If the €12m Government metropolitan area network (MAN) in Cork to is to have a serious commercial impact on the city, Cork City Council will have to encourage the creation of a regional data centre or co-location facility, have multiple access points and encourage State agencies like CIE and ESB to open up their backhaul fibre networks to competition, a critical report has warned.
The report by PA Consulting, which benchmarks Cork against five other European cities in terms of internet connectivity and commercial and domestic broadband usage, drove home the point that the purpose of the 60km Cork MAN – the first of 19 such networks to be lit – is to accelerate the decline of broadband prices in the region, attract more service providers to the market and reduce prices charged by Eircom and Esat BT in the region.
The report illustrates that simply having a MAN live is only the beginning of the battle for all-pervasive, and affordable, broadband services in Irish towns and cities.
The report compares Cork with the cities of Aarhus in Denmark, Aberdeen in Scotland, Bilbao in Spain, Montpellier in France and Tampere in Finland. It said that while Cork performs strongly in terms of Internet penetration, government prioritisation, and promotion of ICT, it performs poorly in terms of the amount of external business correspondence done using email, broadband access and public access to the Internet.
“The lack of competition in the Cork telecommunications market when compared to other European cities is a disadvantage. Moreover, the prices of broadband services in Cork are the highest among the six cities. Based on the analysis, Cork’s competitiveness and attractiveness as a location for ICT is greater than Aberdeen’s, but lags behind that of Tampere and Aarhus, and (on balance) would be on par with Bilbao and Montpellier,” the report said.
Looking at the current telecoms landscape in Cork, the report emphasised that Eircom and Esat BT were the dominant providers, although their main purpose of doing business in Cork is to serve the needs of multinational corporations and not those of consumers and SMEs. These multinationals mostly use dedicated leased lines of 2Mbps while some have 34Mbps services and it is expected that some of these will shortly move to 1Gbps services. Most SMEs in the region have ISDN access, and some are considering a move to DSL. The majority of residential users in the marketplace depend on 56k dial-up.
Using Cork as the template, the PA Consulting report emphasised that unless the national backhaul issue was resolved, many of the MANs would be virtually useless. It indicated that Eircom and Esat BT are quoting extremely high prices for wholesale backhaul from Cork to Dublin. Although ESB Telecom’s €120m backhaul will undercut their prices by 20-30pc, PA said that it is “still not low enough to provide alternative provider with prices that are affordable and will create effective competition.”
For the Cork MAN to be successful, PA warned that there is a need to create a carrier-neutral point of presence (PoP) in Cork where service providers could locate without any one service provider having control of the facility. Such a data centre could start off on a reasonable small scale and then grow as data service requirements grow. As part of a longer-term strategy, the development of a regional Internet Neutral Exchange (INEX) should be a priority and should be investigated.
The report also called for the creation of multiple, rather than a single, points of access between national networks and the Cork City MAN and therefore the provision of back-up facilities for the carrier-neutral PoP would ensure resilience. “The Cork City MAN will effectively be competing with Eircom and Esat BT’s city networks, and therefore must offer other service providers flexibilty in terms of where they wish to interconnection with national and international networks.
“In the absence of a carrier-neutral national backhaul network, customers will have to use either Eircom or Esat BT,” PA warned.
PA indicated that there are State-owned national fibre networks that collectively have sufficient geographical reach to facilitate a low cost comprehensive national backhaul network. ESB Telecom has a 1,300km fibre network that covers most towns and cities in teh country. In addition, CIE owns dark fibre on Esat BT’s 2,000km fibre network that is laid along the railway network. “Therefore, the critical recommendation that this report makes in relationa to the national backhaul issue is that State-owned fibre networks are utilised to deliver low cost national backhaul,” the report said.
In terms of the Managed Services Entity (MSE) that will oversee the Government’s €170m investment in its National Broadband Strategy, PA warned that the MSE must operate to a level of excellence that will enable other service providers to win over business from Eircom and Esat BT. If it doesn’t operate to a level of excellence, it will dilute the confidence of potential service providers, erode the chance for success of the Cork City MAN and therefore substantially reduce the return on the State’s investment.
The PA Consulting report was compiled prior to the Government’s appointment of a company to run the MSE. It is understood that a consortium led by Limerick property developer Tiernan Properties has been selected as the preferred bidder for the Government’s broadband network. The consortium, led by Tiernan Properties’ telecoms subsidiary eNet, includes a spin-off from Eircom called TE Services and Swedish firm Swedia.
While the Government’s plan is currently to build MANs that will span 19 regional towns, it is expected that the Government will also extend these networks to about 88 towns over the next few years.
By John Kennedy