Can Ireland’s telecoms leaders collaborate to construct the nation’s fibre network of the future?
THERE is no getting away from it: Ireland’s first broadband decade was far from being a smooth ride. Instead of speeding down the highways of the future, think of it more like driving a 1979 Ford Cortina with no suspension across a Donegal bog.
Only in the past few years has the speed of progress that’s been needed occurred, bringing broadband penetration to over 1.2 million subscribers, moving Ireland from being a laggard and placing it slightly above average in the EU-15.
Continuing this progress and building fast fibre networks will be vital if the country is to bring the trade routes of tomorrow to towns in Ireland that will attract investment and where export-focused entrepreneurs can create local jobs.
Many of the CEOs of Ireland’s telecoms companies would agree that the past decade in Irish telecoms has been a tale of two industries. On the one hand, you have the fixed-line industry and the torturous road to local loop unbundling (LLU) of telecoms exchanges around the country. On the other hand, you have a vibrant and competitive mobile industry, with four networks unleashing new mobile broadband technologies.
The competitive strength of the mobile industry can be seen by the fact that mobile operators like Vodafone, through deals with BT, are becoming fixed-line players too and plan to shake up the LLU market. Both companies aim to build an alternative LLU infrastructure that will grow access to LLU from 20pc today to two thirds in the coming years.
In the past year, the Commission for Communications Regulation (ComReg) has moved to reduce LLU access prices and this was the spark that allowed Vodafone and BT to pool their resources.
The continuing trauma of competing in the fixed-line space, however, can be illustrated by Smart Telecom – a considerable private investor in LLU – which is seeking examinership this week after investing millions in unbundling local exchanges. Rival LLU and fibre-network owner Mark Kellett of Magnet Networks has blamed Smart’s troubles on the slow pace of regulatory reform for creating a situation where only the best-funded companies can survive and compete.
If Ireland is going to build the next-generation networks (NGNs) it clearly needs, making LLU a competitive marketplace will still be an important stepping stone.
The chairman of ComReg, John Doherty, agrees. “We are making progress on LLU. In markets like France where next-generation fibre services are available, LLU has been a precursor to building NGNs. The fact that BT and Vodafone are committed to rolling out more exchanges will mean there will be a footprint to make LLU more competitive.”
Doherty also points out that if Ireland wants to see early deployment of services like Long Term Evolution (LTE) – that will mature 3G to a point where services like 50Mbps over mobile networks will be possible or Data Over Cable Service Interface Specification [DOCSIS] 3.0, which will see speeds of 120Mbps over cable – it will need to get its fibre NGN in order.
The country already has an abundance of State-owned fibre networks and ducting lying unused, waiting to be joined up to the Metropolitan Area Networks (MANs) in 96 towns.
Doherty is spearheading a Stakeholders Group to get all network infrastructure owners in Ireland to work together to build this future network, but also to compete on the network. The Government is also working to create an Exemplar Network with Intune Networks to make use of the State-owned fibre assets and join up the 96 fibre MANs.
The Telecommunications and Internet Federation (TIF) at its 16th Annual Conference on 21 September will reveal a study that will propose a NGN infrastructure capable of creating speeds of 50Mbps to 90pc of the Irish population in three to five years.
“To make this happen, we need to ensure the key players in the industry can work together and build it as a consortium and then compete equally and fairly as part of a competitive industry,” explains Tommy McCabe, director of TIF. “The logical view is the telecoms industry is best placed to make the investment, but we need to ensure that the network is opened up to competition, with all retail telecoms operators gaining access.”
Charles Butterworth, CEO of Vodafone, agrees that the Government has a role to play in terms of ensuring the regulatory environment is right so private industry feels confident about making an investment. “I’m not a great believer in public funds being used when private organisations like Vodafone are willing to make the investment.
“But to encourage private money to be used to build future networks, regulation is vital to create a level playing field where competition is allowed to flourish because competition drives investment. That investment will only occur if investors see evidence of regulatory certainty.
On the other hand, fixed-line regulation needs to be clearer and fairer if we are to see investors invest in taking Ireland’s infrastructure to the next level,” Butterworth adds.
The newly appointed chief executive of Eircom, Paul Donovan, points out that Eircom has invested €1bn so far in its fibre core network and says that regulation will have to keep pace with the changing shape of the market.
“If we are to move to create a next-generation, technology- agnostic high-bandwidth access network, it is vital that regulation recognises the changing definition of the market. If not, there will not be an appropriate incentive to invest for the future. This would undermine the policy objective of the Government in the context of creating the smart economy.”
So far, he says, 51 sites of Eircom’s core network are live across Ireland and by 2011 over 200 locations across the country will be capable of carrying data speeds of 1Gbps.
“The next question is really about the role of fibre in the access network, which is the subject of serious debate in nearly every country, even without the challenging geography in Ireland. This is really an issue of economics that will have to be addressed by industry with new business models to make it commercially viable.”
Donovan says that those who invest the most in the NGN in Ireland must be guaranteed an appropriate return on that investment.
“Those who merely choose to have access and resell services should expect a lower return commensurate with the risk they themselves are taking.”
By John Kennedy
The TIF 16th Annual Conference takes place on Monday, 21 September 2009 at Dublin Castle. To learn more, go to www.tif.ie.