Telecoms industry calls for ‘balanced’ regulation

29 May 2006

The Irish telecoms industry is operating at full steam, with the market growing to €4.4bn and accounting for 3pc of GDP. However, the chairman of the Telecommunications and Internet Federation (TIF) Gerry Fahy (pictured) said entry and innovation into the sector must be further promoted and investment further incentivised.

Addressing the annual TIF dinner on Friday evening, Fahy, who is also strategy director for Vodafone, said that the ‘Rip-off Ireland’ tag cannot be applied to an industry that has seen broadband prices falling below €20 a month, continually reducing mobile rates along with the abolition of roaming to the Great Britain and Northern Ireland for contract customers.

“It is impossible to think of even one other service industry which can make similar claims. This is an industry of which we can be rightly proud. It is also appropriate to recognise ComReg’s (Commission for Communications Regulation) role in this regard with the launch of their service, which advises customer of the best deals available on service packages.”

Fahy acknowledged that 2006 has been the headiest year for the Irish telecoms landscape in terms of mergers and acquisitions. “The structure of our industry has been altered significantly by a range of consolidation transactions in the past year. Among these are the purchase of Chorus and NTL by Liberty Global International, the purchase of Cara Computing by BT, the takeover of WorldCom by Verizon, Energis by Cable & Wireless and also the deal which saw O2 being bought by Telefonica.

“Perhaps the most significant local consolidation deal has been the €420m takeover of Meteor by Eircom, the leading fixed-line player. All of these transactions have the potential to impact and change the dynamic of our industry as has the most recent offer by Babcock & Brown for the acquisition of Eircom Group.

“Media comment around the deal has speculated on a break-up of Eircom into a network operator and retail arm, which would have further significant impact on the market dynamic were it to proceed in that way,” Fahy said.

In terms of the industry’s performance, Fahy said: “On the back of a strong economy, our industry has seen a return to profitable growth with significant new market entrants and new service launches. Our industry has responded well to the challenge, investing more than €600m per year, or about 14pc of sector revenues, comparing favourably with levels in other developed markets.”

Addressing the issue of regulation, Mr Fahy said: “Competitors are battling fiercely for market share which inevitably result in calls by some for increased regulation. We can probably all agree that it is a question of establishing the right balance between promoting entry and innovation and incentivising investment in risky infrastructures with a long-term payback horizon.”

On broadband he commented: “Basic access has been largely addressed via multiple technologies and we now need to communicate this effectively.

“The challenge for both industry and government is to address the demand and choice issue. Through intense competition on service and price, industry has done a lot but perhaps more can be achieved with the co-operation of government on some innovative demand stimulation schemes,” Fahy concluded.

By John Kennedy