Broadband growth to push e-services

17 Dec 2007

ComReg is banking on growth in the consumer and small-business broadband market to drive complementary services such as voice over internet protocol (VoIP) and postal delivery of online purchases.

In its Strategy Statement for the electronic communications sector 2008-2010, the Irish telecoms regulator predicted that the pursuit of new revenue streams will see increased industry consolidation through mergers and acquisitions. This will be driven by operators seeking scale and opportunities for adding new services such as mobile voice to their bundled package offerings.

ComReg anticipates strong consumer demand for bundled services will also encourage new and non-traditional operators to offer electronic communications services.

There were 790,000 broadband subscribers at the end of September 2007, ComReg said. Some 380,000 subscribers were still connecting to the internet by means of a narrowband connection at the time, however.

ComReg has identified encouraging these users to migrate to broadband, as well as increasing household ownership of PCs and other internet-enabled devices, as a key challenge in the period up to 2010.

Telecoms providers will face the strong possibility of declines in revenues over the next three years as new services such as VoIP and instant messaging take hold and also because of falling interconnection rates and an increasing trend towards bundling multiple services under a set price, ComReg said.

Providers will at best stabilise voice revenues — which account for around 70pc of total telecoms revenues worldwide — and are more likely to seek revenues elsewhere, such as fixed and mobile broadband, IPTV and other valued-added services.

The ICT sector in Ireland has grown strongly over the past few years and generated approximately €4.3bn in 2006, representing about 2.6pc of GDP. The European Information Technology Observatory has forecast 2.9pc growth in the EU ICT sector in 2007, with corresponding growth in Ireland expected to be marginally lower at around 2.7pc.

Convergence is another key trend ComReg expects to see over the next three years, with fixed and mobile voice services being provided over single devices. Consumers will be able to access entertainment, business and social services through a range of different devices across multiple platforms.

Existing broadband platforms will be push to the limit as increased demand for bandwidth will arise from greater usage and newer, richer applications, as has been seen in broadband-leading countries such as Japan and South Korea.

Between 2008 and 2010, a new regulatory framework for electronic communications is due to be implemented in the EU. This will substantially overhaul existing legislation around areas such as spectrum management, internal market consolidation, consumer protection, security and user rights.

ComReg reaffirmed its commitment to ensure “all consumers are appropriately informed and protected and have easy access to a wide range of competitively priced quality products and services”.

The regulator also announced it proposes to deal with operator non-compliance by working with other bodies such as the National Consumer Association, the Office of the Data Protection Commissioner and the Advertising Standards Authority for Ireland to enforce consumer legislation.

“This is a period of potentially great change in the sector, with developments such as next-generation networks; convergence of technologies, platforms, applications and markets; further consolidation in the sector across Europe; revisions to the number and range of markets we regulate; and revisions to the underpinning European regulatory framework all presenting challenges,” said John Doherty, chairperson, ComReg.

“The achievement of the appropriate level of regulation necessary to ensure sustainable competition, provide consumers with price choice and quality and drive innovation in such a rapidly changing and dynamic sector as electronic communications is central to Ireland’s continued economic success.”

By Niall Byrne