EU telecoms sector weathers economic storm

25 Mar 2009

Europe’s telecoms market is weathering the current economic storm, but Ireland’s fixed-line broadband penetration is still behind the EU average, and our wholesale market is “expensive” and “unreliable”, an EU Commission report has warned.

The report said Europe leads the world in mobile phone services, with the number of subscriptions in 2008 at 119pc of the EU population (+7pc from 2007), well ahead of the US (87pc) and Japan (84pc).

Despite the economic crisis, the EU’s telecoms sector (worth about 3pc of EU GDP) continued to grow in 2008, with revenues estimated at above €300bn, up 1.3pc from 2007.

The report showed that in Ireland fixed broadband internet penetration grew to 20pc of the population in 2008, compared to 17pc in 2007. This is closing in on the EU average of 23pc, and is almost 10 percentage points more than two years ago.

The report does, however, show that Ireland is one of the top five EU markets when it comes to mobile broadband penetration. In January 2009, Ireland had a penetration of mobile broadband of 6.3pc well above the EU average of 2.8pc.

The report revealed that the digital divide persists in rural areas where fixed broadband (DSL) coverage is 73pc, compared to 89pc of national coverage. Competition on the market for fixed calls remains limited.

Fixed broadband (DSL) coverage in rural areas stood at 73pc, an increase of 9 percentage points over the year. This is still, however, 16 percentage points less than national coverage, although this digital gap has narrowed from 22 percentage points last year.

Lower consumer prices and easy number portability helped the mobile penetration rate in Ireland climb to 119pc in October 2008 (EU average was 119pc). A mobile phone call costs the average Irish consumer €0.11 per minute, making them better than the EU average (€0.23).

But there is room for improvement, and wholesale costs are holding back broadband competition, which the EU has described as expensive and unreliable.

The monthly rental charge for making the last mile of phone lines to homes accessible to alternative operators in Ireland increased for the second year running, and is now the highest in the EU. Service failures for alternative operators using these lines have made life even harder for them.

Only 5.8pc of the alternative operators were using their own network infrastructure for the delivery of fixed telephony services in 2008, and the high cost for alternative operators of using the incumbent’s phone network to provide services has had bad effects on competition and prices.

In particular, the incumbent increased its local calls tariffs in 2008, and its consumer monthly line rental charge of € 25 remained the highest in the EU.

At the same time, only 22pc of subscribers used an alternative provider for fixed-line phone services in July 2008, no change compared to one year earlier.

It also takes much longer to port a fixed than a mobile number in Ireland – 10 days, above the EU average of 7.5 days. It is no surprise there are high levels of consumers substituting fixed for mobile lines.

Digital TV advances slowly in Ireland and the country is still waiting for a digital switchover deadline.

Some 75pc of Irish TV viewers use satellite or cable, and 58pc of Irish TV viewers receive digital TV services. A digital terrestrial TV (DTTV) pilot project in the Dublin area has been successfully completed. The launch of both public and commercial DTTV is likely to take place in the autumn of 2009.

However, a specific analogue broadcasting switch-off date still has not been set in Ireland, even though digital terrestrial TV plans have been set out.

By John Kennedy