Michael Tiernan doesn't shy away from big challenges. In the mid-1980s, when many of his friends in the civil-engineering business were boarding planes at Shannon Airport to go to jobs in England, he took a bet on Limerick and set up Tiernan Properties.

At a time when investing in the regions was unpopular, Mr Tiernan built a shopping centre at Arthur's Quay in Limerick city centre in the late 1980s. Over the following decade he followed the same model, developing shopping centres in regional towns such as Roscrea, Longford and Athlone.

"I was the one with the idea for the Arthur's Quay project and I made it happen with a joint venture," says Mr Tiernan, who admits failure would have resulted in emigration for him.

"We have also developed office blocks in the past and are now working on a shopping centre in Tuam."

Success in the development game has generated a generous income for the father of seven, with one of Tiernan Properties' subsidiaries, Doncove Ltd, posting profits of €3.17 million and net assets worth more than €15.7 million in 2003.

But not content with the riding the property boom, over the past four years Mr Tiernan has taken on a major challenge: transforming the Republic from a broadband laggard into a global leader.

ENet, another Limerick-based firm that Mr Tiernan set up in 2000, was recently awarded a 15-year contract to manage the State's €170 million fibre optic networks, which are being constructed in regional areas.

The high-profile contract will see eNet operate as a wholesale telecoms firm, offering cut-price broadband connectivity to a range of operators who want to offer high-speed internet to customers, many of whom live in areas poorly served by the dominant telecoms operator Eircom and its main rival, Esat BT.

"The Government's regional broadband initiative is in line with what is happening in Korea, Stockholm and Palo Alto but it is probably more innovative than anywhere else in the world," says Mr Tiernan. "The first 19 metropolitan area networks \ are completed and will be operational by the end of the year."

The MANs are networks of ducting and fibre optic cable, built around towns by the State, that are capable of delivering telecoms, internet, television, telematics and CCTV services.

As manager of the State network, eNet will lease capacity to other telecoms operators to enable them to offer more services to businesses and consumers to spur regional development. Revenue generated from the contract will be split between the State and eNet, which has raised €13 million from private individuals, venture funds and investment banks, to fund its operations.

So how does a Limerick-based property developer get involved in a State-sponsored project to develop the digital economy?

"I have a strong interest in regional development and from working with Shannon Development, Limerick City Council and the IDA, it became patently obvious that building the Citywest-style business parks of Dublin was just not possible here," he says.

"Software companies were interested in setting up in Limerick but the lack of suitable broadband and IT infrastructure was a major deterrent."

Although Shannon has been a major telecoms hub for many years, there were no internet data centres outside Dublin, says Mr Tiernan, who was eager to enter this booming market back in 2000 and create new development opportunities for his main business, Tiernan Properties.

To try to break the broadband deficit in the region, he formed eNet and began negotiations with Esat BT to try to buy fibre capacity on its Western Digital Corridor. But the talks led nowhere and eNet failed in a separate bid to attract Government funding for the construction of a new fibre optic link between Dublin and the west of Ireland to break the broadband bottleneck that was strangling the region.

"The ESB is now there and its nationwide fibre network is a key enabler in providing a competitive market for national connectivity... The Government has also now completed construction of its 19 metropolitan-area networks and sanctioned the construction of a further six in the north east," says Mr Tiernan.

He adds that the lack of broadband connectivity should not prevent firms from locating in Limerick or, indeed, any regional towns covered by the State's €170 million scheme.

ENet has already assumed control of the regional networks and has resumed all marketing, maintenance and management. It will not offer businesses or consumers a telecoms service but rather become a "carrier's carrier" that leases fibre to other telecoms operators who will use it to provide broadband or telecoms services to their own customers.

"It is very important that you realise we are completely carrier neutral and won't be becoming a retail telecoms operator," says Mr Tiernan. "We are purely in the wholesale space and deal with operators on a very confidential basis. We only engage with end users from an educational point of view."

So far, it is going well, he says. "We've already sold fibre to Esat BT, Smart Telecom and Leap Broadband in Limerick and Cork. We are also actively engaged with telecoms operators in Letterkenny and Galway."

Mr Tiernan admits that getting operators interested in providing new services in smaller towns will be more of a challenge. But he says he is encouraged with the level of inquiries received by eNet and claims the initiative will bring in a lot of new operators that, in the past, haven't been interested in regional locations.

One potential stumbling block for the State's regional broadband initiative is the hostile reaction of Eircom, which is already losing business on its own national backbone network as a result of the ESB's re-entry into the telecoms sector earlier this year.

Eircom has not yet decided whether it will link its own telecoms network into the Government exchanges - a failure to collocate would make it more difficult for other fixed-line telecoms firms to use the MAN networks to reach residential consumers to offer broadband.

"We have initiated contact with Eircom and we expect, over time, they will become one of our biggest customers given the cost-effectiveness of using our infrastructure. Our long-term goal is to create a good relationship and we have asked Eircom to locate at our co-location facilities."

So far, this invitation has not been accepted by the firm and Mr Tiernan refuses to be drawn on whether the State could enforce co-location in the future.

"This isn't our role. We aren't in the regulation business."

Another challenge will be setting an attractive price to attract operators into the regions while proving an appropriate return to both eNet and the State. Commercial details of the State contract have not been released by the Government but Mr Tiernan says he expects it to break even within three years of operation.

Clearly, eNet will have its venture capital backers in mind when setting tariffs but adopting a purely commercial approach may limit the regional-development ambitions of the State.

"The Government has set maximum prices that we can charge and we already have customers," says Mr Tiernan. "We feel our rates are similar to those charged in other comparable locations."