Regulation boosts tech investment, report finds

6 Nov 2007

Investment in the Irish telecoms sector rose from US$639m to US$684m between 2003 and 2005, a new report has revealed.

European pro-competition group ECTA released the report, Regulation and Investments in European Telecoms Markets, which it says is the strongest indication yet that effective telecoms regulation stimulates investment.

ALTO (Alternative Operators in the Communications Market), the representative body for telecom operators in Ireland, welcomed the findings that show increased investment in the Irish telecoms industry, but said that further measures were necessary to enhance the level of competition in the sector.

“This report shows that, contrary to popular belief, a strong regulatory environment is integral to achieving a competitive market,” said Liam O’Halloran, chairman of ALTO. “All state bodies involved with the Irish telecoms sector, particularly ComReg, need to pay close attention to the findings of this study.”

“On a positive note, it’s reassuring to see that telecoms companies are continuing to put money into the telecoms sector in Ireland. But, for this pattern to continue, other measures, such as the functional separation of the incumbent operator, will have to be considered,” he added.

The study, carried out by SPC Network, uses separate measures of regulatory effectiveness – the ECTA Regulatory Scorecard, which measures how effective the telecoms regulatory regimes in 17 EU countries are in opening markets to free and fair competition, and the independent OECD Regulatory Reform Index to establish a relationship between regulation and investment.

“It has long been recognised that the actions of the State, including telecoms regulators, have a significant impact on firms’ incentives to invest. What this study shows, more emphatically than any study before, is that there is a direct and positive correlation between investment levels and the effective implementation of pro-competition regulation,” said Richard Cadman, director of SPC Network.

By Niall Byrne