A €2.5bn capital investment will be necessary to invest in the roll out of next-generation broadband access which will in turn provide Ireland with the economic stimulus it needs, the telecoms industry led by TIF revealed.
In a reset world where it could take more than a decade for operators to recover their costs, out of all the options available – from charging higher prices for consumers to charging online services companies and dragging Ireland into the net neutrality debate – State investment, it appears, seems like the only practicable way forward.
The report by Analysys Mason, commissioned by the Telecommunications and Internet Federation (TIF) said that a multi-platform access network would require €2.5bn.
Driving economic recovery
TIF said that next-generation access networks (NGAs) have the potential to drive economic recovery by enhancing the development of Ireland’s smart economy.
The report says that Ireland must act quickly to avoid being left behind other countries that are accelerating investment in NGAs.
The report also points out that the high cost of deploying the networks in Ireland poses a significant challenge, as a gap exists between the price consumers are prepared to pay for network access and the cost of building the network.
“Investment in next-generation access is crucial for Ireland, and as an industry we are determined to play our role in making this investment a reality,” newly-elected TIF chairman and director of wholesale at Eircom, John McKeon, explained.
“Analysys Mason estimates a cost of €2.5bn to build an NGA to serve the needs of Ireland’s consumers and businesses.
“If the investment is to be made, which we believe it must, it is essential that network operators work together with content providers, the Government and regulator to find a way to reduce and share the costs and risks associated with such a significant investment. We are confident that with such an approach Ireland can, and will, benefit from a world-class next-generation network.”
The report points out that in the 1980s and 1990s Ireland was one of the world’s first nations to invest in a digital telecommunications network, at a cost of €10bn in today’s money.
Complexity in multi-platform network
While the sum of money required might seem modest by comparison, the report warns that the multi-platform network will be a complex endeavour that nonetheless must be made.
First, a next-generation access network will not be just one network but will in fact consist of many networks – including fibre to the home/fibre to the cabinet, cable TV, and 4G wireless networks. A key issue arises, therefore, as to how much of what type of network should be built and in what locations. In particular, how investment resources can be deployed in the most efficient way possible to avoid unnecessary ‘overbuild’ of multiple networks in the same locations.
And secondly, the investment in these networks will not be made and co-ordinated by one single Government-controlled entity (as was the case with the digitalisation investment of the 1980s by the-then Telecom Eireann) but will involve multiple operators all with different business strategies.
TIF believes, as set out in its statement of ‘Principles to inform the development of Next Generation Networks and Services’ that the members of industry working together are best positioned to resolve these complexities in collaboration with other stakeholders including Government and regulators.
The key steps to Ireland benefiting from a next-generation access network that will deliver the economic stimulus that competing in a digital economy will bring are as follows:
· Network sharing and collaborative investments by operators
· A forward-looking regulatory approach
· Forward-looking and pro-investment public policy by Government
The report estimates that it would take at least 12 years for operators to recover investment costs not to mention return on investment from an NGA network – returns that are unsustainable in the private sector.
The only way the NGA can be deployed can be through three possible methods:
1. Charging consumers and businesses higher prices.
2. Investment by the State which in return would benefit from a more efficient and competitive national economy.
3. Or from somehow applying charges to online service providers who will benefit from a better infrastructure – dragging Ireland reluctantly into the so-called net neutrality debate and potentially damage the significant global internet industry that has amassed in Dublin.
“NGAs are likely to consist of multiple network platforms, including fibre to the home/cabinet, cable and 4G wireless,” said Peter Evans, vice-chairman of TIF’s broadband and NGN industry group and product director at BT.
“In addition to funding this investment, other challenges that need to be considered are aligning the business strategies of multiple operators in the market, competition challenges, declining revenues and the pace of technological changes.”
Tommy McCabe, director of TIF, said there is widespread agreement that Ireland needs a state-of-the-art telecoms infrastructure.
“As a nation we need to be ambitious with regard to what we can achieve as we turn our focus to economic recovery and growth. This TIF report will facilitate an informed dialogue with the key stakeholders in the coming months,” McCabe said.
By John Kennedy