EU regulatory reform will kick-start vital fibre investment

11 Jun 2009

Eleven years since deregulation of the Irish telecoms market began and it is a sad indicator that 96pc of DSL broadband sold in Ireland still originates with Eircom. It is for this reason that the Minister for Communications, Energy and Natural Resources, Eamon Ryan TD, is being urged to back EU-wide reform of telecoms regulation.

Tomorrow, the European Council of Telecoms Ministers is meeting to consider a set of reforms that will have repercussions for telecoms regulation in Ireland.

If Ireland is to benefit from investment by operators in next-generation infrastructure, the missing piece, according to the heads of the major operators, is regulatory certainty.

In order to get clearance to continue investing in infrastructure, shareholders in companies such as Magnet and Vodafone need to be confident the same disasters that struck local loop unbundling (LLU) over the past decade don’t occur again with next-generation infrastructure.

The reforms being proposed in Europe tomorrow will enable the national communications regulator, the Commission for Communications Regulation (ComReg), to better regulate the market, allowing other operators to compete on an equal footing, said Magnet CEO, Mark Kellett.

The telecoms reforms being presented for approval include national regulators being enabled to enact functional separation of an incumbent telecoms provider, if all other regulation initiatives fail to open the market.

As well as this, national telecoms regulators will gain greater independence from national governments, and a new European Telecoms Authority will be established with powers to enforce competitiveness across all member states.

“There is a national imperative to facilitate competition, if the country is to have the broadband infrastructure it needs to attract inward knowledge economy investment,” Kellett explained.

“We have been frustrated by the slow progress made on telecoms competition here, and would urge the Minister to use his place on the council to ratify the reforms, which will greatly help.”

Charles Butterworth, CEO of Vodafone Ireland, said that investment will only happen if shareholders are confident their investments can thrive. “There is a significant role the Government has to play in setting out a framework that is flexible and allows industry to develop services. Going forward, if we are to deliver infrastructure into rural communities, sharing infrastructure among competitors in a way that is appropriate will also be key.

“Regulatory framework in both fixed and mobile is massively important in terms of giving industry the inducement to invest. We need a solid investment in infrastructure, we need a fibre core. It is fibre in the long term that provides the capacity for the digital highways.”

Kellett pointed out that functional separation has been proven to be the best option for fostering private investment in the network. “When BT was separated in the UK, the amount of unbundled lines grew from 100,000 to 5.5 million lines within three years.”

Magnet Networks has unbundled 40 exchanges, offering upgraded broadband services to a footprint of over 500,000 subscribers from Magnet’s investment of €90m.

“Very often, customers are getting re-badged Eircom product when they subscribe to another supplier. If companies such as ourselves can more readily and more cost effectively gain access to the exchanges to offer our own services, consumers and businesses will benefit immensely in terms of speed, quality and cost,” Kellett said.

By John Kennedy

Pictured: the Minister for Communications, Energy and Natural Resources, Eamon Ryan TD