“The telecoms sector is changing and regulation will have to change as well,” Isolde Goggin, chairwoman of the Commission for Communications Regulation (ComReg), told a gathering of the telecoms sector’s leading minds this morning.
At a First Tuesday event in Dublin today, Goggin unveiled a report on ComReg’s strategic vision on the future of telecoms in Ireland, which warned that key trends in internet protocol (IP) and the emergence of next-generation networks will change how services will be delivered to consumers and businesses as well as how operators will interact with each other.
The report hits on a number of key trends such as voice over IP (VoIP), fixed and mobile convergence and the need to ensure the roll out of legislation that won’t stifle competition in these areas as well as avoid potential pitfalls. Divided into two parts, the report looks firstly at establishing an appropriate regulatory strategy for telecoms between 2005 and 2010 and secondly examines emerging trends.
According to ComReg, at present the telecoms sector contributed an estimated €4bn to the economy and employs more than 15,000 people.
The report also examines two future scenarios for communications in Ireland in 2010. Firstly, a fibre nation whereby broadband in the form of naked DSL has been fully embraced in Ireland and where its citizens enjoy fixed price VoIP, the Government’s metropolitan area networks (MANs) have successfully facilitated competition and the complete onset of wide area broadband networks that enable nomadic work styles.
Regulation in the fibre nation has reduced traditional barriers to entry for new operators and the increased integration of fixed and mobile services has led to the treatment of voice as a single market.
However, the second scenario for 2010 paints telecoms in Ireland as a ‘hibre nation’, an environment desolated by a period of reduced economic growth in line with average European levels, combined with high labour costs, has impacted investment in telecoms. Slow broadband penetration in the hibre nation has stifled early attempts by pure VoIP operators to gain market share and VoIP is only a reality for corporate users. As well as this, initial plans for WiMax hotspots by fixed and mobile operators are scaled down and only exist in urban areas of high population density. Regulation in the hibre nation is stymied by bottlenecks that remain as platform competition develops slowly. The need to ensure that other operators are protected against margin squeeze in tight margin products is a feature of regulation in this future scenario.
According to Goggin, Ireland is well positioned to become the fibre nation identified in the first scenario, however, she warned: “The only factor that might work against us is that population density is very low.”
She also admitted the onus is on the regulator to facilitate new technologies and operators and to avoid the trap of over-regulation. “In an ideal world we would have infrastructure-based competition and a limited need for regulation. But clearly we are not in an ideal word.”
Referring to the current legal battles with the incumbent Eircom over local-loop unbundling and potential legal battles with Vodafone and O2 over the onset of mobile virtual network operators (MVNOs) she added: “We’ve gone through a series of market reviews and it shows we are far from the ideal situation.”
However, remaining optimistic Goggin said that “huge resources” in the form of the wireless spectrum and the scope to create a ladder of investment encouraging new operators to deploy infrastructure and create viable businesses could turn the tide.
Commenting on the relevance of regulation going forward, Goggin said that the job of the regulator is to remove bottlenecks such as those that exist over wholesale telecoms services. “Old bottlenecks eventually disappear but new ones will arise. It is the job of the regulator to ensure that new entrants to the market will get the same treatment as the incumbent.”
Goggins’ colleague Jonathan Evans, a technology analyst with ComReg, told the audience that “it is only a matter of time before VoIP will be distributed to PSTN customers”.
On trends such as fixed-to-mobile substitution amongst consumers, Evans said that the momentum seems to be leaning towards fixed consumers becoming mobile only and the battle is on for fixed-line operators to retain these customers. His argument was backed up by the revelation in ComReg’s report that fixed-line penetration has leveled off to 79pc of Irish households, whereas some 92pc of Irish citizens carry a mobile phone.
Evans concluded: “Communications is becoming a reality for Irish citizens. Regulation going forward will need to be geared towards adoption of new technologies and platforms. The social role of telecoms is changing and the danger is that new control points [amongst incumbents] will emerge. ComReg needs to ensure that everyone’s needs are catered for.”
By John Kennedy