The Government is reviewing its plan to spend €65 million on the first phase of its regional broadband strategy to build fibre optic networks in 20 towns and cities.
The review has raised fears among proponents of the strategy that the Minister for Finance, Mr McCreevy, may significantly scale back the project when he announces the Budget this year.
Forfás has contracted Mr Ira Magaziner, the former US technology tzar of the Clinton administration, to evaluate whether the strategy is the most cost-effective way to build internet infrastructure in the regions. He is expected to complete a report by the end of the year and in recent weeks has held discussions with several local authorities who are managing the local build-out plan.
Mr Magaziner, who helped develop parts of the Government strategy to build out telecoms networks in the regions earlier this year, will review the original decision to build networks that are capable of supporting very fast internet connectivity at speeds of up to five megabytes per second.
The Government was forced to develop a broadband strategy when several international surveys found the Republic lagged most of its European competitors in terms of the availability of internet technologies.
In April it announced a three-phase plan to build fibre metro rings around 127 key towns in the regions at a cost of up to €300 million.
The first phase of the plan is under way and a contract for the provision of plastic ducting for the networks has been awarded to Radius Plastics, a multinational with offices in Northern Ireland.
But the current review is being carried out at a sensitive time for the project and the Department of Communications, Marine and Natural Resources has already had to implement cuts of €20 million in its broadband budget.
It is also understood that the Department of Finance is concerned about certain management and technical issues underpinning the strategy, in light of the Government's fiscal difficulties.
Industry sources told The Irish Times yesterday that a division within the Department of Finance had expressed scepticism about certain "architecture issues" of the project. It is believed the Department thinks it would be more prudent to roll out digital subscriber line (DSL) technology rather than fibre.
This technology would offer consumers and businesses slower internet speeds but would cost a lot less to build out than the metro rings planned by the Government.
Mr Magaziner may also investigate whether it would be feasible to use existing fibre optic networks owned by Eircom, which are currently unused. Some critics of the Government's plans believe that "lighting" this fibre network may serve the same purpose, at a fraction of the cost, as building out new fibre networks.
It is understood that competitors to Eircom may oppose this type of strategy because of the difficulties they face accessing some Eircom networks or services.
A spokesman for the Department of Communications, Marine and Natural Resources said broadband strategy would proceed and the funding had already been allocated to it. He said the review would focus on the broader issues of what technologies were appropriate for the broadband strategy.
