Eircom hinders broadband targets, says ALTO

6 Mar 2006

Broadband penetration in Ireland could reach one million subscribers by 2010 if full local loop unbundling (LLU) becomes a reality, research by London-based Analysys Consulting claims. It says Ireland is underperforming against countries with similar gross domestic product (GDP) by a factor of two to three times.

The Analysys report was commissioned by ALTO, a body representing licensed telecom operators in Ireland.

The report shows that in terms of broadband development Ireland is underperforming against countries with similar GDP per capita by a factor of two to three times and that broadband development will remain very slow until what it describes as “the current Eircom-imposed infrastructural bottlenecks” are eliminated.

Malta, Spain and Portugal, which have a markedly lower GDP per capita than Ireland, had a significantly higher level of residential broadband penetration. In countries with a similar GDP — Austria and Denmark — broadband penetration was respectively three and four times higher than Ireland.

The report found that based on current growth rates the Irish market will not hit the Government’s target of 400,000 broadband subscribers by the end of 2006.

Infrastructure-based competition based on LLU will be a major factor in making progress in broadband penetration. It warned that in the absence of competition in the access network, Eircom has little incentive to price broadband keenly or roll it out to additional areas.

If LLU succeeds, however, broadband penetration in Ireland would be almost one third larger than it would otherwise be in 2010.

If LLU fails in Ireland in the long term, however, Irish economic development will suffer from the effective lack of competition, the Analysys report warns. Businesses in Ireland will face higher costs than in other EU countries and Irish consumers will not have the option of purchasing the advanced services on offer in other countries.

ALTO recommends Eircom immediately implements number portability when unbundling lines and immediately removes the restriction that prevents its competitors from transferring customers to unbundled lines. Currently customers have to cease and re-order. The telecoms body also called on Eircom to develop a scaleable automated solution for number portability.

In terms of actions that the Commission for Communications Regulation (ComReg) must take to resolve Ireland’s broadband woes, ALTO said the regulator must intervene to remove restrictions imposed by Eircom on other licensed operators and immediately investigate the separation of Eircom into a core wholesale unit and a retail unit.

It called on the Government to bring forward the Communications Bill as a priority in order to give ComReg stronger enforcement powers. It also called on the Government to assess the availability of backhaul facilities and develop a programme to ensure backhaul facilities are provided at reasonable prices countrywide.

“Broadband is universally recognised as being a critical factor for social development and economic growth and success,” commented ALTO chairman Tom Hickey. “The market is not competitive and our members have experienced obstacles and delays in obtaining reasonable access to the local network (local loop) in order to supply alternative broadband services to customers.

“There is clear evidence that the countries with the highest rates of users are those with the most competition in providing broadband services.

“It’s hardly a coincidence that in the three countries with the highest broadband penetration — Netherlands, Denmark, Finland — the former state-owned telecoms operator holds less than 50pc of the market. Ireland urgently needs competition from different methods of delivery — cable, wireless and unbundled loops — if our broadband penetration is to even reach the EU average,” Hickey said.

By John Kennedy