As director of an IBEC lobby group covering the volatile telecoms and internet sectors, Tommy McCabe (pictured) has been a prime witness to the tumult that engulfed that industry in recent years. But as we head into the last third of 2004, McCabe sees an altogether calmer business climate evolving.
“I think it is clear from recent figures that we are starting to see an upturn. It is good to see strong results for companies operating in the market, as we have seen recently. Having initial public offerings is a further indicator of health, as is emergence from bankruptcy, and a number of companies have come through this process in recent times. We have also seen a significant increase in capital expenditure in recent months with a number companies beginning to invest again after a period of stagnation,” he says.
TIF’s membership consists mainly of operators in the mobile, fixed line, cable and satellite space as well outsourcing service providers and internet service providers. Despite this broad constituency, there are a number of concerns that are common to virtually all of them. McCabe highlights regulation, demand stimulation, government policy and increased competition as being some of the issues taxing the minds and resources of his members. He also identifies planning, particularly at the local level, as an issue generating ever more heated debate within TIF ranks.
“Planning policy and operational responsibility is currently dispersed between various Government Departments and public bodies, leading to a serious lack of consistency and joined-up thinking,” he argues. “At present, there are significant barriers to infrastructure rollout in the form of local authority bonds, which are levied on telecommunications operators in order to ensure that imposed conditions are complied with.
“There is also no consistent approach among local authorities to the seeking of these bonds; some authorities seek no bonds whereas others seek very substantial bonds, more than doubling the upfront funding requirement in some cases. In many cases the bonds are not released for a number of years, further increasing the funding requirements. It is our view that such barriers should be reduced, encouraging rather than discouraging investment,” he recommends.
McCabe believes, moreover, that nationwide broadband access is a national priority and as such the national telecommunications network should be classified as an ‘essential facility’ and given similar status to other national utilities such as the electricity grid.
Broadband is one of those issues on which opinion tends to be polarised. There are many who believe that Ireland’s broadband network is still a shambles; many more think that the broadband revolution is well under way, despite the late start. McCabe falls into the latter camp.
“I think despite its late start there has been significant progress made in the rollout of broadband in Ireland over the past 12 months, and while we must always strive to do better we should recognise the efforts of industry and government to both increase broadband availability and stimulate demand,” he says.
In McCabe’s view, DSL has emerged as clearly the most effective vehicle for the provision of mass broadband services, with 1.15 million of the country’s 1.6 million customer lines now DSL enabled. He points out that DSL penetration will reach 84pc of the population if Eircom fulfils its promise of bringing DSL to every town in Ireland with a population of at least 1,500 by March 2005 and trigger programmes and the group broadband scheme for smaller towns kick in.
McCabe does not write off cable, however, and believes it could represent a realistic alternative to DSL now that cable operators once again seem to have the funds to upgrade and extend their networks. He cites the example of NTL, which, as part of a €100m investment announced in June, says it will be able to offer broadband to 100,000 homes by the end of the year, up from 28,000 currently.
“It is generally accepted that markets where cable competes with DSL show fastest broadband uptake, therefore this increased investment in cable infrastructure is seen as a very positive development for ‘broadband Ireland,'” says McCabe, who adds that wireless technologies such as 3G and satellite should also help to bridge the gaps in coverage particularly in rural areas.
He also applauds the Commission for Communications Regulation for establishing several licensing regimes over the past two years to support the roll out of fixed wireless access with licences currently available on both a national and regional basis.
While broadband access itself may be progressing satisfactorily, the related issue of bandwidth is not something that can be put on the long finger, he feels. With the Government setting 5MB per second as its target bandwidth and future broadband services requiring at least 2Mbps to work effectively, DSL and other access technologies could be obsolete within just a few years.
Many pundits reckon the economics of bringing fibre to homes and businesses simply do not add up, but McCabe doesn’t necessarily agree. TIF’s calculations show that rolling out fibre into the access network would cost €8bn or thereabouts. Industry on its own cannot fund this level of investment, at least not in the timeframe the government would wish to see, so TIF is looking at how this gap can between current operator investment plans and government aspirations can best be bridged.
“The Government has been willing to commit funding to the sector in pursuit of this end. Whilst the decision on the level of funding is naturally an important one, also important are measures to stimulate private-sector investment and ensure that government funds are truly additional to those from operators. In particular we would call for engagement between government and operators so that investment plans can be aligned with whatever supports as may be available from government … A lack of engagement may mean that government is seen as a competitor, risking crowding out investment rather than adding to the net stock of capital deployed usefully in the sector.”
He adds with a hint of warning: “Tif would feel that continued engagement is required to maintain momentum, particularly if another round of metropolitan area networks (MAN) is to go ahead. It is essential to have government-industry dialogue on this to ensure that any state investment is in parallel to that of the private sector.”
Reading between the lines, McCabe’s comments suggest that, despite TIF’s general approval of government policy’s in relation to telecoms liberalisation and deployment of broadband to date, it will be more than ready to challenge the government where the commercial interests of its members are threatened. Could the Government’s ongoing MAN programme be the flashpoint for future disagreements with Ireland’s telecoms industry? Watch this space.
By Brian Skelly