the forthcoming debate about digitalisation. But the decision to sell off Cablelink - a highly profitable company controlled by Telecom and RTE - has not provoked the strong ideological battle between Left and Right that might have been expected. Most political parties appear to accept that the imperative is to do what is best for the State companies involved, for Cablelink itself and, not least, for the consumer.
The Minister for Public Enterprise, Ms O'Rourke, was anxious to stress this latter element of the sell-off: "Cablelink's customers will be the ultimate beneficiaries of the sale in terms of more services, better quality and competitive rates", she said. On any objective criteria, the Cabinet decision to authorise a complete sale of Cablelink makes sound business sense. The harsh fact of business life is that the company now requires very substantial investment. Its chief executive, Mr Kevin Windle, said recently that an upgrade allowing the company to provide multimedia services such as digital television, Internet services and telephony, would cost around £120 million. Neither Telecom nor RTE have the resources to fund this kind of expansion, so it makes good sense to seek alternative investment.
In truth, the Government probably had no alternative but to order the sale of Cablelink. As the Labour leader, Mr Ruairi Quinn, observed in his groundbreaking address on State ownership at the party's recent consultative conference, all sections of the EU internal market are being opened to competition law, including those areas which were once the province of State monopolies. We are, he said, moving towards a situation in which independent regulators will be established to police competition.
Against this background, the continued State ownership of Cablelink would have been fraught with legal uncertainty. It make good sense to remove this uncertainty now by taking the company out of State ownership. It should also give Cablelink the stability it requires to plan for the future. It is questionable, indeed, whether Telecom should ever have been allowed to acquire its 75 per cent share in Cablelink. Since the early 1990s, the company has invested only £7 million in upgrading the service.
It is also vulnerable to the charge that it purchased the stake as a defensive measure and never intended to develop it for services like telephony, as it would end up competing with itself. RTE's take of 25 per cent in Telecom was less contentious although there was always the potential for a possible conflict of interest since Cablelink provides services which are in competition with RTE for advertising and viewers. The sale of Cablelink is in the best long-term interest of both Telecom and RTE. Both companies have ambitious future development plans which will be boosted by around £140 million from the sell-off. In all the circumstances, Telecom and RTE could ill-afford to retain ownership of the cable television company.