Telecom Eireann's plans to set up a major e-commerce centre mark an important development in the company's strategy and a move away from its old market into the world of international finance and business. In the future, it will be through e-commerce that most of the significant transactions between large multinational and transnational companies, as well as medium-sized Irish firms, will be conducted.
In this particular case it seems likely that Telecom Eireann and its part-owner, the Dutch national telecommunications company KPR, will engage the British NatWest Bank to process the transactions at its new centre.
In the sphere of e-commerce, the major Irish banks, Allied Irish Bank and Bank of Ireland, appear to have gone down a cul-de-sac by employing an outdated system for the security of transactions over the Internet instead of adopting the industry-standard system. It is as though they had opted for Beta rather than VHS in the video market and persevered despite all the signs that they were headed in the wrong direction.
Should Telecom's multi-million pound venture be successful, the Irish banks could miss a significant opportunity as business adapts to the information age. For all the major developments in recent years in the information-technology industry, e-commerce is still very much in its infancy in this State.
Embarking into this market will bring Telecom into an area of business in which it has neither experience nor expertise and for these it will have to rely on its banking and software partners. The competition from companies in Europe and, more particularly, in the United States, will be immense.
However, Telecom is unlikely to be challenged seriously by locally-based competition and this may have been a factor in its decision to move into this area of the market. Since the company lost its monopoly in its traditional sphere, it has been casting its nets widely in businesses associated with the Internet. It now owns Indigo and TINet - two of the largest Internet service providers in the State. It has bought into a developing Irish presence in the World Wide Web in the form of a significant website known as Local Ireland.
Telecom, for the present at least, has a nearmonopoly on control of the physical access to the Internet for other Irish companies and consumers. Eireann's near-monopoly. The prices it charges for this are extremely expensive compared to those offered to consumers elsewhere. In the United States, companies can link their sites to the backbone of the Internet far less expensively than in Ireland and local phone calls through which individuals connect to the Internet are generally free of charge.
By offering a major e-commerce centre as well as being the leading supplier of the telecommunications infrastructure for such a centre, Telecom would find itself in an extremely comfortable business position.
Its move into this new area is a highly-innovative one for a large company with a state-sector background. But the danger of Telecom moving away from a monopoly position in one sphere only to establish a near monopoly in a new one, is something that should be very seriously guarded against.