Ireland’s next generation access network will cost €2.5bn to build

21 Sep 2009

The cost of constructing Ireland’s next generation access network will run to €2.5bn over 10 years, a study by Analysys Mason suggests.

Speaking at the 16th annual conference of the Telecommunications and Internet Federation (TIF) at Dublin Castle today, Dr Matt Yardley of Analysys Mason told more than 200 senior telecoms executives that for the previous three years Ireland’s telecoms industry had been investing on average €700m a year in upgrading its networks.

However, with the recession, that investment is likely to dip to €500m per annum this year.

Dr Yardley pointed out that several next generation access technologies – DOCSIS 3.0, fibre-to-the-curb, fibre-to-the-home, Long Term Evolution and WiMax – may well exist in the near future.

Looking a scenario that would involve the deployment of fibre-to-the-home (FTTH), Yardley said that by his calculations it would cost €1,500 per home that would be passed by FTTH.

This, he said, because of Ireland’s geographic characteristics, is far removed from the cost of NGA identified in the Digital Britain report which estimated the cost of each UK home at only £175 and will cost a total of €1.5bn to cover 10m homes.

“I would exercise caution when it comes to this level of investment in Ireland. Making FTTH available to only half the Irish population will cost €2bn in terms of civils and material.”

He said there was a strong case for reusing existing State fibre assets and that the One Stop Shop will play a role in bringing costs down.

Yardley added that in order to reach the remainder of the Irish population an additional €450m investment in Long Term Evolution (LTE) technology would be needed.

“LTE will require fibre to deliver on its promise. What is critical is what spectrum is going to be available – rural fibre backhaul costs could increase by a factor of three times without 2G or digital dividend spectrum.”

Dr Yardley said the overall NGA investment could take 10 years to complete with a total cost of €2.5bn – some €250m a year and 35pc over and above total investment levels available.

Dr Yardley said the NGA dilemma is not a problem facing Ireland on its own, but all countries around the world. “Widespread FTTH is uneconomical to contemplate and spectrum will have an important role to play.”

He said that based on average revenue per user of €30, investors will get their return within a 10-year period.

Yardley said that NGA civils costs could be reduced by taking steps such as micro-trenching and aerial fibre over telegraph wires.

“Spectrum, in particular certainty of access to 2G spectrum by re-farming the spectrum, ensuring digital dividend spectrum (how much and when) needs to be done as a matter of priority.

“A key hurdle that will also have to be reached will be operators who will make the investment can find a common ground in terms of sharing infrastructure in the same way as has happened in the mobile industry.”

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years