Only 17pc of Ireland’s broadband market reached

1 Feb 2006

Only 17pc of the long-term potential broadband market in Ireland had signed up for broadband at the end of 2005, a report on broadband by the Department of Communications, Marine and Natural Resources reveals. It says that some 800,000 Irish PC users alone could be immediately served with broadband.

The report estimates that there were approximately a quarter of a million broadband subscribers in the Republic of Ireland at the end of 2005. The represents a growth of almost 120,000 subscribers, or 90pc during the year.

Communications Minister Noel Dempsey TD yesterday termed the discussion paper as an opportunity to assess the demand side of the broadband market in Ireland and invited submissions this issue.

He said: “There appears to be substantial demand for broadband services in Ireland, which is in line with or better than the growth experienced in other markets. The current level of take-up is also consistent with the stage of development of the market. The overall broadband market will continue to grow. This should make the market attractive to service providers and encourage investment.”

The report cites the lack of competition between broadband service providers such as telephone and cable TV companies and the reduction in investment after the dotcom bust, which it says weakened the initial rollout of broadband by service providers in Ireland.

The report says that the 250,000-strong existing broadband base in Ireland represents almost 17pc of the long-term potential broadband market size.

It says that industry representatives and observers expect broadband to follow the normal adoption curve by customers, similar to DVDs and mobile phones, which would suggest that the Irish broadband market has completed the early adopter phase.

In estimating the potential size of the broadband market in Ireland, the report says that a maximum of eight out of 10 potential users could be serviced by a broadband provider by mid-2006 — equalling 80pc coverage of the market.

The report says that more than four out of 10 potential users already have narrowband internet access — some 650,000 dial-up users and at least 50pc of the basic ISDN telephone users.

The report claims that Ireland has a broadband penetration rate of 46pc. This contrasts with the Commission for Communications Regulation’s most recent trends survey, which says Ireland has a PC penetration rate of 42pc and says that over half of households have a PC and all SMEs have a PC. Nevertheless, a PC penetration rate of 46pc is still behind the EU average of 54pc.

Based on the 42pc figure, there were approximately 625,000 households and about 180,000 SMEs with PCs in 2000, which means there could be more than 800,000 PC-ready potential broadband customers. “Put another way,” says the report, “more than 50pc of the long-term broadband market could be currently PC ready.” It adds that games consoles with broadband connections will also become more common.

While the report acknowledges that it is not clear what proportion of PCs are too old to be capable of using broadband access, it says that even if a more restrictive ‘service-available’ or ‘PC-ready’ approach is considered, the immediately addressable broadband market is assumed to be 800,000 subscribers and in this case take-up has reached 31pc of the immediately addressable Irish broadband market.

The report also ties the strategic importance of broadband to Ireland because it can accelerate the contribution of ICT to economic growth. It pointed to research that found that the annual growth rate of labour productivity in ICT-using industries was 1.7pc, compared with 5.3pc in the US between 1995 and 2002.

By John Kennedy